Quieting of Title Cases:

ELIAS GALLAR, plaintiff-appellee, vs. HERMENEGILDA HUSAIN, ET AL., defendants. BONIFACIO HUSAIN, defendant-appellant.

SYLLABUS 1.SALE WITH PLIGHT TO REPURCHASE; REDEMPTION; REDEMPTIONER NOT ACTING IN BEHALF OF THE OWNER; EFFECT. While it is indeed true that the first note written on the reverse side of the deed of sale speaks of the "redemption" of the land, there is no evidence to show that the vendee, Graciana Husain, was acting in behalf of her brother Teodoro Husain, in the exercise of the latter's right of redemption. How, unlike a debt which a third person may satisfy even against the debtor's will the right of repurchase may be exercised only by the vendor in whom the right is recognized by contract or by any person to whom the right may have been transferred. Graciana Husain must, therefore, be deemed to have acquired the land in her own right, subject only to Teodoro Husain's right of redemption. As the new owner she had a perfect right to dispose of the land as she in fact did when she exchanged it for a cattle with the appellee. 2.ID.; FAILURE TO REDEEM; EFFECT. When Teodoro Husain failed to redeem the land within the stipulated period, i.e., January 9, 1925, its ownership became consolidated in the appellee. True the successive sales are in a private instrument, but they are valid just the same. By the delivery of possession of the land on April 2, 1919 the sale was consummated and title was transferred to the appellee. 3.ID.; ID.; ACTION TO QUIET TITLE. Indeed, this action is not for specific performance; all it seeks is to quiet title, to remove the cloud cast on appellee's ownership as a result of appellant's refusal to recognize the sale made by their predecessor, lower court's order commanding appellants to execute a deed of conveyance of the land in favor of the appellee on the authority of Sapto vs. Fabiana, 103 Phil., 683; is, therefore, affirmed. 4.PRESCRIPTION OF ACTION; LAND IN POSSESSION OF APPELLEE; EFFECT. As plaintiff and appellee is in possession of the land, the action is imprescriptible (Sapto vs. Fabiana, supra). Appellant's argument that the action has prescribed would be correct if they were in possession as the action to quiet title would then be an action for recovery of real property which must be brought within the statutory period of limitation governing such action. DECISION REGALA, J p: This is an appeal directly from the Court of First Instance. A hectare of rice land in Cabatuan, Iloilo, is the subject of this controversy. On January 9, 1919, Teodoro Husain, the owner, sold this land to Serapio Chichirita for P30, reserving for

himself the right to repurchase it within six years. The deed of sale, written in the Ilongo dialect, is contained in a private instrument, the English translation of which reads: "I, Teodoro Husain, single, of legal age, native and resident of the Municipality of Cabatuan, Province of Iloilo, Philippine Islands, because of the amount of Thirty Pesos (P30.00), Philippine currency, that was paid to me by Serapio Chichirita, married to Florentina Muyuela, of legal age, native and resident of this Municipality of Cabatuan, Province of Iloilo, Philippine Islands, hereby declare that I am selling to the aforementioned vendee Serapio Chichirita, his heirs, and the heirs of the latter, my one parcel of rice land at Barrio Salacay of this Municipality of Cabatuan, and its descriptions are as follows: One parcel of rice land that has a seedling of one cavan of palay, legal measure, bounded on the North, land of Juan Alcayaga, on the East, land of Agapito Suero, on the South, land of Elias Gallar and on the West, land of Juan Mina. The said land was inherited by me from my father who is now dead, Clemente Husain. "I also declare that we have agreed that if the vendor shall have repaid to the vendee the aforementioned amount of P30.00 within six years from this date, the vendee or his heirs shall execute a document of repurchase in my favor, but if after the said term that he cannot return the aforementioned amount, this document shall be considered absolute and irrevocably consummated and in the meantime the vendee shall be the one to make use of the aforementioned land in accordance with the Ley Hipotecaria. "In truth whereof, I have signed this document at Cabatuan, 9th day of January, 1919. (Sgd.) TEODORO HUSAIN "Signed in the presence of: "(Sgd.) TOMAS JILOCA(Sgd.) EUSEBIO JOCANO" Teodoro Husain did not redeem the land, although shortly after the execution of the deed of sale, that is, on January 28, 1919, the vendee a retro, Chichirita, transferred his right to Graciana Husain, sister of the vendor a retro, in what purports to be a resale of the land. The following annotation appears on the reverse side of the deed of pacto de retro sale: "NOTA: The amount stated above was received by me from Graciana Husain and on my own voluntary will as redemption (gawad) of the same land, and because of this, I am transferring my rights as stated above to Graciana Husain in the presence of her husband Manuel Catalan, and in truth whereof I have signed at Cabatuan, 28 January, 1919. Thumb marked Serapio Chichirita" (English translation)

Graciana Husain subsequently transferred her rights to the land to appellee Elias Gallar in exchange for one cow. The transaction is recorded in a second note added on the reverse side of the deed of sale. The note reads: "OTRA NOTA: "The undersigned Graciana Husain, with the consent end knowledge of her husband Manuel Catalan, has agreed with Elias Gallar that all the rights that belongs to her, or she, Graciana Husain, is transferring to the said Elias Gallar in accordance with that stated in the original with the difference that this transfer is definite because it is their agreement in exchange of one head of cow described in the Certificate of Large Cattle existing in the Office or the Municipal Treasurer of this town. And in truth whereof, Graciana Husain signed hereunder together with her husband Manuel Catalan. Cabatuan, April 2, 1919. "(Sgd.) MANUEL CATALAN(Sgd.) GRACIANA HUSAIN" (English translation) Possession of the land, together with the owner's duplicate of the certificate of title of Teodoro Husain, was delivered on the same occasion to appellee who since then has been in possession of the land. In an affidavit dated March 6, 1928, Chichirita confirmed the "redemption" of the land by Graciana Husain. In another affidavit of the same date, Graciana Husain for her part confirmed having subsequently sold the land to the appellee. In 1960, appellee asked the Cadastral Court for the issuance to him of a transfer certificate of title but the court dismissed his petition for lack of jurisdiction. (The court, however, granted appellee's request for the amendment of the certificate of title by changing the surname of "Osaen" to Husain.") He, therefore, filed this suit in the Court of First Instance of Iloilo on October 10, 1960 to compel Hermenegilda and Bonifacio Husain, as heirs of Teodoro Husain, to execute a deed of conveyance in his favor so that he could get a transfer certificate of title. He also asked for damages. In their answer, Hermenegilda and Bonifacio Husain denied the sale and contended that the agreement between their father and Serapio Chichirita was that of a mortgage to secure a loan of P30. They claimed that the mortgage had been discharged on January 28, 1919 when Graciana Husain paid Teodoro Husain's debt to Chichirita. Hermenegilda and Bonifacio Husain likewise invoked prescription to bar appellee's action and asked for damages for the value of palay which they claimed they failed to receive on account of appellee's refusal to return possession of the land to them. The trial court found that after acquiring the land from Teodoro Husain, Serapio Chichirita sold it to Graciana Husain who in turn sold it to the appellee. Accordingly, it ordered the appellants to execute a deed of conveyance of the land in favor of the appellee on the authority of our ruling in Sapto vs. Fabiana, 103 Phil., 683.

From this judgment, Bonifacio Husain brought this appeal to this Court. He contends that the land in question, which is identified as Lot No. 766 of the Cadastral Survey of Cabatuan, Iloilo and covered by Original Certificate of Title No. 4521 of the Register of Deeds of Iloilo, is not the same land which Teodoro Husain sold to Serapio Chichirita on January 9, 1919. According to appellant he raised this question at the trial but the lower court passed it up in its decision. The records on appeal do not disclose that appellant made such a claim. About the only hint that he was questioning the identity of the land sold by means of the deed of sale of January 9, 1919 was an objection to a question during the direct examination of the appellee. Thus the following appears on pages 20-21 of the transcript of notes taken on July 5, 1961: "Q.According to this Exhibit C, you bought the lot referred to in Exhibit A which is Lot 766 in question, was bought by you for one cow. Do you know how much the worth of your cow during that time? Atty. ESMERALDA [for defendants] Objection, Your honor. The question is premised on Lot 766 but the document does not mention Lot 766. xxx xxx xxx "COURT So your objection is that it lacks basis "ATTY. ESMERALDA It lacks basis, your Honor." Otherwise, the records do not show any allegation made, much less evidence presented, by appellant of the supposed difference in the identity of the land sold in the deed of pacto de retro sale and the land now in question. Indeed, the only defense put up by appellant was that the pacto de retro sale was in reality a mortgage and that, at any rate, appellee's action was barred by the statute of limitations. In so doing, appellant joined issues with the appellee and he will not now be permitted to bring up new matters on appeal as this would constitute changing of theory so utterly unfair to the adverse party. 1 that the lower court deliberately, perhaps, ignored the point. It may be added that an admission that the land described in the deed of sale and Lot No. 766 are one and the same is implicit in appellant's defense that the deed of sale did not express the true intention of the parties.

Still it is argued that no action can be brought on the basis of the deed of sale with a right of repurchase because the land in question was redeemed a few days after it had been sold. While it is indeed true that the first note written on the reverse side of the deed of sale speaks of the "redemption" of the land, there is no evidence to show that the vendee, Graciana Husain, was acting in behalf of her brother Teodoro Husain, in the exercise of the

latter's right of redemption. Now, unlike a debt which a third party may satisfy even against the debtor's will 2 the right of repurchase may be exercised only by the vendor in whom the right is recognized by contract 3 or by any person to whom the right may have been transferred. 4 Graciano Husain must, therefore, be deemed to have acquired the land in her own right, subject only to Teodoro Husain's right of redemption. As the new owner she had a perfect right to dispose of the land as she in fact did when she exchanged it for a cattle with the appellee. Now, when Teodoro Husain failed to redeem the land within the stipulated period, i.e., January 9, 1925, its ownership became consolidated in the appellee. True the successive sales are in a private instrument, but they are valid just the same. 5 By the delivery of possession of the land on April 2, 1919 the sale was consummated and title was transferred to the appellee. Indeed, this action is not for specific performance; all it seeks is to quiet title, 6 to remove the cloud cast on appellee's ownership as a result of appellant's refusal to recognize the sale made by the predecessor. And, as plaintiff-appellee is in possession of the land, the action is imprescriptible. 7 Appellant's argument that the action has prescribed would be correct if they were in possession as the action to quiet title would then be an action for recovery of real property which must be brought within the statutory period of limitation governing such actions. 8 Wherefore, the decision appealed from is affirmed, with costs against appellant.

[G.R. No. 70191. October 29, 1987.] RODOLFO L. CORONEL, petitioner, vs. HONORABLE INTERMEDIATE APPELLATE COURT and ELIAS MERLAN, BRIGIDO MERLAN, JOSE MERLAN, TEODORICO NOSTRATIS, SEVERO JECIEL, SANTIAGO FERNAN and FORTUNATO OCAMPO, respondents. DECISION GUTIERREZ, JR., J p: This is a petition to review the decision of the then Intermediate Appellate Court, now the Court of Appeals, which affirmed the decision and order of the then Court of First Instance of Cavite in Civil Case No. 651. The dispositive portion of the trial court's decision reads: llcd "WHEREFORE, in the interest of moral justice, judgment is hereby rendered in favor of all the defendants and intervenor; hereby DISMISSING the complaint; however, the Court hereby orders instead the immediate partition of the land, subject-matter of this case, without prejudice to the plaintiff, and in accordance with the express but undivided apportionments corresponding to the original co-ownership, and pursuant to Transfer Certificate of Title No. T-1444 (EXHIBIT 4-b) of the Registry of Deeds for the Province of Cavite, as entered on May 19, 1960; "Hereby declaring null and void, Transfer Certificate of Title No. T-75543 of the same registry.

"Without pronouncements as to costs." (At p. 71, Record on Appeal). The dispositive portion of the questioned order of the trial court reads: "WHEREFORE, under our present alternatives, as prayed for by defendants and Intervenor, through Lawyer Eleuterio A. Beltran, in their present incident recorded on January 10, 1980; the Decision subject matter hereof is amended in the following significance: "Plaintiff Rodolfo Coronel is further ordered to submit a complete Inventory and Accounting of all the harvests of palay produced from the parcel of land (Lot 1950-A) subject matter of the present litigation, and to deliver the corresponding shares to the defendants and intervenors correlated with all the harvests of palay done by the plaintiffs; considering the unrebutted finality of the testimony of defendant Brigido Merlan in congruence with his supplication for the Inventory and Accounting of all the palay gathered by plaintiff Rodolfo Coronel who is likewise ordered, finally, to pay Lawyer Eleuterio Beltran as counsel for defendants and intervenors, Four Thousand (P4,000.00) Pesos for his professional services. "Naic, Cavite, February 13, 1980." (pp. 88-89, Record on Appeal). Petitioner Rodolfo Coronel filed a complaint for recovery of possession of a parcel of land registered under his name (Transfer Certificate of Title No. T-75543 in the Registry of Deeds for the Province of Cavite) and more particularly described as follows: LLphil "A parcel of land (Lot 1950-A of the subdivision plan (LRC) Psd-104544, being a portion of Lot 1950, Naic, Estate, LRC Rec. No. 8340), situated in the Municipality of Naic, Province of Cavite, Island of Luzon. Bounded on the NE., pts. 12 to 14 by Irrigation Ditch; on the SE., and SW., pts. 14 to 15 and 15 to 1 by Lot 1950-D of the subdivision plan; on the SW., pts. 1 to 2 by Lot 2304, and pts. 2 to 11 by Lot 1951, both of Naic, Estate; and on the NW., pts. 11 to 12 by Road. . . .; containing an area of TWELVE THOUSAND ONE HUNDRED EIGHTY NINE (12,189) SQUARE METERS, more or less. . . ." (p. 10, Record on Appeal). The complaint docketed as Civil Case No. 661 was filed against the private respondents Elias Merlan, Brigido Merlan, Jose Merlan, Teodorico Nostrates, Severo Jeciel, Santiago Fernan and Fortunato Ocampo before the then Court of First Instance of Cavite. Coronel alleged in his complaint that at the time he purchased the subject parcel of land, the defendants (private respondents herein) were already occupying a portion thereof as "tenants at will" and that despite demands to vacate the premises, the defendants failed and refused to move out from the land. In their Answer with Counterclaim and With Third-Party Complaint, the defendants denied that Coronel was the owner of the whole parcel of land and alleged that the lots occupied by them form part of a 1/3 undivided share of brothers Brigido Merlan and Jose Merlan which they inherited from their deceased father Gabriel Merlan, one of the three heirs of Bernabela Lontoc, the original owner of Lot No. 1950-A of the Naic Estate; that the Merlan brothers together with their two brothers and a sister never sold their undivided 1/3 share of the lot to anybody; that it was actually their other co-heirs who sold their undivided portions and

that the plaintiff's claim of ownership of the whole parcel of land, if ever it has basis, is fraudulent, void, and without effect; that the Merlans have always been in open and peaceful possession of their undivided share of the lot throughout the years from the first sale by their co-heirs of Lot No. 1950-A in 1950; and that the other defendants were legitimate tenants. They prayed that the plaintiff respect their rights over 1/3 (4,063 square meters) of Lot No. 1950-A of the Naic Estate. In their Third-Party Complaint, the defendants charged that the third-party defendants, owners of the remaining portion of Lot No. 1950-A, defrauded them when they sold the entire parcel. Third-Party Defendants Marcelo Novelo, Paz Anuat, Daniel Anuat and Rosario Cailao, the defendants' co-owners of Lot No. 1950-A denied that they had something to do with the fraudulent acts or illegal machinations which deprived the defendants of their share in the subject parcel of land, and that what they sold was only their 2/3 undivided shares in said parcel. They also filed a cross-claim against their co-defendant Mariano Manalo whom they charged might have connived with others including the plaintiff to deprive the defendants and their co-heirs of their share in the subject parcel of land. As stated earlier, the lower court ruled in favor of the defendants and on appeal, the lower court's decision was affirmed with the following modification by the then Intermediate Appellate Court, to wit: cdrep "WHEREFORE, PREMISES CONSIDERED, there being no reversible error in the main decision appealed from dated December 7, 1979, and the Order of the Court dated February 13, 1980, the same are hereby AFFIRMED with the modification that after the word 'intervenor' in the main decision, the following shall be inserted: "1)Declaring them as the absolute owners of the remaining 1/3 of the 2/8 portion pertaining to the late Bernabela Lontoc, namely, Lot 1950-A of the Naic Estate pursuant to Art. 845 of the New Civil Code." (At p. 29.). The petitioner states that the appellate court erred as follows: I "THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN NOT CONSIDERING THAT THE CLAIM OF PRIVATE RESPONDENTS TO THE LAND IN QUESTION HAS BEEN BARRED BY THE STATUTE OF LIMITATION OR BY ESTOPPEL BY LACHES. II "THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN NOT CONSIDERING PETITIONER AS A PURCHASER IN GOOD FAITH AND FOR VALUABLE CONSIDERATION OF THE LAND IN QUESTION. III

"THAT THE HONORABLE INTERMEDIATE APPELLATE COURT HAS ERRED IN DECLARING AS NULL AND VOID TRANSFER CERTIFICATE OF TITLE NO. T-75543 OF THE REGISTRY OF DEEDS OF CAVITE WHICH IS ALREADY PLACED IN THE NAME OF PETITIONER." (at pp. 1-2, Brief for the Petitioner). The records show that the 12,189 square meter lot was part of a 48,755 square meter lot covered by Transfer Certificate of Title No. 3116 (RT-5010) of the Naic Estate located at Muzon, Naic, Cavite in the names of the spouses Valentin Gutierrez and Eligia Mangahas with a calculated portion of 2/8; spouses Jose Perea and Celestia Naces with a calculated portion of 3/8; Josefa Nazareno with a calculated portion of 1/8 and Bernabela Lontoc with a calculated portion of 2/8. In dispute in the instant case is the 2/8 share of Bernabela Lontoc which is equivalent to 12,189 square meters. When Lontoc died in 1945, she was survived by three sets of heirs: 1) Bernardino Merlan, a grandson by her son Enrique Merlan who died in 1918; 2) Jose Merlan and Brigido Merlan, defendants in the case below and private respondents herein, Graciano Merlan, Agapito Merlan and Corazon Merlan, children of her son Gabriel who died in 1937; and 3) Daniel Anuat and Paz Anuat, children of her daughter Francisca Merlan. In 1950, Bernardino Merlan, Daniel Anuat and Paz Anuat sold their 2/3 undivided portion of the lot to spouses Ignacio Manalo and Marcela Nobelo. In 1960, Transfer Certificate of Title No. (T-3116) RT-5010 was cancelled by Transfer Certificate of Title No. T-1444 but carried the same afore-specified registered co-owners with an annotation carried from the former Transfer Certificate of Title, to wit: LLphil " 'Entry No. 4953-SALE in favor of IGNACIO MANALO, married to Marcela Nobelo covering the rights, interest and participation of Bernardino Merlan, married to Rosario Cailao, DANIEL ANUAT, married to Dionisia Loyola, and PAZ ANUAT, widow, on the share of BERNABELA LONTOC, consisting of twenty (20) gantas of seedling, on the land described in this Certificate of Title, for the sum of THREE THOUSAND PESOS (P3,000.00) by virtue of the deed of sale, executed before the Notary Public for the City of Cavite Mr. Primo D. Anuat (Doc. No. 652; page No. 77; Book No. VII; Series of 1950) on file in this Registry. " 'Date of Instrument March 11, 1950. " 'Date of Inscription March 13, 1950 at 2:35 p.m.'" (At pp. 2-3, Court of Appeals Decision; pp. 18-19, Rollo) In 1968, Lot No. 1950 of the Naic Estate was subdivided according to a Sketch Plan (Exh. A). The sketch plan was approved by the Commission on Land Registration on August 15, 1969. Bernabela Lontoc's 2/8 portion of Lot No. 1950 became Lot No. 1950-A with an area of 12,189 square meters. Sometime in 1970, Ignacio Manalo sold his interest in Lot 1950-A to Mariano Manalo. The pertinent portions of the deed of sale executed by spouses Ignacio Manalo and Marcela Nobelo in favor of spouses Mariano Manalo and Jorga Manalo states:

" 'Ang pagkamayari namin ng bahaging binabanggit sa itaas nito ay natatalikod ng titulo blg. T-3116 na gaya ng sumusunod:

" '(Entry No. 4953-SALE In favor of IGNACIO MANALO, married to MARCELA NOVELO covering the rights, interests and participations of BERNADINO MERLAN married to ROSARIO CAILAO, DANIEL ANUAT married to DIONISIA LOYOLA, and PAZ ANUAT, widow, on the share of BERNABELA LONTOC, consisting of twenty (20) gantas of seedling, on the land described in this certificate of title of the sum of THREE THOUSAND PESOS (P3,000.00), by virtue of the deed of sale executed before the Notary Public for the City and Prov. of Cavite Mr. Primo D. Anuat (Doc. No. 652; Page No. 77; Book No. VII, Series of 1950) on file in this Registry. Date of instrument March 13, 1950 at 2:35 p.m. (sgd) ESCOLASTICO CUEVAS, Register of Deeds. " 'Na alang-alang sa halagang ISANG LIBONG (P1,000.00) PISO salaping (blurred), na sa amin ay ibinayad ni G. MARIANO MANALO kasal kay JORGA MANALO may sapat na gulang, Filipino at ang tirahan at pahatirang sulat ay (blurred) Cavite, ay aming ipinagbili ng tuluyan (Venta Real y Absoluta) ang nabanggit na DALAWANG PUNG (20) salop na binhi, bahagi ng Lote blg. 1950 (blurred) tiyak sa lote na unahan nito sa naturang G. Mariano Manalo, sa kanyang tagamana o kahalili sa matuwid magpakailan man. Dito'y sinasaysay rin namin ang nasabing lupang tubigan ay walang sinasagutang pagkakautang kanino mang tao.' " (pp. 2526, Rollo) The deed of sale was registered in the Registry of Deeds in Cavite. Thereafter, Transfer Certificate of Title No. T-1444 was cancelled and Transfer Certificate of Title No. T-41175 was issued for Lot No. 1950-A of the Naic Estate in the name of Mariano Manalo, married to Jorga Lagos of Naic, Cavite. The certificate of title issued in the name of spouses Mariano Manalo and Jorga Lagos covered the whole Lot No. 1950-A without any mention of the 1/3 share of the private respondents in the parcel of land which was not sold to them. Relying on the transfer certificate of title of the spouses Mariano Manalo and Jorga Lagos and the Sketch Plan (Exhibit "A"), petitioner Rodolfo Coronel then bought Lot No. 1950-A of the Naic Estate from the former for the consideration of P27,000.00 as per Doc. No. 341; Page No. 70; Book No. V; Series of 1974 in the Notarial Register of Notary Public Nonilo A. Quitangon of the City of Manila. The deed of sale was registered on December 19, 1974 causing the cancellation of Transfer Certificate of Title No. T-41175 and the issuance of Transfer Certificate of Title No. T-75543 in the name of petitioner Rodolfo Coronel. Considering these facts, it is evident that the private respondents never sold their 1/3 share over Lot No. 1950-A of the Naic Estate; that what their co-owners sold to Ignacio Manalo was their 2/3 share of the same lot; and that Ignacio Manalo sold only the 2/3 share to third-party defendant Mariano Manalo, the predecessor-in-interest of petitioner Rodolfo Coronel. Consequently, there was a mistake when Transfer Certificate of Title No. 41175 was issued to Mariano Manalo covering the whole area of Lot No. 1950-A. Unfortunately, Mariano Manalo who was included as third-party defendant as well as the subject of a cross-claim filed by the other third-party defendants, and who could have shed light on this controversy was at the time residing abroad and was not served with the third-party complaint.

Moreover, private respondents Brigido Merlan and Jose Merlan were in open, peaceful and adverse possession of their 1/3 share over the lot even after 1950 when the first sale of the lot took place. The first time they knew about Coronel's claim over the whole lot was when they were served a copy of his complaint in 1975. LLjur Under these circumstances, the first assignment of error is not well taken. The petitioner contends that the claim of the private respondents over their 1/3 undivided portion of Lot No. 1950-A, 25 years after the registration of the deed of sale in favor of Ignacio Manalo in 1950 and more than five (5) years after the registration of the deed of sale in favor of Mariano Manalo is barred by prescription or laches. According to him, there was undue delay on the part of the private respondents to claim their 1/3 portion of Lot No. 1950-A of the Naic Estate and that the action for annulment should have been brought within four (4) years (Art. 1391, New Civil Code) counted from the date of the registration of the instrument. The counterclaim of the private respondents which was in effect a reconveyance to them of their 1/3 undivided share over Lot No. 1950-A has not prescribed. As lawful possessors and owners of the lot in question their cause of action falls within the settled jurisprudence that an action to quiet title to property in one's possession is imprescriptible. Their undisturbed possession over a period of more than 25 years gave them a continuing right to seek the aid of a court of equity to determine the nature of the adverse claim of a third party and the effect of his own title. If at all, the private respondents' right to quiet title, to seek reconveyance and to annul Transfer Certificate of Title No. T-75543 accrued only in 1975 when they were made aware of a claim adverse to their own. It was only at that time that the statutory period of prescription may be said to have commenced to run against them. (Sapto, et al. v. Fabiana, 103 Phil. 683, Faja v. Court of Appeals, 75 SCRA 441; CaragayLayno v. Court of Appeals, 133 SCRA 718). In the same manner, there is no bar based on laches to assert their right over 1/3 of the disputed property. "Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it." (Tejido v. Zamacoma, 138 SCRA 78, citing Tijam, et al. v. Sibonghanoy, et al., 23 SCRA 29, Sotto v. Teves, 86 SCRA 154) The facts of the case show that the private respondents have always been in peaceful possession of the 1/3 portion of the subject lot, exercising ownership thereto for more than 25 years disrupted only in 1975, when the petitioner tried to remove them by virtue of his torrens title covering the entire Lot 1950-A of the Naic Estate. It was only at this point that private respondents knew about the supposed sale of their 1/3 portion of Lot 1950-A of the Naic Estate and they immediately resisted. LLpr The petitioner, however, insists that he is a purchaser in good faith. Thus, he argues that Transfer Certificate of Title No. T-41175 in the name of his successor-in-interest Mariano Manalo was very clear to the effect that there is no lien or encumbrance stated therein which could have been seen by his parents who represented him in the sale as he was then

in the United States and by the lawyer contracted by him to execute or prepare the corresponding deed of sale. This notwithstanding, we cannot close our eyes to the fact that neither the private respondents nor their co-owners of the subject parcel of land sold the former's share of the lot. Furthermore, even Ignacio Manalo to whom the third-party defendants sold their share resold only the 2/3 shares to Mariano Manalo, the successor-in-interest of the petitioner. Whether or not there was fraud or just a mistake or oversight of an employee of the Register of Deeds of Cavite is not clear from the records. The point is that the 1/3 undivided portion of the private respondents over Lot No. 1950-A was mistakenly included in the transfer certificate of title of Mariano Manalo. We apply equitable considerations: "Nor does the mere fact that respondent-appellee Marcelo Coral could show a certificate of Torrens Title in his favor conclude the matter, the question of fraud having been seasonably raised and the remedy of reconveyance sought. Only recently, in Philippine Commercial and Industrial Bank v. Villalva, (L-28194, November 24, 1972, 48 SCRA 31) this Court had occasion to state: 'There is, however, a countervailing doctrine, certainly not of lesser weight, that mitigates the harshness of the iron-clad application of the principle attaching full faith and credit to a Torrens certificate. It is inspired by the highest concept of what is fair and what is equitable. It would be a sad day for the law if it were to be oblivious to the demands of justice. The acceptance accorded the Torrens system of registration would certainly be impaired if it could be utilized to perpetrate fraud and chicanery. If it were thus, then no stigma would attach to a claim based solely on a narrow and literal reading of a statutory prescription, devoid of any shadow of moral right. That is not the juridical norm as recognized by this Court. Deceit is not to be countenanced; duplicity is not to be rewarded. Witness the favor with which jurisprudence has looked on the action for reconveyance as well as the recognition of the constructive trust. There is thus the stress of rectitude.' (Ibid, p. 39)." (Monticines v. Court of Appeals, 53 SCRA 14, 21; Emphasis supplied). Moreover, we ruled in an earlier case that: xxx xxx xxx ". . . The simple possession of a certificate of title, under the Torrens System, does not necessarily make the possessor a true owner of all the property described therein. If a person obtains a title, under the Torrens system, which includes by mistake or oversight land which cannot be registered under the Torrens systems, he does not, by virtue of said certificate alone, become the owner of the lands illegally included. (Ledesma v. Municipality of Iloilo, 49 Phil. 769, 773, citing Legarda and Prieto v. Saleeby, 31 Phil., 590; see also Caragay-Layno v. Court of Appeals, supra)." We find no reversible error on the part of the lower courts in recognizing the ownership of the private respondents over 1/3 of Lot No. 1950-A of the Naic Estate. The petitioner is bound to recognize the lien in favor of the private respondents which was mistakenly excluded and therefore not inscribed in the torrens title of the land of his predecessors-ininterest. LLphil

WHEREFORE, the instant petition is hereby DISMISSED. The questioned decision is AFFIRMED but with a modification to the effect that the statement "Hereby declaring null and void, Transfer Certificate of Title No. T-75543 of the same registry" is deleted. Instead, the Registrar of Deeds of Cavite is ordered to segregate the 1/3 portion of Lot No. 1950-A of the Naic Estate (4,063 square meters) from the entire portion embraced in Transfer Certificate of Title No. T-75543 and issue a new certificate of title in favor of the heirs of Gabriel Merlan over the disputed one-third portion and another new certificate of title over the remaining two-thirds portion of the land in favor of petitioner Rodolfo Coronel after cancelling Transfer Certificate of Title No. T-75543. The questioned order is also AFFIRMED. No costs. [G.R. No. 52064. December 26, 1984.] JULIANA CARAGAY-LAYNO, Assisted by Her Husband, BENITO LAYNO, petitioner, vs. HONORABLE COURT OF APPEALS and SALVADOR ESTRADA as Administrator of the Estate of the Deceased, MARIANO DE VERA, respondents. Pedro G. Peralta for petitioner. Andres T. Gutierrez for private respondent. SYLLABUS 1.CIVIL LAW; LAND REGISTRATION; TORRENS TITLE; MERE POSSESSION THEREOF NOT CONCLUSIVE AS TO HOLDER'S TRUE OWNERSHIP OF ALL PROPERTY DESCRIBED THEREIN. The foregoing conclusion does not necessarily wreak havoc on the indefensibility of a Torrens title. For, mere possession of a certificate of title under the Torrens System is not conclusive as to the holder s true ownership of all the property described therein for he does not by virtue of said certificate alone become the owner of the land illegally included. A Land Registration Court has no jurisdiction to decree a lot to persons who have never asserted any right of ownership over lt. 2.ID.; PRESCRIPTION; AN ACTION TO QUIET TITLE TO PROPERTY IN ONE'S POSSESSION IS IMPRESCRIPTIBLE. Prescription cannot be invoked against JULIANA for the reason that as lawful possessor and owner of the Disputed Portion, her cause of action for reconveyance which, in effect seeks to quiet title to the property, falls within settled jurisprudence that an action to quiet title to property in one's possession is imprescriptible (Sapto, et al. vs. Fabiana, 103 Phil. 683, 687 [1958]). Her undisturbed possession over a period of fifty-two (52) years gave her a continuing right to seek the aid of a Court of equity to determine the nature of the adverse claim of a third party and the effect on her own title. DECISION MELENCIO-HERRERA, J p:

Respondent Appellate Court, then the Court of Appeals, affirmed in toto the judgment of the former Court of First Instance of Pangasinan, Branch III, at Dagupan adjudging private respondent entitled to recover possession of a parcel of land and ordering petitioners, as defendants below, to vacate the premises. Petitioners, as paupers, now seek a reversal of that judgment. It was established by a relocation survey that the Disputed Portion is a 3,732 square-meterarea of a bigger parcel of sugar and coconut land (Lot No. 1, Psu-24206 [Case No. 44, GLRO Rec. No. 117]), with a total area of 8,752 square meters, situated at Calasiao, Pangasinan. The entire parcel is covered by Original Certificate of Title No. 63, and includes the adjoining Lots 2 and 3, issued on 11 September 1947 in the name of Mariano M. DE VERA, who died in 1951 without issue. His intestate estate was administered first by his widow as later by her nephew, respondent Salvador Estrada. Petitioner, JULIANA Caragay, and the decedent, Mariano DE VERA, were first cousins, "both orphans, who lived together under one roof in the care of a common aunt." As Administratrix, DE VERA's widow filed in Special Proceedings No. 4058 of the former Court of First Instance of Pangasinan, Branch III, an Inventory of all properties of the deceased, which included "a parcel of land in the poblacion of Calasiao, Pangasinan, containing an area of 5,417 square meters, more or less, and covered by Tax Declaration No. 12664." Because of the discrepancy in area mentioned in the Inventory as 5,147 square meters (as filed by the widow), and that in the title as 8,752 square meters, ESTRADA repaired to the Disputed Property and found that the northwestern portion, subsequently surveyed to be 3,732 square meters, was occupied by petitioner-spouses Juliana Caragay Layno and Benito Layno. ESTRADA demanded that they vacate the Disputed Portion since it was titled in the name of the deceased DE VERA, but petitioners refused claiming that the land belonged to them and, before them, to JULIANA's father Juan Caragay. ESTRADA then instituted suit against JULIANA for the recovery of the Disputed Portion (Civil Case No. D-2007) which she resisted, mainly on the ground that the Disputed Portion had been fraudulently or mistakenly included in OCT No. 63, so that an implied or constructive trust existed in her favor. She then counterclaimed for reconveyance of property in the sense that title be issued in her favor. LLphil After hearing, the Trial Court rendered judgment ordering JULIANA to vacate the Disputed Portion. On appeal, respondent Appellate Court affirmed the Decision in toto. Before us, JULIANA takes issue with the following finding of respondent Court: "Although Section 102 of Act 496 allows a Petition to compel a trustee to reconvey a registered land to the cestui que trust (Severino vs. Severino, 44 Phil. 343; Escobar vs. Locsin, 74 Phil. 86) this remedy is no longer available to Juliana Caragay. Mariano de Vera's

land, Lot 1, Psu-24206, was registered on September 11, 1947 (Exhibit 'C') and it was only on March 28, 1967 when the defendants filed their original answer that Caragay sought the reconveyance to her of the 3,732 square meters. Thus, her claim for reconveyance base on implied or constructive trust has prescribed after 10 years (Bananga vs. Soler, L-15717, June 30, 1961; J.M. Tuason & Co. vs. Magdangal, L-15539, Jan. 30, 1962; Alzona vs. Capunitan, 4 SCRA 450). In other words, Mariano de Vera's Original Certificate of Title No. 63 (Exhibit 'C') has become indefeasible." 1 We are constrained to reverse. The evidence discloses that the Disputed Portion was originally possessed openly, continuously and uninterruptedly in the concept of an owner by Juan Caragay, the deceased rather of JULIANA, and had been declared in his name under Tax Declaration No. 28694 beginning with the year 1921 (Exhibit "2-C"), later revised by Tax Declaration No. 2298 in 1951 (Exhibit "2-B"). Upon the demise of her father in 1914, JULIANA adjudicated the property to herself as his sole heir in 1968 (Exhibit "4") and declared it in her name under Tax Declaration No. 22522 beginning with the year 1959 (Exhibit "2-A"), later cancelled by TD No. 3539 in 1966 (Exhibit "2"). Realty taxes were also religiously paid from 1938 to 1972 (Exhibits "3-A" to "3-H"). Tacking the previous possession of her father to her own, they had been in actual, open, continuous and uninterrupted possession in the concept of owner for about forty five (45) years, until said possession was disturbed in 1966 when ESTRADA informed JULIANA that the Disputed Portion was registered in Mariano DE VERA's name. To substantiate her claim of fraud in the inclusion of the Disputed Portion in OCT No. 68, JULIANA, an unlettered woman, declared that during his lifetime, DE VERA, her first cousin, and whom she regarded as a father as he was much older, borrowed from her the Tax Declaration of her land purportedly to be used as collateral for his loan and sugar quota application; that relying on her cousin's assurances, she acceded to his request and was made to sign some documents the contents of which she did not ever know because of her ignorance; that she discovered the fraudulent inclusion of the Disputed Portion in OCT No. 63 only in 1966 when ESTRADA so informed her and sought to eject them. Of significance is the fact, as disclosed by the evidence, that for twenty (20) years from the date of registration of title in 1947 up to 1967 when this suit for recovery of possession was instituted, neither the deceased DE VERA up to the time of his death in 1951, nor his successors-in-interest, had taken steps to possess or lay adverse claim to the Disputed Portion. They may, therefore be said to be guilty of laches as would effectively derail their cause of action. Administrator ESTRADA tools interest in recovering the said portion only when he noticed the discrepancy in areas in the Inventory of Property and in the title. Inasmuch as DE VERA had failed to assert any rights over the Disputed Portion during his lifetime, nor did he nor his successors-in-interest possess it for a single moment; but that, JULIANA had been in actual, continuous and open possession thereof to the exclusion of all and sundry, the inescapable inference is, fraud having been unsubstantiated, that it had been erroneously included in OCT No. 63. The mistake is confirmed by the fact that deducting 3,732 sq. ms., the area of the Disputed Portion from 8,752 sq. ms., the area of Lot 1 in OCT No. 63, the difference is 5,020 sq. ms., which closely approximates the area of 5,147 sq. ms., indicated in the Inventory of Property of DE VERA. In fact, the widow by

limiting the area in said Inventory to only 5,147 sq. ms., in effect, recognized and admitted that the Disputed Portion of 3,132 sq. ms. did not form part of the decedent's estate. The foregoing conclusion does not necessarily wreak havoc on the indefeasibility of a Torrens title. For, mere possession of a certificate of title under the Torrens System is not conclusive as to the holder's true ownership of all the property described therein for he does not by virtue of said certificate alone become the owner of the land illegally included. 2 A Land Registration Court has no jurisdiction to decree a lot to persons who have never asserted any right of ownership over it. cdrep " . . . Obviously then, the inclusion of said area in the title of Lot No. 8151 is void and of no effect for a land registration Court has no jurisdiction to decree a lot to persons who have put no claim in it and who have never asserted any right of ownership over it. The Land Registration Act as well as the Cadastral Act protects only the holders of a title in good faith and does not permit its provisions to be used as a shield for the commission of fraud, or that one should enrich himself at the expense of another." 3 JULIANA, whose property had been wrongfully registered in the name of another, but which had not yet passed into the hands of third parties, can properly seek its reconveyance. "The remedy of the landowner whose property has been wrongfully or erroneously registered in another's name is, after one year from the date of the decree, not to set aside the decree, but, respecting the decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages." 4

Prescription cannot be invoked against JULIANA for the reason that as lawful possessor and owner of the Disputed Portion, her cause of action for reconveyance which, in effect, seeks to quiet title to the property, falls within settled jurisprudence that an action to quiet title to property in one's possession is imprescriptible. 5 Her undisturbed possession over a period of fifty two (52) years gave her a continuing right to seek the aid of a Court of equity to determine the nature of the adverse claim of a third party and the effect on her own title. 6 Besides, under the circumstances, JULIANA's right to quiet title, to seek reconveyance, and to annul OCT. No. 63 accused only in 1966 when she was made aware of a claim adverse to her own. It was only then that the statutory period of prescription may be said to have commenced to run against her, following the pronouncement in Faja vs. Court of Appeals, supra, a case almost identical to this one. " . . . Inasmuch as it is alleged in paragraph 3 of Frial's complaint, that Felipa Faja has been in possession of the property since 1945 up to the present for a period of 30 years, her cause of action for reconveyance, which in effect seeks to quiet her title to the property, falls within that rule. If at all, the period of prescription began to run against Felipa Faja only from the time she was served with copy of the complaint in 1975 giving her notice that the property she was occupying was titled in the name of Indelecio Frial. There is settled jurisprudence that one who is in actual possession of a piece of land claiming to be 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 third party and its effect on his own title, which right can be claimed only by one who is in possession. No better situation can be conceived at the moment for Us to apply this rule on equity than that of herein petitioners whose mother, Felipa Faja, as in possession of the litigated property for no less than 30 years and was suddenly confronted with a claim that the land she had been occupying and cultivating all these years, was titled in the name of a third person. We hold that in such a situation the right to quiet title to the property, to seek its reconveyance and annul any certificate of title covering it, accrued only from the time the one in possession was made aware of a claim adverse to his own, and it is only then that the statutory period of prescription commences to run against such possessor." WHEREFORE, the judgment under review is hereby REVERSED and SET ASIDE, and another one entered ordering private respondent Salvador Estrada, as Administrator of the Estate of the Deceased, Mariano de Vera, to cause the segregation of the disputed portion of 3,732 square meters forming part of Lot No. 1, Psu-24206, Case No. 44, GLRO Rec. No. 117, presently occupied by petitioner Juliana Caragay-Layno, and to reconvey the same to said petitioner. After the segregation shall have been accomplished, the Register of Deeds of Pangasinan is hereby ordered to issue a new certificate of title covering said 3,732 sq. m. portion in favor of petitioner, and another certificate of title in favor of the Estate of the deceased, Mariano de Vera covering the remaining portion of 5,0520 square meters. No costs. cdll SO ORDERED.

Action for quieting of title is not a remedy to settle a boundary dispute

[G.R. No. 95748. November 21, 1996.] ANASTACIA VDA. DE AVILES, ET AL., petitioners, vs. COURT OF APPEALS and CAMILO AVILES, respondents. Ulysses T. Sevilla for petitioners. Teodoro C. Fernandez and Manuel Y. Fernandez for private respondent. SYLLABUS 1.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; QUIETING OF TITLE; A BOUNDARY DISPUTE IS NOT COGNIZABLE IN A SPECIAL CIVIL ACTION TO QUIET TITLE. The facts presented unmistakably constitute a clear case of boundary dispute, which is not cognizable in a special civil action to quiet title. Quieting of title is a common law remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real property. The Civil Code authorizes the said remedy in the following language: "Art. 476. Whenever there is a cloud

on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon a title to real property or any interest therein." In fine, to avail of the remedy of quieting of title, a plaintiff must show that there is an instrument, record, claim, encumbrance or proceeding which constitutes or casts a cloud, doubt, question or shadow upon the owner's title to or interest in real property. Thus, petitioners have wholly misapprehended the import of the foregoing rule by claiming that respondent Court erred in holding that there was "no . . . evidence of any muniment of title, proceeding, written contract, . . .," and that there were, as a matter of fact, two such contracts, viz., (i) the Agreement of Partition executed by private respondent and his brothers (including the petitioners' father and predecessor-in-interest), in which their respective shares in the inherited property were agreed upon, and (ii) the Deed of Sale evidencing the redemption by petitioner Anastacia Vda. de Aviles of the subject property in a foreclosure sale. However, these documents in no way constitute a cloud or cast a doubt upon the title of petitioners. Rather, the uncertainty arises from the parties' failure to situate and fix the boundary between their respective properties. An action to quiet title or to remove cloud may not be brought for the purpose of settling a boundary dispute. CaATDE 2.ID.; ID.; DECLARATORY RELIEF; A BOUNDARY DISPUTE IS LIKEWISE NOT COGNIZABLE IN AN ACTION FOR DECLARATORY RELIEF UNDER RULE 64 OF THE RULES OF COURT. Rule 64 of the Rules of Court, dealing with actions for declaratory relief, specifies in Section 1 thereof the grounds, conditions precedent or requisites for bringing such petitions. This Court has previously held that "Under this rule, only a person who is interested 'under a deed, will, contract or other written instrument, and whose rights are affected by a statute or ordinance, may bring an action to determine any question of construction or validity arising under the instrument or statute and for a declaration of his rights or duties thereunder.' This means that the subject matter must refer to a deed, will, contract or other written instrument, or to a statute or ordinance, to warrant declaratory relief. Any other matter not mentioned therein is deemed excluded This is under the principle of expressio unius est exclusio alterius." Inasmuch as the enumeration of the causes, grounds or conditions precedent in the first paragraph of said Sec. 1 is exclusive, by parity of reasoning, it follows that similar remedies provided for in the second paragraph of the same section would also be marked with the same exclusivity as to bar any other cause possibly clouding one's title as a ground for such petitions. Thus, even assuming arguendo that the action to quiet title had been brought under Rule 64, the same would still not have prospered, the subject matter thereof not referring to "a deed, will, contract or other written instrument, or to a statute or ordinance," but to a boundary dispute, and therefore not warranting the grant of declaratory relief. 3.ID.; ID.; THE PROPER ACTION TO SETTLE A BOUNDARY DISPUTE IS EITHER AN ACTION FOR FORCIBLE ENTRY UNDER RULE 70, OR AN ACTION FOR RECOVERY OF POSSESSION DE FACTO. From another perspective, we hold that the trial court (and likewise the respondent Court) cannot, in an action for quieting of title, order the determination of the boundaries of the claimed property, as that would be tantamount to awarding to one or some of the parties the disputed property in an action where the sole issue is limited to whether the instrument, record, claim, encumbrance or proceeding involved constitutes a

cloud upon the petitioners' interest or title in and to said property. Such determination of boundaries is appropriate in adversarial proceedings where possession or ownership may properly be considered and where evidence aliunde, other than the "instrument, record, claim, encumbrance or proceeding" itself, may be introduced. An action for forcible entry, whenever warranted by the period prescribed in Rule 70, or for recovery of possession de facto, also within the prescribed period, may be availed of by the petitioners, in which proceeding the boundary dispute may be fully threshed out. ISDCHA DECISION PANGANIBAN, J p: Is the special civil action of Quieting of Title under Rule 64 the proper remedy for settling a boundary dispute? Did the respondent Court 1 commit a reversible error when it did not declare the respective rights of the parties over the disputed property in said action? These are the key issues raised in this petition to review on certiorari the Decision 2 of the respondent Court promulgated on September 28, 1990 in CA-G.R. CV No. 18155, which affirmed the decision dated December 29, 1987 of the Regional Trial Court, Branch 38, 3 Lingayen, Pangasinan, dismissing a complaint for quieting of title. The Facts In an action for quieting of title commenced before the aforementioned trial court, the following facts, "stripped of unnecessary verbiage" were established by the respondent Court: 4 "PLAINTIFFS aver that they are the actual possessors of a parcel of land situated in Malawa, Lingayen, Pangasinan, more particularly described as fishpond, cogonal, unirrigated rice and residential land, bounded on the N by Camilo Aviles; on the E by Malawa River, on the S by Anastacio Aviles and on the W by Juana and Apolonio Joaquin, with an area of 18,900 square meters and declared under Tax Declaration No. 31446. This property is the share of their father, Eduardo Aviles and brother of the defendant, in the estate of their deceased parents, Ireneo Aviles and Anastacia Salazar. SINCE 1957, Eduardo Aviles was in actual possession of the afore-described property. In fact, the latter mortgaged the same with the Rural Bank and Philippine National Bank branch in Lingayen. When the property was inspected by a bank representative, Eduardo Aviles, in the presence of the boundary owners, namely, defendant Camilo Aviles, Anastacio Aviles and Juana and Apolonio Joaquin(,) pointed to the inspector the existing earthen dikes as the boundary limits of the property and nobody objected. When the real estate mortgage was foreclosed, the property was sold at public auction but this was redeemed by plaintiffs' mother and the land was subsequently transferred and declared in her name. ON March 23, 1983, defendant Camilo Aviles asserted a color of title over the northern portion of the property with an area of approximately 1,200 square meters by constructing a bamboo fence (thereon) and moving the earthen dikes, thereby molesting and disturbing the peaceful possession of the plaintiffs over said portion.

UPON the other hand, defendant Camilo Aviles admitted the agreement of partition (Exh. '1') executed by him and his brothers, Anastacio and Eduardo. In accordance therewith, the total area of the property of their parents which they divided is 46,795 square meters and the area alloted (sic) to Eduardo Aviles is 16,111 square meters more or less, to Anastacio Aviles is 16,214 square meters more or less, while the area alloted to defendant Camilo Aviles is 14,470 square meters more or less. The respective area(s) alloted to them was agreed and measured before the execution of the agreement but he was not present when the measurement was made. Defendant agreed to have a smaller area because his brother Eduardo asked him that he wanted a bigger share because he has several children to support. The portion in litigation however is part of the share given to him in the agreement of partition. At present, he is only occupying an area of 12,686 square meters which is smaller than his actual share of 14,470 square meters. Tax Declarations Nos. 23575, 481 and 379 covering his property from 1958 (Exhs. '7', '8' and '9') show that the area of his property is 14,470 square meters. The riceland portion of his land is 13,290 square meters, the fishpond portion is 500 square meters and the residential portion is 680 square meters, or a total of 14,470 square meters. That the topography of his land is not the same, hence, the height of his pilapils are likewise not the same." In its decision dated December 29, 1987, the trial court disposed of the case thus: 5 "WHEREFORE, premises considered, judgment is hereby rendered as follows: 1.Ordering the parties to employ the services of a Land Surveyor of the Bureau of Lands, Region I, San Fernando, La Union, to relocate and determine the extent and the boundary limit of the land of the defendant on its southern side in order that the fourteen thousand four hundred seventy (14,470) square meters which is the actual area given to the defendant be determined; 2.Ordering the complaint dismissed for lack of basis and merits;

3.Ordering the plaintiffs to pay the defendant the sum of two thousand (P2,000.00) pesos as attorney's fees and to further pay the costs of the proceedings; 4.All other claims are denied for lack of basis." Dissatisfied with the trial court's decision, petitioners appealed to the respondent appellate Court. In its now-assailed Decision, the Court of Appeals affirmed in part the decision of the trial court, reasoning that a special civil action for quieting of title is not the proper remedy for settling a boundary dispute, and that petitioners should have instituted an ejectment suit instead. The dispositive portion of the impugned Decision reads as follows: "WHEREFORE, in view of the foregoing, the decision dated December 29, 1987 dismissing the complaint is hereby AFFIRMED but without necessarily agreeing with the ration d'etre (sic) proferred by the Court a quo. The portion thereof ordering the parties to employ the service of a land surveyor to relocate and determine the extent and boundary limit of the

land of the defendant on its southern portion in order that the fourteen thousand four hundred seventy (14,470) square meters which is the actual area given to the defendant be determined is hereby REVERSED and SET ASIDE. Costs against plaintiffs-appellants. The Issues Disagreeing with the respondent Court, petitioners now raise the following issues: 6 "a.Whether or not the Hon. Court of Appeals is correct when it opined that the . . . complaint for quieting of title instituted by the petitioners against private respondent before the court a quo is not the proper remedy but rather, it should be a case for ejectment (sic). b.Whether or not the Hon. Court of Appeals is correct in rendering a decision, now subject of the instant petition, without fully determining the respective rights of the herein parties." Petitioners deem to be "without basis" the respondent Court's holding that quieting of title is not the proper remedy in the case a quo. They assert that private respondent is occupying the disputed lot because he claimed it to be part of his share in the partitioned property of his parents, whereas petitioners are claiming the said lot as part and parcel of the land allotted to Eduardo Aviles, petitioners' predecessor-in-interest. They contend that they have been occupying the aforesaid land as heirs of Eduardo Aviles in "open, actual, continuous, peaceful, public and adversed (sic) (possession) against the whole world." Further, they argue that, if indeed the disputed lot belonged to private respondent, why then did it take him "almost 26 long years from June 27, 1957 or until March 27, 1983" to assert his ownership; why did he not "assert his ownership" over the property when Eduardo Aviles was still alive; and why did he not take any "action" when the mortgage over the disputed property was foreclosed? 7

Private respondent corrects the petitioners' claim in regard to the date when he had the bamboo fence constructed. He alleges that the petitioners maliciously concocted the story that private respondent had purportedly encroached some 1,200 meters on their property when, in fact, "he was merely repairing the old bamboo fence existing where it had always been since 1957." 8 The Court 's Ruling First Issue: Quieting of Title Not Proper Remedy For Settling Boundary Dispute We agree with respondent Court. The facts presented unmistakably constitute a clear case of boundary dispute, which is not cognizable in a special civil action to quiet title. Quieting of title is a common law remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real property. 9 The Civil Code authorizes the said remedy in the following language:

"Art. 476.Whenever there is a cloud on title to real property or any interest therein, by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought to remove such cloud or to quiet the title. An action may also be brought to prevent a cloud from being cast upon a title to real property or any interest therein." In fine, to avail of the remedy of quieting of title, a plaintiff must show that there is an instrument, record, claim, encumbrance or proceeding which constitutes or casts a cloud, doubt, question or shadow upon the owner's title to or interest in real property. Thus, petitioners have wholly misapprehended the import of the foregoing rule by claiming that respondent Court erred in holding that there was "no . . . evidence of any muniment of title, proceeding, written contract, . . .", and that there were, as a matter of fact, two such contracts, viz., (i) the Agreement of Partition executed by private respondent and his brothers (including the petitioners' father and predecessor-in-interest), in which their respective shares in the inherited property were agreed upon, and (ii) the Deed of Sale evidencing the redemption by petitioner Anastacia Vda. de Aviles of the subject property in a foreclosure sale. However, these documents in no way constitute a cloud or cast a doubt upon the title of petitioners. Rather, the uncertainty arises from the parties' failure to situate and fix the boundary between their respective properties. As correctly held by the respondent Court," (i)n fact, both plaintiffs and defendant admitted the existence of the agreement of partition dated June 8, 1957 and in accordance therewith, a fixed area was alloted (sic) to them and that the only controversy is whether these lands were properly measured. There is no adverse claim by the defendant "which is apparently valid, but is, in truth and in fact, invalid, ineffective, voidable, or unenforceable" and which constitutes a cloud thereon. Corollarily, and equally as clear, the construction of the bamboo fence enclosing the disputed property and the moving of earthen dikes are not the "clouds" or "doubts" which can be removed in an action for quieting of title. An action to quiet title or to remove cloud may not be brought for the purpose of settling a boundary dispute. The precedent on this matter cited by the respondent Court in its Decision is herewith reproduced in full: 10 "In Ashurst v. McKenzie (1890) 92 Ala. 484, 9 So. 262, where the complainants' predecessor in title and the defendant had, during their occupancy, destroyed and obliterated the boundary line between their adjoining tracts of land, and there was now a dispute as to its location, it was held that a bill did not lie to remove a cloud on the complainants' title. The court said: 'There is no allegation or evidence of any muniment of title, proceeding, written contract, or paper showing any color of title in the defendant, which could cast a shadow on the title of complainants to any part of the land; there is no overlapping of description in the muniments held by either. The land of complainants and defendant join. The line which separates them is in dispute and is to be determined by evidence aliunde. Each admits that the other has title up to his line wherever it may be, and the title papers of neither fix its

precise location. So that there is no paper the existence of which clouds the title of either party, and nothing could be delivered up and cancelled under the decree of the court undertaking to remove a cloud. " Another similarly instructive precedent reported in the same reference is also quoted below: "In Kilgannon v. Jenkinson (1883) 51 Mich. 240, 16 N.W. 390, the court, dismissing a bill to quiet title, said: "The fundamental dispute is about the correct position of the line between lots 3 and 7. The case is not one where a complainant in possession of a specific piece of land, and a defendant out of possession, but claiming some right or title, are contending as to which one has the better right to that same parcel; but it is a case where the titles are not opposed, and the basis and existence of all right and claim depend simply upon where the original line runs. When that is once settled, there can remain no semblance of claim or cloud to be passed on, and the issue on that particular question is one regularly triable at law . . . " 11 Second Issue: Should Parties' Rights Have Been Declared? Petitioners also chide the respondent Court (and the trial court) for not declaring the respective rights of the parties with respect to the land in question, arguing that "when one is disturbed in any form in his rights of property over an immovable by the unfounded claims of others, he has the right to ask from the competent courts: . . . that their respective rights be determined . . .". As support for their thesis, petitioners cite the ancient case of Bautista vs. Exconde. 12 Rule 64 of the Rules of Court, dealing with actions for declaratory relief, specifies in Section 1 thereof the grounds, conditions precedent or requisites for bringing such petitions. 13 This Court has previously held that "Under this rule, only a person who is interested 'under a deed, will, contract or other written instrument, and whose rights are affected by a statute or ordinance, may bring an action to determine any question of construction or validity arising under the instrument or statute and for a declaration of his rights or duties thereunder.' This means that the subject matter must refer to a deed, will, contract or other written instrument, or to a statute or ordinance, to warrant declaratory relief. Any other matter not mentioned therein is deemed excluded. This is under the principle of expressio unius est exclusio alterius." 14 Inasmuch as the enumeration of the causes, grounds or conditions precedent in the first paragraph of said Sec. 1 is exclusive, by parity of reasoning, it follows that similar remedies provided for in the second paragraph of the same section would also be marked with the same exclusivity as to bar any other cause possibly clouding one's title as a ground for such petitions. Thus, even assuming arguendo that the action to quiet title had been brought under Rule 64, the same would still not have prospered, the subject matter thereof not referring to "a deed, will, contract or other written instrument, or to a statute or ordinance," but to a boundary dispute, and therefore not warranting the grant of declaratory relief.

From another perspective, we hold that the trial court (and likewise the respondent Court) cannot, in an action for quieting of title, order the determination of the boundaries of the claimed property, as that would be tantamount to awarding to one or some of the parties the disputed property in an action where the sole issue is limited to whether the instrument, record, claim, encumbrance or proceeding involved constitutes a cloud upon the petitioners' interest or title in and to said property. Such determination of boundaries is appropriate in adversarial proceedings where possession or ownership may properly be considered and where evidence aliunde, other than the "instrument, record, claim, encumbrance or proceeding" itself, may be introduced. An action for forcible entry, whenever warranted by the period prescribed in Rule 70, or for recovery of possession de facto, also within the prescribed period, may be availed of by the petitioners, in which proceeding the boundary dispute may be fully threshed out. WHEREFORE, in view of the foregoing considerations, the instant petition is hereby DENIED and the Decision appealed from is AFFIRMED. Costs against petitioners. SO ORDERED.

Prescriptive period to file an action to quiet title; [G.R. No. 144773. May 16, 2005.] AZNAR BROTHERS REALTY COMPANY, petitioner, vs. LAURENCIO AYING, IN HIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS OF EMILIANO AYING, PAULINO AYING, IN HIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS OF SIMEON AYING, AND WENCESLAO SUMALINOG, IN HIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS OF ROBERTA AYING, respondents. DECISION AUSTRIA-MARTINEZ, J p: This resolves the petition for review on certiorari seeking the modification of the Decision 1 of the Court of Appeals (CA) dated March 7, 2000 which affirmed with modification the Decision of the Regional Trial Court (RTC) of Lapu-Lapu City, Branch 27 in Civil Case No. 2930-L; and the Resolution dated August 2, 2000 denying petitioner's motion for reconsideration of the aforementioned decision. The antecedent facts are as follows: The disputed property is Lot No. 4399 with an area of 34,325 square meters located at Dapdap, Lapu-Lapu City. Crisanta Maloloy-on petitioned for the issuance of a cadastral decree in her favor over said parcel of land. After her death in 1930, the Cadastral Court issued a Decision directing the issuance of a decree in the name of Crisanta Maloloy-on's eight children, namely: Juan, Celedonio, Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying. The certificate of title was, however, lost during the war.

Subsequently, all the heirs of the Aying siblings executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964, conveying the subject parcel of land to herein petitioner Aznar Brothers Realty Company. Said deed was registered with the Register of Deeds of Lapu-Lapu City on March 6, 1964 under Act No. 3344 (the law governing registration for unregistered land), and since then, petitioner had been religiously paying real property taxes on said property. In 1988, herein petitioner filed a Petition for Reconstitution of the Original Title as the original title over the subject property had been lost during the war. On April 12, 1988, the court granted said petition, thereby directing the Register of Deeds of Lapu-Lapu City to issue a reconstituted title in the name of the abovementioned Aying siblings. Thus, Original Certificate of Title (OCT) No. RO-2856 was issued. In 1991, petitioner, claiming to be the rightful owner of the subject property, sent out notices to vacate, addressed to persons occupying the property. Unheeded, petitioner then filed a complaint for ejectment against the occupants before the Metropolitan Trial Court (MTC), Lapu-Lapu City. DIETHS On February 1, 1994, the MTC ordered the occupants to vacate the property. The case eventually reached this Court, docketed as G.R. No. 128102, entitled Aznar Brothers Realty Company vs. Court of Appeals, Luis Aying, Demetrio Sida, Felomino Augusto, Federico Abing, and Romeo Augusto. 2 On March 7, 2000, a Decision was promulgated in favor of herein petitioner, declaring it as the rightful possessor of the parcel of land in question. Meanwhile, herein respondents, along with other persons claiming to be descendants of the eight Aying siblings, all in all numbering around 220 persons, had filed a complaint for cancellation of the Extra-Judicial Partition with Absolute Sale, recovery of ownership, injunction and damages with the RTC of Lapu-Lapu City. The complaint was dismissed twice without prejudice. Said complaint was re-filed on August 19, 1993, docketed as Civil Case No. 2930-L. In their amended complaint, herein respondents (plaintiffs before the RTC) alleged that: they are co-owners of subject property, being descendants of the registered owners thereof under OCT No. RO-2856; they had been in actual, peaceful, physical, open, adverse, continuous and uninterrupted possession in concept of owner of subject parcel of land since time immemorial; their possession was disturbed only in the last quarter of 1991 when some of them received notices to vacate from petitioner and several weeks thereafter, earthmoving equipment entered the disputed land, bulldozing the same and destroying plants, trees and concrete monuments ("mohon"); respondents discovered that such activities were being undertaken by petitioner together with Sta. Lucia Realty and Development, Inc.; petitioner claimed to be the owner of subject property by virtue of an extra-judicial partition of real estate with deed of absolute sale executed in petitioner's favor by the alleged heirs of Crisanta Maloloy-on; the aforementioned extra-judicial partition of real estate with deed of absolute sale is a fraud and is null and void ab initio because not all the co-owners of subject property affixed their signature on said document and some of the co-owners who supposedly signed said document had been dead at the time of the execution thereof; petitioner entered subject land in bad faith, knowing fully well that it did

not have any right to the land and used force, threat and intimidation against respondents; and they suffered moral damages. 3 Petitioner (defendant before the RTC) filed its Answer, denying that respondents are the lawful owners of subject parcel of land by virtue of their being descendants or heirs of the registered owners of subject property. Instead, petitioner alleged that it had been in actual possession of subject land as owner thereof by virtue of the extra-judicial partition of real property and deed of absolute sale executed in its favor; that in fact, it had been paying taxes thereon religiously; that it tolerated about 6 persons to live on said land but said persons were eventually ejected by court order. Petitioner then raised the affirmative defenses of failure to state cause of action and prescription, as it took respondents 27 years, 10 months and 27 days to file the action to recover subject property, when an action to recover property based on an implied trust should be instituted within 4 years from discovery of the fraud. 4 In the Pre-Trial Order dated January 30, 1995 of the RTC, the issues were narrowed down to the following: 1.Whether or not the plaintiffs [herein respondents] are the heirs of the registered owners of Lot No. 4399. 2.Whether or not plaintiffs are the owners of Lot No. 4399. 3.Whether or not the defendant Aznar [herein petitioner] is estopped to make any claim on Lot No. 4399. 4.Whether or not the defendant Aznar is a builder in bad faith. 5.Whether or not the defendants are liable for damages and attorney's fees in favor of the plaintiffs. 6.Whether or not the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and had, in effect, validly conveyed to defendant Aznar Lot No. 4399. 7.Whether or not the plaintiffs' action has prescribed. 5 After trial, the RTC rendered a Decision dated July 4, 1997, ruling that respondents' evidence failed to prove that the extra-judicial partition with deed of absolute sale was a totally simulated or fictitious contract and concluded that said document is valid, thus, effectively conveying to petitioner the property in question. It further held that respondents' action had prescribed in that the action is considered as one for reconveyance based on implied or constructive trust, it prescribed in 10 years from the registration of the deed on March 6, 1964; and if the action is considered as one for annulment of contract on the ground of fraud, it should have been filed within 4 years from discovery of the fraud. The trial court also ruled that respondents failed to present any admissible proof of filiation, hence, they were not able to prove that they are indeed heirs of the eight Aying siblings who appear as the registered owners under OCT No. RO-2856. TaDSHC

The dispositive portion of the RTC Decision reads as follows: WHEREFORE, judgment is hereby rendered dismissing the amended complaint on the ground of prescription, and declaring the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964 as valid and binding, adjudging that Lot 4399 with an area of 34,325 square meters located at Dapdap, Mactan, Lapu-Lapu City had been validly conveyed to and in favor of Aznar Brothers Realty Company, and directing the Register of Deeds of Lapu-Lapu City to register the above-mentioned deed in accordance with law and to cancel Original Certificate of Title No. RO-2856, and to issue a transfer certificate of title in the name of Aznar Brothers Realty Company upon payment of the necessary registration fees pursuant thereto. The Writ of Preliminary Injunction issued in this case is hereby ordered dissolved. The Motion for Contempt filed by the plaintiffs against defendants is dismissed for want of factual and legal basis. Costs against the plaintiffs. SO ORDERED. 6 Herein respondents appealed the foregoing decision to the CA and on March 7, 2000, said court promulgated its Decision, the dispositive portion of which is reproduced hereunder: THE FOREGOING CONSIDERED, the contested Decision while AFFIRMED is hereby MODIFIED. The heirs of Emiliano Aying, Simeon Aying and Roberta Aying are hereby declared as the lawful owners of the contested property but equivalent only to 3/8. SO ORDERED. In modifying the RTC judgment, the CA ratiocinated that "an action for recovery of possession of registered land never prescribes in view of the provision of Section 44, Act No. 496 (now Sec. 47, PD 1520), to the effect that no title to registered land in derogation to that of a registered owner shall be acquired by prescription." The CA further ruled that even if the action is deemed to be based on implied trust, prescription did not begin to run since there is no evidence that positive acts of repudiation were made known to the heirs who did not participate in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. Thus, striking down the RTC's ruling that the respondents' complaint is dismissible on the ground of prescription, the CA held instead that herein respondents' action had not prescribed but upheld the validity of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, except as to the shares of the heirs of Emiliano, Simeon and Roberta, who did not participate in the execution of said document.

Herein petitioner's motion for reconsideration of the CA decision was denied per Resolution dated August 2, 2000.

Hence, the present petition for review on certiorari assailing the CA decision on the following grounds: I THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT AN HEIR OF THE ORIGINAL REGISTERED OWNER MAY LOSE HIS RIGHT TO RECOVER A TITLED PROPERTY BY REASON OF LACHES; II THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT THE ACT OF REGISTRATION OF THE DEED OF PARTITION WITH SALE MAY BE CONSIDERED AN UNEQUIVOCAL REPUDIATION OF THE TRUST GIVING RISE TO PRESCRIPTION; SaICcT III THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE PROVISIONS OF ARTICLE 1104 OF THE CIVIL CODE TO THE EFFECT THAT IN THE ABSENCE OF BAD FAITH OR FRAUD, THE PARTITION WITH PRETERITION OF ANY COMPULSORY HEIR SHALL NOT BE RESCINDED. 7 In their Comment, respondents argue that this case is an action to declare as null and void the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, hence, under Article 1410 of the Civil Code, an action for declaration of an inexistent contract does not prescribe. Respondents further posit that the principle of laches should be applied against petitioner and not against them, as they (respondents) had been in actual possession of the subject property, while petitioner merely brought action to eject them more than 29 years after the alleged execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. They also refuted petitioner's arguments regarding the application of the principles of implied and constructive trusts in this case. At the outset, it should be stressed that not all the plaintiffs who filed the amended complaint before the trial court had been impleaded as respondents in the present petition. The only parties impleaded are the heirs of Emiliano, Simeon and Roberta Aying, whom the CA adjudged as owners of a 3/8 portion of the land in dispute for not having participated in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. It is significant to note that herein petitioner does not question the CA conclusion that respondents are heirs of the aforementioned three Aying siblings. Hence, the trial court and appellate court's findings that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was not forged nor simulated and that the heirs of Emiliano, Simeon and Roberta Aying did not participate in the execution thereof, are now beyond cavil. The issues raised by petitioner for the Court's resolution are (1) whether or not respondents' cause of action is imprescriptible; and (2) if their right to bring action is indeed imprescriptible, may the principle of laches apply.

Respondents alleged in their amended complaint that not all the co-owners of the land in question signed or executed the document conveying ownership thereof to petitioner and made the conclusion that said document is null and void. We agree with the ruling of the RTC and the CA that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and binding only as to the heirs who participated in the execution thereof, hence, the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not participate therein, cannot be bound by said document. However, the facts on record show that petitioner acquired the entire parcel of land with the mistaken belief that all the heirs have executed the subject document. Thus, the trial court is correct that the provision of law applicable to this case is Article 1456 of the Civil Code which states: 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. In Vda. De Esconde vs. Court of Appeals, 8 the Court expounded thus: Construing this provision of the Civil Code, in Philippine National Bank v. Court of Appeals, the Court stated: A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust, confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que trust. A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary. 9 The concept of constructive trusts was further elucidated in the same case, as follows: . . . implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties. In turn, implied trusts are either resulting or constructive trusts. These two are differentiated from each other as follows: Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature of circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to

property which he ought not, in equity and good conscience, to hold. 10 (Emphasis supplied) DTAHSI Based on such concept of constructive trusts, the Court ruled in said case that: The rule that a trustee cannot acquire by prescription ownership over property entrusted to him until and unless he repudiates the trust, applies to express trusts and resulting implied trusts. However, in constructive implied trusts, prescription may supervene even if the trustee does not repudiate the relationship. Necessarily, repudiation of said trust is not a condition precedent to the running of the prescriptive period. 11 The next question is, what is the applicable prescriptive period? In Amerol vs. Bagumbaran, 12 the Court expounded on the prescriptive period within which to bring an action for reconveyance of property based on implied or constructive trust, to wit: . . . under 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. xxx xxx xxx An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the property. 13 It has also been ruled that the ten-year prescriptive period begins to run from the date of registration of the deed or the date of the issuance of the certificate of title over the property, but if the person claiming to be the owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. 14 In the present case, respondents Wenceslao Sumalinog, an heir of Roberta Aying; Laurencio Aying, an heir of Emiliano Aying; and Paulino Aying, an heir of Simeon Aying, all testified

that they had never occupied or been in possession of the land in dispute. 15 Hence, the prescriptive period of ten years would apply to herein respondents. The question then arises as to the date from which the ten-year period should be reckoned, considering that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under Act No. 496 (Land Registration Act), despite the fact the land in dispute was already titled under Act No. 496 in the names of the Aying siblings at the time the subject document was executed. In Spouses Abrigo vs. De Vera, 16 it was held that registration of instruments must be done in the proper registry, in order to affect and bind the land and, thus, operate as constructive notice to the world. 17 Therein, the Court ruled: . . . If the land is registered under the Land Registration Act (and has therefore a Torrens Title), and it is sold but the subsequent sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered REGISTERED . . . 18 In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under Act No. 496, said document is deemed not registered. Accordingly, the ten-year prescriptive period cannot be reckoned from March 6, 1964, the date of registration of the subject document under Act No. 3344. The prescriptive period only began to run from the time respondents had actual notice of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. IaAHCE

The only evidence on record as to when such prescriptive period commenced as to each of the respondents are Wenceslao Sumalinog's (heir of Roberta Aying) testimony that about three years after 1964, they already learned of the existence of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale; 19 and Laurencio Aying's (heir of Emiliano Aying) admission that he found out about the sale of the land in dispute a long time ago and can only estimate that it must be after martial law. 20 Paulino Aying (heir of Simeon Aying) gave no testimony whatsoever as to when the children of Simeon Aying actually learned of the existence of the document of sale. On the other hand, petitioner did not present any other evidence to prove the date when respondents were notified of the execution of the subject document. In view of the lack of unambiguous evidence of when the heirs of Emiliano Aying and Simeon Aying discovered the existence of the document of sale, it must be determined which party had the burden of proof to establish such fact. The test for determining where the burden of proof lies is to ask which party to an action or suit will fail if he offers no evidence competent to show the facts averred as the basis for the relief he seeks to obtain. 21 Moreover, one alleging a fact that is denied has the burden of proving it and unless the party asserting the affirmative of an issue sustains the burden of proof of that issue by a preponderance of the evidence, his cause will not succeed. 22 Thus, the defendant bears the burden of proof as to all affirmative defenses which he sets up in answer to the plaintiff's claim or cause of action; he being the party who asserts the truth of

the matter he has alleged, the burden is upon him to establish the facts on which that matter is predicated and if he fails to do so, the plaintiff is entitled to a verdict or decision in his favor. 23 In the case at bar, it was petitioner, as the defendant before the RTC, which set up in its Answer the affirmative defense of prescription. It was, therefore, incumbent upon petitioner to prove the date from which the prescriptive period began to run. Evidence as to the date when the ten-year prescriptive period began exists only as to the heirs of Roberta Aying, as Wenceslao Sumalinog admitted that they learned of the existence of the document of sale in the year 1967. As to the heirs of Emiliano Aying and Simeon Aying, there is no clear evidence of the date when they discovered the document conveying the subject land to petitioner. Petitioner miserably failed to adduce proof of when the heirs of Emiliano Aying and Simeon Aying were notified of the subject document. Hence, with regard to said heirs, the Court may consider the admission in the amended complaint that they learned of the conveyance of the disputed land only in 1991 when petitioner sent notices to vacate to the occupants of the subject land, as the date from which the ten-year prescriptive period should be reckoned. Respondents filed their Amended Complaint on December 6, 1993. 24 Thus, with regard to respondent heirs of Roberta Aying who had knowledge of the conveyance as far back as 1967, their cause of action is already barred by prescription when said amended complaint was filed as they only had until 1977 within which to bring action. As to the respondent heirs of Emiliano and Simeon Aying, they were able to initiate their action for reconveyance of property based on implied or constructive trust well within the ten-year prescriptive period reckoned from 1991 when they were sent by petitioner a notice to vacate the subject property. Evidently, laches cannot be applied against respondent heirs of Emiliano and Simeon Aying, as they took action to protect their interest well within the period accorded them by law. With regard to petitioner's argument that the provision of Article 1104 of the Civil Code, stating that a partition made with preterition of any of the compulsory heirs shall not be rescinded, should be applied, suffice it to say that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is not being rescinded. In fact, its validity had been upheld but only as to the parties who participated in the execution of the same. As discussed above, what was conveyed to petitioner was ownership over the shares of the heirs who executed the subject document. Thus, the law, particularly, Article 1456 of the Civil Code, imposed the obligation upon petitioner to act as a trustee for the benefit of respondent heirs of Emiliano and Simeon Aying who, having brought their action within the prescriptive period, are now entitled to the reconveyance of their share in the land in dispute. IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED and the Decision of the Court of Appeals dated March 7, 2000 is MODIFIED, as follows: The amended complaint of the heirs of Roberta Aying is DISMISSED on the ground of prescription. However, the heirs of Emiliano Aying and Simeon Aying, having instituted the action for reconveyance within the prescriptive period, are hereby DECLARED as the LAWFUL OWNERS of a 2/8 portion of the parcel of land covered by Original Certificate of Title No. RO-2856. caCTHI

Chapter 4: Ruinous Buildings and Trees in Danger of Falling Art 482 and 483. Rules The complainant: must either have his property adjacent to the dangerous construction or must have to pass by necessity in the immediate vicinity Construction falls or large trees about to fall owner is liable for damages or expenses Co-ownership a. Concept, characteristics, causes that give rise to co-ownership. [G.R. No. 120864. October 8, 2003.] MANUEL T. DE GUIA, petitioner, vs. COURT OF APPEALS (Former Sixth Division) and JOSE B. ABEJO, represented by his Attorney-in-Fact, Hermenegilda AbejoRivera, respondents. Manuel T. De Guia in his own behalf. Abaejo & Partners Law Offices for private respondents. SYNOPSIS The subject fishpond has a total area of 79,220 square meters, co-owned by Primitiva Lejano and Lorenza Araniego, married to Juan Abejo, and registered in their names under TCT No. 6358 of the Bulacan Register of Deeds. Petitioner De Guia, along with a certain Aniano Vieta, acquired possession of the entire fishpond by virtue of a document captioned Salin ng Pamumusisyong ng Palaisdaan (Lease Contract) executed between him and the heirs of Primitiva Lejano, effective from 30 July 1974 to 30 November 1979 for a consideration of Pl00,000 with the knowledge and consent of Teofilo Abejo, the sole heir of Lorenza Araniego Abejo who acquired 1/2 undivided share of the latter by intestate succession. Teofilo Abejo, now deceased, sold his undivided share in the fishpond to his son Abejo. Despite the expiration of the lease contract, De Guia continued to possess the entire fishpond and to derive income therefrom despite. several demands to vacate by Teofilo Abejo and by his successor-in-interest, Abejo. The last demand letter was dated 22 November 1983. Abejo filed his complaint for recovery of possession with damages against De Guia for the other 1/2 undivided portion of the fishpond which has not been finally adjudicated for or against him. De Guia offered as evidence of his ownership of the other undivided portion of the fishpond the verified Complaint for Annulment of Real Estate Mortgage and Contract of Lease (Kasunduan ng Sanglaan and Kasulatan ng Pagbubuwis ng Palaisdaan) with Preliminary Injunction signed by the heirs of Primitiva Lejano which he filed for himself and in representation as attorney-in-fact of said heirs. He alleged that he acquired his 1/2 undivided share in the fishpond from the Lejano Heirs in 1986, and that they filed the complaint for annulment of said document because Primitiva Lejano allegedly signed these documents under duress and without consideration.

The trial court rendered judgment against De Guia, holding: a) that ABEJO has the right to demand that DE GUIA vacate and surrender an area equivalent to ABEJO'S. share in the fishpond, but in the meantime, due to lack of evidence of judicial or extrajudicial partition of the property, DE GUIA was ordered to pay a reasonable amount as rental for the use of ABEJO's share; (b) that DE GUIA and the Lejano Heirs as well as their successors-in-interest are not entitled to the relief prayed for in the amended complaint to annul the Kasunduan ng Sanglaan and Kasulatan ng Pagbubuwis ng Palaisdaan and DISMISSED the same for lack of cause of action. The trial court likewise declared the "Kasunduan ng Sanglaan" as valid and ordered the sheriff to proceed to foreclose the aforesaid mortgage. The Court of Appeals affirmed the decision of the trial court and held, among others, that: (a) there is no irregularity in the execution of the aforementioned contract of mortgage; and (b) ABEJO's right over his 1/2 undivided share in the fishpond justified the action for recovery of possession. The trial court's decision effectively enforces Abejo's right over the property which was violated by DE GUIA by possession and use without paying compensation. According to the Court of Appeals, partition would constitute a mechanical aspect of the decision, just like accounting when necessary. On review; the Supreme Court ruled that the petition is partly meritorious, and held: (a) that any co-owner may file an action under Article 487 not only against a third person, but also against another co-owner who takes exclusive possession and asserts exclusive ownership of the property. In the latter case, however, the only purpose of the action is to obtain recognition of the co-ownership, but the plaintiff cannot recover a material or determinate part of a common property prior to partition; (b) the courts cannot proceed without the actual partitioning of the property, hence, judicial or extrajudicial partition is necessary; (c) despite DE GUIA'S acquisition of his 1/2 undivided share in the fishpond on Nov. 22, 1983, after the expiration of his lease of the entire fishpond which was agreed upon by the Lejano heirs and Teofilo Abejo in 1979, DE GUIA should pay reasonable rent to ABEJO corresponding to the latter's share of the 1/2 undivided portion computed at the yearly rental of P825,000.00. SYLLABUS 1. CIVIL CODE; PROPERTY; CO-OWNERSHIP; WHEN IT EXISTS; CASE AT BAR. Under Article 484 of the Civil Code, "there is co-ownership whenever the ownership of an undivided thing or right belongs to different persons." A co-owner of an undivided parcel of land is an "owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract." On the other hand, there is no coownership when the different portions owned by different people are already concretely determined and separately identifiable, even if not yet technically described. . . . Following the inherent and peculiar features of co-ownership, while ABEJO and DE GUIA have equal shares in the fishpond quantitavely speaking, they have the same right in a qualitative sense as co-owners. Simply stated, ABEJO and DE GUIA are owners of the whole and over the whole, they exercise the right of dominion. However, they are at the same time individual owners of a 1/2 portion, which is truly abstract because until there is partition, such portion remains indeterminate or unidentified. As co-owners, ABEJO and DE GUIA may jointly exercise the right of dominion over the entire fishpond until they partition the FISHPOND by identifying or segregating their respective portions.

2.ID.; ID.; ID.; ACTIONS FOR RECOVERY OF POSSESSION UNDER ART. 487 OF THE CIVIL CODE. Article 487 of the Civil Code provides, "[a]ny one of the co-owners may bring an action in ejectment." This article covers all kinds of actions for the recovery of possession. Article 487 includes forcible entry and unlawful detainer (action interdictal), recovery of possession (action publiciana) and recovery of ownership (action de reivindicacion). 3.REMEDIAL LAW; FORCIBLE ENTRY AND UNLAWFUL DETAINER; RECOVERY OF POSSESSION UNDER ART. 487 OF THE CIVIL CODE; JURISDICTION OF COURTS. The summary actions of forcible entry and unlawful detainer seek the recovery of physical possession only. These actions are brought before the municipal trial courts, within one year from dispossession. However, accion publiciana, which is a plenary action for recovery of the right to possess falls under the jurisdiction of the proper regional trial court when the dispossession has lasted for more than one year. Accion de reivindicacion which seeks the recovery of ownership, also falls under the jurisdiction of the proper regional trial court. 4.ID.; ID.; RECOVERY OF POSSESSION UNDER ARTICLE 487; EXTENT OF RECOVERY PRIOR TO PARTITION. Any co-owner may file an action under Art. 487 of the New Civil Code, not only against a third person, but also against another co-owner who takes exclusive possession and asserts exclusive ownership of the property. In the latter case, however, the only purpose of the action is to obtain recognition of the co-ownership. The plaintiff cannot seek exclusion of the defendant from the property because as co-owner he has the right of possession. The plaintiff cannot recover any material or determinate part of the property prior to partition. 5.ID.; SPECIAL CIVIL ACTIONS; PARTITION; IMPRESCRIPTIBLE; NECESSARY BEFORE RECOVERY OF POSSESSION UNDER ARTICLE 487 OF THE NEW CIVIL, CODE; CASE AT BAR. Since co-ownership subsists between ABEJO and DE GUIA, judicial or extra-judicial partition is the proper recourse. An action to demand partition is imprescriptible and not subject to laches. Each co-owner may demand at any time the partition of the common property unless a co-owner has repudiated the co-ownership under certain conditions. Neither ABEJO nor DE GUIA has repudiated the co-ownership under the conditions set by law. To recapitulate, we rule that a co-owner may file an action for recovery of possession against a co-owner who takes exclusive possession of the entire co-owned property. However, the only effect of such action is a recognition of the co-ownership. The courts cannot proceed with the actual partitioning of the co-owned property. Thus, judicial or extra-judicial partition is necessary to effect physical division of the fishpond between ABEJO and DE GUIA. 6.CIVIL LAW; PROPERTY; CO-OWNERSHIP; RIGHT OF EACH CO-OWNER LIMITED BY RIGHT OF OTHER CO-OWNERS; CASE AT BAR. The right of enjoyment by each co-owner is limited by a similar right of the other co-owners. A co-owner cannot devote common property to his exclusive use to the prejudice of the co-ownership. The Lejano heirs and Teofilo Abejo agreed to lease the entire fishpond to DE GUIA. After DE GUIA'S lease expired in 1979, he could no longer use the entire fishpond without paying rent. To allow DE GUIA to continue using the entire FISHPOND without paying rent would prejudice ABEJO'S right to receive rent, which would have accrued to his 1/2 share in the FISHPOND had it been leased to others. Since ABEJO acquired his 1/2 undivided share in the FISHPOND on 22 November 1983, DE

GUIA should pay ABEJO reasonable rent for his possession and use of ABEJO' S portion beginning from that date. 7.ID.; DAMAGES; COMPENSATORY DAMAGES; RATE OF INTEREST DUE; CASE AT BAR. ABEJO made an extrajudicial demand on DE GUIA by sending the 27 November 1983 demand letter. Thus, the rent in arrears should earn interest at 6% per annum from 27 November 1983 until finality of this decision pursuant to Article 2209 of the Civil Code. Thereafter, the interest rate is 12% per annum from finality of this decision until full payment.

8.REMEDIAL-LAW; APPEAL; REVIEW `UNDER RULE 45 OF THE REVISED RULES OF COURT; ONLY QUESTIONS OF LAW MAY BE RAISED; CASE AT BAR. Where DE GUIA contends the P212,500.00 in rent awarded to ABEJO is exorbitant and assails as doubtful and self-serving evidence the Lease Contract between ABEJO and Ruperto C. Villarico that served as basis for the yearly rent of P25,000 for ABEJO'S share in the fishpond, the Court ruled that as a general rule, a party may raise only questions of law in an appeal by certiorari under Rule 45 of the Rules of Court. The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings below. More so in the instant case, where the Court of Appeals affirmed the factual findings of the trial court. 9.CIVIL LAW; DAMAGES; ATTORNEY'S FEES; FEASIBLE UNDER ARTICLE 2208 OF THE CIVIL CODE; CASE AT BAR. The trial court did not err in imposing attorney's fees of P20,000. Attorney's fees can be awarded in the cases enumerated in Article 2208 of the Civil Code, specifically ". . . (2) Where the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest." DE GUIA is a lawyer and he should have known that a co-owner could not take exclusive possession of a common property. Although DE GUIA offered to settle the case out of court, such offer was made under conditions not acceptable to ABEJO. Certainly, ABEJO was still put to unnecessary expense and trouble to protect his interest under paragraph (2), Article 2208 of the Civil Code. DECISION CARPIO, J p: The Case This is a Petition for Review on Certiorari 1 assailing the 22 August 1994 Decision 2 as well as the 27 June 1995 Resolution of the Court of Appeals in CA-G.R. CV No. 39875. The Court of Appeals affirmed the Decision 3 of the Regional Trial Court ("trial court") of Malolos, Bulacan, Branch 16, in Civil Case No. 8796-M. The trial court's Decision ordered petitioner Manuel T. De Guia ("DE GUIA") to turn over to private respondent Jose B. Abejo ("ABEJO") possession of the one half () undivided portion of a fishpond and to pay actual damages and attorney's fees. The Antecedents

On 12 May 1986, ABEJO 4 instituted an action for recovery of possession with damages against DE GUIA. In his complaint, ABEJO alleged that he is the owner of the undivided portion of a property used as a fishpond ("FISHPOND") situated in Meycauayan, Bulacan and covered by TCT No. T-6358 of the Bulacan Register of Deeds. He alleged ownership over approximately 39,611 square meters out of the FISHPOND's total area of 79,220 square meters. ABEJO further averred that DE GUIA continues to possess and use the FISHPOND without any contract and without paying rent to ABEJO's damage and prejudice. ABEJO also complained that DE GUIA refuses to surrender ownership and possession of the FISHPOND despite repeated demands to do so after DE GUIA's sublease contract over the FISHPOND had expired. ABEJO asked the trial court to order DE GUIA to vacate an approximate area of 39,611 square meters as well as pay damages. DE GUIA, a lawyer by profession, appeared on his own behalf. He filed his Answer on 12 January 1990 after the Court of Appeals resolved several issues concerning the validity of the service of summons on him. In his Answer, DE GUIA alleged that the complaint does not state a cause of action and has prescribed. He claimed that the FISHPOND was originally owned by Maxima Termulo who died intestate with Primitiva Lejano as her only heir. According to him, ABEJO is not the owner of the entire FISHPOND but the heirs of Primitiva Lejano who authorized him to possess the entire FISHPOND. He assailed ABEJO's ownership of the undivided portion of the FISHPOND as void and claimed ownership over an undivided half portion of the FISHPOND for himself. DE GUIA sought payment of damages and reimbursement for the improvements he introduced as a builder in good faith. The trial court set the pre-trial and required the parties to file their pre-trial briefs. ABEJO filed his pre-trial brief 5 on 05 April 1990. DE GUIA filed his pre-trial brief 6 on 31 July 1990. DE GUIA's pre-trial brief raised as the only issue in the case the amount of damages in the form of rent that DE GUIA should pay ABEJO. DE GUIA also submitted an Offer to Compromise, 7 offering to settle ABEJO's claim for P300,000 and to lease the entire FISHPOND to any party of ABEJO's choice. Hearing commenced on 30 July 1990. ABEJO rested his case on 4 December 1990. DE GUIA's last witness completed her testimony on 22 November 1991. The trial court summarized the evidence presented by ABEJO and DE GUIA as follows: Evidence adduced from plaintiff shows that there are two parcels of land covering a fishpond with a total area of 79,220 sq. m. more or less, situated at Ubihan, Meycauayan, Bulacan and covered by TCT No. 6358 equally owned by Primitiva Lejano and Lorenza Araniego married to Juan Abejo (Exh. A). The one half undivided portion owned by Lorenza Araniego corresponding to 39,611 sq. m. was later purchased by plaintiff from his father Teofilo Abejo (Exh. B), the only heir of the original owner on November 22, 1983. Prior to this sale on July 30, 1974 the whole fishpond (79,220) was the subject of a "Salin ng Pamumusisyong ng Palaisdaan" executed by the heirs of Primitiva Lejano with the knowledge and consent of Teofilo A. Abejo in favor of one Aniano Victa and defendant. The contract provided that the period of lease shall be until November 30, 1979. When the contract expired and defendant failed to surrender the fishpond, written demands the last of which was on November 27, 1983 were made for defendants to pay back rental and to vacate the premises in question (Exh. D & E). Defendant refused to deliver possession and also to pay the rentals due. In

anticipation, however, that defendant will vacate the fishpond, plaintiff, on December 21, 1983 entered into a two year "Kasunduan ng Buwisan ng Palaisdaan" with Ruperto C. Villarico for a consideration of P50,000.00 (Exh. G). This contract, despite its execution and even already notarized, had to be cancelled and the amount of P50,000.00 returned by plaintiff to Villarico when the defendant did not heed the demand to vacate the fishpond. For unpaid rental, actual as well as moral and exemplary damages, plaintiff asks payment of P450,000.00 and P20,000.00 attorney's fees. On the other hand, defendant's evidence tends to show that the entire fishpond with an area of 79,200 sq. m. was leased to him by the heirs of Primitiva Lejano. Subsequently, defendant became the absolute owner of one half of the undivided area of the fishpond and he questioned plaintiffs ownership of the other half as void and fraudulent. As to the area pertaining to plaintiff, defendant claimed that he introduced improvements worth P500,000 and being in good faith, he asked that he should be reimbursed by plaintiff. In his pre-trial brief, however, defendant raised the only issue which is the amount of damages plaintiff is entitled to in the form of rental. Hence, the thrust of the testimonies of defendant's witnesses particularly Ben Ruben Camargo and Marta Fernando Pea was the amount of rental of fishponds in the same locality as the fishpond in question at a given time. However, the documentary evidence (Exhs. 1 and 2) in support of their testimony were not offered as evidence. 8 The trial court rendered its decision on 8 June 1992, disposing as follows: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant and hereby orders that: 1.Defendant shall turn over possession to plaintiff one half undivided portion of the 79,200 sq. m. fishpond who shall enjoy the benefits and fruits in equal share with the defendant effective immediately until such time that partition of the property is effected; 2.Defendant shall pay to plaintiff the amount of P262,500.00 by way of actual or compensatory damages; 3.Defendant shall pay plaintiff P20,000.00 as and for attorney's fees; and 4.To pay the costs. SO ORDERED. 9 Aggrieved, DE GUIA went to the Court of Appeals insisting the trial court erred in ordering him to vacate and surrender possession of the undivided portion of the FISHPOND and to pay actual damages and attorney's fees. The Court of Appeals found DE GUIA's appeal without merit and affirmed the trial court's decision. Upon DE GUIA's motion for reconsideration, the appellate court reduced the compensatory damages from P262,500 to P212,500. Hence, the instant petition.

The undisputed facts as found by the trial court and adopted in toto by the Court of Appeals are restated as follows: 1.The subject of the dispute are two undivided parcels of land used as a fishpond situated in Barrio Ubihan, Meycauayan, Bulacan, originally co-owned by Primitiva Lejano and Lorenza Araniego married to Juan Abejo. 2.The FISHPOND is registered under the names of Primitiva Lejano and Lorenza Araniego under TCT No. 6358 of the Bulacan Register of Deeds as follows: PRIMITIVA LEJANO, Filipina, of legal age, single share; and LORENZA ARANIEGO, Filipina, of legal age, married to Juan Abejo, share, 3.The FISHPOND has a total land area of approximately 79,220 square meters. ABEJO is seeking to recover possession of the undivided portion of the FISHPOND containing 39,611 square meters. 4.DE GUIA (along with a certain Aniano Victa) acquired possession of the entire FISHPOND by virtue of a document captioned Salin ng Pamumusisyong ng Palaisdaan ("Lease Contract") executed between him and the heirs of Primitiva Lejano. The Lease Contract was effective from 30 July 1974 up to 30 November 1979 for a consideration of P100,000. 5.The Lease Contract was executed with the knowledge and consent of Teofilo Abejo, sole heir of Lorenza Araniego Abejo. Teofilo Abejo acquired Lorenza Araniego Abejo's undivided share in the FISHPOND by intestate succession.

6.Teofilo Abejo (now deceased) sold his undivided share in the FISHPOND to his son, ABEJO, on 22 November 1983. 7.DE GUIA continues to possess the entire FISHPOND and to derive income from the property despite the expiration of the Lease Contract and several demands to vacate made by Teofilo Abejo and by his successor-in-interest, ABEJO. The last demand letter was dated 27 November 1983. 8.ABEJO filed his complaint for recovery of possession with damages against DE GUIA on 12 May 1986. 9.DE GUIA's claim of ownership over the other undivided portion of the FISHPOND has not been finally adjudicated for or against him. DE GUIA offers the verified Complaint for Annulment of Real Estate Mortgage and Contract of Lease with Preliminary Injunction signed by the heirs of Primitiva Lejano as proof of his ownership of the other undivided half portion of the FISHPOND. Records show that DE GUIA filed the complaint for himself and as attorney-in fact of the heirs of Primitiva Lejano ("Lejano Heirs") 10 against Spouses Teofilo Morte and Angelina Villarico, Spouses Ruperto and Milagros Villarico, et al. ("Defendants"). The case was raffled to Branch 12 of the

Regional Trial Court of Malolos, Bulacan, and docketed as Civil Case. No. 86-27-M. The complaint alleged that DE GUIA acquired his undivided share in the FISHPOND from the Lejano Heirs in February 1986. DE GUIA and the Lejano Heirs sought to annul the Kasulatan ng Sanglaan and Kasulatan ng Pagbubuwis ng Palaisdaan, executed on 10 November 1979 by Primitiva Lejano in favor of the Defendants. DE GUIA and the Lejano Heirs claimed that Primitiva Lejano signed these documents under duress and without consideration. The trial court rendered judgment 11 on 28 February 1992 against DE GUIA and the Lejano Heirs as follows: WHEREFORE, the evidence having shown the plaintiffs, particularly Manuel De Guia, their successor-in-interest, not entitled upon the facts and the law to the relief prayed for in the amended complaint, the same is hereby DISMISSED with costs against said plaintiff. Instead, as prayed for by defendants, judgment is hereby rendered: 1.Declaring the "Kasulatan ng Sanglaan" (Exhs. "A" & "1") dated November 10, 1979, and the "Kasulatan ng Pagbubuwis ng Palaisdaan" (Exhs. "C" & "3") also dated November 10, 1979, as valid for all legal intents and purposes; 2.Ordering the Ex-Officio Sheriff, RTC, Bulacan, to proceed with the extrajudicial foreclosure of the subject real estate mortgage; and 3.Ordering plaintiffs to pay defendants attorney's fees in the amount of P20,000.00. SO ORDERED. 12 The Court of Appeals affirmed the trial court in a Decision dated 30 August 2002 in CA-G.R. CV No. 38031. The Court of Appeals found the claim of force and intimidation in the execution of the documents as highly improbable since Primitiva Lejano's son, Renato Davis, witnessed the signing of the documents and found nothing irregular at the time. The appellate court also held that assuming Defendants threatened DE GUIA and the Lejano Heirs with immediate foreclosure, Defendants were merely exercising their legitimate right of foreclosing the mortgaged property for non-payment of the loan. In addition, Primitiva Lejano's lawyer and notary public, Atty. Mamerto Abao, testified that the parties appeared before him to affirm the contents of the documents. He also stated that he was present when Defendants paid Primitiva Lejano Davis and her son Renato. As of this writing, DE GUIA has a pending motion for reconsideration before the Court of Appeals. In the event the Court of Appeals' Decision attains finality, DE GUIA may lose whatever right he claims over the FISHPOND. The Trial Court's Ruling The trial court ruled that ABEJO has the right to demand that DE GUIA vacate and surrender an area equivalent to ABEJO's undivided share in the FISHPOND. The trial court explained that DE GUIA's sublease contract expired in 1979 and ABEJO acquired his father's share in 1983. However, the trial court pointed out that ABEJO failed to present evidence of the judicial or extra-judicial partition of the FISHPOND. The identification of the specific area pertaining to ABEJO and his co-owner is vital in an action to recover possession of real

property. Nevertheless, the trial court declared that pending partition, it is only just that DE GUIA pay ABEJO a reasonable amount as rental for the use of ABEJO's share in the FISHPOND. DE GUIA admitted this obligation when he raised as sole issue in his pre-trial brief how much rent he should pay ABEJO. DE GUIA even proposed P300,000 as the reasonable amount but under certain conditions which ABEJO found unacceptable. In determining the reasonable rent due to ABEJO, the trial court considered the Lease Contract between ABEJO and a certain Ruperto C. Villarico which provided for a yearly rent of P25,000 for undivided portion of the FISHPOND. The trial court declared that the total amount of rent due is P212,500, computed from November 1983 when ABEJO became a coowner of the FISHPOND up to 1991 13 or a period of eight and one half years. The trial court further ordered DE GUIA to pay an additional P50,000 which represents the amount ABEJO returned to Ruperto C. Villarico when they cancelled the Lease Contract between them due to DE GUIA's refusal to vacate the FISHPOND. Lastly, the trial court ruled that pending partition, ABEJO as co-owner has the right to possess the FISHPOND and to receive an equal share in the benefits from the FISHPOND effective immediately. Until there is a partition, and while there is no contract of lease, the Civil Code provisions on co-ownership shall govern the rights of the parties. The Court of Appeals' Ruling The Court of Appeals affirmed the trial court's decision. The Court of Appeals debunked DE GUIA's claim that partition and not recovery of possession was the proper remedy under the circumstances. The Court of Appeals pointed out that DE GUIA's failure to respect ABEJO's right over his undivided share in the FISHPOND justifies the action for recovery of possession. The trial court's decision effectively enforces ABEJO's right over the property which DE GUIA violated by possession and use without paying compensation. According to the Court of Appeals, partition would constitute a mechanical aspect of the decision just like accounting when necessary. The Court of Appeals likewise rejected DE GUIA's claim that the award of compensatory damages of P242,000, computed based on the rent stipulated in the Lease Contract between ABEJO and Ruperto C. Villarico, is grossly exorbitant. The Court of Appeals clarified that the amount the trial court awarded was P262,500 and not P242,000 as erroneously alleged by DE GUIA. The Court of Appeals pointed out that the notarized Lease Contract between ABEJO and Ruperto C. Villarico carries more evidentiary weight than the testimonies of DE GUIA's witnesses, Ben Ruben Camargo and Marta Fernando Pea. The Court of Appeals also upheld the award of attorney's fees since the parties could have avoided litigation had DE GUIA heeded the justifiable demands of ABEJO. aCATSI On motion for reconsideration, the Court of Appeals reduced the compensatory damages from P262,500 to P212,500. The Court of Appeals explained that the trial court correctly computed the total amount of rent due at P212,500. The trial court erred, however, in adding the sum of P50,000 representing the rent for 1983 and 1984 which ABEJO returned to Ruperto C. Villarico. The appellate court clarified that the sum of P212,500 was arrived at by multiplying the rent of P25,000 by 8 years. The 8 year period already included the two months rent received from and then subsequently reimbursed to Ruperto C. Villarico.

The Issues DE GUIA raises the following issues in his Memorandum: I THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT'S DECISION DENYING PETITIONER'S PLEA FOR DISMISSAL OF THE COMPLAINT FOR FAILURE TO STATE A CAUSE OF ACTION; II THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT'S ORDER DIRECTING PETITIONER TO TURN OVER THE ONE-HALF UNDIVIDED PORTION OF THE FISHPOND WHICH IS STILL UNDER A STATE OF CO-OWNERSHIP; III THE COURT OF APPEALS ERRED IN AFFIRMING, IN PART, THE AWARD OF ACTUAL OR COMPENSATORY DAMAGES DESPITE LACK OF CREDIBLE EVIDENCE TO SUPPORT THE SAME; IV THE COURT OF APPEALS ERRED IN AFFIRMING THE AWARD OF ATTORNEY'S FEES IN PRIVATE RESPONDENT'S FAVOR. 14 In essence, this Court is asked to resolve: (1) whether an action for recovery of possession and turn-over of the undivided portion of a common property is proper before partition; and (2) whether there is sufficient basis for the award of compensatory damages and attorney's fees. The Court's Ruling The petition is partly meritorious. First and Second Issues: Cause of Action and Turn-Over of Possession DE GUIA contends that a co-owner cannot claim a definite portion from the property owned in common until there is a partition. DE GUIA argues that ABEJO should have filed an action for partition instead of recovery of possession since the court cannot implement any decision in the latter case without first a partition. DE GUIA contends that an action for recovery of possession cannot prosper when the property subject of the action is part of an undivided, co-owned property. The procedural mode adopted by ABEJO, which is recovery of possession, makes enforcement difficult if not impossible since there is still no partition of the subject property.

Under Article 484 of the Civil Code, "there is co-ownership whenever the ownership of an undivided thing or right belongs to different persons." A co-owner of an undivided parcel of land is an "owner of the whole, and over the whole he exercises the right of dominion, but he is at the same time the owner of a portion which is truly abstract." 15 On the other hand, there is no co-ownership when the different portions owned by different people are already concretely determined and separately identifiable, even if not yet technically described. 16

Article 487 of the Civil Code provides, "[a]ny one of the co-owners may bring an action in ejectment." This article covers all kinds of actions for the recovery of possession. Article 487 includes forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion). The summary actions of forcible entry and unlawful detainer seek the recovery of physical possession only. These actions are brought before municipal trial courts within one year from dispossession. However, accion publiciana, which is a plenary action for recovery of the right to possess, falls under the jurisdiction of the proper regional trial court when the dispossession has lasted for more than one year. Accion de reivindicacion, which seeks the recovery of ownership, also falls under the jurisdiction of the proper regional trial court. 17 Any co-owner may file an action under Article 487 not only against a third person, but also against another co-owner who takes exclusive possession and asserts exclusive ownership of the property. 18 In the latter case, however, the only purpose of the action is to obtain recognition of the co-ownership. The plaintiff cannot seek exclusion of the defendant from the property because as co-owner he has a right of possession. The plaintiff cannot recover any material or determinate part of the property. 19 In Hermogena G. Engreso with Spouse Jose Engreso v. Nestoria De La Cruz and Herminio De La Cruz, 20 we reiterated the rule that a co-owner cannot recover a material or determinate part of a common property prior to partition as follows: It is a basic principle in civil law that before a property owned in common is actually partitioned, all that the co-owner has is an ideal or abstract quota or proportionate share in the entire property. A co-owner has no right to demand a concrete, specific or determinate part of the thing owned in common because until division is effected his right over the thing is represented only by an ideal portion. As such, the only effect of an action brought by a co-owner against a co-owner will be to obtain recognition of the co-ownership; the defendant cannot be excluded from a specific portion of the property because as a co-owner he has a right to possess and the plaintiff cannot recover any material or determinate part of the property. Thus, the courts a quo erred when they ordered the delivery of one-half () of the building in favor of private respondent. Indisputably, DE GUIA has been in exclusive possession of the entire FISHPOND since July 1974. Initially, DE GUIA disputed ABEJO's claim of ownership over the undivided portion of the FISHPOND. Subsequently, he implicitly recognized ABEJO's undivided share by offering to settle the case for P300,000 and to vacate the property. During the trial proper, neither

DE GUIA nor ABEJO asserted or manifested a claim of absolute and exclusive ownership over the entire FISHPOND. Before this Court, DE GUIA limits the issues to the propriety of bringing an action for recovery of possession and the recovery of compensatory damages. Following the inherent and peculiar features of co-ownership, while ABEJO and DE GUIA have equal shares in the FISHPOND quantitatively speaking, they have the same right in a qualitative sense as co-owners. Simply stated, ABEJO and DE GUIA are owners of the whole and over the whole, they exercise the right of dominion. However, they are at the same time individual owners of a portion, which is truly abstract because until there is partition, such portion remains indeterminate or unidentified. 21 As co-owners, ABEJO and DE GUIA may jointly exercise the right of dominion over the entire FISHPOND until they partition the FISHPOND by identifying or segregating their respective portions. Since a co-ownership subsists between ABEJO and DE GUIA, judicial or extra-judicial partition is the proper recourse. An action to demand partition is imprescriptible and not subject to laches. 22 Each co-owner may demand at any time the partition of the common property unless a co-owner has repudiated the co-ownership under certain conditions. 23 Neither ABEJO nor DE GUIA has repudiated the co-ownership under the conditions set by law. To recapitulate, we rule that a co-owner may file an action for recovery of possession against a co-owner who takes exclusive possession of the entire co-owned property. However, the only effect of such action is a recognition of the co-ownership. The courts cannot proceed with the actual partitioning of the co-owned property. Thus, judicial or extrajudicial partition is necessary to effect physical division of the FISHPOND between ABEJO and DE GUIA. An action for partition is also the proper forum for accounting the profits received by DE GUIA from the FISHPOND. However, as a necessary consequence of such recognition, ABEJO shall exercise an equal right to possess, use and enjoy the entire FISHPOND. DE GUIA further claims that the trial and appellate courts erred when they ordered the recovery of rent when the exact identity of the portion in question had not yet been clearly defined and delineated. According to DE GUIA, an order to pay damages in the form of rent is premature before partition. We disagree. The right of enjoyment by each co-owner is limited by a similar right of the other co-owners. A co-owner cannot devote common property to his exclusive use to the prejudice of the coownership. 24 Hence, if the subject is a residential house, all the co-owners may live there with their respective families to the extent possible. However, if one co-owner alone occupies the entire house without opposition from the other co-owners, and there is no lease agreement, the other co-owners cannot demand the payment of rent. Conversely, if there is an agreement to lease the house, the co-owners can demand rent from the co-owner who dwells in the house. The co-owners can either exercise an equal right to live in the house, or agree to lease it. If they fail to exercise any of these options, they must bear the consequences. It would be unjust to require the co-owner to pay rent after the co-owners by their silence have allowed him to use the property. 25

In case the co-owners agree to lease a building owned in common, a co-owner cannot retain it for his use without paying the proper rent. 26 Moreover, where part of the property is occupied exclusively by some co-owners for the exploitation of an industry, the other coowners become co-participants in the accessions of the property and should share in its net profits. 27 The Lejano Heirs and Teofilo Abejo agreed to lease the entire FISHPOND to DE GUIA. After DE GUIA's lease expired in 1979, he could no longer use the entire FISHPOND without paying rent. To allow DE GUIA to continue using the entire FISHPOND without paying rent would prejudice ABEJO's right to receive rent, which would have accrued to his share in the FISHPOND had it been leased to others. 28 Since ABEJO acquired his undivided share in the FISHPOND on 22 November 1983, DE GUIA should pay ABEJO reasonable rent for his possession and use of ABEJO's portion beginning from that date. The compensatory damages of P25,000 per year awarded to ABEJO is the fair rental value or the reasonable compensation for the use and occupation of the leased property, 29 considering the circumstances at that time. DE GUIA shall continue to pay ABEJO a yearly rent of P25,000 corresponding to ABEJO's undivided share in the FISHPOND. However, ABEJO has the option either to exercise an equal right to occupy the FISHPOND, or to file a new petition before the trial court to fix a new rental rate in view of changed circumstances in the last 20 years. ABEJO made an extrajudicial demand on DE GUIA by sending the 27 November 1983 demand letter. Thus, the rent in arrears should earn interest at 6% per annum from 27 November 1983 until finality of this decision pursuant to Article 2209 30 of the Civil Code. Thereafter, the interest rate is 12% per annum from finality of this decision until full payment. 31 Third Issue: Lack of Credible Evidence to Support Award of Compensatory Damages DE GUIA contends the P212,500 in rent awarded to ABEJO is exorbitant. He assails as doubtful and self-serving evidence the Lease Contract between ABEJO and Ruperto C. Villarico that served as basis for the yearly rent of P25,000 for ABEJO's share in the FISHPOND. DE GUIA says the trial and appellate courts should have given credence to the testimonies of his witnesses, Ben Ruben Camargo ("Camargo") and Marta Fernando Pea ("Pea") that rentals of fishponds in the same vicinity are for much lesser considerations. This issue involves calibration of the whole evidence considering mainly the credibility of witnesses. As a rule, a party may raise only questions of law in an appeal by certiorari under Rule 45 of the Rules of Court. The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings below. 32 More so in the instant case, where the Court of Appeals affirmed the factual findings of the trial court. 33 It is not true that the trial court disregarded the testimonies of Camargo and Pea because DE GUIA failed to present documentary evidence to support their testimonies. Actually, the trial and appellate courts found the testimonies of Camargo and Pea unconvincing. Judges

cannot be expected to rely on the testimonies of every witness. In ascertaining the facts, they determine who are credible and who are not. In doing so, they consider all the evidence before them. 34 We find no cogent reason to overturn the trial and appellate courts' evaluation of the witnesses' testimonies. We likewise find reasonable the P25,000 yearly compensation for ABEJO's undivided share in the FISHPOND. Indeed, being a question of fact, it is for the trial and appellate courts to decide and this Court will not disturb their findings unless clearly baseless or irrational. The exception does not obtain in this case.

Fourth Issue: Attorney's Fees The trial court did not err in imposing attorney's fees of P20,000. Attorney's fees can be awarded in the cases enumerated in Article 2208 of the Civil Code specifically: xxx xxx xxx (2)Where the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; xxx xxx xxx DE GUIA is a lawyer and he should have known that a co-owner could not take exclusive possession of a common property. Although DE GUIA offered to settle the case out of court, such offer was made under conditions not acceptable to ABEJO. Certainly, ABEJO was still put to unnecessary expense and trouble to protect his interest under paragraph (2), Article 2208 of the Civil Code. WHEREFORE, the Decision dated 22 August 1994 and Resolution dated 27 June 1995 of the Court of Appeals in CA-G.R. CV No. 39875 is AFFIRMED with respect to that portion ordering Manuel T. De Guia to pay Jose B. Abejo compensatory damages of P212,500 and attorney's fees of P20,000, and MODIFIED as follows: 1.The co-ownership between Manuel T. De Guia and Jose B. Abejo over the entire FISHPOND covered by TCT No. 6358 of the Bulacan Register of Deeds is recognized without prejudice to the outcome of CA-G.R. CV No. 38031 pending before the Court of Appeals and other cases involving the same property; 2.Manuel T. De Guia and Jose B. Abejo shall equally enjoy possession and use of the entire FISHPOND prior to partition; 3.The compensatory damages of P25,000 per annum representing rent from 27 November 1983 until May 1992 shall earn interest at 6% per annum from 27 November 1983 until finality of this decision, and thereafter at 12% per annum until full payment;

4.Manuel T. de Guia shall pay Jose B. Abejo a yearly rent of P25,000 from June 1992 until finality of this decision, with interest at 6% per annum during the same period, and thereafter at 12% interest per annum until full payment; 5.After finality of this decision and for as long as Manuel T. de Guia exclusively possesses the entire FISHPOND, he shall pay Jose B. Abejo a yearly rental of P25,000 for the latter's undivided share in the FISHPOND, unless Jose B. Abejo secures from the proper court an order fixing a different rental rate in view of possible changed circumstances. ADaSET SO ORDERED.

[G.R. No. 4656. November 18, 1912.] RICARDO PARDELL Y CRUZ and VICENTA ORTIZ Y FELIN DE PARDELL, plaintiffsappellees, vs. GASPAR DE BARTOLOME Y ESCRIBANO and MATILDE ORTIZ Y FELIN DE BARTOLOME, defendants-appellants. Gaspar de Bartolome in his own behalf. B. Gimenez Zoboli for appellees. SYLLABUS 1.ESTATES; REALTY; RIGHTS OF COOWNERS OR TENANTS IN COMMON. Each coowner or tenant in common of undivided realty has the same rights therein as the others; he may use and enjoy the same without other limitation except that he must not prejudice the rights of his coowners, but until a division is effected, the respective parts belonging to each can not be determined; each coowner exercises joint dominion and is entitled to joint use. 2.ID.; ID.; ID; RENT BY ONE COOWNER. For the use and enjoyment of a particular portion of the lower part of a house, not used as living quarters, a coowner must, in strict justice, pay rent, in like manner as other people pay for similar space in the house; he has no right to the free use and enjoyment of such space which, if rented to a third party, would produce income. 3.ID.; ID.; ID.; REPAIRS AND IMPROVEMENT; INTEREST. Until a cause instituted to determine the liability of the rest of the coowners for repairs and improvements made by one of their number is finally decided and the amount due is fixed, the persons alleged to be liable can not be considered in default as to interest, because interest is only due from the date of the decision fixing the principal liability. (Supreme court of Spain, April 24, 1867, November 19, 1869, November 22, 1901, in connection with arts. 1108-1110 of the Civil Code.) 4.ID.; ID.; ID.; VOLUNTARY ADMINISTRATOR; COMPENSATION. To an administrator or voluntary manager of property belonging to his wife and another, both coowners, the

property being undivided, the law does not conceded any remuneration, without prejudice to his right to be reimbursed for any necessary and useful expenditures in connection with the property and for any damages he may have suffered thereby. 5.ID.; ID.; ID.; RIGHT TO DEMAND VALUATION BEFORE DIVISION OR SALE. Any one of the coowners of undivided property about to be divided or to be sold in consequence of a mutual petition, has the right to ask that the property be valued by experts, a valuation which would not be prejudicial but rather beneficial to all. DECISION TORRES, J p: This is an appeal by bill of exceptions, from the judgment of October 5, 1907, whereby the Honorable Dionisio Chanco, judge, absolved the defendants from the complaint, and the plaintiff from a counterclaim, without special finding as to costs. Counsel for the spouses Ricardo Pardell y Cruz and Vicenta Ortiz y Felin de Pardell, the first of whom absent in Spain by reason of his employment, conferred upon the second sufficient and ample powers to appear before the courts of justice, on June 8, 1905, in his written complaint, alleged that the plaintiff, Vicenta Ortiz, and the defendant, Matilde Ortiz, are the duly recognized natural daughters of the spouses Miguel Ortiz and Calixta Felin y Paula who died in Vigan, Ilocos Sur, in 1875 and 1882, respectively; that Calixta Felin, prior to her death, executed, on August 17, 1876, a nuncupative will in Vigan, whereby she made her four children, named Manuel, Francisca, Vicenta, and Matilde, surnamed Ortiz y Felin, her sole and universal heirs of all her property; that, of the persons enumerated, Manuel died before his mother and Francisca a few years after her death, leaving no heirs of the said testatrix are the plaintiff Vicenta Ortiz and the defendant Matilde Ortiz; that, aside from some personal property and jewelry already divided among the heirs, the testatrix possessed, at the time of the execution of her will, and left at her death the real properties which, with their respective cash values, are as follows: 1.A house of strong material, with the lot on which it is built, situated on Escalante Street, Vigan, and valued atP6,000.00 2.A house of mixed material, with the lot on which it stands, at No. 88 Washington Street, Vigan valued at1,500.00 3.A lot on Magallanes Street, Vigan; valued at100.00 4.A parcel of rice land, situated in

the barrio of San Julian, Vigan; valued at60.00 5.A parcel of rice land in the pueblo of Santa Lucia;86.00 6.Three parcels of land in the pueblo of Candon; valued at150.00 Total7,896.00 That, on or about the first months of the year 1888, the defendants, without judicial authorization, nor friendly or extrajudicial agreement, took upon themselves the administration and enjoyment of the said properties and collected the rents, fruits, and products thereof, to the serious detriment of the plaintiffs' interest; that, notwithstanding the different and repeated demands extrajudicially made upon Matilde Ortiz to divide the aforementioned properties with the plaintiff Vicenta and to deliver to the latter the one-half of the same which rightly belonged to her, or the value thereof, together with one-half of the fruits and rents collected therefrom, the said defendant and her husband, the said defendant and her husband, the self-styled administrator of the properties mentioned, had been delaying the partition and delivery of the said properties by means of unkempt promises and other excuses; and that the plaintiffs, on account of the extraordinary delay in the delivery of one-half of said properties, or their value in cash, as the case might be, had suffered losses and damages in the sum of P8,000. Said counsel for the plaintiffs therefore asked that judgment be rendered by sentencing the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de Bartolome, to restore and deliver to the plaintiffs one-half of the total value in cash, according to appraisal, of the undivided property specified, which one-half amounted approximately to P3,498, or, if deemed proper, to recognize the plaintiff Vicenta Ortiz to be vested with the full and absolute right of ownership to the said undivided one-half of the properties in question, as universal testamentary heir thereof together with the defendant Matilde Ortiz, to indemnify the plaintiffs in the sum of P8,000, for losses and damages, and to pay the costs. Counsel for the defendants, in his answer denied the facts alleged in paragraphs 1, 4, 6, 7 and 8 thereof, inasmuch as, upon the death of the litigating sisters' brother Manuel, their mother, who was still living, was his heir by force of law, and the defendants had never refused to give to the plaintiff Vicenta Ortiz her share of the said properties; and stated that he admitted the facts alleged in paragraph 2, provided it be understood, however, that the surname of the defendant's mother was Felin, and not Felix, and that Miguel Ortiz died in Spain, and not in Vigan; that he also admitted paragraph 3 of the complaint, with the difference that the said surname should be Felin, and likewise paragraph 5, except the part thereof relating to the personal property and the jewelry, since the latter had not yet been divided; that the said jewelry was in the possession of the plaintiffs and consisted of: one

Lozada gold chronometer watch with a chain in the form of a bridle curb and a watch charm consisting of the engraving of a postage stamp on a stone mounted in gold and bearing the initials M.O., a pair of cuff buttons made of gold coins, four small gold buttons, two finger rings, another with the initials M.O., and a gold bracelet; and that the defendants were willing to deliver to the plaintiffs, in conformity with petition, one-half of the total value in cash, according to appraisement, of the undivided real properties specified in paragraph 5, which half amounted to P3,948. In a special defense said counsel alleged that the defendant had never refused to divide the said property and had in fact several years before solicited the partition of the same; that, from 1886 to 1901, inclusive, there was collected from the property on Calle Escolta the sum of 288 pesos, besides a few other small amounts derived from other sources, which were delivered to the plaintiffs with other larger amounts, in 1891, and from the property on Calle Washington, called La Quinta, 990.95 pesos, which proceeds, added together, made a total of 1,278.95 pesos, saving error or omission; that, between the years abovementioned, 765.38 pesos were spent on the house situated on Calle Escolta, and on that on Calle Washington, La Quinta, 376.33, which made a total of 1,141.71, saving error or omission; that, in 1897, the work of reconstruction was begun of the house on Calle Escolta, which had been destroyed by an earthquake, which work was not finished until 1903 and required an expenditure on the part of the defendant Matilde Ortiz, of 5,091.52 pesos; that all the collections made up to August 1,1905, including the rent from the stores, amounted to only P3,654.15, and the expenses to P6,252.32, there being, consequently, a balance of P2,598.18, which, divided between the sisters, the plaintiff and the defendant, would make the latter's share P1,299.08; that, as shown by the papers kept by the plaintiffs, in the year 1891 the defendant Bartolome presented to the plaintiffs a statement in settlement of accounts, and delivered to the person duly authorized by the latter for the purpose, the sum of P2,606.29, which the said settlement showed was owing his principals, from various sources; that, the defendant Bartolome having been the administrator of the undivided property claimed by the plaintiffs, the latter were owing the former the legal remuneration of the percentage allowed by law for administration; and that the defendants were willing to pay the sum of P3,948, one-half of the total value of the said properties, deducting therefrom the amount found to be owing them by the plaintiffs, and asked that the judgment be rendered in their favor to enable them to recover from the latter that amount, together with the costs and expenses of the suit.

The defendants, in their counterclaim, reported each and all of the allegations contained in each of the paragraphs of section 10 of their answer; that the plaintiffs were obliged to pay to the administrator of the said property the remuneration allowed him by law; that, as the revenues collected by the defendants amounted to no more than P3,654.15, and the expenditures incurred by them, to P6,252.32, it followed that the plaintiffs owed the defendants P1,299.08, that is, one-half of the difference between the amount collected from and that expended on the properties, and asked that judgment be therefore rendered in their behalf to enable them to collect this sum from the plaintiffs, Ricardo Pardell and Vicenta Ortiz, with legal interest thereon from December 7, 1904, the date when the accounts were rendered, together with the sums to which the defendant Bartolome was entitled for the administration of the undivided properties in question.

By a written motion of August 21, 1905, counsel for the plaintiffs requested permission to amend the complaint by inserting immediately after the words "or respective appraisal," fifth line of paragraph 5, the phrased "in cash in accordance with the assessed value," and likewise further to amend the same, in paragraph 6 thereof, by substituting the following words in lieu of the petition for the remedy sought: "By reason of all the foregoing, I beg the court to be pleased to render judgment by sentencing the defendants, Gaspar de Bartolome and Matilde Ortiz Felin de Bartolome, to restore and deliver to the plaintiffs an exact onehalf of the total value of the undivided properties described in the complaint, such value to be ascertained by the expert appraisal of two competent persons, one of whom shall be appointed by the plaintiffs and the other by the defendants, and, in case of disagreement between these two appointees such value shall be determined by a third expert appraiser appointed by the court, or, in a proper case, by the price offered at public auction; or, in lieu thereof, it is requested that the court recognize the plaintiff, Vicenta Ortiz, to be vested with a full and absolute right to an undivided one-half of the said properties; furthermore, it is prayed that the plaintiffs be awarded an indemnity of P8,000 for losses and damages, and the costs." Notwithstanding the opposition of the defendants, the said defendants were allowed a period of three days within which to present a new answer. An exception was taken to this ruling. The proper proceedings were had with reference to the valuation of the properties concerned in the division sought and incidental issues were raised relative to the partition of some of them and their award to one or the other of the parties. Due consideration was taken of the averments and statements of both parties who agreed between themselves, before the court, that any of them might at any time acquire, at the valuation fixed by the expert judicial appraiser, any of the properties in question, there being none in existence excluded by the litigants. The court, therefore, by order of December 28, 1905, ruled that the plaintiffs were entitled to acquire, at the valuation determined by the said expert appraiser, the building known as La Quinta, the lot on which it stands and the warehouses and other improvements comprised within the inclosed land, and the seed lands situated in the pueblos of Vigan and Santa Lucia; and that the defendants were likewise entitled to acquire the house on Calle Escolta, the lot on Calle Magallanes, and the three parcels of land situated in the pueblo of Candon. After this partition had been made, counsel for the defendants, by a writing of March 8, 1908, set forth: That, having petitioned for the appraisement of the properties in question for the purpose of their partition, it was not to be understood that he desisted from the exception duly entered to the ruling made in the matter of the amendment to the complaint; that the properties retained by the defendants were valued at P9,310, and those retained by the plaintiffs, at P2,885, one-half of which amounts each party had to deliver to the other, as they were pro indiviso properties; that, therefore, the defendants had to pay the plaintiffs the sum of P3,212.50, after deducting the amount which the plaintiffs were obliged to deliver to the defendants, as one-half of the price of the properties retained by the former; that, notwithstanding that the amount of the counterclaim for the expenses incurred in the reconstruction of the pro indiviso property should be deducted from the sum which the defendants had to pay the plaintiffs, the former, for the purpose of bringing the matter of the partition to a close, would deliver to the latter, immediately upon the signing of the instrument of purchase and sale, the sum of P3,212.50, which was one-half of the value of

the properties allotted to the defendants; such delivery, however, was not to be understood as a renouncement of the said counterclaim, but only as a means for the final termination of the pro indiviso status of the property. The case having been heard, the court, on October 5, 1907, rendered judgment holding that the revenues and the expenses were compensated by the residence enjoyed by the defendant party, that no losses or damages were either caused or suffered, nor likewise any other expense besides those aforementioned, and absolved the defendants from the complaint and the plaintiffs from the counterclaim, with no special finding as to costs. An exception was taken to this judgment by counsel for the defendants who moved for a new trial on the grounds that the evidence presented did not warrant the judgment rendered and that the latter was contrary to law. This motion was denied, exception whereto was taken by said counsel, who filed the proper bill of exceptions, and the same was approved and forwarded to the clerk of this court, with a transcript of the evidence. Both of the litigating sisters assented to a partition by halves of the property left in her will by their mother at her death; in fact, during the course of this suit, proceedings were had, in accordance with the agreement made, for the division between them of the said hereditary property of common ownership, which division was recognized and approved in the findings of the trial court, as shown by the judgment appealed from. The issues raised by the parties, aside from the said division made during the trial, and which have been submitted to this court for decision, concern: (1) The indemnity claimed for losses and damages, which the plaintiffs allege amount to P8,000, in addition to the rents which should have been derived from the house on Calle Escolta, Vigan; (2) the payment by the plaintiffs to the defendants of the sum of P1,299.08, demanded by way of counterclaim, together with legal interest thereon from December 7, 1904; (3) the payment to the husband of the defendant Matilde Ortiz, of a percentage claimed to be due him as the administrator of the property of common ownership; (4) the division of certain jewelry in the possession of the plaintiff Vicenta Ortiz; and (5) the petition that the amendment be held to have been improperly admitted, which was made by the plaintiffs in their written motion of August 21, 1905, against the opposition of the defendants, through which admission the latter were obliged to pay the former P910.50. Before entering upon an explanation of the propriety or impropriety of the claims made by both parties, it is indispensable to state that the trial judge, in absolving the defendants from the complaint, held that they had not caused losses and damages to the plaintiffs, and that the revenues and the expenses were compensated, in view of the fact that the defendants had been living for several years in the Calle Escolta house, which was pro indiviso property of joint ownership. By this finding absolving the defendants from the complaint, and which was acquiesced in by the plaintiffs who made no appeal therefrom, the first issue has been decided which was raised by the plaintiffs, concerning the indemnity for losses and damages, wherein are comprised the rents which should have been obtained from the upper story of the said house during the time it was occupied by the defendants, Matilde Ortiz and her husband, Gaspar de Bartolome.

Notwithstanding the acquiescence on the part of the plaintiffs, assenting to the said finding whereby the defendants were absolved from the complaint, yet as such absolution is based on the compensation established in the judgment of the trial court, between the amounts which each party is entitled to claim from the other, it is imperative to determine whether the defendant Matilde Ortiz, as coowner of the house on Calle Escolta, was entitled, with her husband, to reside therein, without paying to her coowner, Vicenta Ortiz, who, during the greater part of the time, lived with her husband abroad, one-half of the rents which the upper story would have produced, had it been rented to a stranger. Article 394 of the Civil Code prescribes: "Each coowner may use the things owned in common, provided he uses them in accordance with their object and in such manner as not to injure the interests of the community nor prevent the coowners from utilizing them according to their rights." Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling, in the house of joint ownership; but the record shows no proof that, by so doing, the said Matilde occasioned any detriment to the interests of the community property, nor that she prevented her sister Vicenta from utilizing the said upper story according to her rights. It is to be noted that the stores of the lower floor were rented and an accounting of the rents was duly made to the plaintiffs. Each coowner of realty held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his coowners, for the reason that, until a division be made, the respective part of each holder can not be determined and every one of the coowners exercises together with his other coparticipants, joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same.

As the hereditary properties of the joint ownership of the two sisters, Vicenta Ortiz, plaintiff, and Matilde Ortiz, defendant, were situated in the Province of Ilocos Sur, and were in the care of the last named, assisted by her husband, while the plaintiff Vicenta with her husband was residing outside of the said province the greater part of the time between 1885 and 1905, when she left these Islands for Spain, it is not at all strange that delays and difficulties should have attended the efforts made to collect the rents and proceeds from the property held in common and to obtain a partition of the latter, especially during several years when, owing to the insurrection, the country was in a turmoil; and for this reason, aside from that founded on the right of coownership of the defendants, who took upon themselves the administration and care of the property of joint tenancy for purposes of their preservation and improvement, these latter are not obliged to pay to the plaintiff Vicenta one-half of the rents which might have been derived from the upper story of the said house on Calle Escolta, and, much less, because one of the living rooms and the storeroom thereof were used for the storage of some belongings and effects of common ownership between the litigants. The defendant Matilde, therefore, in occupying with her husband the upper floor of the said house, did not injure the interests of her coowner, her sister Vicenta, nor did she

prevent the latter from living therein, but merely exercised a legitimate right pertaining to her as a coowner of the property. Notwithstanding the above statements relative to the joint-ownership rights which entitled the defendants to live in the upper story of the said house, yet, in view of the fact that the record shows it to have been proved that the defendant Matilde's husband, Gaspar de Bartolome, occupied for four years a room or a part of the lower floor of the same house on Calle Escolta, using it as an office for the justice of the peace, a position which he held in the capital of that province, strict justice requires that he pay his sister-in-law, the plaintiff, onehalf of the monthly rent which the said quarters could have produced, had they been leased to another person. The amount of such monthly rental is fixed at P16 in appearance with the evidence shown in the record. This conclusion as to Bartolome's liability results from the fact that, even as the husband of the defendant coowner of the property, he had no right to occupy and use gratuitously the said part of the lower floor of the house in question, where he lived with his wife, to the detriment of the plaintiff Vicenta who did not receive one-half of the rent which those quarters could and should have produced, had they been occupied by a stranger, in the same manner that rent was obtained from the rooms on the lower floor that were used as stores. Therefore, the defendant Bartolome must pay to the plaintiff Vicenta P384, that is, one-half of P768, the total amount of the rents which should have been obtained during four years from the quarters occupied as an office by the justice of the peace of Vigan. With respect to the second question submitted for decision to this court, relative to the payment of the sum demanded as a counterclaim, it was admitted and proved in the present case that, as a result of a serious earthquake on August 15, 1897, the said house on Calle Escolta was left in ruins and uninhabitable, and that, for its reconstruction or repair, the defendants had to expend the sum of P6,252.32. This expenditure, notwithstanding that it was impugned, during the trial, by the plaintiffs, was duly proved by the evidence presented by the defendants. Evidence, unsuccessfully rebutted, was also introduced which proved that the rents produced by all the rural and urban properties of common ownership amounted, up to August 1, 1905, to the sum of P3,654.15 which, being applied toward the cost of the repair work on the said house, leaves a balance of P2,598.17, the amount actually advanced by the defendants, for the rents collected by them were not sufficient for the termination of all the work undertaken on the said building, necessary for its complete repair and to replace it in a habitable condition. It is therefore lawful and just that the plaintiff Vicenta Ortiz, who was willing to sell to her sister Matilde for P1,500, her share in the house in question, when it was in a ruinous state, should pay the defendants one-half of the amount expended in the said repair work, since the building after reconstruction was worth P9,000, according to expert appraisal. Consequently, the counterclaim made by the defendants for the payment to them of the sum of P1,299.08, is a proper demand, though from this sum a reduction must be made of P384, the amount of one-half of the rents which should have been collected for the use of the quarters occupied by the justice of the peace, the payment of which is incumbent upon the husband of the defendant Matilde, as aforesaid, and the balance remaining, P915.08, is the amount which the plaintiff Vicenta must pay to the defendants. The defendants claim to be entitled to the collection of legal interest on the amount of the counterclaim, from December 7, 1904. This contention can not be sustained, inasmuch as,

until this suit is finally decided, it could not be known whether the plaintiffs would or would not be obliged to pay any sum whatever in reimbursement of expenses incurred by the plaintiffs in the repair work on the said house on Calle Escolta, whether or not the defendants in turn, were entitled to collect any such amount, and finally what the net sum would be which the plaintiffs might have to pay as reimbursement for one-half of the expenditures made by the defendants. Until final disposal of the case, no such net sum can be determined, nor until then can the debtor be deemed to be in arrears. In order that there be an obligation to pay legal interest in connection with a matter at issue between the parties, it must be declared in a judicial decision from what date the interest will be due on the principal concerned in the suit. This rule has been established by the decisions of the supreme court of Spain, in reference to articles 1108, 1109, and 1110 of the Civil Code, rendered on April 24, 1867, November 19, 1869, and February 22, 1901. With regard to the percentage, as remuneration claimed by the husband of the defendant Matilde for his administration of the property of common ownership, inasmuch as no stipulation whatever was made in the matter by and between him and his sister-in-law, the said defendant, the claimant is not entitled to the payment of any remuneration whatsoever. Of his own accord and as an officious manager, he administered the said pro indiviso property, one-half of which belonged to his wife who held it in joint tenancy, with his sisterin-law, and the law does not allow him any compensation as such voluntary administrator. He is merely entitled to a reimbursement for such actual and necessary expenditures as he may have made on the undivided properties and an indemnity for the damages he may have suffered while acting in that capacity, since at all events it was his duty to care for and preserve the said property half of which belonged to his wife; and in exchange for the trouble and labor occasioned him by the administration of his sister-in-law's half of the said property, he with his wife resided in the upper story of the house aforementioned, without payment of one-half of the rents said quarters might have produced had they been leased to another person. With respect to the division of the certain jewelry, petitioned for by the defendants and appellants only in their brief in this appeal, the record of the proceedings in the lower court does not show that the allegation made by the plaintiff Vicenta is not true, to the effect that the deceased mother of the litigant sisters disposed of this jewelry during her lifetime, because, had she not done so, the will made by the said deceased would have been exhibited in which the said jewelry would have been mentioned, at least it would have been proved that the articles in question came into the possession of the plaintiff Vicenta without the expressed desire and the consent of the deceased mother of the said sisters, for the gift of this jewelry was previously assailed in the courts, without success; therefore, and in view of its inconsiderable value, there is no reason for holding that the said gift was not made. As regards the collection of the sum of P910.50, which is the difference between the assessed value of the undivided real properties and the price of the same as determined by the judicial expert appraiser, it is shown by the record that the ruling of the trial judge admitting the amendment to the original complaint, is in accord with the law and principles of justice, for the reason that any of the coowners of a pro indiviso property, subject to division or sale, is entitled to petition for its valuation is not prejudicial to any of the joint owners, but is beneficial to their interests, considering that, as a general rule, the assessed value of a building or a parcel of realty is less than the actual real value of the property, and

this being understood by the defendants, they appointed an expert appraiser to determine, in conjunction with the one selected by the plaintiffs, the value of the properties of joint ownership. These two experts took part in the later proceedings of the suit until finally, and during the course of the latter, the litigating parties agreed to an amicable division of the pro indiviso hereditary property, in accordance with the price fixed by the judicial expert appraiser appointed as a third party, in view of the disagreement between and nonconformity of the appraisers chosen by the litigants. Therefore it is improper now to claim a right to the collection of the said sum, the difference between the assessed value and that fixed by the judicial expert appraiser for the reason that the increase in price, as determined by this latter appraisal, redounded to the benefit of both parties.

In consideration of the foregoing, whereby the errors assigned to the lower court have been duly refuted, it is our opinion that, with a partial reversal of the judgment appealed from, in so far as it absolves the plaintiffs from the counterclaim presented by the defendants, we should and hereby do sentence the plaintiffs to the payment of the sum of P915.08, the balance of the sum claimed by the defendants as a balance of the one-half of the amount which the defendants advanced for the reconstruction or repair of the Calle Escolta house, after deducting from the total of such sum claimed by the latter the amount of P384 which Gaspar de Bartolome, the husband of the defendant Matilde, should have paid as one-half of the rents due for his occupation of the quarters on the lower floor of the said house as an office for the justice of the peace court of Vigan; and we further find: (1) That the defendants are not obliged to pay one-half of the rents which could have been obtained from the upper story of the said house; (2) that the plaintiffs can not be compelled to pay legal interest from December 7, 1904, on the sum expended in the reconstruction of the aforementioned house, but only the interest fixed by law, at the rate of per cent per annum, from the date of the judgment to be rendered in accordance with this decision; (3) that the husband of the defendant Matilde Ortiz is not entitled to any remuneration for the administration of the pro indiviso property belonging to both parties; (4) that, neither is he entitled to collect from the plaintiffs the sum of P910.50, the difference between the assessed valuation and the price set by the expert appraisal solicited by the plaintiffs in their amendment to the complaint; and, (5) that no partition shall be made of certain jewelry aforementioned now in the possession of the plaintiff Vicenta Ortiz. The said judgment, as relates to the points appealed, is affirmed, in so far as its findings agree with those of this decision, and is reversed, in so far as they do not. No special finding is made regarding the costs of both instances. So ordered. Right of any co-owner (to recover)/ limitation of right of co-owner Cases: [G.R. No. 161916. January 20, 2006.] ARNELITO ADLAWAN, petitioner, vs. EMETERIO M. ADLAWAN and NARCISA M. ADLAWAN, respondents. DECISION

YNARES-SANTIAGO, J p: Assailed in this petition for review is the September 23, 2003 Decision 1 of the Court of Appeals in CA-G.R. SP No. 74921 which set aside the September 13, 2002 Decision 2 of the Regional Trial Court (RTC) of Cebu City, Branch 7, in Civil Case No. CEB-27806, and reinstated the February 12, 2002 Judgment 3 of the Municipal Trial Court (MTC) of Minglanilla, Metro Cebu, in Civil Case No. 392, dismissing petitioner Arnelito Adlawan's unlawful detainer suit against respondents Emeterio and Narcisa Adlawan. Likewise questioned is the January 8, 2004 Resolution 4 of the Court of Appeals which denied petitioner' s motion for reconsideration. The instant ejectment suit stemmed from the parties' dispute over Lot 7226 and the house built thereon, covered by Transfer Certificate of Title No. 8842, 5 registered in the name of the late Dominador Adlawan and located at Barrio Lipata, Municipality of Minglanilla, Cebu. In his complaint, petitioner claimed that he is an acknowledged illegitimate child 6 of Dominador who died on May 28, 1987 without any other issue. Claiming to be the sole heir of Dominador, he executed an affidavit adjudicating to himself Lot 7226 and the house built thereon. 7 Out of respect and generosity to respondents who are the siblings of his father, he granted their plea to occupy the subject property provided they would vacate the same should his need for the property arise. Sometime in January 1999, he verbally requested respondents to vacate the house and lot, but they refused and filed instead an action for quieting of title 8 with the RTC. Finally, upon respondents' refusal to heed the last demand letter to vacate dated August 2, 2000, petitioner filed the instant case on August 9, 2000. 9 On the other hand, respondents Narcisa and Emeterio, 70 and 59 years of age, respectively, 10 denied that they begged petitioner to allow them to stay on the questioned property and stressed that they have been occupying Lot 7226 and the house standing thereon since birth. They alleged that Lot 7226 was originally registered in the name of their deceased father, Ramon Adlawan 11 and the ancestral house standing thereon was owned by Ramon and their mother, Oligia Maacap Adlawan. The spouses had nine 12 children including the late Dominador and herein surviving respondents Emeterio and Narcisa. During the lifetime of their parents and deceased siblings, all of them lived on the said property. Dominador and his wife, Graciana Ramas Adlawan, who died without issue, also occupied the same. 13 Petitioner, on the other hand, is a stranger who never had possession of Lot 7226. Sometime in 1961, spouses Ramon and Oligia needed money to finance the renovation of their house. Since they were not qualified to obtain a loan, they transferred ownership of Lot 7226 in the name of their son Dominador who was the only one in the family who had a college education. By virtue of a January 31, 1962 simulated deed of sale, 14 a title was issued to Dominador which enabled him to secure a loan with Lot 7226 as collateral. Notwithstanding the execution of the simulated deed, Dominador, then single, never disputed his parents' ownership of the lot. He and his wife, Graciana, did not disturb respondents' possession of the property until they died on May 28, 1987 and May 6, 1997, respectively. ScCIaA Respondents also contended that Dominador's signature at the back of petitioner's birth certificate was forged, hence, the latter is not an heir of Dominador and has no right to claim

ownership of Lot 7226. 15 They argued that even if petitioner is indeed Dominador's acknowledged illegitimate son, his right to succeed is doubtful because Dominador was survived by his wife, Graciana. 16 On February 12, 2002, the MTC dismissed the complaint holding that the establishment of petitioner's filiation and the settlement of the estate of Dominador are conditions precedent to the accrual of petitioner's action for ejectment. It added that since Dominador was survived by his wife, Graciana, who died 10 years thereafter, her legal heirs are also entitled to their share in Lot 7226. The dispositive portion thereof, reads: In View of the foregoing, for failure to prove by preponderance of evidence, the plaintiff's cause of action, the above-entitled case is hereby Ordered DISMISSED. SO ORDERED. 17 On appeal by petitioner, the RTC reversed the decision of the MTC holding that the title of Dominador over Lot 7226 cannot be collaterally attacked. It thus ordered respondents to turn over possession of the controverted lot to petitioner and to pay compensation for the use and occupation of the premises. The decretal portion thereof, provides: Wherefore, the Judgment, dated February 12, 2002, of the Municipal Trial Court of Minglanilla, Cebu, in Civil Case No. 392, is reversed. Defendants-appellees are directed to restore to plaintiff-appellant possession of Lot 7226 and the house thereon, and to pay plaintiff-appellant, beginning in August 2000, compensation for their use and occupation of the property in the amount of P500.00 a month. So ordered. 18 Meanwhile, the RTC granted petitioner's motion for execution pending appeal 19 which was opposed by the alleged nephew and nieces of Graciana in their motion for leave to intervene and to file an answer in intervention. 20 They contended that as heirs of Graciana, they have a share in Lot 7226 and that intervention is necessary to protect their right over the property. In addition, they declared that as co-owners of the property, they are allowing respondents to stay in Lot 7226 until a formal partition of the property is made. The RTC denied the motion for leave to intervene. 21 It, however, recalled the order granting the execution pending appeal having lost jurisdiction over the case in view of the petition filed by respondents with the Court of Appeals. 22 On September 23, 2003, the Court of Appeals set aside the decision of the RTC and reinstated the judgment of the MTC. It ratiocinated that petitioner and the heirs of Graciana are co-owners of Lot 7226. As such, petitioner cannot eject respondents from the property via an unlawful detainer suit filed in his own name and as the sole owner of the property. Thus WHEEFORE, premises considered, the appealed Decision dated September 13, 2002 of the Regional Trial Court of Cebu City, Branch 7, in Civil Case No. CEB-27806 is REVERSED and

SET ASIDE, and the Judgment dated February 12, 2002 of the Municipal Trial Court of Minglanilla, Metro Cebu, in Civil Case No. 392 is REINSTATED. Costs against the respondent. SO ORDERED. 23 Petitioner's motion for reconsideration was denied. Hence, the instant petition. The decisive issue to be resolved is whether or not petitioner can validly maintain the instant case for ejectment. Petitioner averred that he is an acknowledged illegitimate son and the sole heir of Dominador. He in fact executed an affidavit adjudicating to himself the controverted property. In ruling for the petitioner, the RTC held that the questioned January 31, 1962 deed of sale validly transferred title to Dominador and that petitioner is his acknowledged illegitimate son who inherited ownership of the questioned lot. The Court notes, however, that the RTC lost sight of the fact that the theory of succession invoked by petitioner would end up proving that he is not the sole owner of Lot 7226. This is so because Dominador was survived not only by petitioner but also by his legal wife, Graciana, who died 10 years after the demise of Dominador on May 28, 1987. 24 By intestate succession, Graciana and petitioner became co-owners of Lot 7226. 25 The death of Graciana on May 6, 1997, did not make petitioner the absolute owner of Lot 7226 because the share of Graciana passed to her relatives by consanguinity and not to petitioner with whom she had no blood relations. The Court of Appeals thus correctly held that petitioner has no authority to institute the instant action as the sole owner of Lot 7226. HaIATC Petitioner contends that even granting that he has co-owners over Lot 7226, he can on his own file the instant case pursuant to Article 487 of the Civil Code which provides: ART. 487.Any one of the co-owners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession. Article 487 includes forcible entry and unlawful detainer (accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion). 26 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 presumed to have been filed to benefit his co-owners. It should be stressed, however, that where the suit is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession of the litigated property, the action should be dismissed. 27 The renowned civilist, Professor Arturo M. Tolentino, explained . . . A co-owner may bring such an action, without the necessity of joining all the other coowners 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) 28 In Baloloy v. Hular, 29 respondent filed a complaint for quieting of title claiming exclusive ownership of the property, but the evidence showed that respondent has co-owners over the

property. In dismissing the complaint for want of respondent's authority to file the case, the Court held that

Under Article 487 of the New Civil Code, any of the co-owners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession, including an accion publiciana and a reinvidicatory action. 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. Any judgment of the court in favor of the co-owner will benefit the others but if such judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-owners. If the action is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession thereof, the action will not prosper unless he impleads the other co-owners who are indispensable parties. In this case, the respondent alone filed the complaint, claiming sole ownership over the subject property and praying that he be declared the sole owner thereof. There is no proof that the other co-owners had waived their rights over the subject property or conveyed the same to the respondent or such co-owners were aware of the case in the trial court. The trial court rendered judgment declaring the respondent as the sole owner of the property and entitled to its possession, to the prejudice of the latter's siblings. Patently then, the decision of the trial court is erroneous. Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to implead his siblings, being co-owners of the property, as parties. The respondent failed to comply with the rule. It must, likewise, be stressed that the Republic of the Philippines is also an indispensable party as defendant because the respondent sought the nullification of OCT No. P-16540 which was issued based on Free Patent No. 384019. Unless the State is impleaded as party-defendant, any decision of the Court would not be binding on it. It has been held that the absence of an indispensable party in a case renders ineffective all the proceedings subsequent to the filing of the complaint including the judgment. The absence of the respondent's siblings, as parties, rendered all proceedings subsequent to the filing thereof, including the judgment of the court, ineffective for want of authority to act, not only as to the absent parties but even as to those present. 30 In the instant case, it is not disputed that petitioner brought the suit for unlawful detainer in his name alone and for his own benefit to the exclusion of the heirs of Graciana as he even executed an affidavit of self-adjudication over the disputed property. It is clear therefore that petitioner cannot validly maintain the instant action considering that he does not recognize the co-ownership that necessarily flows from his theory of succession to the property of his father, Dominador. In the same vein, there is no merit in petitioner's claim that he has the legal personality to file the present unlawful detainer suit because the ejectment of respondents would benefit not only him but also his alleged co-owners. However, petitioner forgets that he filed the instant case to acquire possession of the property and to recover damages. If granted, he alone will gain possession of the lot and benefit from the proceeds of the award of damages to the exclusion of the heirs of Graciana. Hence, petitioner cannot successfully capitalize on

the alleged benefit to his co-owners. Incidentally, it should be pointed out that in default of the said heirs of Graciana, whom petitioner labeled as "fictitious heirs," the State will inherit her share 31 and will thus be petitioner's co-owner entitled to possession and enjoyment of the property. SaAcHE The present controversy should be differentiated from the cases where the Court upheld the right of a co-owner to file a suit pursuant to Article 487 of the Civil Code. In Resuena v. Court of Appeals, 32 and Sering v. Plazo, 33 the co-owners who filed the ejectment case did not represent themselves as the exclusive owner of the property. In Celino v. Heirs of Alejo and Teresa Santiago, 34 the complaint for quieting of title was brought in behalf of the coowners precisely to recover lots owned in common. 35 Similarly in Vencilao v. Camarenta, et al., 36 the amended complaint specified that the plaintiff is one of the heirs who co-owns the controverted properties. In the foregoing cases, the plaintiff never disputed the existence of a co-ownership nor claimed to be the sole or exclusive owner of the litigated lot. A favorable decision therein would of course inure to the benefit not only of the plaintiff but to his co-owners as well. The instant case, however, presents an entirely different backdrop as petitioner vigorously asserted absolute and sole ownership of the questioned lot. In his complaint, petitioner made the following allegations, to wit: 3.The plaintiff was the only son (illegitimate) and sole heir of the late DOMINADOR ADLAWAN who died intestate on 28 May 1987 without any other descendant nor ascendant . ... xxx xxx xxx 5.Being the only child/descendant and, therefore, sole heir of the deceased Dominador Adlawan, the plaintiff became the absolute owner, and automatically took POSSESSION, of the aforementioned house and lot. . . (Emphasis added) 37 Clearly, the said cases find no application here because petitioner's action operates as a complete repudiation of the existence of co-ownership and not in representation or recognition thereof. Dismissal of the complaint is therefore proper. As noted by Former Supreme Court Associate Justice Edgrado L. Paras "[i]t is understood, of course, that the action [under Article 487 of the Civil Code] is being instituted for all. Hence, if the co-owner expressly states that he is bringing the case only for himself, the action should not be allowed to prosper." 38 Indeed, respondents' not less than four decade actual physical possession of the questioned ancestral house and lot deserves to be respected especially so that petitioner failed to show that he has the requisite personality and authority as co-owner to file the instant case. Justice dictates that respondents who are now in the twilight years of their life be granted possession of their ancestral property where their parents and siblings lived during their lifetime, and where they, will probably spend the remaining days of their life. WHEREFORE, the petition is DENIED. The September 23, 2003 Decision of the Court of Appeals in CA-G.R. SP No. 74921 which reinstated the February 12, 2002 Judgment of the

Municipal Trial Court of Minglanilla, Metro Cebu, dismissing petitioner's complaint in Civil Case No. 392, and its January 8, 2004 Resolution, are AFFIRMED. SO ORDERED. [G.R. No. 128338. March 28, 2005.] TINING RESUENA, ALEJANDRA GARAY, LORNA RESUENA, ELEUTERIO RESUENA, EUTIQUIA ROSARIO and UNISIMA RESUENA, petitioners, vs. HON. COURT OF APPEALS, 11th DIVISION and JUANITO BORROMEO, SR., respondents. DECISION TINGA, J p: This is a Rule 45 Petition for Review on Certiorari of the Decision 1 of the Court of Appeals affirming that of the Regional Trial Court (RTC) of Cebu, 2 which in turn reversed that of the Metropolitan Trial Court (mtc) of Talisay, Cebu. 3 The facts are as follows: Private respondent, the late Juanito Borromeo, Sr. 4 (hereinafter, respondent), is the coowner and overseer of certain parcels of land located in Pooc, Talisay, Cebu, designated as Lots Nos. 2587 and 2592 of the Talisay-Manglanilla Estate. Respondent owns six-eighths (6/8) of Lot No. 2587 while the late spouses Inocencio Bascon and Basilisa Maneja (Spouses Bascon) own two-eighths (2/8) thereof. On the other hand, Lot No. 2592 is owned in common by respondent and the heirs of one Nicolas Maneja. However, the proportion of their undivided shares was not determined a quo. Prior to the institution of the present action, petitioners Tining Resuena, Alejandra Garay, Lorna Resuena, Eleuterio Resuena, and Unisima Resuena resided in the upper portion of Lot No. 2587, allegedly under the acquiescence of the Spouses Bascon and their heir, Andres Bascon. On the other hand, petitioner Eutiquia Rosario occupied a portion of Lot No. 2592, allegedly with the permission of the heirs of Nicolas Maneja, one of the original co-owners of Lot No. 2587. Respondent claims that all petitioners have occupied portions of the subject property by virtue of his own liberality. Respondent developed portions of Lots Nos. 2587 and 2592 occupied by him into a resort known as the Borromeo Beach Resort. In his desire to expand and extend the facilities of the resort that he established on the subject properties, respondent demanded that petitioners vacate the property. Petitioners, however, refused to vacate their homes. On 16 February 1994, respondent filed a Complaint 5 for ejectment with the MTC against the petitioners. After a summary proceeding, the MTC, in a Decision 6 dated 10 October 1994, found that Lots Nos. 2587 and 2592 were owned in common by respondent with other persons. The MTC ruled that respondent did not have a preferential right of possession over the portions occupied by petitioners, since Lots Nos. 2587 and 2592 were not yet partitioned nor the disputed portions assigned to respondent as his determinate share. Thus, the MTC

held that respondent had no right to evict petitioners therefrom. Consequently, respondent's Complaint was dismissed. SIHCDA Notably, the MTC held that respondent and the spouses Bascon were the owners in common of Lot No. 2587 and their respective shares had not yet been determined by partition as proven by a testimony given by respondent in Civil Case No. R-14600, viz: Q.And the participation there of Inocencio Bascon is 2/8 of the said parcel of land? A.Yes sir. Q.And until the present that parcel of land is undivided? A.It is not yet partitioned, but during the time of Basilisa Maneja we had already made some indications of the portions that we came to occupy. Q.That is the parcel of land where you have your beach resort? A.Yes, sir; and that was our agreement, verbally, that with respect to the portion of the land towards the sea-shore it will be my share and that portion of the land towards the upper part will be theirs." 7 On appeal, the RTC reversed the Decision of the MTC. It held that Article 487 of the Civil Code, which allows any one of the co-owners to bring an action in ejectment, may successfully be invoked by the respondent because, in a sense, a co-owner is the owner and possessor of the whole, and that the suit for ejectment is deemed to be instituted for the benefit of all co-owners. 8 The RTC also ruled that assuming petitioners were authorized to occupy a portion of the co-owned property, they could resume this occupation when the properties shall have been partitioned and allocated to the ones who gave them permission to reside therein. It thus held: WHEREFORE, judgment of the lower court is hereby reversed and the defendants are hereby directed to vacate the premises in question without prejudice to their going back to the land after partition shall have been effected by the coheirs and/or co-owners among themselves but to the specific portion or portions adjudicated to the person or persons who allegedly authorized them to occupy their portions by tolerance. 9 The Court of Appeals affirmed the Decision of the RTC; hence, this petition which involves the following assignment of errors: 10 1.That with grave abuse of discretion, amounting to excess of jurisdiction, the Honorable Eleventh Division of the Court of Appeals erred in NOT APPLYING and/or in NOT DECLARING private respondent Juanito Borromeo estopped in filing this ejectment case against the herein six (6) petitioners. 2.That with grave abuse of discretion, the Honorable Eleventh Division of the Court of Appeals erred in incorrectly applying the statute of frauds, considering that the verbal agreement entered into by and between spouses Inocencio Bascon and Basilisa Maneja on

the one hand and Juanito Borromeo on the other more than twenty (20) years ago today, was already an EXECUTED CONTRACT. 3.That with grave abuse of discretion, amounting to excess of jurisdiction, the Honorable Eleventh Division of the Court of Appeals erred in ignoring outright article 493 of the new Civil Code of the Philippines, considering that the six (6) petitioners are only ASSIGNEES, pure and simple, of co-owners spouses Ignacio Bascon and Basilisa Maneja and/or Andres Bascon, the adopted son of the said spouses. aITECD 4.That granting arguendo that the herein six (6) petitioners have to be ejected, the Eleventh Division of the Court of Appeals erred in NOT remanding this case to the court of origin for the reception of evidence for damages, pursuant to and in accordance with Art. 546, new Civil Code. The petition cannot prosper. At the outset it must be stated that petitioners ground their petition on respondent's testimony in Civil Case No. R-14600 that he had agreed with co-owner, Basilisa Maneja, on the portions they each were to occupy in Lot No. 2587 prior to the partition of the property. However, respondent's testimony and, consequently, the agreement alluded to therein pertains solely to Lot No. 2587 which, admittedly, all of petitioners occupy, save for Eutiquia Rosario who occupies Lot No. 2592. No argument was presented in this petition as regards the latter's claim. Having no basis to review Eutiquia Rosario's claim to be allowed to continue in her occupation of Lot No. 2592, this Court maintains the holding of the RTC on this matter, as affirmed by the Court of Appeals, that respondent has the right to eject petitioner Eutiquia Rosario from Lot No. 2592. With regard to the other five (5) petitioners, the Court notes that their first three assignments of errors are interrelated and built on each other. Petitioners allege that respondent's testimony in Civil Case No. R-14600, expressing that the upper two-eighths (2/8) portion of Lot No. 2587 would be occupied by Basilisa Maneja, constituting as it does a waiver of said portion, has estopped respondent from claiming the portion. Basilisa Maneja and her husband allegedly relied on this agreement when the spouses assigned the upper portion of Lot No. 2587 to petitioners. Moreover, petitioners claim that their occupation of the upper portion of Lot No. 2587 had consummated the verbal agreement between respondent and Basilisa Maneja and brought agreement beyond the purview of the Statute of Frauds. A careful perusal of the foregoing issues reveals that petitioners assumed the following as proven facts: (1) respondent had indicated to Basilisa Maneja the portions they were to occupy in Lot No. 2587; and (2) the Spouses Bascon assigned to petitioners their portions of Lot No. 2587. By claiming these as the bases for their assignment of errors, petitioners in essence are raising questions of fact. 11 The issues raised by petitioners on the application of estoppel, statute of frauds, and the assignment of properties owned in common in their favor, while ostensibly raising questions of law, invite this Court to rule on questions of fact. This runs counter to the settled rule that

only questions of law may be raised in a petition for review before the Court and the same must be distinctly set forth. 12 It is not the function of this Court to weigh anew the evidence already passed upon by the Court of Appeals for such evidence is deemed final and conclusive and may not be reviewed on appeal. A departure from the general rule may be warranted, among others, where the findings of fact of the Court of Appeals are contrary to the findings and conclusions of the trial court, or when the same is unsupported by the evidence on record. 13 In the instant case, the RTC and the Court of Appeals rendered judgment merely on questions of law as applied to the facts as determined by the MTC. Consequently this Court must proceed on the same set of facts without assuming, as petitioners have done, the veracity of claims which have been considered, but not accepted as facts, by the courts below. Guided by the foregoing, this Court finds in this case that filtered of the muddle from petitioners' assignment of errors, it is unmistakable that respondent has a right to eject the petitioners from Lot No. 2587. DaAETS Article 487 of the Civil Code, which provides simply that "[a]ny one of the co-owners may bring an action in ejectment," is a categorical and an unqualified authority in favor of respondent to evict petitioners from the portions of Lot No. 2587.

This provision is a departure from Palarca v. Baguisi, 14 which held that an action for ejectment must be brought by all the co-owners. Thus, a co-owner may bring an action to exercise and protect the rights of all. When the action is brought by one co-owner for the benefit of all, a favorable decision will benefit them; but an adverse decision cannot prejudice their rights. 15 Respondent's action for ejectment against petitioners is deemed to be instituted for the benefit of all co-owners of the property 16 since petitioners were not able to prove that they are authorized to occupy the same. Petitioners' lack of authority to occupy the properties, coupled with respondent's right under Article 487, clearly settles respondent's prerogative to eject petitioners from Lot No. 2587. Time and again, this Court has ruled that persons who occupy the land of another at the latter's tolerance or permission, without any contract between them, are necessarily bound by an implied promise that they will vacate the same upon demand, failing in which a summary action for ejectment is the proper remedy against them. 17 Petitioners pose the strange claim that respondent had estopped himself from filing an ejectment case against petitioners by his aforequoted testimony in Civil Case No. R-14600. Such testimony is irrelevant to the case at bar, as it does nothing to strengthen the claim of petitioners that they had a right to occupy the properties. This testimony merely indicates that there might have been an agreement between the Spouses Bascon and Borromeo as to which of them would occupy what portion of Lot No. 2587. Yet this averment hardly

establishes a definitive partition, or moreover, any right of petitioners to dwell in any portion of Lot No. 2587. Besides, "[e]stoppel is effective only as between the parties thereto or their successors in interest;" thus, only the spouses Bascon or their successors in interest may invoke such "estoppel." A stranger to a transaction is neither bound by, nor in a position to take advantage of, an estoppel arising therefrom. 18 For the same reason, it is of no moment whether indeed, as petitioners claim, there was a verbal contract between Basilisa Maneja and Borromeo when the latter indicated the portions they each were to occupy in Lot No. 2587. Such verbal contract, assuming there was one, does not detract from the fact that the common ownership over Lot No. 2587 remained inchoate and undivided, thus casting doubt and rendering purely speculative any claim that the Spouses Bascon somehow had the capacity to assign or transmit determinate portions of the property to petitioners. Thus, in order that the petition may acquire any whiff of merit, petitioners are obliged to establish a legal basis for their continued occupancy of the properties. The mere tolerance of one of the co-owners, assuming that there was such, does not suffice to establish such right. Tolerance in itself does not bear any legal fruit, and it can easily be supplanted by a sudden change of heart on the part of the owner. Petitioners have not adduced any convincing evidence that they have somehow become successors-in-interest of the Spouses Bascon, or any of the owners of Lot No. 2587. Indeed, there is no writing presented to evidence any claim of ownership or right to occupancy to the subject properties. There is no lease contract that would vest on petitioners the right to stay on the property. As discussed by the Court of Appeals, 19 Article 1358 of the Civil Code provides that acts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property must appear in a public instrument. How then can this Court accept the claim of petitioners that they have a right to stay on the subject properties, absent any document which indubitably establishes such right? Assuming that there was any verbal agreement between petitioners and any of the owners of the subject lots, Article 1358 grants a coercive power to the parties by which they can reciprocally compel the documentation of the agreement. 20 Thus, the appellate court correctly appreciated the absence of any document or any occupancy right of petitioners as a negation of their claim that they were allowed by the Spouses Bascon to construct their houses thereon and to stay thereon until further notice. On this note, this Court will no longer belabor petitioners' allegation that their occupation of Lot No. 2587 is justified pursuant to the alleged but unproven permission of the Spouses Bascon. CTacSE All six (6) petitioners claim the right to be reimbursed "necessary expenses" for the cost of constructing their houses in accordance with Article 546 of the Civil Code. 21 It is wellsettled that while the Article allows full reimbursement of useful improvements and retention of the premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof. Verily, persons whose occupation of a realty is by sheer tolerance of its owners are not possessors in good faith. 22

The lower courts have made a common factual finding that petitioners are occupying portions of Lots No. 2587 and 2592 by mere tolerance. Thus, petitioners have no right to get reimbursed for the expenses they incurred in erecting their houses thereon. WHEREFORE, premises considered, the Petition is DENIED and the Decision of the Court of Appeals AFFIRMED. Costs against petitioners. SO ORDERED.

[G.R. No. 102900. October 2, 1997.] MARCELINO ARCELONA, TOMASA ARCELONA-CHIANG and RUTH ARCELONA, represented by their attorney-in-fact, ERLINDA PILE, petitioners, vs. COURT OF APPEALS, REGIONAL TRIAL COURT OF DAGUPAN CITY, Branch XL, and MOISES FARNACIO, respondents. Tumangan, Nagrampa & Partners for petitioners. Millora & Maningding Law Offices for private respondents. SYNOPSIS Private respondent filed an action for peaceful possession, maintenance of security of tenure and damages against three fishpond co-owners Pacita Arcelona-Olanday, Maria ArcelonaArellano and Natividad Arcelona-Cruz. Three other co-owners petitioners herein, are naturalized Americans, residing in California, USA. Judgment was rendered by the trial declaring private respondent as tenant-caretaker, which was affirmed by the IAC and the Supreme Court. Subsequently, petitioners filed a petition for annulment of said judgment with the Court of Appeals claiming that the lower court did not acquire jurisdiction over their persons. They claimed that being co-owners, they should all be impleaded as indispensable parties. The Court of Appeals rendered judgment dismissing the petition on the ground of petitioners' failure to allege the sole and only ground of extrinsic fraud in their petition for annulment of judgment. TADCSE The Supreme Court ruled that the Court of Appeals erred in limiting the ground for annulment of judgment to extrinsic fraud, there being two other grounds available, namely, a petition for relief from judgment under Rule 38 of the Rules of Court, and a direct action as certiorari, or a collateral attack, to annul a judgment that is void upon its face or void by virtue of its own recitals. Co-owners in an action for the security of tenure of a tenant are encompassed within the definition of indispensable parties thus, all of them must be impleaded. SYLLABUS 1.REMEDIAL LAW; ACTIONS; ANNULMENT OF JUDGMENT; GROUNDS. While it is true that in the cited cases of Canlas vs. CA, and Islamic Da' Wah Council of the Philippines vs. Court of

Appeals, this Court said that a judgment "may be annulled on the ground of extrinsic or collateral fraud," we should hasten to add that in Macabingkil vs. People's Homesite and Housing Corporation, where the above ruling on annulment of judgment was based, we held that there are really three ways by which a final judgment may be attacked: first, a petition for relief from judgment under Rule 38 of the Rules of Court on grounds of fraud, accident, mistake and excusable negligence filed within sixty (60) days from the time petitioner learns of the judgment but not more than six (6) months from the entry thereof; second, a direct action to annul the judgment on the ground of extrinsic fraud; and third, a direct action for certiorari or collateral attack to annul a judgment that is void upon its face or void by virtue of its own recitals. Thus, Macabingkil did not preclude the setting aside of a decision that is patently void where mere inspection of the judgment is enough to demonstrate its nullity on grounds of want of jurisdiction or non-compliance with the due process of law. 2.ID.; JURISDICTION; ITS EXERCISE MUST STRICTLY COMPLY WITH LEGAL REQUISITES. Jurisdiction is conferred by law. Its exercise must strictly comply with the legal requisites; otherwise, a challenge on the ground of lack of jurisdiction may be brought up anytime. Such jurisdiction normally refers to jurisdiction over the subject. Ineluctably, a judgment rendered without jurisdiction over the subject matter is void. (Leonor vs. CA, 256 SCRA 69, April 2, 1996). 3.ID.; ID.; AS A RULE, IF A DEFENDANT HAS NOT BEEN SUMMONED, THE COURT ACQUIRES NO JURISDICTION OVER HIS PERSON AND THE JUDGMENT RENDERED AGAINST HIM IS NULL AND VOID. Courts acquire jurisdiction over a party plaintiff upon the filing of the complaint. On the other hand, jurisdiction over the person of a party defendant is assured upon the service of summons in the manner required by law or otherwise by his voluntary appearance. As a rule, if a defendant has not been summoned, the court acquires no jurisdiction over his person. and a personal judgment rendered against such defendant is null and void. A decision that is null and void for want of jurisdiction on the part of the trial court is not a decision in the contemplation of law and, hence, it can never become final .and executory. 4.ID.; ACTIONS; PARTIES IN CIVIL ACTION; INDISPENSABLE PARTIES; THEIR JOINDER IS A SINE QUA NON FOR THE EXERCISE OF JUDICIAL POWER. Rule 3, Section 7 of the Rules of Court, defines indispensable parties as parties-in-interest without whom there can be no final determination of an action. As such, they must be joined either as plaintiffs or as defendants. The general rule with reference to the making of parties in a civil action requires, of course, the joinder of all necessary parties where possible, and the joinder of all indispensable parties under any and all conditions, their presence being a sine qua non for the exercise of judicial power. It is precisely "when an indispensable party is not before the court (that) the action should be dismissed." The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as those present. 5.ID.; ID.; ID.; CASE AT BAR. Petitioners' are co-owner of a fishpond. Private respondent does not deny this fact, and the Court of Appeals did not make any contrary finding. The fishpond is undivided; it is impossible to pinpoint which specific portion of the property is owned by Olanday, et al. and which portion belongs to petitioners. Thus, it is not possible to show over which portion the tenancy relation of private respondent has been established

and ruled upon in Civil Case D-7240. Indeed, petitioners should have been properly impleaded as indispensable parties. Servicewide Specialists, Incorporated vs. Court of Appeals held that no final determination of a case could be made if an indispensable party is not impleaded. 6.CIVIL LAW; PROPERTY,; CO-OWNERSHIP; A CO-OWNER CANNOT MAINTAIN AN ACTION IN EJECTMENT WITHOUT JOINING ALL THE OTHER CO-OWNERS. Formerly, Article 487 of the old Civil Code provided that "any one of the co-owners may bring an action in ejectment." It was subsequently held that a co-owner could not maintain an action in ejectment without joining all the other co-owners. 7.REMEDIAL LAW; ACTIONS; INDISPENSABLE PARTIES; ALL CO-OWNERS IN AN ACTION FOR SECURITY OF TENURE OF A TENANT MUST BE IMPLEADED. It is logical that a tenant, in an action to establish his status as such, must implead all the pro-indiviso co-owners; in failing to do so, there can be no final determination of the action. In other words, a tenant who fails to implead all the co-owners cannot establish with finality his tenancy over the entire coowned land. Co-owners in an action for the security of tenure of a tenant are encompassed within the definition of indispensable parties; thus all of them must be impleaded. 8.ID.; ID.; ID.; FAILURE TO IMPLEAD ALL CO-OWNERS BARRED THE LOWER COURT FROM MAKING A FINAL ADJUDICATION. The decision in Civil Case D-7240 cannot adjudicate the entire co-owned property, not even that portion belonging to Olanday et al., ownership of the property being still pro-indiviso. Obviously, the failure to implead petitioners barred the lower court from making a final adjudication. Without the presence of indispensable parties to a suit or proceeding, a judgment therein cannot attain finality Ergo, res inter alios judicatae nullum aliis praejudicarium faciunt. Thus, the Court, through former Chief Justice Marcelo B Fernan, held that a person who was not impleaded in the complaint cannot be bound by the decision rendered therein, for no man shall be affected by a proceeding in which he is a stranger. 9.ID.; ID.; APPEAL; REVIEW OF CIVIL CASES IS CONFINED ONLY TO ISSUES RAISED. BY THE PARTIES. The review of civil cases by appellate courts is confined only to the issues raised by the parties. Hence, appellate courts do not have the privilege or the opportunity afforded the trial courts to consider matters beyond the specifically contested issues, e.g., jurisdiction over indispensable parties, as in this case. Such lack of jurisdiction could not have been known by the appellate courts, including this Court, as it was not patent from the documents or submissions filed before them. 10.ID.; EVIDENCE; FINDINGS OF FACT OF THE TRIAL COURT, GENERALLY UPHELD ON APPEAL; CASE AT BAR, AN EXCEPTION. Whether the indispensable parties were actually impleaded and jurisdiction over them was acquired was a factual question for the trial court to determine. Consistent with the basic doctrine that factual findings of lower courts are binding on appellate courts unless covered by the recognized exceptions, appellate courts must be able to rely on the implied affirmation of the trial court that jurisdiction had been acquired over indispensable parties, especially when this was not raised as an issue on appeal. The responsibility for impleading indispensable parties for the exhaustive trial of a case cannot rest on this forum or on the then Intermediate Appellate Court. Indeed, the Decision of this Court affirming the said trial court's decision is captioned only as "Pacita A.

Olanday, Maria A. Arellano and Natividad A. Cruz, petitioners, vs. Intermediate Appellate Court and Moises Farnacio, respondents," clearly indicating that petitioners herein had been omitted as indispensable parties in the proceedings before the trial court and before the appellate tribunals. Substantial justice requires that this error be now rectified. 11.ID.; ANNULMENT OF JUDGMENT; VALIDITY OR NULLITY OF DECISION FOR LACK OF JURISDICTION MUST STAND OR FALL ON ITS OWN FACE AND THE EVIDENCE ON RECORD. As correctly put by petitioners, we hold that Respondent Court of Appeals, in deciding the petition to declare the judgment void, cannot consider extraneous matters to vary what the records bear. In other words, the Court of Appeals cannot annul or declare null the assailed decision with such extraneous matters. The validity or nullity of the said decision must stand or fall on its own face and the evidence on record. In an action to declare a judgment void because of lack of jurisdiction over the parties or subject matter, only evidence found in the records of the case can justify the annulment of the said judgment. Contrariwise, the nullity of the judgment due to lack of jurisdiction may be proved at most by the evidence on record but never by extraneous evidence. The rule is that the nullity of the decision arising from want of jurisdiction and/or due process should appear from the records of the case. And the validity of the judgment cannot be anchored on mere suppositions or speculations, as Respondent Court did.

12.ID.; ID.; EXTRANEOUS EVIDENCE ADMITTED WHERE GROUND IS EXTRINSIC FRAUD. We should add, however, that where an action for annulment of judgment is grounded on extrinsic fraud, extraneous evidence is admitted. We have held that, although a person need not be a party to the judgment sought to be annulled by reason of extrinsic fraud, he must prove his allegation that the judgment was obtained by the use of fraud and collusion and that he would be adversely affected thereby. Fraud must be extraneous; otherwise, there would be no end to litigation. Extrinsic fraud refers to any fraudulent act committed by a prevailing party outside the trial of the case, whereby the defeated party has been prevented from fully exhibiting his side of the case, because of fraud or deception practiced on him by his opponent. 13.ID.; ID.; ESTOPPEL AND LACHES; SILENCE OF PETITIONERS EXPLAINED BY THE FACT THAT THEY WERE NOT IN THE COUNTRY DURING THE PENDENCY OF THE CIVIL CASE. Equally important, the finding of estoppel and laches by Respondent Court is not supported by the evidence on record. The silence of petitioners can easily be explained by the fact that they were not in the country during the pendency of the subject civil case. Such absence from the country was never rebutted by private respondent. Even in the proceedings antecedent to this case before us now, petitioners were merely represented by their attorney-in-fact. Moreover, they were not at all impleaded as parties in the judgment sought to be voided. Neither were they properly served summons. The indelible fact is that they were completely ignored. 14.ID.; ID.; LACHES; DOES NOT ATTACH WHERE JUDGMENT IS NULL AND VOID. In any event, we ruled in Alabang Development Corporation vs. Valenzuela that no laches attach when the judgment is null and void for want of jurisdiction.

15.ID.; ID.; ESTOPPEL; REQUISITES. In Cruz vs. Court of Appeals, we reiterated the requisites of estoppel: (a) lack of knowledge and of the means of knowledge of the truth as the facts in question; (b) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (c) action or inaction based thereon of such character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice." 16.ID.; ID.; ID.; PARTY WITHOUT KNOWLEDGE OF PENDING TENANCY CASE CANNOT BE SUBJECT TO ESTOPPEL. The herein facts ineluctably show the absence of the first element in this case. Inasmuch as there is no proof that petitioners had knowledge of the pending tenancy case filed by private respondent, it is only fair that they should not be held in estoppel for failing to intervene in and to question the jurisdiction of the trial court in Civil Case No. D-7240. Thus private respondent may not say that he was misled into believing that petitioners knew of the lease contract and of the litigation of Civil Case No. D-7240. Undisputedly, from the evidence on record, petitioners had no such knowledge. 17.ID.; ID.; APPEALS; ISSUES CAN NOT BE RAISED FOR THE FIRST TIME ON APPEAL. Petitioners' receipt of lease rentals cannot be used as proof of recognition of private respondent as a caretaker-tenant. This issue was not raised in the lower court and is being alleged for the first time before us. Well-settled is the doctrine that questions not raised in the lower courts cannot be raised for the first time on appeal. EAISDH DECISION PANGANIBAN, J p: What are the remedies and the grounds therefor to invalidate a final and executory judgment? May extraneous matters, not found in the records of the original case, be used to void such final judgment? Procedurally, may an independent action for annulment of a decision filed in the Court of Appeals prosper in the face of a claim that the remedy of intervention could have been availed of in the regional trial court during the original proceedings? Are all the co-owners pro-indiviso of a real property indispensable parties? Does the non-inclusion of some of such co-owners in a suit involving tenancy over said property constitute sufficient ground to nullify the final decision rendered in such case? The Case These are the main questions raised in this petition for review of the Decision 1 in CA G.R. SP No. 24846 promulgated on July 16, 1991 by the Court of Appeals 2 denying petitioners' plea for annulment of a final and executory judgment rendered by the Regional Trial Court of Dagupan City, Branch 40, in Civil Case No. D-7240, and the Resolution 3 promulgated on November 21, 1991 by the appellate court denying their motion for on reconsideration. The Facts Petitioners Marcelino Arcelona, Tomasa Arcelona-Chiang and Ruth Arcelona are natural-born Filipinos who are now naturalized Americans residing in California, U.S.A. Petitioner Ruth Arcelona is the surviving spouse and legal heir of the deceased Benedicto Arcelona, brother of Marcelino and Tomasa. Together with their three sisters Pacita Arcelona-Olanday, Maria

Arcelona-Arellano and Natividad Arcelona-Cruz (hereinafter collectively referred to as Olanday, et al.) petitioners are co-owners pro-indiviso of a fishpond which they inherited from their deceased parents. 4 The six Arcelonas (two brothers and four sisters) are named as co-owners in Transfer Certificate of Title No. 34341 which evidences ownership over the fishpond. On March 4, 1978, a contract of lease over the fishpond was executed between Cipriano Tandoc and Olanday, et al. The lease contract was for a period of three (3) years but was renewed up to February 2, 1984 5 Private Respondent Moises Farnacio was appointed in turn by Tandoc as caretaker-tenant of the same fishpond, effective on the date the contract of lease was executed. After the termination of the lease contract, the lessee (Tandoc) surrendered possession of the leased premises to the lessors, Olanday, et al. Three days thereafter, on February 7, 1984, Private Respondent Farnacio instituted Civil Case D-7240 for "peaceful possession, maintenance of security of tenure plus damages, with motion for the issuance of an interlocutory order" against Olanday, et al., before Respondent Regional Trial Court of Dagupan City, Branch 40. The case was intended to maintain private respondent as tenant of the fishpond. 6 On October 31, 1984, the trial court rendered a decision in favor of private respondent, the dispositive portion of which reads: 7 "WHEREFORE, in the light of the foregoing considerations, this Court hereby renders judgment as follows; to wit: 1.Declaring and recognizing Moises Farnacio as tenant-caretaker over the fishpond in question located at Lomboy District, Dagupan City; 2.Ordering the defendants to maintain plaintiff in the peaceful possession and cultivation of said fishpond, with all the rights accorded and obligations imposed upon him by law; 3.Ordering the Branch Clerk of Court to withdraw and deliver to the plaintiff all the amounts deposited with this Court; and 4.All others claims of the parties are hereby denied for lack of merit." Olanday, et al. elevated the decision to the then Intermediate Appellate Court (IAC) 8 which affirmed with slight modification the decision of the trial court on May 31, 1985. On appeal, this Court 9 sustained the IAC decision in G.R. No. 71217. On May 25, 1991, after remand of the case to the court of origin, private respondent was placed in possession of the entire property covered by TCT 34341. Petitioners then filed with Respondent Court of Appeals a petition for annulment of the aforesaid judgment against private respondent and the implementing sheriff. 10 The case was docketed as CA GR SP No. 24846. On May 8, 1991, Respondent Court issued a resolution directing petitioners "to implead as party defendant the Regional Trial Court of

Dagupan City, Branch 50, Dagupan City." 11 Respondent Court promulgated in due course the assailed Decision and Resolution. Dissatisfied, petitioners lodged this petition for review before us on May 10, 1992. On August 24, 1992, due course was granted to the petition, and the parties filed their respective memoranda. The Issues In their Memorandum dated November 7, 1992, petitioners allege that Respondent Court of Appeals has committed the following errors: 12 "I.The Respondent Court of Appeals erred in ruling that the sole and only ground for annulment of judgment is extrinsic fraud. II.The Respondent Court of Appeals erred when it failed to consider that lack of due process and jurisdiction over the persons of the petitioners are also valid grounds for annulment of judgment. III.In annulment of judgment the grounds should be based solely on the records of the case. It is then an error for the Respondent Court of Appeals to consider matters extraneous to the records of the case. IV.The Respondent Court of Appeals erred in ruling that petitioners should have intervened in the proceedings for issuance of writ of execution before the lower court. V.The Respondent Court of Appeals erred in ruling that the petitioners are estopped or are guilty of laches in questioning the decision of the lower court." The Court believes that these five assigned errors may be condensed into three issues: (1)May a final judgment be annulled on the ground of lack of jurisdiction (over the subject matter and/or over the person of indispensable parties) and denial of due process, aside from extrinsic fraud? (2)May extraneous matters, not found in the records of the original case, be used in voiding or defending the validity of such final judgment? (3)Procedurally, will an independent action for annulment of the decision of the regional trial court (which was affirmed both by the Court of Appeals and the Supreme Court) filed before the Court of Appeals prosper, or is intervention before the court of origin the only remedy? The Court's Ruling The petition is meritorious.

First Issue: Grounds for Annulment of Final Judgment Petitioners contend that Respondent Court of Appeals erred in decreeing "the all-sweeping and categorical pronouncement that the sole and only ground for annulment of judgment is extrinsic fraud," and in thereby ignoring various Supreme Court rulings that a final judgment may also be annulled for "a) lack of jurisdiction over the subject matter; b) lack of jurisdiction over the persons of necessary or indispensable parties; and c) lack of due process." 13 Petitioners argue that, being co-owners of the subject property, they are "indispensable parties." 14 Inasmuch as they were not impleaded in Civil Case D-7240, "the questioned judgment of the lower court is void insofar as the petitioners are concerned for want of jurisdiction over their persons and [for] lack of due process." 15 Petitioners "do not see any reason why a person who was not made a party at all could not assail the same proceedings involving his property and affecting his rights and interests." 16 Petitioners further maintain that since "the case involves the personal status of the private respondent, or relates to, or the subject of which is property within the Philippines, then the petitioners as non-residents" are entitled to extra-territorial service, 17 which is a "due process requirement." As they were never served with summons, to "bar them [from] questioning the proceedings of the lower court will be compounding injustice . . . If a party to a case can assail the proceedings for defective service of summons," the same right should be afforded to a person who was not made a party at all. 18 Public respondent disposed of petitioners' above contention in this wise: 19 "First. Annulment of judgment, as the Supreme Court had occasion to rule, rests on a single ground: extrinsic fraud (Canlas vs. Court of Appeals, 170 [sic] SCRA 160, 170). Islamic Da' Wah Council of the Phils. vs. Court of Appeals, 178, 186, citing Anuran vs. Aquino, 38 Phil. 29, emphatically announced that there can be no question as to the right of any person adversely affected by a judgment to maintain an action to enjoin its enforcement and to have it declared a nullity on the ground of fraud and collusion practiced in obtaining the judgment when such fraud is extrinsic or collateral to the matters involved in the issues raised at the trial which resulted in such judgment. cdtai xxx xxx xxx Clearly, there is nothing in the petition that extrinsic fraud, as Macabingkil defines it, indeed vitiated the proceedings during the trial of Civil Case No. D-7240. The essence of the instant petition is worded by the petitioners as follows: 'The common property involved in this case is covered by a Torrens Title, specifically mentioning the co-owners thereof. To bind the entire property and the owners thereof, all the registered owners must be impleaded. The private respondent ONLY IMPLEADED the three co-owners, excluding the petitioners herein. For the petitioners to be bound by the questioned decision, such would really be a derogation of their constitutional right to due process. The questioned decision, too, suffers the fatal defect of utter want of jurisdiction.

Accordingly, since the petition for annulment of judgment is not based on the ground of extrinsic fraud, the petition suffers from a basic and fundamental infirmity that deprives petitioners of a valid cause of action against respondents herein " We hold that the Court of Appeals erred in limiting the ground(s) for annulment of judgment to only one, namely, extrinsic fraud. While it is true that in the cited cases of Canlas vs. CA 20 and Islamic Da' Wah Council of the Philippines. vs. Court of Appeals, 21 this Court said that a judgment "may be annulled on the ground of extrinsic or collateral fraud," 22 we should hasten to add that in Macabingkil vs. People's Homesite and Housing Corporation, 23 where the above ruling on annulment of judgment was based, we held that there are really three ways by which a final judgment may be attacked: 24 "Under existing rules, there are three (3) ways by which a final and executory judgment may be set aside. The first is by petition for relief from judgment under Rule 38 of the Revised Rules of Court, when judgment has been taken against the party through fraud, accident, mistake or excusable negligence, in which case the petition must be filed within sixty (60) days after the petitioner learns of the judgment, but not more than six (6) months after such judgment was entered. The second is by direct action to annul and enjoin the enforcement of the judgment. This remedy presupposes that the challenged judgment is not void upon its face, but is entirely regular in form, and the alleged defect is one which is not apparent upon its face or from the recitals contained in the judgment. [fn: Abbain v. Chua, 22 SCRA 798; Cadano v. Cadano, 49 SCRA 33; Anuran v. Aquino, 38 Phil. 329] As explained in Banco Espaol-Filipino v. Palanca, [fn: 37 Phil. 291, 949] 'under accepted principles of law and practice, long recognized in American courts, the proper remedy in such case, after the time for appeal or review has passed, is for the aggrieved party to bring an action enjoining the judgment, if not already carried into effect; or if the property has already been disposed of, he may institute suit to recover it.' The third is either a direct action, as certiorari, or by a collateral attack against the challenged judgment (which is) is void upon its face, or that the nullity of the judgment is apparent by virtue of its own recitals. As aptly explained by Justice Malcolm in his dissent in Banco Espaol-Filipino v. Palanca, supra, 'A judgment which is void upon its face, and which requires only an inspection of the judgment roll to demonstrate its want of vitality is a dead limb upon the judicial tree, which should be lopped off, if the power so to do exists.' Since the aforementioned decision in Civil Case No. Q-5866 is not void upon its face, it may only be annulled by direct action on the ground of fraud. It is only extrinsic or collateral fraud, as distinguished from intrinsic fraud, however, that can serve as a basis for the annulment of judgment. [Aring v. Original, 6 SCRA 1021, 1025; Velasco v. Velasco, 2 SCRA 736] Fraud has been regarded as extrinsic or collateral, within the meaning of the rule, 'where it is one the effect of which prevents a party from having a trial, or real contest, or from presenting all of his case to the court, or where it operates upon matters pertaining, not to the judgment itself, but to the manner in which it was procured so that there is not a fair submission of the controversy.'[46 Am. Jur. 913] . . ." It is clear then that to set aside a final and executory judgment, there are three remedies available to a litigant: first, a petition for relief from judgment under Rule 38 of the Rules of Court 25 on grounds of fraud, accident, mistake and excusable negligence filed within sixty

(60) days from the time petitioner learns of the judgment but not more than six (6) months from the entry thereof; second, a direct action to annul the judgment on the ground of extrinsic fraud; and third a direct action for certiorari or collateral attack to annul a judgment that is void upon its face or void by virtue of its own recitals. Thus, Macabingkil did not preclude the setting aside of a decision that is patently void where mere inspection of the judgment is enough to demonstrate its nullity on grounds of want of jurisdiction or noncompliance with due process of law. This doctrine is recognized in other cases: 26 ". . . There is no question that a final judgment may be annulled. There are, however, certain requisites which must be established before a judgment can be the subject of an action for annulment 'Under the present procedure, aside from the reliefs provided in these two sections (Secs. 1 & 2, Rule 38), there is no other means whereby the defeated party may procure final and executory judgment to be set aside with a view to the renewal of the litigation, unless (a) the judgment is void for want of jurisdiction or for lack of due process of law, or (b) it has been obtained by fraud.' (I Moran's Rules of Court 1950 Ed., p. 697, citing Anuran v. Aquino, 38 Phil. 29; Banco Espaol-Filipino v. Palanca, 37 Phil. 921). Reason of public policy which favors the stability of judicial decisions are (sic) mute in the presence of fraud which the law abhors (Garchitorena vs. Sotelo, 74 Phil. 25)." On the one hand, extrinsic fraud is the ground to annul a voidable final judgment; the declaration of nullity of a patently void final judgment, on the other, is based on grounds other than extrinsic fraud. To say, then, that petitioners can avail themselves only of the ground of extrinsic fraud and no other is to fail to appreciate the true meaning and ramifications of annulment/nullity. Jurisdiction is conferred by law. Its exercise must strictly comply with the legal requisites; otherwise, a challenge on the ground of lack of jurisdiction may be brought up anytime. Such jurisdiction normally refers to jurisdiction over the subject. As an example, in a case involving the issuance of a new owner's duplicate certificate of title, the original of which was lost, stolen or destroyed, the court must strictly comply with the requisites of Section 109 of P.D. 1529; otherwise, its jurisdiction may be attacked anytime. Thus, we ruled in New Durawood Co. Inc. vs. Court of Appeals: 27 "In Demetriou vs. Court of Appeals, et al., [238 SCRA 158, at 162 (November 14, 1994)] this Court ruled: 'In Serra Serra v. Court of Appeals (195 SCRA 482 [1991]), on facts analogous to those involved in this case, this Court already held that if a certificate of title has not been lost but is in fact in the possession of another person, the reconstituted title is void and the court rendering the decision has not acquired jurisdiction. Consequently the decision may be attacked any time.'

In the instant case, the owner's duplicate certificates of title were in the possession of Dy Quim Pong, the petitioner's chairman of the board and whose family controls the petitioner corporation. Since said certificates were not in fact 'lost or destroyed,' there was no necessity for the petition filed in the trial court for the 'Issuance of New Owner's Duplicate

Certificates of Title . . .,' In fact, the said court never acquired jurisdiction to order the issuance of new certificates. Hence, the newly issued duplicates are themselves null and void. It is obvious that this lapse happened because private respondents and respondent judge failed to follow the procedure set forth in P.D. No. 1529 which, as already stated, governs the issuance of new owner's duplicate certificates of title. Section 109 of the said law provides, inter alia, that 'due notice under oath' of the loss or theft of the owner's duplicate certificate 'shall be sent by the owner or by someone in his behalf to the Register of Deeds . . .' (emphasis supplied). In this case, while an affidavit of loss was attached to the petition in the lower court, no such notice was sent to the Register of Deeds. Private respondents tried to convince the Court that by their failure to locate Francis Dytiongsee, they had no other recourse but to file a petition for reconstitution. Sec. 107 of the P.D. 1529, however, states that the remedy, in case of the refusal or failure of the holder in this case, the petitioner to surrender the owner's duplicate certificate of title, is a 'petition in court to compel surrender of the same to the Register of Deeds,' and not a petition for reconstitution " Ineluctably, a judgment rendered without jurisdiction over the subject matter is void. As we elucidated in Leonor vs. CA: 28 "Clearly and unequivocally, the summary procedure under Rule 108, and for that matter under Art. 412 of the Civil Code, cannot be used by Mauricio to change his and Virginia's civil status from married to single and of their three children from legitimate to illegitimate. Neither does the trial court, under said Rule, have any jurisdiction to declare their marriage null and void and as a result thereof, to order the local civil registrar to cancel the marriage entry in the civil registry. Further, the respondent trial judge gravely and seriously abused his discretion in unceremoniously expanding his very limited jurisdiction under such rule to hear evidence on such a controversial matter as nullity of a marriage under the Civil Code and/or Family Code, a process that is proper only in ordinary adversarial proceedings under the Rules. Jurisdiction over the Persons of Indispensable Parties True, the above dispositions refer to jurisdiction over the subject matter. Basic considerations of due process, however, impel a similar holding in cases involving jurisdiction over the persons of indispensable parties which a court must acquire before it can validly pronounce judgments personal to said defendants. Courts acquire jurisdiction over a party plaintiff upon the filing of the complaint. On the other hand, jurisdiction over the person of a party defendant is assured upon the service of summons in the manner required by law or otherwise by his voluntary appearance. As a rule, if a defendant has not been summoned, the court acquires no jurisdiction over his person, and a personal judgment rendered against such defendant is null and void. 29 A decision that is null and void for want of jurisdiction on the part of the trial court is not a decision in the contemplation of law and, hence, it can never become final and executory. 30

Rule 3, Section 7 of the Rules of Court, defines indispensable parties as parties-in-interest without whom there can be no final determination of an action. As such, they must be joined either as plaintiffs or as defendants. The general rule with reference to the making of parties in a civil action requires, of course, the joinder of all necessary parties where possible, and the joinder of all indispensable parties under any and all conditions, their presence being a sine qua non for the exercise of judicial power. 31 It is precisely "when an indispensable party is not before the court (that) the action should be dismissed." 32 The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present. 33 cdasia Petitioners are co-owners of a fishpond. Private respondent does not deny this fact, and the Court of Appeals did not make any contrary finding. The fishpond is undivided; it is impossible to pinpoint which specific portion of the property is owned by Olanday, et al. and which portion belongs to petitioners. Thus, it is not possible to show over which portion the tenancy relation of private respondent has been established and ruled upon in Civil Case D7240. Indeed, petitioners should have been properly impleaded as indispensable parties. Servicewide Specialists, Incorporated vs. Court of Appeals 34 held that no final determination of a case could be made if an indispensable party is not impleaded: ". . . An indispensable party is one whose interest will be affected by the court's action in the litigation, and without whom no final determination of the case can be had. The party's interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties that his legal presence as a party to the proceeding is an absolute necessity. In his absence there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable " Formerly, Article 487 of the old Civil Code provided that "any one of the co-owners may bring an action in ejectment." It was subsequently-held that a co-owner could not maintain an action in ejectment without joining all the other co-owners. Former Chief Justice Moran, an eminent authority on remedial law, explains: 35 ". . . As held by the Supreme Court, were the courts to permit an action in ejectment to be maintained by a person having merely an undivided interest in any given tract of land, a judgment in favor of the defendants would not be conclusive as against the other co-owners not parties to the suit, and thus the defendant in possession of the property might be harassed by as many succeeding actions of ejectment, as there might be co-owners of the title asserted against him. The purpose of this provision was to prevent multiplicity of suits by requiring the person asserting a right against the defendant to include with him, either as co-plaintiffs or as co-defendants, all persons standing in the same position, so that the whole matter in dispute may be determined once and for all in one litigation." Contrariwise, it is logical that a tenant, in an action to establish his status as such, must implead all the pro-indiviso co-owners; in failing to do so, there can be no final determination of the action. In other words, a tenant who fails to implead all the co-owners cannot establish with finality his tenancy over the entire co-owned land.

Co-owners in an action for the security of tenure of a tenant are encompassed within the definition of indispensable parties; thus, all of them must be impleaded. As defined: 36 "An indispensable party is a party who has such an interest in the controversy or subject matter that a final adjudication cannot be made, in his absence, without injuring or affecting that interest, a party who has not only an interest in the subject matter of the controversy, but also has an interest of such nature that a final decree cannot be made without affecting his interest or leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience. It has also been considered that an indispensable party is a person in whose absence there cannot be a determination between the parties already before the court which is effective, complete, or equitable. Further, an indispensable party is one who must be included in an action before it may properly go forward. A person is not an indispensable party, however, if his interest in the controversy or subject matter is separable from the interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice between them. Also, a person is not an indispensable party if his presence would merely permit complete relief between him and those already parties to the action, or if he has no interest in the subject matter of the action. It is not a sufficient reason to declare a person to be an indispensable party that his presence will avoid multiple litigation." Clearly, the decision in Civil Case D-7240 cannot bind petitioners and cannot adjudicate the entire co-owned property, not even that portion belonging to Olanday et al., ownership of the property being still pro-indiviso. Obviously, the failure to implead petitioners barred the lower court from making a final adjudication. Without the presence of indispensable parties to a suit or proceeding, a judgment therein cannot attain finality. 37 Ergo, res inter alios judicatae nullum aliis praejudicarium faciunt. 38 Thus, the Court, through former Chief Justice Marcelo B. Fernan, held that a person who was not impleaded in the complaint cannot be bound by the decision rendered therein, for no man shall be affected by a proceeding in which he is a stranger. 39 Admittedly, in this case, the want of jurisdiction of the trial court in rendering its decision in Civil Case No. D-7240 is not patent on the face of said judgment. However, there were glaring documentary and testimonial pieces of evidence referred to by the trial court in its decision which should have prompted it to inquire further whether there were other indispensable parties who were not impleaded. These facts and circumstances should have forewarned the trial court that it had not acquired jurisdiction over a number of indispensable parties. In American jurisprudence, the nullity of a decision arising from lack of jurisdiction may be determined from the record of the case, not necessarily from the face of the judgment only. 40 We believe that this rule should be applied to this case, considering that in the assailed trial court's decision, referrals were made to crucial evidence which if scrutinized would readily reveal that there were indispensable parties omitted.

First, the decision referred to the subject property "as Lot No. 3312 of the Cadastral Survey.'' 41 This lot was particularly described in private respondent's Complaint dated February 6, 1984 filed in Civil Case D-7240. 42 Obviously such description was copied by private respondent from the transfer certificate of title over the subject fishpond issued on August 12, 1975 naming all the co-owners, including the herein petitioners and the fact of their foreign residences, thus: 43 "IT IS HEREBY CERTIFIED that certain land situated in the City of Dagupan, formerly in the Province of Pangasinan bounded and described as follows: A parcel of land (Lot 3312 of the Cadastral Survey of Dagupan), situated in the City of Dagupan. . . is registered in accordance with the provisions of the Land Registration Act in the name of PACITA ARCELONA, married to Miguel Ulanday; TOMASA ARCELONA, married to Tung Ming Chiang; MARCELINO V. ARCELONA, married to Soledad Tiongco; MARIA V. ARCELONA, married to Oreste Arellano; BENEDICTO V. ARCELONA, married to Ruth Suget; and NATIVIDAD ARCELONA, married to Agrimero Cruz; all of legal age, Filipinos, the second and fifth named residents of Los Angeles, California, U.S.A., third & fourth of Manila; first of Villasis, Pangasinan & the last named of Lingayen, Pangasinan as owner thereof in fee simple, subject to such of the incumbrances mentioned in Section 39 of said Act as may be subsisting, and to xxx xxx xxx Entered at the City of Dagupan Philippines, on the 12th day of August in the year nineteen hundred and seventy-five at 4:00 pm." (Emphasis supplied). Considering that private respondent was suing to establish his status as a tenant over the subject fishpond, the responsibility for impleading all the indispensable parties undeniably rested on him as provided under Rule 3 of the Rules of Court. Section 2 of Rule 3 requires that "every action must be prosecuted and defended in the name of the real party in interest. All persons having an interest in the subject of the action and in obtaining the relief demanded shall be joined as plaintiffs." Further, Section 7 of the same rule states that "(p)arties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants." Second, Respondent Court of Appeals ruled that private respondent "in his motion to dismiss (before said Court) alleged that petitioners knew of the lessee as revealed by the testimony of Pacita Olanday, one of the defendants in Civil Case No. D-7240 and a sister of petitioners. (TSN, pp. 15-16, hearing of October 2, 1984, Civil Case No. D-7240)." That being so, why did private respondent fail to include petitioners as defendants in the case below? It should be noted that the lease contract was between Cipriano Tandoc and Olanday, et al. Private respondent, a caretaker-tenant of Tandoc, knew or should have known that there were coowners other than Olanday, et al. And even conceding arguendo that petitioners had authorized Olanday, et al. to enter into a lease contract with Tandoc, this fact did not authorize the latter to represent petitioner in the civil case he brought. Under Rule 9, Section 9 of the Rules of Court, the pleader is required to set forth the names, if known to him, of

persons who ought to be parties, if complete relief is to be accorded to those who are already parties but who are not joined; and to state why they have been omitted. Surely, he brought suit to establish his status as a tenant. It is thus his responsibility to state the names of all the persons against whom he wants to establish his status as tenant. aisadc Third, both the private respondent and the trial court knew of the obvious omission of petitioners as party defendants. Telling is the fact that, by reciting part of the transcript of stenographic notes, private respondent himself provided clear evidence in his memorandum that he knew of the existence of other co-owners who were not impleaded in his case against Olanday et al.: 44 "As admitted by Pacita Olanday, one of the defendants in Civil Case No. D-7240, the petitioners know of the lease with Cipriano Tandoc; they were authorized to lease the shares of the petitioners. Here is the testimony of Pacita Olanday: ATTY. VINLUAN: Q.You made mentioned that you were authorized by your brothers and sister who are (sic) residing in the United States to enter into a contract. Did these brothers and sister of yours make any special power of attorney authorizing you to that effect? xxx xxx xxx A.I talked with my brothers when they 'balik-bayan', they said I will make an agreement. (tsn. October 2, 1984 pp. 15 and 16 CV# D-7240)." He also knew that in executing the lease, Pacita Olanday represented only her sisters (Maria and Natividad) who were residing in the Philippines. Definitely, at the time of the execution of the contract, she had no brother residing in the Philippines because her only brothers, Marcelino and Benedicto Arcelona, (the latter now deceased and represented in this case by Petitioner Ruth Arcelona) were living in California. This fact can be deduced from the recitals of the RTC decision: 45 "It is undisputed in the records that the defendants (referring to Olanday, et al.) are coowners and civil law lessors of a fishpond otherwise known as Lot No. 3312 of the Cadastral Survey of Dagupan City; that as owners, they entered into a Contract of Lease (Exh. '1') with one Cipriano Tandoc dated March 4, 1978 for a term of three (3) years from February 2, 1982, which contract was renewed for another two (2) years up to February 2, 1984. On the 31st of January, 1984, Exhibit '3', an 'Affidavit of Surrender of Rights and Possession of Lessee over a Fishpond' was executed between Cipriano Tandoc and Pacita Olanday who signed for herself and in behalf of her two (2) sisters. Plaintiff Moises Farnacio was however, instituted as caretaker-tenant over the same fishpond by Cipriano Tandoc on the date of the Contract of Lease was entered into between the owners-lessors and Cipriano Tandoc. The private agreement (Exh. 'D') signed by Cipriano Tandoc and Moises Farnacio is, however, assailed in a criminal case for falsification in the Fiscal's Office." (Underscoring supplied). In fact, only these co-owners who are residing in the Philippines were joined as defendants in Civil Case D-7240. But the mention of Pacita's relatives who were residing abroad should

have made the trial court aware of the existence of indispensable parties who were not yet impleaded. Despite this knowledge of the apparent defect in the complaint and in its jurisdiction, the trial court did not take the initiative to implead petitioners as defendants or to order private respondent to do so, contrary to the clear mandate of Rule 3, Sec. 11 of the Rules of Court 46 which provides: Sec. 11.Misjoinder and non-joinder of parties. Misjoinder of parties is not ground for dismissal of an action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just. Any claim against a party may be severed and proceeded with separately. The foregoing testimony on the existence of other co-owners was a clear signal that indispensable parties had not yet been impleaded. Indeed, this knowledge should have put the private respondent and the trial court on guard. The burden to implead or to order the impleading of indispensable parties is placed on private respondent and on the trial court, respectively. Since no evidence was presented to prove that petitioners were aware of the civil case filed against Olanday et al., they cannot be faulted for not intervening therein. In sum, we hold that the nullity of a judgment grounded on lack of jurisdiction may be shown not only by what patently appears on the face of such decision but also by documentary and testimonial evidence found in the records of the case and upon which such judgment is based. Before ending our discussion on the first issue, we must stress that the then Intermediate Appellate Court and this Court, in affirming the RTC decision in Civil Case No. D-7240 which we here nullify, had not been given the occasion to rule on the issue of the trial court's jurisdiction over the persons of indispensable parties; verily, this question had not been raised before the two appellate courts. The review of civil cases by appellate courts is confined only to the issues raised by the parties. Hence, appellate courts do not have the privilege or the opportunity afforded the trial courts to consider matters beyond the specifically contested issues, e.g., jurisdiction over indispensable parties, as in this case. Such lack of jurisdiction could not have been known by the appellate courts, including this Court, as it was not patent from the documents or submissions filed before them. The issue raised before the then Intermediate Appellate Court and this Court was formulated in this wise: "(t)he validity of private respondent's claim that he is a tenant of the petitioners' fishpond, with security of tenure as such assured under the law, is the basic question presented in this appeal." 47 We underscore the fact that the issue of whether all the indispensable parties had been validly impleaded, if at all, had not been raised at that time. In any event, whether the indispensable parties were actually impleaded and jurisdiction over them was acquired was a factual question for the trial court to determine. Consistent with the basic doctrine that factual findings of lower courts are binding on appellate courts unless covered by the recognized exceptions, 48 appellate courts must be able to rely on the implied affirmation of the trial court that jurisdiction had been acquired over indispensable parties, especially when this was not raised as an issue on appeal. The responsibility for impleading indispensable parties for the exhaustive trial of a case cannot rest on this forum or on the then Intermediate Appellate Court. Indeed, the Decision of this

Court affirming the said trial court's decision is captioned only as "Pacita A. Olanday, Maria A. Arellano and Natividad A. Cruz, petitioners, vs. Intermediate Appellate Court and Moises Farnacio, respondents", clearly indicating that petitioners herein had been omitted as indispensable parties in the proceedings before the trial court and before the appellate tribunals. Substantial justice requires that this error be now rectified.

Second Issue: Estoppel and Laches Apart from holding that there was only one ground to annul a judgment, namely, extrinsic fraud, the appellate court using extraneous evidence also found that estoppel and laches had set in against petitioners, thereby barring them from asserting lack of jurisdiction over their persons These ''extraneous matters" are stated by the Respondent Court in this wise: ". . . True, indeed, that petitioners were not original parties to the action and that the decision embraces half of the property in dispute belonging to petitioners as co-owners thereof. But they cannot now complain they were denied due process. It will be recalled that the contract of lease was entered with one Cipriano Tandoc on March 4, 1978 for a term of three years, which contract was renewed for another two years up to February 2, 1984. During all the years of the existence of the lease contract, it would be incredulous for petitioners to assert that they never knew of such lease agreement from their three sisters, the defendants herein. Petitioners raised no overt protest against the lease contract executed by their sisters with Cipriano Tandoc in 1978 and renewed in 1982. Petitioners took no direct action to promptly disavow or disaffirm the action taken by their sisters to lease the entire property to Tandoc. It is likewise unbelievable that during all the years that the subject property (fishpond) is under litigation in Civil Case No. D-7240 from 1984 to 1991, petitioners were not aware that their property is subject of the controversy. By their continued silence, they have permitted the acts of their sisters in leasing the property and they cannot now be heard, after a prolonged period of time, to denounce such acts as done without their knowledge and consent. The rule of acquiescence by silence has estopped petitioners to deny the reality of the state of things which they made to appear to exist and upon which others have been led to reply. Parties must take the consequences of the position they assume. Sound ethics require that the apparent in its effects and consequences should be as if it were real, and the law properly so regards. (Metro Manila Transit Corporation vs. Morales, 173 SCRA 629, 633). In Santiago Syjuco, Inc. vs. Castro, 175 SCRA 171, 192, it was held, inter alia: xxx xxx xxx . . . Likewise, in Criminal Case No. 16866 for falsification against respondent Farnacio before Branch 3 of the Municipal Trial Court of Dagupan City, witness Juan Bernal testified that the petitioners herein Tomasa Arcelona, Marcelino Arcelona and Ben Arcelona authorized their

sisters Natividad Cruz, Corazon Arcelona, Pacita Olanday to lease the fishpond to Cipriano Tandoc. (TSN, pp. 5-6, hearing of August 10, 1987 in Criminal Case No. 16866)." 49 Petitioners balk at these pronouncements, arguing that in annulment of judgments, "the grounds thereof must be based solely on the records of the case." They contend that "to permit the court's record to be contradicted or varied by evidence dehors would render such records of no avail." Petitioners contend that Respondent Court of Appeals erred in taking into account "the proceedings in Criminal Case No. 16866 to show alleged knowledge of the petitioners herein of the lease of the property to Cipriano Tandoc." 50 Petitioners submit that the bone of contention in this case is "not knowledge of the petitioners of the Lease Contract executed by Pacita Olanday et al. and Cipriano Tandoc, but whether the petitioners knew of the case filed by private respondent against Pacita Olanday et al. involving their common property." Petitioners stress that Private Respondent Farnacio is "a total stranger" and has absolutely no privity of interest with them because it was Tandoc, not Farnacio, who entered into a lease contract with Olanday, et al. 51 Petitioners deny any concealment or deception on their part that would constitute estoppel. They contend that in the transfer certificate of title, their names were specifically mentioned as co-owners of the property on which the private respondent sought to be installed in physical possession as tenant." 52 They aver that Respondent Court of Appeals' finding that they had knowledge of the lease contract "is based on presumption not on clear and convincing evidence." Assuming, according to petitioners, that they can be held in estoppel, it can only be as against Cipriano Tandoc, not private respondent who "was never a party to the lease contract." 53 Since the judgment is void "insofar as the petitioners are concerned for lack of jurisdiction [over] their persons and for want of due process," and since they "were never given the opportunity to institute any action to protect their interest," petitioners contend that to bar them now by laches and estoppel "will create an unfair and unjust situation." For as petitioners candidly state, they "do not question the pronouncement that private respondent is the tenant of Pacita Olanday et al."; however, they submit that the issue in this case is whether private respondent "is also the tenant of herein petitioners entitled to be placed in physical possession and cultivation of their undetermined share in the property without [petitioners] being made parties in the case." 54 Private respondent counters that "Pacita Olanday . . . testified that she was authorized to lease the share of . . . petitioners." According to private respondent, while petitioners were in the Philippines, they were informed of the appointment of private respondent as caretaker-tenant of the entire fishpond, and they did not object to such appointment. 55 Further, private respondent contends that petitioners failed to intervene in the case before the writ of execution was granted on "May 5, 1991" despite the "appearance . . . of their counsel, Atty. Marina Cruz, when the motion for issuance of said writ was heard" Private respondent adds that he was "impliedly recognized" as a tenant when petitioners "received their corresponding shares [i]n the lease rental of the property from the private respondent, through Olanday, et al. and their counsel, Atty. Marina Cruz." 56

As correctly put by petitioners, we hold that Respondent Court of Appeals, in deciding the petition to declare the judgment void, cannot consider extraneous matters to vary what the records bear. In other words, the Court of Appeals cannot annul or declare null the assailed decision with such extraneous matters. The validity or nullity of the said decision must stand or fall on its own face and the evidence on record. cdasia In an action to declare a judgment void because of lack of jurisdiction over the parties or subject matter, only evidence found in the records of the case can justify the annulment of the said judgment. Contrariwise, the nullity of the judgment due to lack of jurisdiction may be proved at most by the evidence on record but never by extraneous evidence. Sen. Vicente J. Francisco aptly explains this in his treatise on the Rules of Court: 57 "The validity of a final judgment may be attacked on the ground that the judgment or order is null and void, because the court had no power or authority to grant the relief or no jurisdiction over the subject matter or over the parties or both. The aggrieved party may attack the validity of the final judgment by a direct action or proceeding in order to annul the same, as certiorari, which is not incidental to, but is the main object of the proceeding. The validity of a final judgment may also be attacked collaterally as when a party files a motion for the execution of the judgment and the adverse party resists the motion by claiming that the court has no authority to pronounce the judgment and that the same is null and void for lack of jurisdiction over the subject matter or over the parties. In cases of collateral attack, the principles that apply have been stated as follows: 'The legitimate province of collateral impeachment is void judgments. There and there alone can it meet with any measure of success. Decision after decision bears this import: 'In every case the field of collateral inquiry is narrowed down to the single issue concerning the void character of the judgment and the assailant is called upon to satisfy the court that such is the fact. To compass his purpose of overthrowing the judgment, it is not enough that he shows a mistaken or erroneous decision or a record disclosing non-jurisdictional irregularities in the proceedings leading up to the judgment. He must go beyond this and show to the court, generally from the fact of the record itself, and not by extraneous evidence that the judgment complained of is utterly void. If he can do that his attack will succeed for the cases leave no doubt respecting the right of a litigant to collaterally impeach a judgment that he can prove to be void.' The reason for the rule of exclusion of extraneous proof to show that the judgment complained of is utterly void for lack of jurisdiction has been expressed in the following words: 'The doctrine that the question of jurisdiction is to be determined by the record alone, thereby excluding extraneous proof seems to be the natural unavoidable result of that stamp of authenticity which, from the earliest times, was placed upon the 'record,' and which gave it such 'uncontrollable credit and verity that no plea, proof, or averment could be heard to the contrary.' . . . Any rule, . . . would be disastrous in its results, since to permit the court's record to be contradicted or varied by evidence dehors would render such records of no avail and definite sentences would afford but slight protection to the rights of parties once solemnly adjudicated.'"

We should add, however, that where an action for annulment of judgment is grounded on extrinsic fraud, extraneous evidence is admitted. We have held that, although a person need not be a party to the judgment sought to be annulled by reason of extrinsic fraud, he must provehis allegation that the judgment was obtained by the use of fraud and collusion and that he would be adversely affected thereby. 58 Fraud must be extraneous; otherwise, there would be no end to litigation. Extrinsic fraud refers to any fraudulent act committed by a prevailing party outside the trial of the case, whereby the defeated party has been prevented from fully exhibiting his side of the case, because of fraud or deception practiced on him by his opponent. 59 As distinctly defined in Cosmic Lumber Corporation vs. Courts of Appeals, et al.: 60

"There is extrinsic fraud within the meaning of Sec. 9, par. (2), of B.P. Blg. 129, where it is one the effect of which prevents a party from hearing a trial, or real contest, or from presenting all of his case to the court, or where it operates upon matters, not pertaining to the judgment itself, but to the manner in which it was procured so that there is not a fair submission of the controversy. In other words, extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case, whereby the defeated party has been prevented from exhibiting fully his side of the case by fraud or deception practiced on him by his opponent. (fn: Makabingkil v. PHHC, No. L-29080, 17 August 1976, 72 SCRA 326, 343-344) Fraud is extrinsic where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as keeping him away from court, a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or without authority connives at his defeat; these and similar cases which show that there has never been a real contest in the trial or hearing of the case are reasons for which a new suit may be sustained to set aside and annul the former judgment and open the case for a new and fair hearing.( fn: Id., p. 344 citing U.S. v. Throckmorton, 25 L. Ed. 93, 95)" In deciding the "petition for annulment of judgment" which should be a "petition to declare judgment void" Respondent Court of Appeals should not have considered the following matters which find no support from the records and are thus considered "extraneous": (1) the assumption that petitioners knew of the five-year lease contract with private respondent and the pendency of Civil Case No. D-7240 from 1984 to 1991; and (2) the testimony of Juan Bernal in a separate criminal case before another court concerning the authority granted to Olanday et al. and where petitioners were not parties. The rule is that the nullity of the decision arising from want of jurisdiction and/or due process should appear from the records of the case. And the validity of the judgment cannot be anchored on mere suppositions or speculations, as Respondent Court did. Equally important, the finding of estoppel and laches by Respondent Court is not supported by the evidence on record. The silence of petitioners can easily be explained by the fact that they were not in the country during the pendency of the subject civil case. Such absence from the country was never rebutted by private respondent. Even in the proceedings antecedent to this case before us now, petitioners were merely represented by their attorney-in-fact. 61 Moreover, they were not at all impleaded as parties in the judgment

sought to be voided. Neither were they properly served summons. The indelible fact is that they were completely ignored. In any event, we ruled in Alabang Development Corporation vs. Valenzuela 62 that no laches attach when the judgment is null and void for want of jurisdiction: "The herein respondents attribute laches to the petitioners for not appealing from the order of the lower court denying their motion to intervene and motion for new trial hence allowing the said order/decision to become final. There is no laches nor finality of any decision to speak of since the decision under question is herein pronounced null and void for having been rendered without jurisdiction. Prescinding therefrom, as admitted by themselves in their comment, the judgment of reconstitution is 'ineffective' against the owners of lands covered thereby who were not joined as parties in the proceeding. As the Court ruled in Bernal case on the matter of intervention [fn: 93 SCRA at pp. 247, 248] 'a valid judgment cannot even be rendered where there is want of indispensable parties' such as petitioners who hold subsisting Torrens Title to the properties in question and 'this aspect of the case commands the joinder of indispensable parties to allow them to uphold their interests based upon the Torrens titles they hold overrides any question of later intervention.' Petitioners have precisely availed of the proper, speedy and adequate remedy of the present special civil action of certiorari and prohibition to annul and set aside for want of jurisdiction the decision and all proceedings of respondent judge." On the other hand, the doctrine of estoppel is predicated on and finds its roots in equity which, broadly defined, is justice according to natural law and right. It is a principle intended to prevent a clear case of injustice. The term is hardly separable from a waiver of right. Estoppel, like laches, must be intentional and unequivocal, for when misapplied, it can easily become a most convenient and effective means of injustice. Estoppel is a principle that, as a rule) can be invoked only in highly exceptional and legitimate cases. 63 In Cruz vs. Court of Appeals, 64 we reiterated the requisites of estoppel: "In Kalalo vs. Luz, [ fn: 34 SCRA 337] We held that the essential elements of estoppel in respect to the party claiming it are: (a) lack of knowledge and of the means of knowledge of the truth as the facts in question; (b) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (c) action or inaction based thereon of such character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice." The herein facts ineluctably show the absence of the first element in this case. Inasmuch as there is no proof that petitioners had knowledge of the pending tenancy case filed by private respondent, it is only fair that they should not be held in estoppel for failing to intervene in and to question the jurisdiction of the trial court in Civil Case No. D-7240. Thus, private respondent may not say that he was misled into believing that petitioners knew of the lease contract and of the litigation of Civil Case No. D-7240. Undisputedly, from the evidence on record, petitioners had no such knowledge. Petitioners' receipt of lease rentals cannot be used as proof of recognition of private respondent as a caretaker-tenant. This issue was not raised in the lower court and is being

alleged for the first time before us. Well-settled is the doctrine that questions not raised in the lower courts cannot be raised for the first time on appeal. 65 Third Issue: Intervention as a Remedy of Petitioners Petitioners' contend that Respondent Court of Appeals erred when it ruled that their only remedy was intervention during the execution stage of Civil Case No. D-7240. Inasmuch as "annulment of judgment could be made either collaterally or directly," petitioners insist that their resort to "direct action in annulling the Decision of the lower court should not be taken against them." 66 Moreover, petitioners argue that "in proceedings for execution of a final decision or judgment, it is the ministerial duty of the court of origin to issue the writ." 67 Petitioners add that because their action would result in the "modification, alteration, and annulment of the judgment, the specific provision of law that annulment of judgment of the Regional Trial Court is within the exclusive jurisdiction of the Court of Appeals should prevail." 68 Private respondent counters that petitioners deliberately did not intervene "to afford them opportunity to question, as they now question, the validity of any decision to be rendered in said case, . . . in the event of an adverse decision." 69 We hold that intervention is not the only remedy to assail a void final judgment. There is no procedural rule prescribing that petitioners' intervention in the hearing for the issuance of a writ is the only way to question a void final judgment. As already stated, petitioners were not aware of such hearing. Besides, as already discussed, a direct action is available in assailing final judgments grounded on extrinsic fraud, while a direct or a collateral action may be used to show lack of jurisdiction. The assailed Decision of Respondent Court of Appeals cites certain cases allowing intervention as follows: 70 "A case in which an execution has been issued is regarded as still pending so that all proceedings in the execution are proceedings in the suit. There is no question that the court which rendered the judgment has a general supervisory control over its process of execution and this power carries with it the right to determine every question of fact and law which may be involved in the execution. (Suson vs. Court of Appeals, 172 SCRA 70, 75, citing Paman vs. Severis, 115 SCRA 709; Seavan Carrier vs. GTI Sportswear, 137 SCRA 580)" These cases, which require intervention of parties who may be adversely affected by the decision, are not applicable. In the cited Suson vs. Court of Appeals, 71 the parties, though not impleaded, knew of the case and were in fact directed by the trial court to intervene, but they refused to do so. These particular facts are absent in the instant case where, to repeat, petitioners were abroad when Civil Case D-7240 was prosecuted. In any event, as earlier pointed out, jurisprudence upholds the soundness of an independent action to declare as null and void a judgment rendered without jurisdiction as in this case. In Leonor vs. Court of Appeals, 72 Petitioner Virginia A. Leonor, through a "petition for certiorari, prohibition and mandamus . . . sought the nullification of both the decision dated December 14, 1992 and the order dated February 24, 1993 of the trial court for having been

issued in excess of jurisdiction and/or with grave abuse of discretion." 73 We held in that case that: 74 "A void judgment for want of jurisdiction is no judgment at all. It cannot be the source of any right nor the creator of any obligation. All acts performed pursuant to it and all claims emanating from it have no legal effect. Hence, it can never become final and any writ of execution based on it is void: .'. . . it may be said to be a lawless thing which can be treated as an outlaw and slain at sight, or ignored wherever and whenever it exhibits its head.'" cdasia

WHEREFORE, the petition for certiorari is GRANTED. The Decision of Respondent Court of Appeals is hereby REVERSED and SET ASIDE. The decisions in Civil Case No. D-7240, AC-G.R. SP-05237-CAR and G.R. No. L-71217 are ANNULLED and SET ASIDE for lack of jurisdiction. No costs. SO ORDERED.

Expenses for preservation, useful expenses Condominium law (Republic Act no. 4726), PD 957 AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND GOVERN ITS INCIDENTS. Sec. 1. The short title of this Act shall be "The Condominium Act". Sec. 2. A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the "condominium corporation") in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas. The real right in condominium may be ownership or any other interest in real property recognized by law, on property in the Civil Code and other pertinent laws. Sec. 3. As used in this Act, unless the context otherwise requires: (a) "Condominium" means a condominium as defined in the next preceding section.

(b) "Unit" means a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or

part or parts of floors) in a building or buildings and such accessories as may be appended thereto. (c) "Project" means the entire parcel of real property divided or to be divided in condominiums, including all structures thereon, (d) "Common areas" means the entire project excepting all units separately granted or held or reserved. (e) "To divide" real property means to divide the ownership thereof or other interest therein by conveying one or more condominiums therein but less than the whole thereof. Sec. 4. The provisions of this Act shall apply to property divided or to be divided into condominiums only if there shall be recorded in the Register of Deeds of the province or city in which the property lies and duly annotated in the corresponding certificate of title of the land, if the latter had been patented or registered under either the Land Registration or Cadastral Acts, an enabling or master deed which shall contain, among others, the following: (a) Description of the land on which the building or buildings and improvements are or are to be located; (b) Description of the building or buildings, stating the number of stories and basements, the number of units and their accessories, if any; (c) Description of the common areas and facilities;

(d) A statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in the common areas of the condominium project. Where title to or the appurtenant interests in the common areas is or is to be held by a condominium corporation, a statement to this effect shall be included; (e) Statement of the purposes for which the building or buildings and each of the units are intended or restricted as to use; (f) A certificate of the registered owner of the property, if he is other than those executing the master deed, as well as of all registered holders of any lien or encumbrance on the property, that they consent to the registration of the deed; (g) The following plans shall be appended to the deed as integral parts thereof:

(1) A survey plan of the land included in the project, unless a survey plan of the same property had previously bee filed in said office; (2) A diagrammatic floor plan of the building or buildings in the project, in sufficient detail to identify each unit, its relative location and approximate dimensions; (h) Any reasonable restriction not contrary to law, morals or public policy regarding the right of any condominium owner to alienate or dispose of his condominium.

The enabling or master deed may be amended or revoked upon registration of an instrument executed by the registered owner or owners of the property and consented to by all registered holders of any lien or encumbrance on the land or building or portion thereof. The term "registered owner" shall include the registered owners of condominiums in the project. Until registration of a revocation, the provisions of this Act shall continue to apply to such property. Sec. 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation: Provided, however, That where the common areas in the condominium project are owned by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens, or corporations at least sixty percent of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws. Sec. 6. Unless otherwise expressly provided in the enabling or master deed or the declaration of restrictions, the incidents of a condominium grant are as follows: (a) The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof. The following are not part of the unit bearing walls, columns, floors, roofs, foundations and other common structural elements of the building; lobbies, stairways, hallways, and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air-conditioning equipment, reservoirs, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof when located within the unit. (b) There shall pass with the unit, as an appurtenance thereof, an exclusive easement for the use of the air space encompassed by the boundaries of the unit as it exists at any particular time and as the unit may lawfully be altered or reconstructed from time to time. Such easement shall be automatically terminated in any air space upon destruction of the unit as to render it untenantable. (c) Unless otherwise, provided, the common areas are held in common by the holders of units, in equal shares, one for each unit. (d) A non-exclusive easement for ingress, egress and support through the common areas is appurtenant to each unit and the common areas are subject to such easements. (e) Each condominium owner shall have the exclusive right to paint, repaint, tile, wax, paper or otherwise refinish and decorate the inner surfaces of the walls, ceilings, floors, windows and doors bounding his own unit.

(f) Each condominium owner shall have the exclusive right to mortgage, pledge or encumber his condominium and to have the same appraised independently of the other condominiums but any obligation incurred by such condominium owner is personal to him. (g) Each condominium owner has also the absolute right to sell or dispose of his condominium unless the master deed contains a requirement that the property be first offered to the condominium owners within a reasonable period of time before the same is offered to outside parties; Sec. 7. Except as provided in the following section, the common areas shall remain undivided, and there shall be no judicial partition thereof. Sec. 8. Where several persons own condominiums in a condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Provided, however, That a partition shall be made only upon a showing: (a) That three years after damage or destruction to the project which renders material part thereof unit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction, or (b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project; or (c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project; or (d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or (e) That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of this Act, have been met. Sec. 9. The owner of a project shall, prior to the conveyance of any condominium therein, register a declaration of restrictions relating to such project, which restrictions shall constitute a lien upon each condominium in the project, and shall insure to and bind all condominium owners in the project. Such liens, unless otherwise provided, may be enforced by any condominium owner in the project or by the management body of such project. The Register of Deeds shall enter and annotate the declaration of restrictions upon the certificate of title covering the land included within the project, if the land is patented or registered under the Land Registration or Cadastral Acts.

The declaration of restrictions shall provide for the management of the project by anyone of the following management bodies: a condominium corporation, an association of the condominium owners, a board of governors elected by condominium owners, or a management agent elected by the owners or by the board named in the declaration. It shall also provide for voting majorities quorums, notices, meeting date, and other rules governing such body or bodies. Such declaration of restrictions, among other things, may also provide: (a) As to any such management body;

(1) For the powers thereof, including power to enforce the provisions of the declarations of restrictions; (2) For maintenance of insurance policies, insuring condominium owners against loss by fire, casualty, liability, workmen's compensation and other insurable risks, and for bonding of the members of any management body; (3) Provisions for maintenance, utility, gardening and other services benefiting the common areas, for the employment of personnel necessary for the operation of the building, and legal, accounting and other professional and technical services; (4) For purchase of materials, supplies and the like needed by the common areas;

(5) For payment of taxes and special assessments which would be a lien upon the entire project or common areas, and for discharge of any lien or encumbrance levied against the entire project or the common areas; (6) For reconstruction of any portion or portions of any damage to or destruction of the project; (7) The manner for delegation of its powers;

(8) For entry by its officers and agents into any unit when necessary in connection with the maintenance or construction for which such body is responsible; (9) For a power of attorney to the management body to sell the entire project for the benefit of all of the owners thereof when partition of the project may be authorized under Section 8 of this Act, which said power shall be binding upon all of the condominium owners regardless of whether they assume the obligations of the restrictions or not. (b) The manner and procedure for amending such restrictions: Provided, That the vote of not less than a majority in interest of the owners is obtained. (c) For independent audit of the accounts of the management body;

(d) For reasonable assessments to meet authorized expenditures, each condominium unit to be assessed separately for its share of such expenses in proportion (unless otherwise provided) to its owners fractional interest in any common areas; (e) For the subordination of the liens securing such assessments to other liens either generally or specifically described; (f) For conditions, other than those provided for in Sections eight and thirteen of this Act, upon which partition of the project and dissolution of the condominium corporation may be made. Such right to partition or dissolution may be conditioned upon failure of the condominium owners to rebuild within a certain period or upon specified inadequacy of insurance proceeds, or upon specified percentage of damage to the building, or upon a decision of an arbitrator, or upon any other reasonable condition. Sec. 10. Whenever the common areas in a condominium project are held by a condominium corporation, such corporation shall constitute the management body of the project. The corporate purposes of such a corporation shall be limited to the holding of the common areas, either in ownership or any other interest in real property recognized by law, to the management of the project, and to such other purposes as may be necessary, incidental or convenient to the accomplishment of said purposes. The articles of incorporation or by-laws of the corporation shall not contain any provision contrary to or inconsistent with the provisions of this Act, the enabling or master deed, or the declaration of restrictions of the project. Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be transferable separately from the condominium unit of which it is an appurtenance. When a member or stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the common areas, he shall automatically cease to be a member or stockholder of the condominium corporation. Sec. 11. The term of a condominium corporation shall be co-terminus with the duration of the condominium project, the provisions of the Corporation Law to the contrary notwithstanding. Sec. 12. In case of involuntary dissolution of a condominium corporation for any of the causes provided by law, the common areas owned or held by the corporation shall, by way of liquidation, be transferred pro-indiviso and in proportion to their interest in the corporation to the members or stockholders thereof, subject to the superior rights of the corporation creditors. Such transfer or conveyance shall be deemed to be a full liquidation of the interest of such members or stockholders in the corporation. After such transfer or conveyance, the provisions of this Act governing undivided co-ownership of, or undivided interest in, the common areas in condominium projects shall fully apply. Sec. 13. Until the enabling or the master deed of the project in which the condominium corporation owns or holds the common area is revoked, the corporation shall not be voluntarily dissolved through an action for dissolution under Rule 104 of the Rules of Court except upon a showing:

(a) That three years after damage or destruction to the project in which the corporation owns or holds the common areas, which damage or destruction renders a material part thereof unfit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction; or (b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that more than thirty percent of the members of the corporation, if non-stock, or the shareholders representing more than thirty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or reconstruction of the project, or (c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomical, and that more than fifty percent of the members of the corporation, if nonstock, or the stockholders representing more than fifty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or restoration or remodeling or modernizing of the project; or (d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the members holding in aggregate more than seventy percent interest in the corporation, if non-stock, or the stockholders representing more than seventy percent of the capital stock entitled to vote, if a stock corporation, are opposed to the continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or (e) That the conditions for such a dissolution set forth in the declaration of restrictions of the project in which the corporation owns of holds the common areas, have been met. Sec. 14. The condominium corporation may also be dissolved by the affirmative vote of all the stockholders or members thereof at a general or special meeting duly called for the purpose: Provided, That all the requirements of Section sixty-two of the Corporation Law are complied with. Sec. 15. Unless otherwise provided for in the declaration of restrictions upon voluntary dissolution of a condominium corporation in accordance with the provisions of Sections thirteen and fourteen of this Act, the corporation shall be deemed to hold a power of attorney from all the members or stockholders to sell and dispose of their separate interests in the project and liquidation of the corporation shall be effected by a sale of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporate and of individual condominium creditors. Sec. 16. A condominium corporation shall not, during its existence, sell, exchange, lease or otherwise dispose of the common areas owned or held by it in the condominium project unless authorized by the affirmative vote of all the stockholders or members.

Sec. 17. Any provision of the Corporation Law to the contrary notwithstanding, the bylaws of a condominium corporation shall provide that a stockholder or member shall not be entitled to demand payment of his shares or interest in those cases where such right is

granted under the Corporation Law unless he consents to sell his separate interest in the project to the corporation or to any purchaser of the corporation's choice who shall also buy from the corporation the dissenting member or stockholder's interest. In case of disagreement as to price, the procedure set forth in the appropriate provision of the Corporation Law for valuation of shares shall be followed. The corporation shall have two years within which to pay for the shares or furnish a purchaser of its choice from the time of award. All expenses incurred in the liquidation of the interest of the dissenting member or stockholder shall be borne by him. Sec. 18. Upon registration of an instrument conveying a condominium, the Register of Deeds shall, upon payment of the proper fees, enter and annotate the conveyance on the certificate of title covering the land included within the project and the transferee shall be entitled to the issuance of a "condominium owner's" copy of the pertinent portion of such certificate of title. Said "condominium owner's" copy need not reproduce the ownership status or series of transactions in force or annotated with respect to other condominiums in the project. A copy of the description of the land, a brief description of the condominium conveyed, name and personal circumstances of the condominium owner would be sufficient for purposes of the "condominium owner's" copy of the certificate of title. No conveyance of condominiums or part thereof, subsequent to the original conveyance thereof from the owner of the project, shall be registered unless accompanied by a certificate of the management body of the project that such conveyance is in accordance with the provisions of the declaration of restrictions of such project. In cases of condominium projects registered under the provisions of the Spanish Mortgage Law or Act 3344, as amended, the registration of the deed of conveyance of a condominium shall be sufficient if the Register of Deeds shall keep the original or signed copy thereof, together with the certificate of the management body of the project, and return a copy of the deed of conveyance to the condominium owner duly acknowledge and stamped by the Register of Deeds in the same manner as in the case of registration of conveyances of real property under said laws. Sec. 19. Where the enabling or master deed provides that the land included within a condominium project are to be owned in common by the condominium owners therein, the Register of Deeds may, at the request of all the condominium owners and upon surrender of all their "condominium owner's" copies, cancel the certificates of title of the property and issue a new one in the name of said condominium owners as pro-indiviso co-owners thereof. Sec. 20. An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs (including attorney's fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium assessed when the management body causes a notice of assessment to be registered with the Register of Deeds of the city or province where such condominium project is located. The notice shall state the amount of such assessment and such other charges thereon a may be authorized by the declaration of restrictions, a description of the condominium, unit against which same has been assessed, and the name of the registered owner thereof. Such notice shall be signed by an authorized representative of the

management body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges or other satisfaction thereof, the management body shall cause to be registered a release of the lien. Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances. Such liens may be enforced in the same manner provided for by law for the judicial or extrajudicial foreclosure of mortgages of real property. Unless otherwise provided for in the declaration of restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner shall have the same right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages. Sec. 21. No labor performed or services or materials furnished with the consent of or at the request of a condominium owner or his agent or his contractor or subcontractor, shall be the basis of a lien against the condominium of any other condominium owner, unless such other owners have expressly consented to or requested the performance of such labor or furnishing of such materials or services. Such express consent shall be deemed to have been given by the owner of any condominium in the case of emergency repairs of his condominium unit. Labor performed or services or materials furnished for the common areas, if duly authorized by the management body provided for in a declaration of restrictions governing the property, shall be deemed to be performed or furnished with the express consent of each condominium owner. The owner of any condominium may remove his condominium from a lien against two or more condominiums or any part thereof by payment to the holder of the lien of the fraction of the total sum secured by such lien which is attributable to his condominium unit. Sec. 22. Unless otherwise provided for by the declaration of restrictions, the management body, provided for herein, may acquire and hold, for the benefit of the condominium owners, tangible and intangible personal property and may dispose of the same by sale or otherwise; and the beneficial interest in such personal property shall be owned by the condominium owners in the same proportion as their respective interests in the common areas. A transfer of a condominium shall transfer to the transferee ownership of the transferor's beneficial interest in such personal property. Sec. 23. Where, in an action for partition of a condominium project or for the dissolution of condominium corporation on the ground that the project or a material part thereof has been condemned or expropriated, the Court finds that the conditions provided for in this Act or in the declaration of restrictions have not been met, the Court may decree a reorganization of the project, declaring which portion or portions of the project shall continue as a condominium project, the owners thereof, and the respective rights of said remaining owners and the just compensation, if any, that a condominium owner may be entitled to due to deprivation of his property. Upon receipt of a copy of the decree, the Register of Deeds shall enter and annotate the same on the pertinent certificate of title.

Sec. 24. Any deed, declaration or plan for a condominium project shall be liberally construed to facilitate the operation of the project, and its provisions shall be presumed to be independent and severable. Sec. 25. Whenever real property has been divided into condominiums, each condominium separately owned shall be separately assessed, for purposes of real property taxation and other tax purposes to the owners thereof and the tax on each such condominium shall constitute a lien solely thereon. PRESIDENTIAL DECREE No. 957 July 12, 1976 REGULATING THE SALE OF SUBDIVISION LOTS AND CONDOMINIUMS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF Title I TITLE AND DEFINITIONS Section 1. Title. This Decree shall be known as THE SUBDIVISION AND CONDOMINIUM BUYERS' PROTECTIVE DECREE. Section 2. Definition of Terms When used in this Decree, the following terms shall, unless the context otherwise indicates, have the following respective meanings: (a) Person. "Person" shall mean a natural or a juridical person. A juridical person refers to a business firm whether a corporation, partnership, cooperative or associations or a single proprietorship. (b) Sale or sell. "Sale" or "sell" shall include every disposition, or attempt to dispose, for a valuable consideration, of a subdivision lot, including the building and other improvements thereof, if any, in a subdivision project or a condominium unit in a condominium project. "Sale" and "sell" shall also include a contract to sell, a contract of purchase and sale, an exchange, an attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell, directly or by an agent, or by a circular, letter, advertisement or otherwise. A privilege given to a member of a cooperative, corporation, partnership, or any association and/or the issuance of a certificate or receipt evidencing or giving the right of participation in, or right to, any land in consideration of payment of the membership fee or dues, shall be deemed a sale within the meaning of this definition. (c) Buy and purchase. The "buy" and "purchase" shall include any contract to buy, purchase, or otherwise acquire for a valuable consideration a subdivision lot, including the building and other improvements, if any, in a subdivision project or a condominium unit in a condominium project. (d) Subdivision project. "Subdivision project" shall mean a tract or a parcel of land registered under Act No. 496 which is partitioned primarily for residential purposes into individual lots with or without improvements thereon, and offered to the public for sale, in cash or in

installment terms. It shall include all residential, commercial, industrial and recreational areas as well as open spaces and other community and public areas in the project. (e) Subdivision lot. "Subdivision lot" shall mean any of the lots, whether residential, commercial, industrial, or recreational, in a subdivision project. (f) Complex subdivision plan. "Complex subdivision plan" shall mean a subdivision plan of a registered land wherein a street, passageway or open space is delineated on the plan. (g) Condominium project. "Condominium project" shall mean the entire parcel of real property divided or to be divided primarily for residential purposes into condominium units, including all structures thereon. (h) Condominium unit. "Condominium unit" shall mean a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part of parts of floors) in a building or buildings and such accessories as may be appended thereto. (i) Owner. "Owner" shall refer to the registered owner of the land subject of a subdivision or a condominium project. (j) Developer. "Developer" shall mean the person who develops or improves the subdivision project or condominium project for and in behalf of the owner thereof. (k) Dealer. "Dealer" shall mean any person directly engaged as principal in the business of buying, selling or exchanging real estate whether on a full-time or part-time basis. (l) Broker. "Broker" shall mean any person who, for commission or other compensation, undertakes to sell or negotiate the sale of a real estate belonging to another. (m) Salesman. "Salesman" shall refer to the person regularly employed by a broker to perform, for and in his behalf, any or all functions of a real estate broker. (n) Authority. "Authority" shall mean the National Housing Authority. Title II REGISTRATION AND LICENSE TO SELL Section 3. National Housing Authority The National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree. Section 4. Registration of Projects The registered owner of a parcel of land who wishes to convert the same into a subdivision project shall submit his subdivision plan to the Authority which shall act upon and approve the same, upon a finding that the plan complies with the Subdivision Standards' and Regulations enforceable at the time the plan is submitted. The same procedure shall be followed in the case of a plan for a condominium project except that, in addition, said Authority shall act upon and approve the plan with respect to the

building or buildings included in the condominium project in accordance with the National Building Code (R.A. No. 6541). The subdivision plan, as so approved, shall then be submitted to the Director of Lands for approval in accordance with the procedure prescribed in Section 44 of the Land Registration Act (Act No. 496, as amended by R.A. No. 440): Provided, that it case of complex subdivision plans, court approval shall no longer be required. The condominium plan as likewise so approved, shall be submitted to the Register of Deeds of the province or city in which the property lies and the same shall be acted upon subject to the conditions and in accordance with the procedure prescribed in Section 4 of the Condominium Act (R.A. No. 4726). The owner or the real estate dealer interested in the sale of lots or units, respectively, in such subdivision project or condominium project shall register the project with the Authority by filing therewith a sworn registration statement containing the following information: (a) Name of the owner; (b) The location of the owner's principal business office, and if the owner is a non-resident Filipino, the name and address of his agent or representative in the Philippines is authorized to receive notice; (c) The names and addresses of all the directors and officers of the business firm, if the owner be a corporation, association, trust, or other entity, and of all the partners, if it be a partnership; (d) The general character of the business actually transacted or to be transacted by the owner; and (e) A statement of the capitalization of the owner, including the authorized and outstanding amounts of its capital stock and the proportion thereof which is paid-up. The following documents shall be attached to the registration statement: (a) A copy of the subdivision plan or condominium plan as approved in accordance with the first and second paragraphs of this section. (b) A copy of any circular, prospectus, brochure, advertisement, letter, or communication to be used for the public offering of the subdivision lots or condominium units; (c) In case of a business firm, a balance sheet showing the amount and general character of its assets and liabilities and a copy of its articles of incorporation or articles of partnership or association, as the case may be, with all the amendments thereof and existing by-laws or instruments corresponding thereto. (d) A title to the property which is free from all liens and encumbrances: Provided, however, that in case any subdivision lot or condominium unit is mortgaged, it is sufficient if the instrument of mortgage contains a stipulation that the mortgagee shall release the

mortgage on any subdivision lot or condominium unit as soon as the full purchase price for the same is paid by the buyer. The person filing the registration statement shall pay the registration fees prescribed therefor by the Authority. Thereupon, the Authority shall immediately cause to be published a notice of the filing of the registration statement at the expense of the applicant-owner or dealer, in two newspapers general circulation, one published in English and another in Pilipino, once a week for two consecutive weeks, reciting that a registration statement for the sale of subdivision lots or condominium units has been filed in the National Housing Authority; that the aforesaid registration statement, as well as the papers attached thereto, are open to inspection during business hours by interested parties, under such regulations as the Authority may impose; and that copies thereof shall be furnished to any party upon payment of the proper fees. The subdivision project of the condominium project shall be deemed registered upon completion of the above publication requirement. The fact of such registration shall be evidenced by a registration certificate to be issued to the applicant-owner or dealer. Section 5. License to sell. Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project. The Authority, upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent. Section 6. Performance Bond. No license to sell subdivision lots or condominium units shall be issued by the Authority under Section 5 of this Decree unless the owner or dealer shall have filed an adequate performance bond approved by said Authority to guarantee the construction and maintenance of the roads, gutters, drainage, sewerage, water system, lighting systems, and full development of the subdivision project or the condominium project and the compliance by the owner or dealer with the applicable laws and rules and regulations. The performance bond shall be executed in favor of the Republic of the Philippines and shall authorize the Authority to use the proceeds thereof for the purposes of its undertaking in case of forfeiture as provided in this Decree. Section 7. Exempt transactions. A license to sell and performance bond shall not be required in any of the following transactions: (a) Sale of a subdivision lot resulting from the partition of land among co-owners and coheirs.

(b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot. (c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt. Section 8. Suspension of license to sell. Upon verified complaint by a buyer of a subdivision lot or a condominium unit in any interested party, the Authority may, in its discretion, immediately suspend the owner's or dealer's license to sell pending investigation and hearing of the case as provided in Section 13 hereof. The Authority may motu proprio suspend the license to sell if, in its opinion, any information in the registration statement filed by the owner or dealer is or has become misleading, incorrect, inadequate or incomplete or the sale or offering for a sale of the subdivision or condominium project may work or tend to work a fraud upon prospective buyers. The suspension order may be lifted if, after notice and hearing, the Authority is convinced that the registration statement is accurate or that any deficiency therein has been corrected or supplemented or that the sale to the public of the subdivision or condominium project will neither be fraudulent not result in fraud. It shall also be lifted upon dismissal of the complaint for lack of legal basis. Until the final entry of an order of suspension, the suspension of the right to sell the project, though binding upon all persons notified thereof, shall be deemed confidential unless it shall appear that the order of suspension has in the meantime been violated. Section 9. Revocation of registration certificate and license to sell. The Authority may, motu proprio or upon verified complaint filed by a buyer of a subdivision lot or condominium unit, revoke the registration of any subdivision project or condominium project and the license to sell any subdivision lot or condominium unit in said project by issuing an order to this effect, with his findings in respect thereto, if upon examination into the affairs of the owner or dealer during a hearing as provided for in Section 14 hereof, if shall appear there is satisfactory evidence that the said owner or dealer: (a) Is insolvent; or (b) has violated any of the provisions of this Decree or any applicable rule or regulation of the Authority, or any undertaking of his/its performance bond; or (c) Has been or is engaged or is about to engage in fraudulent transactions; or (d) Has made any misrepresentation in any prospectus, brochure, circular or other literature about the subdivision project or condominium project that has been distributed to prospective buyers; or (e) Is of bad business repute; or

(f) Does not conduct his business in accordance with law or sound business principles. Where the owner or dealer is a partnership or corporation or an unincorporated association, it shall be sufficient cause for cancellation of its registration certificate and its license to sell, if any member of such partnership or any officer or director of such corporation or association has been guilty of any act or omission which would be cause for refusing or revoking the registration of an individual dealer, broker or salesman as provided in Section 11 hereof. Section 10. Registers of subdivision lots and condominium units. A record of subdivision lots and condominium units shall be kept in the Authority wherein shall be entered all orders of the Authority affecting the condition or status thereof. The registers of subdivision lots and condominium units shall be open to public inspection subject to such reasonable rules as the Authority may prescribe. Title III DEALERS, BROKERS AND SALESMEN Section 11. Registration of dealers, brokers and salesmen. No real estate dealer, broker or salesman shall engage in the business of selling subdivision lots or condominium units unless he has registered himself with the Authority in accordance with the provisions of this section. If the Authority shall find that the applicant is of good repute and has complied with the applicable rules of the Authority, including the payment of the prescribed fee, he shall register such applicant as a dealer, broker or salesman upon filing a bond, or other security in lieu thereof, in such sum as may be fixed by the Authority conditioned upon his faithful compliance with the provisions of this Decree: Provided, that the registration of a salesman shall cease upon the termination of his employment with a dealer or broker. Every registration under this section shall expire on the thirty-first day of December of each year. Renewal of registration for the succeeding year shall be granted upon written application therefor made not less than thirty nor more than sixty days before the first day of the ensuing year and upon payment of the prescribed fee, without the necessity of filing further statements or information, unless specifically required by the Authority. All applications filed beyond said period shall be treated as original applications. The names and addresses of all persons registered as dealers, brokers, or salesmen shall be recorded in a Register of Brokers, Dealers and Salesmen kept in the Authority which shall be open to public inspection. Section 12. Revocation of registration as dealers, brokers or salesmen. Registration under the preceding section may be refused or any registration granted thereunder, revoked by the Authority if, after reasonable notice and hearing, it shall determine that such applicant or registrant: 1. Has violated any provision of this Decree or any rule or regulation made hereunder; or

2. Has made a material false statement in his application for registration; or 3. Has been guilty of a fraudulent act in connection with any sale of a subdivision lot or condominium unit; or 4. Has demonstrated his unworthiness to transact the business of dealer, broker, or salesman, as the case may be. In case of charges against a salesman, notice thereof shall also be given the broker or dealer employing such salesman. Pending hearing of the case, the Authority shall have the power to order the suspension of the dealer's, broker's, of salesman's registration; provided, that such order shall state the cause for the suspension. The suspension or revocation of the registration of a dealer or broker shall carry with it all the suspension or revocation of the registrations of all his salesmen. Title IV PROCEDURE FOR REVOCATION OF REGISTRATION CERTIFICATE Section 13. Hearing. In the hearing for determining the existence of any ground or grounds for the suspension and/or revocation of registration certificate and license to sell as provided in Section 8 and 9 hereof, the following shall be complied with: (a) Notice. No such hearing shall proceed unless the respondent is furnished with a copy of the complaint against him or is notified in writing of the purpose of such hearing. (b) Venue. The hearing may be held before the officer or officers designated by the Authority on the date and place specified in the notice. (c) Nature of proceeding. The proceedings shall be non-litigious and summary in nature without regard to legal technicalities obtaining in courts of law. The Rules of court shall not apply in said hearing except by analogy or in a suppletory character and whenever practicable and convenient. (d) Power incidental to the hearing. For the purpose of the hearing or other proceeding under this Decree, the officer or officers designated to hear the complaint shall have the power to administer oaths, subpoena witnesses, conduct ocular inspections, take depositions, and require the production of any book, paper, correspondence, memorandum, or other record which are deemed relevant or material to the inquiry. Section 14. Contempt. (a) Direct contempt. The officer or officers designated by the Authority to hear the complaint may summarily adjudge in direct contempt any person guilty of misbehavior in the presence of or so near the said hearing officials as to obstruct or interrupt the proceedings before the same or of refusal to be sworn or to answer as a witness or to subscribe an affidavit or

deposition when lawfully required to do so. The person found guilty of direct contempt under this section shall be punished by a fine not exceeding Fifty (P50.00) Pesos or imprisonment not exceeding five (5) days, or both. (b) Indirect contempt. The officer or officers designated to hear the complaint may also adjudge any person in indirect contempt on grounds and in the manner prescribed in Rule 71 of the Revised Rules of Court. Section 15. Decision. The case shall be decided within thirty (30) days from the time the same is submitted for decision. The Decision may order the revocation of the registration of the subdivision or condominium project, the suspension, cancellation, or revocation of the license to sell and/or forfeiture, in whole or in part, of the performance bond mentioned in Section 6 hereof. In case forfeiture of the bond is ordered, the Decision may direct the provincial or city engineer to undertake or cause the construction of roads and of other requirements for the subdivision or condominium as stipulated in the bond, chargeable to the amount forfeited. Such decision shall be immediately executory and shall become final after the lapse of 15 days from the date of receipt of the Decision. Section 16. Cease and Desist Order. Whenever it shall appear to the Authority that any person is engaged or about to engage in any act or practice which constitutes or will constitute a violation of the provisions of this Decree, or of any rule or regulation thereunder, it may, upon due notice and hearing as provided in Section 13 hereof, issue a cease and desist order to enjoin such act or practices. Section 17. Registration. All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of the Register of Deeds of the province or city where the property is situated. Whenever a subdivision plan duly approved in accordance with Section 4 hereof, together with the corresponding owner's duplicate certificate of title, is presented to the Register of Deeds for registration, the Register of Deeds shall register the same in accordance with the provisions of the Land Registration Act, as amended: Provided, however, that it there is a street, passageway or required open space delineated on a complex subdivision plan hereafter approved and as defined in this Decree, the Register of Deeds shall annotate on the new certificate of title covering the street, passageway or open space, a memorandum to the effect that except by way of donation in favor of a city or municipality, no portion of any street, passageway, or open space so delineated on the plan shall be closed or otherwise disposed of by the registered owner without the requisite approval as provided under Section 22 of this Decree. Section 18. Mortgages. No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee

who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereto; Section 19. Advertisements. Advertisements that may be made by the owner or developer through newspaper, radio, television, leaflets, circulars or any other form about the subdivision or the condominium or its operations or activities must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive the public. The owner or developer shall answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in this Decree.

Section 20. Time of Completion. Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority. Section 21. Sales Prior to Decree. In cases of subdivision lots or condominium units sold or disposed of prior to the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium project to complete compliance with his or its obligations as provided in the preceding section within two years from the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond is filed in accordance with Section 6 hereof. Failure of the owner or developer to comply with the obligations under this and the preceding provisions shall constitute a violation punishable under Sections 38 and 39 of this Decree. Section 22. Alteration of Plans. No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities for public use and/or other form of subdivision development as contained in the approved subdivision plan and/or represented in its advertisements, without the permission of the Authority and the written conformity or consent of the duly organized homeowners association, or in the absence of the latter, by the majority of the lot buyers in the subdivision. Section 23. Non-Forfeiture of Payments. No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within

the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate. Section 24. Failure to pay installments. The rights of the buyer in the event of this failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552. Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to the corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary. Section 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith. Section 26. Realty Tax. Real estate tax and assessment on a lot or unit shall de paid by the owner or developer without recourse to the buyer for as long as the title has not passed the buyer; Provided, however, that if the buyer has actually taken possession of and occupied the lot or unit, he shall be liable to the owner or developer for such tax and assessment effective the year following such taking of possession and occupancy. Section 27. Other Charges. No owner or developer shall levy upon any lot or buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowners association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project. Section 28. Access to Public Offices in the Subdivisions. No owner or developer shall deny any person free access to any government office or public establishment located within the subdivision or which may be reached only by passing through the subdivision. Section 29. Right of Way to Public Road. The owner or developer of a subdivision without access to any existing public road or street must secure a right of way to a public road or street and such right of way must be developed and maintained according to the requirement of the government and authorities concerned. Section 30. Organization of Homeowners Association. The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development.

Section 31. Donations of roads and open spaces to local government. The registered owner or developer of the subdivision or condominium project, upon completion of the development of said project may, at his option, convey by way of donation the roads and open spaces found within the project to the city or municipality wherein the project is located. Upon acceptance of the donation by the city or municipality concerned, no portion of the area donated shall thereafter be converted to any other purpose or purposes unless after hearing, the proposed conversion is approved by the Authority. Section 32. Phases of Subdivision. For purposes of complying with the provisions of this Decree, the owner or developer may divide the development and sale of the subdivision into phases, each phase to cover not less than ten hectares. The requirement imposed by this Decree on the subdivision as a whole shall be deemed imposed on each phase. Section 33. Nullity of waivers. Any condition, stipulation, or provision in contract of sale whereby any person waives compliance with any provision of this Decree or of any rule or regulation issued thereunder shall be void. Section 34. Visitorial powers. This Authority, through its duly authorized representative may, at any time, make an examination into the business affairs, administration, and condition of any person, corporation, partnership, cooperative, or association engaged in the business of selling subdivision lots and condominium units. For this purpose, the official authorized so to do shall have the authority to examine under oath the directors, officers, stockholders or members of any corporation, partnership, association, cooperative or other persons associated or connected with the business and to issue subpoena or subpoena duces tecum in relation to any investigation that may arise therefrom. The Authority may also authorize the Provincial, City or Municipal Engineer, as the case may be, to conduct an ocular inspection of the project to determine whether the development of said project conforms to the standards and specifications prescribed by the government. The books, papers, letters, and other documents belonging to the person or entities herein mentioned shall be open to inspection by the Authority or its duly authorized representative. Section 35. Take-over Development. The Authority, may take over or cause the development and completion of the subdivision or condominium project at the expenses of the owner or developer, jointly and severally, in cases where the owner or developer has refused or failed to develop or complete the development of the project as provided for in this Decree. The Authority may, after such take-over, demand, collect and receive from the buyers the installment payments due on the lots, which shall be utilized for the development of the subdivision. Section 36. Rules and Regulations. The Authority shall issue the necessary standards, rules and regulations for the effective implementation of the provisions of this Decree. Such standards, rules and regulations shall take effect immediately after their publication three times a week for two consecutive weeks in any newspaper of general circulation.

Section 37. Deputization of law enforcement agencies. The Authority may deputize the Philippine Constabulary or any law enforcement agency in the execution of its final orders, rulings or decisions. Section 38. Administrative Fines. The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of this Decree or of any rule or regulation thereunder. Fines shall be payable to the Authority and enforceable through writs of execution in accordance with the provisions of the Rules of Court. Section 39. Penalties. Any person who shall violate any of the provisions of this Decree and/or any rule or regulation that may be issued pursuant to this Decree shall, upon conviction, be punished by a fine of not more than twenty thousand (P20,000.00) pesos and/or imprisonment of not more than ten years: Provided, That in the case of corporations, partnership, cooperatives, or associations, the President, Manager or Administrator or the person who has charge of the administration of the business shall be criminally responsible for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto. Section 40. Liability of controlling persons. Every person who directly or indirectly controls any person liable under any provision of this Decree or of any rule or regulation issued thereunder shall be liable jointly and severally with and to the same extent as such controlled person unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. Section 41. Other remedies. The rights and remedies provided in this Decree shall be in addition to any and all other rights and remedies that may be available under existing laws. Cases: Lien for condominium dues [G.R. No. 163196. July 4, 2008.] FIRST MARBELLA CONDOMINIUM ASSOCIATION, INC., petitioner, vs. AUGUSTO GATMAYTAN, respondent. DECISION AUSTRIA-MARTINEZ, J p: From the January 7, 2004 Order 1 of the Regional Trial Court (RTC), Pasay City, denying the request of First Marbella Condominium Association, Inc. (petitioner) for extrajudicial foreclosure against Augusto Gatmaytan (respondent); and the March 31, 2004 RTC Order, 2 denying petitioner's Motion for Reconsideration, the latter filed directly with this Court a Petition for Review on Certiorari under Rule 45 of the Rules of Court on this sole ground: HAICcD The Executive Judge of the Regional Trial Court of Pasay City gravely erred in dismissing the petition in view of the fact that:

(A)Section 20 of Rep. Act No. 4726, as amended, otherwise known as the "Condominium Act", expressly grant the petitioner, being the acknowledged association of unit owners at Marbella I Condominium, the right to enforce its liens of unpaid dues and other assessments in the same manner provided for by law for judicial or extra-judicial foreclosure of mortgage of real property; and (B)Such practice of auctioning the delinquent condominium unit through a petition for extrajudicial foreclosure of mortgage, as aforestated is permitted in other jurisdictions, such as in the City of Manila. 3 The factual antecedents are as follows. Respondent is the registered owner of Fontavilla No. 501 (condominium unit), Marbella I Condominium, Roxas Boulevard, Pasay City, under Condominium Certificate of Title No. 1972 (CCT No. 1972). 4 Inscribed on his title is a Declaration of Restrictions, to wit: CcHDSA Entry No. 65370/T-20065 DECLARATIONS OF RESTRICTIONS executed by the herein registered owner, is hereon annotated restrictions shall be deemed to run with the land, the bldg. & other improvements making up the project, shall constitute lien upon the project, and each unit and shall inure to the benefit of, and be binding upon all units owners, purchasers, interchangeably or sometimes referred to in this Master of Deed with Dec. of Restrictions as occupant, [sic] or holding any w/o [sic] or any right or interest therein or in the project, pursuant to the prov. of the condominium act or other pertinent laws. See restrictions and conditions imposed on Doc. No. 114, Page 24, Bk. I, s. of 1974 of the Not. Pub. for Rizal, M. Perez, Cardenas among w/c are those dealing on scope & coverage; Management Body; repair, alteration et [sic] assessment real property of restrictions & bldg. rules & waivers rights and assignee, tenants occupants of unit validity, [sic] amendment of declaration dated March 19, 1974. Date of inscription May 9, 1979 3:02 p.m. 5 (Emphasis supplied). IcDCaS Also inscribed is a Notice of Assessment, which states: Entry No. 96-2466/CCT No. 1972 NOTICE OF ASSESSMENT Executed by MILAGROS D. CUBACUB in her capacity as Vice-President/Administrator of FIRST MARBELLA CONDOMINIUM ASSOCIATION, INC. (FMCAI) [herein petitioner], stating among other things that the condominium unit, described herein has an outstanding dues with the FMCAI in the sum of P775,786.17, inclusive of interests, penalties and attorney's fees, which aforementioned liabilities constitute as first lien against this condominium unit pursuant to the Master Deed of Restrictions. (Doc. No. 34; Page No. 7; Book No. III; Series of 1996 before Notary Public Jose A. Suing, Notary Public for Quezon City). Date of Instrument March 27, 1996. Date of Inscription May 3, 1996 2:10 p.m. 6 On November 11, 2003, petitioner filed with the RTC, through the Office of the Clerk of Court & Ex-Oficio Sheriff, a Petition 7 for extrajudicial foreclosure of the condominium unit of

respondent, alleging that it (petitioner) is a duly organized association of the tenants and homeowners of Marbella I Condominium; that respondent is a member thereof but has unpaid association dues amounting to P3,229,104.89, as of June 30, 2003; and that the latter refused to pay his dues despite demand. The petition is docketed as File Case No. 03033. Attached to it are the June 30, 2003 Statement of Account 8 and July 22, 2000 demand letter 9 issued to respondent. TAacIE In a letter dated November 21, 2003, the Clerk of Court, as Ex-Oficio Sheriff, recommended to the RTC Executive Judge that the petition be dismissed for the following reasons: Under the facts given, no mortgage exists between the petitioner and respondent. Evidently, it is not one of those contemplated under Act 3135 as amended by Act 4118. The allegation simply does not show a mortgagor-mortgagee relationship since respondent liability arises from his failure to pay dues, assessments and charges due to the petitioner. As clearly stated, the authority of the Executive Judge under Administrative Matter No. 9910-05-0, as amended dated March 1, 2001, covers extra-judicial foreclosure of real estate mortgages under R.A. No. 3135 and chattel mortgages under P.D. No. 1508. There is nothing in the above mentioned Circular which authorizes the Executive Judge and/or the Ex-Officio Sheriff to extra judicially foreclose properties covered by obligations other than the said mortgages. Hence, the subject petition is not proper for extra-judicial foreclosure under the supervision of the Executive Judge. Dismissal of the subject petition is recommended. 10 Agreeing with the Clerk of Court, the RTC Executive Judge issued on January 7, 2004 the following Order: Upon perusal of the pertinent laws and Supreme Court Resolutions, this Court concurs with the position taken by the Ex-Oficio Sheriff that herein petition is not within the coverage of Administrative Matter No. 99-10-05-0 as amended, dated March 1, 2001 re: Procedure in Extra Judicial Foreclosure of Mortgage, paragraph 1 thereof is hereby quoted as follows: "1.All applications for extra-judicial foreclosure of mortgage whether under the direction of the sheriff or a notary public, pursuant to Act 3135, as amended by Act 4118, and Act 1508, as amended, shall be filed with the Executive Judge, through the Clerk of Court who is also the Ex-Oficio Sheriff." Hence, it is not within the authority of the Executive Judge to supervise and approve extra judicial foreclosures of mortgages. WHEREFORE, the request for extra-judicial foreclosure of the subject condominium unit is DENIED. Consequently, the petition is DISMISSED. cTEICD SO ORDERED. 11 (Emphasis added). Petitioner filed a Motion for Reconsideration, 12 but the RTC Executive Judge denied it in an Order 13 dated March 31, 2004. Hence, the present petition.

Petitioner asserts that it is expressly provided under Section 20 of Republic Act (R.A.) No. 4726 that it has the right to cause the extrajudicial foreclosure of its annotated lien on the condominium unit. Its petition then is cognizable by the RTC under Administrative Matter No. 99-10-05. 14 In his Comment, 15 Supplemental Comment 16 and Memorandum, 17 respondent objects to petitioner's direct appeal to this Court from an Order issued by the RTC on a mere administrative matter. 18 Respondent also impugns petitioner's right to file the petition for extra-judicial foreclosure, pointing out that the latter does not hold a real estate mortgage on the condominium unit or a special power of attorney to cause the extra-judicial foreclosure sale of said unit. 19 Respondent claims that there is even a pending litigation regarding the validity of petitioner's constitution as a homeowners association and its authority to assess association dues, annotate unpaid assessments on condominium titles and enforce the same through extrajudicial foreclosure sale. 20 In sum, respondent contends that petitioner has no factual or legal basis to file the petition for extrajudicial foreclosure. HDTISa The petition lacks merit. Only a judgment, final order or resolution rendered by a court in the exercise of its judicial functions relative to an actual controversy is subject to an appeal to this Court by way of a Petition for Review on Certiorari under Rule 45 of the Rules of Court. 21 The January 7, 2004 Order and March 21, 2004 Order assailed herein were issued by the RTC Executive Judge in the exercise of his administrative function to supervise the ministerial duty of the Clerk of Court as Ex-Oficio Sheriff in the conduct of an extrajudicial foreclosure sale; hence, said orders are not appealable under Rule 45. Rather, the correct mode of appeal is by petition for mandamus 22 under Section 3, Rule 65 of the Rules of Court, to wit: Sec. 3.Petition for mandamus When any tribunal, corporation, board, officer or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent, immediately or at some other time to be specified by the court, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the respondent. aIcCTA Although under Section 5, 23 Rule 56, an erroneous appeal may be dismissed outright, this Court shall not exercise such option; but instead, shall treat the present petition as a petition for mandamus to obviate further litigation between the parties. 24 Yet, in order to avail itself of a writ of mandamus, petitioner must establish that it has a clear right to the extrajudicial foreclosure sale of the condominium unit of respondent. 25 Under Circular No. 7-2002, 26 implementing Supreme Court Administrative Matter No. 99-

10-05-0, 27 it is mandatory that a petition for extrajudicial foreclosure be supported by evidence that petitioner holds a special power or authority to foreclose, thus:

Sec. 1.All applications for extra-judicial foreclosure of mortgage, whether under the direction of the Sheriff or a notary public pursuant to Art. No. 3135, as amended, and Act 1508, as amended, shall be filed with the Executive Judge, through the Clerk of Court, who is also the Ex-Officio Sheriff (A.M. No. 99-10-05-0, as amended, March 1, 2001). DAHSaT Sec. 2.Upon receipt of the application, the Clerk of Court shall: a.Examine the same to ensure that the special power of attorney authorizing the extrajudicial foreclosure of the real property is either inserted into or attached to the deed of real estate mortgage (Act No. 3135, Sec. 1, as amended) . . . . Without proof of petitioner's special authority to foreclose, the Clerk of Court as Ex-Oficio Sheriff is precluded from acting on the application for extrajudicial foreclosure. 28 In the present case, the only basis of petitioner for causing the extrajudicial foreclosure of the condominium unit of respondent is a notice of assessment annotated on CCT No. 1972 in accordance with Section 20 of R.A. No. 4726. However, neither annotation nor law vests it with sufficient authority to foreclose on the property. DaACIH The notice of assessment contains no provision for the extrajudicial foreclosure of the condominium unit. All that it states is that the assessment of petitioner against respondent for unpaid association dues constitutes a "first lien against [the] condominium unit". 29 Neither does Section 20 of R.A. No. 4726 30 grant petitioner special authority to foreclose. All that the law provides is the following: Sec. 20.The assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs (including attorney's fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium to be registered with the Register of Deeds of the city or province where such condominium project is located. The notice shall state the amount of such assessment and such other charges thereon as may be authorized by the declaration of restrictions, a description of condominium unit against which same has been assessed, and the name of the registered owner thereof. Such notice shall be signed by an authorized representative of the management body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges or other satisfaction thereof, the management body shall cause to be registered a release of the lien. HcSCED Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances,

such liens may be enforced in the same manner provided for by law for the judicial or extrajudicial foreclosure of mortgage or real property. Unless otherwise provided for in the declaration of the restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner shall have the right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages. (Emphasis supplied). Clearly, Section 20 merely prescribes the procedure by which petitioner's claim may be treated as a superior lien i.e., through the annotation thereof on the title of the condominium unit. 31 While the law also grants petitioner the option to enforce said lien through either the judicial or extrajudicial foreclosure sale of the condominium unit, Section 20 does not by itself, ipso facto, authorize judicial as extra-judicial foreclosure of the condominium unit. Petitioner may avail itself of either option only in the manner provided for by the governing law and rules. As already pointed out, A.M. No. No. 99-10-05-0, as implemented under Circular No. 7-2002, requires that petitioner furnish evidence of its special authority to cause the extrajudicial foreclosure of the condominium unit. SaDICE There being no evidence of such special authority, petitioner failed to establish a clear right to a writ of mandamus to compel the RTC to act on its petition for extrajudicial foreclosure. WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner. EaHATD SO ORDERED. e. Alteration of a property under co-ownership cases: [G.R. No. 164110. February 12, 2008.] LEONOR B. CRUZ, petitioner, vs. TEOFILA M. CATAPANG, respondent. DECISION QUISUMBING, J p: 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 respondent's 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 7th 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 defendant's 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 attorney's fees of P10,000.00, plus costs of suit. SO ORDERED. 10 On appeal, the RTC, Branch 86, Taal, Batangas, affirmed the MCTC's 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 RTC's decision. The Court of Appeals held that there is no cause of action for forcible entry in this case because respondent's 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 petitioner's 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 petitioner's 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 coowned 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 respondent's 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. Respondent's 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, respondent's 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, respondent's acts constitute forcible entry.

Petitioner's 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.

f. extent of co-owners right cases: [G.R. No. 61584. November 25, 1992.] DONATO S. PAULMITAN, JULIANA P. FANESA and RODOLFO FANESA, petitioners, vs. COURT OF APPEALS, ALICIO PAULMITAN, ELENA PAULMITAN, ABELINO PAULMITAN, ANITA PAULMITAN, BAKING PAULMITAN, ADELINA PAULMITAN and ANITO PAULMITAN, respondents. SYLLABUS 1.CIVIL LAW; PROPERTY; CO-OWNERSHIP; SALE BY CO-OWNER OF THING OWNED IN COMMON WITHOUT THE CONSENT OF ALL CO-OWNERS; CONSEQUENCES; CASE AT BAR. When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa, he was only a co-owner with respondents and as such, he could only sell that portion which may be allotted to him upon termination of the co-ownership. The sale did not prejudice the rights of respondents to one half (1/2) undivided share of the land which they inherited from their father. It did not vest ownership in the entire land with the buyer but transferred only the seller's pro indiviso share in the property and consequently made the buyer a co-owner of the land until it is partitioned. In Bailon-Casilao v. Court of Appeals, the Court, through Justice Irene R. Cortes, outlined the effects of a sale by one co-owner without the content of all the co-owners, thus: "The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil Code. Thus: Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it and even substitute another person in its

enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common. [Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)]. From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property." Applying this principle to the case at bar, the sale by petitioner Donato Paulmitan of the land to his daughter, petitioner Juliana P. Fanesa, did not give to the latter ownership over the entire land but merely transferred to her the one half (1/2) undivided share of her father, thug making her the co-owner of the land in question with the respondents, her first cousins. 2.ID.; ID.; ID.; REDEMPTION BY CO-OWNER OF THING OWNED IN COMMON; CONSEQUENCES; CASE AT BAR. The redemption of the land made by Fanesa did not terminate the coownership nor give her title to the entire land subject of the co-ownership. While the records show that petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership (Supra, art. 489). There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: ART. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership. The result is that the property remains to be in a condition of co-ownership. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name (Supra, art. 1607). But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership." Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the redemption she made, nevertheless, she did acquire the right to be reimbursed for half of the redemption price she paid to the Provincial Government of Negros Occidental on behalf of her co-owners. Until reimbursed, Fanesa holds a lien upon the subject property for the amount due her. 3.ID.; SUCCESSION; RIGHTS TO SUCCESSION TRANSMITTED FROM MOMENT OF DEATH OF DECEDENT; RELATIVE NEAREST IN DEGREE EXCLUDES MORE DISTANT ONES; CASE AT BAR. When Agatona died in 1953, she was survived by two (2) sons, Donato and Pascual. Since it is well-settled by virtue of Article 777 of the Civil Code that "[t]he rights to the succession

are transmitted from the moment of the death of the decedent," the right of ownership, not only of Donato but also of Pascual, over their respective shares in the inheritance was automatically and by operation of law vested in them in 1953 when their mother died intestate. At that stage, the children of Donato and Pascual did not yet have any right over the inheritance since "[i]n every inheritance the relative nearest in degree excludes the more distant ones." Donato and Pascual excluded their children as to the right to inherit from Agatona Sagario Paulmitan, their mother. 4.ID.; ID.; BEFORE PARTITION WHOLE ESTATE OF DECEDENT OWNED IN COMMON BY HEIRS; CASE AT BAR. From the time of the death of Agatona Sagario Paulmitan to the subsequent passing away of her son Pascual in 1953, the estate remained unpartitioned. Article 1078 of the Civil Code provides: "Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased." Donato and Pascual Paulmitan were, therefore, coowners of the estate left by their mother as no partition was ever made. When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him in the coownership of the disputed property. Pascual Paulmitan's right of ownership over an undivided portion of the property passed on to his children, who, from the time of Pascual's death, became co-owners with their uncle Donato over the disputed decedent estate. 5.REMEDIAL LAW; APPEAL; ONLY QUESTIONS OF LAW RAISED IN PETITION FOR REVIEW; FACTUAL FINDINGS OF TRIAL COURT AND COURT OF APPEALS GENERALLY FINAL AND CONCLUSIVE. Petitioners dispute the order of the trial court, which the Court of Appeals affirmed, for them to pay private respondents P5,000.00 per year from 1966 until the partition of the estate which represents the share of private respondents in the fruits of the land. According to petitioners, the land is being leased for P2,000.00 per year only. This assigned error, however, raises a factual question. The settled rule is that only questions of law may be raised in a petition for review. As a general rule, findings of fact made by the trial court and the Court of Appeals are final and conclusive and cannot be reviewed on appeal. DECISION ROMERO, J p: This is a petition for review on certiorari seeking the reversal of the decision 1 of the Court of Appeals, dated July 14, 1982 in CA-G.R. No. 62255-R entitled "Alicio Paulmitan, et al. v. Donato Sagario Paulmitan, et al." which affirmed the decision 2 of the then Court of First Instance (now RTC) of Negros Occidental, 12th Judicial District, Branch IV, Bacolod City, in Civil Case No. 11770. The antecedent facts are as follows: Agatona Sagario Paulmitan, who died sometime in 1953, 3 left the two following parcels of land located in the Province of Negros Occidental: (1) Lot No. 757 with an area of 1,946 square meters covered by Original Certificate of Title (OCT) No. RO-8376; and (2) Lot No. 1091 with an area of 69,080 square meters and covered by OCT No. RO-11653. From her marriage with Ciriaco Paulmitan, who is also now deceased, Agatona begot two legitimate

children, namely: Pascual Paulmitan, who also died in 1953, 4 apparently shortly after his mother passed away, and Donato Paulmitan, who is one of the petitioners. Petitioner Juliana P. Fanesa is Donato's daughter while the third petitioner, Rodolfo Fanesa, is Juliana's husband. Pascual Paulmitan, the other son of Agatona Sagario, is survived by the respondents, who are his children, namely: Alicio, Elena, Abelino, Adelina, Anita, Baking and Anito, all surnamed Paulmitan. Until 1963, the estate of Agatona Sagario Paulmitan remained unsettled and the titles to the two lots mentioned above remained in the name of Agatona. However, on August 11, 1963, petitioner Donato Paulmitan executed an Affidavit of Declaration of Heirship, extrajudicially adjudicating unto himself Lot No. 757 based on the claim that he is the only surviving heir of Agatona Sagario. The affidavit was filed with the Register of Deeds of Negros Occidental who, on August 20, 1963, cancelled OCT No. RO-8376 in the name of Agatona Sagario and issued Transfer Certificate of Title (TCT) No. 35979 in Donato's name. As regards Lot No. 1091, Donato executed on May 28, 1974 a Deed of Sale over the same in favor of petitioner Juliana P. Fanesa, his daughter. 5

In the meantime, sometime in 1952, for non-payment of taxes, Lot No. 1091 was forfeited and sold at a public auction, with the Provincial Government of Negros Occidental being the buyer. A Certificate of Sale over the land was executed by the Provincial Treasurer in favor of the Provincial Board of Negros Occidental. 6 On May 29, 1974, Juliana P. Fanesa redeemed the property from the Provincial Government of Negros Occidental for the amount of P2,959.09. 7 On learning of these transactions, respondents children of the Late Pascual Paulmitan filed on January 18, 1975 with the Court of First Instance of Negros Occidental a Complaint against petitioners to partition the properties plus damages. Cdpr Petitioners set up the defense of prescription with respect to Lot No. 757 as an affirmative defense, contending that the Complaint was filed more than eleven years after the issuance of a transfer certificate of title to Donato Paulmitan over the land as a consequence of the registration with the Register of Deeds, of Donato's affidavit extrajudicially adjudicating unto himself Lot No. 757. As regards Lot No. 1091, petitioner Juliana P. Fanesa claimed in her Answer to the Complaint that she acquired exclusive ownership thereof not only by means of a deed of sale executed in her favor by her father, petitioner Donato Paulmitan, but also by way of redemption from the Provincial Government of Negros Occidental. Acting on the petitioners' affirmative defense of prescription with respect to Lot No. 757, the trial court issued an order dated April 22, 1976 dismissing the complaint as to the said property upon finding merit in petitioners' affirmative defense. This order, which is not the object of the present petition, has become final after respondents' failure to appeal therefrom.

Trial proceeded with respect to Lot No. 1091. In a decision dated May 20, 1977, the trial court decided in favor of respondents as to Lot No. 1091. According to the trial court, the respondents, as descendants of Agatona Sagario Paulmitan were entitled to one-half (1/2) of Lot No. 1091, pro indiviso. The sale by petitioner Donato Paulmitan to his daughter, petitioner Juliana P. Fanesa, did not prejudice their rights. And the repurchase by Juliana P. Fanesa of the land from the Provincial Government of Negros Occidental did not vest in Juliana exclusive ownership over the entire land but only gave her the right to be reimbursed for the amount paid to redeem the property. The trial court ordered the partition of the land and directed petitioners Donato Paulmitan and Juliana P. Fanesa to pay private respondents certain amounts representing the latter's share in the fruits of the land. On the other hand, respondents were directed to pay P1,479.55 to Juliana P. Fanesa as their share in the redemption price paid by Fanesa to the Provincial Government of Negros Occidental. The dispositive portion of the trial court's decision reads: "WHEREFORE, judgment is hereby rendered on the second cause of action pleaded in the complaint as follows: "1.The deed of sale (Exh. 'F') dated May 28, 1974 is valid insofar as the one-half undivided portion of Lot 1091 is concerned as to vest ownership over said half portion in favor of defendant Juliana Fanesa and her husband Rodolfo Fanesa, while the remaining half shall belong to plaintiffs, pro-indiviso; "2.Lot 1091, Cadastral Survey of Pontevedra, Province of Negros Occidental, now covered by TCT No. RO-11653 (N.A.), is ordered partitioned. The parties must proceed to an actual partition by property instrument of partition, submitting the corresponding subdivision within sixty (60) days from finality of this decision, and should they fail to agree, commissioners of partition may be appointed by the Court; "3.Pending the physical partition, the Register of Deeds of Negros Occidental is ordered to cancel Original Certificate of Title No. RO-11653 (N.A.) covering Lot 1091, Pontevedra Cadastre, and to issue in lieu thereof a new certificate of title in the name of plaintiffs and defendants, one half portion each, pro-indiviso, as indicated in paragraph 1 above; "4.Plaintiffs are ordered to pay, jointly and severally, defendant Juliana Fanesa the amount of P1,479.55 with interest at the legal rate from May 28, 1974 until paid; "5.Defendants Donato Sagario Paulmitan and Juliana Paulmitan Fanesa are ordered to account to plaintiffs and to pay them, jointly and severally, the value of the produce from Lot 1091 representing plaintiffs' share in the amount of P5,000.00 per year from 1966 up to the time of actual partition of the property, and to pay them the sum of P2,000.00 as attorney's fees as well as the costs of the suit." xxx xxx xxx On appeal, the Court of Appeals affirmed the trial court's decision. Hence this petition. To determine the rights and obligations of the parties to the land in question, it is well to review, initially, the relatives who survived the decedent Agatona Sagario Paulmitan. When

Agatona died in 1953, she was survived by two (2) sons, Donato and Pascual. A few months later in the same year, Pascual died, leaving seven children, the private respondents. On the other hand, Donato's sole offspring was petitioner Juliana P. Fanesa. At the time of the relevant transactions over the properties of decedent Agatona Sagario Paulmitan, her son Pascual had died, survived by respondents, his children. It is, thus, tempting to apply the principles pertaining to the right of representation as regards respondents. It must, however, be borne in mind that Pascual did not predecease his mother 8 thus precluding the operation of the provisions in the Civil Code on the right of representation 9 with respect to his children, the respondents. When Agatona Sagario Paulmitan died intestate in 1952, her two (2) sons Donato and Pascual were still alive. Since it is well-settled by virtue of Article 777 of the Civil Code that "[t]he rights to the succession are transmitted from the moment of the death of the decedent," 10 the right of ownership, not only of Donato but also of Pascual, over their respective shares in the inheritance was automatically and by operation of law vested in them in 1953 when their mother died intestate. At that stage, the children of Donato and Pascual did not yet have any right over the inheritance since "[i]n every inheritance the relative nearest in degree excludes the more distant ones." 11 Donato and Pascual excluded their children as to the right to inherit from Agatona Sagario Paulmitan, their mother. cdll From the time of the death of Agatona Sagario Paulmitan to the subsequent passing away of her son Pascual in 1953, the estate remained unpartitioned. Article 1078 of the Civil Code provides: "Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased." 12 Donato and Pascual Paulmitan were, therefore, co-owners of the estate left by their mother as no partition was ever made. When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him in the co-ownership of the disputed property. Pascual Paulmitan's right of ownership over an undivided portion of the property passed on to his children, who, from the time of Pascual's death, became co-owners with their uncle Donato over the disputed decedent estate. Petitioner Juliana P. Fanesa claims ownership over Lot No. 1091 by virtue of two transactions, namely: (a) the sale made in her favor by her father Donato Paulmitan; and (b) her redemption of the land from the Provincial Government of Negros Occidental after it was forfeited for non-payment of taxes. When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa, he was only a co-owner with respondents and as such, he could only sell that portion which may be allotted to him upon termination of the co-ownership. 13 The sale did not prejudice the rights of respondents to one half (1/2) undivided share of the land which they inherited from their father. It did not vest ownership in the entire land with the buyer but transferred only the seller's pro indiviso share in the property 14 and consequently made the buyer a co-owner of the land until it is partitioned. In Bailon-Casilao v. Court of Appeals, 15 the Court, through Justice Irene R. Cortes, outlined the effects of a sale by one co-owner without the content of all the co-owners, thus:

"The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil Code. Thus: ARTICLE 493.Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the coownership. [Emphasis supplied.]. As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common. [Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)].

From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other coowners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property." Applying this principle to the case at bar, the sale by petitioner Donato Paulmitan of the land to his daughter, petitioner Juliana P. Fanesa, did not give to the latter ownership over the entire land but merely transferred to her the one half (1/2) undivided share of her father, thug making her the co-owner of the land in question with the respondents, her first cousins. Petitioner Juliana P. Fanesa also claims ownership of the entire property by virtue of the fact that when the Provincial Government of Negros Occidental bought the land after it was forfeited for non-payment of taxes, she redeemed it. The contention is without merit. The redemption of the land made by Fanesa did not terminate the co-ownership nor give her title to the entire land subject of the co-ownership. Speaking on the same issue raised by petitioners, the Court, in Adille v. Court of Appeals, 16 resolved the same with the following pronouncements: "The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common?

Essentially, it is the petitioners' contention that the property subject of dispute devolved upon him upon the failure of his co-heirs to join him in its redemption within the period required by law. He relies on the provisions of Article 1515 of the old Civil Code, Article 1613 of the present Code, giving the vendee a retro the right to demand redemption of the entire property. There is no merit in this petition. The right of repurchase may be exercised by a co-owner with respect to his share alone (CIVIL CODE, art. 1612; CIVIL CODE (1889), art. 1514.). While the records show that petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership (Supra, art. 489). There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: ARTICLE 488.Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership. The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name (Supra, art. 1607). But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership." Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the redemption she made, nevertheless, she did acquire the right to be reimbursed for half of the redemption price she paid to the Provincial Government of Negros Occidental on behalf of her co-owners. Until reimbursed, Fanesa holds a lien upon the subject property for the amount due her. 17 Finally, petitioners dispute the order of the trial court, which the Court of Appeals affirmed, for them to pay private respondents P5,000.00 per year from 1966 until the partition of the estate which represents the share of private respondents in the fruits of the land. According to petitioners, the land is being leased for P2,000.00 per year only. This assigned error, however, raises a factual question. The settled rule is that only questions of law may be raised in a petition for review. As a general rule, findings of fact made by the trial court and the Court of Appeals are final and conclusive and cannot be reviewed on appeal. 18 WHEREFORE, the petition is DENIED and the decision of the Court of Appeals AFFIRMED. SO ORDERED. [G.R. No. 152766. June 20, 2003.]

LILIA SANCHEZ, petitioner, vs. COURT OF APPEALS, HON. VICTORINO S. ALVARO as Presiding Judge, RTC-Br. 120, Caloocan City, and VIRGINIA TERIA, respondents. Noel S. Sorreda for petitioner. Felizardo M. Mercado for private respondent. SYNOPSIS Petitioner and five others were co-owners of a parcel of land registered under TCT No. 263624. The lot was subsequently sold and registered in the name of private respondent by virtue of a Deed of Absolute Sale supposed to have been executed in her favor by all six coowners. Petitioner, however, refused to vacate the lot claiming that she did not affix her signature on the said Deed. Hence, private respondent filed an action for recovery of possession of the aforesaid lot before the Metropolitan Trial Court of Caloocan City. The MeTC ruled in favor of private respondent declaring that the sale was valid only to the extent of 5/6 of the lot and the other 1/6 remaining as the property of petitioner. On appeal, the RTC required the parties to file their respective memoranda of appeal. Counsel for petitioner did not comply with this order, nor even inform her of the developments in her case. Petitioner not having filed any pleading, the trial court affirmed the decision of the MeTC. Thereafter, private respondent demolished petitioner's house from the lot. Hence, petitioner filed her Petition for Relief from Judgment with the RTC on the ground that she was not bound by the inaction of her counsel. The RTC denied the petition. Petitioner's petition for certiorari and subsequent motion for reconsideration were likewise denied by the Court of Appeals. Hence, this petition for certiorari. The Supreme Court suspended the Rules in this case since the procedural infirmity was not entirely attributable to the fault or negligence of petitioner. According to the Court, a notice to a lawyer who appears to have been unconscionably irresponsible cannot be considered as notice to his client. Thus, despite the procedural lapses and in the interest of substantial justice, the Court looked into the merits of the petition to put an end to the dispute on the property held in common. It held that before the partition of a land or thing held in common, no individual or co-owner can claim title to any definite portion thereof. All that the co-owner has is an ideal or abstract quota or proportionate share in the entire land or thing. Here, although assigned an aliquot but abstract part of the property, the metes and bounds of petitioner's lot has not been designated. As she was not a party to the Deed of Absolute Sale voluntarily entered into by the other co-owners, her right to 1/6 of the property must be respected. Partition needs to be effected to protect her right to her definite share and determine the boundaries of her property. Such partition must be done without prejudice to the rights of private respondent as buyer of the 5/6 portion of the lot under dispute. SYLLABUS 1.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; PETITION FOR CERTIORARI; GROUNDS. As a matter of policy, the original jurisdiction of this Court to issue the so-called extraordinary writs should generally be exercised relative to actions or proceedings before the Court of Appeals or before constitutional or other tribunals or agencies the acts of which for some

reason or other are not controllable by the Court of Appeals. Where the issuance of the extraordinary writ is also within the competence of the Court of Appeals or the Regional Trial Court, it is either of these courts that the specific action for the procurement of the writ must be presented. However, this Court must be convinced thoroughly that two (2) grounds exist before it gives due course to a certiorari petition under Rule 65: (a) The tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction; and (b) There is no appeal nor any plain, speedy and adequate remedy in the ordinary course of law. 2.ID.; RULES OF PROCEDURE; LIBERALLY CONSTRUED TO EFFECT SUBSTANTIAL JUSTICE; LITIGATIONS SHOULD BE DECIDED ON THEIR MERITS NOT ON MERE TECHNICALITIES. Despite the procedural lapses present in this case, we are giving due course to this petition as there are matters that require immediate resolution on the merits to effect substantial justice. The Rules of Court should be liberally construed in order to promote their object of securing a just, speedy and inexpensive disposition of every action or proceeding. The rules of procedure should be viewed as mere tools designed to aid the courts in the speedy, just and inexpensive determination of the cases before them. Liberal construction of the rules and the pleadings is the controlling principle to effect substantial justice. Litigations should, as much as possible, be decided on their merits and not on mere technicalities. 3.ID.; ID.; ID.; RATIONALE. The rationale for this approach is explained in Ginete v. Court of Appeals This Court may suspend its own rules or exempt a particular case from its operation where the appellate court failed to obtain jurisdiction over the case owing to appellant's failure to perfect an appeal. Hence, with more reason would this Court suspend its own rules in cases where the appellate court has already obtained jurisdiction over the appealed case. This prerogative to relax procedural rules of the most mandatory character in terms of compliance, such as the period to appeal has been invoked and granted in a considerable number of cases . . . 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, as we are now constrained to do in the instant case . . . 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. 4.ID.; ID.; LIBERALLY CONSTRUED WHERE COUNSEL WAS NEGLIGENT IN NOT ADEQUATELY PROTECTING HIS CLIENT'S INTEREST; NOTICE TO IRRESPONSIBLE LAWYER CANNOT BE CONSIDERED AS NOTICE TO HIS CLIENT. Verily, the negligence of petitioner's counsel cannot be deemed as negligence of petitioner herself in the case at bar. A notice to a lawyer who appears to have been unconscionably irresponsible cannot be considered as notice to his client. Under the peculiar circumstances of this case, it appears from the records that counsel was negligent in not adequately protecting his client's interest, which necessarily calls for a liberal construction of the Rules.

5.ID.; ID.; SUSPENSION THEREOF AND REVIEW OF LOWER COURT'S FACTUAL FINDINGS, WHEN WARRANTED. Aside from matters of life, liberty, honor or property which would warrant the suspension of the Rules of the most mandatory character and an examination and review by the appellate court of the lower court's findings of fact, the other elements that should be considered are the following: (a) the existence of special or compelling circumstances, (b) the merits of the case, (c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (d) a lack of any showing that the review sought is merely frivolous and dilatory, and (e) the other party will not be unjustly prejudiced thereby. 6.ID.; ID.; SUSPENSION THEREOF WARRANTED WHERE PROCEDURAL INFIRMITY WAS NOT ENTIRELY ATTRIBUTABLE TO FAULT OF PETITIONER. The suspension of the Rules is warranted in this case since the procedural infirmity was not entirely attributable to the fault or negligence of petitioner. Besides, substantial justice requires that we go into the merits of the case to resolve the present controversy that was brought about by the absence of any partition agreement among the parties who were co-owners of the subject lot in question. Hence, giving due course to the instant petition shall put an end to the dispute on the property held in common. 7.CIVIL LAW; CO-OWNERSHIP; DEFINED. Sanchez Roman defines co-ownership as "the right of common dominion which two or more persons have in a spiritual part of a thing, not materially or physically divided. Manresa defines it as the "manifestation of the private right of ownership, which instead of being exercised by the owner in an exclusive manner over the things subject to it, is exercised by two or more owners and the undivided thing or right to which it refers is one and the same." 8.ID.; ID.; CHARACTERISTICS. The characteristics of co-ownership are: (a) plurality of subjects, who are the co-owners, (b) unity of or material indivision, which means that there is a single object which is not materially divided, and which is the element which binds the subjects, and, (c) the recognition of ideal shares, which determines the rights and obligations of the co-owners. 9.ID.; ID.; EVERY CO-OWNER IS A TRUSTEE FOR THE OTHERS. In co-ownership, the relationship of such co-owner to the other co-owners is fiduciary in character and attribute. Whether established by law or by agreement of the co-owners, the property or thing held pro-indiviso is impressed with a fiducial nature so that each co-owner becomes a trustee for the benefit of his co-owners and he may not do any act prejudicial to the interest of his coowners. Thus, the legal effect of an agreement to preserve the properties in co-ownership is to create an express trust among the heirs as co-owners of the properties. Co-ownership is a form of trust and every co-owner is a trustee for the others. aCHDST

10.ID.; ID.; CO-OWNER CANNOT ALIENATE A CONCRETE, SPECIFIC OR DETERMINATE PART OF THE THING OWNED IN COMMON; CO-OWNER'S RIGHT OVER THE THING IS REPRESENTED BY A QUOTA OR IDEAL PORTION WITHOUT ANY PHYSICAL ADJUDICATION; CASE AT BAR. Before the partition of a land or thing held in common, no individual or co-owner can claim title to any definite portion thereof. All that the co-owner has is an ideal or abstract quota or

proportionate share in the entire land or thing. Article 493 of the Civil Code gives the owner of an undivided interest in the property the right to freely sell and dispose of it, i.e., his undivided interest. He may validly lease his undivided interest to a third party independently of the other co-owners. But he has no right to sell or alienate a concrete, specific or determinate part of the thing owned in common because his right over the thing is represented by a quota or ideal portion without any physical adjudication. Although assigned an aliquot but abstract part of the property, the metes and bounds of petitioner's lot has not been designated. As she was not a party to the Deed of Absolute Sale voluntarily entered into by the other co-owners, her right to 1/6 of the property must be respected. Partition needs to be effected to protect her right to her definite share and determine the boundaries of her property. Such partition must be done without prejudice to the rights of private respondent Virginia Teria as buyer of the 5/6 portion of the lot under dispute. DECISION BELLOSILLO, J p: This is a Special Civil Action for Certiorari under Rule 65 of the Rules of Court to annul and set aside the Decision of the Court of Appeals dated 23 May 2001 as well as its Resolution dated 8 January 2002 in CA-G.R. SP No. 59182. Lilia Sanchez, petitioner, constructed a house on a 76-square meter lot owned by her parents-in-law. The lot was registered under TCT No. 263624 with the following co-owners: Eliseo Sanchez married to Celia Sanchez, Marilyn Sanchez married to Nicanor Montalban, Lilian Sanchez, widow, Nenita Sanchez, single, Susana Sanchez married to Fernando Ramos, and Felipe Sanchez. 1 On 20 February 1995, the lot was registered under TCT No 289216 in the name of private respondent Virginia Teria by virtue of a Deed of Absolute Sale supposed to have been executed on 23 June 1995 2 by all six (6) co-owners in her favor. 3 Petitioner claimed that she did not affix her signature on the document and subsequently refused to vacate the lot, thus prompting private respondent Virginia Teria to file an action for recovery of possession of the aforesaid lot with the Metropolitan Trial Court (MeTC) of Caloocan City sometime in September 1995, subsequently raffled to Br. 49 of that court. On 12 February 1998, the MeTC-Br. 49 of Caloocan City ruled in favor of private respondent declaring that the sale was valid only to the extent of 5/6 of the lot and the other 1/6 remaining as the property of petitioner, on account of her signature in the Deed of Absolute Sale having been established as a forgery. Petitioner then elevated her appeal to the Regional Trial Court of Caloocan City, subsequently assigned to Br. 120, which ordered the parties to file their respective memoranda of appeal. Counsel for petitioner did not comply with this order, nor even inform her of the developments in her case. Petitioner not having filed any pleading with the RTC of Caloocan City, the trial court affirmed the 27 July 1998 decision of the MeTC. On 4 November 1998, the MeTC issued an order for the issuance of a writ of execution in favor of private respondent Virginia Teria, buyer of the property. On 4 November 1999 or a year later, a Notice to Vacate was served by the sheriff upon petitioner who however refused to heed the Notice.

On 28 April 1999 private respondent started demolishing petitioner's house without any special permit of demolition from the court. Due to the demolition of her house which continued until 24 May 1999 petitioner was forced to inhabit the portion of the premises that used to serve as the house's toilet and laundry area. On 29 October 1999 petitioner filed her Petition for Relief from Judgment with the RTC on the ground that she was not bound by the inaction of her counsel who failed to submit petitioner's appeal memorandum. However the RTC denied the Petition and the subsequent Motion for Reconsideration. On 14 June 2000 petitioner filed her Petition for Certiorari with the Court of Appeals alleging grave abuse of discretion on the part of the court a quo. On 23 May 2001 the appellate court dismissed the petition for lack of merit. On 18 June 2001 petitioner filed a Motion for Reconsideration but the Court of Appeals denied the motion in its Resolution of 8 January 2002. The only issue in this case is whether the Court of Appeals committed grave abuse of discretion in dismissing the challenged case before it. AIECSD As a matter of policy, the original jurisdiction of this Court to issue the so-called extraordinary writs should generally be exercised relative to actions or proceedings before the Court of Appeals or before constitutional or other tribunals or agencies the acts of which for some reason or other are not controllable by the Court of Appeals. Where the issuance of the extraordinary writ is also within the competence of the Court of Appeals or the Regional Trial Court, it is either of these courts that the specific action for the procurement of the writ must be presented. However, this Court must be convinced thoroughly that two (2) grounds exist before it gives due course to a certiorari petition under Rule 65: (a) The Tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction; and (b) There is no appeal nor any plain, speedy and adequate remedy in the ordinary course of law. Despite the procedural lapses present in this case, we are giving due course to this petition as there are matters that require immediate resolution on the merits to effect substantial justice. The Rules of Court should be liberally construed in order to promote their object of securing a just, speedy and inexpensive disposition of every action or proceeding. 4 The rules of procedure should be viewed as mere tools designed to aid the courts in the speedy, just and inexpensive determination of the cases before them. Liberal construction of the rules and the pleadings is the controlling principle to effect substantial justice. 5 Litigations should, as much as possible, be decided on their merits and not on mere technicalities. 6

Verily, the negligence of petitioner's counsel cannot be deemed as negligence of petitioner herself in the case at bar. A notice to a lawyer who appears to have been unconscionably irresponsible cannot be considered as notice to his client. 7 Under the peculiar circumstances of this case, it appears from the records that the counsel was negligent in not adequately protecting his client's interest, which necessarily calls for a liberal construction of the Rules. The rationale for this approach is explained in Ginete v. Court of Appeals 8 This Court may suspend its own rules or exempt a particular case from its operation where the appellate court failed to obtain jurisdiction over the case owing to appellant's failure to perfect an appeal. Hence, with more reason would this Court suspend its own rules in cases where the appellate court has already obtained jurisdiction over the appealed case. This prerogative to relax procedural rules of the most mandatory character in terms of compliance, such as the period to appeal has been invoked and granted in a considerable number of cases . . . 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, as we are now constrained to do in the instant case . . . 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. Aside from matters of life, liberty, honor or property which would warrant the suspension of the Rules of the most mandatory character and an examination and review by the appellate court of the lower court's findings of fact, the other elements that should be considered are the following: (a) the existence of special or compelling circumstances, (b) the merits of the case, (c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (d) a lack of any showing that the review sought is merely frivolous and dilatory, and (e) the other party will not be unjustly prejudiced thereby. 9 The suspension of the Rules is warranted in this case since the procedural infirmity was not entirely attributable to the fault or negligence of petitioner. Besides, substantial justice requires that we go into the merits of the case to resolve the present controversy that was brought about by the absence of any partition agreement among the parties who were coowners of the subject lot in question. Hence, giving due course to the instant petition shall put an end to the dispute on the property held in common. DEaCSA In People's Homesite and Housing Corporation v. Tiongco 10 we held:

There should be no dispute regarding the doctrine that normally notice to counsel is notice to parties, and that such doctrine has beneficent effects upon the prompt dispensation of justice. Its application to a given case, however, should be looked into and adopted, according to the surrounding circumstances; otherwise, in the court's desire to make shortcut of the proceedings, it might foster, wittingly or unwittingly, dangerous collusions to the detriment of justice. It would be then be easy for one lawyer to sell one's rights down the river, by just alleging that he just forgot every process of the court affecting his clients, because he was so busy. Under this circumstance, one should not insist that a notice to such irresponsible lawyer is also a notice to his clients.

Thus, we now look into the merits of the petition. This case overlooks a basic yet significant principle of civil law: co-ownership. Throughout the proceedings from the MeTC to the Court of Appeals, the notion of co-ownership 11 was not sufficiently dealt with. We attempt to address this controversy in the interest of substantial justice. Certiorari should therefore be granted to cure this grave abuse of discretion. Sanchez Roman defines co-ownership as "the right of common dominion which two or more persons have in a spiritual part of a thing, not materially or physically divide. 12 Manresa defines it as the "manifestation of the private right of ownership, which instead of being exercised by the owner in an exclusive manner over the things subject to it, is exercised by two or more owners and the undivided thing or right to which it refers is one and the same." 13 The characteristics of co-ownership are: (a) plurality of subjects, who are the co-owners, (b) unity of or material indivision, which means that there is a single object which is not materially divided, and which is the element which binds the subjects, and, (c) the recognition of ideal shares, which determines the rights and obligations of the co-owners. 14 In co-ownership, the relationship of such co-owner to the other co-owners is fiduciary in character and attribute. Whether established by law or by agreement of the co-owners, the property or thing held pro-indiviso is impressed with a fiducial nature so that each co-owner becomes a trustee for the benefit of his co-owners and he may not do any act prejudicial to the interest of his co-owners. 15 Thus, the legal effect of an agreement to preserve the properties in co-ownership is to create an express trust among the heirs as co-owners of the properties. Co-ownership is a form of trust and every co-owner is a trustee for the others. 16 Before the partition of a land or thing held in common, no individual or co-owner can claim title to any definite portion thereof. All that the co-owner has is an ideal or abstract quota proportionate share in the entire land or thing. 17 Article 493 of the Civil Code gives the owner of an undivided interest in the property the right to freely sell and dispose of it, i.e., his undivided interest. He may validly lease his

undivided interest to a third party independently of the others co-owners. 18 But he has no right to sell or alienate a concrete, specific or determinate part of the thing owned in common because his right over thing is represented by quota or ideal portion without any physical adjudication. 19 Although assigned an aliquot but abstract part of the property, the metes and bounds of petitioner's lot has not been designated. As she was not a party to the Deed of Absolute Sale voluntarily entered into by the other co-owners, her right to 1/6 of the property must be respected. Partition needs to be effected to protect her right to her definite share and determine the boundaries of her property. Such partition must be done without prejudice to the rights of private respondent Virginia Teria as buyer of 5/6 portion of the lot under dispute. WHEREFORE, the Petition is GRANTED. The Decision of the Court of appeals dated 23 May 2001 as well as its Resolution dated 8 January 2002 in CA-G.R. SP No. 59182 is ANNULLED and SET ASIDE. A survey of the questioned lot with TCT No. 289216 (formerly TCT No. 263624) by a duly licensed geodetic engineer and the PARTITION of the aforesaid lot are ORDERED. Let the records of this case be REMANDED to MeTC-Br. 49, Caloocan City to effect the aforementioned survey and partition, as well as segregate the 1/6 portion appertaining to petitioner Lilia Sanchez. The Deed of Absolute Sale by the other co-owners to Virginia Teria shall be RESPECTED insofar as the other undivided 5/6 portion of the property is concerned. SO ORDERED. f.1 effect of redemption of co-owned property by one co-owner [G.R. No. L-44546. January 29, 1988.] RUSTICO ADILLE, petitioner, vs. THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO, DOMINGO ASEJO, JOSEFA ASEJO, and SANTIAGO ASEJO, respondents. SYLLABUS 1.CIVIL LAW; SALES; RIGHT OF REPURCHASE EXERCISED BY A CO-OWNER; PERTAINS TO HIS SHARE ALONE; OWNERSHIP OVER THE ENTIRE PROPERTY NOT VESTED IN FAVOR OF REDEEMING CO-OWNER. The result is that the property remains to be in a condition of coownership. While a vendee a retro, under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name. But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership.

2.ID.; ID.; ID.; EXISTING CO-OWNERSHIP NOT TERMINATED EVEN THOUGH THE LATTER SECURED TITLE OVER THE PARCEL IN HIS NAME. Neither does the fact that the petitioner had succeeded in securing title over the parcel in his name terminate the existing coownership. While his half-brothers and sisters are, as we said, liable to him for reimbursement as and for their shares in redemption expenses, he cannot claim exclusive right to the property owned in common. Registration of property is not a means of acquiring ownership. It operates as a mere notice of existing title, that is, if there is one. The petitioner must then be said to be a trustee of the property on behalf of the private respondents. The Civil Code states: 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. 3.ID.; ID.; ID.; RELATION OF CO-OWNERSHIP; TERMINATION THEREOF BY PRESCRIPTION MUST BE PRECEDED BY REPUDIATION. This Court is not unaware of the well-established principle that prescription bars any demand on property (owned in common) held by another (co-owner) following the required number of years. In that event, the party in possession acquires title to the property and the state of co-ownership is ended. In the case at bar, the property was registered in 1955 by the petitioner, solely in his name, while the claim of the private respondents was presented in 1974. Has prescription then, set in? We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation (of the co-ownership). 4.ID.; ID.; ID.; ID.; ID.; REQUISITES ON THE ACT OF REPUDIATION. The act of repudiation, in turn, is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners; (3) the evidence thereon is clear and conclusive; and (4) he has been in possession through open, continuous, exclusive, and notorious possession of the property for the period required by law. The instant case shows that the petitioner had not complied with these requisites. We are not convinced that he had repudiated the co-ownership; on the contrary, he had deliberately kept the private respondents in the dark by feigning sole heirship over the estate under dispute. He cannot therefore be said to have "made known" his efforts to deny the coownership. 5.ID.; LAND REGISTRATION; REGISTRATION UNDER THE TORRENS SYSTEM, NOT A MEANS TO SHIELD FRAUD. It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud. It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration operates as a universal notice of title. 6.ID.; ID.; CONSTRUCTIVE TRUST: ACTION TO ENFORCE IT RECKONED FROM ACTUAL DISCOVERY OF THE ACT OF DEFRAUDATION. For the same reason, we cannot dismiss the private respondents' claims commenced in 1974 over the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten years, reckoned from the date of the registration of the property, we, as we said, are not prepared to count the period from such a date in this case. We note the petitioner's sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only heir and child of his mother Feliza

with the consequence that he was able to secure title in his name also." Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner's act of defraudation. According to the respondent Court of Appeals, they came to know [of it] apparently only during the progress of the litigation." Hence, prescription is not a bar. 7.REMEDIAL LAW; CIVIL PROCEDURE; PRESCRIPTION AS AN AFFIRMATIVE DEFENSE; DEEMED WAIVED IF NOT PLEADED IN A MOTION TO DISMISS OR IN THE ANSWER. Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in a motion to dismiss or in the answer otherwise it is deemed waived, and here, the petitioner never raised that defense. There are recognized exceptions to this rule, but the petitioner has not shown why they apply. DECISION SARMIENTO, J p: In issue herein are property and property rights, a familiar subject of controversy and a wellspring of enormous conflict that has led not only to protracted legal entanglements but to even more bitter consequences, like strained relationships and even the forfeiture of lives. It is a question that likewise reflects a tragic commentary on prevailing social and cultural values and institutions, where, as one observer notes, wealth and its accumulation are the basis of self-fulfillment and where property is held as sacred as life itself. "It is in the defense of his property," says this modern thinker, that one "will mobilize his deepest protective devices, and anybody that threatens his possessions will arouse his most passionate enmity." 1 The task of this Court, however, is not to judge the wisdom of values; the burden of reconstructing the social order is shouldered by the political leadership and the people themselves. The parties have come to this Court for relief and accordingly, our responsibility is to give them that relief pursuant to the decree of law. The antecedent facts are quoted from the decision 2 appealed from: xxx xxx xxx . . . [Th]e land in question Lot 14694 of Cadastral Survey of Albay located in Legaspi City with an area of some 11,325 sq. m. originally belonged to one Felisa Alzul as her own private property; she married twice in her lifetime; the first, with one Bernabe Adille, with whom she had as an only child, herein defendant Rustico Adille; in her second marriage with one Procopio Asejo, her children were herein plaintiffs, now, sometime in 1939, said Felisa sold the property in pacto de retro to certain 3rd persons, period of repurchase being 3 years, but she died in 1942 without being able to redeem and after her death, but during the period of redemption, herein defendant repurchased, by himself alone, and after that, he executed a deed of extra-judicial partition representing himself to be the only heir and child of his mother Felisa with the consequence that he was able to secure title in his name alone also, so that OCT. No. 21137 in the name of his mother was transferred to his name, that was in 1955; that was why after some efforts of compromise had failed, his half-brothers and

sisters, herein plaintiffs, filed present case for partition with accounting on the position that he was only a trustee on an implied trust when he redeemed, and this is the evidence, but as it also turned out that one of plaintiffs, Emeteria Asejo was occupying a portion, defendant counterclaimed for her to vacate that, Well then, after hearing the evidence, trial Judge sustained defendant in his position that he was and became absolute owner, he was not a trustee, and therefore, dismissed case and also condemned plaintiff occupant, Emeteria to vacate; it is because of this that plaintiffs have come here and contend that trial court erred in: "I.. . . declaring the defendant absolute owner of the property; II.. . . not ordering the partition of the property; and III.. . . ordering one of the plaintiffs who is in possession of the portion of the property to vacate the land, p. 1 Appellant's brief. which can be reduced to simple question of whether or not on the basis of evidence and law, judgment appealed from should be maintained. 3 xxx xxx xxx The respondent Court of Appeals reversed the trial court, 4 and ruled for the plaintiffsappellants, the private respondents herein. The petitioner now appeals, by way of certiorari, from the Appellate Court's decision. We required the private respondents to file a comment and thereafter, having given due course to the petition, directed the parties to file their briefs. Only the petitioner, however, filed a brief, and the private respondents having failed to file one, we declared the case submitted for decision. The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common? cdphil Essentially, it is the petitioner's contention that the property subject of dispute devolved upon him upon the failure of his co-heirs to join him in its redemption within the period required by law. He relies on the provisions of Article 1515 of the old Civil Code, Article 1613 of the present Code, giving the vendee a retro the right to demand redemption of the entire property.

There is no merit in this petition. The right of repurchase may be exercised by a co-owner with respect to his share alone. 5 While the records show that the petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership.

Necessary expenses may be incurred by one co-owner, subject to his right to collect reimbursement from the remaining co-owners. 6 There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: ART. 488.Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership. The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name. 7 But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership. Neither does the fact that the petitioner had succeeded in securing title over the parcel in his name terminate the existing co-ownership. While his half-brothers and sisters are, as we said, liable to him for reimbursement as and for their shares in redemption expenses, he cannot claim exclusive right to the property owned in common. Registration of property is not a means of acquiring ownership. It operates as a mere notice of existing title, that is, if there is one. The petitioner must then be said to be a trustee of the property on behalf of the private respondents. The Civil Code states: 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. We agree with the respondent Court of Appeals that fraud attended the registration of the property. The petitioner's pretension that he was the sole heir to the land in the affidavit of extrajudicial settlement he executed preliminary to the registration thereof betrays a clear effort on his part to defraud his brothers and sisters and to exercise sole dominion over the property. The aforequoted provision therefore applies. It is the view of the respondent Court that the petitioner, in taking over the property, did so either on behalf of his co-heirs, in which event, he had constituted himself a negotiorum gestor under Article 2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud, and must act as trustee, the private respondents being the beneficiaries, under the Article 1456. The evidence, of course, points to the second alternative the petitioner having asserted claims of exclusive ownership over the property and having acted in fraud of his co-heirs. He cannot therefore be said to have assumed the mere management of the property abandoned by his co-heirs, the situation Article 2144 of the Code contemplates. In any case, as the respondent Court itself affirms, the result would be the

same whether it is one or the other. The petitioner would remain liable to the private respondents, his co-heirs. This Court is not unaware of the well-established principle that prescription bars any demand on property (owned in common) held by another (co-owner) following the required number of years. In that event, the party in possession acquires title to the property and the state of co-ownership is ended. 8 In the case at bar, the property was registered in 1955 by the petitioner, solely in his name, while the claim of the private respondents was presented in 1974. Has prescription then, set in? We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation (of the co-ownership). The act of repudiation, in turn, is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other co-owners; (3) the evidence thereon is clear and conclusive; and (4) he has been in possession through open, continuous, exclusive, and notorious possession of the property for the period required by law. 9 The instant case shows that the petitioner had not complied with these requisites. We are not convinced that he had repudiated the co-ownership; on the contrary, he had deliberately kept the private respondents in the dark by feigning sole heirship over the estate under dispute. He cannot therefore be said to have "made known" his efforts to deny the coownership. Moreover, one of the private respondents, Emeteria Asejo, is occupying a portion of the land up to the present, yet, the petitioner has not taken pains to eject her therefrom. As a matter of fact, he sought to recover possession of that portion Emeteria is occupying only as a counterclaim, and only after the private respondents had first sought judicial relief. prcd It is true that registration under the Torrens system is constructive notice of title, 10 but it has likewise been our holding that the Torrens title does not furnish a shield for fraud. 11 It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the long-standing rule that registration operates as a universal notice of title. For the same reason, we cannot dismiss the private respondents' claims commenced in 1974 over the estate registered in 1955. While actions to enforce a constructive trust prescribes in ten years, 12 reckoned from the date of the registration of the property, 13 we, as we said, are not prepared to count the period from such a date in this case. We note the petitioner's sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only heir and child of his mother Feliza with the consequence that he was able to secure title in his name also." 14 Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner's act of defraudation. 15 According to the respondent Court of Appeals, they came to know [of it] apparently only during the progress of the litigation." 16 Hence, prescription is not a bar. Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in a motion to dismiss or in the answer otherwise it is deemed waived, 17 and here, the

petitioner never raised that defense. 18 There are recognized exceptions to this rule, but the petitioner has not shown why they apply. LLpr WHEREFORE, there being no reversible error committed by the respondent Court of Appeals, the petition is DENIED. The Decision sought to be reviewed is hereby AFFIRMED in toto. No pronouncement as to costs. SO ORDERED. g. termination of co-ownership cases: [G.R. No. L-59974. March 9, 1987.] TEODORA, MARTA, JOSE, SIXTO, RICARDO, ROBERTO, PILAR, VIRGILIO, all surnamed MARIANO and AURORA EUGENIO, petitioners, vs. THE HON. JUDGE JESUS R. DE VEGA, PRESIDING JUDGE, COURT OF FIRST INSTANCE OF BULACAN, BRANCH II, PILAR, REGINA, FELISA and DOMINADOR all surnamed PANGANIBAN, respondents. Ernesto T. Zshornack, Jr. for petitioners. Emiliano S. Samson for private respondents. DECISION PARAS, J p: This is an appeal from the order of the then Court of First Instance of Bulacan in Civil Case No. 6200-M ** for partition and delivery of possession of certain shares in the conjugal assets. The dispositive portion of the order which herein petitioners assail states: "Upon due research and study, the Court finds sustainable the position of the defendants that the settled prevailing rule at present as laid down in latest decisions of the Supreme Court is that the right or action to enforce an implied or constructive trust (which is the situation indicated in the case at bar) in one's favor prescribes in ten (10) years. The citation of authorities made by defendants appears to be correct. (Carontes vs. C.A., 76 SCRA 514; Dela Cerna vs. Dela Cerna, 72 SCRA 514). In other words, the rule of imprescriptibility of actions based on constructive trust invoked by plaintiffs has been reversed and abandoned. For the foregoing premises, this case has to be resolved for defendants-movants. Case is accordingly dismissed. No costs." The records show that spouses Urbano Panganiban and Roberta Espino owned, as conjugal property, during their lifetime 29 parcels of unregistered land with improvements thereon, all situated in Dampol 1st, Pulilan, Bulacan. On February 18, 1903, Roberta Espino died intestate and without debts in Pulilan, Bulacan, where she was a resident before and at the

time of her death. She left her husband, Urbano Panganiban, and their two legitimate children, Mercedes and Gaudencia as her only forced heirs. On September 18, 1952, Urbano Panganiban died also intestate and without debts in Pulilan, Bulacan, leaving as his only compulsory heirs the children of Gaudencia (who together with her sister Mercedes, had predeceased their father) who are now petitioners herein and his legitimate children with his second wife, Atanacia Agustin, who are the private respondents herein. The records also disclose that on June 19, 1981, or 28 years, 9 months and 1 day after Urbano's death, petitioners instituted an action with the then CFI of Bulacan for partition and delivery of possession of their corresponding shares in the conjugal estate of decedentsspouses Urbano and Roberta consisting of subject 29 parcels of unregistered land. Petitioners filed the case because since the death of Urbano, their grandfather, in 1952, private respondents (his children by the second marriage) had taken possession of the whole conjugal property and appropriated to themselves to the exclusion of petitioners the products coming from the 29 parcels of land. cdrep On September 30, 1981 or around three (3) months from the filing of the civil case, respondent judge issued the questioned order. Petitioners' motion for reconsideration of the same was denied on January 12, 1982. Hence, this petition which petitioners filed on April 5, 1982 praying for the revocation of the questioned order and the reinstatement of this case in the trial court. Petitioners anchor their petition on the following grounds: 1.The subject parcels of land being unregistered lands do not come within the applicability of the decisions invoked which involve registered lands; 2.Assuming that the ten-year prescriptive period applies even in cases of unregistered lands, the prescriptive period did not commence to run against petitioners since there is no allegation, much less evidence, that private respondents had openly and effectively repudiated the co-ownership or constructive trust over the subject property; 3.There can be no constructive notice of an adverse claim of ownership in favor of private respondents by placing the subject lands in their names in the office of the Provincial Assessor; and 4.Petitioners' action for partition is still timely despite the lapse of almost 29 years during which private respondents had been in possession of the property. Private respondents, on the other hand, contend that the order appealed from has already become final and no longer appealable; and, that the petition is not meritorious because of the following: 1.The theory of constructive trust was brought out by petitioners themselves; 2.Petitioners cannot contradict their own admissions in the pleadings;

3.Petitioners slept on their alleged rights; and 4.Contrary to petitioners' claim, the jurisprudence cited by private respondents apply to unregistered lands. cdphil The resolution of this case hinges on the focal issue of prescription. We find the order of the trial court dismissing petitioners' complaint on the ground of prescription under Section 40 of Public Act No. 190 to be inaccurate. As We see it, this case is governed by the rules on co-ownership, since both parties are clearly co-owners of the disputed properties, having inherited the same from a common ancestor. Now then, Art. 494 (last paragraph) of the Civil Code provides:. "xxx xxx xxx "No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership." In view of their lack of a clear repudiation of the co-ownership, duly communicated to the petitioners (the other co-owners), private respondents cannot acquire the shares of the petitioners by prescription. The record in the Office of the Assessor is not the sufficient repudiation and communication contemplated by the law. Neither may the private respondents' possession of the premises militate against petitioners' claim. After all, coowners are entitled to be in possession of the premises. The existence of the co-ownership here argues against the theory of implied trust, for then a co-owner possesses co-owned property not in behalf of the other co-owners but in his own behalf. Anent the contention that the judgment of the trial court has already become final and executory, the records reveal the contrary. The appeal was filed on time on April 5, 1982 or before April 28, 1982, the last day granted by this Court for the filing of the appeal. LLphil WHEREFORE, the assailed Order is SET ASIDE, and a new one is rendered remanding this case to the lower court for adjudication on the merits. SO ORDERED. [G.R. No. 61584. November 25, 1992.] DONATO S. PAULMITAN, JULIANA P. FANESA and RODOLFO FANESA, petitioners, vs. COURT OF APPEALS, ALICIO PAULMITAN, ELENA PAULMITAN, ABELINO PAULMITAN, ANITA PAULMITAN, BAKING PAULMITAN, ADELINA PAULMITAN and ANITO PAULMITAN, respondents.

SYLLABUS 1.CIVIL LAW; PROPERTY; CO-OWNERSHIP; SALE BY CO-OWNER OF THING OWNED IN COMMON WITHOUT THE CONSENT OF ALL CO-OWNERS; CONSEQUENCES; CASE AT BAR. When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa, he was only a co-owner with respondents and as such, he could only sell that portion which may be allotted to him upon termination of the co-ownership. The sale did not prejudice the rights of respondents to one half (1/2) undivided share of the land which they inherited from their father. It did not vest ownership in the entire land with the buyer but transferred only the seller's pro indiviso share in the property and consequently made the buyer a co-owner of the land until it is partitioned. In Bailon-Casilao v. Court of Appeals, the Court, through Justice Irene R. Cortes, outlined the effects of a sale by one co-owner without the content of all the co-owners, thus: "The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil Code. Thus: Art. 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common. [Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)]. From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property." Applying this principle to the case at bar, the sale by petitioner Donato Paulmitan of the land to his daughter, petitioner Juliana P. Fanesa, did not give to the latter ownership over the entire land but merely transferred to her the one half (1/2) undivided share of her father, thug making her the co-owner of the land in question with the respondents, her first cousins. 2.ID.; ID.; ID.; REDEMPTION BY CO-OWNER OF THING OWNED IN COMMON; CONSEQUENCES; CASE AT BAR. The redemption of the land made by Fanesa did not terminate the coownership nor give her title to the entire land subject of the co-ownership. While the records show that petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership (Supra, art. 489). There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: ART. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt

himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership. The result is that the property remains to be in a condition of co-ownership. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name (Supra, art. 1607). But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership." Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the redemption she made, nevertheless, she did acquire the right to be reimbursed for half of the redemption price she paid to the Provincial Government of Negros Occidental on behalf of her co-owners. Until reimbursed, Fanesa holds a lien upon the subject property for the amount due her. 3.ID.; SUCCESSION; RIGHTS TO SUCCESSION TRANSMITTED FROM MOMENT OF DEATH OF DECEDENT; RELATIVE NEAREST IN DEGREE EXCLUDES MORE DISTANT ONES; CASE AT BAR. When Agatona died in 1953, she was survived by two (2) sons, Donato and Pascual. Since it is well-settled by virtue of Article 777 of the Civil Code that "[t]he rights to the succession are transmitted from the moment of the death of the decedent," the right of ownership, not only of Donato but also of Pascual, over their respective shares in the inheritance was automatically and by operation of law vested in them in 1953 when their mother died intestate. At that stage, the children of Donato and Pascual did not yet have any right over the inheritance since "[i]n every inheritance the relative nearest in degree excludes the more distant ones." Donato and Pascual excluded their children as to the right to inherit from Agatona Sagario Paulmitan, their mother. 4.ID.; ID.; BEFORE PARTITION WHOLE ESTATE OF DECEDENT OWNED IN COMMON BY HEIRS; CASE AT BAR. From the time of the death of Agatona Sagario Paulmitan to the subsequent passing away of her son Pascual in 1953, the estate remained unpartitioned. Article 1078 of the Civil Code provides: "Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased." Donato and Pascual Paulmitan were, therefore, coowners of the estate left by their mother as no partition was ever made. When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him in the coownership of the disputed property. Pascual Paulmitan's right of ownership over an undivided portion of the property passed on to his children, who, from the time of Pascual's death, became co-owners with their uncle Donato over the disputed decedent estate. 5.REMEDIAL LAW; APPEAL; ONLY QUESTIONS OF LAW RAISED IN PETITION FOR REVIEW; FACTUAL FINDINGS OF TRIAL COURT AND COURT OF APPEALS GENERALLY FINAL AND CONCLUSIVE. Petitioners dispute the order of the trial court, which the Court of Appeals affirmed, for them to pay private respondents P5,000.00 per year from 1966 until the partition of the estate which represents the share of private respondents in the fruits of the land. According to petitioners, the land is being leased for P2,000.00 per year only. This assigned error, however, raises a factual question. The settled rule is that only questions of law may be raised in a petition for review. As a general rule, findings of fact made by the trial court and the Court of Appeals are final and conclusive and cannot be reviewed on appeal. DECISION

ROMERO, J p: This is a petition for review on certiorari seeking the reversal of the decision 1 of the Court of Appeals, dated July 14, 1982 in CA-G.R. No. 62255-R entitled "Alicio Paulmitan, et al. v. Donato Sagario Paulmitan, et al." which affirmed the decision 2 of the then Court of First Instance (now RTC) of Negros Occidental, 12th Judicial District, Branch IV, Bacolod City, in Civil Case No. 11770. The antecedent facts are as follows: Agatona Sagario Paulmitan, who died sometime in 1953, 3 left the two following parcels of land located in the Province of Negros Occidental: (1) Lot No. 757 with an area of 1,946 square meters covered by Original Certificate of Title (OCT) No. RO-8376; and (2) Lot No. 1091 with an area of 69,080 square meters and covered by OCT No. RO-11653. From her marriage with Ciriaco Paulmitan, who is also now deceased, Agatona begot two legitimate children, namely: Pascual Paulmitan, who also died in 1953, 4 apparently shortly after his mother passed away, and Donato Paulmitan, who is one of the petitioners. Petitioner Juliana P. Fanesa is Donato's daughter while the third petitioner, Rodolfo Fanesa, is Juliana's husband. Pascual Paulmitan, the other son of Agatona Sagario, is survived by the respondents, who are his children, namely: Alicio, Elena, Abelino, Adelina, Anita, Baking and Anito, all surnamed Paulmitan. Until 1963, the estate of Agatona Sagario Paulmitan remained unsettled and the titles to the two lots mentioned above remained in the name of Agatona. However, on August 11, 1963, petitioner Donato Paulmitan executed an Affidavit of Declaration of Heirship, extrajudicially adjudicating unto himself Lot No. 757 based on the claim that he is the only surviving heir of Agatona Sagario. The affidavit was filed with the Register of Deeds of Negros Occidental who, on August 20, 1963, cancelled OCT No. RO-8376 in the name of Agatona Sagario and issued Transfer Certificate of Title (TCT) No. 35979 in Donato's name. As regards Lot No. 1091, Donato executed on May 28, 1974 a Deed of Sale over the same in favor of petitioner Juliana P. Fanesa, his daughter. 5

In the meantime, sometime in 1952, for non-payment of taxes, Lot No. 1091 was forfeited and sold at a public auction, with the Provincial Government of Negros Occidental being the buyer. A Certificate of Sale over the land was executed by the Provincial Treasurer in favor of the Provincial Board of Negros Occidental. 6 On May 29, 1974, Juliana P. Fanesa redeemed the property from the Provincial Government of Negros Occidental for the amount of P2,959.09. 7 On learning of these transactions, respondents children of the Late Pascual Paulmitan filed on January 18, 1975 with the Court of First Instance of Negros Occidental a Complaint against petitioners to partition the properties plus damages. Cdpr

Petitioners set up the defense of prescription with respect to Lot No. 757 as an affirmative defense, contending that the Complaint was filed more than eleven years after the issuance of a transfer certificate of title to Donato Paulmitan over the land as a consequence of the registration with the Register of Deeds, of Donato's affidavit extrajudicially adjudicating unto himself Lot No. 757. As regards Lot No. 1091, petitioner Juliana P. Fanesa claimed in her Answer to the Complaint that she acquired exclusive ownership thereof not only by means of a deed of sale executed in her favor by her father, petitioner Donato Paulmitan, but also by way of redemption from the Provincial Government of Negros Occidental. Acting on the petitioners' affirmative defense of prescription with respect to Lot No. 757, the trial court issued an order dated April 22, 1976 dismissing the complaint as to the said property upon finding merit in petitioners' affirmative defense. This order, which is not the object of the present petition, has become final after respondents' failure to appeal therefrom. Trial proceeded with respect to Lot No. 1091. In a decision dated May 20, 1977, the trial court decided in favor of respondents as to Lot No. 1091. According to the trial court, the respondents, as descendants of Agatona Sagario Paulmitan were entitled to one-half (1/2) of Lot No. 1091, pro indiviso. The sale by petitioner Donato Paulmitan to his daughter, petitioner Juliana P. Fanesa, did not prejudice their rights. And the repurchase by Juliana P. Fanesa of the land from the Provincial Government of Negros Occidental did not vest in Juliana exclusive ownership over the entire land but only gave her the right to be reimbursed for the amount paid to redeem the property. The trial court ordered the partition of the land and directed petitioners Donato Paulmitan and Juliana P. Fanesa to pay private respondents certain amounts representing the latter's share in the fruits of the land. On the other hand, respondents were directed to pay P1,479.55 to Juliana P. Fanesa as their share in the redemption price paid by Fanesa to the Provincial Government of Negros Occidental. The dispositive portion of the trial court's decision reads: "WHEREFORE, judgment is hereby rendered on the second cause of action pleaded in the complaint as follows: "1.The deed of sale (Exh. 'F') dated May 28, 1974 is valid insofar as the one-half undivided portion of Lot 1091 is concerned as to vest ownership over said half portion in favor of defendant Juliana Fanesa and her husband Rodolfo Fanesa, while the remaining half shall belong to plaintiffs, pro-indiviso; "2.Lot 1091, Cadastral Survey of Pontevedra, Province of Negros Occidental, now covered by TCT No. RO-11653 (N.A.), is ordered partitioned. The parties must proceed to an actual partition by property instrument of partition, submitting the corresponding subdivision within sixty (60) days from finality of this decision, and should they fail to agree, commissioners of partition may be appointed by the Court; "3.Pending the physical partition, the Register of Deeds of Negros Occidental is ordered to cancel Original Certificate of Title No. RO-11653 (N.A.) covering Lot 1091, Pontevedra Cadastre, and to issue in lieu thereof a new certificate of title in the name of plaintiffs and defendants, one half portion each, pro-indiviso, as indicated in paragraph 1 above;

"4.Plaintiffs are ordered to pay, jointly and severally, defendant Juliana Fanesa the amount of P1,479.55 with interest at the legal rate from May 28, 1974 until paid; "5.Defendants Donato Sagario Paulmitan and Juliana Paulmitan Fanesa are ordered to account to plaintiffs and to pay them, jointly and severally, the value of the produce from Lot 1091 representing plaintiffs' share in the amount of P5,000.00 per year from 1966 up to the time of actual partition of the property, and to pay them the sum of P2,000.00 as attorney's fees as well as the costs of the suit." xxx xxx xxx On appeal, the Court of Appeals affirmed the trial court's decision. Hence this petition. To determine the rights and obligations of the parties to the land in question, it is well to review, initially, the relatives who survived the decedent Agatona Sagario Paulmitan. When Agatona died in 1953, she was survived by two (2) sons, Donato and Pascual. A few months later in the same year, Pascual died, leaving seven children, the private respondents. On the other hand, Donato's sole offspring was petitioner Juliana P. Fanesa. At the time of the relevant transactions over the properties of decedent Agatona Sagario Paulmitan, her son Pascual had died, survived by respondents, his children. It is, thus, tempting to apply the principles pertaining to the right of representation as regards respondents. It must, however, be borne in mind that Pascual did not predecease his mother 8 thus precluding the operation of the provisions in the Civil Code on the right of representation 9 with respect to his children, the respondents. When Agatona Sagario Paulmitan died intestate in 1952, her two (2) sons Donato and Pascual were still alive. Since it is well-settled by virtue of Article 777 of the Civil Code that "[t]he rights to the succession are transmitted from the moment of the death of the decedent," 10 the right of ownership, not only of Donato but also of Pascual, over their respective shares in the inheritance was automatically and by operation of law vested in them in 1953 when their mother died intestate. At that stage, the children of Donato and Pascual did not yet have any right over the inheritance since "[i]n every inheritance the relative nearest in degree excludes the more distant ones." 11 Donato and Pascual excluded their children as to the right to inherit from Agatona Sagario Paulmitan, their mother. cdll From the time of the death of Agatona Sagario Paulmitan to the subsequent passing away of her son Pascual in 1953, the estate remained unpartitioned. Article 1078 of the Civil Code provides: "Where there are two or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs, subject to the payment of debts of the deceased." 12 Donato and Pascual Paulmitan were, therefore, co-owners of the estate left by their mother as no partition was ever made. When Pascual Paulmitan died intestate in 1953, his children, the respondents, succeeded him in the co-ownership of the disputed property. Pascual Paulmitan's right of ownership over an undivided portion of the property passed on to his children, who, from the time of Pascual's death, became co-owners with their uncle Donato over the disputed decedent estate.

Petitioner Juliana P. Fanesa claims ownership over Lot No. 1091 by virtue of two transactions, namely: (a) the sale made in her favor by her father Donato Paulmitan; and (b) her redemption of the land from the Provincial Government of Negros Occidental after it was forfeited for non-payment of taxes. When Donato Paulmitan sold on May 28, 1974 Lot No. 1091 to his daughter Juliana P. Fanesa, he was only a co-owner with respondents and as such, he could only sell that portion which may be allotted to him upon termination of the co-ownership. 13 The sale did not prejudice the rights of respondents to one half (1/2) undivided share of the land which they inherited from their father. It did not vest ownership in the entire land with the buyer but transferred only the seller's pro indiviso share in the property 14 and consequently made the buyer a co-owner of the land until it is partitioned. In Bailon-Casilao v. Court of Appeals, 15 the Court, through Justice Irene R. Cortes, outlined the effects of a sale by one co-owner without the content of all the co-owners, thus: "The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil Code. Thus: ARTICLE 493.Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with respect to the co owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the coownership. [Emphasis supplied.]. As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only his own share but not those of the other co-owners who did not consent to the sale [Punsalan v. Boon Liat, 44 Phil. 320 (1923)]. This is because under the aforementioned codal provision, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common. [Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court since the sales produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14 Phil. 730 (1910)].

From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one co-owner without the consent of the other coowners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property." Applying this principle to the case at bar, the sale by petitioner Donato Paulmitan of the land to his daughter, petitioner Juliana P. Fanesa, did not give to the latter ownership over the entire land but merely transferred to her the one half (1/2) undivided share of her father, thug making her the co-owner of the land in question with the respondents, her first cousins.

Petitioner Juliana P. Fanesa also claims ownership of the entire property by virtue of the fact that when the Provincial Government of Negros Occidental bought the land after it was forfeited for non-payment of taxes, she redeemed it. The contention is without merit. The redemption of the land made by Fanesa did not terminate the co-ownership nor give her title to the entire land subject of the co-ownership. Speaking on the same issue raised by petitioners, the Court, in Adille v. Court of Appeals, 16 resolved the same with the following pronouncements: "The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common? Essentially, it is the petitioners' contention that the property subject of dispute devolved upon him upon the failure of his co-heirs to join him in its redemption within the period required by law. He relies on the provisions of Article 1515 of the old Civil Code, Article 1613 of the present Code, giving the vendee a retro the right to demand redemption of the entire property. There is no merit in this petition. The right of repurchase may be exercised by a co-owner with respect to his share alone (CIVIL CODE, art. 1612; CIVIL CODE (1889), art. 1514.). While the records show that petitioner redeemed the property in its entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership (Supra, art. 489). There is no doubt that redemption of property entails a necessary expense. Under the Civil Code: ARTICLE 488.Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership. The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the Code, "may not be compelled to consent to a partial redemption," the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name (Supra, art. 1607). But the provision does not give to the redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership." Although petitioner Fanesa did not acquire ownership over the entire lot by virtue of the redemption she made, nevertheless, she did acquire the right to be reimbursed for half of the redemption price she paid to the Provincial Government of Negros Occidental on behalf

of her co-owners. Until reimbursed, Fanesa holds a lien upon the subject property for the amount due her. 17 Finally, petitioners dispute the order of the trial court, which the Court of Appeals affirmed, for them to pay private respondents P5,000.00 per year from 1966 until the partition of the estate which represents the share of private respondents in the fruits of the land. According to petitioners, the land is being leased for P2,000.00 per year only. This assigned error, however, raises a factual question. The settled rule is that only questions of law may be raised in a petition for review. As a general rule, findings of fact made by the trial court and the Court of Appeals are final and conclusive and cannot be reviewed on appeal. 18 WHEREFORE, the petition is DENIED and the decision of the Court of Appeals AFFIRMED. SO ORDERED. [G.R. No. 76351. October 29, 1993.] VIRGILIO B. AGUILAR, petitioner, vs. COURT OF APPEALS and SENEN B. AGUILAR, respondents. Jose F. Manacop for petitioner. Siruelo, Muyco & Associates Law Office for private respondent. SYLLABUS 1.REMEDIAL LAW; CIVIL PROCEDURE; PRE-TRIAL; APPEARANCE OF PARTIES THEREIN; MANDATORY. The law is clear that the appearance of parties at the pre-trial is mandatory. A party who fails to appear at a pre-trial conference may be non-suited or considered as in default. In the case at bar, where private respondent and counsel failed to appear at the scheduled pre-trial, the trial court has authority to declare respondent in default. 2.ID.; ID.; ID.; GRANT OR DENIAL OF POSTPONEMENT THEREOF; SUBJECT TO THE SOUND DISCRETION OF THE TRIAL JUDGE; CASE AT BAR. Although respondent's counsel filed a motion to postpone pre-trial hearing, the grant or denial thereof is within the sound discretion of the trial court, which should take into account two factors in the grant or denial of motions for postponement, namely: (a) the reason for the postponement and (b) the merits of the case of movant. In the instant case, the trial court found the reason stated in the motion of counsel for respondent to cancel the pre-trial to be without merit. Counsel's explanation that he had to go to Iloilo by boat as early as 25 March 1979 to fetch his wife and accompany her to a wedding in Dumaguete City on 27 April 1979 where she was one of the principal sponsors, cannot be accepted. We find it insufficient to justify postponement of the pre-trial, and the Court of Appeals did not act wisely in overruling the denial. We sustain the trial court and rule that it did not abuse its discretion in denying the postponement for lack of merit. Certainly, to warrant a postponement of a mandatory process as pre-trial would require much more than mere attendance in a social function. It is time indeed we emphasize that there should be much more than mere perfunctory treatment of the pre-trial

procedure. Its observance must be taken seriously if it is to attain its objective, i. e., the speedy and inexpensive disposition of cases. 3.CIVIL LAW; CO-OWNERSHIP; RIGHT OF CO-OWNER OVER AN INDIVISIBLE PROPERTY. Article 494 of the Civil Code provides that no co-owner shall be obliged to remain in the coownership, and that each co-owner may demand at any time partition of the thing owned in common insofar as his share is concerned. Corollary to this rule, Art. 498 of the Code states that whenever the thing is essentially indivisible and the co-owners cannot agree that it be allotted to one of them who shall indemnify the others, it shall be sold and its proceeds accordingly distributed. This is resorted to (1) when the right to partition the property is invoked by any of the co-owners but because of the nature of the property it cannot be subdivided or its subdivision would prejudice the interests of the co-owners, and (b) the coowners are not in agreement as to who among them shall be allotted or assigned the entire property upon proper reimbursement of the co-owners. In one case, this Court upheld the order of the trial court directing the holding of a public sale of the properties owned in common pursuant to Art. 498 of the Civil Code. However, being a co-owner respondent has the right to use the house and lot without paying any compensation to petitioner, as he may use the property owned in common so long as it is in accordance with the purpose for which it is intended and in a manner not injurious to the interest of the other co-owners. Each coowner of property held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his co-owners, the reason being that until a division is made, the respective share of each cannot be determined and every co-owner exercises, together with his co-participants joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same. 4.ID.; ID.; TERMINATION THEREOF; EFFECT; CASE AT BAR. Since petitioner has decided to enforce his right in court to end the co-ownership of the house and lot and respondent has not refuted the allegation that he has been preventing the sale of the property by his continued occupancy of the premises, justice and equity demand that respondent and his family vacate the property so that the sale can be effected immediately. In fairness to petitioner, respondent should pay a rental of P1,200.00 per month, with legal interest from the time the trial court ordered him to vacate, for the use and enjoyment of the other half of the property appertaining to petitioner. When petitioner filed an action to compel the sale of the property and the trial court granted the petition and ordered the ejectment of respondent, the co-ownership was deemed terminated and the right to enjoy the possession jointly also ceased. Thereafter, the continued stay of respondent and his family in the house prejudiced the interest of petitioner as the property should have been sold and the proceeds divided equally between them. To this extent and from then on, respondent should be held liable for monthly rentals until he and his family vacate. DECISION BELLOSILLO, J p: This is a petition for review on certiorari seeking to reverse and set aside the Decision of the Court of Appeals in CA-GR CV No. 03933 declaring null and void the orders of 23 and 26 April 1979, the judgment by default of 26 July 1979, and the order of 22 October 1979 of the then

Court of First Instance of Rizal, Pasay City, Branch 30, and directing the trial court to set the case for pre-trial conference. LLjur Petitioner Virgilio and respondent Senen are brothers; Virgilio is the youngest of seven (7) children of the late Maximiano Aguilar, while Senen is the fifth. On 28 October 1969, the two brothers purchased a house and lot in Paraaque where their father could spend and enjoy his remaining years in a peaceful neighborhood. Initially, the brothers agreed that Virgilio's share in the co-ownership was two-thirds while that of Senen was one-third. By virtue of a written memorandum dated 23 February 1970, Virgilio and Senen agreed that henceforth their interests in the house and lot should be equal, with Senen assuming the remaining mortgage obligation of the original owners with the Social Security System (SSS) in exchange for his possession and enjoyment of the house together with their father. llcd Since Virgilio was then disqualified from obtaining a loan from SSS, the brothers agreed that the deed of sale would be executed and the title registered in the meantime in the name of Senen. It was further agreed that Senen would take care of their father and his needs since Virgilio and his family were staying in Cebu. After Maximiano Aguilar died in 1974, petitioner demanded from private respondent that the latter vacate the house and that the property be sold and proceeds thereof divided among them. Because of the refusal of respondent to give in to petitioner's demands, the latter filed on 12 January 1979 an action to compel the sale of the house and lot so that the they could divide the proceeds between them. In his complaint, petitioner prayed that the proceeds of the sale be divided on the basis of two-thirds (2/3) in his favor and one-third (1/3) to respondent. Petitioner also prayed for monthly rentals for the use of the house by respondent after their father died. cdphil In his answer with counterclaim, respondent alleged that he had no objection to the sale as long as the best selling price could be obtained; that if the sale would be effected, the proceeds thereof should be divided equally; and, that being a co-owner, he was entitled to the use and enjoyment of the property. Upon issues being joined, the case was set for pre-trial on 26 April 1979 with the lawyers of both parties notified of the pre-trial and served with the pre-trial order, with private respondent executing a special power of attorney to his lawyer to appear at the pre-trial and enter into any amicable settlement in his behalf. 1 On 20 April 1979, Atty. Manuel S. Tonogbanua, counsel for respondent, filed a motion to cancel pre-trial on the ground that he would be accompanying his wife to Dumaguete City where she would be a principal sponsor in a wedding. On 23 April 1979, finding the reasons of counsel to be without merit, the trial court denied the motion and directed that the pre-trial should continue as scheduled.

When the case was called for pre-trial as scheduled on 26 April 1979, plaintiff and his counsel appeared. Defendant did not appear; neither his counsel in whose favor he executed a special power of attorney to represent him at the pre-trial. Consequently, the trial court, on motion of plaintiff, declared defendant as in default and ordered reception of plaintiff's evidence ex parte. On 7 May 1979, defendant through counsel filed an omnibus motion to reconsider the order of default and to defer reception of evidence. The trial court denied the motion and plaintiff presented his evidence. On 26 July 1979, rendering judgment by default against defendant, the trial court found him and plaintiff to be co-owners of the house and lot in equal shares on the basis of their written agreement. However, it ruled that plaintiff has been deprived of his participation in the property by defendant's continued enjoyment of the house and lot, free of rent, despite demands for rentals and continued maneuvers of defendant to delay partition. The trial court also upheld the right of plaintiff as co-owner to demand partition. Since plaintiff could not agree to the amount offered by defendant for the former's share, the trial court held that the property should be sold to a third person and the proceeds divided equally between the parties. The trial court likewise ordered defendant to vacate the property and pay plaintiff P1,200.00 as rentals 2 from January 1975 up to the date of decision plus interest from the time the action was filed.

On 17 September 1979, defendant filed an omnibus motion for new trial but on 22 October 1979 the trial court denied the motion. Defendant sought relief from the Court of Appeals praying that the following orders and decision of the trial court be set aside: (a) the order of 23 April 1970 denying defendant's motion for postponement of the pre-trial set on 26 April 1979; (b) the order of 26 April 1979 declaring him in default and authorizing plaintiff to present his evidence ex-parte; (c) the default judgment of 26 July 1979; and, (d) the order dated 22 October 1979 denying his omnibus motion for new trial. On 16 October 1986, the Court of Appeals set aside the order of the trial court of 26 April 1979 as well as the assailed judgment rendered by default. The appellate court found the explanation of counsel for defendant in his motion to cancel pre-trial as satisfactory and devoid of a manifest intention to delay the disposition of the case. It also ruled that the trial court should have granted the motion for postponement filed by counsel for defendant who should not have been declared as in default for the absence of his counsel. LLpr Petitioner now comes to us alleging that the Court of Appeals erred (1) in not holding that the motion of defendant through counsel to cancel the pre-trial was dilatory in character and (2) in remanding the case to the trial court for pre-trial and trial.

The issues to be resolved are: whether the trial court correctly declared respondent as in default for his failure to appear at the pre-trial and in allowing petitioner to present his evidence ex-parte, and whether the trial court correctly rendered the default judgment against respondent. We find merit in the petition. As regards the first issue, the law is clear that the appearance of parties at the pre-trial is mandatory. 3 A party who fails to appear at a pre-trial conference may be non-suited or considered as in default. 4 In the case at bar, where private respondent and counsel failed to appear at the scheduled pre-trial, the trial court has authority to declare respondent in default. 5 Although respondent's counsel filed a motion to postpone pre-trial hearing, the grant or denial thereof is within the sound discretion of the trial court, which should take into account two factors in the grant or denial of motions for postponement, namely: (a) the reason for the postponement and (b) the merits of the case of movant. 6 In the instant case, the trial court found the reason stated in the motion of counsel for respondent to cancel the pre-trial to be without merit. Counsel's explanation that he had to go to Iloilo by boat as early as 25 March 1979 to fetch his wife and accompany her to a wedding in Dumaguete City on 27 April 1979 where she was one of the principal sponsors, cannot be accepted. We find it insufficient to justify postponement of the pre-trial, and the Court of Appeals did not act wisely in overruling the denial. We sustain the trial court and rule that it did not abuse its discretion in denying the postponement for lack of merit. Certainly, to warrant a postponement of a mandatory process as pre-trial would require much more than mere attendance in a social function. It is time indeed we emphasize that there should be much more than mere perfunctory treatment of the pre-trial procedure. Its observance must be taken seriously if it is to attain its objective., i.e., the speedy and inexpensive disposition of cases. LLpr Moreover, the trial court denied the motion for postponement three (3) days before the scheduled pre-trial. If, indeed, counsel for respondent could not attend the pre-trial on the scheduled date, respondent at least should have personally appeared in order not to be declared as in default. But, since nobody appeared for him, the order of the trial court declaring him as in default and directing the presentation of petitioner's evidence ex parte was proper. 7 With regard to the merits of the judgment of the trial court by default, which respondent appellate court did not touch upon in resolving the appeal, the Court holds that on the basis of the pleadings of the parties and the evidence presented ex parte, petitioner and respondents are co-owners of subject house and lot in equal shares; either one of them may demand the same of the house and lot at any time and the other cannot object to such demand; thereafter the proceeds of the sale shall be divided equally according to their respective interests. Private respondent and his family refuse to pay monthly rentals to petitioner from the time their father died in 1975 and to vacate the house so that it can be sold to third persons.

Petitioner alleges that respondent's continued stay in the property hinders its disposal to the prejudice of petitioner. On the part of petitioner, he claims that he should be paid two-thirds (2/3) of a monthly rental of P2,400.00 or the sum of P1,600.00. In resolving the dispute, the trial court ordered respondent to vacate the property so that it could be sold to third persons and the proceeds divided between them equally, and for respondent to pay petitioner one-half (1/2) of P2,400.00 or the sum of P1,200.00 as monthly rental, conformably with their stipulated sharing reflected in their written agreement. We uphold the trial court in ruling in favor of petitioner, except as to the effectivity of the payment of monthly rentals by respondent as co-owner which we here declare to commence only after the trial court ordered respondent to vacate in accordance with its order of 26 July 1979. LLphil Article 494 of the Civil Code provides that no co-owner shall be obliged to remain in the coownership, and that each co-owner may demand at any time partition of the thing owned in common insofar as his share is concerned. Corollary to this rule, Art. 498 of the Code states that whenever the thing is essentially indivisible and the co-owners cannot agree that it be allotted to one of them who shall indemnify the others, it shall be sold and its proceeds accordingly distributed. This is resorted to (1) when the right to partition the property is invoked by any of the co-owners but because of the nature of the property it cannot be subdivided or its subdivision would prejudice the interests of the co-owners, and (b) the coowners are not in agreement as to who among them shall be allotted or assigned the entire property upon proper reimbursement of the co-owners. In one case, 8 this Court upheld the order of the trial court directing the holding of a public sale of the properties owned in common pursuant to Art. 498 of the Civil Code. However, being a co-owner respondent has the right to use the house and lot without paying any compensation to petitioner, as he may use the property owned in common so long as it is in accordance with the purpose for which it is intended and in a manner not injurious to the interest of the other co-owners. 9 Each co-owner of property held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his co-owners, the reason being that until a division is made, the respective share of each cannot be determined and every co-owner exercises, together with his co-participants joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same. 10 Since petitioner has decided to enforce his right in court to end the co-ownership of the house and lot and respondent has not refuted the allegation that he has been preventing the sale of the property by his continued occupancy of the premises, justice and equity demand that respondent and his family vacate the property so that the sale can be effected immediately. In fairness to petitioner, respondent should pay a rental of P1,200.00 per month, with legal interest from the time the trial court ordered him to vacate, for the use and enjoyment of the other half of the property appertaining to petitioner. When petitioner filed an action to compel the sale of the property and the trial court granted the petition and ordered the ejectment of respondent, the co-ownership was deemed terminated and the right to enjoy the possession jointly also ceased. Thereafter, the

continued stay of respondent and his family in the house prejudiced the interest of petitioner as the property should have been sold and the proceeds divided equally between them. To this extent and from then on, respondent should be held liable for monthly rentals until he and his family vacate. WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals dated 16 October 1986 is REVERSED and SET ASIDE. The decision of the trial court in Civil Case No. 6912-P dated 26 July 1979 is REINSTATED, with the modification that respondent Senen B. Aguilar is ordered to vacate the premises in question within ninety (90) days from receipt of this decision, and to pay petitioner Virgilio B. Aguilar a monthly rental of P1,200.00 with interest at the legal rate from the time he received the decision of the trial court directing him to vacate until he effectively leaves the premises. LLpr The trial court is further directed to take immediate steps to implement this decision conformably with Art. 498 of the Civil Code and the Rules of Court. This decision is final and executory. SO ORDERED.

h. partition v. Possession a. concept of possession, material occupation, animus possidendi cases: [G.R. No. 140228. November 19, 2004.] FRANCISCO MEDINA, MARIA MEDINA, RAYMUNDO MEDINA, ENRIQUE MEDINA, EDGARDO MEDINA, EVELYN MEDINA, ERNIE MEDINA, ELPIDIO MEDINA, EDWIN MEDINA, ELEONOR MEDINA, TEOFILO MEDINA, JR., EUGENE MEDINA, ELVIRA MEDINA, ANATALIO MEDINA, MARIO MEDINA, CORNELIO MEDINA, ERNESTO MEDINA, IGNACIO CONSTANTINO, SANTOS CONSTANTINO, HERMOGENES CONSTANTINO, FLORENCIO CONSTANTINO, VIRGINIA CONSTANTINO, MARCELO GEREMILLO, ROSILA GEREMILLO, ERNESTO GEREMILLO, MERCEDES GEREMILLO, MELENCIO GEREMILLO, BALBINO MEDINA, CRISANTA MEDINA, YOLANDA MEDINA, LYDIA MEDINA, RENATO MEDINA, EUFEMIA MEDINA, VIRGILIO MEDINA, SONIA MEDINA, LUZVIMINDA MEDINA, CRISPIN MEDINA, REMIGIO M. RODOLFO, MILAGROS M. RODOLFO, NIDA M. RODOLFO, BELEN M. RODOLFO, MANUEL M. RODOLFO, ALFREDO M. RODOLFO, SALLY AREVALO, ELMER AREVALO, CELSO AREVALO, JR., VINCENT AREVALO, NENE AREVALO, THE HEIRS OF NAZARIA CRUZ and SANTOS AREVALO, petitioners, vs. GREENFIELD DEVELOPMENT CORPORATION, respondent. DECISION AUSTRIA-MARTINEZ, J p:

The propriety of the writ of preliminary injunction issued by the Regional Trial Court of Muntinlupa City (Branch 276) in Civil Case No. 98-233 is the sole issue in this petition for review on certiorari, assailing the decision of the Court of Appeals nullifying said writ. Petitioners are the grandchildren of Pedro Medina from two marriages. In his first marriage to Isadora San Jose, Pedro sired three children: Rafael, Rita and Remegia; in his second marriage, this time to Natalia Mullet, Pedro had five: Cornelio, Brigida, Balbino, Crisanta and Rosila. Except for Balbino and Crisanta, all of Pedro's children likewise bore children, the petitioners in this case. 1 On June 5, 1962, Pedro, his brother Alberto Medina and his niece Nazaria Cruz (Alberto's daughter) executed a notarized Contract to Sell in favor of respondent Greenfield Development Corporation over a parcel of land located in Muntinlupa City, then in the Province of Rizal, covered by Transfer Certificate of Title (TCT) No. 100177 (Lot 90-A) and measuring 17,121 square meters. 2 A notarized Deed of Sale covering said property was subsequently entered into on June 27, 1962, in favor of respondent, and this time signed by Pedro, Cornelio, Brigida, Balbino, Gregoria, Crisanta, Rosila, and Alberto, all surnamed Medina, and Nazaria Cruz, as vendors. 3 Thereafter, a notarized Deed of Absolute Sale with Mortgage was executed on September 4, 1964 in favor of respondent over Lot 90-B covered by TCT No. 100178, measuring 16,291 square meters. Signing as vendors were Pedro, Cornelio, Brigida, Balbino, Gregoria, Crisanta, Rosila, and Alberto, all surnamed Medina, and Nazaria Cruz. 4 By virtue of these sales, respondent was able to register in its name the title to the two parcels of land with TCT No. 100578 covering Lot 90-A and TCT No. 133444 covering Lot 90B. These properties were consolidated with other lots and were eventually registered on July 19, 1995, in the name of respondent under TCT Nos. 202295, 202296 and 202297. 5 On November 6, 1998, petitioners instituted Civil Case No. 98-233, an action for annulment of titles and deeds, reconveyance, damages with preliminary injunction and restraining order, against respondent and the Register of Deeds of Makati. 6 Included in the complaint are the heirs of Nazaria Cruz, as unwilling co-plaintiffs. 7 Petitioners allege in their complaint that they are co-owners of these two parcels of land. While the titles were registered in the names of Pedro, Alberto, Cornelio, Brigida and Gregoria, all surnamed Medina, they alleged that they were recognized as co-owners thereof. In support of their case, petitioners maintain that the deeds of sale on these properties were simulated and fictitious, and the signatures of the vendors therein were fake. Despite the transfer of the title to respondent's name, they remained in possession thereof and in fact, their caretaker, a certain Santos Arevalo and his family still reside on a portion of the property. On July 13, 1998, petitioners caused an adverse claim to be annotated on the titles. After discovering the annotation, respondent constructed a fence on the property and posted security personnel, barring their ingress and egress. Thus, petitioners sought, among others, the issuance of a temporary restraining order and a writ of preliminary injunction enjoining respondent and its agents and representatives from preventing petitioners to exercise their rights over the properties. 8

Respondent denied the allegations, stating that petitioners have no valid claim on the properties as it is already titled in its name by virtue of the public documents executed by their predecessors. As counterclaim, respondent alleged that Santos Arevalo is not petitioners' caretaker and it was them who employed him as caretaker. 9 On January 18, 1999, the trial court issued its resolution granting petitioners' prayer for injunctive relief. The dispositive portion of the resolution reads: Let therefore an injunction issue, enjoining and directing defendant GREENFIELD DEVELOPMENT CORPORATION, its security guards, agents, representatives, and all those claiming rights under it, from preventing plaintiffs and their caretaker Santos Arevalo, from entering and going out of the subject premises, and from preventing them to exercise their property rights, upon payment of a bond in the amount of P100,000.00. ECSHAD It is SO ORDERED. 10 Respondent filed a special civil action for certiorari and prohibition with the Court of Appeals, docketed as CA-G.R. SP No. 52015. On July 16, 1999, the Court of Appeals 11 rendered its decision nullifying the trial court's resolution, the dispositive portion of which provides: IN THE (sic) LIGHT OF ALL THE FOREGOING, the petition is hereby GRANTED. The assailed Resolution of the Public Respondent Judge, dated January 18, 1999, in Civil Case No. 98-233 is hereby NULLIFIED. SO ORDERED. 12 Petitioners now seek recourse with this Court, alleging the following grounds: I THE COURT OF APPEALS ERRED IN RELYING HEAVILY ON THE ANTECEDENT FACTS NARRATED IN THE PETITION OF THE RESPONDENT IN CA-G.R. SP NO. 52015 AND ADOPTED THE SAME AS ITS OWN WITHOUT EVIDENTIARY SUPPORT II THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN UPHOLDING THE VALIDITY OF THE DEEDS OF SALE IN FAVOR OF THE RESPONDENT AND IN HOLDING THAT RESPONDENT'S TRANSFER CERTIFICATES OF TITLE ARE VALID DESPITE THE FACT THAT THE SAID ISSUES ARE YET TO BE TRIED III THE COURT OF APPEALS ERRED IN PRESUMING THAT NOTARIZED DOCUMENTS ARE VALID AND THAT RESPONDENT'S TORRENS TITLES ARE INDEFEASIBLE ON THE WRONG NOTION THAT THE RESPONDENT WAS PRESUMED INNOCENT PERSON IV

THE COURT OF APPEALS COMMITTED A MISTAKE IN HOLDING THAT RESPONDENT WAS IN CONSTRUCTIVE POSSESSION OF THE SUBJECT PREMISES NOTWITHSTANDING THAT PETITIONERS ARE IN ACTUAL POSSESSION THEREOF V THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONERS' RIGHT TO IMPUGN RESPONDENT'S TITLES HAVE (SIC) PRESCRIBED SINCE AN ACTION OR DEFENSE BASED ON THE INEXISTENCE OF A CONTRACT DOES NOT PRESCRIBE 13 As stated at the outset, the sole issue in this case is whether or not the trial court erred in granting petitioners' prayer for injunctive relief. This Court's resolution will revolve only on the propriety of the injunction. Any reference to the validity or invalidity of the transfers and the titles is merely preliminary, as the matter should be resolved after trial on the merits. It was the trial court's opinion that petitioners are entitled to the injunction for the following reasons: The Court however holds suspect the acquisition by Greenfield Development Corporation of the two parcels. Lot 90-A covered by Transfer Certificate of Title No. 100177, was promised to be sold to defendant under a contract to sell but the other co-owners did not sign this Contract to Sell, who all denied knowledge of the same. No contract of Sale followed this Contract to Sell which cannot be the bases of the issuance of a new title. A Contract to Sell is only a promise to sell, and is not a deed of sale, specially as this Contact to Sell is not signed by all of the registered owners. This Court cannot also understand how the document, denominated as DEED OF ABSOLUTE SALE WITH MORTGAGE can be the bases (sic) of a new title. The absoluteness of the sale, is contradicted by the mortgage it also provides. There is absoluteness of sale only when the buyer upon execution of the contract, pay (sic) in full the consideration and ownership passes to the Vendee. The registered owners of Lot 90-B covered by Transfer Certificate of Title No. 100178 even deny having executed this document of Deed of Absolute Sale with Mortgage. AaSHED Until these matters are threshed out at the trial on the merits, and after this is fully explained and determined, whether the properties were actually sold to Defendant Greenfield Development Corporation, irreparable injury will visit the landowner if the claim of ownership by Greenfield Development Corporation is allowed and not enjoined. 14 The Court of Appeals, however, disagreed with the trial court. It noted that the trial court relied mainly on petitioners' allegations in the complaint, which were not supported by substantial evidence, and ignored the presumption of validity ascribed to the duly notarized deeds of conveyances and the titles issued to respondent. The Court of Appeals also found that respondent is in constructive possession of the properties in dispute considering that it is already the registered owner thereof since 1962. Lastly, the Court of Appeals held that petitioners' right to impugn respondent's title to the property has already prescribed. 15

Section 3, Rule 58 of the Rules of Court provides for the grounds justifying the issuance of a preliminary injunction, to wit: SEC. 3.Grounds for issuance of preliminary injunction. A preliminary injunction may be granted when it is established:

(a)That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the act or acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually; (b)That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or (c)That a party, court, agency or a person is doing, threatening or is attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual. The purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to some of the parties before their claims can be thoroughly studied and adjudicated. Its sole aim is to preserve the status quo until the merits of the case can be heard fully. 16 Thus, to be entitled to an injunctive writ, the petitioner has the burden to establish the following requisites: 17 (1)a right in esse or a clear and unmistakable right to be protected; (2)a violation of that right; (3)that there is an urgent and permanent act and urgent necessity for the writ to prevent serious damage. Hence, petitioners' entitlement to the injunctive writ hinges on their prima facie legal right to the properties subject of the present dispute. The Court notes that the present dispute is based solely on the parties' allegations in their respective pleadings and the documents attached thereto. We have on one hand, petitioners' bare assertion or claim that they are co-owners of the properties sold by their predecessors to respondent, and on the other, respondent's claim of ownership supported by deeds of conveyances and torrens titles in their favor. From these alone, it is clear that petitioners failed to discharge the burden of clearly showing a clear and unmistakable right to be protected. Where the complainant's right or title is doubtful or disputed, injunction is not proper. The possibility of irreparable damage without proof of actual existing right is not a ground for an injunction. 18 Petitioners contend that the Court of Appeals should not have relied on respondent's allegations regarding the circumstances surrounding the sales and the transfer of the titles. Petitioners point out that trial on the merits of the case is still ongoing and respondent is yet to adduce evidence in support of its contention. The same, however, applies to petitioners'

cause of action. They only have their own allegations and are yet to prove their claim. And as stated earlier, the only bases from which the propriety of the injunction can be determined are their respective pleadings and documents. What tilt the balance in respondent's favor are the notarized documents and the titles to the properties. The wellsettled rule is that a document acknowledged before a notary public enjoys the presumption of regularity. It is a prima facie evidence of the facts therein stated. To overcome this presumption, there must be presented evidence that is clear and convincing. Absent such evidence, the presumption must be upheld. 19 In addition, the titles in the name of respondent, having been registered under the Torrens system, are generally a conclusive evidence of the ownership of the land referred to therein, 20 and a strong presumption exists that the titles are regularly issued and valid. 21 Therefore, until and unless petitioners show that the documents are indeed spurious and the titles invalid, then the presumptions must prevail at this juncture. ScTIAH Petitioners, however, argue that the presumption of validity of the notarized documents and titles cannot be applied in respondent's case as it is not an innocent purchaser. 22 According to petitioners, respondent is fully aware that at the time that the Contract to Sell was entered into in 1962, Leon Medina who is a co-owner of the property then covered by TCT No. 21314, was already dead. Suffice it to say that these arguments already involve the merits of the main case pending before the trial court, which should not even be preliminarily dealt with, as it would be premature. Equally pertinent is the rule that courts should avoid issuing a writ of preliminary injunction, which in effect, would dispose of the main case without trial. 23 The ground relied upon by the trial court in issuing the writ of preliminary injunction in this case is its doubt over the acquisition of the properties by respondent. 24 Such basis would be virtually recognizing petitioners' claim that the deeds of conveyances and the titles are a nullity without further proof, to the detriment of the doctrine of presumption of validity in favor of these documents. There would, in effect, be a prejudgment of the main case and a reversal of the rule on the burden of proof since it would assume the proposition which the petitioners are inceptively duty bound to prove. 25 Petitioners also claim that they are in actual possession of the property. As alleged in their complaint, they instituted Santos Arevalo, a co-petitioner, as caretaker. 26 They also alleged in their petition filed before this Court that Balbino and Yolanda Medina and their respective families are still residing on a portion of the property. 27 Respondent belies their claim, declaring that it employed Arevalo as caretaker. Respondent presented a notarized Receipt and Quitclaim dated April 26, 1994, signed by Arevalo, who attested that he was employed by respondent as caretaker and that his stay on the property was a mere privilege granted by respondent. Possession and ownership are two different legal concepts. Just as possession is not a definite proof of ownership, neither is non-possession inconsistent with ownership. Even assuming that petitioners' allegations are true, it bears no legal consequence in the case at hand because the execution of the deeds of conveyances is already deemed equivalent to delivery of the property to respondent, and prior physical delivery or possession is not legally required. 28 Under Article 1498 of the Civil Code, "when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the object of

the contract, if from the deed the contrary does not appear or cannot be inferred." Possession is also transferred, along with ownership thereof, to respondent by virtue of the notarized deeds of conveyances. 29 In sum, the trial court committed grave abuse of discretion in issuing the writ of preliminary injunction, and the Court of Appeals was correct in nullifying the same. The Court, however, finds that it was precipitate for the Court of Appeals to rule that petitioners' action is barred by prescription. As previously stressed, the parties are yet to prove their respective allegations and the trial court is yet to receive the evidence. There is nothing on record that can conclusively support the conclusion that the action is barred by prescription. Hence, the Court of Appeals should not have made such ruling. WHEREFORE, the petition is hereby DENIED for lack of merit. The Decision dated July 16, 1999 rendered by the Court of Appeals in CA-G.R. SP No. 52015 is AFFIRMED, except as to its view on prescription, as discussed in the body of the text. Let the original records of this case be remanded to the Regional Trial Court of Muntinlupa City (Branch 276) with dispatch for further proceedings. AEITDH SO ORDERED.

[G.R. No. 175746. March 12, 2008.] CHARLES L. ONG, petitioner, vs. REPUBLIC OF THE PHILIPPINES, respondent. DECISION YNARES-SANTIAGO, J p: This petition for review on certiorari assails the April 25, 2006 Decision 1 of the Court of Appeals in CA-G.R. CV No. 76085, which reversed and set aside the January 16, 2002 Decision 2 of the Municipal Trial Court of Mangaldan, Pangasinan in Land Registration Case No. 99-023, and the November 20, 2006 Resolution 3 which denied petitioner's motion for reconsideration. The antecedent facts are as follows. On July 1, 1999, petitioner Charles L. Ong (petitioner) in his behalf and as duly authorized representative of his brothers, namely, Roberto, Alberto and Cesar, filed an Application for Registration of Title 4 over Lot 15911 (subject lot) situated in Barangay Anolid, Mangaldan, Pangasinan with an area of five hundred seventy four (574) square meters, more or less. They alleged that they are the co-owners of the subject lot; that the subject lot is their exclusive property having acquired the same by purchase from spouses Tony Bautista and Alicia Villamil on August 24, 1998; that the subject lot is presently unoccupied; and that they and their predecessors-in-interest have been in open, continuous and peaceful possession of the subject lot in the concept of owners for more than thirty (30) years.

After due notice and publication, only respondent Republic of the Philippines (respondent), represented by the Office of the Solicitor General, opposed the application for registration of title. Respondent asserted that neither applicants nor their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the subject lot since June 12, 1945 or earlier as required by Section 48 (b) of Commonwealth Act No. 141, as amended by Presidential Decree (P.D.) No. 1073; that applicants failed to adduce any muniment of title to prove their claims; that the tax declaration appended to the application does not appear genuine and merely shows pretended possession of recent vintage; that the application was filed beyond the period allowed under P.D. No. 892; and that the subject lot is part of the public domain which cannot be the subject of private appropriation. On January 16, 2002, the trial court rendered a Decision in favor of petitioner and his brothers, viz: The foregoing evidences presented by the applicant indubitably established sufficient basis to grant the applicant (sic) for registration. Originally, the whole parcel of land was owned by spouses Teofilo Abellera and Abella Charmine who acquired the same by virtue of a Deed of Sale from Cynthia Cacho, Agustin Cacho, Jr., Jasmin Cacho, Jover Cacho and Lauro Cacho. Later, they sold the same parcel of land to spouses Tony C. Villamil and Alicia Bautista, who in turn sold the same land to herein applicants. The same parcel of land has been declared in the name of the applicant and her predecessors-in-interest and its taxes has (sic) been religiously paid. The said circumstances further show that the possession and ownership of the applicant and her (sic) predecessors-in-interest over the same parcel of land has (sic) been continuous and peaceful under bona fide claim of ownership before the filing of the instant application for registration on [July 1, 1999]. WHEREFORE, after confirming the Order of General Default, the Court hereby orders and decrees the registration of a parcel of land as shown on plan ap-01-004897 approved by the Bureau of Land(s) situated in Barangay Anolid, Mangaldan, Pangasinan, containing an area of Five Hundred Seventy Four (574) square meters, subject of the application for registration of title, in accordance with Presidential Decree No. 1529, in favor of CHARLIE L. ONG in his behalf and as representative of his brothers namely, ROBERTO L. ONG, ALBERTO L. ONG and CESAR L. ONG. Furnish copies of this Decision to the Office of the Solicitor General, Makati City, Metro Manila, the Office of the Provincial Prosecutor, Dagupan City, Atty. Celestino Domingo Jr., the Office of the Land Registration Authority, Quezon City, as well as the applicant. SO ORDERED. 5 Aggrieved, respondent appealed to the Court of Appeals which rendered the assailed Decision, the dispositive portion of which reads:

WHEREFORE, the instant appeal is GRANTED. Accordingly, the decision of the court a quo granting the application for registration of title of applicants-appellees is REVERSED and SET ASIDE. No pronouncement as to costs. SO ORDERED. 6 In reversing the decision of the trial court, the Court of Appeals found that the subject lot is part of the alienable and disposable lands of the public domain. Thus, it was incumbent upon petitioner to prove that they possessed the subject lot in the nature and for the duration required by law. However, petitioner failed to prove that he or his predecessors-in-interest have been in adverse possession of the subject lot in the concept of owner since June 12, 1945 or earlier as mandated by Section 14 (1) of P.D. 1529. It noted that the earliest tax declaration which petitioner presented is dated 1971. Consequently, petitioner could not fairly claim possession of the land prior to 1971. Neither was petitioner able to prove that he or his predecessors-in-interest actually occupied the subject lot prior to the filing of the application. Thus, the trial court erred in granting the application for registration of title over the subject lot. Hence, this petition raising the following issues: 1.WHETHER OR NOT PETITIONER, TOGETHER WITH HIS BROTHERS, NAMELY, ROBERTO L. ONG, ALBERTO L. ONG AND CEZAR L. ONG, HAVE REGISTRABLE OWNERSHIP OVER THE REAL PROPERTY SUBJECT MATTER OF LAND REGISTRATION CASE NO. 99-023, AND 2.WHETHER OR NOT THE FINDINGS AND CONCLUSION OF THE FORMER SPECIAL FOURTH DIVISION OF THE COURT OF APPEALS THAT THE SUBJECT REAL PROPERTY IS A PUBLIC LAND IS CORRECT. 7 The petition lacks merit. Section 14 (1) of P.D. 1529 ("Property Registration Decree"), as amended, provides SEC. 14. Who may apply. The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives: (1)Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier. Thus, pursuant to the aforequoted provision of law, applicants for registration of title must prove: (1) that the subject land forms part of the disposable and alienable lands of the public domain, and (2) that they have been in open, continuous, exclusive and notorious possession and occupation of the same under a bona fide claim of ownership since June 12, 1945, or earlier. 8 These requisites involve questions of fact which are not proper in a petition for review on certiorari. Factual findings of the court a quo are generally binding on this Court except for certain recognized exceptions, as is the case here, where the trial court

and the Court of Appeals arrived at conflicting findings. 9 After a careful review of the records, we sustain the findings and conclusions of the Court of Appeals. There is no dispute that the subject lot is classified as alienable and disposable land of the public domain. The Report 10 dated January 17, 2000 of the Bureau of Lands stated that the subject lot is "within the alienable and disposable zone as classified under Project 50 L.C. Map No. 698 and released and classified as such on November 21, 1927." 11 This finding is, likewise, embodied in the Report 12 dated January 7, 1999 of the Department of Environment and Natural Resources Community Environment and Natural Resources Office (DENR-CENRO) and the blue print Copy 13 of the plan covering the subject lot. However, petitioner failed to prove that he or his predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the subject lot since June 12, 1945 or earlier. The records show that petitioner and his brothers bought the subject lot from spouses Tony Bautista and Alicia Villamil on August 24, 1998, 14 who in turn purchased the same from spouses Teofilo Abellera and Abella Sarmen on January 16, 1997. 15 The latter bought the subject lot from Cynthia, Agustin Jr., Jasmin, Omir and Lauro, all surnamed Cacho, on July 10, 1979. 16 The earliest tax declaration which was submitted in evidence was Tax Declaration No. 25606 17 issued in 1971 in the names of spouses Agustin Cacho and Eufrosinia Bautista. While tax declarations are not conclusive proof of ownership, they constitute good indicia of possession in the concept of owner and a claim of title over the subject property. 18 Even if we were to tack petitioner's claim of ownership over the subject lot to that of their alleged predecessors-in-interest, spouses Agustin Cacho and Eufrosinia Bautista in 1971, still this would fall short of the required possession from June 12, 1945 or earlier. Further, as correctly pointed by the Court of Appeals, possession alone is not sufficient to acquire title to alienable lands of the public domain because the law requires possession and occupation. As held in Republic v. Alconaba: 19 The law speaks of possession and occupation. Since these words are separated by the conjunction and, the clear intention of the law is not to make one synonymous with the other. Possession is broader than occupation because it includes constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit the all encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his possession must not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property. 20

Petitioner admitted that after he and his brothers bought the subject lot from spouses Tony Bautista and Alicia Villamil in 1998, neither he nor his brothers actually occupied the subject lot. 21 No improvements were made thereon and the most that they did was to visit the lot on several occasions. 22 Petitioner's predecessor-in-interest, Tony Bautista testified that he and his wife never actually occupied the subject lot from the time they bought the same from spouses Teofilo Abellera and Abella Sarmen in 1997. 23 Aside from these two

testimonies, no other evidence was presented to establish the character of the possession of the subject lot by petitioner's other alleged predecessors-in-interest. Clearly, petitioner's evidence failed to establish specific acts of ownership to substantiate the claim that he and his predecessors-in-interest possessed and occupied the subject lot in the nature and duration required by law. The burden of proof in land registration cases rests on the applicant who must show by clear, positive and convincing evidence that his alleged possession and occupation of the land is of the nature and duration required by law. 24 Unfortunately, petitioner's evidence do not constitute the "well-nigh incontrovertible" evidence necessary in cases of this nature. 25 Accordingly, the Court of Appeals did not err in reversing the Decision of the trial court and in denying his application for registration of title over the subject lot. WHEREFORE, in view of the foregoing, the petition is DENIED. The April 25, 2006 Decision of the Court of Appeals in CA-G.R. CV No. 76085 which reversed and set aside the January 16, 2002 Decision of the Municipal Trial Court of Mangaldan, Pangasinan in Land Registration Case No. 99-023, and the November 20, 2006 Resolution denying the motion for reconsideration, are AFFIRMED. Costs against petitioner. SO ORDERED.

Constructive possession Viewpoint of possession [G.R. No. 130316. January 24, 2007.] ERNESTO V. YU and ELSIE O. YU, petitioners, vs. BALTAZAR PACLEB, 1 respondent. DECISION CORONA, J p: The present petition filed under Rule 45 of the Rules of Court originated from an action for forcible entry and damages filed by petitioners Ernesto and Elsie Yu against respondent Baltazar Pacleb. The antecedent facts follow. Sometime in September 1992, Ruperto Javier allegedly offered to sell Lot No. 6853-D to petitioners for P75 per sq.m. The lot was approximately 18,000 square meters and was located in Barangay Langkaan, Dasmarias, Cavite. Javier supposedly purchased the lot from one Rebecca del Rosario who, in turn, acquired it from respondent and his wife. The title of the property (Transfer Certificate of Title [TCT] No. T-118375), however, remained in

the names of respondent and his wife. The instruments in support of the series of alleged sales were not registered. On September 11, 1992, petitioners accepted the offer and gave Javier P200,000 as downpayment for the lot. Javier then delivered his supposed muniments of title to petitioners. After the execution of a contract to sell, he formally turned over the property to petitioners. At the time of the turn-over, a portion of the lot was occupied by Ramon C. Pacleb, respondent's son, and his wife as tenants. On September 12, 1992, Ramon and his wife allegedly surrendered possession of their portion to petitioners. Later on, petitioners appointed Ramon as their trustee over the subject lot. Aside from taking possession of the property, petitioners also caused the annotation on TCT No. T-118375 of a decision rendered in their favor in Civil Case No. 741-93. 2 This decision attained finality on April 19, 1995. Petitioners alleged that they exercised ownership rights as well as enjoyed open, public and peaceful possession over the property from September 12, 1992 until the early part of September 1995. During this time, respondent was in the United States. Upon respondent's return to the Philippines in May 1995, he allegedly entered the property by means of force, threat, intimidation, strategy and stealth thereby ousting petitioners and their trustee, Ramon. DEcTCa Despite repeated demands, respondent, asserting his rights as registered owner of the property, refused to vacate the premises and surrender its possession to petitioners. Petitioners filed an action for forcible entry 3 in the Municipal Trial Court (MTC) of Dasmarias, Cavite on November 23, 1995. Respondent filed an answer with compulsory counterclaim dated December 8, 1995. After the issues were joined, the MTC required the submission of the parties' position papers at a preliminary conference on March 11, 1996. Respondent failed to comply. On June 17, 1996, the MTC ruled: WHEREFORE, in view of the foregoing, the [respondent] and other persons claiming right under him are hereby ordered to surrender physical possession of Lot No. 6853-D in favor of the [petitioners] and to pay the sum of TWENTY-FIVE THOUSAND (P25,000.00) PESOS as attorney's fees. SO ORDERED. 4 On appeal, 5 the Regional Trial Court (RTC) of Imus, Cavite rendered a decision affirming the MTC decision in toto. 6 Respondent elevated his case to the Court of Appeals (CA) 7 which rendered the assailed decision on March 18, 1997:

WHEREFORE, the Petition is GRANTED; the Decision dated October 25, 1996 of the [RTC] of Imus, Cavite in Civil Case No. 052-96 and the Decision of the [MTC] of Dasmarias, Cavite in Civil Case No. 182 are SET ASIDE; and Civil Case No. 182 for Forcible Entry and Damages is hereby ordered DISMISSED. No pronouncement as to costs. SO ORDERED. 8 In a resolution dated August 20, 1997, the CA denied petitioners' motion for reconsideration for lack of merit. Before us now come petitioners who claim that the appellate court erred in finding that respondent had prior physical possession of the subject property. "In an action for forcible entry, the plaintiff must prove that he was in prior possession of the land or building and that he was deprived thereof by means of force, intimidation, threat, strategy or stealth." 9 The plaintiff, however, cannot prevail where it appears that, as between himself and the defendant, the latter had possession antedating his own. 10 We are generally precluded in a Rule 45 petition from reviewing factual evidence tracing the events prior to the first act of spoliation. 11 However, the conflicting factual findings of the MTC and RTC on one hand, and the CA on the other, require us to make an exception. We overrule petitioners' contentions. The Civil Code states that possession is the holding of a thing or the enjoyment of a right. 12 In the grammatical sense, to possess means to have, to actually and physically occupy a thing, with or without right. 13 "Possession always includes the idea of occupation . . . . It is not necessary that the person in possession should himself be the occupant. The occupancy can be held by another in his name." 14 Without occupancy, there is no possession. 15 Two things are paramount in possession. 16 First, there must be occupancy, apprehension or taking. Second, there must be intent to possess (animus possidendi). 17 Here, petitioners failed to establish that they had prior physical possession to justify a ruling in their favor in the complaint for forcible entry against respondent. IcTCHD In the decision in Civil Case No. 741-93 (a case for specific performance and damages against Javier, the alleged vendor of the lot in question) upon which petitioners based their right to possess in the first place, the trial court categorically stated: The [petitioners were never placed] in possession of the subject property on which [was] planned to be [site of] a piggery, nor [were they] given a clearance or certification from the Municipal Agrarian Reform Officer. 18 (emphasis ours) The claim that the lot was turned over to petitioners in 1992 was self-serving in the face of this factual finding. On the other hand, the tax declarations and receipts in the name of respondent in 1994 and 1995 established the possession of respondent. 19 The payment of

real estate tax is one of the most persuasive and positive indications showing the will of a person to possess in concepto de dueo or with claim of ownership. 20 "[P]ossession in the eyes of the law does not mean that a man has to have his feet on every square meter of the ground before he is deemed in possession." 21 In this case, Ramon, as respondent's son, was named caretaker when respondent left for the United States in 1983. 22 Due to the eventual loss of trust and confidence in Ramon, however, respondent transferred the administration of the land to his other son, Oscar, in January 1995 until his return in May 1995. 23 In other words, the subject land was in the possession of the respondent's sons during the contested period. Petitioners cite an alleged document (Kusangloob na Pagsasauli ng Lupang Sakahan at Pagpapahayag ng Pagtalikod sa Karapatan) dated March 10, 1995 executed by them and Ramon to prove a turn over of possession. They also seek to prove their exercise of rights over the land through alleged frequent visits and the designation of Ramon as their own trustee as declared in a joint affidavit attached to their position paper filed with the MTC. These instruments, however, fail to convince us of petitioners' actual occupancy of the subject land. First, petitioners themselves acknowledged that Ramon and his wife occupied part of the land as tenants of respondent. Second, Ramon, a mere tenant, had no authority to sign such document dated March 10, 1995 waiving all rights to the land. Third, there was no clear proof in the records of the appointment of Ramon as petitioners' trustee save their self-serving statements to this effect. Finally, at the time the Kusangloob na Pagsasauli document was executed, the caretaker of the land was no longer Ramon but Oscar. 24 Most important, the title of the land in question (TCT No. T-118375) remained in the name of respondent. 25 "As the registered owner, petitioner had a right to the possession of the property, which is one of the attributes of ownership." 26 The Civil Code states: Art. 538.Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessors, the one longer in possession; if the dates of the possession are the same, the one who presents a title; and if all these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings. In view of the evidence establishing respondent's continuing possession of the subject property, petitioners' allegation that respondent deprived them of actual possession by means of force, intimidation and threat was clearly untenable. In Gaza v. Lim, we held that: Where a dispute over possession arises between two persons, the person first having actual possession is the one who is entitled to maintain the action granted by law; otherwise, a mere usurper without any right whatever, might enter upon the property of another and, by allowing himself to be ordered off, could acquire the right to maintain the action of forcible entry and detainer, however momentary his intrusion might have been. 27 WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals dated March 18, 1997 in CA-G.R. SP No. 42604 is AFFIRMED.

Costs against petitioners. SO ORDERED. Degrees of possession Possession of holder Possession in concept of owner, effects of Cases: [G.R. No. 170264. March 13, 2009.] JAMES ESTRELLER, EDUARDO CULIANAN, GREG CARROS, RAQUEL YEE, JOSELITO PENILLA, LORNA DOTE, CRESENCIANA CLEOPAS, TRINIDAD TEVES, SONIA PENILLA, ANITA GOMINTONG, CHING DIONESIO, MARIBEL MANALO, DESIRES HUERTO, and RAYMUNDO CORTES, petitioners, vs. LUIS MIGUEL YSMAEL and CRISTETA L. SANTOS-ALVAREZ, respondents. * DECISION AUSTRIA-MARTINEZ, J p: In the present petition, the Court finds occasion to reassert the legal precepts that a coowner may file an action for recovery of possession without the necessity of joining all the other co-owners as co-plaintiffs since the suit is deemed to be instituted for the benefit of all; and that Section 2 of Presidential Decree (P.D.) No. 2016, reinforced by P.D. No. 1517, which prohibits the eviction of qualified tenants/occupants, extends only to landless urban families who are rightful occupants of the land and its structures, and does not include those whose presence on the land is merely tolerated and without the benefit of contract, those who enter the land by force or deceit, or those whose possession is under litigation. cACEaI Respondents filed with the Regional Trial Court (RTC), Branch 216, Quezon City, a case for Recovery of Possession against petitioners, claiming ownership of the property subject of dispute located in E. Rodriguez Avenue and La Filonila Streets in Quezon City, by virtue of Transfer Certificate of Title (TCT) No. 41698 issued by the Register of Deeds of Quezon City on June 10, 1958. Respondents alleged that on various dates in 1973, petitioners entered the property through stealth and strategy and had since occupied the same; and despite demands made in March 1993, petitioners refused to vacate the premises, prompting respondents to file the action. 1 Petitioners denied respondents' allegations. According to them, respondent Luis Miguel Ysmael (Ysmael) had no personality to file the suit since he only owned a small portion of the property, while respondent Cristeta Santos-Alvarez (Alvarez) did not appear to be a registered owner thereof. Petitioners also contended that their occupation of the property was lawful, having leased the same from the Magdalena Estate, and later on from Alvarez. Lastly, petitioners asserted that the property has already been proclaimed by the Quezon City Government as an Area for Priority Development under P.D. Nos. 1517 and 2016, which prohibits the eviction of lawful tenants and demolition of their homes. 2

After trial, the RTC rendered its Decision dated September 15, 2000 in favor of respondents. The dispositive portion of the Decision reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs Luis Miguel Ysmael and Cristeta L. Santos-Alvarez and against defendants ordering the latter and all persons claiming rights under them to immediately vacate the subject property and peacefully surrender the same to the plaintiffs. Defendants are likewise ordered to pay plaintiffs the following: 1.The amount of P400.00 each per month from the date of extra-judicial demand until the subject property is surrendered to plaintiffs as reasonable compensation for the use and possession thereof; 2.The amount of P20,000.00 by way of exemplary damages; 3.The amount of P20,000.00 by way of attorney's fees and litigation expenses; 4.Cost of suit. ESTDIA Corollarily, the counter-claims of defendants are hereby DISMISSED for lack of merit. SO ORDERED. 3 Petitioners appealed to the Court of Appeals (CA), which, in a Decision 4 dated March 14, 2005, dismissed their appeal and affirmed in toto the RTC Decision. Hence, the present petition for review under Rule 45 of the Rules of Court, on the following grounds: I THE HONORABLE COURT OF APPEALS ERRED IN CONCLUDING THAT RESPONDENTS YSMAEL AND ALVAREZ ARE BOTH "REAL PARTIES IN INTEREST" WHO WOULD BE BENEFITED OR INJURED BY THE JUDGMENT OR THE PARTY ENTITLED TO THE AVAILS OF THE SUIT. II THE HONORABLE COURT OF APPEALS FAILED TO CONSIDER AND DECIDE THE RELEVANT QUESTIONS AND ISSUES PRESENTED BY THE PETITIONERS IN ROMAN NUMERALS II, III AND IV OF THEIR DISCUSSIONS AND ARGUMENTS IN THE APPELLANTS' BRIEF WHICH ARE HEREUNTO COPIED OR REPRODUCED. 5 The present petition merely reiterates the issues raised and settled by the RTC and the CA. On this score, it is well to emphasize the rule that the Court's 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 CA, 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. 6 HDTCSI The Court then finds that the petition is without merit. Respondents are real parties-in-interest in the suit below and may, therefore, commence the complaint for accion publiciana. On the part of Ysmael, he is a named co-owner of the subject property under TCT No. 41698, together with Julian Felipe Ysmael, Teresa Ysmael, and Ramon Ysmael. 7 For her part, Alvarez was a buyer of a portion of the property, as confirmed in several documents, namely: (1) Decision dated August 30, 1974 rendered by the Regional Trial Court of Quezon City, Branch 9 (IX), in Civil Case No. Q-8426, which was based on a Compromise Agreement between Alvarez and the Magdalena Estate; 8 (2) an unnotarized Deed of Absolute Sale dated May 1985 executed between the Ysmael Heirs and Alvarez; 9 and (3) a notarized Memorandum of Agreement between the Ysmael Heirs and Alvarez executed on May 2, 1991. 10 Recently, in Wee v. De Castro, 11 the Court, citing Article 487 of the Civil Code, reasserted the rule that any one of the co-owners may bring any kind of action for the recovery of coowned properties since the suit is presumed to have been filed for the benefit of all coowners. The Court also stressed that Article 487 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), thus: In the more recent case of Carandang v. Heirs of De Guzman, this Court declared that a coowner 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 coowned 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. (Emphasis supplied) Petitioners persistently question the validity of the transfer of ownership to Alvarez. They insist that Alvarez failed to establish any right over the property since the Deed of Absolute Sale was not inscribed on TCT No. 41698. Interestingly, petitioners debunked their own argument when they themselves claimed in their Answer with Counter-claim that they derived their right to occupy the property from a lease agreement with, first, the Magdalena Estate, and thereafter, Alvarez herself. 12 More importantly, the fact that the sale was not annotated or inscribed on TCT No. 41698 does not make it any less valid. A contract of sale has the force of law between the contracting parties and they are expected to abide, in good faith, by their respective contractual commitments. Article 1358 of the Civil Code which requires the embodiment of certain contracts in a public instrument, is only for convenience;

and registration of the instrument only adversely affects third parties, and non-compliance therewith does not adversely affect the validity of the contract or the contractual rights and obligations of the parties thereunder. 13 HAEDIS Petitioners further contend that the property subject of the Deed of Absolute Sale Lot 6, Block 4 of Subd. Plan Psd No. 33309 is different from that being claimed in this case, which are Lots 2 and 3. They claim that there exists another title covering the subject property, i.e., TCT No. 41698 in the names of Victoria M. Panganiban and Teodoro M. Panganiban. Notably, TCT No. 41698 in the name of the Ysmael Heirs covers several parcels of land under Subd. Plan Psd No. 33309. These include: Lot 2, Block 4; Lot 3, Block 4; and Lot 6, Block 4, each of which contains 1,000 square meters. In the Decision dated August 30, 1974 rendered by the RTC of Quezon City, Branch 9, in Civil Case No. Q-8426, the ownership of 200 square meters of Lot 2, Block 4; 250 square meters of Lot 3, Block 4; and the full 1,000 square meters of Lot 6, Block 4, was conferred on Alvarez. A Deed of Absolute Sale dated May 1985 was later executed by the Ysmael Heirs in favor of Alvarez, but it covered only Lot 6, Block 4. Nevertheless, a Memorandum of Agreement dated May 2, 1991 was subsequently entered into by the Ysmael Heirs and Alvarez, whereby all three apportioned parcels of land allocated to Alvarez under the RTC Decision dated August 30, 1974, were finally sold, transferred and conveyed to her. Evidently, while the title was yet to be registered in the name of Alvarez, for all intents and purposes, however, the subject property was already owned by her. The Ysmael Heirs are merely naked owners of the property, while Alvarez is already the beneficial or equitable owner thereof; and the right to the gains, rewards and advantages generated by the property pertains to her.

The existence of a title in the same TCT No. 41698, this time in the names of Victoria M. Panganiban and Teodoro M. Panganiban, was adequately explained by the Certification of the Register of Deeds dated March 1, 1994, and which reads: At the instance of RUY ALBERTO S. RONDAIN, I, SAMUEL C. CLEOFE, Register of Deeds of Quezon City, do hereby certify that TCT No. 41698, covering Lot 19, Blk. 8 of the cons.-subd. plan Pos-817, with an area of Three Hundred Seventy Five (375) Square Meters, registered in the name of VICTORIA M. PANGANIBAN; and TEODORO M. PANGANIBAN, married to Elizabeth G. Panganiban, issued on February 8, 1991, is existing and on file in this Registry. This is to certify further that TCT No. 41698 presented by Ruy Alberto S. Rondain covering Lot 3, Blk. 2 of the subd. Plan PSD-3309, with an area of Nine Hundred Ninety Six (996) Square Meters, issued on June 10, 1958 and registered in the name of JUAN FELIPE YSMAEL, TERESA YSMAEL, RAMON YSMAEL, LUIS MIGUEL YSMAEL, which is also an existing title is different and distinct from each other inasmuch as they cover different Lots and Plans. That it is further certified that the similarity in the title numbers is due to the fact that after the fire of June 11, 1988, the Quezon City Registry issued new title numbers beginning with TCT No. 1. 14 (Emphasis supplied) DIESHT

Finally, petitioners' claim that they are entitled to the protection against eviction and demolition afforded by P.D. Nos. 2016, 15 1517, 16 and Republic Act (R.A.) No. 7279, 17 is not plausible. Section 6 of P.D. No. 1517 grants preferential rights to landless tenants/occupants to acquire land within urban land reform areas, while Section 2 of P.D. No. 2016 prohibits the eviction of qualified tenants/occupants. In Dimaculangan v. Casalla, 18 the Court was emphatic in ruling that the protective mantle of P.D. No. 1517 and P.D. No. 2016 extends only to landless urban families who meet these qualifications: a) they are tenants as defined under Section 3 (f) of P.D. No. 1517; b) they built a home on the land they are leasing or occupying; c) the land they are leasing or occupying is within an Area for Priority Development and Urban Land Reform Zone; and d) they have resided on the land continuously for the last 10 years or more. Section 3 (f) of P.D. No. 1517 defines the term "tenant" covered by the said decree as the "rightful occupant of land and its structures, but does not include those whose presence on the land is merely tolerated and without the benefit of contract, those who enter the land by force or deceit, or those whose possession is under litigation." It has already been ruled that occupants of the land whose presence therein is devoid of any legal authority, or those whose contracts of lease were already terminated or had already expired, or whose possession is under litigation, are not considered "tenants" under the Section 3 (f). 19 Petitioners claim that they are lawful lessees of the property. However, they failed to prove any lease relationship or, at the very least, show with whom they entered the lease contract. Respondents, on the other hand, were able to prove their right to enjoy possession of the property. Thus, petitioners, whose occupation of the subject property by mere tolerance has been terminated by respondents, clearly do not qualify as "tenants" covered by these social legislations. Finally, petitioners failed to demonstrate that they qualify for coverage under R.A. No. 7279 or the Urban Development and Housing Act of 1992. R.A. No. 7279 provides for the procedure to be undertaken by the concerned local governments in the urban land development process, to wit: conduct an inventory of all lands and improvements within their respective localities, and in coordination with the National Housing Authority, the Housing and Land Use Regulatory Board, the National Mapping Resource Information Authority, and the Land Management Bureau; identify lands for socialized housing and resettlement areas for the immediate and future needs of the underprivileged and homeless in the urban areas; acquire the lands; and dispose of said lands to the beneficiaries of the program. 20 While there is a Certification that the area bounded by E. Rodriguez, Victoria Avenue, San Juan River and 10th Street of Barangay Damayang Lagi, Quezon City is included in the list of Areas for Priority Development under Presidential Proclamation No. 1967, 21 there is no showing that the property has already been acquired by the local government for this purpose; or that petitioners have duly qualified as beneficiaries. aIcDCT All told, the Court finds no reason to grant the present petition.

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated March 14, 2005 of the Court of Appeals is AFFIRMED. SO ORDERED. [G.R. No. 124699. July 31, 2003.] BOGO-MEDELLIN MILLING CO., INC., petitioner, vs. COURT OF APPEALS AND Heirs of MAGDALENO VALDEZ SR., respondents. Juluis S. Neri for petitioner. Zosa & Quijano Law Offices for private respondents. SYNOPSIS This case involves a narrow lot known as Lot 954 of the Cadastral Survey of Medellin, Cebu where the railroad tracks of the Bogo-Medellin Milling Co., Inc. (Bomedco) were laid and was also registered in its name. However, herein respondent heirs of Magdaleno Valdez, Sr. filed a complaint before the Regional Trial Court of Cebu City, Branch IX for payment of compensation and/or recovery of possession of real property and damages against Bomedco by claiming ownership of the said narrow lot. After trial, the court a quo rejected Bomedco's defense of ownership on the basis of a prior sale. Nonetheless, it held that Bomedco had been in possession of Cadastral Lot No. 954 in good faith for more than 10 years, thus, it had already acquired ownership of the property through acquisitive prescription under Article 620 of the Civil Code. When this case was elevated to the Court of Appeals, the latter reversed the trial court's decision. It held that Bomedco only acquired an easement of right of way by unopposed and continuous use of the land, but not ownership, under Article 620 of the Civil Code. Thus, it awarded compensation to the respondent heirs, to be computed from the time of discovery of the adverse acts of Bomedco. Consequently, Bomedco interposed this petition. caSDCA The Court was inclined to believe the version of respondent heirs that an easement of the right of way was actually granted to petitioner for which reason the latter was able to occupy Cadastral Lot No. 954. It cannot disregard the fact that, for the years 1930, 1937, 1949, 1962 and 1963, petitioner unequivocally declared the property to be a "central railroad right of way" or "sugar central railroad right of way" in its real estate tax receipts when it could have declared it to be "industrial land" as it did for the years 1975 and 1985. Instead of indicating ownership of the lot, these receipts showed that all petitioner had was possession by virtue of the right of way granted to it. Moreover, the mere expiration of the period of easement in 1959 did not convert petitioner's possession into an adverse one. To be sure, beginning 1959 when the original 30-year grant of right of way given to petitioner Bomedco expired, its occupation and use of Cadastral Lot No. 954 came to be by mere tolerance of the respondent heirs. Thus, upon demand by said heirs in 1989 for the return of the subject land and the removal of the railroad tracks, or, in the alternative, payment of compensation for the use thereof, petitioner Bomedco which had no title to the land should have returned the possession thereof or should have begun paying compensation for its use.

Accordingly, the decision of the Court of Appeals was modified. Petitioner Bomedco was ordered to vacate the subject land, remove its railway tracks thereon and return its possession to respondent heirs. SYLLABUS 1.CIVIL LAW; PROPERTY; PRESCRIPTION; EXTRAORDINARY ACQUISITIVE PRESCRIPTION; POSSESSION MUST BE UNDER A CLAIM OF TITLE. There is no dispute that the controversial strip of land has been in the continuous possession of petitioner since 1929. But possession, to constitute the foundation of a prescriptive right, must be possession under a claim of title, that is, it must be adverse. Unless coupled with the element of hostility towards the true owner, possession, however long, will not confer title by prescription. 2.ID.; ID.; EASEMENTS; PERSON CANNOT HAVE AN EASEMENT ON HIS OWN LAND. [W]e are inclined to believe the version of respondent heirs that an easement of right of way was actually granted to petitioner for which reason the latter was able to occupy Cadastral Lot No. 954. We cannot disregard the fact that, for the years 1930, 1937, 1949, 1962 and 1963, petitioner unequivocally declared the property to be a "central railroad right of way" or "sugar central railroad right of way" in its real estate tax receipts when it could have declared it to be "industrial land" as it did for the years 1975 and 1985. Instead of indicating ownership of the lot, these receipts showed that all petitioner had was possession by virtue of the right of way granted to it. Were it not so and petitioner really owned the land, petitioner would not have consistently used the phrases "central railroad right of way" and "sugar central railroad right of way" in its tax declarations until 1963. Certainly an owner would have found no need for these phrases. A person cannot have an easement on his own land, since all the uses of an easement are fully comprehended in his general right of ownership. DcTSHa 3.ID.; ID.; ID.; TAX DECLARATIONS CONSTITUTE STRONG EVIDENCE OF OWNERSHIP OF THE LAND BUT DOES NOT APPLY IN CASES WHERE THE PROPERTY IS DECLARED TO BE A MERE EASEMENT OF RIGHT OF WAY. While it is true that, together with a person's actual and adverse possession of the land, tax declarations constitute strong evidence of ownership of the land occupied by him, this legal precept does not apply in cases where the property is declared to be a mere easement of right of way. 4.ID.; ID.; ID.; ACKNOWLEDGMENT THEREOF IS AN ADMISSION THAT THE PROPERTY BELONGS TO ANOTHER. An easement or servitude is a real right, constituted on the corporeal immovable property of another, by virtue of which the owner has to refrain from doing, or must allow someone to do, something on his property, for the benefit of another thing or person. It exists only when the servient and dominant estates belong to two different owners. It gives the holder of the easement an incorporeal interest on the land but grants no title thereto. Therefore, an acknowledgment of the easement is an admission that the property belongs to another. Having held the property by virtue of an easement, petitioner cannot now assert that. its occupancy since 1929 was in the concept of an owner. Neither can it declare that the 30-year period of extraordinary acquisitive prescription started from that year.

5.ID.; ID.; ID.; MERE EXPIRATION OF THE PERIOD THEREOF DID NOT CONVERT ONE'S POSSESSION INTO AN ADVERSE ONE. The mere expiration of the period of easement in 1959 did not convert petitioner's possession into an adverse one. Mere material possession of land is not adverse possession as against the owner and is insufficient to vest title, unless such possession is accompanied by the intent to possess as an owner. There should be a hostile use of such a nature and exercised under such circumstances as to manifest and give notice that the possession is under a claim of right. 6.ID.; ID.; ID.; ID.; CASE AT BAR. In the absence of an express grant by the owner, or conduct by petitioner sugar mill from which an adverse claim can be implied, its possession of the lot can only be presumed to have continued in 'the same character as when it was acquired (that is, it possessed the land only by virtue of the original grant of the easement of right of way), or was by mere license or tolerance of the owners (respondent heirs). It is a fundamental principle of law in this jurisdiction that acts of possessory character executed by virtue of license or tolerance of the owner, no matter how long, do not start the running of the period of prescription. After the grant of easement expired in 1959, petitioner never performed any act incompatible with the ownership of respondent heirs over Cadastral Lot No. 954. On the contrary, until 1963, petitioner continued to declare the "sugar central railroad right of way" in its realty tax receipts, thereby doubtlessly conceding the ownership of respondent heirs. Respondents themselves were emphatic that they simply tolerated petitioner's continued use of Cadastral Lot No. 954 so as not to jeopardize the employment of one of their co-heirs in the sugar mill of petitioner. 7.ID.; ID.; PRESCRIPTION; EXTRAORDINARY ACQUISITIVE PRESCRIPTION; APPLICABLE BUT NOT COMPLIED WITH IN CASE AT BAR. The only time petitioner assumed a legal position adverse to respondents' was when it filed a claim over the property in 1965 during the cadastral survey of Medellin. Since then (1965) and until the filing of the complaint for the recovery of the subject land before the RTC of Cebu in 1989, only 24 years had lapsed. Since the required 30-year extraordinary prescriptive period had not yet been complied with in 1989, petitioner never acquired ownership of the subject land. 8.REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; LACHES; NOT CONSTITUTED BY MERE LAPSE OF TIME OR DELAY. It is not just the lapse of time or delay that constitutes laches. The essence of laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, through due diligence, could or should have been done earlier, thus giving rise to a presumption that the party entitled to assert it had either abandoned or declined to assert it. TEDaAc 9.ID.; ID.; ID.; ID.; ESSENTIAL ELEMENTS. Its essential elements are: (a) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (b) delay in asserting complainant's rights after he had knowledge of defendant's acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit; and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant. 10.ID.; ID.; ID.; ID.; ASPECTS OF DELAY IN ASSERTING COMPLAINANT'S RIGHTS. The second element (which in turn has three aspects) is lacking in the case at bar. These aspects

are: (a) knowledge of defendant's action, (b) opportunity to sue defendant after obtaining such knowledge and (c) delay in the filing of such suit. 11.ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR. Records show that respondent heirs only learned about petitioner's claim on their property when they discovered the inscription for the cadastral survey in the records of the Bureau of Lands in 1989. Respondents lost no time in demanding an explanation for said claim in their letters to the petitioner dated March 1. 1989 and April 6. 1989. When petitioner ignored them, they instituted their complaint before the Regional Trial Court of Cebu City on June 8, 1989.

12.ID.; ID.; ID.; ID.; CARO vs. COURT OF APPEALS AND VDA. DE ALBERTO vs. COURT OF APPEALS; NOT APPLICABLE IN CASE AT BAR. Petitioner's reliance on Caro vs. Court of Appeals and Vda. de Alberto vs.Court of Appeals is misplaced. There, laches was applied to bar petitioners from questioning the ownership of the disputed properties precisely because they had knowledge of the adverse claims on their properties yet tarried for an extraordinary period of time before taking steps to protect their rights. 13.ID.; ID.; ID.; ID.; A RULE OF EQUITY. [T]here is no absolute rule on what constitutes laches. It is a rule of equity and applied not 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 unfair situation. The question of lathes is addressed to the sound discretion of the court and each case must be decided according to its particular circumstances. It is the better rule that courts, under the principle of equity, should not be guided or bound strictly by the statute of limitations or the doctrine of laches if wrong or injustice will result. 14.CIVIL LAW; PROPERTY; EASEMENTS; THE NATURE THEREOF WHETHER CONTINUOUS OR DISCONTINUOUS IS IN ACCORDANCE TO THE MANNER THEY ARE EXERCISED. Under civil law and its jurisprudence, easements are either continuous or discontinuous according to the manner they are exercised, not according to the presence of apparent signs or physical indications of the existence of such easements. Thus, an easement is continuous if its use is, or may be, incessant without the intervention of any act of man, like the easement of drainage; and it is discontinuous if it is used at intervals and depends on the act of man, like the easement of right of way. 15.ID.; ID.; ID.; RIGHT OF WAY; CLASSIFIED AS DISCONTINUOUS. The easement of right of way is considered discontinuous because it is exercised only if a person passes or sets foot on somebody else's land. Like a road for the passage of vehicles or persons, an easement of right of way of railroad tracks is discontinuous because the right is exercised only if and when a train operated by a person passes over another's property. In other words, the very exercise of the servitude depends upon the act or intervention of man which is the very essence of discontinuous easements. 16.ID.; ID.; ID.; ID.; CANNOT BE ACQUIRED BY PRESCRIPTION. In Cuba, it has been held that the existence of a permanent railway does not make the right of way a continuous one; it is only apparent. Therefore, it cannot be acquired by prescription. In Louisiana, it has also

been held that a right of passage over another's land cannot be claimed by prescription because this easement is discontinuous and can be established only by title. 17.ID.; ID.; ID.; ID.; CAN ONLY BE ACQUIRED BY TITLE. In this case, the presence of railroad tracks for the passage of petitioner's trains denotes the existence of an apparent but discontinuous easement of right of way. And under Article 622 of the Civil Code, discontinuous easements, whether apparent or not, may be acquired only by title. Unfortunately, petitioner Bomedco never acquired any title over the use of the railroad right of way whether by law, donation, testamentary succession or contract. Its use of the right of way, however long, never resulted in its acquisition of the easement because, under Article 622, the discontinuous easement of a railroad right of way can only be acquired by title and not by prescription. DCTSEA 18.ID.; ID.; ID.; PRESENCE OF PHYSICAL OR VISUAL SIGNS CLASSIFIES AN EASEMENT INTO APPARENT OR NONAPPARENT. The presence of more or less permanent railroad tracks does not in any way convert the nature of an easement of right of way to one that is continuous. It is not the presence of apparent signs or physical indications showing the existence of an easement, but rather the manner of exercise thereof, that categorizes such easement into continuous or discontinuous. The presence of physical or visual signs only classifies an easement into apparent or non-apparent. Thus, a road (which reveals a right of way) and a window (which evidences a right to light and view) are apparent easements, while an easement of not building beyond a certain height is non-apparent. 19.ID.; ID.; ID.; RIGHT OF WAY; AFTER THE EXPIRATION OF THE ORIGINAL GRANT THEREOF, ITS POSSESSION SHOULD BE RETURNED TO THE OWNER OR THE POSSESSOR SHOULD HAVE BEGUN PAYING COMPENSATION FOR ITS USE. To be sure, beginning 1959 when the original 30-year grant of right of way given to petitioner Bomedco expired, its occupation and use of Cadastral Lot No. 954 came to be by mere tolerance of the respondent heirs. Thus, upon demand by said heirs in 1989 for the return of the subject land and the removal of the railroad tracks, or, in the alternative, payment of compensation for the use thereof, petitioner Bomedco which had no title to the land should have returned the possession thereof or should have begun paying compensation for its use. 20.ID.; ID.; ID.; ID.; WHEN A PARTY IS DEEMED TO ACQUIRE TITLE OVER THE USE OF LAND. But when is a party deemed to acquire title over the use of such land (that is, title over the easement of right of way)? In at least two cases, we held that if: (a) it had subsequently entered into a contractual right of way with the heirs for the continued use of the land under the principles of voluntary easements or (b) it had filed a case against the heirs for conferment on it of a legal easement of right of way under Article 629 of the Civil Code, then title over the use of the land is deemed to exist. 21.ID.; ID.; ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR. None of the above options to acquire title over the railroad right of way was ever pursued by petitioner despite the fact that simple resourcefulness demanded such initiative, considering the importance of the railway tracks to its business. No doubt, it is unlawfully occupying and using the subject strip of land as a railroad right of way without valid title yet it refuses to vacate it even after

demand of the heirs. Furthermore, it tenaciously insists on ownership thereof despite a clear showing to the contrary. We thus uphold the grant by the Court of Appeals of attorney's fees in the amount of P10,000 considering the evident bad faith of petitioner in refusing respondents' just and lawful claims, compelling the latter to litigate. CcAITa 22.ID.; ID.; ID.; ID.; REQUISITES FOR CONFERMENT THEREOF. The conferment of a legal easement of right of way under Article 629 is subject to proof of the following: (1) it is surrounded by other immovables and has no adequate outlet to a public highway; (2) payment of proper indemnity; (3) the isolation is not the result of its own acts; and (4) the right of way claimed is at the point least prejudicial to the servient estate, and, insofar as consistent with this rule, the distance from the dominant estate to the highway is the shortest. DECISION CORONA, J p: This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the decision 1 dated November 17, 1995 of the Court of Appeals, Tenth Division, which reversed the decision 2 dated November 27, 1991 of the Regional Trial Court of Cebu City, Branch IX, which ruled in favor of herein petitioner, Bogo-Medellin Milling Company, Inc. and dismissed herein private respondents' complaint for payment of compensation and/or recovery of possession of real property and damages with application for restraining order preliminary injunction; and its resolution dated March 2, 1996 denying petitioner's motion for reconsideration. aHcDEC The antecedent facts follow. Magdaleno Valdez, Sr., father of herein private respondents Sergio Valdez, Angelina ValdezNovabos, Teresita Argawanon-Mangubat and Daylinda Argawanon-Melendres (hereafter the heirs), purchased from Feliciana Santillan, on December 9, 1935, a parcel of unregistered land covered by Tax Declaration No. 3935 with an area of one hectare, 34 ares and 16 centares, located in Barrio Dayhagon, Medellin, Cebu. 3 He took possession of the property and declared it for tax purposes in his name. 4 Prior to the sale, however, the entire length of the land from north to south was already traversed in the middle by railroad tracks owned by petitioner Bogo-Medellin Milling Co., Inc. (hereafter Bomedco). The tracks were used for hauling sugar cane from the fields to petitioner's sugar mill. When Magdaleno Valdez, Sr. passed away in 1948, herein private respondents inherited the land. However, unknown to them, Bomedco was able to have the disputed middle lot which was occupied by the railroad tracks placed in its name in the Cadastral Survey of Medellin, Cebu in 1965. The entire subject land was divided into three, namely, Cadastral Lot Nos. 953, 954 and 955. Lot Nos. 953 and 955 remained in the name of private respondents. However, Lot No. 954, the narrow lot where the railroad tracks lay, was claimed by Bomedco as its own and was declared for tax purposes in its name. 5

It was not until 1989 when private respondents discovered the aforementioned claim of Bomedco on inquiry with the Bureau of Lands. Through their lawyer, they immediately demanded the legal basis for Bomedco's claim over Cadastral Lot No. 954 but their letter of inquiry addressed to petitioner went unheeded, as was their subsequent demand for payment of compensation for the use of the land. 6 On June 8, 1989, respondent heirs filed a "Complaint for Payment of Compensation and/or Recovery of Possession of Real Property and Damages with Application for Restraining Order/Preliminary Injunction" against Bomedco before the Regional Trial Court of Cebu. 7 Respondent heirs alleged that, before she sold the land to Valdez, Sr. in 1935, Santillan granted Bomedco, in 1929, a railroad right of way for a period of 30 years. When Valdez, Sr. acquired the land, he respected the grant. The right of way expired sometime in 1959 but respondent heirs allowed Bomedco to continue using the land because one of them was then an employee of the company. 8

In support of the complaint, they presented an ancient document an original copy of the deed of sale written in Spanish and dated December 9, 1935 9 to evidence the sale of the land to Magdaleno Valdez, Sr.; several original estate tax receipts 10 including Real Property Tax Receipt No. 3935 11 dated 1922 in the name of Graciano de los Reyes, husband of Feliciana Santillan, and Real Property Tax Receipt No. 09491 12 dated 1963 in the name of Magdaleno Valdez, Sr. Magdaleno Valdez, Jr. also testified for the plaintiffs during the trial. On the other hand, Bomedco's principal defense was that it was the owner and possessor of Cadastral Lot No. 954, having allegedly bought the same from Feliciana Santillan in 1929, prior to the sale of the property by the latter to Magdaleno Valdez, Sr. in 1935. It also contended that plaintiffs' claim was already barred by prescription and laches because of Bomedco's open and continuous possession of the property for more than 50 years. SDTaHc Bomedco submitted in evidence a Deed of Sale 13 dated March 18, 1929; seven real estate tax receipts 14 for the property covering the period from 1930 to 1985; a 1929 Survey Plan of private land for Bogo-Medellin Milling Company; 15 a Survey Notification Card; 16 Lot Data Computation for Lot No. 954; 17 a Cadastral Map for Medellin Cadastre 18 as well as the testimonies of Vicente Basmayor, Geodetic Engineer and property custodian for Bomedco, and Rafaela A. Belleza, Geodetic Engineer and Chief of the Land Management Services of the DENR, Region VIII. In its decision dated November 27, 1991, the trial court 19 rejected Bomedco's defense of ownership on the basis of a prior sale, citing that its evidence a xerox copy of the Deed of Sale dated March 18, 1929 was inadmissible and had no probative value. Not only was it not signed by the parties but defendant Bomedco also failed to present the original copy without valid reason pursuant to Section 4, Rule 130 of the Rules of Court. 20 Nonetheless, the trial court held that Bomedco had been in possession of Cadastral Lot No. 954 in good faith for more than 10 years, thus, it had already acquired ownership of the property through acquisitive prescription under Article 620 of the Civil Code. It explained:

Under Article 620 of the Civil Code, CONTINUOUS and APPARENT easements can be acquired by prescription after ten (10) years. The "apparent" characteristic of the questioned property being used by defendant as an easement is no longer at issue, because plaintiffs themselves had acknowledged that the existence of the railway tracks of defendant Bomedco was already known by the late Magdaleno Valdez, herein plaintiffs' predecessor-in-interest, before the late Magdaleno Valdez purchased in 1935 from the late Feliciana Santillan the land described in the Complaint where defendant's railway tracks is traversing [sic] (TSN of February 5, 1991, pp. 7-8). As to the continuity of defendant's use of the strip of land as easement is [sic] also manifest from the continuous and uninterrupted occupation of the questioned property from 1929 up to the date of the filing of the instant Complaint. In view of the defendant's UNINTERRUPTED possession of the strip of land for more than fifty (50) years, the Supreme Court's ruling in the case of Ronquillo, et al. v. Roco, et al. (103 Phil 84) is not applicable. This is because in said case the easement in question was a strip of dirt road whose possession by the dominant estate occurs only everytime said dirt road was being used by the dominant estate. Such fact would necessarily show that the easement's possession by the dominant estate was never continuous. In the instant case however, there is clear continuity of defendant's possession of the strip of land it had been using as railway tracks. Because the railway tracks which defendant had constructed on the questioned strip of land had been CONTINUOUSLY occupying said easement. Thus, defendant Bomedco's apparent and continuous possession of said strip of land in good faith for more than ten (10) years had made defendant owner of said strip of land traversed by its railway tracks. Because the railway tracks which defendant had constructed on the questioned strip of land had been continuously occupying said easement [sic]. Thus, defendant Bomedco's apparent and continuous possession of said strip of land in good faith for more than ten (10) years had made defendant owner of said strip of land traversed by its railway tracks. Respondent heirs elevated the case to the Court of Appeals which found that Bomedco did not acquire ownership over the lot. It consequently reversed the trial court. In its decision dated November 17, 1995, the appellate court held that Bomedco only acquired an easement of right of way by unopposed and continuous use of the land, but not ownership, under Article 620 of the Civil Code. The appellate court further ruled that Bomedco's claim of prior sale to it by Feliciana Santillan was untrue. Its possession being in bad faith, the applicable prescriptive period in order to acquire ownership over the land was 30 years under Article 1137 of the Civil Code. Adverse possession of the property started only in 1965 when Bomedco registered its claim in the cadastral survey of Medellin. Since only 24 years from 1965 had elapsed when the heirs filed a complaint against Bomedco in 1989, Bomedco's possession of the land had not ripened into ownership. And since there was no showing that respondent heirs or their predecessor-in-interest was ever paid compensation for the use of the land, the appellate court awarded compensation to them, to be computed from the time of discovery of the adverse acts of Bomedco. HScaCT Its motion for reconsideration having been denied by the appellate court in its resolution dated March 22, 1996, Bomedco now interposes before us this present appeal by certiorari under Rule 45, assigning the following errors:

I THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT REVERSED AND SET ASIDE THE TRIAL COURT'S DECISION DISMISSING PRIVATE RESPONDENT'S COMPLAINT. II THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT ORDERED THE PETITIONER TO PAY THE PRIVATE RESPONDENT THE REASONABLE VALUE OF LOT 954 AND THE AMOUNT OF TEN THOUSAND (P10,000.00) PESOS AS REASONABLE ATTORNEY'S FEES. Petitioner Bomedco reiterates its claim of ownership of the land through extraordinary acquisitive prescription under Article 1137 of the Civil Code and laches to defeat the claim for compensation or recovery of possession by respondent heirs. It also submits a third ground originally tendered by the trial court acquisition of the easement of right of way by prescription under Article 620 of the Civil Code. EXTRAORDINARY ACQUISITIVE PRESCRIPTION UNDER ART. 1137 OF THE CIVIL CODE Petitioner's claim of ownership through extraordinary acquisitive prescription under Article 1137 of the Civil Code cannot be sustained. There is no dispute that the controversial strip of land has been in the continuous possession of petitioner since 1929. But possession, to constitute the foundation of a prescriptive right, must be possession under a claim of title, that is, it must be adverse. 21 Unless coupled with the element of hostility towards the true owner, possession, however long, will not confer title by prescription. 22 After a careful review of the records, we are inclined to believe the version of respondent heirs that an easement of right of way was actually granted to petitioner for which reason the latter was able to occupy Cadastral Lot No. 954. We cannot disregard the fact that, for the years 1930, 1937, 1949, 1962 and 1963, petitioner unequivocally declared the property to be a "central railroad right of way" or "sugar central railroad right of way" in its real estate tax receipts when it could have declared it to be "industrial land" as it did for the years 1975 and 1985. 23 Instead of indicating ownership of the lot, the receipts showed that all petitioner had was possession by virtue of the right of way granted to it. Were it not so and petitioner really owned the land, petitioner would not have consistently used the phrases "central railroad right of way" and "sugar central railroad right of way" in its tax declarations until 1963. Certainly an owner would have found no need for these phrases. A person cannot have an easement on his own land, since all the uses of an easement are fully comprehended in his general right of ownership. 24 While it is true that, together with a person's actual and adverse possession of the land, tax declarations constitute strong evidence of ownership of the land occupied by him, 25 this legal precept does not apply in cases where the property is declared to be a mere easement of right of way.

An easement or servitude is a real right, constituted on the corporeal immovable property of another, by virtue of which the owner has to refrain from doing, or must allow someone to do, something on his property, for the benefit of another thing or person. It exists only when the servient and dominant estates belong to two different owners. It gives the holder of the easement an incorporeal interest on the land but grants no title thereto. Therefore, an acknowledgment of the easement is an admission that the property belongs to another. 26 Having held the property by virtue of an easement, petitioner cannot now assert that its occupancy since 1929 was in the concept of an owner. Neither can it declare that the 30year period of extraordinary acquisitive prescription started from that year. Petitioner, however, maintains that even if a servitude was merely imposed on the property in its favor, its possession immediately became adverse to the owner in the late 1950's when the grant was alleged by respondent heirs to have expired. It stresses that, counting from the late 1950's (1959 as found by the trial court), the 30-year extraordinary acquisitive prescription had already set in by the time respondent heirs made a claim against it in their letters dated March 1 and April 6, 1989.

We do not think so. The mere expiration of the period of easement in 1959 did not convert petitioner's possession into an adverse one. Mere material possession of land is not adverse possession as against the owner and is insufficient to vest title, unless such possession is accompanied by the intent to possess as an owner. 27 There should be a hostile use of such a nature and exercised under such circumstances as to manifest and give notice that the possession is under a claim of right. In the absence of an express grant by the owner, or conduct by petitioner sugar mill from which an adverse claim can be implied, its possession of the lot can only be presumed to have continued in the same character as when it was acquired (that is, it possessed the land only by virtue of the original grant of the easement of right of way), 28 or was by mere license or tolerance of the owners (respondent heirs). 29 It is a fundamental principle of law in this jurisdiction that acts of possessory character executed by virtue of license or tolerance of the owner, no matter how long, do not start the running of the period of prescription. 30 After the grant of easement expired in 1959, petitioner never performed any act incompatible with the ownership of respondent heirs over Cadastral Lot No. 954. On the contrary, until 1963, petitioner continued to declare the "sugar central railroad right of way" in its realty tax receipts, thereby doubtlessly conceding the ownership of respondent heirs. Respondents themselves were emphatic that they simply tolerated petitioner's continued use of Cadastral Lot No. 954 so as not to jeopardize the employment of one of their co-heirs in the sugar mill of petitioner. 31 The only time petitioner assumed a legal position adverse to respondents' was when it filed a claim over the property in 1965 during the cadastral survey of Medellin. Since then (1965) and until the filing of the complaint for the recovery of the subject land before the RTC of Cebu in 1989, only 24 years had lapsed. Since the required 30-year extraordinary

prescriptive period had not yet been complied with in 1989, petitioner never acquired ownership of the subject land. HIAESC LACHES Neither can petitioner find refuge in the principle of laches. It is not just the lapse of time or delay that constitutes laches. The essence of laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, through due diligence, could or should have been done earlier, thus giving rise to a presumption that the party entitled to assert it had either abandoned or declined to assert it. 32 Its essential elements are: (a) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (b) delay in asserting complainant's rights after he had knowledge of defendant's acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit; and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant. 33 The second element (which in turn has three aspects) is lacking in the case at bar. These aspects are: (a) knowledge of defendant's action, (b) opportunity to sue defendant after obtaining such knowledge and (c) delay in the filing of such suit. 34 Records show that respondent heirs only learned about petitioner's claim on their property when they discovered the inscription for the cadastral survey in the records of the Bureau of Lands in 1989. Respondents lost no time in demanding an explanation for said claim in their letters to the petitioner dated March 1, 1989 and April 6, 1989. When petitioner ignored them, they instituted their complaint before the Regional Trial Court of Cebu City on June 8, 1989. Petitioner's reliance on Caro vs. Court of Appeals 35 and Vda. de Alberto vs. Court of Appeals 36 is misplaced. There, laches was applied to bar petitioners from questioning the ownership of the disputed properties precisely because they had knowledge of the adverse claims on their properties yet tarried for an extraordinary period of time before taking steps to protect their rights. Further, there is no absolute rule on what constitutes laches. It is a rule of equity and applied not 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 unfair situation. The question of laches is addressed to the sound discretion of the court and each case must be decided according to its particular circumstances. 37 It is the better rule that courts, under the principle of equity, should not be guided or bound strictly by the statute of limitations or the doctrine of laches if wrong or injustice will result. It is clear that petitioner never acquired ownership over Cadastral Lot No. 954 whether by extraordinary acquisitive prescription or by laches. ACQUISITION OF EASEMENT OF RIGHT OF WAY BY PRESCRIPTION UNDER ART. 620 OF THE CIVIL CODE

Petitioner contends that, even if it failed to acquire ownership of the subject land, it nevertheless became legally entitled to the easement of right of way over said land by virtue of prescription under Article 620 of the Civil Code: Continuous and apparent easements are acquired either by virtue of a title or by prescription of ten years. The trial court and the Court of Appeals both upheld this view for the reason that the railroad right of way was, according to them, continuous and apparent in nature. The more or less permanent railroad tracks were visually apparent and they continuously occupied the subject strip of land from 1959 (the year the easement granted by Feliciana Santillan to petitioner expired). Thus, with the lapse of the 10-year prescriptive period in 1969, petitioner supposedly acquired the easement of right of way over the subject land. Following the logic of the courts a quo, if a road for the use of vehicles or the passage of persons is permanently cemented or asphalted, then the right of way over it becomes continuous in nature. The reasoning is erroneous. Under civil law and its jurisprudence, easements are either continuous or discontinuous according to the manner they are exercised, not according to the presence of apparent signs or physical indications of the existence of such easements. Thus, easement is continuous if its use is, or may be, incessant without the intervention of any act of man, like the easement of drainage; 38 and it is discontinuous if it is used at intervals and depends on the act of man, like the easement of right of way. 39 The easement of right of way is considered discontinuous because it is exercised only if a person passes or sets foot on somebody else's land. Like a road for the passage of vehicles or persons, an easement of right of way of railroad tracks is discontinuous because the right is exercised only if and when a train operated by a person passes over another's property. In other words, the very exercise of the servitude depends upon the act or intervention of man which is the very essence of discontinuous easements. The presence of more or less permanent railroad tracks does not in any way convert the nature of an easement of right of way to one that is continuous. It is not the presence of apparent signs or physical indications showing the existence of an easement, but rather the manner of exercise thereof, that categorizes such easement into continuous or discontinuous. The presence of physical or visual signs only classifies an easement into apparent or non-apparent. Thus, a road (which reveals a right of way) and a window (which evidences a right to light and view) are apparent easements, while an easement of not building beyond a certain height is non-apparent. 40 In Cuba, it has been held that the existence of a permanent railway does not make the right of way a continuous one; it is only apparent. Therefore, it cannot be acquired by prescription. 41 In Louisiana, it has also been held that a right of passage over another's land cannot be claimed by prescription because this easement is discontinuous and can be established only by title. 42

In this case, the presence of railroad tracks for the passage of petitioner's trains denotes the existence of an apparent but discontinuous easement of right of way. And under Article 622 of the Civil Code, discontinuous easements, whether apparent or not, may be acquired only by title. Unfortunately, petitioner Bomedco never acquired any title over the use of the railroad right of way whether by law, donation, testamentary succession or contract. Its use of the right of way, however long, never resulted in its acquisition of the easement because; under Article 622, the discontinuous easement of a railroad right of way can only be acquired by title and not by prescription. To be sure, beginning 1959 when the original 30-year grant of right of way given to petitioner Bomedco expired, its occupation and use of Cadastral Lot No. 954 came to be by mere tolerance of the respondent heirs. Thus, upon demand by said heirs in 1989 for the return of the subject land and the removal of the railroad tracks, or, in the alternative, payment of compensation for the use thereof, petitioner Bomedco which had no title to the land should have returned the possession thereof or should have begun paying compensation for its use. But when is a party deemed to acquire title over the use of such land (that is, title over the easement of right of way)? In at least two cases, we held that if: (a) it had subsequently entered into contractual right of way with the heirs for the continued use of the land under the principles of voluntary easements or (b) it had filed a case against the heirs for conferment on it of a legal easement of right of way under Article 629 of the Civil Code, then title over the use of the land is deemed to exist. The conferment of a legal easement of right of way under Article 629 is subject to proof of the following:

(1)it is surrounded by other immovables and has no adequate outlet to a public highway; (2)payment of proper indemnity; (3)the isolation is not the result of its own acts; and (4)the right of way claimed is at the point least prejudicial to the servient estate, and, insofar as consistent with this rule, the distance from the dominant estate to the highway is the shortest. 43 None of the above options to acquire title over the railroad right of way was ever pursued by petitioner despite the fact that simple resourcefulness demanded such initiative, considering the importance of the railway tracks to its business. No doubt, it is unlawfully occupying and using the subject strip of land as a railroad right of way without valid title yet it refuses to vacate it even after demand of the heirs. Furthermore, it tenaciously insists on ownership thereof despite a clear showing to the contrary. We thus uphold the grant by the Court of Appeals of attorney's fees in the amount of P10,000 considering the evident bad faith of petitioner in refusing respondents' just and lawful claims, compelling the latter to litigate. 44

WHEREFORE, the petition is DENIED. The appealed decision dated November 17, 1995 and resolution dated March 2, 1996 of the Court of Appeals are AFFIRMED with MODIFICATION. Petitioner Bogo-Medellin Milling Company, Inc. is hereby ordered to vacate the subject strip of land denominated as Cadastral Lot No. 954, remove its railway tracks thereon and return its possession to the private respondents, the heirs of Magdaleno Valdez, Sr. It is also hereby ordered to pay private respondents attorney's fees in the amount of P10,000. SEDaAH SO ORDERED. Possession in good faith Case: [G.R. No. L-39044. January 31, 1985.] MANOTOK REALTY, INC., petitioner, vs. THE HON. COURT OF APPEALS and FELIPE CARILLO, respondents. SYLLABUS 1.CIVIL LAW; POSSESSION; POSSESSOR IN GOOD FAITH, CONSTRUED. A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. (Caram v. Laureta, 103 SCRA 7, Art. 526, Civil Code). One who acquires real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should put a reasonable man upon his guard, and then claims that he acted in good faith under the belief that there was no defect in the title of the vendor. (See Leung Yee v. F.L. Strong Machinery Co., 37 Phil. 644). 2.ID.; ID.; POSSESSOR HELD NOT IN GOOD FAITH WHERE DISPUTED LOT WAS ALREADY REGISTERED AND TITLED. The records show that when Dayrit executed the deed of assignment in favor of the respondent, the disputed lot was already registered and titled in the name of the petitioner. Such an act of registration served as a constructive notice to the whole world and the title issued in favor of petitioner made his ownership conclusive upon and against all persons including Dayrit and herein respondent, although no personal notice was served on either of the latter. (See Garcia v. Bello, 13 SCRA 769; Demontano v. Court of Appeals, 81 SCRA 286). Therefore, the presumption of good faith in favor of the respondent cannot apply because as far as the law is concerned, he had notice of the ownership by the petitioner over said lot. It is also unthinkable that in the big Tambunting Estate beset with one of the most serious squatter problems in Metro Manila, any tenant or prospective buyer would be unaware that the petitioner acquired the estate as highest bidder at the sale ordered by the probate court. Furthermore, the respondent did not even bother to inquire about the certificate of title covering the lot in question to verify who was the real owner thereof, despite the fact that his transferor, Dayrit, never showed him any title thereto; a circumstance which should have put him upon such inquiry or investigation. His failure to exercise that measure of precaution which was reasonably required of a prudent man in order to acquaint him with the defects in the title of his vendor precludes him from claiming possession in good faith.

DECISION GUTIERREZ, JR., J p: In the petition for review, the petitioner asks that we reverse the decision of the Court of Appeals, now the intermediate Appellate Court, which declared respondent Felipe Carillo a builder in good faith with the right to remain in the questioned premises, free of rent, until reimbursed by the petitioner for the necessary and useful expenses introduced on the land. The dispositive portion of the Court of Appeals' decision reads: "WHEREFORE, the appealed judgment is hereby modified in the sense that the appellant being a builder in good faith is entitled to the right of retention of the lot introduced thereon, and he is not liable to pay rentals for the occupation thereof pending payment of the indemnity for such improvements. In all other respects, the appealed judgment is affirmed, without pronouncement as to costs." The background facts of the case are found in the decision of the respondent court as follows: "There is no dispute that herein appellee is the registered owner of a parcel of land covered by Tax Declaration Nos. 2455 and 2456 issued by the City Assessor's Office of Manila with a total assessed value of P3,059,180.00 and by TCT 55125 (Exh. A) and TCT No. 76130 of the Register of Deeds of the City of Manila. It acquired the aforementioned property from the Testate Estate of Clara Tambunting de Legarda, being the highest bidder in a sale conducted by the Probate Court (Exhs. C-7 & C-7-A). "After having acquired said property, the appellee subdivided it, but could not take possession thereof because the whole area is occupied by several houses among which is the one belonging to the herein appellant Felipe Carillo, Lot 143, Block 2 of the subdivision plan (Exh. A-4 Carillo). "Demands to vacate and to surrender possession of the property were made by the appellee verbally and by publication (Exhs. D, D-1 & D-2) and by circulars served to the appellant. In spite of such demands, the appellant continued to occupy the disputed lot and refused to surrender possession thereof to the appellee. "On the other hand, appellant's evidence tends to show that he acquired the lot in dispute from a certain Delfin Dayrit on September 25, 1962, pursuant to a deed of assignment (Exh. 1-Carillo); that Dayrit in turn had acquired the property from the late Carla Tambunting by virtue of a Contract of Sale on Installment Basis (Exh. 2-Carillo); that Dayrit had religiously paid the monthly installments as they fell due, his last payment being on May 25, 1954, in the sum of P200.00, then leaving an unpaid balance of P1,306.00 when the said parcel was conveyed to defendant Carillo, for which receipts were duly issued (Exhs. 3-Carillo to 24Carillo); that Dayrit could not continue paying the succeeding installments as they fell due because Vicente Legarda, the surviving spouse of Clara Tambunting, refused to receive any

payment for the same and that it was only lately, more specifically on September 25, 1962, when Dayrit conveyed the lot to appellant Carillo." After the petitioner failed in its attempts to take possession of the lot, it filed the reivindicatory action against the respondent. LLpr The trial court decided the case in favor of the petitioner. The dispositive portion of its decision reads: "In Civil Case No. 64578: "(1)Ordering defendant Felipe Carillo to vacate and/or surrender possession to plaintiff Manotok Realty Inc. of the parcel of land subject matter of the complaint described in paragraph 2 thereof; "(2)To pay plaintiff the sum of P75.50 per month from January 21, 1961 up to the time he actually surrenders possession of the said parcel to the plaintiff; and "(3)To pay plaintiff the sum of P1,000.00 as attorney's fees and to pay costs." On August 15, 1984, we required the parties to show whether or not the disputed lot falls within the area expropriated under P.D. No. 1669 and P.D. No. 1670. It appears that the expropriated portion of the Tambunting Estate is the area located at the east side adjacent to the Chinese Cemetery. The lot is on the unexpropriated and mainly commercial portion on the west side, across from Rizal Avenue. In this petition, the petitioner maintains that the appellate court erred in considering the respondent a possessor and builder in good faith. It argues that at the time of the execution of the deed of assignment in favor of the respondent, the land was already registered in its name; and that if the respondent were really acting in good faith, he should have verified from the Register of Deeds of Manila who was the registered owner of the land in question. We agree. A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. (Caram v. Laureta, 103 SCRA 7, Art. 526, Civil Code). One who acquires real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should put a reasonable man upon his guard, and then claims that he acted in good faith under the belief that there was no defect in the title of the vendor. (See Leung Yee v. F.L. Strong Machinery Co., 37 Phil. 644). prLL The records show that when Dayrit executed the deed of assignment in favor of the respondent, the disputed lot was already registered and titled in the name of the petitioner. Such an act of registration served as a constructive notice to the whole world and the title issued in favor of petitioner made his ownership conclusive upon and against all persons including Dayrit and herein respondent, although no personal notice was served on either of

the latter. (See Garcia v. Bello, 13 SCRA 769; Demontano v. Court of Appeals, 81 SCRA 286). Therefore, the presumption of good faith in favor of the respondent cannot apply because as far as the law is concerned, he had notice of the ownership by the petitioner over said lot. It is also unthinkable that in the big Tambunting Estate beset with one of the most serious squatter problems in Metro Manila, any tenant or prospective buyer would be unaware that the petitioner acquired the estate as highest bidder at the sale ordered by the probate court. Furthermore, the respondent did not even bother to inquire about the certificate of title covering the lot in question to verify who was the real owner thereof, despite the fact that his transferor, Dayrit, never showed him any title thereto; a circumstance which should have put him upon such inquiry or investigation. His failure to exercise that measure of precaution which was reasonably required of a prudent man in order to acquaint him with the defects in the title of his vendor precludes him from claiming possession in good faith. We agree with the following observations of Justice Guillermo S. Santos in his separate concurring and dissenting opinion: "The issue now is whether appellant may be considered as a possessor in good faith of the property in question. Article 256 of the Civil Code defines a possessor in good faith as one who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. "In this case, it was shown that under the contract of sale on installment basis, Delfin Dayrit had only paid a total of P4,917.30, leaving an unpaid balance of P3,860.20 as of August 9, 1954 (Dec. RA, p. 43). The said contract specifically provides that '. . . if for some reason or other the purchaser cannot pay a certain installment on the date agreed upon, it is hereby agreed that said purchaser will be given a maximum limit of two months' grace in which to pay his arrears, after which the property will revert to the original owner hereof: the Clara Tambunting Subdivision, No. 50 Reina Regente St., Binondo, Manila, P.I.' The subsequent installment after August 9, 1954, not having been paid, the property, therefore, reverted to Clara Tambunting and therefore formed part of her estate, which was subsequently acquired by appellee. Thus, when appellant purchased the parcel of land in question from Dayrit on August 25, 1962 or eight (8) years after the default the latter had no more right over the same.

"It was incumbent on appellant to inquire into the title of his vendor over the property. Had appellant demanded from his vendor, Dayrit, the certificate of his ownership of the property subject of the negotiation, he would have learned that the latter had no right, much less, title over the same because of his default in the payment of the monthly installments. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor (Leung Yee v. Strong Machinery Co., 37 Phil. 644). Consequently, appellant cannot be deemed a possessor in good faith and is not, therefore, entitled to reimbursement for the improvements he had introduced in the property in question." No installments and rentals have been paid for the lot since 1954 or for more than thirty (30) years. While Dayrit transferred to Carillo whatever rights he may have had to the lot

and its improvements on September 25, 1962, the claim for back rentals was from March 20, 1959 while the trial court ordered payment as of January 21, 1961 or twenty four (24) years ago. Considering the facts, applicable law, and equities of this case, the decision of the trial court appears to be correct and is, therefore, reinstated. LLphil WHEREFORE, the questioned decision of the Court of Appeals is hereby SET ASIDE and another one is entered AFFIRMING in toto the decision of the Court of First Instance of Manila in Civil Case No. 64578. SO ORDERED. [G.R. No. 177187. April 7, 2009.] SPS. JUANITO R. VILLAMIL and LYDIA M. VILLAMIL, represented herein by their Attorney-in-Fact/Son WINFRED M. VILLAMIL, petitioners, vs. LAZARO CRUZ VILLAROSA, respondent. DECISION TINGA, J p: The instant petition for review seeks the reversal of the Decision and Resolution of the Court of Appeals 1 dated 12 September 2006 and 23 March 2007, which partially reversed and set aside the Decision of the Regional Trial Court (RTC) 2 of Quezon City, Branch 88, in Civil Case No. Q-92-11997. ECHSDc Spouses Juanito and Lydia Villamil (petitioners) represented by their son and attorney-infact, Winfred Villamil, filed a complaint 3 for annulment of title, recovery of possession, reconveyance, damages, and injunction against the Spouses Mateo and Purificacion Tolentino (Spouses Tolentino), Lazaro Villarosa (Villarosa) and the Register of Deeds of Quezon City before the RTC of Quezon City. The complaint alleged that petitioners were the registered owners of a parcel of land situated at Siska Subdivision, Tandang Sora, Quezon City, covered by Transfer Certificate of Title (TCT) No. 223611; 4 that Juanito Villamil Jr. asked permission from his parents, petitioners herein, to construct a residential house on the subject lot in April 1986; that in the first week of May 1987, petitioners visited the lot and found that a residential house was being constructed by a certain Villarosa; that petitioners proceeded to the Office of the Register of Deeds to verify their title; that they discovered a Deed of Sale 5 dated 16 July 1979 which they purportedly executed in favor of Cipriano Paterno (Paterno) as the vendee; that they later found out that the TCT in their names was cancelled and a new one, TCT No. 351553, was issued in the name of Paterno; that a Deed of Assignment 6 was likewise executed by Paterno in favor of the Spouses Tolentino, and; that on the basis of said document, TCT No. 351553 was cancelled and in its place TCT No. 351673 7 was issued in the name of the Spouses Tolentino. Three months later, the Spouses Tolentino executed a Deed of Absolute Sale 8 in favor of Villarosa for the sum of P276,000.00. TCT No. 354675 was issued in place of TCT No. 351673. 9

Spouses Villamil asserted that the Deed of Sale in favor of Paterno is a falsified document because they did not participate in its execution and notarization. They also assailed the Deed of Assignment in favor of the Spouses Tolentino as having been falsified because the alleged assignor is a fictitious person. Finally, they averred that the Deed of Sale between Spouses Tolentino and Villarosa is void considering that the former did not have any right to sell the subject property. In their Answer, the Spouses Tolentino alleged that Paterno had offered the property for sale and presented to him TCT No. 351553 registered in his (Paterno's) name. Since they did not have sufficient funds then, the Spouses Tolentino negotiated with and obtained from Express Credit Financing a loan, the proceeds of which they used in paying the agreed consideration. They paid Paterno P180,000.00, but upon the latter's request, a deed of assignment was issued, instead of a deed of sale, to avoid payment of capital gains tax. Express Credit Financing held their title as security for the loan. The Spouses Tolentino thereafter decided to sell the property to Villarosa to pay their obligation to Express Credit Financing. 10 Villarosa, for his part, claimed in his Answer that he is a purchaser in good faith and for value, having paid P276,000.00 as consideration for the purchase of the land and the payment having been received and acknowledged by Mateo Tolentino. 11 In their Reply, petitioners insisted that the deed of absolute sale executed by the Spouses Tolentino in favor of Villarosa is legally defective, having been notarized by one Atty. Juanito Andrade, who was not a duly commissioned notary public for the year 1987, as evidenced by a certification of the Clerk of Court of the RTC of Quezon City. 12 To establish that the deed of sale between the Spouses Villamil and Paterno is spurious, the Spouses Villamil proferred * three points, namely: first, the residence certificate number of Juanito Villamil in the Deed of Sale was 510462 while in the income tax return he filed in 1979, his residence certificate was numbered 4868818; 13 second, the tax account numbers in these two documents are not the same, in the Deed of Sale, it was 9007-586-9 whereas in the income tax return he filed in 1979 it was J 4545-30821-A-1; 14 and third, the Spouses Villamil had paid the real estate taxes over the subject land from 1976-1987. 15 Petitioner also alleged that Paterno is a fictitious person. 16 During the pre-trial, the parties agreed to limit the issues to the following: 1.Whether the Deed of Absolute Sale executed by Villamil in favor of Paterno is fake; 2.Whether Paterno is a fictitious person; 3.Whether the Spouses Tolentino are buyers in good faith; Whether Villarosa, the present registered owner, is a buyer in good faith. 17

On 12 June 2003, the trial court declared all the TCTs of Paterno, Spouses Tolentino and Villarosa null and void and ordered the cancellation of the latter's title and the issuance of a new one in the name of the Spouses Villamil. The dispositive portion reads: cCSDaI WHEREFORE, in view of the foregoing, the court finds merit on plaintiff's complaint and hereby orders the following: A.The injunction against defendant Lazaro Cruz Villarosa, enjoining him from further acts of possession, ownership and dominion over the property is made permanent. B.Transfer Certificate of Titles Number 351553; in the name of Cipriano Paterno, 351673; in the name of Spouses Mateo A. Tolentino and Purificacion Tolentino and 354675; in the name of Lazaro Cruz Villarosa are declared null and void; C.All of the existing improvements on the land shall be forfeited in favor of the plaintiffs; D.The Register of Deeds of Quezon City is hereby ordered to cancel TCT No. 354675 in the name of Lazaro Cruz Villarosa and issue a new one in the name of Spouses Juanito R. Villamil and Lydia M. Villamil; E.Defendant Lazaro Cruz Villarosa shall pay plaintiffs the rent of P1,000.00 per month to commence February 1987 up to the present; F.Defendants shall pay solidarily plaintiffs the amount of P30,000.00 as attorney's fees, P50,000.00 as moral damages and P20,000.00 exemplary damages. G.The counterclaims of the defendants are dismissed. SO ORDERED. 18 The trial court also found that the Deed of Absolute Sale executed by the Spouses Villamil in favor of Paterno is fake; that Paterno is a fictitious person; and that Spouses Tolentino and Villarosa are both buyers in bad faith. On 12 September 2006, the Court of Appeals reversed the trial court and declared void the title of the Spouses Tolentino and Paterno but upheld the validity of the title of Villarosa. The dispositive portion of the appellate court's decision reads, thus: WHEREFORE, the appeal is GRANTED and the trial court's June 12, 2003 Decision is REVERSED and SET ASIDE with respect to appellant. In lieu thereof, another is entered as follows: (a) ordering the dissolution of the injunction issued by the trial court; (b) declaring Transfer Certificate of Title No. 354675 in the name of appellant valid; (c) affirming appellant's ownership of the subject parcel as well as all existing improvements thereon; and (d) absolving appellant of liability for all monetary awards adjudicated by the trial court. 19

The appellate court ruled that while the Spouses Tolentino's acquisition of the subject land does not "appear to be above board," 20 the circumstances surrounding Villarosa's acquisition, on the other hand, indicate that he is a purchaser for value and in good faith. 21 On 23 March 2007, the appellate court denied petitioners' motion for reconsideration. Hence, this petition. It should be noted that Paterno was not made a defendant in the complaint before the trial court and that the decision of the Court of Appeals insofar as it nullified the title in the name of the Spouses Tolentino was not appealed to this Court. Thus, the petition before this Court centers on the validity of Villarosa's title only. The resolution of this issue devolves on whether Villarosa is a purchaser in good faith. The Spouses Villamil maintains that Villarosa is not a purchaser in good faith considering that he has knowledge of the circumstances that should have forewarned him to make further inquiry beyond the face of the title. 22 Villarosa counters that he is a purchaser in good faith because before buying the property, he went to the Register of Deeds of Quezon City to verify the authenticity of Spouses Tolentino's title, as well as to the Express Credit Financing Corporation to check whether Spouses Tolentino had indeed mortgaged the subject property. Having been assured of the authenticity and genuineness of its title, he proceeded to purchase the property. 23 The determination of whether Villarosa is a purchaser in good faith is a factual issue which is generally outside the province of this Court to determine in a petition for review. Indeed, this Court is not a trier of facts, and the factual findings of the Court of Appeals are binding and conclusive upon this Court. 24 However, the rule has its recognized exceptions, 25 one of which obtains in this case, i.e., there is a conflict between the findings of fact of the Court of Appeals and those of the trial court. In the case at bar, the courts below arrived at the same findings concerning the circumstances related to the transfer of titles in favor of Paterno and the Spouses Tolentino and on that basis declared both their titles spurious. But they differ with respect to the title of Villarosa. The trial court held that Villarosa knew of the circumstances of Spouses Tolentino's acquisition of the subject property, thus making him (Villarosa) a purchaser in bad faith. To the contrary, the Court of Appeals, upon review of the records, found that Villarosa is a purchaser in good faith. AEIHCS

The burden of proving the status of a purchaser in good faith lies upon one who asserts that status. 26 An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in that same property, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person's claim. 27

The honesty of intention that constitutes good faith implies freedom from knowledge of circumstances that ought to put a prudent person on inquiry. Good faith consists in the belief of the possessors that the persons from whom they received the thing are its rightful owners who could convey their title. Good faith, while always presumed in the absence of proof to the contrary, requires this well-founded belief. 28 Indeed, we found that Villarosa had successfully discharged this burden. In the instant case, there were no traces of bad faith on Villarosa's part in acquiring the subject property by purchase. Villarosa merely responded to a newspaper advertisement for the sale of a parcel of land with an unfinished structure located in Tierra Pura, Tandang Sora, Quezon City. 29 He contacted the number specified in the advertisement and was able to talk to a certain lady named Annabelle 30 who introduced him to the owner, Mateo Tolentino. 31 When he visited the site, he inquired from Mateo Tolentino about the unfinished structure and was informed that the latter allegedly ran out of money and eventually lost interest in pursuing the construction because of his old age. 32 Villarosa was then given a copy of the title. 33 He went to the Register of Deeds and was able to verify the authenticity of the title. 34 He also found out that the property was mortgaged under the name of Mario Villamor, who turned out to be the employer of Tolentino. Upon reaching an agreement on the price of P276,000.00, Villarosa redeemed the title from Express Financing Company. 35 Thereafter, the property was released from mortgage and a deed of sale was executed. 36 Villarosa then secured the transfer of title in his name. 37 Well-settled is the rule that every person dealing with a 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 beyond the certificate to determine the condition of the property. Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right that may subsequently defeat his right thereto. 38 This principle does not apply when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith. 39 Petitioner enumerates the instances that should have put Villarosa on guard with respect to the title of the Spouses Tolentino. First, petitioner points out that Villarosa should have inquired about the unfinished structure by verifying if there was a building permit. If he did ask, Villarosa would have found out that it was not the Spouses Tolentino who owned the structure, petitioner adds. In finding bad faith on Villarosa, the trial court relied mainly on the alleged testimony of Mateo Tolentino that he told Villarosa at the time he offered the property for sale to him that the lot and the unfinished structure belonged to Spouses Villamil. 40 However, as observed by the appellate court to which the Court agrees, all that the transcript of the stenographic

notes of the hearing concerned state is that Mateo Tolentino told Villarosa that the unfinished structure belonged to the previous owner without mention of the Spouses Villamil. 41 In any event, even if Mateo Tolentino had particularly referred to or mentioned the Spouses Villamil, that would not have mattered at all. Specifically, the information alone and without more would not be enough to make Villarosa investigate further. Second, petitioner notes that while the title of the Spouses Tolentino was issued only on 6 November 1986 they offered the property for sale barely two months later. According to petitioner, this should have prompted Villarosa to make further inquiries. Third, petitioner harps that the property was mortgaged to Express Financing to secure a loan in the amount of P225,000.00 which was satisfied out of the proceeds of the sale to Villarosa, leaving the Spouses Tolentino a "measly" P21,000.00 from the transaction. The circumstance was no cause for Villarosa to be alarmed nor to arouse his suspicion that there was a defect in the title of the Spouses Tolentino. There was nothing unlawful or irregular with the fact that the property offered for sale or sold was mortgaged. Besides, the records are bereft of any indication that Villarosa had knowledge of the details of the mortgage transaction. Also, there is no question about the adequacy of the price provided in the deed of sale in favor of Villarosa. cIEHAC Petitioner also avers that since Paterno's transfer to Spouses Tolentino is spurious, the Spouses Tolentino could not also transfer any right to Villarosa on account of the principle that no one can transfer a greater right to another than he himself has.

We do not agree. A forged or fraudulent document may become the root of a valid title if the property has already been transferred from the name of the owner to that of the forger. 42 This doctrine serves to emphasize that a person who deals with registered property in good faith will acquire good title from a forger and be absolutely protected by a Torrens title. 43 Having made the necessary inquiries and having found the title to be authentic, Villarosa need not go beyond the certificate of title. When dealing with land that is registered and titled, as in this case, buyers are not required by the law to inquire further than what the Torrens certificate of title indicates on its face. 44 He examined the transferor's title, which was then under the name of Spouses Tolentino. He did not have to scrutinize each and every title and previous owners of the property preceding Tolentino. In sum, Villarosa was able to establish good faith when he bought the subject property. Therefore, TCT No. 354675 issued in his name is declared valid. WHEREFORE, the Decision of the Court of Appeals dated 12 September 2006 is AFFIRMED. Costs against petitioners. SO ORDERED.

Acquisition of possession, requisites -material possession -subject of thing or right to the will of possessor -proper acts and legal formalities Constructive delivery Cases: [G.R. No. 50264. October 21, 1991.] IGNACIO WONG, petitioner, vs. HON. LUCAS D. CARPIO, as Presiding Judge, Court of First Instance of Davao del Sur, Branch V and MANUEL MERCADO, respondents. Rodolfo B. Quiachon for petitioner. Jose M. Ilagan for private respondent. SYLLABUS 1.CIVIL LAW; PROPERTY; POSSESSION; MODES OF ACQUIRING THEREOF. It should be stressed that "possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc. vs. Villareal, 135 SCRA 15 [1985]); and that the execution of a sale thru a public instrument shall be equivalent to the delivery of the thing, unless there is stipulation to the contrary . . . . If, however, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it herself, because such tenancy and enjoyment are opposed by another, then delivery has not been effected. (Paras, Civil Code of the Philippines, Vol. II, 1989 Ed., p. 400). 2.ID.; ID.; ID.; PROPERTY POSSESSED BY TWO DIFFERENT PERSONALITIES; RULE. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessions, the one longer in possession, if the dates of possession are the same, the one who presents a title; and if these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings (Art. 538, Civil Code). 3.ID.; ID.; ID.; ENTERING THE PROPERTY AND EXCLUDING THE LAWFUL POSSESSOR THEREFROM; IMPLIES THE EXERTION OF FORCE. The act of entering the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property, and this is all that is necessary. Under the rule, entering upon the premises by strategy or stealth is equally as obnoxious as entering by force. The foundation of the action is really the forcible exclusion of the original possessor by a person who has entered without right. 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 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. (Tolentino, Civil Code of the Philippines, Vol. II, 1983 Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]). 4.ID.; ID.; ID.; POSSESSION IN GOOD FAITH; GENERALLY, DOES NOT LOSS ITS CHARACTER; EXCEPTION. It should be noted that possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. (Art. 528, Civil Code). Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith. (Tolentino, Civil Code of the Philippines, Vol. II, p. 226). Such interruption takes place upon service of summons (Manotok Realty vs. Judge Tecson, 164 SCRA 587 [1988] citing Mindanao Academy, Inc. v. Yap (13 SCRA 190 [1965]). DECISION BIDIN, J p: This is a petition for review on certiorari, certified to this Court by the Court of Appeals as it involves purely question of law, seeking the annulment of the September 29, 1978 decision of the then Court of First Instance * of Davao del Sur, Branch V, in Civil Case No. 1258 which reversed the February 20, 1978 decision of the Municipal Court of Sta. Maria, ** Davao del Sur in an action for Forcible Entry (Civil Case No. 13) ordering the dismissal of the complaint as well as the counterclaim. The undisputed facts of this case, as found by both the trial court and the then Court of First Instance of Davao del Sur, are as follows: "On the basis of the admission of parties in their respective pleadings, the oral testimonies of all witnesses for both plaintiff and defendants and the documentary evidence offered and admitted this Court finds that plaintiff Manuel Mercado acquired his rights to possess the land in litigation, particularly lot 3 (LRC) Pcs-295, (situated at Colonga, Sta. Maria, Davao del Sur) and which is particularly described and embraced in Transfer Certificate of title No. (T4244) T-972 from William Giger by virtue of a deed of sale with right to repurchase which was executed in 1972 for a consideration of P3,500.00 (testimony of plaintiff, T.S.N., p. 3, hearing of January 7, 1977). Then, in 1973, William Giger again asked an additional amount of P2,500.00 from plaintiff and so he required William Giger to sign a new deed of Pacto de Retro Sale (Exhibit "A") on November 5, 1973 at Davao City before Notary Public Gregorio C. Batiller (T.S.N., p. 5, hearing of January 7, 1977). In 1972, plaintiff began harvesting only the coconut fruits and he paid the taxes on the land (Exhibits B to E) for Mr. Giger. He went periodically to the land to make copra but he never placed any person on the land in litigation to watch it. Neither did he reside on the land as he is a businessman and storekeeper by occupation and resides at Lower Sta. Maria, Davao del Sur while the land in

litigation is at Colongan, Sta. Maria. Neither did he put any sign or hut to show that he is in actual possession (p. 8, T.S.N., p. 7, hearing of January 14, 1978). He knew defendants' laborers were in the land in suit as early as August, 1976 and that they have a hut there but he did not do anything to stop them. Instead plaintiff was happy that there were people and a hut on the land in suit (p. 14, T.S.N., hearing of January 14, 1978). prLL Before July, 1976, defendant Ignacio Wong went to the land in litigation to find out if there were other people residing there or claiming it besides the owner and he found none. So, in July, 1976, defendant Ignacio Wong bought the parcel of land in litigation from William Giger and his wife Cecilia Valenzuela (Exhibit 5). After the execution of Exhibit 5, defendant Ignacio Wong asked for the delivery of the title to him and so he has in his possession TCT No. (T-4244) T974 (Exhibit 6) in the name of William Giger. Mr. Wong declared the land in suit for taxation purposes in his name (Exhibit 7). He tried to register the pacto de retro sale with the Register of Deeds by paying the registration fee (Exhibit 8) but due to some technicalities, the pacto de retro sale could not be registered. The defendant Wong placed laborers on the land in suit, built a small farm house after making some clearings and fenced the boundaries. He also placed signboards (T.S.N., pp. 14-15, hearing of September 15, 1977). On September 27, 1976, plaintiff Manuel Mercado again went to the land in suit to make copras. That was the time the matter was brought to the attention of the police of Sta. Maria, Davao del Sur and the incident entered in the police blotter (Exhibit 11). Then on November 18, 1976, defendant Wong ordered the hooking of the coconuts from the land in litigation and nobody disturbed him. But on November 29, 1976, defendant received a copy of plaintiff's complaint for forcible entry with summons to answer which is the case now before the Court. During the pendency of this instant complaint for forcible entry, spouses William Giger and Cecilia Valenzuela filed a case for reformation of instrument with the Court of First Instance of Digos, Davao del Sur against plaintiff Mercado (Exhibit 4). The case pertains to Exhibit "A" of plaintiff" (pp. 1-3, CA Decision, pp. 82-84, Rollo). On the basis of the aforestated undisputed facts, the Municipal Court of Sta. Maria, Davao del Sur in its February 20, 1978 Decision found that herein petitioner (defendant Ignacio Wong) had prior, actual and continuous physical possession of the disputed property and dismissed both the complaint and the counter-claim. On appeal, the then Court of First Instance of Davao del Sur, in its September 29, 1978 Decision drew a completely different conclusion from the same set of facts and ruled in favor of herein private respondent (plaintiff Manuel Mercado). The decretal portion of the said decision, reads: "WHEREFORE, the Court finds the plaintiff to have taken possession of the property earlier in point of time and defendant is an intruder and must, as he is hereby ordered to return, the possession of the land in question to the plaintiff, paying a monthly rental of P400.00 from August, 1976, till the property is returned with costs against the defendant. Judgment is reversed." Petitioner filed the instant petition with the Court of Appeals. But the Court of Appeals, in its March 1, 1979 Resolution *** found that the only issue is a pure question of law the correctness of the conclusion drawn from the undisputed facts and certified the case to this Court.

In its April 4, 1979 Resolution, the Second Division of this Court docketed the case in this Court and considered it submitted for decision. Petitioner alleged two (2) errors committed by respondent judge, to wit: A)THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER IS AN INTRUDER IS WITHOUT FACTUAL AND LEGAL BASIS FOR PURPOSES OF A FORCIBLE ENTRY.

B)THE CONCLUSION DRAWN BY RESPONDENT JUDGE THAT PETITIONER MUST PAY A MONTHLY RENTAL OF P400.00 FROM AUGUST, 1976 TILL THE PROPERTY IS RETURNED HAS NO LEGAL AND FACTUAL BASIS. The petition is without merit. Petitioner, in claiming that the private respondent has not established prior possession, argues that private respondent's periodic visit to the lot to gather coconuts may have been consented to and allowed or tolerated by the owner thereof for the purposes of paying an obligation that may be due to the person gathering said nuts and that a person who enters a property to gather coconut fruits and convert the same to copras may only be a hired laborer who enters the premises every harvest season to comply with the contract of labor with the true owner of the property. The argument is untenable. It should be stressed that "possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is subject to the action of our will, or by the proper acts and legal formalities for acquiring such right." (Art. 531, Civil Code; Rizal Cement Co., Inc. vs. Villareal, 135 SCRA 15 [1985]); and that the execution of a sale thru a public instrument shall be equivalent to the delivery of the thing, unless there is stipulation to the contrary . . . . If, however, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it herself, because such tenancy and enjoyment are opposed by another, then delivery has not been effected. (Paras, Civil Code of the Philippines, Vol. II, 1989 Ed., p. 400). Applying the above pronouncements on the instant case, it is clear that possession passed from vendor William Giger to private respondent Manuel Mercado by virtue of the first sale a retro (Exhibit A), and accordingly, the later sale a retro (Exhibit 5) in favor of petitioner failed to pass the possession of the property because there is an impediment the possession exercised by private respondent. Possession as a fact cannot be recognized at the same time in two different personalities except in the cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessions, the one longer in possession, if the dates of possession are the same, the one who presents a title; and if these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings (Art. 538, Civil Code).

As to petitioner's query that "Is the entry of petitioner to the property characterized by force, intimidation, threat, strategy, or stealth in order to show that private respondent has had possession so that the case is within the jurisdiction of the inferior court?" (p. 15, Petition; p. 16, Rollo). The same is answered in the affirmative. The act of entering the property and excluding the lawful possessor therefrom necessarily implies the exertion of force over the property, and this is all that is necessary. Under the rule, entering upon the premises by strategy or stealth is equally as obnoxious as entering by force. The foundation of the action is really the forcible exclusion of the original possessor by a person who has entered without right. 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 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. (Tolentino, Civil Code of the Philippines, Vol. II, 1983 Ed., pp. 243-244; Drilon vs. Gaurana, 149 SCRA 342 [1987]). cdphil Anent the award of rentals in favor of private respondent, the same is in order. Petitioner's argument that there is no legal or factual basis for the payment of monthly rentals because bad faith on the part of petitioner was never proved" deserves no merit. It should be noted that possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. (Art. 528, Civil Code). Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith. (Tolentino, Civil Code of the Philippines, Vol. II, p. 226). Such interruption takes place upon service of summons (Manotok Realty vs. Judge Tecson, 164 SCRA 587 [1988] citing Mindanao Academy, Inc. v. Yap (13 SCRA 190 [1965]). In the latter case, this Court held: " . . . Although the bad faith of one party neutralizes that of the other and hence as between themselves their rights would be as if both of them had acted in good faith at the time of the transaction, this legal fiction of Yap's good faith ceased when the complaint against him was filed, and consequently the court's declaration of liability for the rents thereafter is correct and proper. A possessor in good faith is entitled to the fruits only so long as his possession is not legally interrupted, and such interruption takes place upon service of judicial summons (Arts. 544 and 1123, Civil Code)." A perusal of the records of the case shows that petitioner received private respondent's complaint for forcible entry with summons on November 29, 1976 (Rollo, p. 46). His good

faith therefore ceased on November 29, 1976. Accordingly, the computation of the payment of monthly rental should start from December, 1976, instead of August, 1976. WHEREFORE, with the modification that the computation of the monthly rental should start from December, 1976 instead of August, 1976, the September 29, 1978 decision of respondent judge is Affirmed in all other respects, with costs against petitioner. SO ORDERED. [G.R. No. 173215. May 21, 2009.] CEBU WINLAND DEVELOPMENT CORPORATION, petitioner, vs. ONG SIAO HUA, respondent. DECISION PUNO, C.J p: Before us is a Petition for Review 1 filed under Rule 45 of the Rules of Court assailing the Decision 2 dated February 14, 2006 of the Court of Appeals and its Resolution 3 dated June 2, 2006 denying petitioner's motion for reconsideration of the said decision. The facts are undisputed. Petitioner, Cebu Winland Development Corporation, is the owner and developer of a condominium project called the Cebu Winland Tower Condominium located in Juana Osmea Extension, Cebu City. Respondent, Ong Siao Hua, is a buyer of two condominium units and four parking slots from petitioner. Sometime before January 6, 1995 while the Cebu Winland Tower Condominium was under construction, petitioner offered to sell to respondent condominium units at promotional prices. As an added incentive, petitioner offered a 3% discount provided 30% of the purchase price is paid as down payment and the balance paid in 24 equal monthly installments. EcDSHT On January 6, 1995, respondent accepted the offer of petitioner and bought two condominium units designated as Unit Nos. 2405 and 2406, as well as four parking slots designated as slots 91, 99, 101 and 103 (subject properties). The area per condominium unit as indicated in petitioner's price list is 155 square meters and the price per square meter is P22,378.95. The price for the parking slot is P240,000 each. Respondent, therefore, paid P2,298,655.08 as down payment and issued 24 postdated checks in the amount of P223,430.70 per check for the balance of the purchase price in the total amount of P5,362,385.19 computed as follows: 4

155 sq.m./unit x 2 units x P22,378.95/sq.m. P6,937,474.50 4 parking slots at P240,000/slot 960,000.00 Sub-total P7,897,474.50 Less: 3% discount (236,924.23) Net purchase price P7,660,550.27 30% down payment (2,298,165.08) Balance at P223,430.70 per month for 24 months P5,362,385.19 =========== On October 10, 1996, possession of the subject properties was turned over to respondent. 5 After the purchase price was fully paid with the last check dated January 31, 1997, respondent requested petitioner for the condominium certificates of title evidencing ownership of the units. Petitioner then sent to respondent, for the latter's signature, documents denominated as Deeds of Absolute Sale for the two condominium units. Upon examination of the deed of absolute sale of Unit No. 2405 and the identical document for Unit No. 2406, respondent was distressed to find that the stated floor area is only 127 square meters contrary to the area indicated in the price list which was 155 square meters. Respondent caused a verification survey of the said condominium units and discovered that the actual area is only 110 square meters per unit. Respondent demanded from petitioner to refund the amount of P2,014,105.50 representing excess payments for the difference in the area, computed as follows: 6 155 sq.m. 110 = 45 x 2 units = 90 sq.m. x P22,378.95 = P2,014,105.50 Petitioner refused to refund the said amount to respondent. Consequently, respondent filed a Complaint 7 on August 7, 1998 in the Regional Office of the Housing and Land Use Regulatory Board (HLURB) in Cebu City, praying for the refund of P2,014,105.50 plus interest, moral damages and attorney's fees, including the suspension of petitioner's license to sell. The case was docketed as HLURB Case No. REM-0220-080798. On December 6, 1999, the Housing and Land Use Arbiter (the Arbiter) rendered a Decision 8 dismissing the complaint. The Arbiter found petitioner not guilty of misrepresentation.

Considering further that the subject properties have been delivered on October 10, 1996 and respondent filed his complaint only on August 7, 1998, the Arbiter further ruled that respondent's action had already prescribed pursuant to Article 1543, 9 in relation to Articles 1539 and 1542, 10 of the Civil Code. The dispositive portion of the said decision reads: CcaASE WHEREFORE, Premises Considered, judgment is hereby rendered DISMISSING this Complaint, and ordering the parties to do the following, to wit: 1.For the Complainant to SIGN the two (2) Deed[s] of Absolute Sale which this Board finds to be in order within 30 days from finality of this decision; and 2.For the Respondent to DELIVER the corresponding condominium certificate of title for the two units namely units 2405 and 2406 free from all liens and encumbrances. Consequently, the counterclaim is likewise dismissed for it finds no evidence that Complainant acted in bad faith in filing this complaint. Cost against the parties. SO ORDERED. 11 Aggrieved, respondent filed a Petition for Review of said decision with the Board of Commissioners of the HLURB (the Board). In the course of its proceedings, the Board ordered that an ocular inspection of Unit Nos. 2405 and 2406 be conducted by an independent engineer. The Board further ordered that there should be two measurements of the areas in controversy, one based on the master deed and another based on the internal surface of the perimeter wall. After the ocular inspection, the independent geodetic engineer found the following measurements:

Unit 2405 Based on internal face of perimeter wall Based on master deed = 115 sq.m.

109 sq.m.

Unit 2406 Based on internal face of perimeter wall = Based on master deed = 116 sq.m. 12

110 sq.m.

Thereafter, the Board rendered its Decision 13 dated June 8, 2004 affirming the Arbiter's finding that respondent's action had already prescribed. However, the Board found that there was a mistake regarding the object of the sale constituting a ground for rescission based on Articles 1330 and 1331 14 of the Civil Code. Hence, the Board modified the decision of the Arbiter as follows: Wherefore[,] the decision of the [O]ffice below is hereby modified with the following additional directive: In the alternative, and at the option of the complainant, the contract is rescinded and the respondent is directed to refund to (sic) P7,660,550[.]27 while complainant is directed to

turn over possession of the units 2405, 2406 and the four parking lots to the respondent. AETcSa So ordered. 15 Not satisfied with the decision of the Board, petitioner filed an appeal to the Office of the President arguing that the Board erred in granting relief to respondent considering that the latter's action had already prescribed. On March 11, 2005, the Office of the President rendered a Decision 16 finding that respondent's action had already prescribed pursuant to Article 1543 of the Civil Code. The dispositive portion of said decision reads as follows: WHEREFORE, premises considered, the Decision dated June 8, 2004 of the HLURB is hereby MODIFIED and the Decision dated December 6, 1999 of the Housing and Land Use Arbiter is hereby REINSTATED. SO ORDERED. 17 Respondent filed a Motion for Reconsideration but the same was denied by the Office of the President in a Resolution 18 dated June 20, 2005. Hence, respondent filed a Petition for Review before the Court of Appeals. On February 14, 2006, the Court of Appeals rendered the assailed Decision finding that respondent's action has not prescribed. The dispositive portion of the Decision reads: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the petition filed in this case, REVERSING and SETTING ASIDE the assailed Decision and Resolution of the Office of the President dated March 11, 2005 and June 20, 2005, respectively, and reinstating the Decision promulgated by the Board of Commissioners of the HLURB on June 8, 2004. SO ORDERED. 19 Petitioner's Motion for Reconsideration 20 of the assailed decision having been denied in the Resolution dated June 2, 2006, petitioner is now before us, in this petition for review raising the following grounds: I. The Court of Appeals Erred in Holding that in a Contract of Sale Ownership is Not Transferred by Delivery[.] II. The Court of Appeals Erred in Holding that Respondent's Action has Not Prescribed. III.

The Court of Appeals Erred and Exceeded its Jurisdiction When it Found Petitioner Guilty of Misrepresentation as the Decision of the HLURB Board of Commissioners on the Same Matter is Final With Respect to Respondent Who Did Not Appeal Said Decision that Petitioner Did Not Commit Misrepresentation. 21 The issue before us is whether respondent's action has prescribed pursuant to Article 1543, in relation to Articles 1539 and 1542 of the Civil Code, to wit: ART. 1539.The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in conformity with the following rules: If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated. The same shall be done, even when the area is the same, if any part of the immovable is not of the quality specified in the contract. The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing sold exceeds one-tenth of the price agreed upon. Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area or inferior quality, he may rescind the sale. (1469a) [Emphasis supplied]

ART. 1542.In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or lesser area or number than that stated in the contract. The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. (1471) [Emphasis supplied] ART. 1543.The actions arising from Articles 1539 and 1542 shall prescribe in six months, counted from the day of delivery. (1472a) [Emphasis supplied] Petitioner argues that it delivered possession of the subject properties to respondent on October 10, 1996, hence, respondent's action filed on August 7, 1998 has already prescribed.

Respondent, on the one hand, contends that his action has not prescribed because the prescriptive period has not begun to run as the same must be reckoned from the execution of the deeds of sale which has not yet been done. The resolution of the issue at bar necessitates a scrutiny of the concept of "delivery" in the context of the Law on Sales or as used in Article 1543 of the Civil Code. Under the Civil Code, the vendor is bound to transfer the ownership of and deliver the thing which is the object of the sale. The pertinent provisions of the Civil Code on the obligation of the vendor to deliver the object of the sale provide: cCTIaS ART. 1495.The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale. (1461a) ART. 1496.The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. (n) ART. 1497.The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee. (1462a) ART. 1498.When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. xxx xxx xxx Under the Civil Code, ownership does not pass by mere stipulation but only by delivery. 22 Manresa explains, "the delivery of the thing . . . signifies that title has passed from the seller to the buyer." 23 According to Tolentino, the purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and determines the transmission of ownership, the birth of the real right. The delivery under any of the forms provided by Articles 1497 to 1505 of the Civil Code signifies that the transmission of ownership from vendor to vendee has taken place. 24 Article 1497 above contemplates what is known as real or actual delivery, when the thing sold is placed in the control and possession of the vendee. Article 1498, on the one hand, refers to symbolic delivery by the execution of a public instrument. It should be noted, however, that Article 1498 does not say that the execution of the deed provides a conclusive presumption of the delivery of possession. It confines itself to providing that the execution thereof is equivalent to delivery, which means that the presumption therein can be rebutted by means of clear and convincing evidence. Thus, the presumptive delivery by the execution of a public instrument can be negated by the failure of the vendee to take actual possession of the land sold. 25 In Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., 26 the concept of "delivery" was explained as follows:

Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee." (Emphasis supplied) In light of the foregoing, "delivery" as used in the Law on Sales refers to the concurrent transfer of two things: (1) possession and (2) ownership. This is the rationale behind the jurisprudential doctrine that presumptive delivery via execution of a public instrument is negated by the reality that the vendee actually failed to obtain material possession of the land subject of the sale. 27 In the same vein, if the vendee is placed in actual possession of the property, but by agreement of the parties ownership of the same is retained by the vendor until the vendee has fully paid the price, the mere transfer of the possession of the property subject of the sale is not the "delivery" contemplated in the Law on Sales or as used in Article 1543 of the Civil Code. In the case at bar, it appears that respondent was already placed in possession of the subject properties. However, it is crystal clear that the deeds of absolute sale were still to be executed by the parties upon payment of the last installment. This fact shows that ownership of the said properties was withheld by petitioner. Following case law, it is evident that the parties did not intend to immediately transfer ownership of the subject properties until full payment and the execution of the deeds of absolute sale. 28 Consequently, there is no "delivery" to speak of in this case since what was transferred was possession only and not ownership of the subject properties. We, therefore, hold that the transfer of possession of the subject properties on October 10, 1996 to respondent cannot be considered as "delivery" within the purview of Article 1543 of the Civil Code. It follows that since there has been no transfer of ownership of the subject properties since the deeds of absolute sale have not yet been executed by the parties, the action filed by respondent has not prescribed. aCTcDH The next issue is whether the sale in the case at bar is one made with a statement of its area or at the rate of a certain price for a unit of measure and not for a lump sum. Article 1539 provides that "If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee . . . all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract . . . ." Article 1542, on the one hand, provides that "In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or lesser area or number than that stated in the contract". The distinction between Article 1539 and Article 1542 was explained by Manresa 29 as follows:

. . . If the sale was made for a price per unit of measure or number, the consideration of the contract with respect to the vendee, is the number of such units, or, if you wish, the thing purchased as determined by the stipulated number of units. But if, on the other hand, the sale was made for a lump sum, the consideration of the contract is the object sold, independently of its number or measure, the thing as determined by the stipulated boundaries, which has been called in law a determinate object. This difference in consideration between the two cases implies a distinct regulation of the obligation to deliver the object, because, for an acquittance delivery must be made in accordance with the agreement of the parties, and the performance of the agreement must show the confirmation, in fact, of the consideration which induces each of the parties to enter into the contract. In Rudolf Lietz, Inc. v. Court of Appeals, 30 we held: Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate. In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. The parties agree on a stated purchase price for an immovable the area of which may be declared based on an estimate or where both the area and boundaries are stated. In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price although there be a greater or lesser area or number than that stated in the contract. However, the discrepancy must not be substantial. A vendee of land, when sold in gross or with the description "more or less" with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency.

Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area

contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object. In the case at bar, it is undisputed by the parties that the purchase price of the subject properties was computed based on the price list prepared by petitioner, or P22,378.95 per square meter. Clearly, the parties agreed on a sale at a rate of a certain price per unit of measure and not one for a lump sum. Hence, it is Article 1539 and not Article 1542 which is the applicable law. Accordingly, respondent is entitled to the relief afforded to him under Article 1539, that is, either a proportional reduction of the price or the rescission of the contract, at his option. Respondent chose the former remedy since he prayed in his Complaint for the refund of the amount of P2,014,105.50 representing the proportional reduction of the price paid to petitioner. In its decision, the Court of Appeals held that the action filed by respondent has not prescribed and reinstated the decision of the Board. It is an error to reinstate the decision of the Board. The Board, in its decision, held that there was a mistake regarding the object of the sale constituting a ground for rescission based on Articles 1330 and 1331 of the Civil Code. It then granted the relief of rescission at the option of respondent. Articles 1330 and 1331 of the Civil Code provide: ART. 1330.A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. (1265a) ART. 1331.In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. EACIcH We find that these articles are inapplicable to the case at bar. In order that mistake may invalidate consent and constitute a ground for annulment of contract based on Article 1331, the mistake must be material as to go to the essence of the contract; that without such mistake, the agreement would not have been made. 31 The effect of error must be determined largely by its influence upon the party. If the party would have entered into the contract even if he had knowledge of the true fact, then the error does not vitiate consent. 32 In the case at bar, the relief sought by respondent was for a refund and he continued to occupy the subject properties after he found out that the same were smaller in area. All these show that respondent did not consider the error in size significant enough to vitiate the contract. Hence, the Court of Appeals erred in affirming the Board's decision to grant rescission based on Articles 1330 and 1331 of the Civil Code. IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED but with the MODIFICATION that the decision of the HLURB is not reinstated. Petitioner is ordered to refund the amount of Two Million Fourteen Thousand One Hundred Five Pesos

and Fifty Centavos (P2,014,105.50) to respondent with legal interest of six percent (6%) per annum from August 7, 1998, the date of judicial demand. A twelve percent (12%) interest per annum, in lieu of six percent (6%), shall be imposed on such amount from the date of promulgation of this decision until the payment thereof. Costs against petitioner. SO ORDERED. Different civil actions to recover possession Tolerated possession, clandestine and unknown acts, acts of violence. Their effect on possession Cases: [G.R. No. 71393. June 28, 1989.] MANILA ELECTRIC COMPANY, petitioner, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT AND ELPIDIA, FELICIDAD, ISABEL, JOSE, EUGENIA, AQUILINA, CONSUELO AND NATIVIDAD, all surnamed LEYVA, and EDUARDA Vda. de LEYVA, respondents. Angara, Abello, Concepcion, Regala & Cruz for petitioner. Sumulong Law Offices for respondents. SYLLABUS 1.REMEDIAL LAW; EVIDENCE; PROOF OF EXISTENCE OF INSTRUMENT, ESSENTIAL BEFORE THE INTRODUCTION OF SECONDARY EVIDENCE TO PROVE ITS CONTENTS. It is a rule that "before a party can be permitted to introduce secondary evidence of the contents of a written instrument, satisfactory proof must he made of the former existence of the instrument and this necessarily involves proof of its proper execution or genuineness". (V. Francisco, Revised Rules of Court, Ann., Vol. VII, p. 132, 1973 Ed.) 2.CIVIL LAW; POSSESSION; USE OF PROPERTY IF WITHOUT EXPRESS GRANT, CONSIDERED BY MERE TOLERANCE. There being no evidence that the original use of the property in question by Meralco was based upon any express grant of a fee to the said property, or of an easement of right of way nor that it began under the assertion of a right on its part, the presumption must be that the origin of the use was by mere tolerance. 3.ID.; ID.; MUST BE UNDER CLAIM OF OWNERSHIP TO CONSTITUTE THE FOUNDATION OF PRESCRIPTION. 'Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be possession under claim of title (en concepto de dueo), or to use the common law equivalent of the term, it must be adverse. 4.ID.; ID.; POSSESSION BY MERE TOLERANCE DOES NOT START THE RUNNING OF PERIOD OF PRESCRIPTION. Acts of a possessory character performed by one who holds by mere tolerance of the owner are clearly not en concepto de dueo, and such possessory acts, no matter how long so continued, do not start the running of the period of prescription.

5.ID.; ID.; ID.; CASE AT BAR. In the case at bar, the evidence discloses that sometime after the war, plaintiffs complained against MERALCO's use and occupancy of the premises. Subsequently, defendant sometime in 1968 negotiated with plaintiff for the purchase of the entire lot but the negotiation did not prosper as MERALCO suspended the negotiations on the ground that it was considering the selection of another site. Finally, plaintiff filed the present action on August 7, 1973 after their demand for compensation was refused. It is obvious that there can be no prescription or laches to bar plaintiffs' present action. DECISION MEDIALDEA, J p: This is a petition to review by way of an appeal by certiorari under Rule 45 of the Rules of Court the decision of the Intermediate Appellate Court (now Court of Appeals), dated April 12, 1985 (p. 36, Rollo) affirming in toto the decision of the lower court, holding petitioner Manila Electric Company ("MERALCO", for brevity) liable to private respondents Elpidia, Felicidad, Isabel, Jose, Eugenia, Aquilina, Consuelo and Natividad, all surnamed Leyva and Eduarda Vda. de Leyva ("LEYVAs", for short) for damages and compensation, and its Resolution, dated June 28, 1985, denying petitioner's Motion for Reconsideration. LLphil Based on the respondent court's decision, the facts of the case are as follows: Nazario Crisostomo and Maria Escusar owned a parcel of land with an area of 5,216.60 square meters, situated in Cainta, Rizal at the corner of Ortigas Avenue and the road leading to the town center of Cainta, covered by O.C.T. 4416, issued in 1931. Upon the death of both, the property passed on to their daughter Bibiana Crisostomo Vda. de Eladio Leyva, whose title was evidenced by TCT 8144. Ultimately, the property was inherited by the LEYVAs who were the children of Bibiana. Prior to the issuance of OCT 4416, in the name of Nazario Crisostomo between 1929 and 1930, MERALCO erected thereon two transmission steel towers numbered 86 and 87, later renumbered 76 (situated in Lot 1-K, which is owned in common by the LEYVAs and covered by TCT No. 297168) and 77 (situated in Lot 2-V-6, which is also owned in common by the LEYVAs and covered by TCT No. 338524), (par. 3, Partial Stipulation of Facts, quoted in CA Decision, p. 39, Rollo). In 1931, when O.C.T. 4416 was issued, no encumbrance was annotated thereon. On August 4, 1973, the LEYVAs sued MERALCO for damages and sum of money with prayer for attorney's fees and exemplary damages for its continued use of the LEYVAs' property, claiming that the property became off limits because of the high voltage of electric current running in the cable lines. In its answer, MERALCO claimed that it had acquired a grant from the original owner of the land, Nazario Crisostomo, for a perpetual easement of right of way for the erection and operation of the transmission steel towers for which it had paid Crisostomo the total sum of $12.40. Moreover, even without the grant of perpetual easement, the LEYVAs' complaint is

deemed barred by prescription and laches, because of MERALCO's open, continuous and uninterrupted enjoyment of the easement for a period of 43 years. MERALCO did not present any proof regarding the alleged contract/grant with Nazario Crisostomo. Instead, it presented a deposition of a certain Leland Gardner, a retired MERALCO field auditor, who testified on the alleged payment by MERALCO of the sum of $12.40 for the grant of right of way, claiming thus, that in the absence of the original document, Leland's deposition must be admitted as secondary evidence of an original document, pursuant to Sec. 4, Rule 130 of the Rules of Court. prcd The lower court decided in favor of the LEYVAs, as follows: "WHEREFORE, in view of the foregoing premises, this Court rules against the defendant MERALCO and finds MERALCO LIABLE TO PLAINTIFFS as follows: "1)the total sum of Two Hundred Thousand Pesos (P200,000 .00) as temperate damages suffered by the plaintiffs for the entire period starting the year 1930 up to 10 August 1973. "2)the amount of Six Thousand Pesos (P6,000.00) as annual of (sic) yearly compensation for loss of use and deprivation of opportunity to profit and benefit from their lands to be computed from August 11, 1973, the date of filing of the complaint and computed for the same amount annually thereafter; "3)the legal rate of interest of all the foregoing sums in addition thereto computed from the date of this Decision; "4)the amount of Ten Thousand Pesos (P10,000.00) as and for attorney's fees in favor of the plaintiffs; "5)the cost of suit;. "In addition, the counterclaim filed by defendant MERALCO is hereby ordered dismissed for lack of basis and merit; "Finally, there is no pronouncement as to exemplary damages against any party. "SO ORDERED" (pp. 36-37, Rollo). MERALCO appealed, assigning the following errors: "I THE TRIAL COURT ERRED IN NOT HOLDING THAT APPELLANT ACQUIRED BY TITLE AN EASEMENT OF RIGHT OF WAY OVER APPELLEES' PROPERTY. "II

ASSUMING ARGUENDO THAT APPELLANT DID NOT ACQUIRE THE EASEMENT BY TITLE, THE TRIAL COURT ERRED IN NOT HOLDING THAT APPELLANT ACQUIRED THE EASEMENT BY PRESCRIPTION. "III THE TRIAL COURT ERRED IN NOT DECLARING THAT APPELLEES' CAUSE OR CAUSES OF ACTION, IF ANY, HAVE PRESCRIBED OR HAVE BEEN BARRED BY LACHES. "IV THE TRIAL COURT ERRED IN AWARDING TEMPERATE DAMAGES AND ANNUAL COMPENSATION TO APPELLEES FOR PURPORTED 'LOSS OF USE AND DEPRIVATION OF OPPORTUNITY TO PROFIT AND BENEFIT FROM THEIR LANDS'. "V THE TRIAL COURT ERRED IN AWARDING ATTORNEY'S FEES IN FAVOR OF APPELLANT" (pp. 37-38, Rollo.) Respondent court affirmed the decision in toto. The only issue to be resolved in this case is whether or not MERALCO acquired a perpetual easement of right of way, over subject property. Respondent court has ruled out the existence of a contract to support MERALCO's claim and consequently, its absence renders the inadmisibility of the Gardner deposition as secondary evidence based on Sec. 4, Rule 130 which provides as follows: "SEC. 4.Secondary evidence when original is lost or destroyed. When the original writing has been lost or destroyed, or cannot be produced in court, upon proof of its execution and loss or destruction, or unavailability, its contents may be proved by a copy, or by a recital of its contents in some authentic document, or by the recollection of witnesses." We agree with respondent court. It is a rule that "before a party can be permitted to introduce secondary evidence of the contents of a written instrument, satisfactory proof must he made of the former existence of the instrument and this necessarily involves proof of its proper execution or genuineness". (v. Francisco, Revised Rules of Court, Ann., Vol. VII, p. 132, 1973 Ed.). Respondent court quotes portions of the Gardner deposition (pp. 40-42, Rollo): "80.Q:Were these grants of right of way public instruments or merely simple statements? "A:In my judgment, they were not public documents, as it is doubtful if they were recorded in any deeds. They were written statements (p. 2, Answers to Cross-Interrogations). xxx xxx xxx

"81.Q:Does the defendant MERALCO still have copies of the written grant of right of way executed by Nazario Crisostomo? "A:No more. "82.Q:Why does not defendant Meralco have any more copies? "A:All the copies of the grant were burned during the war. "83.Q:Where does Meralco usually place said copies? "A:In the files of the accounting department. "94.Q:What efforts, if any, did you exert to locate copies of this particular grant of right of way? "A:We have exerted diligent and extensive effort. (pp. 9-10 of the deposition). xxx xxx xxx "40.Q:From whom did you get the date for the entries made in Exhibit 'I-D'? "A:From the receipts signed by the owners of land granting the right of way through the personnel of the right of way department. Such receipts covered the money paid as shown under the heading in the report 'amount' all the other items covered expenses of Meralco.

"41.Q:When were these data given to you? "A:Sometime after the transaction to which they refer. "42.Q:Why were these datas (sic) given to you? "A:It was routine being done at that time as part of the standard operating procedure. "43.Q:What, if any, did you do with such data after you received it? "A:The date (sic) was sent to Manila Office which was later entered in this report. (p. 5 of his deposition). "52.Q:Why were such amounts paid to the persons listed in Schedule 16? "A:The amounts were paid to these persons in consideration for the grant of a right of way for the erection and maintenance of the steel tower. "53.Q:Do you know who made payment to the persons listed in Schedule 16?

"A:The personnel of the right of way department. "54.Q:What participation, if any, did you have in making payments to the persons listed in Schedule 16? "A:I did not personally make the payments." (pp. 6-7, Deposition) (pp. 40-42, Rollo) The foregoing testimony does not constitute evidence of a contract much less its execution. To quote counsel for the LEYVAs in his Comment (p. 93, Rollo): prcd "In point of fact, there is no evidence that Nazario Crisostomo even executed the alleged grant. Leland Gardner, in his deposition, never stated positively that there was an alleged grant of right of way by Nazario Crisostomo. What he saw was the receipt supposedly signed by Nazario Crisostomo for $7.50 allegedly paid for the erection of the two towers, which receipt was secured by "someone" from the right of way department and filed by that "someone" with the Manila office. Because of this receipt which Leland Gardner saw in the Manila Office, he assumed that Nazario Crisostomo executed a grant of right of way in favor of Meralco because according to him it was standard operating procedure to require the execution of the grant of right of way after payment of the consideration for the erection of the towers. In other words, Leland Gardner who was not present when the receipt was signed by someone purporting to be Nazario Crisostomo, assumed that it was truly the signature of Nazario Crisostomo, and because of the said receipt he further assumed that the real Nasario Crisostomo executed a grant of right of way in favor of Meralco. It is an assumption based on another assumption . . ." Alternatively, MERALCO claims that in the absence of a grant or contract to support its title to the grant, it nonetheless acquired title by prescription because it had been in possession of the property since 1930 or for over 43 years. Again, respondent court correctly ruled that: ". . . There being no evidence that the original use of the property in question by Meralco was based upon any express grant of a fee to the said property, or of an easement of right of way nor that it began under the assertion of a right on its part, the presumption must be that the origin of the use was the mere tolerance or licence of Nazario Crisostomo. Thus, in Cuaycong vs. Benedicto (37 Phil. 781, 792-793) it was held: 'It is a fundamental principle of the law in this jurisdiction concerning the possession of real property that such possession is not affected by acts of a possessory character which are 'merely tolerated' by the possessor, or which are due to his license (Civil Code, Arts. 444 and 1942). This principle is applicable not only with respect to the prescription of the dominium as a whole, but to the prescription of right in rem. In the case of Cortes vs. Palanca Yu-Tibo (2 Phil. Rep., 24, 38) the Court said: 'The provision of Article 1942 of the Civil Code to the effect that acts which are merely tolerated produce no effect with respect to possession is applicable as much to the prescription of real rights as to the prescription of the fee, it being a glaring and self-evident

error to affirm the contrary, as does the appellant in his motion papers. Possession is the fundamental basis of the prescription. Without it no kind of prescription is possible, not even the extraordinary. Consequently, if acts of mere tolerance produce no effect with respect to possession, as that article provides, in conformity with Article 444 of the same Code, it is evident that they can produce no effect with respect to prescription, whether ordinary or extraordinary. This is true whether the prescriptive acquisition be of a fee or of real rights, for the same reason holds in one and the other case; that is, that there has been no true possession in the legal sense of the word.' (See also Ayala de Roxas vs. Maglonso, 8 Phil. Rep., 745; Municipality of Nueva Caceres vs. Director of Lands and Roman Catholic Bishop of Nueva Caceres, 24 Phil. Rep., 485). 'Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be possession under claim of title (en concepto de dueo), or to use the common law equivalent of the term, it must be adverse. Acts of a possessory character performed by one who holds by mere tolerance of the owner are clearly not en concepto de dueo, and such possessory acts, no matter how long so continued, do not start the running of the period of prescription.' "In the case at bar, the evidence discloses that sometime after the war, plaintiffs complained against MERALCO's use and occupancy of the premises. Subsequently, defendant sometime in 1968 negotiated with plaintiff for the purchase of the entire lot but the negotiation did not prosper as MERALCO suspended the negotiations on the ground that it was considering the selection of another site. Finally, plaintiff filed the present action on August 7, 1973 after their demand for compensation was refused. It is obvious that there can be no prescription or laches to bar plaintiffs' present action." xxx xxx xxx (pp. 42-44, Rollo) Based on the foregoing, it is clear that MERALCO never acquired any easement over the LEYVAs' property to construct and operate the steel towers. Consequently, the LEYVAs must be compensated and awarded temperate damages, attorney's fees and annual compensation for the loss of use and deprivation of opportunity to profit and benefit from their lands. As respondent court pointed out (pp. 44-45, Rollo): cdphil "In this case, there is no doubt that plaintiffs' property has been practically off-limits to its entirety because of the danger posed by the high voltage electric current being conducted through cable lines hanging through the steel transmission towers, thereby prejudicing plaintiffs from reaping profits and benefits from their lands. Aggravating the situation, plaintiffs remain as owners only to be liable to payment of real estate taxes and other related dues and levies. Meanwhile, the MERALCO does nothing except to reap benefits and profits in its business concern to the prejudice of plaintiffs; or as Manresa has pined 'to the annulment of right' of ownership of plaintiffs. For this plaintiffs should not be without redress." ACCORDINGLY, the petition is hereby DENIED and the decision of the respondent court is AFFIRMED in toto with costs against petitioner. SO ORDERED.

[G.R. No. 142882. May 2, 2006.] SPS. RICARDO AND LYDIA LLOBRERA, SPS. BENJAMIN AND ESTHER LLOBRERA, SPS. MIKE AND RESIDA MALA, SPS. OTOR AND DOLINANG BAGONTE, SPS. EDUARDO AND DAMIANA ICO, SPS. ANTONIO AND MERLY SOLOMON, SPS. ANSELMO AND VICKY SOLOMON, SPS. ALEX AND CARMELITA CALLEJO, SPS. DEMETRIO AND JOSEFINA FERRER, SPS. BENJAMIN AND ANITA MISLANG, SPS. DOMINGO AND FELICIDAD SANCHEZ, SPS. FERNANDO AND CARMELITA QUEBRAL, SPS. BERNARDO AND PRISCILLA MOLINA, PRISCILLA BAGA AND BELEN SEMBRANO, petitioners, vs. JOSEFINA V. FERNANDEZ, respondent. DECISION GARCIA, J p: Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to nullify and set aside the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 48918, to wit: 1.Decision dated June 30, 1999, 1 affirming the Decision dated August 7, 1998 of the Regional Trial Court (RTC) of Dagupan City, Branch 41, in Civil Case No. 98-02353-D which affirmed an earlier decision of the Municipal Trial Court in Cities (MTCC), Dagupan City, Branch 2, in Civil Case No. 10848, entitled "Josefina F. De Venecia Fernandez vs. Sps. Mariano and Lourdes Melecio, et al.," an action for ejectment. 2.Resolution dated March 27, 2000, 2 denying petitioners' motion for reconsideration. Subject of the controversy is a 1,849 square-meter parcel of land, covered by Transfer Certificate of Title No. 9042. Respondent Josefina V. Fernandez, as one of the registered coowners of the land, served a written demand letter upon petitioners Spouses Llobrera, et al., to vacate the premises within fifteen (15) days from notice. Receipt of the demand letter notwithstanding, petitioners refused to vacate, necessitating the filing by the respondent of a formal complaint against them before the Barangay Captain of Barangay 11, Dagupan City. Upon failure of the parties to reach any settlement, the Barangay Captain issued the necessary certification to file action. Respondent then filed a verified Complaint for ejectment and damages against the petitioners before the MTCC of Dagupan City, which complaint was raffled to Branch 2 thereof. By way of defense, petitioners alleged in their Answer that they had been occupying the property in question beginning the year 1945 onwards, when their predecessors-in-interest, with the permission of Gualberto de Venecia, one of the other co-owners of said land, developed and occupied the same on condition that they will pay their monthly rental of P20.00 each. From then on, they have continuously paid their monthly rentals to Gualberto de Venecia or Rosita de Venecia or their representatives, such payments being duly

acknowledged by receipts. Beginning sometime June 1996, however, the representative of Gualberto de Venecia refused to accept their rentals, prompting them to consign the same to Banco San Juan, which bank deposit they continued to maintain and update with their monthly rental payments. In a decision dated February 18, 1998, the MTCC rendered judgment for the respondent as plaintiff, thus: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants as follows: 1.Ordering each of the defendants to vacate the portion of the land in question they respectively occupy and to restore the possession thereof to the plaintiff and her co-owners; 2.Ordering each of the defendants to pay to the plaintiff the amount of P300.00 per month from January 17, 1997 until they vacate the land in question as the reasonable compensation for the use and occupation of the premises; cEaCTS 3.Ordering the defendants to pay proportionately the amount of P10,000.00 as attorney's fee and P2,000.00 as litigation expenses, and to pay the cost of suit. SO ORDERED. On petitioners' appeal to the RTC of Dagupan City, Branch 41 thereof, in its decision of August 7, 1998, affirmed the foregoing judgment. Therefrom, petitioners went to the CA whereat their recourse was docketed as CA-G.R. SP. No. 48918. As stated at the threshold hereof, the CA, in its Decision of June 30, 1999, affirmed that of the RTC. With the CA's denial of their motion for reconsideration, in its Resolution of March 27, 2000, petitioners are now before this Court with the following assignment of errors: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN: A.HOLDING THAT THE OCCUPATION AND POSSESSION OF THE PROPERTY IN QUESTION IS BY MERE TOLERANCE OF THE RESPONDENT. B.HOLDING THAT THE FAILURE OF THE PETITIONERS (defendants) TO VACATE THE PREMISES AFTER DEMANDS WERE MADE UPON THEM IS A VALID GROUND FOR THEIR EJECTMENT. HCacTI C.HOLDING THAT THE CONSIGNATION MADE BY PETITIONERS IN CONTEMPLATION OF ARTICLE 1256 OF THE NEW CIVIL CODE IS NOT LEGALLY TENABLE. D.AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT DATED AUGUST 7, 1998 WHICH, LIKEWISE AFFIRMED THE DECISION OF THE MTCC DECISION DATED FEBRUARY 18, 1998 INSOFAR AS THE ORDER FOR THE PETITIONERS (DEFENDANTS) TO PAY RENTAL AND ATTORNEY'S FEES AND LITIGATION EXPENSES.

At the heart of the controversy is the issue of whether petitioners' possession of the subject property is founded on contract or not. This factual issue was resolved by the three (3) courts below in favor of respondent. As tersely put by the CA in its assailed decision of June 30, 1999: Petitioners failed to present any written memorandum of the alleged lease arrangements between them and Gualberto De Venecia. The receipts claimed to have been issued by the owner were not presented on the excuse that the March 19, 1996 fire burned the same. Simply put, there is a dearth of evidence to substantiate the averred lessor-lessee relationship. . . . . 3 Consistent with this Court's long-standing policy, when the three courts below have consistently and unanimously ruled on a factual issue, such ruling is deemed final and conclusive upon this Court, especially in the absence of any cogent reason to depart therefrom. From the absence of proof of any contractual basis for petitioners' possession of the subject premises, the only legal implication is that their possession thereof is by mere tolerance. In Roxas vs. Court of Appeals, 4 we ruled: A person who occupies the land of another at the latter's 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 judgment favoring the ejectment of petitioners being consistent with law and jurisprudence can only be affirmed. The alleged consignation of the P20.00 monthly rental to a bank account in respondent's name cannot save the day for the petitioners simply because of the absence of any contractual basis for their claim to rightful possession of the subject property. Consignation based on Article 1256 of the Civil Code indispensably requires a creditor-debtor relationship between the parties, in the absence of which, the legal effects thereof cannot be availed of. Article 1256 pertinently provides: Art. 1256.If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. Unless there is an unjust refusal by a creditor to accept payment from a debtor, Article 1256 cannot apply. In the present case, the possession of the property by the petitioners being by mere tolerance as they failed to establish through competent evidence the existence of any contractual relations between them and the respondent, the latter has no obligation to receive any payment from them. Since respondent is not a creditor to petitioners as far as the alleged P20.00 monthly rental payment is concerned, respondent cannot be compelled to receive such payment even through consignation under Article 1256. The bank deposit

made by the petitioners intended as consignation has no legal effect insofar as the respondent is concerned. IDASHa Finally, as regards the damages awarded by the MTCC in favor of the respondent, as affirmed by both the RTC and the CA, petitioners failed to present any convincing argument for the Court to modify the same. The facts of the case duly warrant payment by the petitioners to respondent of actual and compensatory damages for depriving the latter of the beneficial use and possession of the property. Also, the unjustified refusal to surrender possession of the property by the petitioners who were fully aware that they cannot present any competent evidence before the court to prove their claim to rightful possession as against the true owners is a valid legal basis to award attorney's fees as damages, as well as litigation expenses and cost of suit. Rule 70 of the Rules of Court relevantly reads: Sec. 17.Judgment. If after trial the court finds that the allegations of the complaint are true, it shall render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the premises, attorney's fees and costs. If it finds that said allegations are not true, it shall render judgment for the defendant to recover his costs. If a counterclaim is established, the court shall render judgment for the sum found in arrears from either party and award costs as justice requires. (Emphasis supplied). DcTSHa There is no doubt whatsoever that it is within the MTCC's competence and jurisdiction to award attorney's fees and costs in an ejectment case. After thoroughly considering petitioners' arguments in this respect, the Court cannot find any strong and compelling reason to disturb the unanimous ruling of the three (3) courts below on the matter of damages. WHEREFORE, the petition is hereby DENIED for lack of merit, with costs against petitioners. SO ORDERED. Rule regarding possession as a fact, expectations Cases: [G.R. No. 80638. April 26, 1989.] GABRIEL ELANE, petitioner, vs. COURT OF APPEALS and INOCENCIO V. CHUA, respondents. Mario O. Leyco for petitioner. Perfecto R. Bautista for private respondent I.V. Chua. DECISION

REGALADO, J p: The decision promulgated on September 30, 1987 by respondent Court of Appeals in CAG.R. SP No. 09536, 1 which reversed the decision of the Regional Trial Court 2 and, correlatively, the Municipal Trial Court of Olongapo City, 3 is assailed in this petition for review on certiorari. Private respondent Inocencio V. Chua filed an action for forcible entry in the then City Court of Olongapo City for the eviction of petitioner Gabriel Elane from a portion of a parcel of land designated as Block V, LC Project No. 14, Olongapo City, BF Map LC 2427, which was the subject of a permit to occupy issued to private respondent by the Bureau of Forestry on August 16, 1961. Private respondent alleges that on February 15, 1980, while visiting the property, he discovered that petitioner was constructing a semi-concrete building on a portion thereof, without his knowledge and consent. The order made by private respondent upon petitioner to desist therefrom was ignored by the latter. 4 When his demand letter of March 1, 1980 to stop said construction was refused, private respondent filed an action for forcible entry. 5 In his answer, petitioner Elane claims that he was granted a permit by the Bureau of Forest Development over a parcel of land located at Upper Kalaklan, with an area of 360 square meters, more or less, designated as Block V, LC Project No. 14, Olongapo City, BF Map LC 2427, as allegedly evidenced by a certification from the said bureau dated April 10, 1979; that he has been in possession and occupation of that parcel of land continuously and uninterruptedly since 1970, having originally erected a hut thereon which was later replaced by a bungalow; and that the land has been declared for taxation in his name and the real property taxes thereon paid by him for the years 1970 to 1979. 6 On February 14, 1984, the Municipal Trial Court of Olongapo City rendered a decision dismissing the complaint and which, on appeal, was affirmed in toto by the Regional, Trial Court of Olongapo City. Thereafter, herein private respondent elevated the case on a petition for review to respondent court which reversed the decisions of the two courts a quo and rendered judgment ordering therein respondent Elane to remove or demolish the residential house or building that he constructed on that part of the land in question, to vacate and return possession of said parcel of land to therein petitioner Chua and to pay said petitioner P5,000.00 by way of attorney's fees, with the costs of suit. 7 A motion for reconsideration was denied on November 3, 1987. 8 In the present appeal, petitioner contends that the respondent court (1) gravely abused its discretion in giving due course to the petition for review notwithstanding the fact that the decision sought to be reviewed had already become final and executory; and (2) gravely erred in holding that "the instant petition must be resolved on the all important issue of priority of possession instead of the issue as to who is the legal possessor of the lot subject of the litigation." 9 Concordant with the claim of private respondent, the respondent court found the following relevant facts established by the evidence of record: LLphil

"On August 16, 1961, Ordinary Residence Permit No. 1675 was issued by the Bureau of Forestry authorizing the petitioner to occupy four hectares of public forest land situated in Sitio Upper Kalaklan, Olongapo, Zambales (Exhibit A), on which he constructed a warehouse and a gasoline station pursuant to permits issued to him by the said bureau (Exhibits C, C-1, 1 and J), which on February 10, 1970 were declared for purposes of taxation in his name (Exhibits E and E-1) and taxes due thereon were paid (Exhibits F-4 and F-5). "On January 19, 1977, the parcel of land in question, designated as Block V, LC Project No. 14, Olongapo City, BF Map LC 2427, containing an area of 42,086 square meters, covered by the sketch (Exhibit G), having been declared alienable and disposable, the petitioner filed an application with the Bureau of Lands to purchase it under Miscellaneous Sales Application No. (111-4) 9019 (Exhibit M). "On March 1, 1980, the petitioner wrote to the respondent advising him to stop construction of the building that he was putting up within the parcel of land in question (Exhibit H). On March 6, 1980, the respondent having refused to desist from constructing the building that he was putting up, the petitioner filed the instant complaint for forcible entry in the then City Court of Olongapo." 10 We initially take up the first error imputed by petitioner which, although the records do not show that the same war raised in the petition for review in respondent court, deserves a corresponding resolution since it indirectly attributes a jurisdictional defect. Petitioner claims that a copy of the decision of the Regional Trial Court of Olongapo City was sent by registered mail to the counsel of private respondent at his given address. However, the envelope was supposedly returned to the court when counsel for private respondent allegedly failed to claim the same after a second notice was made on July 10, 1985. Petitioner then contends that, pursuant to Section 3, Rule 13 of the Rules of Court, the decision of the regional trial court became final on July 15, 1985, private respondent not having seasonably filed either a motion for reconsideration or a notice of appeal. 11 We are not persuaded by this argument belatedly raised by petitioner. It is incumbent upon a party who relies upon constructive service under Section 5 of Rule 13 of the Rules to prove that the first notice of the registered letter was sent and delivered to the addressee, as the presumption that official duty has been regularly performed does not apply to such a situation. 12 Here, the assertions in the petition of the facts stated in the next preceding paragraph are unsubstantiated. In the absence of such proof in the record, the disputable presumption of completeness of service does not arise. Furthermore, not only has petitioner failed in such requisite proof, but, as earlier stated, the records do not show that such issue was raised or proved by him in the respondent court when the petition for review was filed with and was pending therein. The principle of estoppel by laches, which is in the interest of a sound administration of the laws, consequently bars this objection from being raised by petitioner for the first time and at this late stage. 13

It is next alleged that respondent court gravely erred in adjudicating the case on the basis of priority of physical possession instead of legal possession. As already adumbrated, respondent court held that private respondent was granted a residence permit over a lot with an area of 42,086 square meters by the Bureau of Forestry on August 16, 1961, and a permit to construct a warehouse and gasoline station thereon by the then municipal government Olongapo on October 1, 1963. 14 This residence permit, which was renewable every year, was not renewed after June 30, 1969 because it was stopped by then Vice-President Fernando Lopez, although private respondent continued to pay rental fees for the land until 1973. 15 Upon application by private respondent the said lot was declared alienable and disposable public and released by the Bureau of Forest Development to the Bureau of Lands in March, 1973. Thereafter, he filed a Miscellaneous Sales Application with the Bureau of Lands on January 19, 1977 for the purchase of the said lot. 16 It likewise appears that private respondent declared the warehouse and gasoline station for taxation purposes and paid taxes thereon in 1970 and 1971. 17 On the other hand, petitioner claims that he entered into and took possession of the contested lot in 1970 pursuant to a permit granted to him by the Bureau of Forest Development, as supposedly evidenced by a certification from the latter dated April 10, 1979, 18 and a building permit and sanitary/plumbing permit issued for the construction of his house thereon. 19 This is an egregious inaccuracy as aptly observed by respondent court, thus: "Said permits (Annexes A, B and C to answer) were not actually introduced in evidence by the respondent Elane in support of his allegations and defenses. They may not, therefore, be considered at all as evidence. Besides, the certification (Annex A to answer) do (sic) not attest to the issuance of any permit to occupy the parcel of land in question in favor of the respondent Elane. It merely certified to the fact the parcel of land in question was found to be Alienable and Disposable Land.' And the building and sanitary/plumbing permits (Annexes B and C to answer) could not have established his possession of the parcel of land since 1970 because aside from the fact that they bear no date of actual issuance, they were accomplished by the applicant whose residence certificate appears to have been issued only on January 5, 1979. How then can it be correctly concluded that based upon such certification and permits (Annexes A, B and C to answer), the respondent Elane had entered into and had taken possession of the parcel of land in question since 1970? LibLex "Moreover, the survey of the parcel of land in question was prepared for the respondent Elane only on February 25, 1979 (Exhibit 6). His miscellaneous sales application was filed in the Bureau of Lands only on March 26, 1979 (Exhibit 7). The lot and residential building constructed thereon were declared for purposes of taxation only on October 18, 1979 and April 1, 1981 (Exhibits 4-A and 5). The realty taxes due for 1970-73, 1974-78 and 1979 (Exhibit 8) and those due for the succeeding years were paid only on April 14, 1980, May 8, 1981 and March 16, 1982 (Exhibits 8-1 to 8-5). Respondent Elane's possession based on those documents cannot, therefore retroact as of 1970." 20

Under these circumstances, We are convinced that private respondent has priority of possession over petitioner whose entry into the subject lot may be reckoned only as of 1979. There is no merit in the suggestion that petitioner was authorized by the Bureau of Forest Development to occupy the land by virtue of an alleged permit issued by said bureau. A cursory examination of said document readily shows that it is a mere certification that the lot claimed by petitioner is part of the alienable and disposable land of the public domain. Nowhere is it stated therein that petitioner is allowed to take possession of the subject lot. Furthermore, it is uncontroverted that private respondent was issued a residence permit way back in 1961 which entitled him to possession of the disputed land starting in the same year. Petitioner, however, submits that the expiration of private respondent's permit in 1969, and its non-renewal, deprived the latter of his possessory right over and the corresponding right eject petitioner from the subject lot. Petitioner argues that by reason of the expiration of said permit, the right of possession over the land reverted to the Bureau of Lands thereby vesting in said entity the sole right to institute any forcible entry case over the land in question. We likewise reject this submission. The respondent court expressly observed that while private respondent's permit to occupy the land may have expired in 1969, he remained in physical possession thereof. Since the decisive issue is priority of possession and private respondent had been in actual and continuous possession of the land August 16, 1961, his material possession must be protected in this ejectment case until a competent court in an appropriate case determines which of the contending parties has the better right of possession. 21 As tersely emphasized by respondent court, and correctly so, "it is of no moment that petitioner's right to occupy said parcel of land by reason of the permit issued to him by the Bureau of Forestry has already expired. For, it is not whether he has a legal right to possess it that is in issue; it is whether he is in actual physical possession of it that is decisive in the instant case for forcible entry." 22 In sum, private respondent was in earlier possession of the contested lot; his sales application preceded that of petitioner; his warehouse and gasoline station already existed long before petitioner took possession of the parcel of land in question; and he has been paying taxes and rental fees thereon since 1968. As provided by the Civil Code "Art. 538.Possession as a fact cannot be recognized at the same time in two different personalities except in the case of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred; if there are two possessors, the one longer in possession; . . ." Having been in prior continuous possession, private respondent is preferentially entitled to occupy the land. Petitioner's intrusion upon the disputed premises can properly be categorized as one effected through stealth. Where forcible entry was thus made clandestinely, the one-year

prescriptive period should be counted from the time private respondent demanded that the deforciant desist from such dispossession when the former learned thereof. 23 The records reflect that such discovery and prohibition took place on February 15, 1980, reiterated thereafter in the demand letter of March 1, 1980, both to no avail. Consequently, the oneyear period had not expired on March 6, 1980 when private respondent filed the ejectment suit with the then City Court of Olongapo City. WHEREFORE, the judgment appealed from is hereby AFFIRMED in toto, without pronouncement as to costs. SO ORDERED. [G.R. No. 162787. June 13, 2008.] REPUBLIC OF THE PHILIPPINES, petitioner, vs. LOURDES F. ALONTE, respondent. DECISION AUSTRIA-MARTINEZ, J p: This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision 1 of the Court of Appeals (CA) dated February 26, 2004 which affirmed the Decision of the Regional Trial Court of Quezon City, Branch 82 (RTC) granting respondent's petition for reconstitution, be reversed and set aside. DaIAcC The CA accurately summarized the facts as culled from the records, thus: On August 10, 2001, the petitioner-appellee [herein respondent] Lourdes F. Alonte filed a Petition for the Reconstitution of the Original of Transfer Certificate of Title No. 335986 and Issuance of the Corresponding Owner's Duplicate thereof supposedly over lot 18-B of the subd. Plan (LRC) Psd-328326 containing an area of Eighty Square Meters and Ninety Five Square Decimeters (80.95) situated in the Municipality of Caloocan (now Quezon City). The petitioner-appellee alleged in its [sic] petition that she is the owner in fee simple of a parcel of land with its improvement situated in Quezon City, bounded and described as follows: xxx xxx xxx It is further alleged that the original copy of the aforesaid title which used to be kept in the Office of the Register of Deeds of Quezon City was among those declared either destroyed or burned during the fire which razed the said office on June 11, 1988 (Annex "E", Certification From the Register of Deeds, Records, p. 9). Likewise, the petitioner-appellee alleged that the owner's Duplicate copy thereof was lost and an affidavit to that effect was executed and accordingly filed in the Office of the Registry of Deeds for Quezon City (Annex "F").

At the ex-parte hearing conducted on January 4, 2002, the petitioner-appellee was represented by her attorney-in-fact, Editha Alonte as evidenced by a Special Power of Attorney (Exh. "H"). The petitioner-appellee is presently in the United States and the witness and her family together with her sisters-in-law are the ones presently occupying the house erected thereon. caIDSH The following documents were presented to prove the jurisdictional facts: Exhibit "A" copy of the Petition dated July 27, 2001. Exhibit "B" Order dated August 29, 2001. Exhibit "C", "C-1" to "C-5" the proof of service of the said Order to the City Prosecutor's Office, the Registry of Deeds of Quezon City, the Quezon City Legal Department, the Land Registration Authority, the Office of the Solicitor General, and the Land Management Bureau of the DENR; Exhibit "D" Certificate of Publication dated October 26, 2001 issued by the National Printing Office; Exhibit "E" Volume 97 No. 43, October 22, 2001 issue of the Official Gazette; Exhibit "E-1" Volume 97 No. 44, October 29, 2001 issue of the Official Gazette; Exhibit "F" Certificate of Posting and Service dated November 19, 2001 by the Deputy Sheriff of this Court. In addition to the abovementioned documents, the petitioner-appellee presented the following: Annex "A" Photocopy of TCT No. 335986; Annex "B" Tax Declaration No. D-074-00504 for 1996; Annex "C" Tax Declaration No. D-074-00921 for 1997; Annex "D" Certification from the Office of the City Treasurer dated July 25, 2001; Annex "E" Certification from the Register of Deeds of Quezon City dated February 4, 2000; Annex "F" Affidavit of Loss dated July 9, 2001; Annex "G" Technical Description; DAHSaT Annex "H" Certification from the Office of the City Assessor dated August 1, 2001 (Records, pp. 5-12). 2

The CA further adopted the following factual findings of the RTC, to wit: The adjoining owners of the subject property were also furnished with copies of the Order dated August 29, 2001 by registered mail, as evidenced by the registry return cards (Exhibits "G", "G-1" and "G-2") attached to the records. There being no opposition thereto, the petitioner was allowed to present her evidence ex-parte before a Hearing Officer designated by the Court. xxx xxx xxx In its Report dated August 2, 2002, the Land Registration Authority submitted its findings as follows: (1)The present petition seeks the reconstitution of Transfer Certificate of Title No. 335986, allegedly lost or destroyed and supposedly covering Lot 18-B of the subdivision plan (LRC) Psd-328326, situated in the Municipality of Caloocan (now Quezon City). (2)The plan and technical description of Lot 18-B of the subdivision plan (LRC) Psd-328326, were verified correct by this Authority to represent the aforesaid lot and the same have been approved under (LRA) PR-19193 pursuant to the provision of Section 12 of Republic Act No. 26. 3 (Emphasis supplied) On August 13, 2002, the RTC promulgated its Decision, the dispositive portion of which reads as follows: WHEREFORE, the Petition dated July 27, 2001 is hereby GRANTED and the Register of Deeds of Quezon City is hereby directed to reconstitute in the files of his Office the original copy of TCT No. 335986 based on the corresponding technical description and survey plan of the property in question in the name of petitioner Lourdes F. Alonte. The owner's duplicate copy of TCT No. 335986 which was lost is hereby declared null and void and the Register of Deeds of Quezon City is hereby directed to issue a new owner's duplicate copy of the reconstituted title to the petitioner, after payment of the prescribed fees and after their Order shall have become final. HcSDIE SO ORDERED. 4 Thereafter, the RTC Branch Clerk of Court issued a Certificate of Finality dated September 3, 2002. 5 However, on September 10, 2002, the RTC issued an Order reading as follows: It appearing from the records that the Notice of Appeal filed by the Office of the Solicitor General thru registered mail on August 29, 2002 and received by this Court on September 4, 2002, was within the reglementary period, the Certificate of Finality earlier issued on September 3, 2002 is hereby REVOKED and/or otherwise RECALLED.

ACCORDINGLY, the Notice of Appeal is hereby given due course. Let, therefore, the records hereof be elevated to the Court of Appeals for appropriate proceedings and disposition. SO ORDERED. 6 On February 26, 2004, the CA then issued the assailed Decision affirming the RTC judgment. The CA held that the RTC did not err in ordering the reconstitution of the original copy of Transfer Certificate of Title (TCT) No. 335986 based on a photocopy because the court applied Section 3 (f) of Republic Act (R.A.) No. 26, entitled "An Act Providing a Special Procedure for the Reconstitution of Torrens Certificate of Title Lost or Destroyed", which took effect on September 26, 1946. Said provision states that "transfer certificates of title shall be reconstituted from . . . any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title." Hence, the present petition for review on certiorari on the following grounds: I The Court of Appeals erred in finding that there is sufficient and proper basis for reconstitution of TCT No. 335986. II The Court of Appeals erred in affirming the lower court's decision granting the petition for reconstitution despite respondent's failure to comply with the mandatory requirements prescribed under Republic Act No. 26. 7 ACcaET Petitioner alleges that the trial court did not acquire jurisdiction to hear the petition for respondent's failure to allege the following mandatory and jurisdictional facts in her petition: 1.the names and addresses of the occupants or persons in possession of the property, of the owners of the adjoining properties and of all persons who may have any interest in the property; 2.a detailed description of the encumbrance appearing on the title; and 3.the restrictions and liabilities allegedly appearing on the subject title as referred to in paragraph 8 of the Petition. 8 Petitioner also pointed out other supposed defects in the petition, i.e., it was not accompanied by a plan and technical description of the property duly approved by the Chief of the General Land Registration Office (now Land Registration Authority [LRA]) or by a certified copy of the description taken from a prior certificate of title covering the same property as prescribed under the last condition under Section 12 of R.A. No. 26; there was no tracing cloth plan attached to the petition as prescribed by Section 5 (a) of LRC Circular No. 35; and there is no showing that the Affidavit of Loss executed on July 9, 2001 by the petitioner stating the alleged fact of loss of the owner's duplicate copy of TCT No. T-335986 had been sent or registered with the Office of the Registry of Deeds of Quezon City. 9

The petition is unmeritorious. The Court emphasizes its ruling in Republic of the Philippines v. Casimiro, 10 to wit: The findings of fact of the RTC, affirmed by the Court of Appeals, cannot be disturbed by this Court, since As a rule, only questions of law may be appealed to the Court by certiorari. The Court is not a trier of facts, its jurisdiction being limited to errors of law. Moreover, where as in this case the Court of Appeals affirms the factual findings of the trial court, such findings generally become conclusive and binding upon the Court. The Court will not disturb the factual findings of the trial and appellate courts unless there are compelling or exceptional reasons, and there is none in the instant petition. SEcAIC Petitioner failed to present before this Court any compelling or exceptional argument or evidence that would justify a departure from the foregoing general rule. This Court defers to the findings of both the RTC and the Court of Appeals as to the weight accorded to respondent's evidence and the sufficiency thereof to substantiate his right to a reconstitution of the original copy of TCT No. 305917. 11 (Emphasis supplied)

In the present case, the RTC declared the petition to be sufficient in form and substance in its Order 12 dated August 29, 2001. Both the RTC and the CA found the evidence presented by petitioner as adequate to order the reconstitution of TCT No. 335986. Akin to Casimiro, 13 herein petitioner also failed to convince the Court that there are compelling reasons for it to deviate from the general rule that the findings of fact of the RTC, affirmed by the CA, are binding on this Court. A thorough examination of the record reveals that there is no factual basis for petitioner's claim that respondent failed to comply with the requirements for a petition for reconstitution as enumerated in Sections 12 and 13 of R.A. No. 26, to wit: Section 12.Petitions for reconstitution from sources enumerated in Section . . . 3(f) of this Act, shall be filed with the proper Court of First Instance, by the registered owner, his assigns, or any person having an interest in the property. The petition shall state or contain, among other things, the following: (a) that the owner's duplicate of the certificate of title had been lost or destroyed; (b) that no co-owner's, mortgagee's or lessee's duplicate had been issued, or, if any had been issued, the same had been lost or destroyed; (c) the location, area and boundaries of the property; (d) the nature and description of the buildings or improvements, if any, which do not belong to the owner of the land, and the names and addresses of the owners of such buildings or improvements; (e) the names and addresses of the occupants or persons in possession of the property, of the owners of the adjoining properties and of all persons who may have any interest in the property; (f) a detailed description of the encumbrances, if any, affecting the property; and (g) a statement that no deeds or other instruments affecting the property have been presented for registration, or, if there be any, the registration thereof has not been accomplished, as yet. All documents, or

authenticated copies thereof, to be introduced in evidence in support of the petition for reconstitution shall be attached thereto and filed with the same: Provided, That in case the reconstitution is to be made exclusively from sources enumerated in Sections 2(f) or 3(f) of this Act, the petition shall be further accompanied with a plan and technical description of the property duly approved by the Chief of the General Land Registration Office, or with a certified copy of the description taken from a prior certificate of title covering the same property. acIASE Section 13.The Court shall cause a notice of the petition, filed under the preceding section, to be published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and to be posted on the main entrance of the provincial building and of the municipal building of the municipality or city in which the land is situated, at least thirty days prior to the date of hearing. The court shall likewise cause a copy of the notice to be sent, by registered mail or otherwise, at the expense of the petitioner, to every person named therein whose address is known, at least thirty days prior to the date of hearing. Said notice shall state, among other things, the number of the lost or destroyed certificate of title, if known, the name of the registered owner, the names of the occupants or persons in possession of the property, the owners of the adjoining properties and all other interested parties, the location, area and boundaries of the property, and the date on which all persons having any interest therein, must appear and file their claim or objections to the petition. The petitioner shall, at the hearing, submit proof of the publication, posting and service of the notice as directed by the court. The petition for reconstitution alleged that respondent is in possession of the subject lot and it listed the names and addresses of adjoining owners enumerated in the Certification from the Office of the City Assessor dated August 1, 2001; it stated that the title is free from any and all liens and encumbrances; and it stated that a copy of TCT No. 335986 is attached to the petition and made an integral part of the petition, hence, the restrictions and liabilities appearing at the back of the copy of the TCT are deemed part of the petition for reconstitution. Said petition was also accompanied by a technical description of the property approved by the Commissioner of the National Land Titles and Deeds Registration Administration, the predecessor of the LRA, as prescribed under the last condition of Section 12 of R.A. No. 26. Thus, the petition clearly complied with the requirements of Section 12, R.A. No. 26. The fact that Editha Alonte, respondent's attorney-in-fact, testified that it is she and her family who are residing on the subject lot does not negate the statement in the petition for reconstitution that it is respondent who is in possession of the lot. After all, Article 524 of the New Civil Code provides that possession may be exercised in one's own name or in that of another. Obviously, Editha Alonte was exercising possession over the land in the name of respondent Lourdes Alonte. This is supported by the Certification 14 from the Office of the City Treasurer of Quezon City which states that the real property taxes on said property, declared in the name of Lourdes Alonte, had been paid. ITEcAD Furthermore, as stated above, the LRA submitted to the trial court a Report 15 dated August 2, 2002 stating that "[t]he plan and technical description of Lot 18-B of the subdivision plan (LRC) Psd-328326, were verified correct by this Authority to represent the aforesaid lot and the same have been approved under (LRA) PR-19193 pursuant to the provisions of Section

12 of R.A. No. 26." Attached to said Report were the print copy of plan (LRA) PR-19193 16 and the corresponding technical description. 17 Since the LRA issued a Report that is highly favorable to respondent, and considering further the presumption that official duty has been regularly performed, 18 the only conclusion would be that respondent has fully complied with the requirements of LRC Circular No. 35. It also appears that the Affidavit of Loss dated July 9, 2001 executed by respondent has indeed been submitted to the Register of Deeds as the photocopy of TCT No. 335986 bears an inscription at the back regarding the submission of such document to the Register of Deeds. In fine, petitioner miserably failed to present any matter that would warrant the reversal or modification of the factual findings of the RTC, as affirmed by the CA. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. EaHcDS No costs. SO ORDERED. Effects of possession

[G.R. No. L-21312. November 22, 1923.] JOSEPH N. WOLFSON, plaintiff-appellant, vs. ADOLFO AENLLE, defendantappellee. Camus & Delgado for appellant. Romualdez Bros. for appellee. SYLLABUS 1. INTENTION TO CLAIM BEYOND TRUE BOUNDARIES. The general rule is that where one in ignorance of his true boundaries takes and holds possession by mistake to a line beyond his limits under the claim and in the belief that it is true line and with intention to claim title up to that line, such possession will ripen into title. 2. WHEN POSSESSION IS NOT ADVERSE. Where a party, through ignorance, inadvertence, or mistake, occupies land up to a given line beyond his actual boundaries because he believes it to be his true line, but has no intention of claiming title to the extent, if it should be ascertained that such line is on his neighbor's land, such possession beyond his true line is not adverse. 3. QUESTION OF INTENT. Where land is occupied by mistake and with no intent on the part of the occupant to claim any land which does not belong to him, but with the

intention only to claim to the true line wherever it may be, such occupancy does not constitute adverse possession. DECISION STATEMENT This action was brought by the plaintiff in May, 1920, in the Court of the First Instance of the City of Manila to recover from the defendant a strip of land containing about 1,635 square meters, adjacent to a parcel of land of which the plaintiff is the owner, located on Lamayan street, on the Pasig River, in the district of Santa Ana, and to recover P10,000 as damages for the alleged wrongful detention. For answer, the defendant alleges that the land in dispute is his land, and that as the owner thereof, he has been in the undisputed and adverse possession of it for more than sixteen years. The lower court found that the title of the land was in the defendant both by purchase and prescription, from which the plaintiff appeals, contending that the lower court erred in finding that the defendant has been in the adverse and continuous possession and under a claim of ownership for more than ten years, and that he was vested with full and complete title, and in not rendering judgment as prayed for in the complaint, and in denying plaintiffs motion for a new trial. JOHNS, J p: It appears that in 1903, and for many years prior thereto, Ramon Martinez de Viademonte was the owner of a tract of land about three and one-half hectares in the district of Santa Ana, City of Manila, known as the Hacienda de Namayan. That on October 12, 1903, from and out of said tract he sold to the defendant a parcel of land described as follows: "Bounded on the north by lands pertaining to the Hacienda de Namayan of Don Ramon Martinez de Viademonte, from which it is taken; on the south by lands of Don Candelario de las Cajigas; on the east by the Pasig River; on the west by the Namayan street; measuring on the north 137 meters, on the south 16 meters, on the east 29 meters, and on the west 13 meters having an area of 2,194.77 square meters." And thereafter sold the following described parcel: "Bounded on the north by land pertaining to the Hacienda de Namayan of Don Ramon Martinez de Viademonte, from which it is taken; on the east by the Pasig River; on the south by land of Don Adolfo Aenlle y Santos; and on the west with Namayan street,having an area of 1,000 square meters," making a total area as described in the calls of the respective deeds of 3,194.77 square meters. At or about the time of the purchase a surveyor purporting to act for Viademonte made a survey for the purpose of defining the boundaries of the land which the defendant purchased. It also appears that the defendant entered and took possession of the land including that in dispute, and that in truth and in fact, he planted some trees and shrubs along the boundaries of the land as it was then surveyed. It also appears that from and out of his original land Viademonte sold and conveyed to plaintiffs grantors another tract of

3,000 square meters, which adjoined, and was contiguous to, the land of the defendant. As a result of an actual survey, which was made some years later, it was found and determined as a fact that the defendant had about 1,762.52 square meters of land in excess of the actual calls in his deeds, and that most of the excess was taken from and out of the deed for the 3,000 square meters under which plaintiff deraigns title. In this situation a dispute arose between plaintiff and the defendant as to the actual amount of land which the plaintiff owned, and how much, if any, of the lands which the plaintiff claims were lands which defendant claimed. It is conceded that the area of the land which the defendant bought and actually paid for is 3,194.77 square meters, and that he bought and paid for it on the basis of that area at so much per square meter. It is also conceded that plaintiffs grantors bought and paid for 3,000 square meters at so much per square meter; and that the actual area of the lands described in all of the respective deeds conforms to the number of square meters specified in such deeds. Hence, the sole question involved in this appeal is whether the defendant now has a title by prescription and by prescription only to the 1,635 square meters which were originally conveyed to the persons from whom plaintiff deraigns title, which is one of facts and fact only. Venancio Velasco, as a witness for the plaintiff, testified that he was 46 years old, married, and by occupation a broker of real estate and a resident of the City of Manila, and that sometime during the year 1909, Mr. Katigbak, who at that time was a surveyor or engineer for the City of Manila, came to the office of Mr. Wolfson, where the witness was then employed, and told Wolfson that his land at Santa Ana did not have an area of 3,000 square meters, but only a little over 1,300 square meters. They then agreed that after office hours they would make an investigation for the purpose of finding out the actual facts. The three of them went to Santa Ana and Mr. Wolfson called Mr. Aenlle, and together all of them went over the property and Wolfson said to Aenlle: "'You said that I had here 3,000 square meters of land, and that you had little over 3,000 square meters. It now appears, however, according to Mr. Katigbak, that I only have a little over 1,300 square meters. Can you tell me where is the other portion of that land?" Mr. Aenlle pointed out to Mr. Wolfson the land towards the north and stated that part of his land was lying towards the north where the property of the Lara sisters was." Mr. Wolfson said to Aenlle: "Would it not be better to have Mr. Aenlle's land surveyed on his, Mr. Wolfson's, account, and that he, Mr. Wolfson, would obtain a Torrens title for Mr. Aenlle at Mr. Wolfson's expense, in order to find out whether or not any portion of his, Mr. Wolfson's, land had been included within his enclosure, and Mr. Aenlle answered that what was the use of incurring that expense when there was no necessity for it. He said: 'Let us wait for the cadastral survey, and, if it comes out that I am holding any part of your property, I an going to return it to you everything over and in excess of what appears in my title.'" The records show that at the time this testimony was given Velasco was an impartial witness, and in the opinion of this court, as to the time, place, and parties present and what

said, his evidence is materially strengthened by the facts brought out on his crossexamination. It appears from the plat in the record, known as Exhibit G, that Katigbak made his survey on May 9, 1910. Hence, the visit which Velasco made to the land, about which he testified, must have been made a few days later after the Katigbak survey. It appears from the record that Katigbak was dead at the time of the trial. The testimony of Velasco is corroborated in all of its details by that of the plaintiff. The only other living witness to that conversation was the defendant who testified as a witness in his own behalf. Strange as it may seem, the testimony of the witness Velasco, as to that conversation on this important and vital point, was not disputed or denied by the defendant, and is not even mentioned or referred to in defendant's testimony. It is true that the defendant testified: "No, sir, I never told Mr. Wolfson that I was going to give him any overage." But it is also true that at no time or place in the record was the attention of the defendant as a witness called to the above testimony of the witness Velasco, or as to the conversation about which Velasco testified, or as to whether it ever took place. In other words, the defendant does not deny that Velasco was present at the time and place and heard the conversation about which he (Velasco) testified. The evidence of Velasco was either true or false, and not being denied or disputed, and having been given in a straightforward manner, we must assume that it is true. Assuming to be true, the defendant then, in legal effect, said plaintiff that if it should be developed by the cadastral survey that "I am holding any part of your property over and above the lands described in my deeds, I will return it to you when that facts is established by the cadastral survey." In other words, the only lands which the defendant then actually claimed to own were those described in his respective deeds, amounting to 3,194.77 square meters. The words "in my title" could only refer to his record title. In some respects Velasco's evidence is materially corroborated by the defendant's own testimony. It will be noted that the defendant purchased the land and took possession under his deed in 1903, and that this conversation took place about seven years later in the year 1910. In other words, at the time the statute of limitations could not have run for more than seven years. Later the cadastral survey was made, and the fact was then conclusively established that defendant did have about 1,635 square meters of land which is described in the deed from which plaintiff deraigns title. Under such a state of facts, which are undisputed, can the defendant now claim title by prescription?

Ruling Case Law, volume 1, page 686, says: ". . . All the authorities agree that, in order to bar the true owner of land from recovering it from an occupant in adverse possession and claiming ownership through the operation of the statute of limitations, the possession must have been, for the whole period prescribe by the statute, actual, open, visible, notorious, continuous, and hostile to the true owner's title and to the world at large. It is also essential that the possession must have been held under claim of right or color of title. . . ." On page 732 of the same volume, the author says:

"Intention to Claim to True Boundaries. The general rule is that where one in ignorance of his actual boundaries takes and holds possession by mistake up to a certain line beyond his limits, upon the claim and in the belief that it is the true line, with the intention to claim title and thus if necessary, to acquire 'title by possession' up to that line, such possession, having the requisite duration and continuity, will ripen into title. But if, on the other hand, a party, through ignorance, inadvertence, or mistake, occupies up to a given line beyond his actual boundaries, because he believes it to be the true line, but has no intention to claim title to that extent if it should be as certained that such line is on his neighbor's land, an indispensable element of adverse possession is wanting. In such a case the intent to claim title exist only upon the condition that the line acted upon is, in fact, the true line. The intention is not absolute, but provisional, and, consequently, the possession is not adverse. This rule recognizes the intentions as the essential element; thus where the owner of a city lot builds a house thereon, and unintentionally puts a wall a few inches over the division line between his and the adjoining lot, without any intention to assert any title thereto, and the adjoining owner is ignorant of the encroachment, the possession is not adverse. . . ." Corpus Juris, volume 2, page 139, says: "View That Possession without Intent to Claim Is Not Adverse. Statement of Rule. Nevertheless, according to the great weight of authority, where the occupation of the land is by a mere mistake and with no intention on the part of the occupant to claim as his own land which does not belong to him, but with the intention to claim only to the true line wherever it may be, the holding is not adverse. The theory on which these decisions proceed is that in cases of mistake as to the true line between adjoining lands the real test as to whether or not a title will be acquired by a holding for the period prescribed by the statute of limitations is the intention of the party holding beyond the true line. It is not merely the existence of a mistake but the presence or absence of the requisite intention to claim title that fixes the character of the entry and determines the question of disseizin. There must be an intention to claim title to all within a certain boundary, whether it eventually be the correct one or not." Applying the law to the facts, we have this situation. At or about the time the shortage in plaintiff's land was discovered, the defendant said to the plaintiff: "Let us wait for the cadastral survey, and if it is established by that survey that I am holding any part of your property I will return to you all of that portion which may be in excess of what appears in my title." The cadastral survey was later made from which it was found as a fact that the defendant was holding 1,635 square meters of plaintiff's land in excess of defendant's record title. The refusal of the defendant to abandon his claim to the plaintiff for the excess of the 1,635 square meters, which was found to exist by the cadastral survey, resulted in the commencement of this action. After 1910 the defendant's possession of the land in dispute could not be adverse to plaintiff's claim until after the cadastral survey was made, and the defendant had refused to abandon his claim for the excess. That important fact, having been established by the evidence of an impractical witness whose testimony is not disputed or denied, is conclusive of this case. Under such a state of facts, the defendant could not acquire title by prescription.

The judgment of the lower court is reversed, and one will be entered here in favor of the plaintiff and against the defendant in substance and to the possession of the land described in his complaint, without any damages, together with the costs of the action in this and the lower court. As to the improvements placed by the defendant on the land in dispute, it is declared that, in accordance with the provisions of article 361 of the Civil Code, the plaintiff has the right to appropriate them as his own upon payment of the compensation provided in this article, or to compel the defendant to pay him the price of the land. So ordered. Malcolm, Avancea, and Villamor, JJ., concur. Ostrand and Romualdez, JJ., took no part in this decision. Separate Opinions STREET, J., with whom concurs JOHNSON, J., dissenting: I am unable to agree with the majority of the court in this case, and as the point of law involved is of importance, I deem it my duty to set forth clearly the reasons for my dissent. The case depends largely upon a correct understanding of the facts in the case, though these are comparatively simple; and I shall therefore go over the main features of the case in my own way, even at the cost of repeating something already stated in the opinion of the court. It appears, then, that in 1903, and for many years prior thereto, one Ramon de Viademonte was owner of a tract of land containing an area of nearly 3 1/2 hectares in the district of Santa Ana, in the City of Manila, known as the Hacienda de Namayan, and lying between Lamayan street and the Pasig River. About the date mentioned Viademonte began selling portions of this tract of land to various purchasers. The first of these sales to be here noted was one made on October 12, 1903, to the defendant Adolfo Aenlle, consisting of a strip on the south side of said tract. In the deed to Aenlle the parcel then sold is described as follows: "Bounded on the north by lands pertaining to the Hacienda de Namayan of Don Ramon Martinez de Viademonte, from which it is taken; on the south by lands of Don Candelario de las Cajigas; on the east by the Pasig River; on the west by the Namayan street; measuring on the north 137 meters, on the south 16 meters, on the east 29 meters, and on the west 13 meters having an area of 2,194.77 square meters." Shortly after the preceding purchase had been made, Aenlle found that he had not acquired enough land to meet his requirements, and he therefore purchased from Viademonte an additional strip immediately adjacent and to the north of his previous purchase. In the deed conveying this second parcel the land conveyed is described as follows: "Bounded on the north by land pertaining to the Hacienda de Namayan of Don Ramon de Viademonte from which it is taken; on the east by the Pasig River; on the south by land of

Don Adolfo Aenlle y Santos; and on the west with Namayan street having an area of 1,000 square meters." At the time Aenlle acquired these lots a surveyor acting for Viademonte was directed to go upon the land and segregate the property which had been sold to Aenlle. Pursuant to these instructions this surveyor made a sketch of the property and placed stakes along the boundary lines. In order to mark out the boundary in a more permanent way, Viademonte's manager placed monuments where the surveyor had only set his spikes. Two of these monuments lie on the northern boundary of the second parcel, separating it from the land of which Viademonte remained the owner. As the two acquisitions are in immediate juxtaposition to each other Aenlle treated the two as constituting a single lot and planted low trees and shrubbery, forming a kind of fence, along the northern boundary between Lamayan street and Pasig River. He then constructed on the property a house for residential purposes and in said house has since lived. In addition to this the defendant planted various trees, especially mangos, upon the land; and from the day when he entered into possession in 1903 he has continuously exercised over the entire property all of the rights of ownership to the exclusion of all other persons. By referring to the deeds by which the defendant acquired the land above described, it will be seen that the land conveyed was intended to consist altogether of 3,194.77 square meters. But when the land of which Aenlle took possession in 1903 was accurately surveyed in January, 1919, the same was found to contain an area of some 4,957.29 square meters, thus showing an excess of 1,762.52 square meters over the area specified in the deeds. This lack of conformity between the area indicated in the defendant's deeds and the area of land which was actually assigned to him by Viademonte was undoubtedly due to an error on the part of the surveyor who surveyed the property in 1903 and indicated the boundaries of the land which was the subject of transfer. The defendant apparently assumed that the limits assigned to the land by the surveyor were correct, and he seems to have believed in good faith for twelve or fifteen years that the land occupied by him contained a total area of only 3,194.77 square meters. By referring to the second and last conveyance from Viademonte to Aenlle it will be seen that no fixed boundary along the north side of the lot conveyed is defined, it being merely stated that the land is "Bounded on the north by land pertaining to the Hacienda de Namayan of Don Ramon Martinez de Viademonte, from which it is taken." In other words there has never been any other boundary than that fixed by the agreement of the parties when Aenlle entered into possession. We now direct attention to the plaintiff's chain of title. In this connection it appears that in December, 1903, the same Viademonte sold to the Lara sisters another strip lying immediately north of the land which had been sold to Aenlle. In the deed to these purchasers the land conveyed is described as follows:

"Bounded on the north by the lands of Don Ramon Martinez de Viademonte; on the east by the Pasig River; on the south by the lands of Don Adolfo Aenlle y Santos; and on the west by

Lamayan street, of the said pueblo of Santa Ana, and containing a superficial area of 3,000 square meters." On January 9, 1904, the Lara sisters transferred the same parcel to the Casa Comision; and on February 15, 1906, the Casa Comision transferred it to the International Banking Corporation. On December 19, 1908, the International Banking Corporation transferred the same property to the plaintiff, Joseph N. Wolfson. On March 3, 1904, Viademonte sold still another strip of 2,000 square meters of the same tract to one Manuel Garcia, which lot was immediately adjacent to that which had been conveyed to the Lara sisters. On June 7, 1904, Manuel Garcia transferred the lot thus acquired by himself to Pedro Castillo, who in turn sold it to Luis Kiene. The said Kiene upon acquiring the parcel applied for and secured a Torrens title thereto By this cat the boundary between Kiene's lot and that which had been conveyed to the Lara sisters and later through various persons to the plaintiff Wolfson was definitely fixed, without the possibility of the future question concerning the proper location of that boundary. When the International Banking Corporation acquired the lot which had been sold by Viademonte to the Lara sisters, the plaintiff Wolfson was attorney for said corporation, and as such had charge of its large holdings in real estate. By this means the plaintiff was apprised of the existence of said lot, and he supposed of course that it in fact contained the full 3,000 square meters called for in the deeds. In February or March, 1910, however, the plaintiff employed a surveyor, Mr. Jose P. Katigbak, to make a survey of the property; and the fact was then revealed that the lot of which Wolfson had become owner contained only 1,365 square meters and not 3,000 square meters. In order to discover the reason for this shortage the plaintiff sought an interview with Aenlle, who assured him that his (Aenlle's) inclosure did not contain any more land than was called for in his deeds. In the course of this conversation Aenlle is reported to have said: "Let us wait for the cadastral survey, and if it comes out that I am holding any part of your property, i am going to return it to you everything over and in excess of what appears in my title." The plaintiff says that in this interview Aenlle suggested that the land compromising the shortage of which the plaintiff complained might possibly be found in the land on the other side of the plaintiff's lot over which Kiene had acquired a Torrens title. Acting upon this suggestion the plaintiff began investigations in that direction, and in a letter of May 11, 1911, he directed his attorney to take steps to vindicate his rights against the owner of the property then registered in the same of Kiene. This project was, however, abandoned; and instead of moving legal proceeding with respect to the registered parcel, the plaintiff bought Kiene out and then began operations against the defendant Aenlle. The first legal step taken consisted in a proceeding by the plaintiff to procure a Torrens title in his own name to the parcel which is now in controversy, but this was opposed by the defendant; and the judge presiding in the registration proceeding held that Aenlle had acquired a perfect title, either by purchase or prescription to all the land held by him. The present action was then instituted by the plaintiff to recover the property with damages for its detention. I submit that in the opinion written by Mr. Justice Johns together too much importance is attached to Aenlle's verbal promise, made fourteen years ago, to surrender to Wolfson any excess over the precise area specified in Aenlle's deeds. In the first place, considered in its

legal effects, that promise was not binding because made without consideration, and it cannot be said that it was supported by the consideration of forbearance on the part of Wolfson to molest the defendant. Wolfson did not so understand it, and years before the present action was brought he was litigating with Aenlle over the title to the property in a land registration proceeding. Secondly, the spoken words show on their face that the promise was made under a mistake of fact, and in the belief, then entertained by Aenlle, that he held only so much land as his deeds called for. Thirdly, the promise was not in writing, and would not have been binding if an action had been brought thereto. Lastly, if said promise be considered, as it should be, merely in the light of a revelation of the state of mind of Aenlle with reference to the character of his occupation, it merely shows that he believed in good faith that all of the land within his inclosure belonged to him by virtue of his purchases from Viademonte. The simple truth is that in all of his conversations with Wolfson, Aenlle asserted an adverse title to every foot of this land against Wolfson and all other persons. This is made apparent in the words quoted below taken from the testimony of the plaintiff himself. Being asked what conversation he had had with Aenlle on a certain occasion in connection with the land, the plaintiff replied: "The same as I have had a hundred times, I presume, with reference to his having my land and he denying it." More complete proof of denial of right in another could not well be presented. What has been said should serve to strip the case of its accidental features, leaving for discussion the simple question whether the occupation of this land by the defendant for seventeen years under a mistake belief as to the area inclosed was sufficient to confer a perspective title to the excess. Upon this point it is clear to me that the defendant has acquired such title, as was held, first, by the judge presiding in the Court of Land Registration; and, secondly, by the judge of First Instance who decided this case in the court below. In this connection it is well to remember that, under section 41 of the Code of Civil Procedure, ten years actual adverse occupation confers a perfect title "in whatever way such occupancy may have commenced or continued."

The principle which should, in my opinion, govern the case is well expressed by the author of the article on Adverse Possession in Corpus Juris, where it is said: "Where a person, acting under a mistake as to the true boundary line between his land and that of another, takes possession of land of another believing it to be his own, up to a mistaken line, claims title to it and so holds, the holding is adverse and, if continued for the requisite period, will give title by adverse possession. And the fact that on taking possession he had no intention of taking what did not belong to him, or claimed that he had no desire or intention to take any land belonging to the adjoining owner, or that he would have surrendered possession if he had known that the land in dispute was not within the calls of his deed, or that the owner of the record title was ignorant of the location of the true boundary line or of the fact that the land was his, or supposed that the adverse occupant intended to claim only what he actually owned, or the fact that both owners were mistaken as to the true boundary line, does not affect the operation of the rule. . . ." (2 C. J., 141)

A similar doctrine is stated in the article on Adverse Possession in Ruling Case Law, where we find the following proposition: "It is also a well-settled rule that where one in possession of land manifests his intention to claim the ownership thereof to a fixed visible or ascertained boundary line, his possession to such line will be deemed adverse, even though it was erroneously assumed to be the true line. . . ." (1 R. C. L., 733.) In the syllabus to Edwards vs. Fleming (83 Kan., 653; 33 L. R. A. [N. S.], 923), as reported in Lawyers' Reports Annotated, it is said: "The real test as to whether or not possession of real estate beyond the true boundary line will be held adverse is the intention with which the party takes and holds the possession. . . ." In the foot-note to the same case (at page 924) it is said: "The old idea that there could be no disseizin by mistake is now abandoned. And the courts are now agreed that an entry by mistake will not prevent an adverse possession. . . ." In Thornely vs. Andrews (88 Pac., 757), it appeared that in 1890 an owner of adjacent lots conveyed them to separate grantees; and the boundary between the lots was staked off on the ground. The grantees improved their separate lots to their common boundary, which was assumed to be correctly said out. It was held that the possession of each was adverse as to the other, and that after the period prescribed by the statute had passed, and the boundary was found to be erroneous, the mistake could not be rectified. That case is exactly similar to the one now before us. The same is true of Milligan vs. Fritts (226 Mo., 189). The rule stated in these authorities has more particular reference to the case where the line to which an occupant claims is fixed by his own act without the acquiescence of the other party in interest; and the doctrine must operate with still greater force in a case where, as here, the erroneous boundary was fixed by mutual agreement of the vendor and vendee. "Where the adjoining owners or claimants of land have agreed upon boundary lines, or have acquiesced therein for a sufficient length of time to warrant the inference of mutual consent thereto, the lines so fixed will blind the parties. . . ." (1 R. C. L., 733.) The passages cited by Mr. Justice Johns from Ruling Case Law and Corpus juris are in my opinion misapplied. the doctrine there stated contemplates the situation where there is a real boundary already determined by monuments or capable of being fixed by survey and where there is an accidental and unintentional occupation beyond such boundary, without intention on the part of the occupant to hold beyond the true limit. This has often occurred in the occupation of public domain by settlers in the United States. In such a situation it may be properly held that the mistaken occupation is not adverse. In the case before us the deed under which Aenlle claims fixes no definite boundary on the northern side of his lots; and at the time he took possession the boundary was located by mutual agreement of both seller and buyer. The judgment of the court in this case will have the effect of forcing Aenlle back not to a boundary already defined in Aenlle's deed but to a new boundary, now first created by the court, which is different from the boundary agreed upon by the parties to the contract.

Again, upon reference to the deed from Viademonte to the Lara sisters, under which the plaintiff claims, it will be seen that no definite southern boundary is there fixed. All that is said on this point is that the land which was the subject of the sale is bounded on the south

by the lands of Aenlle. This could only mean that the limit of the land then sold to the Lara sisters was the boundary which had been previously fixed as Aenlle's northern boundary; and it cannot be asserted that the plaintiff, or his predecessors, ever acquired title to a foot of the land in Aenlle's enclosure. In view of the fact that the lot sold to the Laras was still open on its north side by reason of the fact that Viademonte still owned the land there, it was most reasonable for Aenlle to suggest to Wolfson, as he did, that the latter should look to the north side of his lot to recover any shortage discovered in the area of his lot. In closing I wish to call attention to two anomalous results to which the decision in this case conducts us. The first in this: After Aenlle was placed in possession by Viademonte in 1903, the latter could at any time within ten years have maintained an action against Aenlle to fix the boundary along the right line, thereby correcting the error that had been made by Viademonte's surveyor. That right of action was barred in 1913; and yet the court, in this action, first begun in 1920, allows a stranger to the contract to maintain an action in every respect identical with that which Viademonte might once have maintained. The second is that if Aenlle's occupation had been an act of open piracy from the first, and instead of asserting his good faith, he had had the audacity to tell Wolfson after the period of prescription had passed that he knew of the mistake all along but was nevertheless resolved from the beginning to hold to the limit of his enclosure, his title would have been incontrovertibly good. When it comes to this, that the law will concede to the occupant in bad faith what an occupant in good faith cannot acquire, something must be wrong. Holder of torrens title, right of possession: [G.R. No. 125375. June 17, 2004.] SPOUSES ELPIDIO APOSTOL and AMELIA APOSTOL, petitioners, vs. COURT OF APPEALS and SPOUSES EMMANUEL CHUA and EDNA L. CHUA, respondents. DECISION CALLEJO, SR., J p: This is a petition for review of the Decision 1 of the Court of Appeals in CA-G.R. SP No. 38333 reversing the Decision, 2 on appeal, of the Regional Trial Court of Quezon City, Branch 215, in Civil Case No. Q-94-21698. The Antecedents On September 3, 1993, the respondents, Spouses Emmanuel and Edna Chua, filed a complaint for unlawful detainer against the petitioners, Spouses Elpidio and Amelia Apostol, in the Metropolitan Trial Court (MeTC) of Metro Manila, docketed as Civil Case No. 7660. The respondents alleged, inter alia, that they had contracted with the Spouses Paulo and Georgina Pascua for the purchase of a parcel of land. The petitioners, who were present during the negotiations, verbally assured the respondents that they would vacate the property within ten (10) days from the execution of the sale. The petitioners then acknowledged that their stay in the property was only upon the tolerance of its former owners. On June 7, 1993, the Spouses Pascua executed a Deed of Absolute Sale over the

property and the improvements thereon in favor of the respondents for P1,000,000. On the basis of the said deed, the respondents were issued Transfer Certificate of Title (TCT) No. 87610 over the property on June 8, 1993. Despite demands, however, the petitioners refused to vacate the property. The respondents prayed that, after due proceedings, judgment be rendered in their favor, thus: WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court that after a summary hearing, judgment be rendered in favor of the plaintiffs and against the defendants, as follows: 1.Ordering the defendants and all persons claiming under them to immediately vacate the above-mentioned parcel of land; 2.Ordering the defendants to pay the plaintiffs the sum of P5,000.00 per month from the filing of the complaint until they finally vacate and turn over completely the abovementioned parcel of land representing the reasonable compensation for the use and occupancy of the above-mentioned parcel of land; 3.Ordering the defendants to pay the plaintiffs the sum of P10,000.00 for and as attorney's fees, plus the sum of P1,000.00 appearance fee for every court attendance of plaintiffs' counsel; and 4.Ordering defendants to pay plaintiffs the costs of suit. PLAINTIFFS further pray for such other reliefs and remedies as may be deemed just and equitable in the premises. 3 In their answer with special and affirmative defenses and compulsory counterclaim, the respondents alleged, inter alia, that Luz B. Pascua was the owner of the parcel of land located in Quezon City covered by TCT No. 198936 with an area of 315 square meters. She sold a portion of the property, an area of 285.32 square meters, to the respondents on July 8, 1976 for P45,548 of which P15,548 was paid. On the same day, the parties executed a memorandum agreement covering the property, in which the respondents agreed that the balance of the purchase price would be paid in installments. Thereafter, a deed of absolute sale was executed in favor of the respondents over an unsegregated portion of the property, with an area of 29.68 square meters, for P7,350 and, later, a deed of confirmation of deed of absolute sale with waiver over the said property. On June 20, 1979, the respondents executed an Affidavit of Adverse Claim over the property, stating, inter alia, that they could not cause the registration of the said deeds because the owner's duplicate of TCT No. 198936 was in the possession of Teresita B. Jimenez, a former co-owner of the property. The respondents further alleged that Luz Pascua, in her letter to the Register of Deeds dated August 6, 1979, confirmed that she failed to turn over the owner's duplicate of TCT No. 198936 because the same was in the possession of Jimenez, who, in turn, gave it to Jose J. Burgos. Thereafter, on May 15, 1980, Luz Pascua filed a Complaint against the petitioners in the RTC of Quezon City for rescission and damages docketed as Civil Case No. 29895 but the same was dismissed on December 19, 1983 for lack of interest to prosecute. Paulo Pascua

filed a similar complaint against the petitioners in the RTC, docketed as Civil Case No. 88523, but the same was, likewise, dismissed. Finally, the petitioners alleged that the Spouses Pascua's possession of the property after the sale thereof to the respondents was by mere tolerance. In the meantime, the petitioners filed a complaint against the respondents, the Spouses Chua, the Spouses Pascua, and the Register of Deeds in the RTC of Quezon City, for annulment of deed of sale and TCT No. 86338, and for reconveyance with damages. The petitioners alleged, inter alia, that they had been in possession of the property since 1973; their adverse claim over the property was annotated on June 20, 1979 as Entry No. PE 8812; Luz Pascua died on December 2, 1984 but Paulo Pascua did not inherit the property from her because the same had already been sold to the respondents; Paulo Pascua executed a falsified affidavit for self-adjudication over the property on the basis of which he was able to secure, on May 20, 1993, TCT No. 86338. The petitioners prayed that, after due proceedings, judgment be rendered in their favor, thus: WHEREFORE, premises considered, it is respectfully prayed that judgment be rendered as follows: 1.Nullifying the deed of sale executed by Paulo Pascua in favor of Edna Chua, marked as Annex "G" hereof and TCT No. 87610 (Annex "H") in the name of Edna L. Chua; including TCT No. 86338 RT-432 (Annex "F") in the name of Paulo Pascua; and in the alternative to reconvey the aforesaid property to herein plaintiffs; 2.Ordering the Register of Deeds of Quezon City to cancel TCT Nos. 87610 and 86338; 3.Sentencing defendants to pay plaintiffs: a)P100,000 as actual and consequential damages; b)P50,000 as moral damages; c)Exemplary damages, P50,000; d)P15,000 as attorney's fee; e)Cost; and, f)Praying for other reliefs and remedies, equitable and just under the premises. 4 On February 17, 1994, the MeTC issued an Order in Civil Case No. 7660 defining the issues, thus: 1.Whether or not the complaint is for Forcible Entry or Unlawful Detainer; 2.Who is entitled to the lawful possession of the subject property;

3.Whether this case has to be suspended in view of the filing of an action for Annulment of Title in the Regional Trial Court of Quezon City; and 4.Whether the plaintiffs can lawfully eject the defendants from the premises. 5 The MeTC rendered judgment in favor of the respondents on August 11, 1994. The decretal portion of the decision reads: WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of plaintiffs and against defendants by ordering as follows: 1)Defendants and all persons claiming rights under them to vacate the premises denominated as No. 39, Visayas Ave., Project 6, Diliman, Quezon City, and to surrender the peaceful possession thereof to plaintiffs; 2)Defendants to pay plaintiffs the sum of P5,000.00 per month representing the reasonable compensation for the use and occupancy of the premises from the time of formal demand until the possession of the premises shall have been fully restored to plaintiffs; 3)Defendants to pay plaintiffs the sum of P5,000.00 as attorney's fees; and 4)Defendants to pay the costs of this suit. aATESD SO ORDERED. 6 The MeTC ruled that having acquired the property from the Spouses Pascua, and being the registered owners of the property, the respondents are entitled to the possession thereof: The Court holds that plaintiffs are the ones entitled to the material or physical possession of the subject property. This is so because they have sufficiently established their title over the premises in question. They have shown that they are the registered owners of the subject premises located at No. 39 Visayas Avenue, Project 6, Diliman, Quezon City, as evidenced by Transfer Certificate of Title No. 87610 issued in their name by the Registry of Deeds of Quezon City, which property they acquired from its former registered owners, the Sps. Paulo and Georgiana (sic) Pascua. Hence, as an incident to their ownership over said property, plaintiffs are entitled to its possession. 7 The court also ruled that the proceedings were not suspended by the pendency of Civil Case No. Q-94-19352. The respondents appealed the decision to the RTC, which rendered judgment on April 15, 1996 in their favor, reversing the decision of the MeTC and ordering the dismissal of the complaint. The RTC anchored its decision on the following findings: It is the contention of the plaintiff that as registered owners of the subject lot, they have the right to take possession thereof and eject defendants from the premises. On the other hand, it is the contention of the defendants that they are the rightful owners of the land and have

been in possession thereon from the time they acquired the land from the real owner Luz B. Pascua. In ejectment cases, the only issue to be determined by the Court is the fact of prior physical and material possession over the subject property. Under Article 538 of the New Civil Code (NCC), it is provided that: "Article 538.Possession as a fact cannot be recognized at the same time in two different personalities except in cases of co-possession. Should a question arise regarding the fact of possession, the present possessor shall be preferred, if there are two possessors, the one longer in possession; if the dates of the possession are the same, the one who presents a title; and if all these conditions are equal, the thing shall be placed in judicial deposit pending determination of its possession or ownership through proper proceedings."

In this case, defendants were able to establish the fact that they have been in physical and material possession of the subject premises from the time they purchased the same from Luz B. Pascua on July 8, 1976. Defendants, therefore, are in possession of the property in the concept of an owner, and under the law, a possessor in the concept of an owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or prove it (Art. 541, NCC). Moreover, it is important to note that defendants purchased the subject premises from Luz B. Pascua on July 8, 1976 while plaintiffs purchased the same from Paulo Pascua only on June 4, 1993, a much later date. This is shown by the Deed of Absolute Sale executed by Luz B. Pascua in favor of defendants on July 8, 1976 (Annex 1); Deed of Absolute Sale of Unsegregated Portion of Land executed by Luz B. Pascua and Paulo Pascua in favor of the defendants on July 14, 1977 (Annex 2) and a Deed of Confirmation of Deed of Absolute Sale of a Parcel of Land with Waiver dated July 14, 1977 executed by Paulo Pascua (Annex 3). These documents put in doubtful validity the subsequent sale of the same land by Paulo Pascua in favor of the plaintiffs. Paulo Pascua had no right, therefore, to transfer ownership of the subject land to plaintiffs because, Luz B. Pascua, the original owner, had already sold the same land to defendants during her lifetime. And upon the death of Luz B. Pascua, Paulo Pascua had no right to adjudicate the subject lot to himself because he even confirmed such sale and waived any rights, interest and participation over the subject residential house and lot in a Deed of Confirmation of Absolute Sale with Waiver dated July 14, 1977 (Annex 3). It bears emphasis, however, that the validity of the respective titles of the parties is now the subject of controversy in Civil Case No. Q-94-19352 pending before the Regional Trial Court of Quezon City, Branch 102. From the foregoing, it is clear that defendants have priority of right and possession over the subject property and have, therefore, the right to be respected in their present possession thereon. 8 The petitioners filed a petition for review with the Court of Appeals, which later rendered judgment reversing the decision of the RTC and reinstated the decision of the MeTC. The CA

held that in ruling against the petitioners, who were the registered owners of the property, the RTC thereby violated the prescription against the collateral attack of a torrens title. The Present Petition In the present recourse, the petitioners, the Spouses Apostol, assert the following: (a) their possession of the property since 1976 preceded the sale of the property to the private respondents; (b) the respondents were purchasers of the property in bad faith; and, (c) in declaring that the petitioners had priority of possession of the property on the sale thereof by Luz Pascua and Paulo Pascua way back in 1976 and 1977, the RTC did not thereby collaterally attack the title of the respondents over the property. According to the petitioners, an inflexible adherence to the proscription against a collateral attack of a torrens title may result to gross injustice. In their comment on the petition, the respondents assert that contrary to the petitioners' claim, the petition raises questions of facts. The respondents also aver that the CA did not commit any error in its decision. The petitioners contend that the respondents themselves admitted in their complaint before the MeTC that they knew that the petitioners were in actual possession of the property even before they purchased the same. Hence, the petitioners argue, the respondents were purchasers in bad faith. The petitioners also point out that since they purchased the property before the respondents, they cannot be ejected therefrom. Under Article 1544 of the Civil Code which, according to Justice Jose C. Vitug, is "self-operating," the sale of the property to them prevails over the sale in favor of the respondents. Thus, the sale in favor of the respondents is null and void; consequently, TCT No. 87610 issued in favor of the respondents is, likewise, null and void. Finally, the petitioners aver that they may very well have become the owners of the property by prescription under Article 1134 of the New Civil Code. For its part, the CA held as follows: The respondent court erred in dismissing the action for unlawful detainer on the sole ground that the private respondents are possessors in the concept of an owner of the subject premises and cannot, thus, be dispossessed of the same. The subject property is registered under the Torrens System in the names of the petitioners whose title to the property is presumed legal and cannot be collaterally attacked, much less in an action for unlawful detainer. No title to registered land in derogation of the title of the registered owner may be acquired by prescription or adverse possession (Caina vs. Court of Appeals, 239 SCRA 256; Odsigue vs. Court of Appeals, 233 SCRA 615; Calang vs. Register of Deeds of Quezon City, 231 SCRA 257). The presumption of ownership granted by law to a possessor in the concept of an owner under Article 541 is only prima facie and cannot prevail over a valid title registered under the Torrens System. 9 The Ruling of the Court

We agree with the Court of Appeals. In Pangilinan v. Aguilar, 10 we held that it is an accepted rule that a person who has a torrens title over the property, such as the respondents, is entitled to the possession thereof. We reiterated our ruling in the Pangilinan Case in Javelosa v. Court of Appeals, 11 and declared that the registered owners are entitled to the possession of the property covered by the said title from the time such title was issued in their favor. Moreover, the fact that the respondents were never in prior physical possession of the subject land is of no moment, as prior physical possession is necessary only in forcible entry cases. The petitioners claim that, as alleged in their answer to the complaint for unlawful detainer, the respondents' title over the property is a nullity; hence, the complaint for unlawful detainer against the petitioners should be dismissed for lack of merit. Such allegation does not help their present recourse. Under Section 48 of Presidential Decree No. 1529, a certificate of title shall not be subject to collateral attack. It cannot be altered, modified or cancelled, except in a direct proceeding for that purpose in accordance with law. The issue of the validity of the title of the respondents can only be assailed in an action expressly instituted for that purpose. 12 Whether or not the petitioners have the right to claim ownership over the property is beyond the power of the court a quo to determine in an action for unlawful detainer. 13 The following issues are now the subject of Civil Case No. Q-94-19352 before the RTC of Quezon City: (1) whether the respondents were buyers in bad faith; (2) the validity of the deed of absolute sale over the property executed by the Spouses Pascua in favor of the respondents; and (3) the validity of the title issued to and in the names of the respondents. Hence, the Court shall no longer delve into such issues. IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The assailed decision of the Court of Appeals in CA-G.R. SP No. 38333 is AFFIRMED. Costs against the petitioners. SO ORDERED. [G.R. No. 162028. July 14, 2008.] DR. LORNA VILLA, petitioner, vs. HEIRS OF ENRIQUE ALTAVAS, namely: Enrique Altavas II, Erlinda Liboro and Maria A. de Jesus, respondents. DECISION AUSTRIA-MARTINEZ, J p: Assailed in the present Petition for Review on Certiorari under Rule 45 of the Rules of Court is the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 63123 promulgated on January 31, 2003 which affirmed the Orders dated December 13, 2000 2 and January 19, 2001 3 of the Regional Trial Court (RTC) of Roxas City, Branch 16; and the CA Resolution 4 of January 14, 2004, denying herein petitioner's Motion for Reconsideration. aTHASC The facts of the case are as follows:

On November 26, 1997, Enrique Altavas II, Erlinda Liboro and Maria de Jesus (respondents), in their capacity as heirs of Enrique Altavas (Enrique), filed a Complaint 5 for ejectment with the 2nd Municipal Circuit Trial Court (MCTC) of Pontevedra-Panay in the Province of Capiz against Dr. Lorna Villa (petitioner) together with Virginia Bermejo (Virginia) and Rolito Roxas (Roxas), alleging that respondents are heirs of the deceased Enrique, the registered owner of two parcels of fishpond designated as Lot No. 2816 and Lot No. 2817, who have been in actual possession through their administrator, overseer and representative, the late councilor Mussolini C. Bermejo, the husband of Virgina; that on January 31, 1994, after the death of Mussolini, Virgina took over the possession of the premises in question without the consent or permission of respondents; that Virginia leased in favor of petitioner a portion of about five hectares of Lot No. 2816, without any right whatsoever to do so; that on October 21, 1997, respondents through counsel formally sent demand letters to Virginia and petitioner to vacate the respective portions occupied by them; and that despite said demands, they persisted in continuing their illegal possession of the premises. Petitioner and Virginia filed their respective Answers to the Complaint. On her part, petitioner contended that: she is in lawful possession of the area possessed and developed by her as lessee; she is a possessor in good faith; the subject lot was leased to her by a person who was in actual possession thereof, and who represented herself as the owner of the said lot; and respondents have no cause of action against her, as they (respondents) are no longer the owners of the said lots, it appearing that the same were already conveyed by the original owners during their lifetime; and the complaint was premature, as there was still a pending case in court involving the ownership of the properties in question. 6 After preliminary conference and submission by the parties of their respective affidavits, evidence and position papers, the MCTC rendered a Decision with the following dispositive portion: IASTDE WHEREFORE, in the light of the foregoing circumstances, judgment is hereby rendered in favor of plaintiffs [respondents], declaring them as rightful owners and legal possessors of Lot. Nos. 2816 and 2817 portion of which are possessed by defendants [petitioner and Virginia], ordering the following: 1.a)To defendant Virginia Bermejo to vacate the premises of portion of Lot no. 2817 presently occupied by her, surrendering peacefully its possession to plaintiffs; b)Payment of Ten Thousand (P10,000.00) Pesos per hectare a year as compensation to plaintiff's deprivation of possession of the property reckoned from October 21, 1997 until possession is returned; c)The payment of attorney's fees in the amount of Fifty Thousand (P50,000.00) Pesos and costs of suit. 2.To defendant Lorna Villa to vacate the premises over portion of Lot No. 2817 she occupies with an area of five (5) hectares and to peacefully return its possession to plaintiffs, as well

as pay the amount of Ten Thousand (10,000.00) Pesos per hectare a year reckoned from the date of demand until possession is returned to plaintiffs; xxx xxx xxx c)Payment of attorney's fees in the amount of Fifty Thousand (P50,000.00) Pesos and costs of suit. SO DECIDED. 7 Aggrieved by the Decision of the MCTC, petitioner and Virginia filed an appeal with the RTC of Roxas City. SDIACc However, in its Order dated December 13, 2000, the RTC dismissed the appeal of petitioner pursuant to Section 7, Rule 40 of the Rules of Court for her failure to file her appeal memorandum. Virginia's appeal, on the other hand, was dismissed because of her withdrawal of her appeal. Petitioner filed a Motion for Reconsideration but the same was denied by the RTC in its Order of January 19, 2001. Petitioner then filed a special civil action for certiorari with the CA contending that the RTC committed grave abuse of discretion in dismissing her appeal on technical ground. On January 31, 2003, the CA promulgated its presently assailed Decision dismissing the petition for certiorari and affirming the December 13, 2000 and January 19, 2001 Orders of the RTC. Petitioner moved for reconsideration but her motion was denied by the CA in its Resolution dated January 14, 2004. Hence, the present petition raising the following issues: I WHETHER OR NOT THE SUBMISSION OF POSITION PAPER WILL SUFFICE TO SUPPORT A DECISION IN FAVOR OF RESPONDENTS IN THE EJECTMENT CASE? II WHETHER OR NOT RESPONDENTS WHO DID NOT HAVE ACTUAL, PHYSICAL POSSESSION OF THE LOT IN QUESTION FOR YEARS RECOVER POSSESSION THEREOF THROUGH THE SUMMARY REMEDY OF EJECTMENT? WILL AN ACTION FOR EJECTMENT LIE AGAINST PETITIONER? STEacI III

WHETHER OR NOT THE AWARD OF ATTORNEY'S FEES EXCEEDING THE AMOUNT OF P20,000.00 LEGAL? IV WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE RTC, BR. 16. 8 Petitioner contends that respondents failed to comply with the provisions of Section 10, Rule 70 of the Rules of Court requiring the submission of affidavits of witnesses and other evidence on the factual issues of the case; that the complaint, the exhibits marked by respondents and their position paper do not constitute preponderance of evidence in their favor, especially in view of the fact that the allegations in respondents' complaint were controverted by petitioner; and that since there is no sufficient evidence to support respondents' complaint, the MCTC committed error when it rendered judgment in favor of respondents. Petitioner also avers that respondents failed to establish that they are in actual possession of the lots in question; that, in fact, they have not proven that they are the owners of the said properties; and that petitioner has a valid contract of lease with Virginia which entitles her to the possession of Lot No. 2817. Petitioner argues that respondents have no cause of action against her as they are not lessors, vendors or persons with whom petitioner has a contract, express or implied and that respondents failed to aver facts constitutive of either forcible entry or unlawful detainer. As such, the MCTC did not acquire jurisdiction over the case. ICHDca Petitioner further contends that the MCTC erred in awarding attorney's fees exceeding the amount of P20,000.00 because the Rules on Summary Procedure clearly provide that in ejectment cases, irrespective of the amount of damages or unpaid rentals sought to be recovered, the attorney's fees to be awarded should not exceed P20,000.00. Lastly, petitioner avers that the CA erred in ruling that the RTC did not commit grave abuse of discretion in denying petitioner's appeal considering that the latter's failure to submit her appeal memorandum on time was due to a fortuitous event. Petitioner cites jurisprudence holding that technical rules should be liberally construed in favor of the parties so as not to frustrate substantial justice or bar vindication of a legitimate grievance. Respondents counter that the Decision of the MCTC is based on the titles over the disputed lots which they presented in evidence; and that the award of damages is supported by the stipulations in the Lease Contract entered into between petitioner and Virginia. Respondents assert that the findings of fact by lower courts are not subject to review by this Court. Moreover, the findings of fact by the MCTC and the CA are based on stipulations of facts made by the parties as contained in the Pre-Trial Order of the MCTC dated September 10, 1999 and on the parties' admissions in their respective pleadings. The petition is unmeritorious.

However, certain clarification must first be made. While respondents in their Complaint filed with the RTC refer to Lot No. 2816, which is allegedly occupied by herein petitioner, the MCTC and the CA, in their respective Decisions, found that the disputed property occupied by petitioner is Lot No. 2817. Respondents never questioned this finding in any of their pleadings in the present petition. Hence, insofar as the Court is concerned, the subject property is Lot No. 2817. aESIDH The Court will resolve the last issue ahead of the first three issues. The Court finds that the CA did not err in ruling that the RTC did not commit grave abuse of discretion when it denied petitioner's appeal for her failure to timely file her appeal memorandum. Section 7 (b), Rule 40 of the Rules of Court provides: Sec. 7.Procedure in the Regional Trial Court. . . . (b)Within fifteen (15) days from such notice, it shall be the duty of the appellant to submit a memorandum which shall briefly discuss the errors imputed to the lower court, a copy of which shall be furnished by him to the adverse party. Within fifteen (15) days from receipt of the appellant's memorandum, the appellee may file his memorandum. Failure of the appellant to file a memorandum shall be a ground for dismissal of the appeal. (Emphasis supplied) ADCSEa Rules of procedure do not exist for the convenience of the litigants. 9 These rules are established to provide order to and enhance the efficiency of our judicial system. 10 They are not to be trifled with lightly or overlooked by the mere expedience of invoking "substantial justice". 11 In a long line of decisions, this Court has repeatedly held that, while the rules of procedure are liberally construed, the provisions on reglementary periods are strictly applied, indispensable as they are to the prevention of needless delays, and are necessary to the orderly and speedy discharge of judicial business. 12 The same is true with respect to the rules on the manner of and periods for perfecting appeals. 13

In Enriquez v. Court of Appeals, 14 the Court further elucidated on the meaning and consequence of the provisions of Section 7 (b), Rule 40 of the Rules of Court, to wit: Rule 40, Section 7 (b) provides that, "it shall be the duty of the appellant to submit a memorandum" and failure to do so "shall be a ground for dismissal of the appeal". The use of the word "shall" in a statute or rule expresses what is mandatory and compulsory. Further, the Rule imposes upon an appellant the "duty" to submit his memorandum. A duty is a "legal or moral obligation, mandatory act, responsibility, charge, requirement, trust, chore, function, commission, debt, liability, assignment, role, pledge, dictate, office, (and) engagement". Thus, under the express mandate of said Rule, the appellant is duty-bound to submit his memorandum on appeal. Such submission is not a matter of discretion on his part. His failure to comply with this mandate or to perform said duty will compel the RTC to dismiss his appeal.

In rules of procedure, an act which is jurisdictional, or of the essence of the proceedings, or is prescribed for the protection or benefit of the party affected is mandatory. As private respondent points out, in appeals from inferior courts to the RTC, the appellant's brief is mandatory for the assignment of errors is vital to the decision of the appeal on the merits. This is because on appeal only errors specifically assigned and properly argued in the brief or memorandum will be considered, except those affecting jurisdiction over the subject matter as well as plain and clerical errors. Otherwise stated, an appellate court has no power to resolve an unassigned error, which does not affect the court's jurisdiction over the subject matter, save for a plain or clerical error. CHIEDS It is true that the Rules should be interpreted so as to give litigants ample opportunity to prove their respective claims and that a possible denial of substantial justice due to legal technicalities should be avoided. But it is equally true that an appeal being a purely statutory right, an appealing party must strictly comply with the requisites laid down in the Rules of Court. In other words, he who seeks to avail of the right to appeal must play by the rules. This the petitioner failed to do when she did not submit her memorandum of appeal in Civil Case No. 12044 as required by Rule 40, Section 7 of the 1997 Rules of Civil Procedure. That she lost her case is not the trial court's fault but her own. 15 The aforequoted ruling of the Court was reiterated in the more recent case of Gonzales v. Gonzales. 16 ECSHAD In the instant case, upon motion of petitioner, she was granted by the RTC an additional 45 days, within which to file the appeal memorandum, with a warning that the period is nonextendible. The last day for filing the memorandum is December 8, 2000. The Court is not persuaded by petitioner's contention that because of a typhoon that hit Roxas City, her counsel was not able to go to work on December 7, 2000 and finish the preparation of her memorandum. In the first place, the 45-day extension given to petitioner was an ample period for her counsel to prepare the required memorandum, such that the failure of the latter to go to work on December 7, 2000 was not a sufficient justification for the RTC to grant another extension, especially in light of the warning that the 45-day period is nonextendible. Secondly, petitioner's counsel was already able to go to work on December 8, 2000 and, instead of filing a motion for extension, she should have finished the preparation of the memorandum. She had until the closing of government offices on that day to finish and file the said memorandum. Yet, she failed to do so. The Court is also not persuaded by petitioner's contention that her failure to submit her appeal memorandum was because her counsel also had to prepare a memorandum required by this Court in another case which was due for submission on December 10, 2000. Petitioner's counsel should have prioritized the preparation of the memorandum required by the RTC because of its earlier deadline. Clearly, petitioner's counsel is guilty of simple negligence. Settled is the rule that the negligence of counsel binds the client. 17 This is based on the rule that any act performed by a lawyer within the scope of his general or implied authority is regarded as an act of his client. 18 Consequently, the mistake or negligence of petitioners' counsel may result in the rendition of an unfavorable judgment against them. 19 It is true that there are recognized exceptions to this rule, as in cases where reckless or gross negligence of counsel deprives

the client of due process of law, or when its application results in the outright deprivation of one's property through a technicality. 20 However, none of these exceptions have been shown to be present in the instant case. Hence, the negligence of her counsel binds petitioner, and she cannot insist that the principle of liberal interpretation of the rules of procedure be applied to her case. cCAIDS In any event, petitioner's claim over the subject property has no leg to stand on. With respect to the first and second issues, the CA sustained the following findings of the MCTC, to wit: that respondents' predecessor, Enrique Altavas, was not divested of his ownership of the subject lots; that the titles over the subject properties remain in his name; that, not being the owner or administrator of the said lots, Virginia has no right to enter into any contract for the lease of the said properties; and that petitioner's possession of portions of the disputed properties is merely upon tolerance of respondents. Settled is the rule that the trial court's findings of fact, especially when affirmed by the CA, are generally binding and conclusive upon this Court. 21 There are recognized exceptions to this rule, among which are: (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific evidence on which the factual findings are based; (7) the finding of absence of facts is contradicted by the presence of evidence on record; (8) the findings of the CA are contrary to the findings of the trial court; (9) the CA manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a different conclusion; (10) the findings of the CA are beyond the issues of the case; and (11) such findings are contrary to the admissions of both parties. 22 However, petitioner failed to show that any of the exceptions is present in the instant case to warrant a review of the findings of fact of the lower courts. As to respondents' ownership and right of possession of the subject properties, records show that the MCTC based its Decision not only on the Position Paper of respondents but also on the pieces of evidence submitted by them. Respondents attached, as annexes to their Complaint, the Original Certificates of Title Nos. RO-4326 and RO-4327 in the name of Enrique, covering Lot Nos. 2816 and 2817, respectively, as evidence of their ownership and right to possess the disputed properties. Moreover, being a mere lessee, petitioner steps into the shoes of her lessor, Virginia. However, Virginia's claim of ownership was not sustained by the MCTC, which instead found that she was not the owner of and had no right to possess the disputed property or to transfer possession of the same, through lease, in favor of another person. Virginia later withdrew her appeal filed with the RTC. By reason of such withdrawal, she is bound by the findings of the MCTC. The third issue raised by petitioner is misplaced. Only Roxas and Virginia, co-defendants of petitioner, were ordered by the MCTC to pay attorney's fees in the amount of P50,000.00. Both appealed the MCTC Decision. However, their respective appeals were dismissed by the RTC Roxas's, for failure to file his appeal memorandum; and Virginia's, because of her subsequent withdrawal of her appeal.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated January 31, 2003 and its Resolution of January 14, 2004 in CA-G.R. SP No. 63123 are AFFIRMED. ECSHID Double costs against petitioner. SO ORDERED. Just title, its definition Possessor in good faith, fruits Cases: [G.R. No. L-32974. July 30, 1979.] BARTOLOME ORTIZ, petitioner, vs. HON. UNION C. KAYANAN, in his capacity as Judge of the Court of First Instance of Quezon, Branch IV; ELEUTERIO ZAMORA, QUIRINO COMINTAN, VICENTE FERRO, AND GREGORIO PAMISARAN, respondents. Salonga, Ordoez, Yap, Sicat & Associates and Salvador, Ulgado & Carbon for petitioner. Jose A. Cusi for private respondents. DECISION ANTONIO, J p: Petition for Certiorari and Prohibition with Preliminary Injunction to nullify the Order of respondent Judge directing the execution of the final judgment in Civil Case No. C-90, entitled "Bartolome Ortiz vs. Secretary of Agriculture and Natural Resources, et al.," and the Writ of Execution issued to implement said Order, allegedly for being inconsistent with the Judgment sought to be enforced. LLpr Civil Case No. C-90 was filed by Bartolome Ortiz who sought the review and/or annulment of the decision of the Secretary of Agriculture and Natural Resources, giving preference to the sales applications of private respondents Quirino Comintan and Eleuterio Zamora over Lot No. 5785, PLS-45, located at Barrio Cabuluan, Calauag, Quezon. I The factual background of the case, as found by respondent Court, is as follows: ". . . The lot in controversy was formerly the subject of Homestead Application No. 122417 of Martin Dolorico II, plaintiff's ward who died on August 20, 1931; that since then it was plaintiff who continued the cultivation and possession of the property, without however filing any application to acquire title thereon; that in the Homestead Application No. 122417, Martin Dolorico II named his uncle, Martin Dolorico I as his heir and successor in interest, so that in 1951 Martin Dolorico I executed an affidavit relinquishing his rights over the property

in favor of defendants Quirino Comintan and Eleuterio Zamora, his grandson and son-in-law, respectively, and requested the Director of Lands to cancel the homestead application; that on the strength of the affidavit, Homestead Application No. 122417 was cancelled and thereafter, defendants Comintan and Zamora filed their respective sales applications Nos. 8433 and 9258; that plaintiff filed his protest on November 26, 1951 alleging that he should be given preference to purchase the lot inasmuch as he is the actual occupant and has been in continuous possession of the same since 1931; and inspite of plaintiff's opposition, 'Portion A' of the property was sold at public auction wherein defendant Comintan was the only bidder; that on June 8, 1957, investigation was conducted on plaintiff's protest by Assistant Public Lands Inspector Serapion Bauzon who submitted his report to the Regional Land Officer, and who in turn rendered a decision on April 9, 1958, dismissing plaintiff's claim and giving due course to defendants' sales applications on the ground that the relinquishment of the homestead rights of Martin Dolorico I in favor of Comintan and Zamora is proper, the former having been designated as successor in interest of the original homestead applicant and that because plaintiff failed to participate in the public auction, he is forever barred to claim the property; that plaintiff filed a motion for reconsideration of this decision which was denied by the Director of Lands in his order dated June 10, 1959; that finally, on appeal to the Secretary of Agriculture and Natural Resources, the decision rendered by the Regional Land Officer was affirmed in toto." 1 On March 22, 1966, respondent Court rendered judgment in the afore-mentioned civil case, the dispositive portion of which reads as follows: "IN VIEW OF THE FOREGOING CONSIDERATIONS, judgment is hereby rendered awarding Lot No. 5785-A of PLS-45, (Calauag Public Land Subdivision) one-half portion of the property in litigation located at Bo. Cabuluan, Calauag, Quezon in favor of defendant QUIRINO COMINTAN, being the successful bidder in the public auction conducted by the Bureau of Lands on April 18, 1955, and hereby giving due course to the Sales Application No. 9258 of defendant Eleuterio Zamora over the other half, Lot No. 5785-B of PLS-45, Calauag, without prejudice to the right of plaintiff BARTOLOME ORTIZ to participate in the public bidding of the same to be announced by the Bureau of Lands, Manila. However, should plaintiff Bartolome Ortiz be not declared the successful bidder thereof defendants Quirino Comintan and Eleuterio Zamora are ordered to reimburse jointly said plaintiff the improvements he has introduced on the whole property in the amount of THIRTEEN THOUSAND SIX HUNDRED THIRTY-TWO (P13,632.00) PESOS, the latter having the right to retain the property until after he has been fully paid therefor, without interest since he enjoys the fruits of the property in question, with prejudice and with costs against the plaintiff." 2 Plaintiff appealed the decision to the Court of Appeals. Two (2) years after the rendition of the judgment by the court a quo, while the case was pending appeal and upon petition of private respondents Quirino Comintan and Eleuterio Zamora, respondent Court appointed respondent Vicente Ferro, Clerk of Court, as Receiver to collect tolls on a portion of the property used as a diversion road. On August 19, 1969, the Court of Appeals issued a Resolution annulling the Order appointing the Receiver. Subsequently, on February 19, 1970, the Appellate Court affirmed the decision of the trial court. A petition for review on certiorari of the decision of the Court of Appeals was denied by this Court on April 6, 1970. At this point, private respondents filed a petition for

appointment of a new receiver with the court a quo. This petition was granted and the receiver was reappointed. Petitioner sought the annulment of this Order with the Court of Appeals, but said Court ruled that its decision had already become final and that the records of the case were to be remanded to the trial court. LLpr Not satisfied with such denial, petitioner filed a petition for certiorari, prohibition and mandamus with preliminary injunction before this Court, 3 praying for the annulment of the Order reappointing the Receiver. On July 13, 1970, the petition was dismissed by this Court on the ground of insufficient showing of grave abuse of discretion. II The judgment having become final and executory private respondents filed a motion for the execution of the same, praying as follows: "WHEREFORE, it is respectfully prayed of this Honorable Court to order the issuance of a writ of execution in accordance with the judgment of this Honorable Court, confirmed by the Court of Appeals and the Supreme Court, commanding any lawful officer to deliver to defendants Comintan and Zamora the land subject of the decision in this case but allowing defendants to file a bond in such amount as this Honorable Court may fix, in lieu of the P13,632.00 required to be paid to plaintiff, conditioned that after the accounting of the tools collected by plaintiff, there is still an amount due and payable to said plaintiff, then if such amount is not paid on demand, including the legal interests, said bond shall be held answerable. "Ordering further the plaintiff to render an accounting of the tolls he collected from March of 1967 to December 31, 1968 and from September 1969 to March 31, 1970, and deliver said tolls collected to the receiver and if judgment is already executed, then to Quirino Comintan and Eleuterio Zamora; and, "Finally, to condemn plaintiff to pay moral damages for withholding the tools which belong to your movant in an amount this Court may deem just in the premises." 4 Acting upon the foregoing motion, respondent Judge issued an Order, dated September 23, 1970, stating, among others, the following: "The records further disclosed that from March 1967 to December 31, 1968, plaintiff Bartolome Ortiz collected tolls on a portion of the property in question wherein he has not introduced any improvement particularly on Lot No. 5785-A; PLS-45 awarded to defendant Quirino Comintan, thru which vehicular traffic was detoured or diverted, and again from September 1969 to March 31, 1970, the plaintiff resumed the collection of tools on the same portion without rendering any accounting on said tolls to the Receiver, who was reappointed after submitting the required bond and specifically authorized only to collect tolls leaving the harvesting of the improvements to the plaintiff. xxxxxxxxx

"In virtue of the findings of this Court as contained in the dispositive portion of its decision, the defendants are jointly obligated to pay the plaintiff in the amount of P13,632.00 as reasonable value of the improvements he introduced on the whole property in question, and that he has the right of retention until fully paid. It can be gleaned from the motion of the defendants that if plaintiff submits an accounting of the tolls he collected during the periods above alluded to, their damages of about P25,000.00 can more than offset their obligation of P13,362.00 in favor of the plaintiff, thereafter the possession of the land he delivered to the defendants since the decision of the Supreme Court has already become final and executory, but in the interregnum pending such accounting and recovery by the Receiver of the tolls collected by the plaintiff, the defendants pray that they allowed to put up a bond in lieu of the said P13,632.00 to answer for damages of the former, if any. "On the other hand, plaintiff contends in his opposition, admitting that the decision of the Supreme Court has become final and executory; (1) the offer of a bond in lieu of payment of P13,632.00 does not, and cannot, satisfy the condition imposed in the decision of this Court which was affirmed in toto; (2) the public sale of Portion 'B' of the land has still to take place as ordained before the decision could be executed; and, (3) that whatever sums plaintiff may derive from the property cannot be set off against what is due him for the improvements he made, for which he has to be reimbursed as ordered.

xxxxxxxxx "Let it be known that plaintiff does not dispute his having collected tolls during the periods from March 1967 to December 31, 1968 and from September 1969 to March 31, 1970. The Supreme Court affirmed the decision of this Court in its findings that said tolls belong to the defendants, considering that the same were collected on a portion of the land in question where the plaintiff did not introduce any improvement. The reimbursement to the plaintiff pertains only to the value of the improvements, like coconut trees and other plants which he introduced on the whole property. The tolls collected by the plaintiff on an unimproved portion naturally belong to the defendants, following the doctrine on accretion. Further, the reappointment of a Receiver by this Court was upheld by the Supreme Court when it denied the petition for certiorari filed by the plaintiff, bolstering the legal claim of defendants over said tolls. Thus, the decision of the Supreme Court rendered the decision of this Court retroactive from March 22, 1966 although pending appeal its implementation was suspended. It is our honest conviction, therefore, that the putting up of a bond by the defendants pending accounting of the tolls collected by the plaintiff is justified and will not prejudice anybody, but certainly would substantially satisfy the conditions imposed in the decision. However, insofar as the one-half portion 'B' of the property, the decision may he executed only after public sale by the Bureau of Lands shall be accomplished. "WHEREFORE, finding the Motion for Execution filed by the defendants to be meritorious, the same is granted; provided, however, that they put up a bond equal the adjudicated amount of P13,632.00 accruing in favor of the plaintiff, from a reputable or recognized bonding or surety company, conditioned that after an accounting of the tolls collected by the plaintiff should there be found out any balance due and payable to him after reckoning said obligation of P13,632.00 the bond shall be held answerable therefor." 5

Accordingly, a Writ of Execution was issued after private respondent Quirino Comintan had filed the required bond. The writ directed the Sheriff to enforce the decision of the Court, and stated, in part, the following: "But should there be found any amount collectible after accounting and deducting the amount of P13,632.00, you are hereby ordered that of the goods and chattels of Bartolome Ortiz of Bo. Kabuluan, Calauag, Quezon, be caused to be made any excess in the abovementioned amount together with your lawful fees and that you render same to defendant Quirino Comintan. If sufficient personal property cannot be found thereof to satisfy this execution and lawful fees thereon, then you are commanded that of the lands and buildings of the said BARTOLOME ORTIZ you make the said excess amount in the manner required by the Rules of Court, and make return of your proceedings within this Court within sixty (60) days from date of service. "You are also ordered to cause Bartolome Ortiz to vacate the property within fifteen (15) days after service thereof the defendant Quirino Comintan having filed the required bond in the amount of THIRTEEN THOUSAND SIX HUNDRED THIRTY-TWO (P13,632.00) PESOS." 6 On October 12, 1970, petitioner filed a Motion for Reconsideration of the aforesaid Order and Writ of Execution, alleging: "(a)That the respondent judge has no authority to place respondents in possession of the property; "(b)That the Supreme Court has never affirmed any decision of the trial court that tolls collected from the diversionary road on the property, which is public land, belong to said respondents; "(c)That to assess petitioner a P25,000.00 liability for damages is purely punitive imposition without factual or legal justification." The foregoing Motion for Reconsideration was denied by respondent Judge per Order dated November 18, 1970. Said Order states, in part: "It goes without saying that defendant Comintan is entitled to be placed in possession of Lot No. 5785-A of PLS-45 (Calauag Public Land Subdivision) and enjoyment of the tolls from March, 1967 to March, 1968 and from September, 1969 to March 31, 1970 which were received by plaintiff Bartolome Ortiz, collected from the property by reason of the diversion road where vehicular traffic was detoured. To defendant Comintan belongs the tolls thus collected from a portion of the land awarded to him used as a diversionary road by the doctrine of accretion and his right over the same is ipso jure, there being no need of any action to possess said addition. It is so because as consistently maintained by the Supreme Court, an applicant who has complied with all the terms and conditions which entitle him to a patent for a particular tract of public land, acquires a vested right therein and is to be regarded as equitable owner thereof so that even without a patent, a perfected homestead or sales application is a property right in the fullest sense, unaffected by the fact that the paramount title is still in the Government and no subsequent law can deprive him of that

vested right. The question of the actual damages suffered by defendant Comintan by reason of the unaccounted tolls received by plaintiff had already been fully discussed in the order of September 23, 1970 and the Court is honestly convinced and believes it to be proper and regular under the circumstances. "Incidentally, the Court stands to correct itself when in the same order, it directed the execution of the decision with respect to the one-half portion 'B' of the property only after the public sale by the Bureau of Lands, the same being an oversight, it appearing that the Sales Application of defendant Eleuterio Zamora had already been recognized and fully confirmed by the Supreme Court. "In view thereof, finding the motion filed by plaintiff to be without merit, the Court hereby denies the same and the order of September 23, 1970 shall remain in full force subject to the amendment that the execution of the decision with respect to the one-half portion 'B' shall not be conditioned to the public sale by the Bureau of Lands. "SO ORDERED." 7 III Petitioner thus filed the instant petition, contending that in having issued the Order and Writ of Execution, respondent Court "acted without or in excess of jurisdiction, and/or with grave abuse of discretion, because the said order and writ in effect vary the terms of the judgment they purportedly seek to enforce." He argued that since said judgment declared the petitioner a possessor in good faith, he is entitled to the payment of the value of the improvements introduced by him on the whole property, with right to retain the land until he has been fully paid such value. He likewise averred that no payment for improvements has been made and, instead, a bond therefor had been filed by defendants (private respondents), which, according to petitioner, is not the payment envisaged in the decision which would entitle private respondents to the possession of the property. Furthermore, with respect to portion "B", petitioner alleges that, under the decision, he has the right to retain the same until after he has participated and lost in the public bidding of the land to be conducted by the Bureau of Lands. It is claimed that it is only in the event that he loses in the bidding that he can be legally dispossessed thereof. cdll It is the position of petitioner that all the fruits of the property, including the tolls collected by him from the passing vehicles, which according to the trial court amounts to P25,000.00, belongs to petitioner and not to defendant/private respondent Quirino Comintan, in accordance with the decision itself, which decreed that the fruits of the property shall be in lieu of interest on the amount to be paid to petitioner as reimbursement for improvements. Any contrary opinion, in his view, would be tantamount to an amendment of a decision which has long become final and executory and, therefore, cannot be lawfully done. Petitioner, therefore, prayed that (1) a Writ of Preliminary Injunction be issued enjoining the enforcement of the Orders of September 23, 1970 and November 18, 1970, and the Writ of Execution issued thereto, or restoring to petitioner the possession of the property if the private respondents had been placed in possession thereof; (2) annulling said Orders as well as the Writ of Execution, dissolving the receivership established over the property; and (3)

ordering private respondents to account to petitioner all the fruits they may have gathered or collected from the property in question from the time of petitioner's illegal dispossession thereof. On January 29, 1971, this Court issued the Writ of Preliminary Injunction. On January 30, 1971, private respondents filed a Motion for Reconsideration and/or Modification of the Order dated January 29, 1971. This was followed by a Supplemental Motion for Reconsideration and Manifestation on February 3, 1971. In the latter motion, private respondents manifested that the amount of P14,040.96, representing the amount decreed in the judgment as reimbursement to petitioner for the improvements, plus interest for six months, has already been deposited by them in court, "with the understanding that said amount shall be turned over to the plaintiff after the court a quo shall have determined the improvement on Lot 5785-A, and subsequently the remaining balance of the deposit shall be delivered to the petitioner (plaintiff therein) in the event he loses the bid for Lot 5785-B in favor of private respondent Eleuterio Zamora." 8 The deposit is evidenced by a certification made by the Clerk of the Court a quo. 9 Contending that said deposit was a faithful compliance with the judgment of the trial court, private respondent Quirino Comintan prayed for the dissolution of the Writ of Injunction. llcd It appears that as a consequence of the deposit made by private respondents, the Deputy Sheriff of Calauag, Quezon ousted petitioner's representative from the land in question and put private respondents in possession thereof. 10

On March 10, 1971, petitioner filed a "Comment on Respondents' 'Motion for Reconsideration' dated January 29, 1971' and 'Supplemental Motion for Reconsideration and Manifestation,"' contending that the tender of deposit mentioned in the Supplemental Motion was not really and officially made, "'inasmuch as the same is not supported by any official receipt from the lower court, or from its clerk or cashier, as required by law;" that said deposit does not constitute sufficient compliance with the judgment sought to be enforced, neither was it legally and validly made because the requisites for consignation had not been complied with; that the tender of legal interest for six months cannot substitute petitioner's enjoyment of the fruits of the property as long as the judgment in Civil Case No. C-90 has not been implemented in the manner decreed therein; that contrary to the allegations of private respondents, the value of the improvements on the whole property had been determined by the lower court, and the segregation of the improvements for each lot should have been raised by them at the opportune moment by asking for the modification of the decision before it became final and executory; and that the tolls on the property constituted "civil fruits" to which the petitioner is entitled under the terms of the decision. IV The issue decisive of the controvercy is after the rendition by the trial court of its judgment in Civil Case No. C-90 on March 22, 1966 confirming the award of one-half of the property to Quirino Comintan whether or not petitioner is still entitled to retain for his own exclusive benefit all the fruits of the property, such as the tolls collected by him from March

1967 to December 1968, and September 1969 to March 31, 1970, amounting to about P25,000.00. In other words, petitioner contends that so long as the aforesaid amount of P13,632.00 decreed in the judgment representing the expenses for clearing the land and the value of the coconuts and fruit trees planted by him remains unpaid, he can appropriate for his exclusive benefit all the fruits which he may derive from the property, without any obligation to apply any portion thereof to the payment of the interest and the principal of the debt. LexLib We find this contention untenable. There is no question that a possessor in good faith is entitled to the fruits received before the possession is legally interrupted. 11 Possession in good faith ceases or is legally interrupted from the moment defects in the title are made known to the possessor, by extraneous evidence or by the filing of an action in court by the true owner for the recovery of the property. 12 Hence, all the fruits that the possessor may receive from the time he is summoned in court, or when he answers the complaint, must be delivered and paid by him to the owner or lawful possessor. 13 However, even after his good faith ceases, the possessor in fact can still retain the property, pursuant to Article 546 of the New Civil Code, until he has been fully reimbursed for all the necessary and useful expenses made by him on the property. This right of retention has been considered as one of the conglomerate of measures devised by the law for the protection of the possessor in good faith. Its object is to guarantee the reimbursement of the expenses, such as those for the preservation of the property, 14 or for the enhancement of its utility or productivity. 15 It permits the actual possessor to remain in possession while he has not been reimbursed by the person who defeated him in the possession for those necessary expenses and useful improvements made by him on the thing possessed. The principal characteristic of the right of retention is its accessory character. It is accessory to a principal obligation. Considering that the right of the possessor to receive the fruits terminates when his good faith ceases, it is necessary, in order that this right to retain may be useful, to concede to the creditor the right to secure reimbursement from the fruits of the property by utilizing its proceeds for the payment of the interest as well as the principal of the debt while he remains in possession. This right of retention of the property by the creditor, according to Scaevola, in the light of the provisions of Article 502 of the Spanish Civil Code, 16 is considered not a coercive measure to oblige the debtor to pay, depriving him temporarily of the enjoyment of the fruits of his property, but as a means of obtaining compensation for the debt. The right of retention in this case is analogous to a contract of antichresis and it can be considered as a means of extinguishing the obligation, inasmuch as the right to retain the thing lasts only for the period necessary to enable the creditor to be reimbursed from the fruits for the necessary and useful expenses. 17 According to Manresa, the right of retention is, therefore, analogous to that of a pledge, if the property retained is a movable, and to that of antichresis, if the property held is immovable. 18 This construction appears to be in harmony with similar provisions of the civil law which employs the right of retention as a means or device by which a creditor is able to obtain the payment of a debt. Thus, under Article 1731 of the New Civil Code, any person who has performed work upon a movable has a right to retain it by way of pledge until he is paid. Similarly, under Article 1914 of the same Code, the agent may retain in pledge the

things which are the object of the agency until the principal effects reimbursement of the funds advanced by the former for the execution of the agency, or he is indemnified for all damages which he may have suffered as a consequence of the execution of the agency, provided he is free from fault. To the same effect, the depository, under Article 1994 of the same Code, may retain the thing in pledge until the full payment of what may be due him by reason of the deposit. The usufructuary, pursuant to Article 612 of the same Code, may retain the property until he is reimbursed for the amount paid for taxes levied on the capital (Article 597) and for extraordinary repairs (Article 594). LLjur In all of these cases, the right of retention is used as a means of extinguishing the obligation. As amply observed by Manresa: "El derecho de retencion, lo hemos dicho, es el derecho de prenda o el de anticresis constituido por la ley con independencia de la voluntad de las partes." 19 In a pledge if the thing pledged earns or produces fruits, income, dividends or interests, the creditor shall compensate what he receives with those which are owing him. 20 In the same manner, in a contract of antichresis, the creditor acquires the right to receive the fruits of an immovable of his debtor with the obligation to apply them to the payment of the interest, if owing, and thereafter to the principal of his credit. 21 The debtor can not reacquire enjoyment of the immovable until he has actually paid what he owes the creditor. 22 Applying the afore-cited principles to the case at bar, petitioner cannot appropriate for his own exclusive benefit the tolls which he collected from the property retained by him. It was his duty under the law, after deducting the necessary expenses for his administration, to apply such amount collected to the payment of the interest, and the balance to the payment of the principal of the obligation. We hold, therefore, that the disputed tolls, after deducting petitioner's expenses for administration, belong to Quirino Comintan, owner of the land through which the toll road passed, further considering that the same was on portions of the property on which petitioner had not introduced any improvement. The trial court itself clarified this matter when it placed the toll road under receivership. The omission of any mention of the tolls in the decision itself may be attributed to the fact that the tolls appear to have been collected after the rendition of the judgment of the trial court. The records further reveal that earnest efforts have been made by private respondents to have the judgment executed in the most practicable manner. They deposited in court the amount of the judgment in the sum of P13,632.00 in cash, subject only to the accounting of the tolls collected by the petitioner so that whatever is due from him may be set off with the amount of reimbursement. This is just and proper under the circumstances and, under the law, compensation or set off may take place, either totally or partially. Considering that petitioner is the creditor with respect to the judgment obligation and the debtor with respect to the tolls collected, Comintan being the owner thereof, the trial court's order for an accounting and compensation is in accord with law. 23 With respect to the amount of reimbursement to be paid by Comintan, it appears that the dispositive portion of the decision was lacking in specificity, as it merely provided that Comintan and Zamora are jointly liable therefor. When two persons are liable under a contract or under a judgment, and no words appear in the contract or judgment to make

each liable for the entire obligation, the presumption is that their obligation is joint or mancomunada, and each debtor is liable only for a proportionate part of the obligation. 24 The judgment debt of P13,632.00 should, therefore, be pro-rated in equal shares to Comintan and Zamora. Regarding Lot 5785-B, it appears that no public sale has yet been conducted by the Bureau of Lands and, therefore, petitioner is entitled to remain in possession thereof. This is not disputed by respondent Eleuterio Zamora. 25 After public sale is had and in the event that Ortiz is not declared the successful bidder, then he should be reimbursed by respondent Zamora in the corresponding amount for the improvements on Lot 5785-B.

WHEREFORE, in view hereof, the Order of respondent Court of November 18, 1970 is hereby modified to conform to the foregoing judgment. The Writ of Preliminary Injunction, dated January 29, 1971, is hereby dissolved. Without special pronouncement as to costs. Necessary expenses, useful expenses, expenses for pure luxury or mere pleasure [G.R. No. L-29972. January 26, 1976.] ROSARIO CARBONELL, petitioner, vs. HONORABLE COURT OF APPEALS, JOSE PONCIO, EMMA INFANTE and RAMON INFANTE, respondents. Tolentino, Garcia, Cruz & Reyes for the petitioner. Guillermo B. Guevara for the private respondents. SYNOPSIS On January 27, 1955, Jose Poncio executed a private memorandum of sale of the property in question in favor of Rosario Carbonell. Four days latter, or an January 31, 1955, Poncio in a private memorandum bound himself to sell the property for an improved price to one Emma Infante, and on February 2, 1955, he executed a formal registerable deed of sale in her (Infante's) favor. So, when the first buyer Carbonell saw the seller Poncio a few days afterwards, bringing the formal deed of sale for the latter's signature and the balance of the agreed cash payment, she was told that he could no longer proceed with formalizing the contract with her (Carbonell) because he had already formalized a sales contract in favor of Infante. Since Carbonell (the first buyer) did not have a formal registerable deed of sale, she did the next best thing to protect her legal rights and registered on February 8, 1955 with the Register of Deeds her adverse claim as first buyer entitled to the property. The second buyer registered the sale in her favor with the Register of Deeds only on February 12, 1955, so that the transfer certificate of title issued in her favor carried the duly annotated adverse claim of Carbonell as the first buyer.

The trial court declared the claim of the second buyer Infante to be superior to that of the first buyer Carbonell. The Court of Appeals (Fifth Division) reversed the decision of the trial court, declaring the first buyer Carbonell to have a superior right to the land in question, and condemning the second buyer Infante to reconvey to the former, after reimbursement of expenses, the land in question and all its improvements. On motion for reconsideration, a special division of five of the said appeals court annulled and set aside the decision of the regular division and entered another judgment affirming in toto the decision of the court a quo. The Supreme Court reversed the decision of the Special Division of Five of the Court of Appeals and declared the first buyer Rosario Carbonell to have the superior right to the land in question. SYLLABUS 1.CONTRACTS; PURCHASE AND SALE OF REALTY; REGISTRATION; EFFECT OF GOOD FAITH ON DOUBLE SALES. The buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of Article 1544 of the New Civil Code. Unlike the first and third paragraphs of said Article which accords preference to the one who first takes possession in good faith of personal or real property, the second paragraph directs that ownership of immovable property should be recognized in favor of one "who in good faith recorded" his right. Under the first and third paragraphs, good faith must characterize prior possession. Under the second paragraph, good faith must characterize the act of anterior registration. If there is no inscription, what is decisive is prior possession in good faith. If there is inscription, prior registration in good faith is a pre-condition to support title. 2.ID.; ID.; DOUBLE SALE ; FIRST BUYER IN GOOD FAITH WITH SUPERIOR RIGHT OVER PROPERTY. Where the first buyer was not aware - and could not have been aware - of any sale to another person as there was no such sale, the buyer's prior purchase of the land was made in good faith. Her good faith subsisted and continued to exist when she recorded her adverse claim four days prior to the registration of the second buyer's deed of sale. The first buyer's good faith did not cease after the seller told her of his second sale of the same lot to the second buyer. By reason thereof, she has superior right to the land in question. 3.ID.; ID.; VALIDITY OF PRIVATE DOCUMENT EXECUTED THEREFOR. A private document is a valid contract of sale between the parties, since sale is a consensual contract and is perfected by mere consent. Even an oral contract of realty is valid between the parties and accords to the vendee the right to compel the vendor to execute the proper public document. A private document can be fully and partially performed to remove it from the operation of the statute of frauds. Being a valid consensual contract, a private document can effectively transfer the possession of the lot to the vendee by constitutum possessorium (Art. 1500, New Civil Code); because thereunder the vendor continues to retain physical possession of the lot as tenant of the vendee and no longer as owner thereof. 4.PROPERTY; POSSESSION; POSSESSION IN GOOD FAITH; RIGHTS TO USEFUL IMPROVEMENTS. Under the second paragraph of Art. 546, the possessor in good faith can retain the useful improvement unless the person who defeated him in his possession refunds

him the amount of such useful expenses or pay him the increased value the land may have acquired by reason thereof. Under Article 547, the possessor in good faith has also the right to remove the useful improvements if such removal can be done without damage to the land, unless the person with the superior right elects to pay for the useful improvements or reimburse the expenses therefor under paragraph 2 of Article 546. These provisions seem to imply that the possessor in bad faith has neither the right of retention of useful improvements nor the right to refund for useful expenses. 5.ID.; USEFUL IMPROVEMENT; EXAMPLES. Expenses for draining the property, filling it up with garden soil, building a wall around it and installing a gate, and erecting bungalow thereon, are useful expenditures, for they add to the value of the property. 6.ID.; ID.; ID.; RETENTION OF IMPROVEMENTS INTRODUCED BY POSSESSOR IN BAD FAITH. If the lawful possessor can retain the improvements introduced by the possessor in bad faith for pure luxury or mere pleasure only by paying the value thereof at the time he enters into possession (Art. 594, NCC), as a matter of equity, the possessors in bad faith should be allowed to remove the aforesaid improvements, unless the lawful possessor chooses to pay for their value at the time the possessor in bad faith introduced said useful improvements. The possessor cannot claim reimbursement for the current value of said useful improvements; because they have enjoyed such improvements for about two decades without paying any rent on the land and during which period the lawful possessor was deprived of its possession and use. MUOZ PALMA, J., dissenting: 1.CONTRACTS; PURCHASE AND SALE; DOUBLE SALES; BUYER IN GOOD FAITH; REGISTRATION OF TITLE MUST BE DONE IN GOOD FAITH. In applying Art. 1544 of the Civil Code, it is not enough that the buyer bought the property in good faith, but that the registration of her title must also be accomplished in good faith. This requirement of good faith is not only applicable to the second or subsequent purchaser but to the first as well. 2.ID.; ID.; ID.; ID.; GOOD FAITH, MEANING OF. Good faith means "freedom from knowledge and circumstances which ought to put a person on inquiry." It consists of an honest intention to abstain from taking any unconscientious advantage of another. 3.ID.; ID.; ID.; ID.; ABSENCE OF GOOD FAITH ILLUSTRATED. The first purchaser in these case cannot be held to have a title superior to that of the second purchaser for even if we were to concede that the notation of her adverse claim was in the nature of registration of a title as required in Art. 1544 of the Civil Code, the same was not accomplished in good faith, for at the time petitioner herein caused the annotation of her adverse claim she was cognizant of facts which impaired her title to the property in question, and taking advantage of the situation that the second purchaser had not as yet registered her deed of sale, she went ahead of the second buyer and annotated what was only in the nature of an adverse claim inasmuch as she had no registrable document of sale at the time. That annotation of adverse claim did not produce any legal effects as to place her in a preferential situation to that of the second purchaser, for the simple reason that a registration made in bad faith is equivalent to no registration at all.

4.ID.; ID.; ID.; ID.; ID.; KNOWLEDGE EQUIVALENT TO REGISTRATION. We have long accepted the rule that knowledge is equivalent to registration. ". . The purpose of registering an instrument relating to hand, annuities, mortgages, liens, or any other class of real rights is to give notice persons interested of the existence of those various liens against the property. If the parties interested have actual notice of the existence of such liens, then the necessity for registration does not exist. Neither can one who has actual notice of existing liens acquire any rights in such property free from such liens by the mere fact such liens have not been recorded. . . " TEEHANKEE, J., concurring: 1.CONTRACTS; PURCHASE AND SALE; DOUBLE SALES; IMMOVABLE PROPERTY; REGISTRATION IN GOOD FAITH. As between two buyers in good faith, Article 1544 of the Civil Code (formerly Art. 1473 of the Old Civil Code) ordains that "the ownership of the immovable property shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property." 2.ID.; ID.; ID. The fact that the first buyer registered only an adverse claim as she had no registrable deed of sale is of no moment, where it appears that she had a written memorandum of the sale, which was partly executed with the advance payment made by her for the seller's mortgage account with the bank, and which was perfected and finding in law by their accord on the subject matter and price. The first buyer could in law enforce in court her rights as such under the memorandum agreement and compel the seller to execute in her favor a formal registrable deed of sale which would relate back to the date of the original memorandum agreement. Under Art. 1544 of the New Civil Code, the first buyer had to dully register such adverse claim as first buyer, as otherwise the subsequent registration of the second buyer's deed of sale would have obliterated her legal right and enable the seller to achieve his fraudulent act of selling the property a second time for a better price in derogation of her prior right thereto.

DECISION MAKASIAR, J p: Petitioner seeks a review of the resolution of the Court of Appeals (Special Division of Five) dated October 30, 1968, reversing its decision of November 2, 1967 (Fifth Division), and its resolution of December 6, 1968 denying petitioner's motion for reconsideration. The dispositive part of the challenged resolution reads: "Wherefore, the motion for reconsideration filed on behalf of appellee Emma Infante, is hereby granted and the decision of November 2, 1967, is hereby annulled and set aside. Another judgment shall be entered affirming in toto that of the court a quo dated January 20, 1965, which dismisses the plaintiff's complaint and defendants' counterclaim. "Without costs.

"SO ORDERED." (p. 11, rec.) The facts of the case are as follows: Prior to January 27, 1955, respondent Jose Poncio, a native of the Batanes Islands, was the owner of the parcel of land herein involved with improvements situated at 179 V. Agan St., San Juan, Rizal, having an area of some one hundred ninety-five (195) square meters, more or less, covered by TCT No. 5040 and subject to a mortgage in favor of the Republic Savings Bank for the sum of P1,500.00. Petitioner Rosario Carbonell, a cousin and adjacent neighbor of respondent Poncio, and also from the Batanes Islands, lived in the adjoining lot at 177 V. Agan Street. LexLib Both petitioners Rosario Carbonell and respondent Emma Infante offered to buy the said lot from Poncio (Poncio's Answer, p. 38, rec. on appeal). Respondent Poncio, unable to keep up with the installments due on the mortgage, approached petitioner one day and offered to sell to the latter the said lot, excluding the house wherein respondent lived. Petitioner accepted the offer and proposed the price of P9.50 per square meter. Respondent Poncio, after having secured the consent of his wife and parents, accepted the price proposed by petitioner, on the condition that from the purchase price would come the money to be paid to the bank. Petitioner and respondent Jose Poncio then went to the Republic Savings Bank and secured the consent of the President thereof for her to pay the arrears on the mortgage and to continue the payment of the installments as they fall due. The amount in arrears reached a total sum of P247.26. But because respondent Poncio had previously told her that the money needed was only P200.00, only the latter amount was brought by petitioner constraining respondent Jose Poncio to withdraw the sum of P47.00 from his bank deposit with Republic Savings Bank. But the next day, petitioner refunded to Poncio the sum of P47.00. Cdpr On January 27, 1955, petitioner and respondent Poncio, in the presence of a witness, made and executed a document in the Batanes dialect, which, translated into English, reads: "CONTRACT FOR ONE HALF LOT WHICH I BOUGHT FROM JOSE PONCIO "Beginning today, January 27, 1955, Jose Poncio can start living on the lot sold by him to me, Rosario Carbonell, until after one year during which time he will not pay anything. Then if after said one year, he could not find any place where to move his house, he could still continue occupying the site but he should pay a rent that may be agreed. (Sgd.) "JOSE PONCIO (Sgd.) "ROSARIO CARBONELL (Sgd.) "CONSTANCIO MEONADA Witness"

(Pp. 6-7, rec. on appeal). Thereafter, petitioner asked Atty. Salvador Reyes, also from the Batanes Islands, to prepare the formal deed of sale, which she brought to respondent Poncio together with the amount of some P400.00, the balance she still had to pay in addition to her assuming the mortgage obligation to Republic Savings Bank. Upon arriving at respondent Jose Poncio's house, however, the latter told petitioner that he could not proceed any more with the sale, because he had already even the lot to respondent Emma Infante; and that he could not withdraw from his deal with respondent Mrs. Infante, even if he were to go to jail. Petitioner then sought to contact respondent Mrs. Infante, but the latter refused to see her. LLjur On February 5, 1955, petitioner saw Emma Infante erecting a wall around the lot with a gate. Petitioner then consulted Atty. Jose Garcia, who advised her to present and adverse claim over the land in question with the Office of the Register of Deeds Rizal. Atty. Garcia actually sent a letter of inquiry to the Register of Deeds and demand letters to private respondents Jose Poncio and Emma Infante. In his answer to the complaint, Poncio admitted "that on January 30, 1955, Mrs. Infante improved her offer and he agreed to sell the land and its improvements to her for P3,535.00" (pp. 38-40, ROA). In a private memorandum agreement dated January 31, 1955, respondent Poncio indeed bound himself to sell to his co-respondent Emma Infante, the property for the sum of P2,357.52, with respondent Emma Infante still assuming the existing mortgage debt in favor of Republic Savings Bank in the amount of P1,177.48. Emma Infante lives just behind the houses of Poncio and Rosario Carbonell. On February 2, 1955, respondent Jose Poncio executed the formal deed of sale in favor of respondent Mrs. Infante in the total sum of P3,554.00 and on the same date, the latter paid Republic Savings Bank the mortgage indebtedness of P1,500.00. The mortgage on the lot was eventually discharged. Informed that the sale in favor of respondent Emma Infante had not yet been registered, Atty. Garcia prepared an adverse claim for petitioner, who signed and swore to and registered the same on February 8, 1955. The deed of sale in favor of respondent Mrs. Infante was registered only on February 12, 1955. As a consequence thereof, a Transfer Certificate of Title was issued to her but with the annotation of the adverse claim of petitioner Rosario Carbonell. Respondent Emma Infante took immediate possession of the lot involved, covered the same with 500 cubic meters of garden soil and built therein a wall and gate, spending the sum of P1,500.00. She further contracted the services of an architect to build a house; but the construction of the same started only in 1959 years after the litigation actually began and

during its pendency. Respondent Mrs. Infante spent for the house the total amount of P11,929.00. On June 1, 1955, petitioner Rosario Carbonell, thru counsel, filed a second amended complaint against private respondents, praying that she be declared the lawful owner of the questioned parcel of land; that the subsequent sale to respondents Ramon R. Infante and Emma L. Infante be declared null and void, and that respondent Jose Poncio be ordered to execute the corresponding deed of conveyance of said land in her favor and for damages and attorney's fees (pp. 1-7, rec. on appeal in the C.A.). Respondents first moved to dismiss the complaint on the ground, among others, that petitioner's claim is unenforceable under the Statute of Frauds, the alleged sale in her favor not being evidenced by a written document (pp. 7-13, rec. on appeal in the C.A.); and when said motion was denied without prejudice to passing on the question raised therein when the case would be tried on the merits (p. 17, ROA in the C.A.), respondents filed separate answers, reiterating the grounds of their motion to dismiss (pp. 18-23, ROA in the C.A.). During the trial, when petitioner started presenting evidence of the sale of the land in question to her by respondent Poncio, part of which evidence was the agreement written in the Batanes dialect aforementioned, respondent Infantes objected to the presentation by petitioner of parol evidence to prove the alleged sale between her and respondent Poncio. In its order of April 26, 1966, the trial court sustained the objection and dismissed the complaint on the ground that the memorandum presented by petitioner to prove said sale does not satisfy the requirements of the law (pp. 31-35, ROA in the C.A.). From the above order of dismissal, petitioner appealed to the Supreme Court (G.R. No. L-1 1231) which ruled in a decision dated May 12, 1958, that the Statute of Frauds, being applicable only to executory contracts, does not apply to the alleged sale between petitioner and respondent Poncio, which petitioner claimed to have been partially performed, so that petitioner is entitled to establish by parol evidence "the truth of this allegation, as well as the contract itself." The order appealed from was thus reversed, and the case remanded to the court a quo for further proceedings (pp. 26-49, ROA in the C.A.). After trial in the court a quo, a decision was rendered on December 5, 1962, declaring the second sale by respondent Jose Poncio to his co-respondents Ramon Infante and Emma Infante of the land in question null and void and ordering respondent Poncio to execute the proper deed of conveyance of said land in favor of petitioner after compliance by the latter of her covenants under her agreement with respondent Poncio (pp. 50-56, ROA in the C.A.). On January 23, 1963, respondent Infantes, through another counsel, filed a motion for retrial to adduce evidence for the proper implementation of the court's decision in case it would be affirmed on appeal (pp. 56-60, ROA in the C.A.), which motion was opposed by petitioner for being premature (pp. 61-64, ROA in the C.A.). Before their motion for re-trial could be resolved, respondent Infantes, this time through their former counsel, filed another motion for new trial, claiming that the decision of the trial court is contrary to the evidence and the law (pp. 64-78, ROA in the C.A.), which motion was also opposed by petitioner (pp. 78-89, ROA in the C.A.). prLL

The trial court granted a new trial (pp. 89-90, ROA in the C.A.), at which re-hearing only the respondents introduced additional evidence consisting principally of the cost of improvements they introduced on the land in question (p. 9, ROA in the C.A.). After the re-hearing, the trial court rendered a decision, reversing its decision of December 5, 1962 on the ground that the claim of the respondents was superior to the claim of petitioner, and dismissing the complaint (pp. 91-95, ROA in the C.A.). From this decision, petitioner Rosario Carbonell appealed to the respondent Court of Appeals (p. 96, ROA in the C.A.).

On November 2, 1967, the Court of Appeals (Fifth Division composed of Justices Magno Gatmaitan, Salvador V. Esguerra and Angel H. Mojica, speaking through Justice Magno Gatmaitan), rendered judgment reversing the decision of the trial court, declaring petitioner herein, to have a superior right to the land in question, and condemning defendant Infantes to reconvey to petitioner, after her reimbursement to them of the sum of P3,000.00 plus legal interest, the land in question and all its improvements (Appendix "A" of Petition). Respondents Infantes sought reconsideration of said decision and acting on the motion for reconsideration, the Appellate Court, three Justices (Villamor, Esguerra and Nolasco), of Special Division of Five, granted said motion, annulled and set aside its decision of November 2, 1967, and entered another judgment affirming in toto the decision of the court a quo, with Justices Gatmaitan and Rodriguez dissenting (Appendix "B" of Petition). Petitioner Rosario Carbonell moved to reconsider the Resolution of the Special Division of Five, which motion was denied by Minute Resolution of December 6, 1968 (but with Justices Rodriguez and Gatmaitan voting for reconsideration) [Appendix "C" of Petition]. Hence, this appeal by certiorari. Article 1544, New Civil Code, which is decisive of this case, recites: "If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken 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 the possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good faith" (emphasis supplied). It is essential that the buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of said Article 1544.

Unlike the first and third paragraphs of said Article 1544, which accord preference to the one who first takes possession in good faith of personal or real property, the second paragraph directs that ownership of immovable property should be recognized in favor of one "who in good faith first recorded" his right. Under the first and third paragraphs, good faith must characterize the prior possession. Under the second paragraph, good faith must characterize the act of anterior registration (DBP vs. Mangawang, et al., 11 SCRA 405; Soriano, et al. vs. Magale, et al., 8 SCRA 489). LLphil If there is no inscription, what is decisive is prior possession in good faith. If there is inscription, as in the case at bar, prior registration in good faith is a pre-condition to superior title. When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer thereof and the title of Poncio was still in his name solely encumbered by bank mortgage duly annotated thereon. Carbonell was not aware and she could not have been aware of any sale to Infante as there was no such sale to Infante then. Hence, Carbonell's prior purchase of the land was made in good faith. Her good faith subsisted and continued to exist when she recorded her adverse claim four (4) days prior to the registration of Infante's deed of sale. Carbonell's good faith did not cease after Poncio told her on January 31, 1955 of his second sale of the same lot to Infante, Because of that information, Carbonell wanted an audience with Infante, which desire underscores Carbonell's good faith. With an aristocratic disdain unworthy of the good breeding of a good Christian and good neighbor, Infante snubbed Carbonell like a leper and refused to see her. So Carbonell did the next best thing to protect her right she registered her adverse claim on February 8, 1955. Under the circumstances, this recording of her adverse claim should be deemed to have been done in good faith and should emphasize Infante's bad faith when she registered her deed of sale four (4) days later on February 12, 1955. Bad faith arising from previous knowledge by Infante of the prior sale to Carbonell is shown by the following facts, the vital significance and evidenciary effect of which the respondent Court of Appeals either overlooked or failed to appreciate: (1)Mrs. Infante refused to see Carbonell, who wanted to see Infante after she was informed by Poncio that he sold the lot to Infante but several days before Infante registered her deed of sale. This indicates that Infante knew from Poncio and from the bank of the prior sale of the lot by Poncio to Carbonell. Ordinarily, one will not refuse to see a neighbor. Infante lives just behind the house of Carbonell. Her refusal to talk to Carbonell could only mean that she did not want to listen to Carbonell's story that she (Carbonell) had previously bought the lot from Poncio. (2)Carbonell was already in possession of the mortgage passbook [not Poncio's savings deposit passbook Exhibit "1" Infantes] and Poncio's copy of the mortgage contract, when Poncio sold the lot to Infante. This also shows that the lot was already sold to Carbonell who, after paying the arrearages of Poncio, assumed the balance of his mortgage indebtedness to the bank, which in the normal course of business must have necessarily informed Infante about the said assumption by Carbonell of the mortgage indebtedness of Poncio. Before or upon paying in full the mortgage indebtedness of Poncio to the bank, Infante naturally must have demanded from Poncio the delivery to her of his mortgage

passbook as well as Poncio's mortgage contract so that the fact of full payment of his bank mortgage will be entered therein; and Poncio, as well as the bank, must have inevitably informed her that said mortgage passbook could not be given to her because it was already delivered to Carbonell. If Poncio was still in possession of the mortgage passbook and his copy of the mortgage contract at the time he executed a deed of sale in favor of the Infantes and when the Infantes redeemed his mortgage indebtedness from the bank, Poncio would have surrendered his mortgage passbook and his copy of the mortgage contract to the Infantes, who could have presented the same as exhibits during the trial, in much the same way that the Infantes were able to present as evidence Exhibit "1" Infantes, Poncio's savings deposit passbook, of which Poncio necessarily remained in possession as the said deposit passbook was never involved in the contract of sale with assumption of mortgage. Said savings deposit passbook merely proves that Poncio had to withdraw P47.26, which amount was added to the sum of P200.00 paid by Carbonell for Poncio's amortization arrearages in favor of the bank on January 27, 1955; because Carbonell on that day brought with her only P200.00, as Poncio told her that was the amount of his arrearages to the bank. But the next day Carbonell refunded to Poncio the sum of P47.26. prLL (3)The fact that Poncio was no longer in possession of his mortgage passbook and that the said mortgage passbook was already in possession of Carbonell, should have compelled Infante to inquire from Poncio why he was no longer in possession of the mortgage passbook and from Carbonell why she was in possession of the same (Paglago, et al., vs. Jarabe, et al., 22 SCRA 1247, 1252-1253). The only plausible and logical reason why Infante did not bother anymore to make such inquiry, was because in the ordinary course of business the bank must have told her that Poncio already sold the lot to Carbonell who thereby assumed the mortgage indebtedness of Poncio and to whom Poncio delivered his mortgage passbook. Hoping to give a semblance of truth to her pretended good faith, Infante snubbed Carbonell's request to talk to her about the prior sale to her by Poncio of the lot. As aforestated, this is not the attitude expected of a good neighbor imbued with Christian charity and good will as well as a clear conscience. (4)Carbonell registered on February 8, 1955 her adverse claim, which was accordingly annotated on Poncio's title four [4] days before Infante registered on February 12, 1955 her deed of sale executed on February 2, 1955. Here she was again on notice of the prior sale to Carbonell. Such registration of adverse claim is valid and effective (Jovellanos vs. Dimalanta, L-11736-37, January 30, 1959, 105 Phil. 1250-51). (5)In his answer to the complaint filed by Poncio, as defendant in the Court of First Instance, he alleged that both Mrs. Infante and Mrs. Carbonell offered to buy the lot at P15.00 per square meter, which offers he rejected as he believed that his lot is worth at least P20.00 per square meter. It is therefore logical to presume that Infante was told by Poncio and consequently knew of the offer of Carbonell which fact likewise should have put her on her guard and should have compelled her to inquire from Poncio whether or not he had already sold the property to Carbonell.

As recounted by Chief Justice Roberto Concepcion, then Associate Justice, in the preceding case of Rosario Carbonell vs. Jose Poncio, Ramon Infante and Emma Infante (L-11231, May 12, 1958), Poncio alleged in his answer: ". . . that he had consistently turned down several offers, made by plaintiff, to buy the land in question, at P15 a square meter, for he believes that it is worth not less than P20 a square meter; that Mrs. Infante, likewise, tried to buy the land at P15 a square meter; that on or about January 27, 1955, Poncio was advised by plaintiff that should she decide to buy the property at P20 a square meter, she would allow bill to remain in the property for one year; that plaintiff then induced Poncio to sign a document, copy of which is probably the one appended to the second amended complaint; that Poncio signed it 'relying upon the statement of the plaintiff that the document was a permit for him to remain in the premises in the event defendant decided to sell the property to the plaintiff at P20.00 a square meter'; that on January 30, 1955 Mrs. Infante improved her offer and he agreed to sell the land and its improvements to her for P3,535.00; that Poncio has not lost 'his mind,' to sell his property, worth at least P4,000, for the paltry sum P1,177.48, the amount of his obligation to the Republic Savings Bank; and that plaintiff's action is barred by the Statute of Frauds. . . ." (pp. 38-40, ROA, emphasis supplied).

II EXISTENCE OF THE PRIOR SALE TO CARBONELL DULY ESTABLISHED (1)In his order dated April 26, 1956 dismissing the complaint on the ground that the private document Exhibit "A" executed by Poncio and Carbonell and witnessed by Constancio Meonada captioned "Contract for One-half Lot which I Bought from Jose Poncio," was not such a memorandum in writing within the purview of the Statute of Frauds, the trial judge himself recognized the fact of the prior sale to Carbonell when he stated that "the memorandum in question merely states that Poncio is allowed to stay in the property which he had sold to the plaintiff . There is no mention of the consideration, a description of the property and such other essential elements of the contract of sale. There is nothing in the memorandum which would tend to show even in the slightest manner that it was intended to be an evidence of contract of sale. On the contrary, from the terms of the memorandum, it tends to show that the sale of the property in favor of the plaintiff is already an accomplished act. By the very contents of the memorandum itself, it cannot therefore, be considered to be the memorandum which would show that a sale has been made by Poncio in favor of the plaintiff" (p. 33, ROA, emphasis supplied). As found by the trial court, to repeat, the said memorandum states "that Poncio is allowed to stay in the property which he had sold to the plaintiff . . ., it tends to show that the sale of the property in favor of the plaintiff is already an accomplished act. . . . ." (2)When the said order was appealed to the Supreme Court by Carbonell in the previous case of Rosario Carbonell vs. Jose Poncio, Ramon Infante and Emma Infante (L-11231, supra), Chief Justice Roberto Concepcion, then Associate Justice, speaking for a unanimous Court, reversed the aforesaid order of the trial court dismissing the complaint, holding that because the complaint alleges and the plaintiff claims that the contract of sale was partly

performed, the same is removed from the application of the Statute of Frauds and Carbonell should be allowed to establish by parol evidence the truth of her allegation of partial performance of the contract of sale, and further stated: "Apart from the foregoing, there are in the case at bar several circumstances indicating that plaintiff's claim might not be entirely devoid of factual basis. Thus, for instance, Poncio admitted in his answer that plaintiff had offered several times to purchase his land. "Again, there is Exhibit A, a document signed by the defendant. It is in the Batanes dialect, which, according to plaintiff's uncontradicted evidence, is the one spoken by Poncio, he being a native of said region. Exhibit A states that Poncio would stay in the land sold by him to plaintiff for one year, from January 27, 1955, free of charge, and that, if he cannot find a place where to transfer his house thereon, he may remain in said lot under such terms as may be agreed upon. Incidentally, the allegation in Poncio's answer to the effect that he signed Exhibit A under the belief that it 'was a permit for him to remain in the premises in the event' that 'he decided to sell the property' to the plaintiff at P20 a sq. m.' is, on its face, somewhat difficult to believe. Indeed, if he had not decided as yet to sell the land to plaintiff , who had never increased her offer of P15 a square meter, there was no reason for Poncio to get said permit from her. Upon the other hand, if plaintiff intended to mislead Poncio, she would have caused Exhibit A to be drafted, probably, in English, instead of taking the trouble of seeing to it that it was written precisely in his native dialect, the Batanes. Moreover, Poncio's signature on Exhibit A suggests that he is neither illiterate nor so ignorant as to sign a document without reading its contents, apart from the fact that Meonada had read Exhibit A to him and given him a copy thereof , before he signed thereon, according to Meonada's uncontradicted testimony. "Then, also, defendants say in their brief: "'The only allegation in plaintiff's complaint that bears any relation to her claim that there has been partial performance of the supposed contract of sale, is the notation of the sum of P247.26 in the bank book of defendant Jose Poncio. The noting or jotting down of the sum of P247.26 in the bank book of Jose Poncio does not prove of the property in question. For all we knew, the price of the property in question. For all we knew, the sum of P247.26 which plaintiff claims to have paid to the Republic Savings Bank for the account of the defendant, assuming that the money paid to the Republic Savings Bank came from the plaintiff, was the result of some usurious loan or accommodation, rather than earnest money or part payment of the land. Neither is it competent or satisfactory evidence to prove the conveyance of the land in question the fact that the bank book account of Jose Poncio happens to be in the possession of the plaintiff.' (Defendants-Appellees' brief, pp. 25-26). "How shall We know why Poncio's bank deposit book is in plaintiff's possession, or whether there is any relation between the P247.26 entry therein and the partial payment of P247.26 allegedly made by plaintiff to Poncio on account of the price of his land, if we do not allow the plaintiff to explain it on the witness stand? Without expressing any opinion on the merits of plaintiffs claim, it is clear, therefore, that she is entitled, legally as well as from the viewpoint of equity, to an opportunity to introduce parol evidence in support of the allegations of her second amended complaint" (pp. 46-49, ROA, emphasis supplied).

(3)In his first decision of December 5, 1962 declaring null and void the sale in favor of the Infantes and ordering Poncio to execute a deed of conveyance in favor of Carbonell, the trial judge found: ". . . . A careful consideration of the contents of Exh. 'A' show to the satisfaction of the court that the sale of the parcel of land in question by the defendant Poncio in favor of the plaintiff was covered therein and that the said Exh. 'A' was also executed to allow the defendant Poncio to continue staying in the premises for the stated period. It will be noted that Exh. 'A' refers to a lot 'sold by him to me' and having been written originally in a dialect well understood by the defendant Poncio, he signed the said Exh. 'A' with a full knowledge and consciousness of the terms and consequences thereof . This therefore, corroborates the testimony of the plaintiff Carbonell that the sale of the land was made by Poncio. It is further pointed out that there was a partial performance of the verbal sale executed by Poncio in favor of the plaintiff , when the latter paid P247.26 to the Republic Savings Bank on account of Poncio's mortgage indebtedness. Finally, the possession by the plaintiff of the defendant Poncio's passbook of the Republic Savings Bank also adds credibility to her testimony. The defendant contends on the other hand that the testimony of the plaintiff, as well as her witnesses, regarding the sale of the land made by Poncio in favor of the plaintiff is inadmissible under the provision of the Statute, of Fraud based on the argument that the note Exh. 'A' is not the note or memorandum referred to in the Statute of Fraud. The defendants argue that Exh. 'A' fails to comply with the requirements of the Statute of Fraud to qualify it as the note or memorandum referred to therein and open the way for the presentation of parole evidence to prove the fact contained in the note or memorandum. The defendant argues that there is even no description of the lot referred to in the note, especially when the note refers to only one half lot. With respect to the latter argument of the defendant, plaintiff points out that one half lot was mentioned in Exhibit 'A' because the original description carried in the title states that it was formerly part of a bigger lot and only segregated later. The explanation is tenable, in considering the time value of the contents of Exh. 'A', the court has arrived at the conclusion that there is a sufficient description of the lot referred to in Exh. 'A' as none other than the parcel of land occupied by the defendant Poncio and where he has his improvements erected. The identity of the parcel of land involved herein is sufficiently established by the contents of the note Exh. 'A' . For a while, this court had that similar impression but after a more and thorough consideration of the context in Exh. 'A' and for the reasons stated above, the Court has arrived at the conclusion stated earlier" (pp. 52-54, ROA, emphasis supplied). (4)After re-trial on motion of the Infantes, the trial Judge rendered on January 20, 1965 another decision dismissing the complaint, although he found "1.That on January 27, 1955, the plaintiff purchased from the defendant Poncio a parcel of land with an area of 195 square meters, more or less, covered by TCT No. 5040 of the Province of Rizal, located at San Juan del Monte, Rizal, for the price of P9.50 per square meter; "2.That the purchase made by the plaintiff was not reduced to writing except for a short note or memorandum Exh. A, which also recited that the defendant Poncio would be allowed to continue his stay in the premises, among other things; . . . " (pp. 91-92, ROA, emphasis supplied).

From such factual findings, the trial judge confirms the due execution of Exhibit "A", only that his legal conclusion is that it is not sufficient to transfer ownership (pp. 93-94, ROA). (5)In the first decision of November 2, 1967 of the Fifth Division of the Court of Appeals composed of Justices Esguerra (now Associate Justice of the Supreme Court), Gatmaitan and Mojica, penned by Justice Gatmaitan., the Court of Appeals found that: ". . . the testimony of Rosario Carbonell not having at all been attempted to be disproved by defendants, particularly Jose Poncio, and corroborated as it is by the private document in the Batanes dialect, Exhibit A, the testimony being to the effect that between herself and Jose there had been celebrated a sale of the property excluding the house for the price of P9.50 per square meter, so much so that on faith of that, Rosario had advanced the sum of P247.26 and binding herself to pay unto Jose the balance of the purchase price after deducting the indebtedness to the Bank and since the wording of Exhibit A, the private document goes so far as to describe their transaction as one of sale, already consummated between them, note the past tense used in the phrase, 'the lot sold by him to me' and going so far even as to state that from that day onwards, vendor would continue to live therein, for one year, 'during which time he will not pay anything' this can only mean that between Rosario and Jose, there had been a true contract of sale, consummated by delivery constitutum possessorium, Art.1500, New Civil Code; vendor's possession having become converted from then on, as a mere tenant of vendee, with the special privilege of not paying rental for one year, it is true that the sale by Jose Poncio to Rosario Carbonell corroborated documentarily only by Exhibit A could not have been registered at all, but it was a valid contract nonetheless, since under our law, a contract sale is consensual, perfected by mere consent, Couto vs. Cortes, 8 Phil. 459, so much so that under the New Civil Code, while a sale of an immovable is ordered to be reduced to a public document, Art. 1358, that mandate does not render an oral sale of realty unvalid, but merely incapable of proof, where still executory and action is brought and resisted for its performance, 1403, par. 2, 3; but where already wholly or partly executed or where even if not yet, it is evidenced by a memorandum, in any case where evidence to further demonstrate is presented and admitted as the case was here, then the oral sale becomes perfectly good, and becomes a good cause of action not only to reduce it to the form of a public document, but even to enforce the contract in its entirety, Art. 1357; and thus it is that what we now have is a case wherein on the one hand Rosario Carbonell has proved that she had an anterior sale, celebrated in her favor on 27 January, 1955, Exhibit A, annotated as an adverse claim on 8 February, 1955, and on other, a sale in due form in favor of Emma L. Infante on 2 February, 1955, Exhibit 3-Infante, and registered in due form with title unto her issued on 12 February, 1955; the vital question must now come on which of these two sales should prevail; . . ." (pp. 74-76, rec., emphasis supplied).

(6)In the resolution dated October 30, 1968 penned by then Court of Appeals Justice Esguerra (now a member of this Court), concurred in by Justices Villamor and Nolasco, constituting the majority of a Special Division of Five, the Court of Appeals, upon motion of the Infantes, while reversing the decision of November 2, 1967 and affirming the decision of the trial court of January 20, 1965 dismissing plaintiffs complaint, admitted the existence

and genuineness of Exhibit "A" the private memorandum dated January 27, 1955, although it did not consider the same as satisfying "the essential elements of a contract of sale," because it "neither specifically describes the property and its boundaries, nor mention its certificate of title number, nor states the price certain to be paid, or contrary to the express mandate of Articles 1458 and 1475 of the Civil Code. (7)In his dissent concurred in by Justice Rodriguez, Justice Gatmaitan maintains his decision of November 2, 1967 as well as his findings of facts therein, and reiterated that the private memorandum Exhibit "A", is a perfected sale, as a sale is consensual and consummated by mere consent, and is binding on and effective between the parties. This statement of the principle is correct [pp. 89-92, rec.]. III ADEQUATE CONSIDERATION OR PRICE FOR THE SALE IN FAVOR OF CARBONELL It should be emphasized that the mortgage on the lot was about to be foreclosed by the bank for failure on the part of Poncio to pay the amortizations thereon. To forestall the foreclosure and at the same time to realize some money from his mortgaged lot, Poncio agreed to sell the same to Carbonell at P9.50 per square meter, on condition that Carbonell [1] should pay (a) the amount of P400.00 to Poncio and (b) the arrears in the amount of P247.26 to the bank; and [2] should assume his mortgage indebtedness. The bank president agreed to the said sale with assumption of mortgage in favor of Carbonell and Carbonell accordingly paid the arrears of P247.26. On January 27, 1955, she paid the amount of P200.00 to the bank because that was the amount that Poncio told her as his arrearages and Poncio advanced the sum of P47.26 which amount was refunded to him by Carbonell the following day. This conveyance was confirmed that same day, January 27, 1955, by the private document, Exhibit "A", which was prepared in the Batanes dialect by the witness Constancio Meonada, who is also from Batanes like Poncio and Carbonell. The sale did not include Poncio's house on the lot. And Poncio was given the right to continue staying on the land without paying any rental for one year, after which he should pay rent if he could not still find a place to transfer his house. All these terms are part of the consideration of the sale to Carbonell. LexLib It is evident therefore that there was ample consideration, and not merely the sum of P200.00, for the sale of Poncio to Carbonell of the lot in question. But Poncio, induced by the higher price offered to him by Infante. reneged on his commitment so Carbonell and told Carbonell, who confronted him about it, that he would not withdraw from his deal with Infante even if he is sent to jail. The victim, therefore, "of injustice and outrage" is the widow Carbonell and not the Infantes, who without moral compunction exploited the greed and treacherous nature of Poncio, who, for love of money and without remorse of conscience, dishonored his own plighted word to Carbonell, his own cousin. Inevitably evident therefore from the foregoing discussion, is the bad faith of Emma Infante from the time she enticed Poncio to dishonor his contract with Carbonell, and instead to sell

the lot to her (Infante) by offering Poncio a much hinger price than the price for which he sold the same to Carbonell. Being guilty of bad faith, both in taking physical possession of the lot and in recording their deed of sale, the Infantes cannot recover the value of the improvements they introduced in the lot. And after the filing by Carbonell of the complaint in June, 1955, the Infantes had less justification to erect a building thereon since their title to said lot is seriously disputed by Carbonell on the basis of a prior sale to her. With respect to the claim of Poncio that he signed the document Exhibit "A" under the belief that it was a permit for him to remain in the premises in case he decides to sell the property to Carbonell at P20.00 per square meter, the observation of the Supreme Court through Mr. Chief Justice Concepcion in G.R. No. L-11231, supra, bears repeating: ". . . Incidentally, the allegation in Poncio's answer to the effect that he signed Exhibit A under the belief that it, 'was a permit for him to remain in the premises in the event' that 'he decided to sell the property' to the plaintiff at P20.00 a sq. m.' is, on its face, somewhat difficult to believe. Indeed, if he had not decided as yet to sell the land to plaintiff, who had never increased her offer of P15 a square meter, there was no reason for Poncio to get said permit from her. Upon the other hand, if plaintiff intended to mislead Poncio, she would have caused Exhibit A to be drafted, probably, in English, instead of taking the trouble of seeing to it that it was written precisely in his native dialect, the Batanes. Moreover, Poncio's signature on Exhibit A suggests that he is neither illiterate nor so ignorant as to sign a document without reading its contents, apart from the fact that Meonada had read Exhibit A to him and given him a copy thereof, before he signed thereon, according to Meonada's uncontradicted testimony" (pp. 46-47, ROA). As stressed by Justice Gatmaitan in his first decision of November 2, 1965, which he reiterated in his dissent from the resolution of the majority of the Special Division of Five on October 30, 1968, Exhibit A, the private document in the Batanes dialect, is a valid contract of sale between the parties, since sale is a consensual contract and is perfected by mere consent (Couto vs. Cortes, 8 Phil. 459). Even an oral contract of realty is valid between the parties and accords to the vendee the right to compel the vendor to execute the proper public document. As a matter of fact, Exhibit A, while merely a private document, can be fully or partially performed, to remove it from the operation of the statute of frauds. Being a valid consensual contract, Exhibit A effectively transferred the possession of the lot to the vendee Carbonell by constitutum possessorium (Article 1500, New Civil Code); because thereunder the vendor Poncio continued to retain physical possession of the lot as tenant of the vendee and no longer as owner thereof. More than just the signing of Exhibit A by Poncio and Carbonell with Constancio Meonada as witness to perfect the contract of sale, the transaction was further confirmed when Poncio agreed to the actual payment by Carbonell of his mortgage arrearages to the bank on January 27, 1955 and by his consequent delivery of his own mortgage passbook to Carbonell. If he remained owner and mortgagor, Poncio would not have surrendered his mortgage passbook to Carbonell. LLphil IV IDENTIFICATION AND DESCRIPTION OF THE DISPUTED LOT IN THE MEMORANDUM EXHIBIT "A"

The claim that the memorandum Exhibit "A" does not sufficiently describe the disputed lot as the subject matter of the sale, was correctly disposed of in the first decision of the trial court of December 5, 1962, thus: "The defendant argues that there is even no description of the lot referred to in the note (or memorandum), especially when the note refers to only one-half lot. With respect to the latter argument of the defendant, plaintiff points out that one-half lot was mentioned in Exhibit 'A' because the original description carried in the title states that it was formerly part of a bigger lot and only segregated later. The explanation is tenable, in (sic) considering the time value of the contents of Exh. 'A', the court has arrived at the conclusion that there is sufficient description of the lot referred to in Exh. 'A' as none other than the parcel of lot occupied by the defendant Poncio and where he has his improvements erected. The identity of the parcel of land involved herein is sufficiently established by the contents of the notice Exh. 'A'. For a while, this court had that similar impression but after a more and thorough consideration of the context in Exh. 'A' and for the reasons stated above, the court has arrived to (sic) the conclusion stated earlier" (pp. 53-54, ROA). Moreover, it is not shown that Poncio owns another parcel with the same area, adjacent to the lot of his cousin Carbonell and likewise mortgaged by him to the Republic Savings Bank. The transaction therefore between Poncio and Carbonell can only refer and does refer to the lot involved herein. If Poncio had another lot to remove his house, Exhibit A would not have stipulated to allow him to stay in the sold lot without paying any rent for one year and thereafter to pay rental in case he cannot find another place to transfer his house. While petitioner Carbonell has the superior title to the lot, she must however refund to respondents Infantes the amount of P1,500.00, which the Infantes paid to the Republic Savings Bank to redeem the mortgage. It appearing that the Infantes are possessors in bad faith, their rights to the improvements they introduced on the disputed lot are governed by Articles 546 and 547 of the New Civil Code. Their expenses consisting of P1,500.00 for draining the property, filling it with 500 cubic meters of garden soil, building a wall around it and installing a gate and P11,929.00 for erecting a bungalow thereon, are useful expenditures; for they add to the value of the property (Aringo vs. Arenas, 14 Phil. 263; Alburo vs. Villanueva, 7 Phil. 277; Valencia vs. Ayala de Roxas, 13 Phil. 45). Under the second paragraph of Article 546, the possessor in good faith can retain the useful improvements unless the person who defeated him in his possession refunds him the amount of such useful expenses or pay him the increased value the land may have acquired by reason thereof. Under Article 547, the possessor in good faith has also the right to remove the useful improvements if such removal can be done without damage to the land, unless the person with the superior right elects to pay for the useful improvements or reimburse the expenses therefor under paragraph 2 of Article 546. These provisions seem to imply that the possessor in bad faith has neither the right of retention of useful improvements nor the right to a refund for useful expenses.

But, if the lawful possessor can retain the improvements introduced by the possessor in bad faith for pure luxury or mere pleasure only by paying the value thereof at the time he enters into possession (Article 549 NCC), as a matter of equity, the Infantes, although possessors in bad faith, should be allowed to remove the aforesaid improvements, unless petitioner Carbonell chooses to pay for their value at the time the Infantes introduced said useful improvements in 1955 and 1959. The Infantes cannot claim reimbursement for the current value of the said useful improvements; because they have been enjoying such improvements for about two decades without paying any rent on the land and during which period herein petitioner Carbonell was deprived of its possession and use. WHEREFORE, THE DECISION OF THE SPECIAL DIVISION OF FIVE OF THE COURT OF APPEALS OF OCTOBER 30, 1968 IS HEREBY REVERSED; PETITIONER ROSARIO CARBONELL IS HEREBY DECLARED TO HAVE THE SUPERIOR RIGHT TO THE LAND IN QUESTION AND IS HEREBY DIRECTED TO REIMBURSE TO PRIVATE RESPONDENTS INFANTES THE SUM OF ONE THOUSAND FIVE HUNDRED PESOS (P1,500.00) WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION; AND THE REGISTER OF DEEDS OF RIZAL IS HEREBY DIRECTED TO CANCEL TRANSFER CERTIFICATE OF TITLE NO. 37842 ISSUED IN FAVOR OF PRIVATE RESPONDENTS INFANTES COVERING THE DISPUTED LOT, WHICH CANCELLED TRANSFER CERTIFICATE OF TITLE NO. 5040 IN THE NAME OF JOSE PONCIO, AND TO ISSUE A NEW TRANSFER CERTIFICATE OF TITLE IN FAVOR OF PETITIONER ROSARIO CARBONELL UPON PRESENTATION OF PROOF OF PAYMENT BY HER TO THE INFANTES OF THE AFORESAID AMOUNT OF ONE THOUSAND FIVE HUNDRED PESOS (P1,500.00). PRIVATE RESPONDENTS INFANTES MAY REMOVE THEIR AFOREMENTIONED USEFUL IMPROVEMENTS FROM THE LOT WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION, UNLESS THE PETITIONER ROSARIO CARBONELL ELECTS TO ACQUIRE THE SAME AND PAYS THE INFANTES THE AMOUNT OF THIRTEEN THOUSAND FOUR HUNDRED TWENTYNINE PESOS (P13,429.00) WITHIN THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION. SHOULD PETITIONER CARBONELL FAIL TO PAY THE SAID AMOUNT WITHIN THE AFORESTATED PERIOD OF THREE (3) MONTHS FROM THE FINALITY OF THIS DECISION, THE PERIOD OF THREE (3) MONTHS WITHIN WHICH THE RESPONDENTS INFANTES MAY REMOVE THEIR AFOREMENTIONED USEFUL IMPROVEMENTS SHALL COMMENCE FROM THE EXPIRATION OF THE THREE (3) MONTHS GIVEN PETITIONER CARBONELL TO PAY FOR THE SAID USEFUL IMPROVEMENTS. WITH COSTS AGAINST PRIVATE RESPONDENTS. Castro, C.J., Aquino and Martin, JJ., concur. Separate Opinions TEEHANKEE, J., concurring: I concur. My concurrence proceeds from the same premise as the dissenting opinion of Justice Muoz Palma that both the conflicting buyers of the real property in question, namely, petitioner Rosario Carbonell as the first buyer and respondent Emma Infante as the second buyer may be deemed purchasers in good faith at the respective dates of their purchase.

The answer to the question of who between the two buyers in good faith should prevail is provided in the second paragraph of Article 1544 of the Civil Code 1 (formerly Article 1473 of the old Civil Code) which ordains that "the ownership of the immovable property shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property." In the case at bar, the seller executed on January 27, 1955 the private memorandum of sale of the property in favor of the first buyer Carbonell. However, six days later on February 2, 1955, the seller sold the property for a second time for an improved price, this time executing a formal registrable deed of sale in favor of the second buyer Infante. Cdpr So it was that when the first buyer Carbonell saw the seller a few days afterwards bringing the formal deed of sale for the seller's signature and the balance of the agreed cash payment, the seller told her that he could not proceed anymore with formalizing the first sale because he had already formalized the second sale in favor of the second buyer Infante. Since Carbonell (the first buyer) did not have a formal registrable deed of sale, she did the next best thing to protect her legal rights and registered on February 8, 1955 with the Rizal Register of Deeds her adverse claim as first buyer entitled to the property. The second buyer Infante registered the deed of sale in her favor with the Rizal Register of Deeds only on February 12, 1955 (notwithstanding its having been executed ten days earlier on February 2, 1955), and therefore the transfer certificate of title issued in her favor carried the duly annotated adverse claim of Carbonell as the first buyer. Both these registrations were in good faith and hence, as provided by the cited codal article, the first buyer Carbonell as also the first registrant is legally entitled to the property. The fact that Carbonell registered only an adverse claim as she had no registrable deed of sale is of no moment. The facts of record amply show that she had a written memorandum of sale, which was partially executed with the advance payment made by her for the seller's mortgage account with the bank, and which was perfected and binding in law by their accord on the subject matter and price. Carbonell could in law enforce in court her rights as first buyer under the memorandum agreement and compel the seller to execute in her favor a formal registrable deed of sale which would relate back to the date of the original memorandum agreement. And under the cited codal provision, Carbonell had to duly register such adverse claim as first buyer, as otherwise the subsequent registration of the second buyer's deed of sale would have obliterated her legal rights and enabled the seller to achieve his fraudulent act of selling the property a second time for a better price in derogation of her prior right thereto. The fact that the seller refused to execute the formal deed of sale in Carbonell's favor and (as was only to be expected) informed her that he could not proceed anymore with the sale because he had sold it for a second time for a better price did not convert her prior registration of her adverse claim into one of bad faith.

The fraudulent seller's act of informing the first buyer that he has wrongfully sold his property for a second time cannot work out to his own advantage and to the detriment of the innocent first buyer (by being considered as an "automatic registration" of the second sale) and defeat the first buyer's right of priority, in time, in right and in registration. LexLib The governing principle here is prius tempore, potior jure 2 (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's rights except only as provided by the Civil Code and that is where the second buyer first registers in good faith the second sale ahead of the first. Such knowledge of the first buyer does not bar her from availing of her rights under the law, among them, to register first her purchase as against the second buyer. But in converso knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace the first buyer: that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer's rights) from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession. The second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law. The above principles were aptly restated in a 1948 Court of Appeals decision in the case of Gallardo vs. Gallardo penned by Justice J.B.L. Reyes, then a member of the appellate court. 3 The facts of that case and the case at bar are virtually identical, except that the earlier case was decided under the old Civil Code (Article 1473 thereof now reproduced as Article 1544 of the present Civil Code), and the ratio decidendi thereof, mutatis mutandis, is fully applicable, as follows: "Analysis of article 1473 of the Civil Code shows that before a second vendee can obtain priority over the first, it is indispensable that he should have acted in good faith, (that is to say, in ignorance of the rights of the first vendee's rights) until the title is transferred to him by actual or constructive delivery of the thing sold. This is the price exacted by law for his being able to displace the first vendee; and the mere fact that the second contract of sale was perfected in good faith is not sufficient if , before the title passes, the second vendee acquires knowledge of the first transaction. The second buyer innocently agreed to purchase the land may protect him against responsibility of conspiring with his vendor to defraud the established rights of the first purchaser; but to defeat the latter's priority in time (based on the old principle ' prius tempore, potior jure,' first in time, better in right) the good faith or innocence of the posterior vendee must continue until his contract ripens into ownership by tradition or recording (Palanca vs. Director of Lands, 43 Phil. 141, 154). "That the formal deed of conveyance to Gabino Gallardo was executed after that of Caoagas is of no moment, the contract of sale being perfected and binding by mere accord on the first subject matter and the price, even if neither is delivered (Article 1450, civil Code), the deed of conveyance will relate back to the date of the original agreement." 4

Finally, in the present case, the first buyer's registration (February 8, 1955) concededly preceded the second buyer's registration (February 12, 1955) by four days, and therefore, as provided by the Civil Code, the first buyer thereby duly preserved her right of priority and is entitled to the property.

MUOZ PALMA, J., dissenting: Strongly convinced as I am that the decision of the Court of Appeals under review should be affirmed, this dissenting opinion is being written. We are here confronted with a double sale made by Jose Poncio of his 195-square meter lot located at V. Agan St., San Juan, Rizal, covered by Transfer Certificate of Title No. 5040, the solution to which is found in Art. 1544 of the Civil Code, more particularly the second paragraph thereof which provides that should the thing sold be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the Registry of Property. 1 .The two purchasers, namely, petitioner Rosario Carbonell and respondent Emma Infante, are both purchasers in good faith. That Rosario Carbonell is a buyer in good faith cannot be disputed for at the time negotiations for the purchase of the lot were being made between her and the vendor, Jose Poncio, as of January 27, 1955, there was no indication at all from the latter that another sale was being contemplated. That Emma Infante is likewise a buyer in good faith is supported by: (a) an express finding of the trial court in its decision of January 20, 1965, to the effect that when the vendor and purchaser Infante consummated the sale on or about January 29, 1955, an examination of the original T.C.T. 5040 on file with the Register of Deeds of Rizal as well as the owner's duplicate revealed no annotation of any encumbrance or lien other than the mortgage in favor of the Republic Savings Bank (p. 92, Record on Appeal); (b) the findings of fact of the Court of Appeals given in the decision penned by then Justice Salvador V. Esguerra as well as in the first decision written by Justice Magno Gatmaitan which subsequently became the basis of the dissenting opinion to the majority, and from which I quote: prLL "2.CONSIDERING: That as basis for discussion of this issue, it must have to be remembered that the first vendee, Rosario Carbonell, certainly was an innocent purchaser . . . but also must it be remembered that Emma L. Infante, when she bought the property on 2 February, 1955, under Exhibit 3-Infante, neither had she before then been previously informed of the first sale to Rosario . . .; indeed as Emma has testified on this detail, it is easy to accept her declaration: 'Q.When Mr. Jose Poncio offered you this land in question, did he tell you that the land was sold or otherwise promised to Mrs. Carbonell? 'A.Of course not, otherwise I will never buy.'"(tsn. II-27).

in other words, at the respective dates of their purchase, both vendees, Rosario and Emma, were innocent and had acted in the best of good faith . . ." (pp. 9-10 of Justice Gatmaitan's decision found on pp. 76-77, rollo; see also p. 7 of his dissenting opinion found on p. 95, rollo). Departing from a well-entrenched rule set down in a long array of decisions of this Court that factual findings of the trial court and of the Court of Appeals are generally binding and conclusive, 1 and that on appeal by certiorari, questions of fact are not to be determined nor reviewed by Us, 2 the Majority Opinion of my colleagues however undertakes a fact-finding process of its own, and draws the conclusion that Emma Infante was a buyer in bad faith because, among other things: (a) Emma allegedly refused to talk to Rosario Carbonell when the latter went to see her about the sale of the lot, which "is not the attitude expected of a good neighbor imbued with christian charity and goodwill as well as a clean conscience" (p. 10, Majority Opinion); (b) "(B)efore or upon paying in full the mortgage indebtedness of Poncio to the bank, Infante naturally must have demanded from Poncio the delivery to her of his mortgage passbook as well as Poncio's mortgage contract . . . and Poncio as well as the bank, must have inevitably informed her that said mortgage passbook could not be given to her because it was already delivered to Carbonell" (p. 9, ibid); and (c) ". . . (T)he victim, therefore, 'of injustice and outrage' is the widow Carbonell and not the Infantes, who without moral compunction exploited the greed and treacherous nature of Poncio, who, for love of money and without remorse of conscience, dishonored his own plighted word to Carbonell, his own cousin. . . . Inevitably evident therefore from the foregoing discussion, is the bad faith of Emma Infante from the time she enticed Poncio to dishonor his contract with Carbonell, and instead to sell the lot to her (Infante) by offering Poncio a much higher price than the price for which he sold the same to Carbonell . . ." (p. 20, Majority Opinion; all italicized portions supplied) all of which are unsupported by the evidence and diametrically contrary to the findings of the court a quo and the appellate court sustaining the good faith of Emma Infante. 2.Inasmuch as the two purchasers are undoubtedly in good faith, the next question to be resolved is who of the two first registered her purchase or title in good faith. In applying Art. 1544 of the Civil Code, it is not enough that the buyer bought the property in good faith, but that the registration of her title must also be accomplished in good faith. This requirement of good faith is not only applicable to the second or subsequent purchaser but to the first as well. 3 Construing and applying the second paragraph of Art. 1473 of the Spanish Civil Code which has been adopted verbatim in Art. 1544 of the Civil Code of the Philippines, this Court in Leung Lee vs. F. L. Strong Machinery Co., et al., 37 Phil. 644, declared: "It has been suggested that since the provisions of article 1473 of the Civil Code require 'good faith,' in express terms, in relation to 'possession' and 'title,' but contain no express requirement as to 'good faith' in relation to the 'inscription' of the property in the registry, it must be presumed that good faith is not an essential requisite of registration in order that it may have the effect contemplated in this article. We cannot agree with this contention. It could not have been the intention of the legislator to base the preferential right secured

under this article of the code upon an inscription of title in bad faith. Such an interpretation placed upon the language of this section would open wide the door to fraud and collusion. The public records cannot be converted into instruments of fraud and oppression by one who secures an inscription therein in bad faith. The force and effect given by law to an inscription in a public record presupposes the good faith of him who enters such inscription; and rights created by statute, which are predicated upon an inscription in a public registry, do not and cannot accrue under an inscription 'in bad faith,' to the benefit of the person who thus makes the inscription." (pp 648-649, supra). Good faith means "freedom from knowledge and circumstances which ought to put a person on inquiry"; 3* it consists of an honest intention to abstain from taking any unconscientious advantage of another. 4 On this point it is my view that Rosario Carbonell cannot be held to have a title superior to that of Emma Infante for even if We were to concede that the notation of her adverse claim on February 8, 1955, was in the nature of registration of a title as required in Art. 1544 of the Civil Code, 5 the same was not accomplished in good faith. This is obvious from occurrences narrated in the Majority Opinion, thus: that on January 27, 1955, Carbonell and Jose Poncio made and executed the memorandum of sale, Exhibit A; that thereafter Carbonell asked Atty. Salvador Reyes to prepare the formal deed of sale which she brought to Poncio together with the amount of some P400.00, the balance she had to pay in addition to her assuming the mortgage obligation to Republic Savings Bank; that upon arriving at Poncio's house the latter told Carbonell that he could not proceed anymore with the sale because he had already given the lot to Emma Infante; that on February 5, 1955, Carbonell saw Emma Infante erecting a wall around the lot with a gate; that Carbonell consulted Atty. Jose Garcia who advised her to present an adverse claim with the Office of the Register of Deeds, and that being informed, that the sale in favor of Emma Infante had not yet been registered, Atty. Garcia prepared the notice of adverse claim which was signed and sworn to by Rosario Carbonell and registered on February 8, 1955. (see pp. 3-4, Decision). prcd At the time petitioner herein caused the annotation of her adverse claim she was, therefore, cognizant of facts which impaired her title to the property in question, and taking advantage of the situation that the second purchaser had not as yet registered her deed of sale, she went ahead of the second buyer and annotated what was only in the nature of an adverse claim inasmuch as she had no registrable document of sale at the time. That annotation of Carbonell's adverse claim did not produce any legal effects as to place her in a preferential situation to that of Infante, the second purchaser, for the simple reason that a registration made in bad faith is equivalent to no registration at all. It is a settled rule that the inscription in the registry, to be effective, must be made in good faith. (Pea, supra, p. 164). 3.One last point to be considered is the theory advanced by the dissenting opinion of Justice Gatmaitan that while Carbonell's registration of her adverse claim may indeed be considered in bad faith, nonetheless that of Infante was likewise in bad faith because at the time of the registration of the latter's deed of sale there was already inscribed on the original of the title on file with the Register of Deeds the adverse claim of Rosario Carbonell. With due respect to the foregoing conclusion of a highly respected Colleague, I hold the view that the act of the registration of Infante's deed of sale on February 12, 1955, was but a

formality in the sense that it simply formalized what had already been accomplished earlier, that is, the registration of Infante's purchase as against Carbonell when the latter acquired knowledge of the second sale on or about January 27, 1955, when she brought the memorandum of sale, Exh. A, to Jose Poncio and was informed by the latter that he could not go through with the sale because he had already sold it to Emma Infante, which information was bolstered by the fact that Carbonell saw Infante erecting a wall around the lot on February 5.

We have long accepted the rule that knowledge is equivalent to registration. What would be the purpose of registration other than to give notice to interested parties and to the whole world of the existence of rights or liens against the property under question? What has been clearly and succinctly postulated in T. de Winkleman and Winkleman vs. Veluz, 1922, 43 Phil. 604, 609, is applicable to the case before Us, and We quote therefrom: ". . . The purpose of registering an instrument relating to land, annuities, mortgages, liens, or any other class of real rights is to give notice to persons interested of the existence of these various liens against the property. If the parties interested have actual notice of the existence of such liens, then the necessity for registration does not exist. Neither can one who has actual notice of existing liens acquire any rights in such property free from such liens by the mere fact that such liens have not been recorded . . ." (citing Obras Pias vs. Devera Ignacio, 17 Phil. 45, 47). We cannot overlook the fact that while it may be true that the vendor Poncio had signed the memorandum, Exh. A, from which it may be implied that he sold a lot to Carbonell, there were other things to be accomplished for purposes of binding third parties, the lot in question being registered land, such as the execution of a formal deed of sale. Such a document of sale was never signed by Poncio for according to petitioner Carbonell, when she presented to Poncio the corresponding document together with the sum of P400.00 which according to her was the balance of the purchase price after she had assumed the mortgage with the Republic Bank, she was informed by the vendor that the property had been sold to another. That sale was confirmed when Carbonell saw Infante erecting a wall around the lot on February 5, 1955. As of that moment when Carbonell had notice or actual knowledge of the second sale in favor of Emma Infante a valid registration of the latter's deed of sale was constituted as against Carbonell. Accordingly, Infante has a preferential right to the property, the registration of her sale having been effected in the foregoing manner, prior to the annotation of Carbonell's adverse claim on February 8, 1955. LLjur The circumstances of the present case are strikingly similar to the hypothetical problem posted in Commentator Edgardo Paras' Book on the Civil Code of the Philippines and I wholeheartedly concur with his solution of the problem which is based on law. From him I quote: 6 "A sold a parcel of land with a torrens title to B on January 5. A week later, A sold the same land to C. Neither sale was registered. As soon as B learned of the sale in favor of C, he (b) registered an adverse claim stating that he was making the claim because the second sale

was in fraud of his rights as first buyer. Later, C registered the deed of sale that had been made in his favor. Who is now the owner B or C? "Ans. C is clearly the owner, although he was the second buyer. This is so, not because of the registration of the sale itself but because of the AUTOMATIC registration in his favor cause by B's knowledge of the first sale (actual knowledge being equivalent to registration). The purpose of registration is to notify. This notification was done because of B's knowledge. It is wrong to assert that B was only trying to protect his right for there was no more right to be protected. He should have registered the sale BEFORE knowledge came to him. It is now too late. It is clear from this that with respect to the principle "actual knowledge is equivalent to registration of the sale about which knowledge has been obtained' the knowledge may be that of either the FIRST or the SECOND buyer." (pp. 142-143, Vol. V, 1972 Ed.) Aside from the fact that the sale to Infante was considered registered prior to the registration of Carbonell's notice of adverse claim, Infante also took immediate physical possession of the property by erecting a fence with a gate around the lot on February 5, at least three days prior to Carbonell's registration on February 8, 1955. On top of all these, equity is on the side of Emma Infante. Under the Majority Opinion, Emma Infante stands to lose the lot she bought in good faith which was fully paid for plus the building she erected thereon for which she spent the total sum of a little less than P14,000.00, or equivalent to about P40,000.00 at the time the case was decided by the Appellate Court, considering that Rosario Carbonell is being given the option either to order the removal of the house or to acquire it at P13,429.00. On this point I agree with the following statement of Justice Esguerra who penned the decision of the Appellate Court, thus: "It is indeed inequitable and revolting to one's sense of justice and fairness that Rosario Carbonell who paid out of her own money the sum of only P200.00 to the Republic Savings Bank for the account of Jose Poncio, which was the motivation for the execution of the private instrument, Exhibit A, should have a superior right to the land involved. The property has been improved at a great expense and a building of strong materials has been constructed thereon by Emma Infante who spent for the lot and building the total sum of P13,429.00 made up of P11,929.00 for cost of land and improvements and the building and P1,500.00 to discharge the mortgage in favor of the Republic Savings Bank. With the present purchasing power of the peso, this sum, after more than 13 years, would be now equivalent to about P40,000.00, Courts should not lend a hand to the perpetration of such kind of injustice and outrage." (see page 88, rollo) I close paraphrasing the Supreme Court of Oklahoma in Phelps vs. Theime, et al., 217 P 376, 377, that "equity is a right wiseneth that considereth all of the particular circumstances of the case and is also tempered with the sweetness of mercy." (quoting from St. Germain) In this case now before Us there is no need to invoke mercy, for all that is required is a wise consideration of the particular circumstances narrated above which warrant a judgment in favor of respondents Infante. With all the foregoing, I vote for the affirmance of the decision under review.

[G.R. No. L-54526. August 25, 1986.] METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner, vs. THE COURT OF APPEALS and THE CITY OF DAGUPAN, respondents. Miguel T. Caguioa, Ireneo B. Orlino and Manuel D. Victorio for respondent City of Dagupan. SYLLABUS 1.REMEDIAL LAW; APPEALS; JOINDER OF PARTIES; COURT WHICH RENDERED THE APPEALED JUDGMENT SHOULD NOT BE MADE PARTY TO AN APPEAL BY CERTIORARI. It may be necessary to invite attention to the common error of joining the court (be it a Regional Trial Court, the Intermediate Appellate Court, or the Sandiganbayan) as a party respondent in an appeal by certiorari to this court under Rule 45 of the Rules of Court. The only parties in an appeal by certiorari are the appellant as petitioner and the appellee as respondent. (Cf. Elks Club vs. Rovira, 80 Phil. 272) The court which rendered the judgment appealed from is not a party in said appeal. 2.ID.; ID.; ID.; EXCEPTION. The joinder of the Intermediate Appellate Court or the Sandiganbayan as party respondent in an appeal by certiorari is necessary in cases where the petitioner-appellant claims that said court acted without or in excess of its jurisdiction or with grave abuse of discretion. An example of this is a case where the petitioner-appellant claims that the Intermediate Appellate Court or the Sandiganbayan acted with grave abuse of discretion in making its findings of fact, thus justifying the review by this court of said findings of fact. In such a case, the petition for review on certiorari under Rule 45 of the Rules of Court is at the same time a petition for certiorari under Rule 65, and the joinder of the Intermediate Appellate Court or the Sandiganbayan becomes necessary. (Cf. Lianga Lumber Company vs. Lianga Timber Co., Inc., March 31, 1977, 76 SCRA 197) 3.ID.; SPECIAL CIVIL ACTION; CERTIORARI; JOINDER OF PARTIES; JOINDER OF JUDGE OR COURTS AS PARTY DEFENDANT OR RESPONDENT, NECESSARY. It is in the special civil action of certiorari under Section 5 of Rule 65 of the Rules of Court where the court or judge is required to be joined as party defendant or respondent. 4.CIVIL LAW; PROPERTY; BUILDER IN BAD FAITH LOSES WHAT IS BUILT AND WITHOUT RIGHT TO INDEMNITY. Does a possessor in bad faith have the right to remove useful improvements? The answer is clearly in the negative. Recognized authorities on the subject are agreed on this point. Article 449 of the Civil Code of the Philippines provides that "he who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity." As a builder in bad faith, NAWASA lost whatever useful improvements it had made without right to indemnity (Santos vs. Mojica, Jan. 31, 1969, 26 SCRA 703). 5.ID.; ID.; RIGHTS OF POSSESSOR IN GOOD FAITH; LIMITATIONS. Under Article 546 of said code, only possessor in good faith shall be refunded for useful expenses with the right of retention until reimbursed; and under Article 547 thereof, only a possessor in good faith may remover useful improvements if this can be done without damage to the principal thing and

if the person who recovers the possession does not exercise the option of reimbursing the useful expenses. 6.ID.; ID.; POSSESSOR IN BAD FAITH ENTITLED TO REMOVE IMPROVEMENTS MADE PURELY FOR LUXURY AND MERE PLEASURE; EXCEPTION. The right given a possessor in bad faith to remove improvements applies only to improvements for pure luxury or mere pleasure, provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they may have at the time he enters into possession (Article 549, Civil Code). 7.ID.; ID.; RULING ON THE CASE OF CARBONELL vs. COURT OF APPEALS (66 SCRA 99) DOES NOT ESTABLISH PRECEDENT; CASE AT BAR. In the case of Carbonell vs. Court of Appeals (66 SCRA 99), both the trial court and the Court of Appeals found that respondents Infantes were possessors in good faith. On appeal, the First Division of this Court reversed the decision of the Court of Appeals and declared petitioner Carbonell to have the superior right to the land in question. On the question of whether or not respondents Infantes were possessors in good faith, four Members ruled that they were not, but as a matter of equity allowed them to remove the useful improvements they had introduced on the land. Inasmuch as only four Members concurred in ruling that respondents Infantes were possessors in bad faith and two Members ruled that they were possessors in good faith, said decision does not establish a precedent. Moreover, the equitable considerations present in said case are not present in the case at bar. DECISION FERIA, J p: This is a petition for review on certiorari of the decision of the Court of Appeals which affirmed the decision of the then Court of First Instance of Pangasinan. The lower court had declared respondent City of Dagupan the lawful owner of the Dagupan Waterworks System and held that the National Waterworks and Sewerage Authority, now petitioner Metropolitan Waterworks and Sewerage System, was a possessor in bad faith and hence not entitled to indemnity for the useful improvements it had introduced. Before proceeding further, it may be necessary to invite attention to the common error of joining the court (be it a Regional Trial Court, the Intermediate Appellate Court, or the Sandiganbayan) as a party respondent in an appeal by certiorari to this Court under Rule 45 of the Rules of Court. The only parties in an appeal by certiorari are the appellant as petitioner and the appellee as respondent. (Cf. Elks Club vs. Rovira, 80 Phil. 272) The court which rendered the judgment appealed from is not a party in said appeal. It is in the special civil action of certiorari under Section 5 of Rule 65 of the Rules of Court where the court or judge is required to be joined as party defendant or respondent. The joinder of the Intermediate Appellate Court or the Sandiganbayan as party respondent in an appeal by certiorari is necessary in cases where the petitioner-appellant claims that said court acted without or in excess of its jurisdiction or with grave abuse of discretion. An example of this is a case where the petitioner-appellant claims that the Intermediate Appellate Court or the Sandiganbayan acted with grave abuse of discretion in making its findings of fact, thus justifying the review by this court of said findings of fact. (See the exceptions to the rule of

conclusiveness of the findings of fact of the Intermediate Appellate Court or the Sandiganbayan in the case of Sacay vs. Sandiganbayan, G.R. Nos. 66497-98, July 10, 1986.) In such a case, the petition for review on certiorari under Rule 45 of the Rules of Court is at the same time a petition for certiorari under Rule 65, and the joinder of the Intermediate Appellate Court or the Sandiganbayan becomes necessary. (Cf. Lianga Lumber Company vs. Lianga Timber Co., Inc., March 31, 1977, 76 SCRA 197). The City of Dagupan (hereinafter referred to as the CITY) filed a complaint against the former National Waterworks and Sewerage Authority (hereinafter referred to as the NAWASA), now the Metropolitan Waterworks and Sewerage System (hereinafter referred to as MWSS), for recovery of the ownership and possession of the Dagupan Waterworks System. NAWASA interposed as one of its special defenses R.A. 1383 which vested upon it the ownership, possession and control of all waterworks systems throughout the Philippines and as one of its counterclaims the reimbursement of the expenses it had incurred for necessary and useful improvements amounting to P255,000.00. Judgment was rendered by the trial court in favor of the CITY on the basis of a stipulation of facts. The trial court found NAWASA to be a possessor in bad faith and hence not entitled to the reimbursement claimed by it. NAWASA appealed to the then Court of Appeals and argued in its lone assignment of error that the CITY should have been held liable for the amortization of the balance of the loan secured by NAWASA for the improvement of the Dagupan Waterworks System. The appellate court affirmed the judgment of the trial court and ruled as follows: "However, as already found above, these useful expenses were made in utter bad faith for they were instituted after the complaint was filed and after numerous Supreme Court decisions were promulgated declaring unconstitutional the taking by NAWASA of the patrimonial waterworks systems of cities, municipalities and provinces without just compensation. "Under Article 546 of the New Civil Code cited by the appellant, it is clear that a builder or a possessor in bad faith is not entitled to indemnity for any useful improvement on the premises. (Santos vs. Mojica, L-25450, Jan. 31, 1969). In fact, he is not entitled to any right regarding the useful expenses (II Paras (1971) 387). He shall not have any right whatsoever. Consequently, the owner shall be entitled to all of the useful improvements without any obligation on his part (Jurado, Civil Law Reviewer (1974) 223)." Petitioner-Appellant MWSS, successor-in-interest of the NAWASA, appealed to this Court raising the sole issue of whether or not it has the right to remove all the useful improvements introduced by NAWASA to the Dagupan Waterworks System, notwithstanding the fact that NAWASA was found to be a possessor in bad faith. In support of its claim for removal of said useful improvements, MWSS argues that the pertinent laws on the subject, particularly Articles 546, 547 and 549 of the Civil Code of the Philippines, do not definitely settle the question of whether a possessor in bad faith has the right to remove useful improvements. To bolster its claim MWSS further cites the decisions in the cases of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) and Carbonell vs. Court of Appeals (69 SCRA 99). The CITY in its brief questions the raising of the issue of the removal of useful improvements for the first time in this Court, inasmuch as it was not raised in the trial court, much less

assigned as an error before the then Court of Appeals. The CITY further argues that petitioner, as a possessor in bad faith, has absolutely no right to the useful improvements; that the rulings in the cases cited by petitioner are not applicable to the case at bar; that even assuming that petitioner has the right to remove the useful improvements, such improvements were not actually identified, and hence a rehearing would be required which is improper at this stage of the proceedings; and finally, that such improvements, even if they could be identified, could not be separated without causing substantial injury or damage to the Dagupan Waterworks System.

The procedural objection of the CITY is technically correct. NAWASA should have alleged its additional counterclaim in the alternative - for the reimbursement of the expenses it had incurred for necessary and useful improvements or for the removal of all the useful improvements it had introduced. Petitioner, however, argues that although such issue of removal was never pleaded as a counterclaim, nevertheless it was joined with the implied consent of the CITY, because the latter never filed a counter-manifestation or objection to petitioner's manifestation wherein it stated that the improvements were separable from the system, and quotes the first part of Sec. 5 of Rule 10 of the Rules of Court to support its contention. Said provision reads as follows: "SEC. 5.Amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects, as if they bad been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure so to amend does not affect the result of the trial of these issues . . . " This argument is untenable because the above-quoted provision is premised on the fact that evidence had been introduced on an issue not raised by the pleadings without any objection thereto being raised by the adverse party. In the case at bar, no evidence whatsoever had been introduced by petitioner on the issue of removability of the improvements and the case was decided on a stipulation of facts. Consequently, the pleadings could not be deemed amended to conform to the evidence. However, We shall overlook this procedural defect and rule on the main issue raised in this appeal, to wit: Does a possessor in bad faith have the right to remove useful improvements? The answer is clearly in the negative. Recognized authorities on the subject are agreed on this point.** Article 449 of the Civil Code of the Philippines provides that "he who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity." As a builder in bad faith, NAWASA lost whatever useful improvements it had made without right to indemnity (Santos vs. Mojica, Jan. 31, 1969, 26 SCRA 703).

Moreover, under Article 546 of said code, only a possessor in good faith shall be refunded for useful expenses with the right of retention until reimbursed; and under Article 547 thereof, only a possessor in good faith may remove useful improvements if the can be done without damage to the principal thing and if the person who recovers the possession does not exercise the option of reimbursing the useful expenses. The right given a possessor in bad faith is to remove improvements applies only to improvements for pure luxury or mere pleasure, provided the thing suffers no injury thereby and the lawful possessor does not prefer to retain them by paying the value they have at the time he enters into possession (Article 549, Id.). The decision in the case of Mindanao Academy, Inc. vs. Yap (13 SCRA 190) cited by petitioner does not support its stand. On the contrary, this Court ruled in said case that "if the defendant constructed a new building, as he alleges, he cannot recover its value because the construction was done after the filing of the action for annulment, thus rendering him a builder in bad faith who is denied by law any right of reimbursement." What this Court allowed appellant Yap to remove were the equipment, books, furniture and fixtures brought in by him, because they were outside of the scope of the judgment and may be retained by him. Neither may the decision in the case of Carbonell vs. Court of Appeals (69 SCRA 99), also cited by petitioner, be invoked to modify the clear provisions of the Civil Code of the Philippines that a possessor in bad faith is not entitled to reimbursement of useful expenses or to removal of useful improvements. In said case, both the trial court and the Court of Appeals found that respondents Infantes were possessors in good faith. On appeal, the First Division of this Court reversed the decision of the Court of Appeals and declared petitioner Carbonell to have the superior right to the land in question. On the question of whether or not respondents Infantes were possessors in good faith, four Members ruled that they were not, but as a matter of equity allowed them to remove the useful improvements they had introduced on the land. Justice Teehankee (now Chief Justice) concurred on the same premise as the dissenting opinion of Justice Muoz Palma that both the conflicting buyers of the real property in question, namely petitioner Carbonell as the first buyer and respondents Infantes as the second buyer, may be deemed purchasers in good faith at the respective dates of their purchase. Justice Muoz Palma dissented on the ground that since both purchasers were undoubtedly in good faith, respondents Infantes' prior registration of the sale in good faith entitled them to the ownership of the land. Inasmuch as only four Members concurred in ruling that respondents Infantes were possessors in bad faith and two Members ruled that they were possessors in good faith, said decision does not establish a precedent. Moreover, the equitable consideration present in said case are not present in the case at bar. WHEREFORE, the decision of the appellate court is affirmed with costs against petitioner. SO ORDERED. Necessary expenses G.R. No. L-28721 October 5, 1928

MARTIN MENDOZA and NATALIO ENRIQUEZ, plaintiffs-appellees, vs. MANUEL DE GUZMAN, defendant-appellant. MAX B. SOLIS, intervenor-appellant. Juan S. Rustia for appellants. Godofredo Reyes for appellees. MALCOLM, J.: This case calls for the application of articles 361, 435, and 454 of the Civil Code to the proven facts. On November 6, 1916, Leandra Solis and her husband Bernardo Solis brought an action in the Court of First Instance of Tayabas against Martin Mendoza for the recovery of a certain piece of land. Judgment was rendered in that case absolving Mendoza from the complaint, and this judgment was subsequently affirmed by the Supreme Court. 1 When the case was remanded to the court of origin, the trial judge issued an order requiring the provincial sheriff immediately to dissolve the preliminary writ of injunction and to put Mendoza in the possession of the land. By virtue of this order, Mendoza was in fact put in possession of the property. In the cadastral proceedings of the municipality of Sariaya, Tayabas, the piece of land above-mentioned was identified as lot No. 687. In the decision rendered in the cadastral case, this lot was adjudicated in favor of Martin Mendoza and Natalio Enriquez in equal parts pro indiviso subject to the right of retention on the part of Manuel de Guzman until he shall have been indemnified for the improvements existing on the land. By virtue of this judgment, De Guzman presented a motion requesting the issuance of a writ of possession for lot No. 687 in his favor which was granted on June 25, 1924. From the time Leandra Solis and Bernardo Solis, as well as Manuel de Guzman who was working on the land, were ejected therefrom, Martin Mendoza possessed it until June 25, 1924, when de Guzman obtained the writ of possession above- mentioned. Since then De Guzman has had dominion over the land. Being unable to come to an agreement as to the amount which should be allowed for the improvements made on the land, Martin Mendoza and Natalio Enriquez began an action requesting the court to (a) fix the value of the necessary and useful expenses incurred by Manuel de Guzman in introducing the improvements; (b) require the defendant to render an accounting of the fruits received by him and order that the value of the fruits be applied to the payment of the necessary and useful expenses; and (c) decree the restitution of the possession to the plaintiffs. To the complaint, the defendant filed an answer in the form of a general denial with special defenses and appended a counter-claim and crosscomplaint, in which a total of P6,000 was asked. During the pendency of the case, Bernardo Solis, or Max. B. Solis, one of the persons who was ejected from the land, asked leave to intervene, alleging, among other things, that De Guzman, in consideration of the sum of P5,000, had transferred all his rights in the improvements and in the lot to him with the exception of two hundred coconut trees. This petition was granted by the trial court. When the case was called for trial, the parties entered into the follwing stipulation: 1. That the plaintiffs are the owners and proprietors of the land described in the second paragraph of the complaint. 2. That a decree of registration has been issued on said land in the terms set forth in paragraph 3 of the complaint.

3. That the defendant Manuel de Guzman is the one who has been in possession and enjoyment of the land from June 25, 1924, up to the present time by virtue of a writ of possession obtained by him from the Court of Land Registration. 4. That the defendant has made improvements on said land be planting coconut trees thereon. 5. That the plaintiff Martin Mendoza is the one who has been in possession and enjoyment of said property and its improvements since December 16, 1916, by virtue of a writ of possession in civil case No. 356 until said pssession was transferred to the defendant Manuel de Guzman. 6. That from March 20, 1920, the plaintiff Natalio Enriquez has been in possession and enjoyment of a portion of the land, the subject matter of the complaint herein, by virtue of a deed of sale executed in his favor by Attorney Agustin Alvarez, who, in turn, acquired it from the other plaintiff Martin Mendoza, until June 25, 1924. The parties desire to submit, as they do submit, under this stipulation of facts the following questions: (a) The amount of the indemnity to be paid to the defendant for the improvements made by him on said lot and the basis upon which said amount shall be fixed. (b) Whether or not the defendant is obliged to render an account of the fruits received by him from June 25, 1924, until the improvements are delivered after same have been paid for. 1awph!l.net (c) Whether the value of said fruits and products received by the defendant shall be applied to the indemnity to which he is entitled, or whether said defendant is obliged to deliver to the plaintiffs the remainder in case of excess. (d) Whether or not the defendant has the right to be paid by the plaintiffs in whole or in part for the value of the fruits received by Martin Mendoza and Natalio Enriquez from the respective dates that they were in possession and enjoyment of the land until June 25, 1924. The parties at the same time that they submit to the court for decision the questions presented in the above stipulation reserve to themselves, whatever said decision may be, the right to present later their evidence in support of their respective views with respect to the amount of the indemnity. After the preliminary questions have been decided, the parties request that commissioners be appointed to receive said evidence with respect to the amount of the indemnity in accordance with the views of both parties. The trial court resolved the questions presented by holding (1) that in accordance with the provisions of articles 435 and 454 in relation with article 361 of the Civil Code, the value of the "indemnization" to be paid to the defendant should be fixed according to the necessary and useful expenses incurred by him in introducing "las plantaciones en cuestion"; (2) that the plaintiffs as the owner of the property have the right to make their own "las plantaciones hechas por el demandado" upon payment in the form indicated in No. 1, the defendant having the right to retain the land until the expenditures have been refunded; (3) that the defendant is obliged to render a detail and just account of the fruits and other profits received by him from the property for their due application; and (4) that the value of the fruits received by the defendant should first be applied to the payment of the "indemnizacion," and in that it exceeds the value of the "indemnizacion," the excess shall be returned to the plaintiffs. With respect to the last question as to whether or not the plaintiffs are obliged to return to the defendant the value of the fruits received by them before the defendant took possession of the land, the trial court abstained from making any pronouncement for the reason that the circumstances under which the plaintiffs acquired

possession and the defendant again acquired it were not before him, the parties needing to submit their evidence with respect to this point. At the trial which followed and at the instance of the parties, two commissioners were appinted with instructions to inspect the land and to count the number of coconut trees planted thereon, determining the number of fruit-bearing trees and those that are not fruitbearing as well as the condition of the same. After trial, Judge of First Instance Gloria rendered judgment declaring (a) that the defendant Manuel de Guzman and the intervenor Bernardo Solis have the right to collect from the plaintiffs Martin Mendoza and Natalio Enriquez the sum of P2,046 as compensation for the necessary and useful expenditures in the proportion of 20 per cent for Manuel de Guzman and 80 per cent for Bernardo Solis; and (b) that Manuel de Guzman and Bernardo Solis are obliged to pay to the plaintiffs the sum of P666.93 per annum from June 25, 1924, one-fifth of this amount to be paid by Manuel de Guzman and the other four-fifths by Bernardo Solis. As on the date when this judgment was rendered, that is on September 23, 1927, the amount that the plaintiffs were required to pay to the defendant and intervenor exceeded the amount that the latter were to pay the former, the defendant and intervenor were ordered to deliver the land and its improvement as soon as the plaintiffs have paid the difference, without special pronouncement as to costs. The appeal of the defendant and intervenor is based on fourteen assigned errors relating to both questions of fact and of law. The question of fact mainly concerns the amount to be paid as "indemnizacion" in the form of necessary and useful expenditures incurred by the defendant. The question of law mainly concerns the interpretation of articles 361, 453, and 454 of the Civil Code. Counsel for the appellants has presented a learned brief divided into three chapters. Counsel for the appellees has countered with an equally helpful brief in which the fourteen assigned errors are reduced for purposes of arguments to four fundamental questions. It would not be profitable and it is not necessary to follow opposing counsel into all of their refinements of fact and law. As to the facts, the findings of the trial judge should be given effect. An examination of the evidence shows that these findings are fully substantiated. Our only doubt has been as to the just value for each coconut tree now found on the land. However, everything considered, we have at last determined that we would not be justified in changing the value per tree of P2 as fixed in the trial court. With respect to the fruits received by the defendant while the land was in his possession, the finding in the trial court is correct. With the facts as above indicated, little time need be taken to discuss the points of law. Article 361 of the Civil Code in the original Spanish text uses the word "indemnizacion." However one may speculate as to the true meaning of the term "indemnizacion" whether correctly translated as "compensation" or "indemnity," the amount of the "indemnizacion" is the amount of the expenditures mentioned in articles 453 and 454 of the Civil Code, which in the present case is the amount of the necessary and useful expenditures incurred by the defendant. Necessary expenses have been variously described by the Spanish commentators as those made for the preservation of the thing (4 Manresa's Comentarios al Codigo Civil, p. 258); as those without which the thing would deteriorate or be lost (Scaevola's Comentarios al Codigo Civil, p.408); as those that augment the income of the things upon which they are expanded (4 Manresa's Comentarios al Codigo Civil, p. 261; 8 Scaevola's Comentarios al Codigo Civil, p. 416). Among the necessary expenditures are those incurred for cultivation, production, upkeep, etc. (4 Manresa's Comentarios al Codigo Civil, p. 257). Here the plaintiffs have chosen to take the improvements introduced on the land and are disposed to pay the amount of the necessary and useful expenses incurred by

the defendant. Inasmuch as the retentionist, who is not exactly a posessor in good faith with in the meaning of the law, seeks to be reimbursed for the necessary and useful expenditures, it is only just that he should account to the owners of the estate for any rents, fruits, or crops he has gathered from it. In brief, therefore, and with special reference to the decision appealed from, the errors assigned on appeal, and the argument of counsel as addressed to the decision in the lower court and the assignment of errors, we may say that we are content to make the findings of fact and law of Judge Gloria in the lower court the findings of fact and law in the appellate court. Based on the foregoing considerations, the judgment appealed from will be affirmed, with the costs of this instance against the appellants. Avancena, C.J., Johnson, Street, Ostrand, Romualdez and Villa-Real, JJ., concur.

G.R. No. L-30823 December 28, 1929 ANGELO ANGELES and LUCIA A. DE ANGELES, plaintiffs-appellees, vs. ANATALIA LOZADA and her husband SEGUNDO SAGUISAG, defendants-appellants. ROMUALDEZ, J.: Alleging that they are entitled to repurchase the property specified in their complaint, the plaintiffs pray: Wherefore: The plaintiffs respectfully pray this honorable court to render judgment ordering the defendants: (a) To vacate the properties described in the complaint; (b) to pay the plaintiffs the sum of two hundred and forty pesos (P240) as rent for said property from December 13, 1925 to December 13, 1926, inclusive, plus P20 monthly as rent from the date last mentioned until they vacate the aforesaid property; (c) to pay plaintiffs the sum of two hundred and fifty pesos (P250) for the portions of the house demolished by the defendants; (d) to pay plaintiffs the sum of P200 for damages; (e) to pay the costs of this action; and (f) to grant plaintiffs any other just and equitable remedy. (Pages 6 and 7, bill of exceptions.) The defendants filed a demurrer, which was overruled, and answered with a general denial and a counterclaim to the effect that in order to make the house mentioned in the complaint habitable, they had to repair it, expending P259.74 thereon which the plaintiffs refused to reimburse them; wherefore, they prayed to be absolved from the complaint and that the plaintiffs be compelled to pay them said sum of P259.74. In reply, the plaintiffs set up a general denial of the allegations of the answer, and by way of special defense contend that the defendants had no right to take possession, or to dispose, of the aforesaid property, and they pray that the petition contained in the complaint be granted, and that they be absolved from the counterclaim. After hearing, the Court of First Instance of Rizal rendered judgment as follows: It is ordered that judgment be entered requiring the defendants to vacate the property described in the complaint, upon payment to them of the repurchase price in the hands of the sheriff; to pay plaintiffs the sum of ten pesos (P10) monthly, as the value fixed by the

court for the use and occupation of the aforementioned property, from December 13, 1925 until the delivery thereof, with the costs of the instant case against said defendants. (Pages 11 and 12, bill of exceptions.) The defendants appeal from this judgment making the following assignments of error as committed by the court below: 1. In overruling the demurrer. 2. In holding: (a) That the appellants refused to vacate the property herein question upon payment of the repurchase price. (b) That the sheriff tendered the repurchase price when the appellants were called upon to resell said lot. (c) That the appellants have no right to take possession of the property before the period of redemption has expired, if the property is not occupied by the judgment debtor. 3. In not holding: (a) That the term of redemption had expired when the action was brought. (b) That the appellants are possessors in good faith. 4. In ordering the payment of P10 monthly for the use and occupation of the property and the payment of the costs. 5. In dismissing the appellants' counterclaim. The facts are: The property in question, levied upon by virtue of a writ of execution, was sold at public auction to the defendants for P405 on December 12, 1925. It is shown by a preponderance of the evidence that the house upon the aforesaid lot was then uninhabitable and almost in ruins, and the defendants repaired it, expending P259.74 thereon. On November 15, 1926, the judgment debtor sold her rights and interest in said lot to the plaintiffs. On November 18, 1926, in view of the defendants' refusal to accept the repurchase, the plaintiff Lucia A. de Angeles, deposited with the sheriff the sum of P457.19, which is the auction sale price, plus 1 per cent interest monthly, and the sheriff notified said defendant thereof, who still refused to resell the lot. With regard to the repurchase, the plaintiffs were, and still are entitled to recover the property from the defendants upon payment of the sum of P457.19 offered and deposited by them. Article 1518 of the Civil Code, made applicable to legal redemption by article 1525 thereof, in so far as it provides that the redemptioner must reimburse the purchaser for the necessary and useful expenditures made upon the thing sold, and with respect to legal

redemption, can no longer be enforced in view of the provision of section 465 of the Code of Civil Procedure, which is a law subsequent to the Civil Code, and which reads: The judgment debtor, or redemptioner, may redeem the property from the purchaser, at any time within twelve months after the sale, on paying the purchaser the amount of his purchase, with one per cent per month interest thereon in addition, up to the time of redemption, together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and interest on such last-named amount at the same rate. And if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase was made, the amount of such other lien, with interest. (Emphasis ours.) The defendants' right of retention by virtue of their having defrayed the expenses for repairs to the property, is not a prior lien to that of the redemptioners, and we have seen that a prior lien is an indispensable condition, according to section 465 of the Code of Civil Procedure, in order that the amount of such lien may be demanded as part of the sum payable for the redemption. With respect to the defendants' counterclaim for the amount expended for the aforesaid repairs, we are of opinion that they are entitled to recover the same from the defendants. It is true that the purchaser of real property sold at public auction is the execution of ajudgment is not entitled to the possession of said property pending the repurchase, for it was so held by this court in the case of Pabico vs. Ong Pauco (43 Phil., 572), and in Powell vs. National Bank (G. R. No. 31339, in the decision promulgated on November 27, 1929), 1 the Spanish translation of said section being wrong, and leading to a different conclusion. But it is certain that the repairs to the real property here in question, according to the evidence, were made in good faith (it has not been shown that they were made in bad faith), and that they were useful and necessary, inasmuch as the house, as has been stated, was uninhabitable and almost in ruins. Consequently, the defendants are entitled to reimbursement of the amount of said repairs from the plaintiffs according to article 453 of the Civil Code, and they would have a perfect right to retain the property according to said article, were it not for the fact that the defendants are indebted to the plaintiffs for rent for the occupation thereof, because as we have stated, the defendants were not entitled to its possession, and because said rent due to this date, compensated by the sum of P259.74, the cost of the repairs, leaves a balance in favor of the plaintiffs. And for the determination of the amount of this rent, we accept the monthly rate fixed by the court below at P10, which, under the circumstances of the case, is reasonable. However, the rent should not be computed from the date of the public auction sale since the house was then uninhabitable, but from the day when the plaintiffs tendered and deposited the repurchase price, which took place on November 18, 1926. Wherefore, the judgment appealed from is affirmed in so far as it orders the defendants to vacate the property described in the complaint upon receipt of payment of the price of redemption in the hands of the sheriff; and it is modified by ordering the plaintiffs to pay the defendants for the repairs made amounting to P259.74, to be compensated by the sum which the defendants are hereby ordered to pay to plaintiffs as rent of the property at the rate of P10 monthly from November 18, 1926, until the same is delivered to the plaintiffs, so

that the defendants are to pay to the plaintiffs the balance resulting in favor of the latter. Without express pronouncement as to costs. So ordered.

G.R. No. 3003

January 2, 1907

LORENZA ALBURO, plaintiff-appellee, vs. CATALINA VILLANUEVA, defendant-appellant. Ledesma, Sumulong & Quintos for appellant. Hipolito Magsalin for appellee. CARSON, J.: In this case no motion for a new trial was filed on the ground that the findings of fact of the trial judge were manifestly contrary to the weight of the evidence, and the facts found must be accepted as set out in the opinion of the lower court. It appears that the plaintiff is the owner, by inheritance from her grandfather, of a certain lot of land in the city of Manila, which, by written contract, was rented on the 23d of January, 1892, to one Antonio Susano Goenco, for a term of six years, with the privilege of renewal for a second term of six years; that the defendant, who is the wife of the said Goenco, came into possession by virtue of this rental contract; that the defendant had her husband expended a considerable sum of money filling in and leveling the lot and that they built a house of hard materials thereon; and that the rental contract, while it expressly permitted the tenant to build upon the lot, is silent as to the disposition of the house at the expiration of the rental term and makes no express provision as to improvements to be made upon the land by way of leveling or otherwise. The defendant having refused to surrender the lot in question of the expiration of the rental term, this action was brought to recover possession thereof and judgment was rendered for the plaintiff, reserving to the defendant the right to remove the house from the lot. Counsel for the defendant contends that she is entitled to a renewal of the rental contract for a third term of six years; or if this be denied, to be reimbursed for expenditures in filling in and leveling the lot, and to have the benefits of the provisions of article 361 of the Civil Code, wherein it is provided that The owner of the land on which building, sowing, or planting is done in good faith shall have a right to appropriate as his own work, sowing, or planting, having previously paid the indemnity mentioned in articles four hundred and fifty-three and four hundred and fifty-four, or to oblige the person who has built or planted to pay him the value of the land. It is said that this rental contract should be construed in accordance with the provisions of articles 1281, 1282, 1288, and 1289 of the Civil Code so as to give the defendant the right to renew the contract for a third term of six years, and so on indefinitely so long as she faithfully paid the rent, but we are of the opinion that there is no room for interpretation in

accordance with the provisions of these articles since the contract expressly provides for a term of a definite number of years, with a privilege of renewal for a second term of definite number of years. This is a very usual form of rental contract and its terms are so clear and explicit that they do not justify an attempt to read into it any alleged intention of the parties other than that which appears upon its face. In support of her claim for reimbursement for expenses in filling in and leveling the lot, defendant relies on the provisions of paragraph 2 of article 1554 of the Civil Code, wherein it is provided that the landlord is obliged "during the lease to make all necessary repairs in order to preserve the thing rented in condition to serve for the purpose to which it was destined." But, as Manresa points out, this article is strictly limited in its effect to repairs necessary to preserve the thing rented in a condition suitable to the use agreed upon ( para el uso pactado). A repair implies the putting of something back into the condition in which it was originally and not an improvement in the condition thereof by adding something new thereto, unless the new thing be in substitution of something formerly in existence and is added to preserve the original status of the subject-matter of the repairs; the filling in of a vacant lot can not be regarded as a repair as the word is used in this article; and even though it could be so considered, the remedy of the tenant under the provisions of article 1556, when the landlord fails to make necessary repairs, is by demand for the annulment of the contract and indemnity by way of damages or without demanding annulment of the contract by demand for damages for negligence on the part of the landlord; and the tenant is not authorized to make such repairs at the expense of the landlord, except when it is a matter of the most urgent necessity (reparacion urgentisima) "where the slightest delay would involve grave damages," when the tenant may take the absolutely necessary means to avoid the loss, at the cost of the owner, doing only that which is required by the force of circumstances and no more, but this on the ground that "he had acted by virtue of the social duty of mutual aid and assistance." (Manresa, vol. 10, p. 473.) It has been suggested that the claim of the defendant for compensation for the filling in and leveling of the lot may be based upon article 453 of the Civil Code which provides that "necessary expenditures will be repaid to all persons in possession (los gastos necesarios se abonan a todo poseedor)." It may be doubted, however, whether the "possessor" referred to in this provision can be said to include one who stands in relation of tenant to his landlord, for the above-cited article 1554 of the Civil Code, and the chapter wherein it occurs, seem to provide for such cases; and in any event we do not think that the filling in and improvement of a lot can be brought under the head of necessary expenses (gastos necesarios) as used in this connection. Manresa in his commentaries upon this article says that gastos necesarios are no others than those made for the preservation of the thing upon which they have been expended. The contention that the defendant is entitled to the benefits of the provisions of article 361 of the Civil Code can not be maintained because the right to indemnification secured in that article is manifestly intended to apply only to a case where one builds or sows or plants an land in which he believes himself to have a claim of title and not to lands wherein one's only interest is that of tenant under a rental contract; otherwise it would always be in the power of the tenant to improve his landlord out of his property. The right of a tenant in regard to improvements (mejoras) is expressly provided for in article 1573 read in connection with article 487, wherein it is provided that the tenant may make such improvements, either useful or convenient, as he considers advantageous, provided he does not alter the form

and substance of the thing rented, but that he will have no right for indemnification therefor, though he can take away such improvements if it is possible to do so without injury or damage to the thing rented. The trial court authorized the removal of the house, apparently relying on the provisions of this article, but since no objection was made by the plaintiff in the court below, we are not authorized to review his action in this connection. The judgment appealed from is affirmed, with the costs of this instance against the appellant. After the expiration of twenty days let judgment be entered in accordance herewith and ten days thereafter let the record in this case be remanded to the court of its origin for execution. Arellano, C.J. Torres, Willard and Tracey, JJ., concur.

Useful expenses [G.R. No. 14594. January 29, 1920.] EDUARDO RIVERA, ANACLETO AGUINALDO, RUFINO SALAW, JACINTO SISON, ELEUTERIO DE LA CRUZ, QUITERIO VICTORINO and AGUEDA DE LA CRUZ, plaintiffsappellants, vs. THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, defendantappellee. Jose Varela Calderon for appellants. Hartigan & Welch for appellee. SYLLABUS 1.PROPERTY; POSSESSION; GOOD FAITH; IMPROVEMENTS. In order to administer complete justice between the proprietor of land and the possessor in good faith thereof, in such a way as neither the former nor the latter may enrich himself of that which does not belong to him, nor any one of them remain prejudiced by the vagueness and casuistry of the rules established to give each one of them that to which they are entitled, it was necessary to use the right epithets which in a clear and unmistakable manner, would set forth the different character regulating their respective rights. Hence, in writing articles 453 and 454 of the Civil Code, the legislator correctly employed the expressions "necessary expenditures," "useful expenditures." and expenditures purely for ostentation and mere pleasure." 2.ID.; ID.; ID.; ID. The Civil Code gives the possessor in good faith greater indemnity in case he has incurred on the land necessary expenditures than in the case he has only incurred useful expenditures or those purely for ostentation and mere pleasure and also greater indemnity in case expenditures are useful than in case they are purely for ostentation and mere pleasure. The reason is because necessary expenditures are incurred for the preservation of the realty in order that it may produce the natural, industrial and civil fruits it ordinarily produces and expenditures purely for ostentation and mere pleasure are

not considered by the Civil Code as leading to the production of all of the aforesaid three kinds of fruits: natural, industrial and civil, but only of the civil fruits. 3.ID.; ID.; BAD FAITH. Possessors de facto of a piece of land or realty exclusively belonging to a third person with whom said possessors have not entered into a contract of lease or paid rent or canon thereto, are considered to have entered into the possession of said land in bad faith and only to profit thereby without the consent of its true owner an act evidently illegal which constitutes an usurpation, inasmuch as according to article 445 of the Civil Code, possession de facto cannot be recognized in favor of two different persons." 4.ID.; ID.; ID.; IMPROVEMENTS. According to article 364 of the Civil Code, bad faith on the part of the owner is deemed to exist in permitting the usurper and possessor de facto of a realty to commence and carry out the construction of any building thereon an act which must be proved at the hearing, for the absence of said proof shows that, with the unlawful trespass upon the realty, the building or construction was commenced without the knowledge and consent of the owner thereof. DECISION TORRES, J p: This case was originally instituted in the Court of First Instance of Rizal upon a complaint dated on February 2, 1916, in which the plaintiffs alleged that they have been in possession, in good faith, of certain parcels of land of the estate called "Hacienda de Sta. Clara," situated in the barrio of Dampalit of the municipality of Malabon, Rizal; and that they have been in possession and enjoyment of several fish ponds constructed by them-on said land up to the time they were defeated in said possession by the defendant entity "The Roman Catholic Archbishop of Manila," which was declared the absolute owner of the aforesaid "Hacienda de Sta. Clara" in the decision of this High Court on August 5, 1915, in the case (R. G. No. 8719) 1 brought by said entity for the registration of the "Hacienda de Sta. Clara" in its name. Plaintiffs pray that said entity be ordered to pay them the value of the fish ponds aforesaid and that their right of retaining said portions of the land occupied by them be declared subsisting until they have been fully paid therefor. To the foregoing complaint the defendant entity interposed a demurrer which was overruled. Defendant excepted to this ruling and afterwards filed an answer denying generally all the material averments of the complaint; but later asked the court to order the plaintiffs to file a bill of particulars of the facts alleged in their complaint. This petition having been granted by the court and the bill of particulars aforesaid having been filed by the plaintiffs, the defendant filed an amended answer denying generally all the material averments of the complaint and alleging as special defense that the subject-matter of this case is res judicata; that the plaintiffs' possession of the land mentioned in the complaint was never in good faith; and that if plaintiffs had made any improvements on said land they never did them in good faith. Defendant alleged as counterclaim that before the filing of the complaint in question, the plaintiffs had been occupying and enjoying for many years the land belonging to the defendant entity and described in the complaint; that said plaintiffs profited of the fruits and improvements on said land to the damage of the defendant without having ever paid any rent or canon therefor notwithstanding the demands made upon them for said

purpose; and that during all the time plaintiffs were in possession and enjoyment of the land and fruits thereon, said canon or rent amounts to seventy-five thousand pesos (P75,000). Wherefore, defendant prayed that plaintiffs' prayer in their complaint be denied and that judgment be rendered condemning them to pay the defendant, jointly and severally, the sum of seventy-five thousand pesos (P75,000) and to pay the costs. Upon plaintiffs' request the defendant filed a bill of particulars of the facts alleged in the counterclaim. After hearing the case and the evidence submitted by both parties, the court rendered judgment absolving the defendant entity from plaintiffs' complaint and the latter from the formers counterclaim, without any findings as to the costs. To this judgment counsel for the plaintiffs excepted, at the same time asking for a new trial which was denied with his exception. He then interposed his appeal to this court by filing the corresponding bill of exceptions which, after having been approved by the lower court, was forwarded to the clerk of this court together with all the evidence taken upon the trial. From the foregoing allegations of the parties, from the agreed statement of facts (rec., pp. 1-2), and from the statements made at the hearing by counsel for the plaintiffs (rec., pp. 48), it appears that there is no question about the fact that prior to the year 1915, the plaintiffs constructed fish ponds in the "Hacienda de Sta. Clara" the registration of which in the name of the defendant entity was decreed by this court in the decision rendered in the Registration Case No. 8719, notwithstanding plaintiffs' opposition; that ever since the construction of the fish ponds aforesaid, the plaintiffs have been in possession and enjoyment thereof up to the present time (the date of this decision); and that said plaintiffs has never entered into any contract of lease with the defendant, the absolute owner of the land aforementioned, nor paid the latter for the use, occupation, and enjoyment of the land upon which said fish ponds were constructed. The controversy involved i8 whether by appropriating the fish ponds in question, which had been constructed upon its land, the defendant is obliged to indemnify the plaintiffs for their value or price, or whether the plaintiffs have the right to compel the defendant, in case the latter does not want to take the fish ponds, to sell to them said land at P0.04 per square meter as 'fixed by them in their brief (pages 29-30, plaintiffs' brief). The parties admitting that the defendant entity is the owner of the land upon which the fish ponds in question have been constructed, articles 361 to 364 and 451 to 457 of the Civil Code are perfectly applicable to the instant case. Said articles define the rights of the owner of a piece of land upon which anything has been built, sown, or planted by another according as whether both acted in good or bad faith and whether what has been built, sown, or planted were necessary, useful or purely for ostentation or mere pleasure. Therefore, in order to decide the controversy, the first thing that will have to be determined is the nature of the fish ponds in question.

From the testimony of Ceferino Cacnio, plaintiffs' witness, it appears that fish ponds are built by digging into the land and putting in rows the earth that has been dug out in order to form with it dikes or embankment for holding the water in which the fish will be kept (rec., p. 5). There is nothing in the record expressly showing that the fish ponds in question have been built in this manner, but this witness Ceferino Cacnio having been the one who made the sketch of said ponds appearing in the record, and who appraised their costs or value by referring to the manner of construction aforesaid (rec., p. 5, Exhibit B, rec., p. 44), it is evident that the fish ponds in question belong to the class mentioned by said witness. Such being the case, the conclusion must be that the expenditures for their construction should be classified as useful, expenditures mentioned in the second paragraph of article 453 of the Civil Code, because since all of the expenditures of man are either useful (utiles) or useless or unnecessary (inutiles), and since it is obvious that the fish ponds in question are neither useless nor purely for ostentation or mere pleasure then said expenditures are useful. In dealing with the foregoing point the litigants in their respective briefs talked about improvements, their permanent and temporary character, the accretion of the soil through the work of man, the greater or less usefulness of the land for one purpose or another, and the increase or decrease in its value, and cited several decisions. But it does not appear that they ever tried to inquire and investigate, with the aid of the science of logic and hermeneutic the true meaning of article 453 of the Civil Code, the only article decisive upon the foregoing controverted point.

The foregoing article 453 speaks of necessary and useful expenditures and not of improvements, nor the increase in value, nor the accretion of something new, nor any thing of those mentioned in the briefs of the parties. A thing may be an improvement or an accretion of something new upon the land; may increase the value of said land; and still it may not be comprised under any of the phrases necessary expenditures" and "useful expenditure" employed in article 453 of the Civil Code, because it is not impossible that said thing may be constructed purely for ostentation or mere pleasure since constructions of this nature as well as those which are necessary and useful can be considered as improvements and can increase the value of the land. In trying to adjust the rights of the owner and the possessor in good faith of a piece of land, the learned Spanish legislator knew very well that, in order to administer complete justice to both of them in such a way as neither the one nor the other may enrich himself of that which does not belong to him, nor remain prejudiced by the vagueness and casuistry of the rules he was going to enact, it was necessary to use the right epithets which, in a clear and unmistakable manner, would describe and define the different characters regulating their respective rights. Hence, in writing articles 453 and 454 of the Civil Code, the legislator correctly employed the expressions "necessary expenditures" ("gastos necesarios") "useful expenditures" ("gastos utiles") and "expenditures purely for ostentation and mere pleasure" ("gastos de puro lujo o mero recreo"). If the owner of land has any interest therein, it is undoubtedly because said land produces for him some benefit or fruit which may be great or small according as the expenses incurred by the possessor thereof may have been the cause of the land producing all kinds

of fruits of great importance: natural, industrial and civil, or only one or two of these kinds which are of little importance; and, consequently, the indemnity to be refunded the possessor in good faith will also be great or small according as the expenses incurred by him may have resulted in the production of all said kinds of fruits or only part of them. Hence, the Civil Code gives the possessor in good faith greater indemnity in case he has incurred necessary expenditures than in case said expenditures are only useful or purely for ostentation and mere pleasure, and also greater indemnity in case said expenditures are useful than in case they are purely for ostentation and mere pleasure. Why? Because necessary expenditures, inasmuch as they redound to the preservation of the realty, render said realty capable of continually producing the natural, industrial and civil fruits it ordinarily produces fruits which the owner would not be able to gather if the land would be rendered unproductive. Useful expenditures also give rise to all these kinds of fruits, but the law considers them rather inferior than necessary expenditures for the reason that the latter preserve the realty and are therefore the source of the producing agency and its fruits, while the former (useful expenditures) are only the source of the fruits. Expenditures purely for ostentation and mere pleasure are considered by the Civil Code of little importance for the reason that they do not have nor will have to do with the production of all the three kinds of fruits we have been speaking about, but only of the civil fruits. That such is the fundamental reason of article 454 of the Civil Code not the least doubt can be entertained, for the words "purely for ostentation and mere pleasure" ("de puro lujo o mero recreo") employed by the code are so clear and unmistakable that they absolutely negative the capacity to produce industrial and natural fruits. Thus, in laying down a rule to distinguish useful expenditures from those purely for ostentation and mere pleasure, the great commentator Manresa has truly said that "expenditures purely for ostentation and mere pleasure either cannot influence the production of natural and industrial fruits or do diminish them; they can, however, influence the production of the civil fruits." (Manresa's Com. of Civil Code, vol. 4, p. 262.) Applying the foregoing considerations to the instant case, it clearly appears that the land in this case on which the fish ponds in question are built, gives its owner benefits called industrial fruits which it would not give without the fish ponds aforesaid. True it is that without the fish ponds the owner of the land could have utilized it for agricultural purposes. But then the owner would have to incur some and costly expenditures, while with the fish ponds already built he would not have to do anything more than to reap its fruits without having incurred any expenditures. And it is this which the law considers unjust, to wit, that the owner of the land would enrich himself with the industrial fruits thereof, produced by the useful expenditures disbursed by the possessor in good faith. Having shown that the fish ponds presuppose the disbursement of useful expenditures payable to the possessor in good faith, we pass on to elucidate the question whether or not the plaintiffs have been possessors in good faith. Plaintiffs have presented in evidence Exhibit A (rec p. 20), which is the decision rendered by this Court in the registration case No. 8719 of August 5, 1915, declaring the defendant entity owner of the lands on which the fish ponds in question were built. But from this exhibit it appears that the plaintiffs have never been in possession of these lands in good faith in

order that they can claim the right of indemnity for the expenditures incurred in the construction of these fish ponds. In fact, the defendant entity herein was the petitioner in said registration proceeding and the plaintiffs herein were the oppositors then. These plaintiffs in that registration case alleged having been in possession of the fish ponds now in question under all the conditions required by law for the prescription of title (p. 29, Exhibit A). But this Court said that said allegation had not been duly proven (pp. 29-30, 36, 41 and 43, Exhibit A) and consequently dismissed their opposition. Moreover, in the same decision it was held that the defendant entity has been in possession of the lands of "La Hacienda de Sta. Clara" publicly and under claim of ownership from time immemorial (pp. 31-32, Exhibit A) without having ever been interrupted thereon except once, whereby it had to institute in 1905 the corresponding action of revindication against the persons unlawfully withholding its possession, three of whom were the plaintiff herein, Eduardo Rivera, Rufino Salaw, and Anacleto Aguinaldo, and that said defendant entity has always exercised over said lands acts of ownership, (p. 35, Exhibit A). It follows, therefore, that the same decision presented by the plaintiffs proves that the defendant has been in possession of the lands on which the fish ponds in question are built, publicly and under claim of ownership, and that the plaintiffs, if they have once possessed certain parcels of these lands, did not do so under claim of ownership. In truth, if the plaintiffs had been in possession of these lands under claim of ownership, this Court would not have decreed their registration in the name of the defendant entity. Now then, if the plaintiffs did not possess the lands on which the fish ponds are built under claim of ownership, it is evident that at most they did possess them as mere usufructuaries, and inasmuch as in the present case counsel for the plaintiffs admit that neither these plaintiffs nor their constituents entered into a contract of lease with, nor paid rent to, the defendant, it follows that the plaintiffs took possession of these lands only to profit thereby without the consent of their true owner an act evidently illegal, which constitutes a real bad faith. Moreover, according to article 445 of the Civil Code "possession de facto cannot be recognized in favor of two different persons." Hence, if this Court recognized the defendant's possession and not plaintiffs' possession, it was because the latter, if it really existed, was illegal, i. e., was a possession in bad faith. What remains for us to determine is whether the defendant entity also acted in bad faith by knowingly permitting the construction of the fish ponds in questions (article 364 of the Civil Code). Regarding this point (defendant's bad faith) the record does not show any proof. The appellants pretend to infer it from the fact that the fish ponds have been in existence for many years, and argue that the defendant could not have ignored their existence during that long period of time.

But the foregoing argument is unfruitful. If the appellants want to deduce the foregoing conclusion (defendant's bad faith) from the fact that it would have been impossible for the defendant to ignore the existence of the fish ponds, then said inference is not supported by law; because according to article 364 of the Civil Code, bad faith on the part of the owners is deemed to exist not in permitting or tolerating the existence of a construction on his land this is merely an act of kindness for which the possessor should be thankful but in permitting the possessor to commence or begin and to carry out said construction. If the latter is what the appellants mean, then they do not have any support upon evidence; because it has not been shown that at the moment the construction of the fish ponds were commenced, the defendant had knowledge thereof and, knowing it, did not oppose said construction. This fact cannot be deduced from the circumstances surrounding the case, inasmuch as the construction of said fish ponds could have been commenced and finished during the time the defendant entity could not have notice thereof, and it has not been shown that there are facts pointing out to the contrary. The plaintiffs did not even try to prove the year and month when said fish ponds were built or indicate some circumstances which might have accompanied in the construction thereof, suggestive of the idea that the defendant entity knew or must have known that the fish ponds were being built.

In any way, it is therefore evident that the instant action is absolutely devoid of any foundation, and is so devoid that from the plaintiffs' own evidence, specially Exhibit A upon which they have relied and do rely so much, it appears that their contention is untenable. We have examined with great care plaintiffs' Exhibit A with their brief before us looking in said Exhibit A for any phrase, word, or sign indicative, at least indirectly, of the good faith plaintiffs allege to have been established in the aforesaid decision, but we have not found any thing favorable to but all against the plaintiffs. For the foregoing consideration whereby all the assignments of errors, alleged to have been committed in the judgment appealed from, have been refuted, we arrive at the conclusion that plaintiffs' contentions have not been fully established; and that the defendant not having insisted upon its counterclaim, the judgment appealed from is affirmed, as we do hereby affirm it, with the costs of this instance against the plaintiffs-appellants. So ordered. [G.R. No. 72188. September 15, 1986.] RODOLFO EUSEBIO, petitioners, vs. INTERMEDIATE APPELLATE COURT and ROHIMUST SANTOS, respondents. Balgos & Perez Law Offices for petitioner. Jesus G. Castro for private respondent. SYLLABUS 1.CIVIL LAW; PROPERTY; CO-OWNERSHIP; DEFINED. As stated in Cabello v. Cabello, 37 Phil. 328, 336, "the possession held by a co-heir of the undivided estate is understood to be enjoyed in the name of the rest of the heirs." An undivided estate is co-ownership by the heirs. The ownership of the physically undivided thing pertains to more than one person,

thus defined as "the right of common dominion which two or more persons have in a spiritual part of a thing which is not physically divided." 2.ID.; ID.; ID.; ART. 543, NEW CIVIL CODE APPLIES. The provision of the Civil Code which should be applicable is Article 543, which provides: "ART. 543. Each one of the participants of a thing possessed in common shall be deemed to have exclusively possessed the part which may be allotted to him upon the division thereof, for the entire period during which the co-possession lasted. Interruption in the possession of the whole or a part of a thing possessed in common shall be to the prejudice of all the possessors. However, in case of civil interruption, the Rules of Court shall apply." Under the foregoing provision, after the LOT is actually partitioned, ROHIMUST would be "deemed to have exclusively possessed" since April 15, 1974, the part which may be allotted to him upon the division thereof" consisting of the definite 200 sq. meter area assigned to him, together with all buildings and parts of buildings erected therein (Section 11, Rule 69). RODOLFO can have no claim over such buildings or parts of a building, which improvements ROHIMUST can keep or demolish without paying any compensation thereof to RODOLFO. For the same reason, if there were buildings or part of a building, found in the definite 611.30 sq. m. area assigned to RODOLFO, he will be deemed to have been in exclusive possession thereof since April 15, 1974, and he can keep or demolish these improvements without paying any compensation therefor to ROHIMUST. DECISION MELENCIO-HERRERA, J p: The controversy in this case is between two co-owners of a parcel of land of 811.30 sq. m. situated at Blumentritt Extension, corner Don Manuel Street, La Loma, Quezon City (the LOT), Petitioner (RODOLFO), as one of the two, had filed suit in 1981 against Private Respondent (ROHIMUST), the other co-owner, before the then Court of First Instance of Quezon City (now Regional Trial Court) for determination of their participations in the coownership, and for actual partition of the LOT. The dispositive part of the Trial Court's Decision was as follows: "WHEREFORE, judgment is hereby rendered ordering the partition of that parcel of land, containing an area of 811.30 square meters, known as Lot No. 1, Block No. 77 of the Subdivision Plan Psd. 157222, situated at Blumentritt Extension corner Don Manuel Street, La Loma, Quezon City, covered by Transfer Certificate of Title No. 37685 of the Register of Deeds, Quezon City, as follows: "a)611.30 sq. m. which shall be given to plaintiff, Rodolfo Y. Eusebio; "b)200 sq. m. which shall be given to defendant, Rohimust Santos. "The expenses for the survey of the lot to define the metes and bounds of the portions appertaining to plaintiff and defendant shall be equally shared by both parties. After which any improvement existing thereon which encroached on that portion appertaining to the other party shall be demolished so that the party affected may fully enjoy and exercise his right over said portion." 1

We have gone over the Expediente in the Trial Court, as well as the Record in the Appellate Tribunal, and we have found indications in the evidence that there are houses constructed on the LOT which may be legally owned in common, or which one party might claim to have been constructed by him separately from the co-ownership. Addresses of both parties are at No. 4 Don Manuel, and it can be presumed they live separately within the LOT. In his brief submitted to the Appellate Tribunal, ROHIMUST, in part, had said: ". . . The said lot is located at the corner of Don Manuel and Blumentritt Extension consisting of 811.30 square meters. There is an old house built and is still standing in the middle of the land. The house was constructed by his late grandfather Philip Zinsineth. (t.s.n., p. 6, Id.)." As the manner of dividing the LOT has yet to be determined, and it could not then be known which buildings have to be cut by a dividing line, the Trial Court simply provided for the demolition of any building or part thereof, claimed by either party, which would be within the area assigned to the other party. No mention of compensation was made, and it is our opinion the omission shows the Trial Court intended that no compensation shall be payable. cdphil ROHIMUST took an appeal from the Trial Court's Decision to the Intermediate Appellate Court (now Court of Appeals). The Appellate Tribunal initially affirmed the judgment of the Trial Court in toto. However, on Motion for Reconsideration filed by ROHIMUST, it rendered a Resolution amending its previous affirmance, holding that ROHIMUST "has the legal right to retain the house together with its improvements and the possession thereof until full payment of the value thereof." It is that modification which RODOLFO, in the instant Petition for Review, has alleged to be erroneous and which should be set aside. The LOT was part of a subdivision owned by J.M. Tuazon & Co., Incorporated, represented by Gregorio Araneta, Incorporated (GA, Inc.). As early as 1924, it was occupied by Philip Zinsineth as a lessee, and he had constructed a house and garage thereon (Exhibit "7"). After his death, his "leasehold rights" were inherited by his two daughters, Mary, the mother of ROHIMUST, and Isabel, the deceased mother of RODOLFO's wife. On April 15, 1974, the parties concerned agreed that the leasehold rights will be placed in the name of RODOLFO to the extent of 383 sq. m., and in the name of FERNANDO J. Santos, Jr., a son of Mary, to the extent of 428.30 sq. m. On that same date, a contract to sell the LOT on installment was executed by GA, Inc. in favor of RODOLFO. FERNANDO was not included in the contract because GA, Inc. wanted to deal only with one person. However, on July 2, 1974, RODOLFO and FERNANDO signed an affidavit reading in part as follows: "xxx xxx xxx "That actually the property was bought by us jointly and the monthly installments shall be paid by us pro-rata to the area which we are presently occupying, which is as follows: "Rodolfo Y. Eusebio 383.00 sq. m. at P49,790.00, of which the amount of P9,958 was paid as down payment, shall pay a share in the monthly installment corresponding to P1,048.94 monthly;

"Fernando J. Santos, Jr. 428.30 sq. m. at P55,679.00, of which the amount of P11,135.80 was paid as down payment, shall pay a share in the monthly installment corresponding to P1,173.01 monthly; "xxx xxx xxx "That it is our understanding that as soon as the property is fully paid for by us, the same shall be subdivided so as to have two transfer certificates of title issued to us for our corresponding portions; "xxx xxx xxx" By August 5, 1976, installment payments under the Contract to Sell had not been kept up to date. RODOLFO and FERNANDO then made an agreement as follow: "That all overdue monthly installment arising from the monthly share of Fernando J. Santos, Jr. will be advanced by Rodolfo Y. Eusebio and the corresponding payment will be charged an interest rate of 1% per month: "That the said parcel of land is to be fully paid forty eight (48) months from May 15, 1974. On the said due date of full payment, each party will have to pay its corresponding full share of payment. Each party will be given a grace period of five (5) months to settle its corresponding share of payment with the corresponding share thereon, and if after this date one party fails to pay its corresponding share, the said parcel of land will be subdivided according to the amount of payment by each party" (Exhibit "G"). In 1978, full payment was made to GA, Inc., and Transfer Certificate of Title No. 244154 of the Registry of Deeds of Metro Manila (originally No. 37685, Quezon City) was issued solely in the name of RODOLFO. For the full payment of the amount paid to GA, Inc., FERNANDO was not able to contribute his full share. In 1980, FERNANDO transferred his rights to ROHIMUST who is his brother. In the case instituted by RODOLFO against ROHIMUST in 1981, the Trial Court found that, as a result of RODOLFO's payments made to GA, Inc. on behalf of FERNANDO, his share in the LOT had to be increased from 383 sq. m. to 611.30 sq. m., with the participation of ROHIMUST being decreased to 200 sq. m. That adjudication is now final. LLpr The legal issue to be resolved in this instance is the correctness of the Appellate Tribunal's Resolution that: ". . . It is undisputed that defendant-appellant's house was erected on the land in question at the time that said portion was under his claim of ownership. They were therefore in possession thereof unquestionably in good faith. And, par. 2 of Article 546 of the Civil Code reads: "Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding

the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. The Appellate Tribunal was in error in invoking Article 546 which prescribes the rights of the possessor in good faith as regards useful expenses. Article 546 presupposes, but does not establish, possession in good faith, the requisites of which are laid down in Article 526, thus:

"ART. 526.He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. "He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing. "Mistake upon a doubtful or difficult question of law may be the basis of good faith." It may be mentioned that, prior to April 15, 1974, the possession of the parties was in the concept of lessees of the LOT, which was not possession in good faith for purposes of Article 546. Conceding, for the sake of avoiding immaterial complications, that the parties became co-owners after April 15, 1974, when the contract to sell was executed, neither co-owner can claim possession in himself of any particular identified part of the LOT. As stated in Cabello v. Cabello, 37 Phil. 328, 336, "the possession held by a co-heir of the undivided estate is understood to be enjoyed in the name of the rest of the heirs." An undivided estate is coownership by the heirs. The ownership of the physically undivided thing pertains to more than one person, thus defined as "the right of common dominion which two or more persons have in a spiritual part of a thing which is not physically divided" (Sanchez Roman). The provision of the Civil Code which should be applicable is Article 543, which provides: "ART. 543.Each one of the participants of a thing possessed in common shall be deemed to have exclusively possessed the part which may be allotted to him upon the division thereof, for the entire period during which the co-possession lasted. Interruption in the possession of the whole or a part of a thing possessed in common shall be to the prejudice of all the possessors. However, in case of civil interruption, the Rules of Court shall apply." Under the foregoing provision, after the LOT is actually partitioned, ROHIMUST would be "deemed to have exclusively possessed" since April 15, 1974, the part which may be allotted to him upon the division thereof" consisting of the definite 200 sq. meter area assigned to him, together with all buildings and parts of buildings erected therein (Section 11, Rule 69). RODOLFO can have no claim over such buildings or parts of a building, which improvements ROHIMUST can keep or demolish without paying any compensation thereof to RODOLFO. For the same reason, if there were buildings or parts of a building, found in the definite 611.30 sq. m. area assigned to RODOLFO, he will be deemed to have been in exclusive possession thereof since April 15, 1974, and he can keep or demolish these improvements without paying any compensation therefor to ROHIMUST. cdrep WHEREFORE, the Resolution of June 14, 1985 of respondent Court promulgated in its case AC-G.R. CV No. 02022 is hereby set aside, and its Decision of September 19, 1984 in the

same case, affirming the judgment of the Trial Court in toto, shall stand without modification. Let this case be remanded to the Trial Court for actual partition of the LOT between its co-owners under the provisions of Rule 69 of the Rules of Court. Without pronouncement as to costs. SO ORDERED. Expenses for pure luxury Possessor in bad faith , right to expenses and improvements Cases: [G.R. No. L-59952. August 31, 1984.] RUBY H. GARDNER and FRANK GARDNER JR., petitioners, vs. COURT OF APPEALS, DEOGRACIAS R. NATIVIDAD and JUANITA A. SANCHEZ, respondents. Mayor, Manalang, Reyes & Associates for petitioners. Joanes Caacbay for private respondents. DECISION MELENCIO-HERRERA, J p: This is a Petition for the review of the Resolutions, dated April 24, 1980 and December 24, 1980, respectively, of the then Court of Appeals in CA-G.R. No. 52729-R entitled "Ruby H. Gardner, et al. versus Deogracias R. Natividad, et al," whereby the original Decision of said Court, promulgated on January 11, 1979, affirming in toto the judgment of the Court of First Instance of Laguna, Branch I, Bian, in Civil Case No. B-774, was reconsidered and the appealed judgment reversed in so far as private respondents herein are concerned. A chain of successive transfers of real property, five in all, is involved. Petitioner Ruby H. GARDNER, married to Frank Gardner, Jr., an American (the GARDNERS, for short), was the registered owner of two adjoining parcels of agricultural land situated at Calamba, Laguna, designated as Lot No. 1426-new and Lot No. 4748-new, with an aggregate area of 93,688 square meters more or less, and covered by TCT Nos. T-20571 and T-20573, respectively, of the Registry of Property of Laguna (Exhibits "A" & "B", Folio of Exhibits). On November 27, 1961, the GARDNERS and the spouses Ariosto C. SANTOS and Cirila Serrano (the SANTOSES) entered into an agreement for the subdivision of the two parcels, with the SANTOSES binding themselves to advance to the GARDNERS the amount of P93,000.00 in installments. For the protection of both parties they executed the following documents all on the same date and referring to the same parcels of land: (1) Absolute Deed of Sale in favor of the SANTOSES (the First Transfer, considering the nature of the document); (2) Subdivision Joint Venture Agreement; and (3) Supplemental Agreement

(Exhibits "C", "D" and "E", ibid.). Despite the "sale,", the GARDNERS were still denominated in the Subdivision Joint Venture Agreement and in the Supplemental Agreement as "owners" and Ariosto SANTOS merely as "broker". It appears from the evidence that the sale to the SANTOSES was one "in trust" for the protection of the SANTOSES who had obligated themselves to give cash advances to the GARDNERS from time to time (Exhibits "E-2" to "E88" incl.). On December 5, 1961, new titles were issued in favor of the SANTOSES (Exhibits "F" & "G", ibid.). Unknown to the GARDNERS, on June 10,1964, the SANTOSES transferred Lot No. 1426-New to Jose Cuenca, married to Amanda Relova (the JOSE CUENCAS) (Exhibit "H", ibid.), and on June 15, 1964, Lot No. 4748-New to Juan Cuenca, married to Soledad Advincula (the JUAN CUENCAS) (Exhibit "1", ibid.) (jointly, the Second Transfer). Titles were thereafter issued in their respective names (Exhibits "L" & "M", ibid.). Upon learning of the Transfer of the properties to the CUENCAS, petitioner Ruby GARDNER, caused the inscription of an Adverse Claim on the titles of the CUENCAS with the Register of Deeds of Laguna on December 2, 1965. Her Affidavit stated in part: LLpr "2.My adverse claim arose from the facts that sometime in the middle part of 1961, I and Mr. Ariosto Santos of 2162 Apolinario, Bangkal St., Makati, Rizal had an understanding and have agreed that we would subdivide my aforedescribed properties then covered by TCT Nos. T20571 and T-20573 for Lot No. 1426-New and 4748-New, respectively, under the condition that he would advance to me a total amount of P93,000.00, which I could withdraw little by little and from time to time; that he would improve the aforesaid land by constructing paved roads sewers, water, other facilities that may be required by the authorities concerned and other requirements of the subdivision laws until he shall have invested for these purposes the sum of P234,220.00; that he assured me that the construction of these paved roads, etc. would commence immediately; "3.We (I and Mr. Ariosto Santos) have agreed that in order to protect his (Mr. Santos) interest to the sum of P93,000.00, to be withdrawn by me little by little and from time to time, I would transfer to his name my aforementioned titles in trust; xxx xxx xxx "5.In the absolute Deed of Sale it was stated that I received from Mr. Santos the sum of P70,266.00 and in consideration of said amount, I have sold, transferred and conveyed my aforedescribed parcels of land to Mr. Santos; but these statements were and are not true, that is why we have the other two more documents the Subdivision Joint Venture Agreement and the Supplemental Agreement. It is stated in the Subdivision Joint Venture Agreement, which contains our true agreement that Mr. Ariosto Santos is only my Broker, so far as the aforedescribed parcels of land are concerned, as can be gleaned from Page 2, paragraphs 2 and 3 of the said Subdivision Joint Venture Agreement, . . ." On October 19, 1966 and November 4, 1966, the JUAN CUENCAS and the JOSE CUENCAS, respectively, transferred the lots to Michael C. VERROYA (Exhibits "P" & "Q", ibid.) an office assistant of Ariosto SANTOS (the Third Transfer). Titles were issued in VERROYA's name with the Adverse Claim carried over.

On March 29, 1967, VERROYA constituted a mortgage on both lots in favor of Anita Nolasco and Rosario Dalma, which encumbrance was registered on the existing titles. On June 29, 1967, VERROYA executed a deed of transfer of the properties to respondent Deogracias Natividad, married to Juanita Sanchez (the NATIVIDADS) (Exhibits "V", "V-4", ibid.) (the Fourth Transfer). On September 30, 1967, the NATIVIDADS transferred the lots to Ignacio Bautista and Encarnacion de los Santos (the BAUTISTAS) (Exhibits "14", "15" [Natividad], "JJ-2", ibid.) (the Fifth Transfer). No titles were issued to the BAUTISTAS. prcd It should be noted that from the titles of the CUENCAS (the Second Transferees) to the titles of the NATIVIDADS (the Fourth Transferee), the Adverse Claim of the GARDNERS continued to be carried, and that throughout the successive transfers, or over a span of approximately six years, the GARDNERS continued to remain in possession, cultivation and occupation of the disputed properties. Aggrieved by the series of transfers, the GARDNERS filed suit on July 8, 1969 for "Declaration of Nullity, Rescission and Damages" against the Five Transferees, including the mortgagees, Anita Nolasco and Rosario Dalma, before the Court of First Instance of Laguna, Branch I (Civil Case No. B-774), praying for the declaration of nullity of all the Five Transfers and the cancellation of all titles issued pursuant thereto on the ground that they were all simulated, fictitious, and without consideration. In their Answer, the SANTOSES claimed, in brief, that the sale to them was conditional in the sense that the properties were to be considered as the investment of the GARDNERS in the subdivision venture and that in the event that this did not materialize they were to reconvey the lots to the GARDNERS upon reimbursement by the latter of all sums advanced to them; and that the deed of sale was to be registered for the protection of the SANTOSES considering the moneys that the latter would be advancing. For their part, respondents NATIVIDADS contended that they were purchasers in good faith notwithstanding the adverse claim as the titles were not shown to them by VERROYA at the time of the sale, and that they had paid good and valuable consideration. The mortgagees, Anita Nolasco and Rosario Dalma, denied the allegations in the Complaint and counterclaimed for damages, which the GARDNERS answered. After the lifting of the Order of default against them, the CUENCAS filed their Answer contending that their transfer to VERROYA of the properties in question was not simulated and was supported by valuable consideration. VERROYA, Juanita Sanchez (wife of Deogracias Natividad), and the BAUTISTAS were declared in default for their failure to seasonably file their responsive pleadings. 1

The GARDNERS, aside from their documentary evidence, adduced in their favor the testimonies of Ruby GARDNER herself, Jose Infante, an employee of the Register of Deeds of Laguna, and defendant Ariosto SANTOS who was presented as an adverse witness. LLphil

Of the eight answering defendants, only respondent Deogracias NATIVIDAD testified on his behalf. Defendant Ariosto SANTOS merely adopted as his own evidence the declaration he had given as an adverse witness. The JOSE CUENCAS and the JUAN CUENCAS neither presented any testimonial evidence but just adopted the testimony of Ariosto SANTOS. Defendants Anita Nolasco and Rosario Dalma, the mortgagees, submitted their case after the genuineness of the deed of mortgage executed in their favor by VERROYA was admitted by the parties. 2 On January 15, 1972, the Trial Court rendered judgment in favor of the GARDNERS declaring as null and void the five Transfers; rescinding the Subdivision Joint Venture Agreement (Exhibit "D") as well as the Supplemental Agreement (Exhibits "E"; ordering the GARDNERS to reimburse the SANTOSES the total cash advances of P36,712.80 which the GARDNERS had received; authorizing the cancellation of the corresponding titles issued pursuant to the deeds of sale and the issuance of new ones in favor of the GARDNERS; ordering the deletion from the titles of the mortgage executed by VERROYA; and requiring the Five Transferees but not mortgagees, Anita Nolasco and Rosario Dalma, to pay the GARDNERS P90,000.00 actual damages, P5,000.00 exemplary damages, and to pay the costs. The respondents NATIVIDADS appealed (notwithstanding that the wife was declared in default) to the then Court of Appeals, which, on January 11, 1979 affirmed in toto the judgment of the Trial Court. 3 The NATIVIDADS received the Decision of affirmance on January 16, 1979. On January 29, 1979, the NATIVIDADS asked for a 30-day extension from January 31, 1979 or up to March 2, 1979, within which to file a Motion for Reconsideration, which was granted by respondent Court. 4 On March 2, 1979, the NATIVIDADS filed their Motion for Reconsideration but the same was denied on November 7, 1979. 5

On December 4, 1979, a "Very Urgent Manifestation and Motion for Leave to File a Second Motion for Reconsideration" was filed by the NATIVIDADS. The pleading was signed by Deogracias NATIVIDAD himself. Respondent Court denied leave on December 28, 1979. 6 However, on the same date of December 28, 1979, the NATIVIDADS filed their Second Motion for Reconsideration. On April 24, 1980, respondent Court reconsidered its Resolution of "January 7, 1980" denying respondents' "Motion for Leave to File Second Motion for Reconsideration', and admitted said second Motion 7 (The resolution of January 7, 1980 refers to the resolution of December 28, 1979 which was released on January 7, 1980). On December 24, 1980, respondent Court 8 issued the questioned Resolution reversing its Decision of January 11, 1979 insofar as the NATIVIDADS are concerned, declaring as valid the sale of the land to them as well as the titles issued pursuant thereto. On January 20, 1981, the GARDNERS sought to set aside the questioned Resolution and moved for entry of judgment averring that said Resolution was null and void for having been issued without jurisdiction as the

Decision of January 11, 1979 had already become final and executory. The Motion was denied for lack of merit on March 4, 1982. 9 Petitioners now seek to set aside the Appellate Court's Resolutions of April 24, 1980 (granting leave to file a 2nd Motion for Reconsideration) and December 24, 1980 (reversing the original judgment), and assigning to respondent Court the following errors: cdrep I "The Court of Appeals erred in promulgating its resolution of April 24, 1980, because it has already lost jurisdiction to act on the case since the decision of January 11, 1979 had already become then final and executory. II "The Court of Appeals erred in promulgating its resolution of December 24, 1980, because it had already then lost jurisdiction to act on the case, much more so, to reverse through its resolution of December 24, 1980 its decision of January 11, 1979 that has already become final and executory. III "Assuming arguendo that it has still jurisdiction to promulgate its resolution of December 24, 1980, the Court of Appeals erred in not holding that the defendant-appellant Deogracias Natividad's second motion for reconsideration, just like the first motion for reconsideration, is unquestionably pro-forma, hence did not suspend the running of the reglementary period of time. IV "Assuming arguendo that it has still jurisdiction to promulgate its resolution of December 24, 1980, the Court of Appeals erred in holding that the testimonies of Ariosto Santos under oath on the witness stand cannot prevail over the allegations in Santos' answer (not verified and only signed by Ariosto Santos' counsel) and, regarding which there is no substantial conflict or variance. V "Assuming arguendo, it has still jurisdiction to promulgate its resolution of December 24, 1980, the Court of Appeals erred in reversing absolutely without valid justification, its findings in its decision of January 11, 1979 and resolution of November 7, 1979, both holding that defendant-appellant Deogracias Natividad was not a buyer in good faith and for value. VI "Assuming arguendo that it has still jurisdiction to promulgate its resolution of December 24, 1980, the Court of Appeals erred in reversing, absolutely without valid justification, its findings in its decision of January 11, 1979 and resolution of November 7, 1979 both holding

that the sales of the questioned properties from Ruby Gardner and spouse Frank Gardner, Jr., to Ariosto Santos and spouse Cirila Serrano, to Jose Cuenca and Juan Cuenca and their spouses Amanda Relova and Soledad Advincula, respectively, to Michael Verroya, to Deogracias Natividad and spouse Juanita Sanchez, to Ignacio Bautista and spouse Encarnacion delos Santos are null and void ab initio. VII "The Court of Appeals erred in holding that it will not hesitate to consider and hear defendant-appellant Deogracias Natividad's second motion for reconsideration (even if it was received when the decision of January 11, 1979 was already final and executory) upon the groundless claim that Deogracias Natividad was abandoned by his counsel, who received the resolution denying Natividad's first motion for reconsideration." Upon the facts and the evidence, we rule that respondent Court had lost jurisdiction to entertain the second Motion for Reconsideration because its Decision of January 11, 1979 had already become final and executory as the following chronological data before respondent Court will show: Jan. 16, 1979Receipt by respondents of CA Decision dated Jan. 11, 1979. Jan. 29, 1979Private respondents filed motion for extension of 30 days from Jan. 31, 1979 to file motion for reconsideration. This was granted. Due Mar. 2, 1979. Mar. 2, 1979Motion for Reconsideration filed (on the last day). Nov. 7, 1979Reconsideration was denied. Nov. 19, 1979Receipt by private respondents of above resolution. Nov. 28, 1979"Very Urgent Manifestation and Motion for Leave to file Second Motion for Reconsideration" with a prayer for extension of 30 days from said date, filed by respondent Deogracias Natividad himself. Dec. 28, 1979Motion for Leave to file Second Motion for Reconsideration denied. Dec. 28, 1979Second Motion for Reconsideration filed by private respondent. Jan. 8, 1980Motion for Reconsideration of Resolution of Dec. 28, 1979 filed by private respondents. April 24, 1980 Resolution reconsidering denial of Motion for Leave, and Second Motion for Reconsideration admitted. This is one of the disputed Resolutions. Dec. 24, 1980Resolution reversing Decision of January 11, 1979. This is the other Resolution assailed.

Section 1, Rule 52 of the Rules of Court, provides: "Section 1.Motion for re-hearing. A motion for re-hearing or reconsideration shall be made ex-parte and filed within fifteen (15) days from notice of final order or judgment. No more than one motion for re-hearing or reconsideration shall be filed without express leave of court. A second motion for reconsideration may be presented within fifteen (15) days from notice of the order or judgment deducting the time in which the first motion has been pending." Evidently, the Second Motion for Reconsideration was filed beyond the reglementary period. The NATIVIDADS erroneously thought that they had another 15-day period from the date of receipt of denial of the first Motion for Reconsideration on November 7, 1979 within which to file a second Motion for Reconsideration. That would be the rule for appeals by certiorari to the Supreme Court from an Appellate Court judgment pursuant to Section 1 of Rule 45. 10 However, under the aforequoted provision, which is the applicable rule, the time in which the first Motion has been pending has to be deducted. As it was, all of the fifteen days had been used up when the first Motion for Reconsideration was filed on March 2, 1979. The Decision of January 11, 1979, therefore, had already attained finality on March 3, 1979 so that respondent Court no longer had jurisdiction to act on the "Very Urgent Motion for Leave to File Second Motion for Reconsideration" submitted by the NATIVIDADS on November 28, 1979, much less to grant the same. It is well settled that once a Decision has become final and executory, it is removed from the power and jurisdiction of the Court which rendered it to further alter or amend it, much less to revoke it. The subsequent filing of a motion for reconsideration cannot disturb the finality of the judgment, nor restore jurisdiction to the court. 11 Although the granting or denial of a motion for reconsideration involves the exercise of discretion, 12 the same should not be exercised whimsically, capriciously or arbitrarily, but prudently in conformity with law, justice, reason and equity. LLjur We likewise find reversible error in the reversal of respondent Court's original Decision of January 11, 1979. In its Resolution of reversal, dated December 24, 1980, respondent Court had stated in part: "The presence of the adverse claim in appellant's (Deogracias Natividad) title does not make him a buyer in bad faith. The validity of the adverse claim has to be determined by the Court. Until the validity of such claim is determined judicially, the same cannot be considered as a flaw in his vendor's title. The adverse claim first appeared in the titles of the Cuencas, the second buyers. It was carried on to the titles of subsequent transferees. The title of Santos appeared clean. This makes the title of Santos' vendee clean. The subsequent annotation of the adverse claim therein would not make the Cuencas buyers in bad faith. If the Cuencas were buyers in good faith, we do not see any reason why subsequent buyers could not enjoy the same status. Good faith is presumed while bad faith must be proved . . ." 13

However, as set forth in the original Decision of the Appellate Court, upholding the findings of the Trial Court, the evidence preponderantly shows that all Five Transfer were null and void for having been simulated and fictitious. The First Transfer in favor of the SANTOSES was "indubitably established" to have been without consideration and is, therefore, void and inexistent. 14 That sale was executed merely as a means of protection to the SANTOSES for their promised cash advances to the GARDNERS in one year in the sum of P93,000.00. Added to this is the admission against his own interest by Ariosto SANTOS that the GARDNERS did not receive from him any consideration, 15 thereby corroborating the declarations of the GARDNERS. The Subdivision Joint Venture Agreement (Exhibit "D") and the Supplemental Agreement (Exhibit "E") eloquently express that the true and real nature of the agreement between the GARDNERS and the SANTOSES was for a subdivision and not a sale transaction. LibLex The evidence also establishes that the Second Transfer to the CUENCAS was fictitious and simulated for not having been supported with any consideration. By his own admission, Ariosto SANTOS transferred to the CUENCAS, who are his "compadres", the disputed properties, together with others that he owned, merely to conceal his ownership and "to protect them from persons who had filed suits against him and were running after the properties registered in his name." It was SANTOS who had caused the execution of those deeds of sale (Exhibits "H" & "I") and had them notarized by his own counsel. 16 No wonder then that the CUENCAS did not even dispute the validity of the adverse claim pursuant to Section 110 of the Land Registration Act, and during the trial, they merely adopted SANTOS' testimony. Under the circumstances surrounding their transaction they knew that their title was flawed and they were not, and cannot be considered, buyers in good faith, having paid no consideration for the sale. The subsequent registration of the adverse claim on their titles, therefore, could not but serve as notice and warning to all subsequent buyers that someone was claiming an interest in the properties or a better right than the registered owners.

The Third Transfer in favor of VERROYA was similarly without consideration and, therefore, void ab initio. The evidence on record shows that Ariosto SANTOS himself caused the execution of the deeds of sale (Exhibits "P" & "Q") in favor of VERROYA, who is SANTOS' office manager in his brokerage business. The only purpose of the transfer was to enable VERROYA to secure for SANTOS a loan with the Veterans Bank so much so that when the documents of sale were signed by the CUENCAS in their respective houses in favor of VERROYA, the latter was not even present. 17 Also significant is the fact that Verroya was declared in default and had not even bothered to resist the suit, which he would have done if the sale transaction were genuine. On equal footing is the Fourth Transfer from VERROYA to private respondents NATIVIDADS. It was SANTOS who had caused the preparation of the deed of sale in favor of the NATIVIDADS after sensing that VERROYA was not inclined to return the title to the properties. Deogracias NATIVIDAD was SANTOS' close and trusted "compadre", who agreed to put the titles in his (NATIVIDAD's) name because of the pending cases against SANTOS. The amount of P80,000.00 stated in the document of sale was not actually paid by the NATIVIDADS to

VERROYA, according to SANTOS' own testimony. The latter further declared that VERROYA was only coerced to sign the deeds (Exhibits "V" & "V-4") after he was boxed by NATIVIDAD in SANTOS' office at the Escolta. That coercion did exist is shown by VERROYA's telegram to the Register of Deeds of Laguna to dishonor any transaction involving the subject properties. 18 The Fifth Transfer to the BAUTISTAS partook of the same nature a simulated and fictitious transaction, for being without consideration, as shown by the evidence. They too, were declared in default and made no attempt to answer or dispute the allegations in the Complaint against them. LLjur The mortgage of the properties by VERROYA in favor of Anita Nolasco and Rosario Dalma was executed after the inscription of the adverse claim on the titles so that they can neither be considered as innocent mortgagees for value. Added proof of the fictitiousness of the chain of transfers is that fact that, notwithstanding the same, the GARDNERS remained in actual possession, cultivation and occupation of the disputed lots throughout the entire series of transactions. As concluded in the original Decision of respondent Court, all Five Transfers starting from that of the SANTOSES down to the NATIVIDADS, were absolutely simulated and fictitious and were, therefore, void ab initio and inexistent. 19 Contracts of sale are void and produce no effect whatsoever where the price, which appears therein as paid, has, in fact, never been paid by the purchaser to the vendor. 20 Such sales are inexistent and cannot be considered consummated. 21 In its Resolution reversing the original Decision, respondent Court discredited the testimony of Ariosto SANTOS for being at variance with the allegations in his Answer. The fact, however, that the allegations made by Ariosto SANTOS in his pleadings and in his declarations in open Court differed will not militate against the findings herein made nor support the reversal by respondent Court. As a general rule, facts alleged in a party's pleading are deemed admissions of that party and binding upon it, but this is not an absolute and inflexible rule. 22 An Answer is a mere statement of fact which the party filing it expects to prove, but it is not evidence. 23 As Ariosto SANTOS himself, in open Court, had repudiated the defenses he had raised in his Answer and against his own interest, his testimony is deserving of weight and credence. Both the Trial Court and the Appellate Court believed in his credibility and we find no reason to overturn their findings thereon. Lastly, the statement of respondent Court in its Resolution of reversal that "until the validity of an adverse claim is determined judicially it cannot be considered a flaw in the vendor's title, contradicts the very essence of adverse claims. The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property, and serves as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or has a better right than the registered owner thereof. 24 A subsequent sale of the property cannot prevail over the adverse claim which was previously annotated in the certificate of title of the property. 25

While one who buys from the registered owner need not have to look behind the certificate of title, 26 he is nevertheless bound by the liens and encumbrances annotated thereon. 27 One who buys without checking the vendor's title takes all the risks and losses consequent to such failure. 28 WHEREFORE, the assailed Resolutions of respondent Court of Appeals (now the Intermediate Appellate Court), dated April 24, 1980 and December 24, 1980, respectively, are hereby REVERSED and SET ASIDE, and its Decision of January 11, 1979 affirming in toto the judgment of the then Court of First Instance of Laguna, Branch I, in Civil Case No. B-774, is hereby reinstated. Costs against private respondents. SO ORDERED. [G.R. No. 115548. March 5, 1996.] STATE INVESTMENT HOUSE INC., petitioner, vs. COURT OF APPEALS, ET AL., respondents. Padilla Law Office for petitioner. Graciano J. Tobias and Cesar Brillantes for Solid Homes, Inc. & Victorio V. Soliven. Felix O. Lodero, Jr. for private respondents. SYLLABUS 1.CIVIL LAW; LAND TITLES AND DEEDS; TORRENS SYSTEM OF LAND REGISTRATION; PURCHASER IS NOT REQUIRED TO EXPLORE FURTHER THAN WHAT THE TITLE INDICATES; EXCEPTION. As a general rule, where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. This rule, however, admits of an exception as where the purchaser or mortgagee, has knowledge of a defect or lack of title in his vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. 2.ID.; ID.; ID.; ID.; EXCEPTION PARTICULARLY APPLIES TO FINANCING INSTITUTIONS ACCEPTING PROPERTIES MORTGAGED BY ENTITIES ENGAGED IN SELLING SUBDIVISION LOTS. In this case, petitioner was well aware that it was dealing with SOLID, a business entity engaged in the business of selling subdivision lots. In fact, the OAALA found that "at the time the lot was mortgaged, respondent State Investment House, Inc., [now petitioner] had been aware of the lot's location and that said lot formed part of Capital Park/Homes Subdivision." In Sunshine Finance and Investment Corp. v. Intermediate Appellate Court, the Court, noting petitioner therein to be a financing corporation, deviated from the general rule that a purchaser or mortgagee of a land is not required to look further than what appears on the face of the Torrens Title. The above-enunciated rule should apply in this case as petitioner admits of being a financing institution. We take judicial notice of the uniform

practice of financing institutions to investigate, examine and assess the real property offered as security for any loan application especially where, as in this case, the subject property is a subdivision lot located at Quezon City, M.M. It is a settled rule that a purchaser or mortgagee cannot close its eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor or mortgagor. Petitioner's constructive knowledge of the defect in the title of the subject property, or lack of such knowledge due to its negligence, takes the place of registration of the rights of respondents-spouses. Respondent court thus correctly ruled that petitioner was not a purchaser or mortgagee in good faith; hence petitioner can not solely rely on what merely appears on the face of the Torrens Title. DECISION FRANCISCO, J p: The factual background of the case, aptly summarized in the decision of the Office of the President and cited by respondent Court of Appeals 1 in its assailed decision, and which we have verified to be supported by the record is herein reproduced as follows: "The uncontroverted facts of the case as recited in the decision of the Office of the President are as follows: 'Records show that on October 15, 1969, Contract to Sell No. 36 was executed by the Spouses Canuto and Ma. Aranzazu Oreta, and the Solid Homes, Inc. (SOLID), involving a parcel of land identified as Block No. 8, Lot No. 1, Phase I of the Capitol Park Homes Subdivision, Quezon City, containing 511 square meters for a consideration of P39,347.00. Upon signing of the contract, the spouses Oreta made payment amounting to P7,869.40, with the agreement that the balance shall be payable in monthly installments of P451.70, at 12% interest per annum. 'On November 4, 1976, SOLID executed several real estate mortgage contracts in favor of State Investment Homes, (sic) Inc. (STATE) over its subdivided parcels of land, one of which is the subject lot covered by Transfer Certificate of Title No. 209642. 'For Failure of SOLID to comply with its mortgage obligations contract, STATE extrajudicially foreclosed the mortgaged properties including the subject lot on April 6, 1983, with the corresponding certificate of sale issued therefor to STATE annotated at the back of the titles covering the said properties on October 13, 1983. 'On June 23, 1984, SOLID thru a Memorandum of Agreement negotiated for the deferment of consolidation of ownership over the foreclosed properties by committing to redeem the properties from STATE. 'On August 15, 1988, the spouses filed a complaint before the Housing and Land Use Regulatory Board, HLURB, against the developer SOLID and STATE for failure on the part of SOLID "to execute the necessary absolute deed of sale as well as to deliver title to said property . . . in violation of the contract to sell . . . ," despite full payment of the purchase price as of January 7, 1981. In its Answer, SOLID, by way of alternative defense, alleged that

the obligations under the Contract to Sell has become so difficult . . . the herein respondents be partially released from said obligation by substituting subject lot with another suitable residential lot from another subdivision which respondents own/operates." Upon the other hand, STATE, to which the subject lot was mortgaged, averred that unless SOLID pays the redemption price of P125,1955.00, (sic) it has "a right to hold on and not release the foreclosed properties." 'On May 23, 1989, the Office of Appeals, Adjudication and Legal Affairs (OAALA) rendered a decision the decretal portion of which reads: '1.Ordering respondent, State Investment House, Inc. to execute a Deed of Conveyance of Lot 1, Block 8, in Capital Park Homes Subdivision in favor of complainants and to deliver to the latter the corresponding certificate of title; '2.Ordering respondent, Solid Homes, Inc. to pay State Investment House, Inc. that portion of its loan which corresponds to the value of the lot as collateral; '3.Ordering respondent, Solid Homes, Inc. to pay to this Board the amount of Six Thousand Pesos (P6,000.00) as administrative fine in accordance with Section 25 in relation to Section 38 of P.D. 957. "Both the STATE and SOLID appealed to the Board of Commissioners, HLURB, which affirmed on June 5, 1990 the OAALA's decision (Annex "C" of the Petition; ibid., p. 34). Again, both STATE and SOLID appealed the decision of the Board of Commissioners, HLURB, to the Office of the President which dismissed the twin appeals on February 26, 1993. "Petitioner filed with the Supreme Court this petition for review of decision of the Office of the President where it was docketed as G.R. No. 109364. However, in a resolution dated May 13, 1993, the Supreme Court referred this case to this Court for proper disposition. On the other hand, SOLID does not appear to have joined herein petitioner in this petition for review." 2 [Emphasis added.] In a decision dated May 19, 1994, respondent court sustained the judgment of the Office of the President. Hence, this petition substantially anchored on these two alleged errors, namely: (1) error in ruling that that private respondent spouses Oreta's unregistered rights over the subject property are superior to the registered mortgage rights of petitioner State Investment House, Inc. (STATE); and (2) error in not applying the settled rule that persons dealing with property covered by Torrens certificate of title are not required to go beyond what appears on the face of the title. At the outset, we note that herein petitioner argues more extensively on the second assigned issue, than on the first. In fact, petitioner admits the superior rights of respondents-spouses Oreta over the subject property as it did not pray for the nullification of the contract between respondents-spouses and SOLID, but instead asked for the payment of the release value of the property in question, plus interest, attorney's fees and costs of suit against SOLID or, in case of the latter's inability to pay, against respondents-spouses before

it can be required to release the title of the subject property in favor of the respondent spouses. 3 And even if we were to pass upon the first assigned error, we find respondent court's ruling on the matter to be well-founded. STATE's registered mortgage right over the property is inferior to that of respondents-spouses' unregistered right. The unrecorded sale between respondents-spouses and SOLID is preferred for the reason that if the original owner (SOLID, in this case) had parted with his ownership of the thing sold then he no longer had ownership and free disposal of that thing so as to be able to mortgage it again. 4 Registration of the mortgage is of no moment since it is understood to be without prejudice to the better right of third parties. 5 Anent the second issue, petitioner asserts that a purchaser or mortgagee of land/s covered under the Torrens System "is not required to do more than rely upon the certificate of title [for] it is enough that the [purchaser or mortgagee] examines the pertinent certificate of title [without] need [of] look[ing] beyond such title." 6 As a general rule, where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. This rule however, admits of an exception as where the purchaser or mortgagee, has knowledge of a defect or lack of title in his vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. 7 In this case, petitioner was well aware that it was dealing with SOLID, a business entity engaged in the business of selling subdivision lots. In fact, the OAALA found that "at the time the lot was mortgaged, respondent State Investment House, Inc., [now petitioner] had been aware of the lot's location and that said lot formed part of Capital Park/Homes Subdivision." 8 In Sunshine Finance and Investment Corp. v. Intermediate Appellate Court, 9 the Court, noting petitioner therein to be a financing corporation, deviated from the general rule that a purchaser or mortgagee of a land is not required to look further than what appears on the face of the Torrens Title. Thus:

"Nevertheless, we nave to deviate from the general rule because of the failure of the petitioner in this case to take the necessary precautions to ascertain if there was any flaw in the title of the Nolascos and to examine the condition of the property they sought to mortgage. The petitioner is an investment and financing corporation. We presume it is experienced in its business. Ascertainment of the status and condition of properties offered to it as security for the loans it extends must be a standard and indispensable part of its operations. Surely, it cannot simply rely on an examination of a Torrens certificate to determine what the subject property looks like as its condition is not apparent in the document. The land might be in a depressed area. There might be squatters on it. It might be easily inundated. It might be an interior lot, without convenient access. These and other similar factors determine the value of the property and so should be of practical concern to the petitioner. xxx xxx xxx

"Our conclusion might have been different if the mortgagee were an ordinary individual or company without the expertise of the petitioner in the mortgage and sale of registered land or if the land mortgaged were some distance from the mortgagee and could not be conveniently inspected. But there were no such impediments in this case. The facilities of the petitioner were not so limited as to prevent it from making a more careful examination of the land to assure itself that there were no unauthorized persons in possession." 10 [Emphasis supplied.] The above-enunciated rule should apply in this case as petitioner admits of being a financing institution. 11 We take judicial notice of the uniform practice of financing institutions to investigate, examine and assess the real property offered as security for any loan application especially where, as in this case, the subject property is a subdivision lot located at Quezon City, M.M. It is a settled rule that a purchaser or mortgagee cannot close its eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor or mortgagor. 12 Petitioner's constructive knowledge of the defect in the title of the subject property, or lack of such knowledge due to its negligence, takes the place of registration of the rights of respondents-spouses. Respondent court thus correctly ruled that petitioner was not a purchaser or mortgagee in good faith; hence petitioner can not solely rely on what merely appears on the face of the Torrens Title. ACCORDINGLY, finding no reversible error in the assailed judgment, the same is hereby AFFIRMED SO ORDERED. [G.R. No. 75336. October 18, 1988.] SPOUSES ANTONIO BORNALES and FLORENDA DIAZ BORNALES, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT and ISABEL MARQUEZ DUMOLONG, respondents. Rodriguez D. Dadivas and Fredicindo A Talabucon for petitioners. Stephen C. Arceo for private respondent. SYLLABUS 1.LAND REGISTRATION; BUYERS IN BAD FAITH; FULL KNOWLEDGE OF THE DEFECT IN THE TITLE. Even without the circumstances enumerated by the Court of Appeals to demonstrate the petitioners' lack of good faith, the fact alone that they purchased the property with full knowledge of the flaws and defect in the title of their vendors is enough proof of their bad faith. In the case of Gatioan v. Gaffud [G.R. No. L-21953, March 28, 1979, 27 SCRA 706] this Court held that one who purchases real property with knowledge of a defect in the title of his vendor cannot claim that he acquired title thereto in good faith as against the owner or of an interest therein.

2.ID.; ID.; ID.; INDEFEASIBILITY OF A CERTIFICATE OF TITLE; DOES NOT EXTEND TO A TRANSFEREE IN BAD FAITH; CASE AT BAR. The petitioners claim that they were not aware of any defect in the title of their vendors because the certificate of title in the name of their predecessors-in-interest which their lawyer examined contained nothing to put them on guard. The fact however remains that the petitioners knew and were parties to the fraud committed against the private respondent. Having bought the land registered under the Torrens system from their vendors who procured title thereto by means of fraud, petitioners cannot invoke the indefeasibility of a certificate of title against the private respondent to the extent of her interest therein. The Torrens system of land registration should not be used as a means to perpetrate fraud against the rightful owner of real property. Registration, to be effective, must be made in good faith. [Palanca v. Director of Lands, 43 Phil. 149 (1922).] Thus, it is a settled rule that the defense of indefeasibility of a certificate of title does not extend to a transferee who takes it with notice of the flaws in his transferor's title. If at all, the petitioners only acquire the right which their vendors then had. [Ramos, et al, v. Dueno, et al., 50 Phil. 786 (1927).] DECISION CORTES, J p: The subject matter of this controversy is a parcel of land (Lot 1318) situated in Barrio Indayagan, Pontevedra (Maayon), Capiz with an area of 74,397 square meters. The land was originally awarded by Decree No. 29015 dated September 21, 1927 in the name of Sixto Dumolong, married to Isabel Marquez, to whom Original Certificate of Title No. 6161 was issued. LLjur Sixto and Isabel whose marriage was not blessed with any child lived separately since 1920. Subsequently, Sixto cohabited extramaritally with Placida Dumolong with whom he had a son by the name of Renito Dumolong and other children. Sometime in November, 1977, representing herself as having hereditary interest in Lot 1318, Placida filed with the Court of First Instance of Capiz a petition for reconstitution of title over said lot. Reconstitution was granted in a decision dated November 18, 1977 and Original Certificate of Title No. RO-6161 was issued in the name of "Sixto Dumolong married to Isabel Marquez". On March 15, 1978, a "Deed of Extrajudicial Adjudication and Sale of Real Property", which was purportedly a settlement of the conjugal estate of Sixto Dumolong and Isabel Marquez Dumolong, involving Lot 1318, and the sale of said lot for P6,000.00 to spouses Carlito Patanao and Minda Dumolong and to spouses Bernardo Decrepito and Loreta Dumolong, was executed by Renito Dumolong and by Isabel Marquez Dumolong whose supposed thumbmark appeared in the document. The deed was registered on November 10, 1978, and pursuant thereto, Transfer Certificate of Title No. T-15856 was issued the abovenamed spouses on the same date. About three months later, or on February 21, 1979, the spouses sold Lot 1318 for P40,000.00 to petitioner-spouses Antonio Bornales and Florenda Diaz Bornales through a Deed of Absolute

Sale [Petition, Annex "C", Rollo, p. 15.] Petitioners eventually secured Transfer Certificate of Title No. 15596 for Lot 1318 in their names. prLL Alleging forgery of the "Deed of Extrajudicial Adjudication and Sale of Real Property", private respondent Isabel Marquez filed on March 11, 1980 an action for reconveyance and damages against Placida Dumolong, Renito Dumolong, spouses Carlito Patanao and Minda Dumolong, spouses Bernardo Decrepito and Loreto Dumolong, and spouses Antonio Bornales and Florenda Diaz. The case was docketed as Civil Case No. V-4366 in the Court of First Instance of Capiz. Only the spouses Bornales answered; the other defendants were declared in default. After trial on the merits, the lower court rendered judgment in Civil Case No. V-4366 in favor of plaintiff and against all the defendants including the petitioners herein who were expressly declared purchasers in bad faith. The subject land was held to be the conjugal property of Sixto Dumolong and plaintiff Isabel Marquez and that the Deed of Extrajudicial Adjudication and Sale of Real Property was a forgery through the machinations of the defaulted defendants. The spouses Bornales timely filed their appeal with the respondent court, which appeal was docketed as AC-G.R. CV No. 05578. On April 1, 1986, the appellate court affirmed the appealed decision in favor of private respondent and against the petitioners but with modifications for the appellate court found that the land was the exclusive property of Sixto Dumolong who had other illegitimate children surviving with Renito Dumolong. The dispositive portion of the decision reads: WHEREFORE, another judgment is entered (1)declaring the Deed of Extrajudicial Adjudication dated March 15, 1978 null and void; (2)cancelling Transfer Certificate of Titles Nos. T-15856 and 15996; (3)declaring Isabel Marquez Dumolong the true and lawful owner of pro-indiviso one-half of the land described in said titles as her intestate inheritance from Sixto Dumolong; (4)declaring the other half of said titles as the intestate inheritance of the illegitimate children of Sixto Dumolong to be divided by them in equal shares; (5)ordering the appellants and all defaulted defendants, jointly and severally, to pay the appellee the sum of P5,000.00 as moral damages with interest of 14% per annum from April 16, 1980, the date the complaint was filed, until full payment; (6)ordering appellants and all defaulted defendants, jointly and severally, to pay the appellee the sum of P5,000.00 as exemplary damages, with interest of 14% per annum from April 16, 1980, the date the complaint was filed, until full payment; (7)ordering the appellants and all defaulted defendants to pay the appellee the sum of P5,000.00 as attorney's fees; and

(8)ordering cross-defendants Carlito Patanao, Minda Dumolong, Bernardo Decrepito and Loreta Dumolong, jointly and severally, to reimburse to the appellants the sum of P40,000.00 with its interests of 14% per annum from May 8, 1980, the date of the filing of the answer with cross-claim, until full payment and the sum of P5,000.00 as attorney's fees. Costs against the appellants. SO ORDERED. [Petition, Annex "D", Rollo, pp. 24-26.] Petitioner's motion for reconsideration filed on April 19, 1986 was denied in a resolution of respondent court dated June 17, 1986. The present petition raises questions of fact. To justify therefore a review by this Court of the decision of the respondent appellate court, the following reasons are adduced by the petitioners: (1)The conclusion of respondent court that herein petitioners are purchasers in bad faith is a finding grounded entirely on speculation, surmises and conjecture; and (2)The inference made by the respondent court that herein petitioners have knowledge that the person who sold them the property in question have acquired the same through forged documents is manifestly mistaken, absurd and impossible. [Petition, p. 5; Rollo, p. 7] The petitioners assail the finding of the respondent appellate court that they are purchasers in bad faith on the ground that such is based on a misapprehension of facts. There is no merit to this allegation. The chain of events starting from the reconstitution of the original certificates of title to the execution of the deed of absolute sale in favor of the petitioners reveals a clear scheme to dispossess the private respondent of her share in the property subject of this controversy. The finding of the Court of Appeals that the land was sold barely three (3) months after the execution of the deed of extra-judicial settlement and the deed of sale is supported by evidence on record. The date appearing on the deed of sale (March 15, 1978) indicates a time span of eight (8) months to the subsequent execution of the deed of absolute sale in favor of the petitioners. However, when the time is reckoned from the date of registration of the deed with the Register of Deeds, it appears that only three (3) months had lapsed when the sale of the subject land to the petitioners took place. The land was registered in the names of the spouses Carlito Patanao and Minda Dumolong and spouses Bernardo Decrepito and Loreta Dumolong on November 10, 1978 [See Annex "B", Petition; Rollo, p. 14.] Three (3) months later or on February 21, 1979, the spouses sold the land to the petitioners [See Annex "C", Petition; Rollo, p. 15.] cdll Petitioners also deny having knowledge of the abnormal increase in the consideration of the sale from P6,000.00 to P40,000.00. They claim that contrary to the findings of the Court of Appeals, the transfer certificate of title which their lawyer examined contained no

annotation of the P6,000.00 purchase price. The fact, however, that petitioners have been the tenants/lessees of the land even during Sixto Dumolong's lifetime belies any alleged lack of knowledge. Having been the cultivators of the land, it is unimaginable that the petitioners would have been unaware of the transactions affecting the land. It appears that petitioners were aware that the private respondent was the legal wife of Sixto Dumolong and was a rightful heir to the properties of the latter. In fact, the trial court conclusively found that the petitioners themselves went to see the private respondent sometime in 1980 to secure her signature and conformity to the Extra-Judicial Adjudication and Sale of Real Property. Cdpr

Thus, even without the circumstances enumerated by the Court of Appeals to demonstrate the petitioners' lack of good faith, the fact alone that they purchased the property with full knowledge of the flaws and defect in the title of their vendors is enough proof of their bad faith. In the case of Gatioan v. Gaffud [G.R. No. L-21953, March 28, 1979, 27 SCRA 706] this Court held that one who purchases real property with knowledge of a defect in the title of his vendor cannot claim that he acquired title thereto in good faith as against the owner or of an interest therein. The petitioners claim that they were not aware of any defect in the title of their vendors because the certificate of title in the name of their predecessors-in-interest which their lawyer examined contained nothing to put them on guard. The fact however remains that the petitioners knew and were parties to the fraud committed against the private respondent. Having bought the land registered under the Torrens system from their vendors who procured title thereto by means of fraud, petitioners cannot invoke the indefeasibility of a certificate of title against the private respondent to the extent of her interest therein. The Torrens system of land registration should not be used as a means to perpetrate fraud against the rightful owner of real property. Registration, to be effective, must be made in good faith. [Palanca v. Director of Lands, 43 Phil. 149 (1922).] Thus, it is a settled rule that the defense of indefeasibility of a certificate of title does not extend to a transferee who takes it with notice of the flaws in his transferor's title. If at all, the petitioners only acquire the right which their vendors then had. [Ramos, et al, v. Dueno, et al., 50 Phil. 786 (1927).] LibLex WHEREFORE, finding no reversible error in the appealed decision, the Court Resolved to DENY the petition for review for lack of merit and AFFIRM the Court of Appeals Decision dated April 1, 1986. SO ORDERED. [G.R. No. 177187. April 7, 2009.] SPS. JUANITO R. VILLAMIL and LYDIA M. VILLAMIL, represented herein by their Attorney-in-Fact/Son WINFRED M. VILLAMIL, petitioners, vs. LAZARO CRUZ VILLAROSA, respondent. DECISION

TINGA, J p: The instant petition for review seeks the reversal of the Decision and Resolution of the Court of Appeals 1 dated 12 September 2006 and 23 March 2007, which partially reversed and set aside the Decision of the Regional Trial Court (RTC) 2 of Quezon City, Branch 88, in Civil Case No. Q-92-11997. ECHSDc Spouses Juanito and Lydia Villamil (petitioners) represented by their son and attorney-infact, Winfred Villamil, filed a complaint 3 for annulment of title, recovery of possession, reconveyance, damages, and injunction against the Spouses Mateo and Purificacion Tolentino (Spouses Tolentino), Lazaro Villarosa (Villarosa) and the Register of Deeds of Quezon City before the RTC of Quezon City. The complaint alleged that petitioners were the registered owners of a parcel of land situated at Siska Subdivision, Tandang Sora, Quezon City, covered by Transfer Certificate of Title (TCT) No. 223611; 4 that Juanito Villamil Jr. asked permission from his parents, petitioners herein, to construct a residential house on the subject lot in April 1986; that in the first week of May 1987, petitioners visited the lot and found that a residential house was being constructed by a certain Villarosa; that petitioners proceeded to the Office of the Register of Deeds to verify their title; that they discovered a Deed of Sale 5 dated 16 July 1979 which they purportedly executed in favor of Cipriano Paterno (Paterno) as the vendee; that they later found out that the TCT in their names was cancelled and a new one, TCT No. 351553, was issued in the name of Paterno; that a Deed of Assignment 6 was likewise executed by Paterno in favor of the Spouses Tolentino, and; that on the basis of said document, TCT No. 351553 was cancelled and in its place TCT No. 351673 7 was issued in the name of the Spouses Tolentino. Three months later, the Spouses Tolentino executed a Deed of Absolute Sale 8 in favor of Villarosa for the sum of P276,000.00. TCT No. 354675 was issued in place of TCT No. 351673. 9 Spouses Villamil asserted that the Deed of Sale in favor of Paterno is a falsified document because they did not participate in its execution and notarization. They also assailed the Deed of Assignment in favor of the Spouses Tolentino as having been falsified because the alleged assignor is a fictitious person. Finally, they averred that the Deed of Sale between Spouses Tolentino and Villarosa is void considering that the former did not have any right to sell the subject property. In their Answer, the Spouses Tolentino alleged that Paterno had offered the property for sale and presented to him TCT No. 351553 registered in his (Paterno's) name. Since they did not have sufficient funds then, the Spouses Tolentino negotiated with and obtained from Express Credit Financing a loan, the proceeds of which they used in paying the agreed consideration. They paid Paterno P180,000.00, but upon the latter's request, a deed of assignment was issued, instead of a deed of sale, to avoid payment of capital gains tax. Express Credit Financing held their title as security for the loan. The Spouses Tolentino thereafter decided to sell the property to Villarosa to pay their obligation to Express Credit Financing. 10

Villarosa, for his part, claimed in his Answer that he is a purchaser in good faith and for value, having paid P276,000.00 as consideration for the purchase of the land and the payment having been received and acknowledged by Mateo Tolentino. 11 In their Reply, petitioners insisted that the deed of absolute sale executed by the Spouses Tolentino in favor of Villarosa is legally defective, having been notarized by one Atty. Juanito Andrade, who was not a duly commissioned notary public for the year 1987, as evidenced by a certification of the Clerk of Court of the RTC of Quezon City. 12 To establish that the deed of sale between the Spouses Villamil and Paterno is spurious, the Spouses Villamil proferred * three points, namely: first, the residence certificate number of Juanito Villamil in the Deed of Sale was 510462 while in the income tax return he filed in 1979, his residence certificate was numbered 4868818; 13 second, the tax account numbers in these two documents are not the same, in the Deed of Sale, it was 9007-586-9 whereas in the income tax return he filed in 1979 it was J 4545-30821-A-1; 14 and third, the Spouses Villamil had paid the real estate taxes over the subject land from 1976-1987. 15 Petitioner also alleged that Paterno is a fictitious person. 16 During the pre-trial, the parties agreed to limit the issues to the following: 1.Whether the Deed of Absolute Sale executed by Villamil in favor of Paterno is fake; 2.Whether Paterno is a fictitious person; 3.Whether the Spouses Tolentino are buyers in good faith; Whether Villarosa, the present registered owner, is a buyer in good faith. 17 On 12 June 2003, the trial court declared all the TCTs of Paterno, Spouses Tolentino and Villarosa null and void and ordered the cancellation of the latter's title and the issuance of a new one in the name of the Spouses Villamil. The dispositive portion reads: cCSDaI WHEREFORE, in view of the foregoing, the court finds merit on plaintiff's complaint and hereby orders the following: A.The injunction against defendant Lazaro Cruz Villarosa, enjoining him from further acts of possession, ownership and dominion over the property is made permanent. B.Transfer Certificate of Titles Number 351553; in the name of Cipriano Paterno, 351673; in the name of Spouses Mateo A. Tolentino and Purificacion Tolentino and 354675; in the name of Lazaro Cruz Villarosa are declared null and void; C.All of the existing improvements on the land shall be forfeited in favor of the plaintiffs; D.The Register of Deeds of Quezon City is hereby ordered to cancel TCT No. 354675 in the name of Lazaro Cruz Villarosa and issue a new one in the name of Spouses Juanito R. Villamil and Lydia M. Villamil;

E.Defendant Lazaro Cruz Villarosa shall pay plaintiffs the rent of P1,000.00 per month to commence February 1987 up to the present; F.Defendants shall pay solidarily plaintiffs the amount of P30,000.00 as attorney's fees, P50,000.00 as moral damages and P20,000.00 exemplary damages. G.The counterclaims of the defendants are dismissed. SO ORDERED. 18 The trial court also found that the Deed of Absolute Sale executed by the Spouses Villamil in favor of Paterno is fake; that Paterno is a fictitious person; and that Spouses Tolentino and Villarosa are both buyers in bad faith. On 12 September 2006, the Court of Appeals reversed the trial court and declared void the title of the Spouses Tolentino and Paterno but upheld the validity of the title of Villarosa. The dispositive portion of the appellate court's decision reads, thus: WHEREFORE, the appeal is GRANTED and the trial court's June 12, 2003 Decision is REVERSED and SET ASIDE with respect to appellant. In lieu thereof, another is entered as follows: (a) ordering the dissolution of the injunction issued by the trial court; (b) declaring Transfer Certificate of Title No. 354675 in the name of appellant valid; (c) affirming appellant's ownership of the subject parcel as well as all existing improvements thereon; and (d) absolving appellant of liability for all monetary awards adjudicated by the trial court. 19 The appellate court ruled that while the Spouses Tolentino's acquisition of the subject land does not "appear to be above board," 20 the circumstances surrounding Villarosa's acquisition, on the other hand, indicate that he is a purchaser for value and in good faith. 21 On 23 March 2007, the appellate court denied petitioners' motion for reconsideration. Hence, this petition. It should be noted that Paterno was not made a defendant in the complaint before the trial court and that the decision of the Court of Appeals insofar as it nullified the title in the name of the Spouses Tolentino was not appealed to this Court. Thus, the petition before this Court centers on the validity of Villarosa's title only. The resolution of this issue devolves on whether Villarosa is a purchaser in good faith. The Spouses Villamil maintains that Villarosa is not a purchaser in good faith considering that he has knowledge of the circumstances that should have forewarned him to make further inquiry beyond the face of the title. 22 Villarosa counters that he is a purchaser in good faith because before buying the property, he went to the Register of Deeds of Quezon City to verify the authenticity of Spouses Tolentino's title, as well as to the Express Credit Financing Corporation to check whether

Spouses Tolentino had indeed mortgaged the subject property. Having been assured of the authenticity and genuineness of its title, he proceeded to purchase the property. 23 The determination of whether Villarosa is a purchaser in good faith is a factual issue which is generally outside the province of this Court to determine in a petition for review. Indeed, this Court is not a trier of facts, and the factual findings of the Court of Appeals are binding and conclusive upon this Court. 24 However, the rule has its recognized exceptions, 25 one of which obtains in this case, i.e., there is a conflict between the findings of fact of the Court of Appeals and those of the trial court. In the case at bar, the courts below arrived at the same findings concerning the circumstances related to the transfer of titles in favor of Paterno and the Spouses Tolentino and on that basis declared both their titles spurious. But they differ with respect to the title of Villarosa. The trial court held that Villarosa knew of the circumstances of Spouses Tolentino's acquisition of the subject property, thus making him (Villarosa) a purchaser in bad faith. To the contrary, the Court of Appeals, upon review of the records, found that Villarosa is a purchaser in good faith. AEIHCS

The burden of proving the status of a purchaser in good faith lies upon one who asserts that status. 26 An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in that same property, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person's claim. 27 The honesty of intention that constitutes good faith implies freedom from knowledge of circumstances that ought to put a prudent person on inquiry. Good faith consists in the belief of the possessors that the persons from whom they received the thing are its rightful owners who could convey their title. Good faith, while always presumed in the absence of proof to the contrary, requires this well-founded belief. 28 Indeed, we found that Villarosa had successfully discharged this burden. In the instant case, there were no traces of bad faith on Villarosa's part in acquiring the subject property by purchase. Villarosa merely responded to a newspaper advertisement for the sale of a parcel of land with an unfinished structure located in Tierra Pura, Tandang Sora, Quezon City. 29 He contacted the number specified in the advertisement and was able to talk to a certain lady named Annabelle 30 who introduced him to the owner, Mateo Tolentino. 31 When he visited the site, he inquired from Mateo Tolentino about the unfinished structure and was informed that the latter allegedly ran out of money and eventually lost interest in pursuing the construction because of his old age. 32 Villarosa was then given a copy of the title. 33 He went to the Register of Deeds and was able to verify the authenticity of the title. 34 He also found out that the property was mortgaged under the name of Mario Villamor, who turned out to be the employer of Tolentino. Upon reaching an agreement on the price of P276,000.00, Villarosa redeemed the title from Express Financing Company. 35 Thereafter,

the property was released from mortgage and a deed of sale was executed. 36 Villarosa then secured the transfer of title in his name. 37 Well-settled is the rule that every person dealing with a 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 beyond the certificate to determine the condition of the property. Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right that may subsequently defeat his right thereto. 38 This principle does not apply when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith. 39 Petitioner enumerates the instances that should have put Villarosa on guard with respect to the title of the Spouses Tolentino. First, petitioner points out that Villarosa should have inquired about the unfinished structure by verifying if there was a building permit. If he did ask, Villarosa would have found out that it was not the Spouses Tolentino who owned the structure, petitioner adds. In finding bad faith on Villarosa, the trial court relied mainly on the alleged testimony of Mateo Tolentino that he told Villarosa at the time he offered the property for sale to him that the lot and the unfinished structure belonged to Spouses Villamil. 40 However, as observed by the appellate court to which the Court agrees, all that the transcript of the stenographic notes of the hearing concerned state is that Mateo Tolentino told Villarosa that the unfinished structure belonged to the previous owner without mention of the Spouses Villamil. 41 In any event, even if Mateo Tolentino had particularly referred to or mentioned the Spouses Villamil, that would not have mattered at all. Specifically, the information alone and without more would not be enough to make Villarosa investigate further. Second, petitioner notes that while the title of the Spouses Tolentino was issued only on 6 November 1986 they offered the property for sale barely two months later. According to petitioner, this should have prompted Villarosa to make further inquiries. Third, petitioner harps that the property was mortgaged to Express Financing to secure a loan in the amount of P225,000.00 which was satisfied out of the proceeds of the sale to Villarosa, leaving the Spouses Tolentino a "measly" P21,000.00 from the transaction. The circumstance was no cause for Villarosa to be alarmed nor to arouse his suspicion that there was a defect in the title of the Spouses Tolentino. There was nothing unlawful or irregular with the fact that the property offered for sale or sold was mortgaged. Besides, the records are bereft of any indication that Villarosa had knowledge of the details of the mortgage

transaction. Also, there is no question about the adequacy of the price provided in the deed of sale in favor of Villarosa. cIEHAC Petitioner also avers that since Paterno's transfer to Spouses Tolentino is spurious, the Spouses Tolentino could not also transfer any right to Villarosa on account of the principle that no one can transfer a greater right to another than he himself has.

We do not agree. A forged or fraudulent document may become the root of a valid title if the property has already been transferred from the name of the owner to that of the forger. 42 This doctrine serves to emphasize that a person who deals with registered property in good faith will acquire good title from a forger and be absolutely protected by a Torrens title. 43 Having made the necessary inquiries and having found the title to be authentic, Villarosa need not go beyond the certificate of title. When dealing with land that is registered and titled, as in this case, buyers are not required by the law to inquire further than what the Torrens certificate of title indicates on its face. 44 He examined the transferor's title, which was then under the name of Spouses Tolentino. He did not have to scrutinize each and every title and previous owners of the property preceding Tolentino. In sum, Villarosa was able to establish good faith when he bought the subject property. Therefore, TCT No. 354675 issued in his name is declared valid. WHEREFORE, the Decision of the Court of Appeals dated 12 September 2006 is AFFIRMED. Costs against petitioners. Liability for loss and deterioration, possessor in good faith (bad faith) Loss of possession Cases: [G.R. No. L-3326. September 7, 1907.] THE UNITED STATES, plaintiff-appellee, vs. LAURENTE REY, defendant-appellant. Bishop & O'Brien, for appellant. Attorney-General Araneta, for appellee. SYLLABUS ROBBERY COMMITTED BY REMOVING CARGO FROM SUNKEN SHIP. U. and M. shipped money from the city of Manila on the steamship Cantabria, destined for C. En route the said ship encountered a baguio and was sunk, with passengers, crew, and cargo. On the next day the defendant, together with others, discovering the locality of the sunken ship, entered the same and took therefrom the sum of P15,000, inclosed in sealed boxes. Held, That the cargo

was not abandoned property and that the defendant and his companions were guilty of the crime of robbery; that property can nor be considered abandoned under the law and the possession left vacant for the finder until the spes recuperandi is gone and the animus revertendi is finally given up. )The Ann L. Lockwood, 37 Fed. Rep., 233; Murphy vs. Dunham, 38 Fed. Rep., 503.) DECISION JOHNSON, J p: This defendant was charged with the crime of robbery in the Court of First Instance of the subprovince of Masbate in the words and figures following: "The undersigned Laurente Rey, as principal, of the crime of robbery, committed as follows: "That on or about the 26th of September, 1905, in the municipality of San Jacinto, subprovince of Masbate, Philippine Islands, the accused Laurente Rey, in company with Hipolito Roblora, Lucio Estay, Jose Sudueo, Demetrio Sudueo, Melecio Hernandez, and Luis Almosara, willfully, intentionally, maliciously, with intent of profiting thereby, against the will of its owner and employing force with regard to the property, took possession of the sum of fifteen thousand pesos, in silver currency and paper certificates, and all the legal tender of the Philippine Islands; that said amount is the property of Urrutia & Co. and of Muoz & Co., both commercial firms doing business in the city of Manila; that the above mentioned amount was placed by those firms on board the steamship Cantabria, which was totally wrecked and lost off the land of Mababuy, within the municipality of San Jacinto, subprovince of Masbate, Philippine Islands; that said amount was packed in several boxes; that those boxes were reenforced with iron straps and nails, which were broken by the accused in order to take possession of the said sum of money; that the accused, once having taken possession of the money, delivered to Petrona Justiniano, who had knowledge of the perpetration of the crime, the paper certificates, which were dried out by her with a smoothing iron and were kept by her with the intent of appropriating the same. All contrary to the statute. "Masbate, March 14, 1906." After hearing the evidence adduced during the trial of the said cause, the lower court found that the defendant guilty of the crime charged in the complaint and sentenced him to be imprisoned for a period of four years, and to restore to the Union Insurance Company of Canton, Limited, the sum of 10,000 pesos and to pay the costs of the prosecution. From this sentence the defendant appealed and made the following assignment of errors: "(1)The court erred in finding that the crime of robbery had been committed. "(2)The sentence of the court is contrary to the evidence and the law." By these assignments of error the defendant presents two questions, one of law and one of fact.

An examination of the record brought to this court shows that some facts were admitted and some were denied by the respective parties. The facts admitted were substantially as follows: That on or about the 19th day of September, 1905, the steamer Cantabria sailed from the port of Manila, destined for the pueblo of Tabaco, in the Province of Albay, and after remaining in quarantine at the quarantine station of Mariveles, continued the journey from said quarantine station on the 24th day of September, and on or about the 26th day of said month said ship was totally wrecked off the small Island of Mababuy and all its officers, passengers, and cargo were totally lost. It is proved that said ship had on board at the time of sailing from the city of Manila, as a part of her cargo, three boxes containing money, amounting to at least 25,000 pesos. There is some confusion in the evidence concerning the exact amount of money. This money was shipped by the firms of Urrutia & Co. and Muoz & Co. It is proved that one Jesus A. de Sendagorta, in the month of January, 1906, recovered from the wreck of said ship the sum of 10,000 pesos. It is proved that of the 25,000 pesos shipped on the said Cantabria, 20,000 of said amount belonged to Urrutia & Co. and 5,000 belonged to Muoz & Co. It is admitted that on the 16th day of October, Mr. Edward E. Hill, as agent for Union Insurance Company of Canton, Limited, paid to Urrutia & Co. the sum of 35,000 pesos for losses which the said company incurred by reason of the wreck of said steamer, and that 20,000 of said amount was for the purpose of covering the 20,000 pesos shipped by the said Urrutia & Co. on said steamer on the 19th day of September. The facts charged by the fiscal and denied by the defendant are substantially as follows: That the defendant, with several others, on the 28th day of September, 1905, after having discovered the existence and location of the wrecked steamer, took from the said wrecked steamer the sum of 15,000 pesos a part of which was distributed among his companions the largest portion of which was retained by the said defendant. The lower court made the following finding of facts from the evidence adduced during the trial of the cause: "That on the 19th of September, 1905, silver and paper money amounting to 25,000 pesos belonging to the firms of Urrutia & Co. and Muoz & Co., of Manila, was placed on the steamer Cantabria at Manila by said firms for shipment; that 5,000 pesos of the said money belonged to Muoz & Co. and 20,000 pesos to Urrutia & Co; that on the 26th day of September the Cantabria was totally wrecked off the Island of Mababuy, every person on her being drowned, the bills of lading of said money being lost, and the money sunk with the ship; that on the 28th day of September, the defendant, Laurente Rey, with the assistance of several men who were in his employ, proceeded to said wrecked steamer and willfully, unlawfully, and with the intention of appropriating it to his own use took therefrom two boxes, one containing 10,000 pesos and the other 5,000 pesos; that 10,000 pesos of the

said money was the property of Urrutia & Co. and 5,000 pesos was the property of Muoz & Co." Admitting the foregoing disputed facts to be true for the purpose of discussing the first assignment of error made by the appellant, the question arises whether or not the defendant, under these facts, is guilty of he crime of robbery, under the provisions of Penal Code. The theory of the defendant and appellant is that the said property which was sunk with the wrecked steamer, the said Cantabria, was abandoned properly and therefore, granting that he had taken possession of said property and appropriated it to his own use, he was not guilty of the crime of robbery. The defendant and appellant, in his brief, admits the following fact: That it was more than six weeks after the cyclone (in which the Cantabria was sunk) before any definite knowledge was received in regard to the fate of the Cantabria, thus admitting that the owner of the money alleged to has been robbed and no definite knowledge of its lost for six weeks or more after the destruction of said ship. Article 460 of the Civil Code provides how the possessor of property may lose his possession of the same: "(1)By abandonment of the thing. "(2)By the transfer to another for a good and valuable consideration. "(3)By the destruction of total loss of the thing or by the thing becoming unmarketable. "(4)By the possession of another, even against the will of the former possessor, if the new possessor has lasted more than one year." The evidence shows, if it can be believed, that the defendant and his companions entered the wrecked ship and removed therefrom the said money and appropriated the same to hiss own use in about twenty-four hours after the time of sinking of the said ship. Can one be charged with the abandonment of his property without even knowing that the same has passed out of his possession or has been lost? We are of the opinion, and so hold, that this question must be answered in the negative. Manresa, in his Commentaries upon the provisions of the Civil Code, says (vol. 4, p. 291): "He who has a right may renounce it. This act by which thing is voluntary renounced constitutes an abandonment. There is no real intention to abandon a property when, as in the case of a shipwreck or a fire, things are thrown into the sea upon the highway." Certainly the owner of the property can not be held to have abandoned the same until at least he has some knowledge of the loss of its possession or of the loss of the thing.

Property can not be considered abandoned under the law and the possession left vacant for the finder until the spes recuperandi is gone and the animus revertendi is finally given up. (The Ann L. Lockwood, 37 Fed. Rep., 233.) The theory of abandonment on the part of the owners of the money stolen is fully refuted by the fact that some weeks after the wreck of the said ship they sent men to the place of the wreck for the purpose of recovering the property which belonged to them, which was on board the ship at the time of her sinking. The mere fact that cargo is sunk with a ship wrecked at sea by no means deprives the owner of said cargo of his property therein. The owner certainly still had the right to reclaim such property and to recover the same if possible. If it should be recovered by others, the real owner would be entitled to recover its value less the necessary expense of recovering the same and carrying it shore by the most approved appliances for that purpose by others. (Murphy vs. Dunham, 38 Fed. Rep., 503.)

If the defendant and his companions had recovered the cargo from the sunken ship for the benefit of the owners of the same, he might have been entitled to compensation of his labor, but when he entered the sunken ship and took therefrom, by force, the property of another before actual abandonment by the owner and appropriated the same to his own use, he was, under the provisions of the Penal Code in force in the Philippine Islands, guilty of the crime of robbery. Upon the question whether or not the defendant and his companions did actually commit the acts charged in the said complaint, we are of the opinion, and so hold, that the evidence adduced during the trial in the lower court fully shows that the defendant did commit such acts in the manner and form as charged in said complaint. Therefore we do hereby affirm the sentence of the lower court and do hereby sentence the defendant to imprisonment for a period of four years of presidio correccional, under the provisions of paragraph 5 article 512 of the Penal Code, to return it Urrutia & Co. and Muoz & Co., or the Union Insurance Company of Canton , Limited, the sum of 15,000 pesos, in case of insolvency to suffer subsidiary imprisonment in accordance of paragraph 1 of article 50 of the Penal Code, and to pay the costs. So ordered. Possession as equivalent to title, when owner can (or cannot) recover in case of loss, what is unlawful deprivation Death of usufructory Other causes [G.R. No. 152809. August 3, 2006.] MERCEDES MORALIDAD, petitioner, vs. SPS. DIOSDADO PERNES and ARLENE PERNES, respondents. DECISION

GARCIA, J p: Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to nullify and set aside the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 61610, to wit: 1.Decision dated September 27, 2001, 1 affirming an earlier decision of the Regional Trial Court (RTC) of Davao City which reversed that of the Municipal Trial Court in Cities (MTCC), Davao City, Branch 1, in an action for unlawful detainer thereat commenced by the petitioner against the herein respondents; and 2.Resolution dated February 28, 2002, 2 denying petitioner's motion for reconsideration. At the heart of this controversy is a parcel of land located in Davao City and registered in the name of petitioner Mercedes Moralidad under Transfer Certificate of Title (TCT) No. T123125 of the Registry of Deeds of Davao City. In her younger days, petitioner taught in Davao City, Quezon City and Manila. While teaching in Manila, she had the good fortune of furthering her studies at the University of Pennsylvania, U.S.A. While schooling, she was offered to teach at the Philadelphia Catholic Archdiocese, which she did for seven (7) years. Thereafter, she worked at the Mental Health Department of said University for the next seventeen (17) years. During those years, she would come home to the Philippines to spend her two-month summer vacation in her hometown in Davao City. Being single, she would usually stay in Mandug, Davao City, in the house of her niece, respondent Arlene Pernes, a daughter of her younger sister, Rosario. Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at the outskirts of Davao City was infested by NPA rebels and many women and children were victims of crossfire between government troops and the insurgents. Shocked and saddened about this development, she immediately sent money to Araceli, Arlene's older sister, with instructions to look for a lot in Davao City where Arlene and her family could transfer and settle down. This was why she bought the parcel of land covered by TCT No. T-123125. Petitioner acquired the lot property initially for the purpose of letting Arlene move from Mandug to Davao City proper but later she wanted the property to be also available to any of her kins wishing to live and settle in Davao City. Petitioner made known this intention in a document she executed on July 21, 1986. 3 The document reads: I, MERCEDES VIA MORALIDAD, of legal age, single, having been born on the 29th day of January, 1923, now actually residing at 8021 Lindbergh Boulevard, Philadelphia, Pennsylvania, U.S.A., wishes to convey my honest intention regarding my properties situated at Palm Village Subdivision, Bajada, Davao City, 9501, . . . and hereby declare: 1.That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein and stay as long as they like;

2.That anybody of my kins who wishes to stay on the aforementioned real property should maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one another; 3.That anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that the same is not inimical to the purpose thereof; 4.That anyone of my kins who cannot conform with the wishes of the undersigned may exercise the freedom to look for his own; 5.That any proceeds or income derived from the aforementioned properties shall be allotted to my nearest kins who have less in life in greater percentage and lesser percentage to those who are better of in standing. xxx xxx xxx Following her retirement in 1993, petitioner came back to the Philippines to stay with the respondents' on the house they build on the subject property. In the course of time, their relations turned sour because members of the Pernes family were impervious to her suggestions and attempts to change certain practices concerning matters of health and sanitation within their compound. For instance, Arlene's eldest son, Myco Pernes, then a fourth year veterinary medicine student, would answer petitioner back with clenched fist and at one time hurled profanities when she corrected him. Later, Arlene herself followed suit. Petitioner brought the matter to the local barangay lupon where she lodged a complaint for slander, harassment, threat and defamation against the Pernes Family. Deciding for petitioner, the lupon apparently ordered the Pernes family to vacate petitioner's property but not after they are reimbursed for the value of the house they built thereon. Unfortunately, the parties could not agree on the amount, thus prolonging the impasse between them. Other ugly incidents interspersed with violent confrontations meanwhile transpired, with the petitioner narrating that, at one occasion in July 1998, she sustained cuts and wounds when Arlene pulled her hair, hit her on the face, neck and back, while her husband Diosdado held her, twisting her arms in the process. Relations having deteriorated from worse to worst, petitioner, on July 29, 1998, lodged a formal complaint before the Regional Office of the Ombudsman for Mindanao, charging the respondent spouses, who were both government employees, with conduct unbecoming of public servants. This administrative case, however, did not prosper. Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful detainer suit against the respondent spouses. Petitioner alleged that she is the registered owner of the land on which the respondents built their house; that through her counsel, she sent the respondent spouses a letter demanding them to vacate the premises and to pay rentals therefor, which the respondents refused to heed. CSTDEH In their defense, the respondents alleged having entered the property in question, building their house thereon and maintaining the same as their residence with petitioner's full

knowledge and express consent. To prove their point, they invited attention to her written declaration of July 21, 1986, supra, wherein she expressly signified her desire for the spouses to build their house on her property and stay thereat for as long as they like. The MTCC, resolving the ejectment suit in petitioner's favor, declared that the respondent spouses, although builders in good faith vis--vis the house they built on her property, cannot invoke their bona fides as a valid excuse for not complying with the demand to vacate. To the MTCC, respondents' continued possession of the premises turned unlawful upon their receipt of the demand to vacate, such possession being merely at petitioner's tolerance, and sans any rental. Accordingly, in its decision dated November 17, 1999, 4 the MTCC rendered judgment for the petitioner, as plaintiff therein, to wit: WHEREFORE, judgment is hereby rendered in favor of herein plaintiff and against the defendants, as follows: a)Directing the defendants, their agents and other persons acting on their behalf to vacate the premises and to yield peaceful possession thereof to plaintiff; b)Ordering defendants to pay P2,000.00 a month from the filing of this complaint until they vacate premises; c)Sentencing defendants to pay the sum of P120,000.00 5 as attorney's fees and to pay the cost of suit. Defendants counterclaim are hereby dismissed except with respect to the claim for reimbursement of necessary and useful expenses which should be litigated in an ordinary civil actions. (sic) Dissatisfied, the respondent spouses appealed to the RTC of Davao City. In the meantime, petitioner filed a Motion for Execution Pending Appeal. The motion was initially granted by the RTC in its Order of February 29, 2000, but the Order was later withdrawn and vacated by its subsequent Order dated May 9, 2000 6 on the ground that immediate execution of the appealed decision was not the prudent course of action to take, considering that the house the respondents constructed on the subject property might even be more valuable than the land site. Eventually, in a decision 7 dated September 30, 2000, the RTC reversed that of the MTCC, holding that respondents' possession of the property in question was not, as ruled by the latter court, by mere tolerance of the petitioner but rather by her express consent. It further ruled that Article 1678 of the Civil Code on reimbursement of improvements introduced is inapplicable since said provision contemplates of a lessor-lessee arrangement, which was not the factual milieu obtaining in the case. Instead, the RTC ruled that what governed the parties' relationship are Articles 448 and 546 of the Civil Code, explaining thus: Since the defendants-appellees [respondents] are admittedly possessors of the property by permission from plaintiff [petitioner], and builders in good faith, they have the right to retain

possession of the property subject of this case until they have been reimbursed the cost of the improvements they have introduced on the property. Indeed, this is a substantive right given to the defendants by law, and this right is superior to the procedural right to [sic] plaintiff to immediately ask for their removal by a writ of execution by virtue of a decision which as we have shown is erroneous, and therefore invalid. (Words in brackets supplied), and accordingly dismissed petitioner's appeal, as follows: WHEREFORE, in view of the foregoing, the Decision appealed from is REVERSED and declared invalid. Consequently, the motion for execution pending appeal is likewise denied. Counter-claims of moral and exemplary damages claimed by defendants are likewise dismissed. However, attorney's fees in the amount of fifteen thousand pesos is hereby awarded in favor of defendants-appellants, and against plaintiffs.

SO ORDERED. 8 Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610. On September 27, 2001, the CA, while conceding the applicability of Articles 448 and 546 of the Civil Code to the case, ruled that it is still premature to apply the same considering that the issue of whether respondents' right to possess a portion of petitioner's land had already expired or was already terminated was not yet resolved. To the CA, the unlawful detainer suit presupposes the cessation of respondents' right to possess. The CA further ruled that what governs the rights of the parties is the law on usufruct but petitioner failed to establish that respondents' right to possess had already ceased. On this premise, the CA concluded that the ejectment suit instituted by the petitioner was premature. The appellate court thus affirmed the appealed RTC decision, disposing: WHEREFORE, premises considered, the instant petition for review is hereby denied for lack of merit. Accordingly, the petitioner's complaint for Unlawful Detainer is DISMISSED. SO ORDERED. With the CA's denial of her motion for reconsideration in its Resolution of February 28, 2002, petitioner is now before this Court raising the following issues: I.WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE UNLAWFUL DETAINER CASE FOR BEING PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH LAW AND JURISPRUDENCE. II.WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING ARTICLES 448 AND 546 AND THE PROVISIONS OF THE CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF THE CIVIL CODE.

The Court rules for the petitioner. The Court is inclined to agree with the CA that what was constituted between the parties herein is one of usufruct over a piece of land, with the petitioner being the owner of the property upon whom the naked title thereto remained and the respondents being two (2) among other unnamed usufructuaries who were simply referred to as petitioner's kin. The Court, however, cannot go along with the CA's holding that the action for unlawful detainer must be dismissed on ground of prematurity. Usufruct is defined under Article 562 of the Civil Code in the following wise: ART. 562.Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides. Usufruct, in essence, is nothing else but simply allowing one to enjoy another's property. 9 It is also defined as the right to enjoy the property of another temporarily, including both the jus utendi and the jus fruendi, 10 with the owner retaining the jus disponendi or the power to alienate the same. 11 It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known her intention to give respondents and her other kins the right to use and to enjoy the fruits of her property. There can also be no quibbling about the respondents being given the right "to build their own house" on the property and to stay thereat "as long as they like." Paragraph #5 of the same document earmarks "proceeds or income derived from the aforementioned properties" for the petitioner's "nearest kins who have less in life in greater percentage and lesser percentage to those who are better of (sic) in standing." The established facts undoubtedly gave respondents not only the right to use the property but also granted them, among the petitioner's other kins, the right to enjoy the fruits thereof. We have no quarrel, therefore, with the CA's ruling that usufruct was constituted between petitioner and respondents. It is thus pointless to discuss why there was no lease contract between the parties. However, determinative of the outcome of the ejectment case is the resolution of the next issue, i.e., whether the existing usufruct may be deemed to have been extinguished or terminated. If the question is resolved in the affirmative, then the respondents' right to possession, proceeding as it did from their right of usufruct, likewise ceased. In that case, petitioner's action for ejectment in the unlawful detainer case could proceed and should prosper. EcATDH The CA disposed of this issue in this wise: . . . Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides . . . xxx xxx xxx

From the foregoing provision, it becomes apparent that for an action for unlawful detainer to prosper, the plaintiff [petitioner] needs to prove that defendants' [respondents'] right to possess already expired and terminated. Now, has respondents' right to possess the subject portion of petitioner's property expired or terminated? Let us therefore examine respondents' basis for occupying the same. It is undisputed that petitioner expressly authorized respondents o occupy portion of her property on which their house may be built. Thus "it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein and stay as long as they like." From this statement, it seems that petitioner had given the respondents the usufructuary rights over the portion that may be occupied by the house that the latter would build, the duration of which being dependent on how long respondents would like to occupy the property. While petitioner had already demanded from the respondents the surrender of the premises, this Court is of the opinion that the usufructuary rights of respondents had not been terminated by the said demand considering the clear statement of petitioner that she is allowing respondents to occupy portion of her land as long as the latter want to. Considering that respondents still want to occupy the premises, petitioner clearly cannot eject respondents. 12 We disagree with the CA's conclusion of law on the matter. The term or period of the usufruct originally specified provides only one of the bases for the right of a usufructuary to hold and retain possession of the thing given in usufruct. There are other modes or instances whereby the usufruct shall be considered terminated or extinguished. For sure, the Civil Code enumerates such other modes of extinguishment: ART. 603.Usufruct is extinguished: (1)By the death of the usufructuary, unless a contrary intention clearly appears; (2)By expiration of the period for which it was constituted, or by the fulfillment of any resolutory condition provided in the title creating the usufruct; (3)By merger of the usufruct and ownership in the same person; (4)By renunciation of the usufructuary; (5)By the total loss of the thing in usufruct; (6)By the termination of the right of the person constituting the usufruct; (7)By prescription. (Emphasis supplied.) The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and sets forth the conditions of, the usufruct. Paragraph #3 thereof states "[T]hat anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof. Provided, however, that the same is not inimical to the purpose thereof" (Emphasis supplied). What may be inimical to the purpose constituting the usufruct may be gleaned from the preceding paragraph wherein petitioner made it abundantly clear "that anybody of my kins who wishes

to stay on the aforementioned property should maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one another." That the maintenance of a peaceful and harmonious relations between and among kin constitutes an indispensable condition for the continuance of the usufruct is clearly deduced from the succeeding Paragraph #4 where petitioner stated "[T]hat anyone of my kins who cannot conform with the wishes of the undersigned may exercise the freedom to look for his own." In fine, the occurrence of any of the following: the loss of the atmosphere of cooperation, the bickering or the cessation of harmonious relationship between/among kin constitutes a resolutory condition which, by express wish of the petitioner, extinguishes the usufruct. From the pleadings submitted by the parties, it is indubitable that there were indeed facts and circumstances whereby the subject usufruct may be deemed terminated or extinguished by the occurrence of the resolutory conditions provided for in the title creating the usufruct, namely, the document adverted to which the petitioner executed on July 21, 1986. As aptly pointed out by the petitioner in her Memorandum, respondents' own evidence before the MTCC indicated that the relations between the parties "have deteriorated to almost an irretrievable level." 13 There is no doubt then that what impelled petitioner to file complaints before the local barangay lupon, the Office of the Ombudsman for Mindanao, and this instant complaint for unlawful detainer before the MTCC is that she could not live peacefully and harmoniously with the Pernes family and vice versa.

Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family and the violence and humiliation she was made to endure, despite her advanced age and frail condition, are enough factual bases to consider the usufruct as having been terminated. To reiterate, the relationship between the petitioner and respondents respecting the property in question is one of owner and usufructuary. Accordingly, respondents' claim for reimbursement of the improvements they introduced on the property during the effectivity of the usufruct should be governed by applicable statutory provisions and principles on usufruct. In this regard, we cite with approval what Justice Edgardo Paras wrote on the matter: If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this, the terms of the contract and the pertinent provisions of law should govern (3 Manresa 215-216; se also Montinola vs. Bantug, 71 Phil. 449). 14 (Emphasis ours.) By express provision of law, respondents, as usufructuary, do not have the right to reimbursement for the improvements they may have introduced on the property. We quote Articles 579 and 580 of the Civil Code:

Art. 579.The usufructuary may make on the property held in usufruct such useful improvements or expenses for mere pleasure as he may deem proper, provided he does not

alter its form or substance; but he shall have no right to be indemnified therefor. He may, however, remove such improvements, should it be possible to do so without damage to the property. (Emphasis supplied.) Art. 580.The usufructuary may set off the improvements he may have made on the property against any damage to the same. Given the foregoing perspective, respondents will have to be ordered to vacate the premises without any right of reimbursement. If the rule on reimbursement or indemnity were otherwise, then the usufructuary might, as an author pointed out, improve the owner out of his property. 15 The respondents may, however, remove or destroy the improvements they may have introduced thereon without damaging the petitioner's property. Out of the generosity of her heart, the petitioner has allowed the respondent spouses to use and enjoy the fruits of her property for quite a long period of time. They opted, however, to repay a noble gesture with unkindness. At the end of the day, therefore, they really cannot begrudge their aunt for putting an end to their right of usufruct. The disposition herein arrived is not only legal and called for by the law and facts of the case. It is also right. WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA are REVERSED and SET ASIDE. Accordingly, the decision of the MTCC is REINSTATED with MODIFICATION that all of respondents' counterclaims are dismissed, including their claims for reimbursement of useful and necessary expenses. No pronouncement as to costs. SO ORDERED. Effect of bad use of the thing VII. Easements or servitudes Different kinds of easements, concept of, distinction Cases: [G.R. No. 136438. November 11, 2004.] TEOFILO C. VILLARICO, petitioner, vs. VIVENCIO SARMIENTO, SPOUSES BESSIE SARMIENTO-DEL MUNDO & BETH DEL MUNDO, ANDOK'S LITSON CORPORATION and MARITES' CARINDERIA, respondents. DECISION SANDOVAL-GUTIERREZ, J p: Before us is a petition for review on certiorari of the Decision 1 of the Court of Appeals dated December 7, 1998 in CA-G.R. CV No. 54883, affirming in toto the Decision 2 of the Regional

Trial Court (RTC) of Paraaque City, Branch 259, dated November 14, 1996, in Civil Case No. 95-044. The facts of this case, as gleaned from the findings of the Court of Appeals, are: Teofilo C. Villarico, petitioner, is the owner of a lot in La Huerta, Paraaque City, Metro Manila with an area of sixty-six (66) square meters and covered by Transfer Certificate of Title (T.C.T.) No. 95453 issued by the Registry of Deeds, same city. Petitioner's lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land belonging to the government. As this highway was elevated by four (4) meters and therefore higher than the adjoining areas, the Department of Public Works and Highways (DPWH) constructed stairways at several portions of this strip of public land to enable the people to have access to the highway. aIcCTA Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband Beth Del Mundo, respondents herein, had a building constructed on a portion of said government land. In November that same year, a part thereof was occupied by Andok's Litson Corporation and Marites' Carinderia, also impleaded as respondents. In 1993, by means of a Deed of Exchange of Real Property, petitioner acquired a 74.30 square meter portion of the same area owned by the government. The property was registered in his name as T.C.T. No. 74430 in the Registry of Deeds of Paraaque City. In 1995, petitioner filed with the RTC, Branch 259, Paraaque City, a complaint for accion publiciana against respondents, docketed as Civil Case No. 95-044. He alleged inter alia that respondents' structures on the government land closed his "right of way" to the Ninoy Aquino Avenue; and encroached on a portion of his lot covered by T.C.T. No. 74430. Respondents, in their answer, specifically denied petitioner's allegations, claiming that they have been issued licenses and permits by Paraaque City to construct their buildings on the area; and that petitioner has no right over the subject property as it belongs to the government. After trial, the RTC rendered its Decision, the dispositive portion of which reads: "WHEREFORE, premises considered, judgment is hereby rendered: 1.Declaring the defendants to have a better right of possession over the subject land except the portion thereof covered by Transfer Certificate of Title No. 74430 of the Register of Deeds of Paraaque; 2.Ordering the defendants to vacate the portion of the subject premises described in Transfer Certificate of Title No. 74430 and gives its possession to plaintiff; and 3.Dismissing the claim for damages of the plaintiff against the defendants, and likewise dismissing the claim for attorney's fees of the latter against the former. CaEATI

Without pronouncement as to costs. SO ORDERED." 3 The trial court found that petitioner has never been in possession of any portion of the public land in question. On the contrary, the defendants are the ones who have been in actual possession of the area. According to the trial court, petitioner was not deprived of his "right of way" as he could use the Kapitan Tinoy Street as passageway to the highway. On appeal by petitioner, the Court of Appeals issued its Decision affirming the trial court's Decision in toto, thus: "WHEREFORE, the judgment hereby appealed from is hereby AFFIRMED in toto, with costs against the plaintiff-appellant. SO ORDERED." 4 In this petition, petitioner ascribes to the Court of Appeals the following assignments of error: "I THE FINDINGS OF FACT OF THE HON. COURT OF APPEALS CONTAINED A CONCLUSION WITHOUT CITATION OF SPECIFIC EVIDENCE ON WHICH THE SAME WAS BASED. II THE HON. COURT OF APPEALS ERRED IN CONSIDERING THAT THE ONLY ISSUE IN THIS CASE IS WHETHER OR NOT THE PLAINTIFF-APPELLANT HAS ACQUIRED A RIGHT OF WAY OVER THE LAND OF THE GOVERNMENT WHICH IS BETWEEN HIS PROPERTY AND THE NINOY AQUINO AVENUE. AcIaST III THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT ACCION PUBLICIANA IS NOT THE PROPER REMEDY IN THE CASE AT BAR. IV THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT THE EXISTENCE OF THE PLAINTIFF-APPELLANT'S RIGHT OF WAY DOES NOT CARRY POSSESSION OVER THE SAME. V THE HON. COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE OF WHO HAS THE BETTER RIGHT OF POSSESSION OVER THE SUBJECT LAND BETWEEN THE PLAINTIFFAPPELLANT AND THE DEFENDANT-APPELLEES." 5

In their comment, respondents maintain that the Court of Appeals did not err in ruling that petitioner's action for accion publiciana is not the proper remedy in asserting his "right of way" on a lot owned by the government. Here, petitioner claims that respondents, by constructing their buildings on the lot in question, have deprived him of his "right of way" and his right of possession over a considerable portion of the same lot, which portion is covered by his T.C.T. No. 74430 he acquired by means of exchange of real property. It is not disputed that the lot on which petitioner's alleged "right of way" exists belongs to the state or property of public dominion. Property of public dominion is defined by Article 420 of the Civil Code as follows: "ART. 420.The following things are property of public dominion: (1)Those intended for public use such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and other of similar character. (2)Those which belong to the State, without being for public use, and are intended for some public service or for the development of the national wealth." Public use is "use that is not confined to privileged individuals, but is open to the indefinite public." 6 Records show that the lot on which the stairways were built is for the use of the people as passageway to the highway. Consequently, it is a property of public dominion. DTAHEC Property of public dominion is outside the commerce of man and hence it: (1) cannot be alienated or leased or otherwise be the subject matter of contracts; (2) cannot be acquired by prescription against the State; (3) is not subject to attachment and execution; and (4) cannot be burdened by any voluntary easement. 7 Considering that the lot on which the stairways were constructed is a property of public dominion, it can not be burdened by a voluntary easement of right of way in favor of herein petitioner. In fact, its use by the public is by mere tolerance of the government through the DPWH. Petitioner cannot appropriate it for himself. Verily, he can not claim any right of possession over it. This is clear from Article 530 of the Civil Code which provides: "ART. 530.Only things and rights which are susceptible of being appropriated may be the object of possession." Accordingly, both the trial court and the Court of Appeals erred in ruling that respondents have better right of possession over the subject lot. However, the trial court and the Court of Appeals found that defendants' buildings were constructed on the portion of the same lot now covered by T.C.T. No. 74430 in petitioner's name. Being its owner, he is entitled to its possession.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated December 7, 1998 in CA-G.R. CV No. 54883 is AFFIRMED with MODIFICATION in the sense that neither petitioner nor respondents have a right of possession over the disputed lot where the stairways were built as it is a property of public dominion. Costs against petitioner. SO ORDERED. Kinds of Easements: Real and personal servitudes [G.R. No. L-17482. March 31, 1966.] GENOVEVA R. JABONETE, ET AL., plaintiffs, vs. JULIANA MONTEVERDE, ET AL., defendants, ANTONIO LEGASPI, respondent-appellant, DEVELOPMENT BANK OF THE PHILIPPINES, petitioner and appellee, MRS. LUZ ARCILLA, petitionerintervenor-appellee. Zuo & Mojica for the respondents and appellants. Jesus Avancea for the plaintiffs. SYLLABUS 1.EASEMENT; PERSONAL SERVITUDE; CASE AT BAR. Under the court order, the right of way granted was expressly limited to the plaintiffs and their "family, friends, drivers, servants and jeeps." The right acquired by plaintiffs, therefore, was a personal servitude under Article 614 of the Civil Code and not a predial servitude that inures to the benefit of whoever owns the dominant estate. Hence, the refusal of the defendant to extend the said easement to the plaintiffs' successors-in-interest was not a defiance of the court's order, since they had no right thereunder. DECISION REGALA, J p: This is an appeal from an order of the Court of First Instance of Davao, dated March 11, 1960, finding the respondent-appellant, Antonio Legaspi, guilty of contempt of court, and imposing upon him a fine of P100.00. On March 11, 1954, the Court of First Instance of Davao, in view of its finding in Case No. 824, entitled Jabonete v. Monteverde et al., that Antonio Legaspi acquired the lot in question with the knowledge that a "gravamen" or easement of right of way existed thereon, promulgated a decision the dispositive portion of which reads:

"Ordena al demandado Antonio Legaspi la demolicion de la parte del corral construido a lo largo de su terreno que impide a lote demandantes tener acceso con la vereda que communica con la carretera principal, Tomas Claudio. "Declara que los demandantes tienen derecho el uso de la vereda (Exh A-3), de 3 metros de ancho, unico paso que disponen para communicarse con la Calle Tomas Claudio, para el paso de sus jeeps, y los vehiculos, reparados que entran y salen del taller de reparacion de aquellos." The respondent-appellant received a copy of the above decision on May 12, 1954. Two days later, May 14, 1954, he filed his notice of appeal therefrom. On May 21, 1954, however, upon a previous motion of the plaintiffs, the lower court issued an order granting discretionary execution of the said decision. In view of this last mentioned order, the plaintiffs immediately proceeded to the premises in question and opened in the fence of the defendant Antonio Legaspi a sufficient opening for the passage of men and vehicles. Even then, however, the defendant filed with the court below on that very same day, May 21, 1954, a motion for the reconsideration of the order granting discretionary execution. Thereafter, and upon the lower court's suggestion, the parties entered into an amicable agreement which was later embodied in an order or "auto" dated May 24, 1954, to wit: "A raiz de la mocion del demandado pidiendo entre otras cosas, la reconsideracion de la orden de ejecucion de la decision dictada en esta causa, el 22 del Mayo de 1954, el Juez que preside esta sala se constituyo para una inspeccion ocular en el lugar en conflicto. "Durante la inspeccion ocular, los demandantes y demandado, Antonio Legaspi, llegaron a un acuerdo: "1.Los demandantes no instalaran en su terreno su taller de reparacion de vehiculos de motor. "2.Los demandantes pueden construir su garaje dentro de su terreno para su jeep (AC), pero no los tendran parados en la calle privada del demandados construido por este en su terreno a lo largo del terreno de los demandantes; "3.Los demandantes contribuiran a prorata con el demandado los gastos de reparacion de la calle privada construida por el referido demandado en su terreno a lo largo del terreno de los demandantes. "4.El demandado, Antonio Legaspi, permitira el uso y paso en la calle privada construida por el en su terreno a lo largo del terreno de los demandantes, a estos, su familia, sus amigos, chofers, servidumbre y de sus jeeps. "5.Para los fines del uso de la calle, el demandado permitira a los demandantes, frente de la casa de estos, abrir una puerta de 4 metros de ancho en el corral construido por el demandado que separa la calle privada y el terreno de los demandantes, a su (demandantes) costa; sus hojas tendran por dentro, que los demandantes tendran cerradas para evitar que los nios, hijos de los inquilinos del demandado tengan acceso a los jeeps de los demandantes, cuyo garaje tendran dentro de su (demandantes) terreno.

"El Juzgado ordena a las partes litigantes cumplan estrictamente con lo estipulado; de los contrario, los mismos estaran sujetos a las ordenes de este Juzgado." As a result of the above agreement and Order of May 24, 1954, the defendant abandoned the prosecution of his appeal. At the same time, both parties complied with its terms until the plaintiffs, unable to continue with their repair shop, transferred to another place in December 1959 whereupon the defendant reconstructed his fence and its footing, closing thereby the opening previously made by the plaintiffs. In the course of time, the plaintiffs' lot was foreclosed by the Development Bank of the Philippines (DBP) which, later still, conveyed it under a conditional sale to Mrs. Luz Arcilla. On her acquisition of the said lot, Mrs. Arcilla demanded of the defendant the re-opening of the fence in question as it was her plan to construct her house in the said lot. When the defendant refused, the Development Bank filed with the lower court a petition to hold the said defendant in contempt. To this petition, Mrs. Luz Arcilla later intervened and was so allowed by the lower court. The Development Bank of the Philippines and Mrs. Luz Arcilla contended that the refusal of the defendant to cause or allow the making of an opening in his fence was a defiance of the said court's decision of March 11, 1954 and was, therefore, contemptuous. After due hearing, the lower court sustained the petitioners and found the defendant guilty of contempt with orders "to pay a fine of One Hundred Pesos (P100.00) and to open the vereda or alley leading to the lot owned by the Development Bank of the Philippines and conveyed to Mrs. Luz S. Arcilla under a conditional deed of sale, otherwise he should be imprisoned until he does so." Thus, the instant appeal. The respondent-appellant maintains that the lower court erred in finding him guilty of contempt because: 1.The decision of March 11, 1954 was novated by the order of May 24, 1954. Consequently, he could not have violated the former decree since with its novation it ceased to have any legal effect. 2.Even assuming that the said decision was not novated by the subsequent order of May 24, 1954, still he could not be deemed to have violated the said decision because the same never became final and executory. The respondent appellant argued that since the decision of March 11, 1954 ordered the opening of a right of way in his property without providing for the corresponding compensation to him, contrary to Article 649 of the Civil Code,1 there was in the said decision "a void which ought to be filled or to be done in order to completely dispose of the case. It was not clear, specific and definitive," and consequently, a judgment that could not have acquired finality. 3.The right to file contempt proceedings against him, with respect to the decrees contained in the decision of March 11, 1954, has prescribed. The respondent-appellant conceded that there is no prescriptive period for the institution of contempt proceedings. However, he contended that inasmuch as contempt under Rule 64 of the Rules of Court is punishable by arresto mayor, it should prescribe in five years just as crimes for which the said penalty is imposed prescribe, under the penal code, in five years.

Without passing on the merits or demerits of the foregoing arguments, this Court believes that the order finding the respondent- appellant guilty of contempt should be reversed. It is clear that the order of May 24, 1954 superseded and was fully intended by the lower court to modify or stand in substitution of the decision of March 11, 1958. More than the expression of the parties' amicable agreement on the dispute, the said order was the lower court's resolution of the respondent-appellant's motion for reconsideration of the decision of March 11, 1954. In the determination, therefore, of the said appellant's obligations relative to the easement in question, the latter and not the decision of March 11, 1954 is the proper point in reference. Under the aforesaid order of May 24, 1954, the easement awarded or secured by the lower court to the plaintiffs was strictly a personal one. The right of way granted was expressly limited to the latter and their "family, friends, drivers, servants and jeeps." In the very language of the agreement the following appears: "El demandado, Antonio Legaspi, permitira el uso y paso en la calle privada construida por el en su terreno a lo largo del terreno de los demandantes, a estos, su familia, sus amigos, chofers, servidumbre y de sus jeeps." The servitude established was clearly for the benefit alone of the plaintiffs and the persons above enumerated and it is clear that the lower court, as well as the parties addressed by the said order, did not intend the same to pass on the plaintiffs' successors-in-interest. In other words, the right acquired by the original plaintiffs was a personal servitude under Article 614 of the Civil Code, and not a predial servitude that inures to the benefit of whoever owns the dominant estate. In resisting the extension of the aforementioned easement to the latter, the plaintiffs' successors-in-interest, the respondent- appellant, therefore, was not defying the decision of March 11, 1954 which was then no longer subsisting, nor the order of May 24, 1954 since the said successors-in-interest had no right thereunder. Another evidence that the servitude in question was personal to the plaintiffs is the fact that the same was granted to the latter without any compensation to the respondent-appellant. Wherefore, the order of the lower court dated March 11, 1960 finding the respondentappellant guilty of contempt is hereby reversed, without pronouncement as to costs . [G.R. No. 136996. December 14, 2001.] EDILBERTO ALCANTARA, FLORENCIO VILLARMIA, POLICARPIO OBREGON, + RICARDO ROBLE, ESCOLASTICA ONDONG, ESTEBAN RALLOS, HENRY SESBINO, SERGIO SESBINO, MANUEL CENTENO, + RENATO CRUZ, MARCELINO CENEZA, BUENAVENTURA ONDONG, and BENJAMIN HALASAN, petitioners, vs. CORNELIO B. RETA, JR., respondent. Pedro F. Alcantara, Jr. for petitioners. Garcia Iigo De Guzman Sarsaba Heje & Associates for private respondent.

SYNOPSIS Petitioners filed a complaint for the exercise of their right of first refusal to purchase subject property in accordance with Section 3(g) of P.D. No. 1517, claiming they are the legitimate tenants or lessees thereof. Both the trial court and the CA dismissed the complaint. On appeal, the Supreme Court held: that P.D. No. 1517, otherwise known as the "Urban Land Reform Act," pertains to areas proclaimed as Urban Land Reform Zones; that subject land is beyond the ambit of P.D. No. 1517 since it has not been proclaimed as an Urban Land Reform Zone; that the applicable law is BP Blg. 25 for failure of petitioners to pay rentals; and that petitioners are not the legitimate tenants contemplated by PD No. 1517, who can exercise the right of first refusal. aECSHI SYLLABUS 1.CIVIL LAW; LEASE; THE URBAN LAND REFORM ACT (P.D. NO. 1517); PERTAINS TO AREAS PROCLAIMED AS URBAN LAND REFORM ZONES; CASE AT BAR. Presidential Decree No. 1517, otherwise known as "The Urban Land Reform Act," pertains to areas proclaimed as Urban Land Reform Zones. Consequently, petitioners cannot claim any right under the said law since the land involved is not an ULRZ. 2.ID.; ID.; ID.; ID.; RIGHT OF FIRST REFUSAL MAY BE AVAILED OF ONLY BY LEGITIMATE TENANT OF THE LAND; CASE AT BAR. To be able to qualify and avail oneself of the rights and privileges granted by the said decree, one must be: (1) a legitimate tenant of the land for ten (10) years or more; (2) must have built his home on the land by contract; and, (3) has resided continuously for the last ten (10) years. Obviously, those who do not fall within the said category cannot be considered "legitimate tenants" and, therefore, not entitled to the right of first refusal to purchase the property should the owner of the land decide to sell the same at a reasonable price within a reasonable time. Respondent Reta denies that he has lease agreements with petitioners Edilberto Alcantara and Ricardo Roble. Edilberto Alcantara, on the other hand, failed to present proof of a lease agreement other than his testimony in court that he bought the house that he is occupying from his father-in-law. Respondent Reta allowed petitioner Ricardo Roble to use sixty-two (62) coconut trees for P186 from where he gathered tuba. This arrangement would show that it is a usufruct and not a lease. Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides. Petitioner Roble was allowed to construct his house on the land because it would facilitate his gathering of tuba. This would be in the nature of a personal easement under Article 614 of the Civil Code. Whether the amicable settlement is valid or not, the conclusion would still be the same since the agreement was one of usufruct and not of lease. Thus, petitioner Roble is not a legitimate tenant as defined by Presidential Decree No. 1517. As to the other petitioners, respondent Reta admitted that he had verbal agreements with them. This notwithstanding, they are still not the legitimate tenants contemplated by Presidential Decree No. 1517, who can exercise the right of first refusal. DECISION

PARDO, J p: The Case In this petition for review, 1 petitioners seek to review the decision 2 of the Court of Appeals affirming the decision 3 of the Regional Trial Court, Davao City, Branch 14, dismissing petitioners' complaint for the exercise of the right of first refusal under Presidential Decree No. 1517, injunction with preliminary injunction, attorney's fees and nullity of amicable settlement. cdaisa The Facts Edilberto Alcantara, Florencio Villarmia, Policarpio Obregon, Ricardo Roble, Escolastica Ondong, Esteban Rallos, Henry Sesbino, Sergio Sesbino, Manuel Centeno, Renato Cruz, Marcelo Ceneza, Buenaventura Ondong and Benjamin Halasan, filed with the Regional Trial Court, Davao City, Branch 14, a complaint 4 against Cornelio B. Reta, Jr. for the exercise of the right of first refusal under Presidential Decree No. 1517, injunction with preliminary injunction, attorney's fees and nullity of amicable settlement. The plaintiffs claimed that they were tenants or lessees of the land located in Barangay Sasa, Davao City, covered by Transfer Certificate of Title No. T-72594, owned by Reta; that the land has been converted by Reta into a commercial center; and that Reta is threatening to eject them from the land. They assert that they have the right of first refusal to purchase the land in accordance with Section 3(g) of Presidential Decree No. 1517 since they are legitimate tenants or lessees thereof. They also claimed that the amicable settlement executed between Reta and Ricardo Roble was void ab initio for being violative of Presidential Decree No. 1517. On the other hand, Reta claimed that the land is beyond the ambit of Presidential Decree No. 1517 since it has not been proclaimed as an Urban Land Reform Zone; that the applicable law is Batas Pambansa Blg. 25 for failure of the plaintiffs to pay the rentals for the use of the land; and that the amicable settlement between him and Ricardo Roble was translated to the latter and fully explained in his own dialect. aTEScI On March 8, 1994, the trial court rendered a decision dismissing the complaint and ordering the plaintiffs to pay Reta certain sums representing rentals that had remained unpaid. 5 On April 6, 1994, plaintiffs appealed the decision to the Court of Appeals. 6 On December 9, 1998, the Court of Appeals promulgated a decision 7 affirming in toto the decision of the trial court. Hence, this appeal. 8 The Issue

The issue is whether petitioners have the right of first refusal under Presidential Decree No. 1517. The Court's Ruling The petition is without merit. The area involved has not been proclaimed an Urban Land Reform Zone (ULRZ). In fact, petitioners filed a petition with the National Housing Authority requesting that the land they were occupying be declared as an ULRZ. On May 27, 1986, the request was referred to Mr. Jose L. Atienza, General Manager, National Housing Authority, for appropriate action. 9 The request was further referred to acting mayor Zafiro Respicio, Davao City, as per 2nd Indorsement dated July 1, 1986. 10 Clearly, the request to have the land proclaimed as an ULRZ would not be necessary if the property was an ULRZ. Presidential Decree No. 1517, otherwise known as "The Urban Land Reform Act," pertains to areas proclaimed as Urban Land Reform Zones. 11 Consequently, petitioners cannot claim any right under the said law since the land involved is not an ULRZ. To be able to qualify and avail oneself of the rights and privileges granted by the said decree, one must be: (1) a legitimate tenant of the land for ten (10) years or more; (2) must have built his home on the land by contract; and, (3) has resided continuously for the last ten (10) years. Obviously, those who do not fall within the said category cannot be considered "legitimate tenants" and, therefore, not entitled to the right of first refusal to purchase the property should the owner of the land decide to sell the same at a reasonable price within a reasonable time. 12 Respondent Reta denies that he has lease agreements with petitioners Edilberto Alcantara and Ricardo Roble. 13 Edilberto Alcantara, on the other hand, failed to present proof of a lease agreement other than his testimony in court that he bought the house that he is occupying from his father-in-law. 14 Respondent Reta allowed petitioner Ricardo Roble to use sixty-two (62) coconut trees for P186 from where he gathered tuba. This arrangement would show that it is a usufruct and not a lease. Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance, unless the title constituting it or the law otherwise provides. 15 Petitioner Roble was allowed to construct his house on the land because it would facilitate his gathering of tuba. This would be in the nature of a personal easement under Article 614 of the Civil Code. 16 Whether the amicable settlement 17 is valid or not, the conclusion would still be the same since the agreement was one of usufruct and not of lease. Thus, petitioner Roble is not a legitimate tenant as defined by Presidential Decree No. 1517.

As to the other petitioners, respondent Reta admitted that he had verbal agreements with them. This notwithstanding, they are still not the legitimate tenants contemplated by Presidential Decree No. 1517, who can exercise the right of first refusal. A contract has been defined as "a meeting of the minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.'' 18 Clearly, from the moment respondent Reta demanded that the petitioners vacate the premises, the verbal lease agreements, which were on a monthly basis since rentals were paid monthly, 19 ceased to exist as there was termination of the lease. ACTaDH Indeed, none of the petitioners is qualified to exercise the right of first refusal under P.D. No. 1517. Another factor which militates against petitioners' claim is the fact that there is no intention on the part of respondent Reta to sell the property. Hence, even if the petitioners had the right of first refusal, the situation which would allow the exercise of that right, that is, the sale or intended sale of the land, has not happened. P.D. No. 1517 applies where the owner of the property intends to sell it to a third party. 20

The Fallo WHEREFORE, the Court DENIES the petition. The Court AFFIRMS the decision of the Court of Appeals 21 and the resolution denying reconsideration thereof. No costs. SO ORDERED.

Public and private easements [G.R. No. 42334. October 31, 1936.] NORTH NEGROS SUGAR CO., INC., plaintiff-appellant, vs. SERAFIN HIDALGO, defendant-appellee. Hilado & Hilado for appellant. Simeon Bitanga for appellee. Ross, Lawrence, Selph & Carrascoso and DeWitt, Perkins & Ponce Enrile as amici curiae. SYLLABUS

1.INJUNCTION; REMEDY SOUGHT AS PRINCIPAL RELIEF; REQUISITES. The plaintiff prays in its complaint against the defendant that an injunction be issued, restraining the defendant from entering or passing through the properties of the plaintiff, specially through the "mill site" of plaintiff's sugar central. The injunction applied for, constitutes, unlike the auxiliary and subordinate remedy that it ordinarily is, the principal remedy itself. The relief should only be granted, therefore, after it has been established not only that the right sought to be protected exists, but also that the acts against which the injunction is to be directed are violative of said right. 2.ID.; ID.; ID. "The existence of a right violated is a prerequisite to the granting of an injunction. . . . A permanent injunction should not be awarded except in a clear case and to prevent irreparable injury." (32 C.J., 34-36.) "A court of chancery will not entertain a bill to enforce a mere valueless abstract right, and the court will, on its own motion, raise the point for its own protection." (Dunnom vs. Thomsen, 58 Ill. App., 390.) None of these requisites is present in the instant case. There has been a failure to establish either the existence of a clear and positive right of the plaintiff specially calling for judicial protection through an extraordinary writ of the kind applied for, or that the defendant has committed or attempts to commit any act which has endangered or tends to endanger the existence of said right, or has injured or threatens to injure the same. 3.ID.; ID.; PRIVATE ROAD OPEN TO PUBLIC USE. When a private road has been thrown open to public use, no action for trespass is maintainable against any person who desires to make use thereof; consequently, an injunction suit likewise does not lie. "Private roads, except where laid out under constitutional provisions authorizing the condemnation of private property for a private use, are public roads in the sense that they are open to all who see fit to use them, and it is immaterial that the road is subject to gates and bars, or that it is merely a cul de sac. Being thus considered as a public road, it necessarily follows that the owner of the land through which the road is laid out cannot maintain an action of trespass against any person using it." (50 C.J., pp. 397, 398.) ". . . Where it is clear that the complainant does not have the right that he claims, he is not entitled to an injunction, either temporary or perpetual, to prevent a violation of such supposed right. . . . An injunction will not issue to protect a right not in esse and which may never arise or to restrain an act which does not give rise to a cause of action, . . .." (32 C.J., pp. 34, 35.) 4.ID.; ID.; ID. Plaintiff states in the sixth paragraph of its amended complaint: "6. That, in addition, the plaintiff, in the exercise of its property rights, does not want to allow the entry of the defendant in any part of its estate above-mentioned in order to avert any friction or ill-feeling against him." The plaintiff, in petitioning the courts for an injunction to avert "friction or ill- feeling" against the defendant, invoking its sacred property rights, attempts to intrust to them a mission at once beyond those conferred upon them by the Constitution and the laws, and unbecoming of their dignity and decorum. 5.ID.; ID.; FAILURE TO ESTABLISH DAMAGE AGAINST WHICH THE INJUNCTION IS INVOKED. Plaintiff has not established the existence, real or probable, of the alleged damage against which the injunction is invoked. Plaintiff's admission in its brief (p. 15) that it has not been established that the defendant has brought tuba to the "mill site," or has sold it within its property, is fatal to the present action charging the defendant with said acts.

6.ID.; ID.; PRINCIPLE OF EQUITY. The well-known principle of equity that "he also comes to equity must come with clean hands" bars the granting of the remedy applied for by the plaintiff. Plaintiff, in order to obtain a preliminary injunction, trifled with the good faith of the lower court by knowingly making untrue allegations on matters important and essential to its cause of action. Consequently, it did not come to court with clean hands. "Coming into equity with clean hands. The maxim that he who comes into equity must come with clean hand is, of course, applicable in suits to obtain relief by injunction. Injunction will be denied even though complainant shows that he has a right and would otherwise be entitled to the remedy in case it appears that he himself acted dishonestly, fraudulently or illegally in respect to the matter in which redress is sought, or where he has encouraged, invited or contributed to the injury sought to be enjoined. However, the general principle that he who comes into equity must come with clean hands applies only to plaintiff's conduct in relation to the very matter in litigation. The want of equity that will bar a right to equitable relief for coming into court with unclean hands must be so directly connected with the matter in litigation that it has affected the equitable relations of the parties arising out of the transaction in question." (32 C.J., pp. 67, 68.) 7.ID.; ID.; JUDICIAL DISCRETION. The exercise of discretion by trial courts in matters injunctive should not be interfered with by appellate courts except in cases of manifest abuse. ". . . The court which is to exercise the discretion is the trial court and not the appellate court. The action of the court may be reviewed on appeal or error in case of a clear abuse of discretion, but not otherwise, and ordinarily mandamus will not lie to control such discretion." (32 C.J., sec. 11, p. 33.) True, the rule has particular application to preliminary injunctions, but the rule should not be otherwise with respect to permanent injunctions especially where, as in this case, set the same aside in its final decision on a careful review of the evidence. 8.ID.; ID.; VOLUNTARY EASEMENT. This is a case of an easement of way voluntarily constituted in favor of a community. (Civil Code, arts. 531 and 594.) There is nothing in the constitution of this easement in violation of law or public order, except perhaps that the right to open roads and charge passage fees therefor is the State's by right of sovereignty and may not be taken over by a private individual without the requisite permit. This, however, would effect the right of the plaintiff to charge tolls, but not that of the defendant or of any other person to make use of the easement. 9.ID.; ID.; ID. Voluntary easements under article 594 are not contractual in nature; they constitute the act of the owner. If he exacts any condition, like the payment of a certain indemnity for the use of the easement, any person who is willing to pay it may make use of the easement. If the contention be made that a contract is necessary, it may be stated that a contract exists from the time all those who desire to make use of the easement are disposed to pay the required indemnity. 10.ID.; ID.; ID. The plaintiff contends that the easement of way is intermittent in nature and can only be acquired by virtue of a title under article 539. The defendant, however, does not lay claim to it by prescription. The title in this case consists in the fact that the plaintiff has offered the use of this road to the general public upon payment of a certain sum as passage fee in the case of motor vehicles.

11.ID.; ID.; ID.; CASES DISTINGUISHED. The cases of Roman Catholic Archbishop of Manila vs. Roxas (22 Phil., 450), and Cuaycong vs. Benedicto (37 Phil., 781), are not controlling, as there the attempt was to establish that the right to an easement of way had been acquired by prescription. Here defendant's contention is, that while the road in question remains open to the public, he has a right to its use upon paying the passage fees required by the plaintiff. Indeed the latter may close it at its pleasure, as no period had been fixed when the easement was voluntarily constituted, but while the road is thrown open, the plaintiff may not capriciously exclude the defendant from its use. 12.ID.; ID.; ID.; PUBLIC INTEREST. Having been devoted by the plaintiff to the use of the public in general, upon paying the passage fees required in the case of motor vehicles, the road in question is charged with a public interest, and while so devoted, the plaintiff may not establish discriminatory exceptions against any private person. "When private property is affected with a public interest, it ceases to be juris privati only; as if a man set out a street in new building on his own land, it is now no longer bare private interest, but is affected by a public interest." (Lord Chief Justice Hale in his treatise "De Portibus Maris," quoted with approval in Munn vs. Illinois, 94 U.S., 113 [1876], and in Nebbia vs. New York, 291 U.S., 502 [1934].) 13.ID.; ID.; ID.; PUBLIC UTILITY. The circumstance that the road in question does not properly fall within the definition of a public utility provided in Act No. 3108, does not divest it of this character: " . . . whether or not a given business, industry, or service is a public utility does not depend upon legislative definition, but upon the nature of the business or service rendered, and an attempt to declare a company or enterprise to be a public utility, where it is inherently not such, is, by virtue of the guaranties of the federal constitution, void whether it interferes with private rights of property or contract. So a legislature cannot by mere flat or regulatory order convert a private business or enterprise into a public utility, and the question whether or not a particular company or service is a public utility is a judicial one, and must be determined as such by a court of competent jurisdiction; . . .." (51 C.J., sec. 3, p. 5.)

14.ID.; ID.; ID. The road in question being a public utility, or, to be more exact, a private property affected with a public interest, it is not lawful to make arbitrary exceptions with respect to its use and enjoyment. "Duty to Serve Without Discrimination. A public utility is obliged by the nature of its business to furnish its service or commodity to the general public, or that part of the public which it has undertaken to serve, without arbitrary discrimination, and it must, to the extent of its capacity, serve all who apply, on equal terms and without distinction, so far as they are in the same class and similarly situated. Accordingly, a utility must act toward all members of the public impartially, and treat all alike; and it cannot arbitrarily select the persons for whom it will perform its service or furnish its commodity, nor refuse to one a favor or privilege it has extended to another, since the term 'public utility' precludes the idea of service which is private in its nature and is not to be obtained by the public. Such duties arise from the public nature of a utility, and statutes providing affirmatively therefor are merely declaratory of the common law." (51 C.J., sec. 16, p.7.)

15.ID.; ID.; ID. The circumstance that the plaintiff is not the holder of a franchise or of a certificate of public convenience, or that it is a company devoted principally to the manufacture of sugar and not to the business of public service, or that the State has not as yet assumed control or jurisdiction over the operation of the road in question by the plaintiff, does not preclude the idea that the said road is a public utility. 16.ID.; ID.; ID. "When private property is devoted to public use in the business of a public utility, certain reciprocal rights and duties are raised by implication of law between the utility and the public it undertakes to serve, and no contract between them is necessary to give rise thereto. . . ." (51 C.J., sec. 12, p. 6.) DECISION RECTO, J p: On October 12, 1933, the plaintiff filed before the Court of First Instance of Occidental Negros a complaint praying, upon the allegations contained therein, that an injunction be issued, restraining the defendant from entering or passing through the properties of the plaintiff, specially through the "mill site" of plaintiffs sugar central. It appears that the plaintiff is the owner of a site in which is located its sugar central, with its factory building and residence for its employees and laborers, known as the "mill site." It also owns the adjoining sugar plantation known as Hacienda "Begoa." Across its properties the plaintiff constructed a road connecting the "mill site" with the provincial highway. Through this road plaintiff allowed and still allows vehicles to pass upon payment of a tool charge of P0.15 for each truck or automobile. Pedestrians are allowed free passage through it. Immediately adjoining the above-mentioned "mill site" of the plaintiff is the hacienda of Luciano Aguirre, known as Hacienda "Sagay," where the defendant has a billiard hall and a tuba saloon. Like other people in the about the place, defendant used to pass through the said road of the plaintiff, because it was his only means of access to the Hacienda "Sagay" where he runs his billiard hall and tuba saloon. Later on, by order of the plaintiff, every time that the defendant passed driving his automobile with a cargo of tuba plaintiff's gatekeeper would stop him and prevent him from passing through said road. Defendant in such cases merely deviated from said road and continued on his way to the Hacienda "Sagay" across the fields of Hacienda "Begoa," likewise belonging to the plaintiff. The alleged conveyance of tuba to plaintiff's "mill site" or the sale thereof within its property has not been established by the evidence adduced in this case. This the plaintiff admits in its brief (p. 15). Neither is there any evidence to show that the defendant actually created disturbance in plaintiff's properties, including its "mill site." Other pertinent facts will be stated in appropriate places in this decision. A.First of all it may be stated that in the case at bar the injunction applied for, constitutes, unlike the auxiliary and subordinate remedy that it ordinarily is, the principal remedy itself. The relief should only be granted, therefore, after it has been established not only that the

right sought to be protected exists, but also that the acts against which the injunction is to be directed are violative of said right. "SEC. 164.Circumstances under which a preliminary injunction may be granted. A preliminary injunction may be granted when it is established, in the manner hereinafter provided, to the satisfaction of the judge granting it: "1.That the plaintiff is entitled to the relief demanded and such relief, or any part thereof, consists in restraining the commission or continuance of the acts complained of either for a limited period or perpetually; "2.That the commission or continuance of some act complained of during the litigation would probably work injustice to the plaintiff; "3.That the defendant is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act probably in violation of the plaintiff's rights, respecting the subject of the action, and tending to render the judgment ineffectual." (Code of Civil Procedure.) "In order that, at the final trial of a case, an injunction may issue perpetually prohibiting the repetition or continuation of an act complained of, it is indispensable that it shall have been proven at trial that he who seeks such a remedy is entitled to ask for it; if he is not, his request must be denied." (Tumacder vs. Nueva, 16 Phil., 513.) "The extraordinary remedy of injunction will not be granted to prevent or remove a nuisance unless there is a strong case of pressing necessity, and not because of a trifling discomfort." (De Ayala vs. Barretto, 33 Phil., 538.) "The existence of a right violated is a prerequisite to the granting of an injunction. . . . A permanent injunction should not be awarded except in a clear case and to prevent irreparable injury." (32 C.J., 34-36.) "A court of chancery will not entertain a bill to enforce a mere valueless abstract right, and the court will, on its own motion, raise the point for its own protection." (Dunnom vs. Thomsen, 58 Ill. App., 390.) None of these requisites is present in the instant case. There has been a failure to establish either the existence of a clear and positive right of the plaintiff specially calling for judicial protection through an extraordinary writ of the kind applied for, or that the defendant has committed or attempts to commit any act which has endangered or tends to endanger the existence of said right, or has injured or threatens to injure the same. In obtaining ex-parte a preliminary injunction in the lower court, the plaintiff made under oath in its complaint the following allegations, which later turned out to be untrue, or, at least, beyond the capacity of plaintiff to prove: "3.That on sundry occasions heretofore, the defendant used to go to the said 'mill site' of the plaintiff, passing over the latter's private roads, and there caused trouble among the peaceful people of the place.

"4.That the plaintiff, through its representatives, has prohibited the defendant from entering its private property, but this notwithstanding, the defendant still persists in repeating his incursions into the said private roads and 'mill site' of the plaintiff, disturbing public order and molesting plaintiff's employees and their families." The court, in its order granting the preliminary injunction, said: "Considering the said complaint and the sworn statement of its correctness filed by plaintiff's attorneys 1 and it appearing satisfactorily that the issuance of a preliminary injunction is in order because of the sufficiency of the grounds alleged, upon the filing of a bond, it is hereby, etc. . . .." After obtaining the preliminary injunction, the plaintiff amended its complaint by eliminating therefrom those very allegations upon which the court granted the temporary remedy, namely, the acts imputed to the defendant "of causing trouble among the peaceful people of plaintiff's 'mill site,' and of disturbing public order and molesting plaintiff's employees and their families within the private roads and the 'mill site' of the plaintiff." The plaintiff doubtless overlooked the fact that the allegation it availed of to obtain a preliminary injunction was necessary to secure one of a permanent character. In its new complaint, its only grievance is that the defendant insists in passing through its property to take tuba to the Hacienda "Sagay" (which does not belong to the plaintiff but to Luciano Aguirre, and where the defendant has established a legitimate business). The amended complaint no longer alleges that the defendant went to the "mill site" and to the private roads of the plaintiff "to cause trouble, disturb public order and molest plaintiff's employees and their families.". It develops, however, that neither the original complaint nor the one amended states how and why the mere passage of the defendant over plaintiff's estate to convey tuba to the Hacienda "Sagay" has caused damages to plaintiff's property rights, requiring the unusual intervention and prohibition thereof of the courts through injunctive relief. The plaintiff failed not only to make any allegation to this effect, but also to state that the road on its property where the defendant used to pass on his way to the Hacienda "Sagay" was open to the public in general, and that the plaintiff, exercising without any permit a power exclusively lodged in the state by reason of its sovereign capacity, required the payment of passage fees for the use of said road. Now, there being no contention here that the defendant, in passing over plaintiff's estate to take tuba to the Hacienda "Sagay," occasioned damages to such estate, or that he sold tuba within the confines thereof, what could have been the basis of plaintiff's right for which the special protection of the court is invoked, and of the illegal act laid at defendant's door? Defendant's passage over plaintiff's property does not, of itself, constitute an unlawful act inasmuch as the plaintiff, of its own accord, opened the same to the public conditioned only upon the payment of transit fees by motor vehicles. Neither does the mere transportation of tuba over plaintiff's estate amount to a violation of the latter's property rights, unless the goods' destination be at any point within the confines thereof, or unless the said goods be sold in transit to the laborers and employees of the plaintiff, which, as plaintiff itself admits in its brief (p. 15), has not been shown.

The deduction from plaintiff's evidence is, that the real damage which it seeks to avoid does not consist in defendant's taking tuba with him while traversing the former's property, as there is no causal relation between the act and any resultant damage, but in the fact that tuba is disposed of at the Hacienda "Sagay" to which plaintiff's laborers have access. What should, therefore, be enjoined, if it were legally possible, is defendant's sale of tuba at the Hacienda "Sagay," and not its conveyance across plaintiff's estate. But if, as plaintiff concedes (brief, p. 16), the former cannot be legally enjoined, least of all can the latter be restrained as long as the public in genera; is free to go about the said property and it has not been shown that the defendant, in passing through it, has occasioned damage thereto or has committed any act infringing plaintiff's property rights or has refused to pay the required road toll. Defendant's sale of tuba at the Hacienda "Sagay" is nothing more than the exercise of a legitimate business, and no real damage to third persons can arise from it as a natural and logical consequence. The bare possibility that plaintiff's laborers, due to the contiguity of the Hacienda "Sagay" to its property, might come to defendant's store to imbibe tuba to drunkenness, does not warrant the conclusion that the defendant, in thus running the business, impinges upon plaintiff's property rights and should thereby be judicially enjoined. The damage which plaintiff seeks to enjoin by this action does not consist, an has been demonstrated, in defendant's maintaining a tuba store at the Hacienda "Sagay," or in defendant's crossing its property while taking tuba to the Hacienda "Sagay," but in its laborers finding their way to the said hacienda in order to buy tuba and become drunk. In other words, the act sought to be restrained as injurious or prejudicial to plaintiff's interests, is that committed, not by the defendant, but by plaintiff's own laborers. Rightly and logically, the injunction should be directed against said laborers to the end that they should abstain from going to the Hacienda "Sagay" in order to buy tuba and become drunk. As it would seem unusual for the plaintiff to do this, it should at least exercise stricter vigilance and impose rigorous discipline on its laborers by, for instance, punishing drunkenness with expulsion. Plaintiff's remedy lies in its own hands and should not be looked for in the courts at the sacrifice of other interests no less sacred and legitimate than the plaintiff's. Where one has a right to do a thing equity has no power to restrain him from doing it. (Dammann vs. Hydraulic Clutch Co., 187 Pac., 1069.) Acts under the authority of the law will not be enjoined (Bonaparte vs. Camden, etc. Railroad Co., 3 Fed. Cas. No. 1617, Baldw., 205). Lawful exercises of rights incidentally injuring others may not be enjoined by injunction. (14 R. C. L., 369.) "It is . . . an established principle that one may not be enjoined from doing lawful acts to protect and enforce his rights of property or of person, . . .." (14 R.C.L., pp. 365, 366.). It is said that the plaintiff seeks to enjoin the defendant, not from selling tuba at his store in the Hacienda "Sagay," but from passing through its property to introduce tuba to said hacienda (plaintiff's brief, p. 16). The legal rule, however, is that what the law does not authorize to be done directly, cannot be done indirectly. If the plaintiff cannot judicially enjoin the defendant from selling tuba at the Hacienda "Sagay," neither can it obtain said injunction to prevent him from passing over its property to transport tuba to that place as

long as the defendant is ready to pay the transit fees required by the plaintiff and does not sell the said goods inside the said property. Suppose that the defendant, instead of being a tuba vendor, is a social propagandist whose preachings, while not subversive of the established legal order, are not acceptable to some capitalistic organizations, say the plaintiff. Suppose that the defendant, armed with the corresponding official permit, should desire to go to the Hacienda "Sagay" through plaintiff's estate for the purpose of explaining to the laborers the advantage of the latter organizing themselves into unions, or joining existing ones, to better defend their interests. Plaintiff learns in time of the plan and determines to frustrate it in the belief that it would be prejudicial to its interests for the laborers to be "unionized," while it is for its good that the laborers be contracted under the so-called "open shop" system. Unable to stop the holding of the meeting because the same is not to take place on its property, may the plaintiff secure an injunction from the courts to prevent the defendant to pass through the said property in order to reach the place of the meeting, by alleging that the defendant entertains theories of social reform which might poison the minds of the laborers at the expense of the plaintiff's interests? May the latter, under the same hypothesis, maintain that defendant's act in passing through its property, which is open to public use, constitute trespass or usurpation restrainable by injunction? If the answer to these questions is, as it must be, in the negative, the present case is not susceptible of a different solution. The only difference between the two cases is that in the one supposed the dreaded damage to plaintiff's interests is of more moment and or more lasting effect than that in the case at bar. When a private road has been thrown open to public use, no action for trespass is maintainable against any person who desires to make use thereof; consequently, an injunction suit likewise does not lie. "Private roads, except where laid out under constitutional provisions authorizing the condemnation of private property for a private use, are public roads in the sense that they are open to all who see fit to use them, and it is immaterial that the road is subject to gates and bars, or that it is merely a cul de sac. Being this considered as a public road, it necessarily follows that the owner of the land through which the road is laid out cannot maintain an action of trespass against any person using it; . . ." (50 C.J., pp. 397, 398.). ". . . Where it is clear that the complainant does not have the right that he claims, he is not entitled to an injunction, either temporary or perpetual, to prevent a violation of such supposed right. . . . An injunction will not issue to protect a right not in esse and which may never arise or to restrain an act which does not give rise to a cause of action, . . .." (32 C.J., pp. 34, 35.) B.In its brief, plaintiff states: "In transporting the tuba which he sells in his saloon in Hacienda 'Sagay' the defendant used to pass thru the private road of the plaintiff which connects its sugar central with the provincial road. On this private road the plaintiff has put up a gate under the charge of a keeper, and every time that the defendant passed with a cargo of tuba the gatekeeper would stop him and remind him that tuba was not permitted entry into the private

properties of the company, but instead of heeding this prohibition the defendant would simply deviate from the road and continue on his way to hacienda 'Sagay' by way of the fields of Hacienda 'Begoa,' which is also the private property of the plaintiff." It is deductible from the above statement that, whenever the gatekeeper of the plaintiff prevented the defendant from passing thru its so-called "private road," on his way from the provincial road to the Hacienda, "Sagay," the defendant deviated from said road and carried the tuba across the lands of the Hacienda "Begoa" is the same one frequented by carabaos (s.t., 32, 36). Plaintiff intends not only to prohibit the defendant from using the road in question, but also from crossing the lands of the Hacienda "Begoa," also belonging to the plaintiff, where carabaos are allowed to roam. An act so shocking to the conscience, one is reminded, could only have been perpetrated during the feudal period when human rights were unmercifully sacrificed to property rights. If an injunction should lie in the instant case, it should be in favor of the defendant and against the plaintiff, to enjoin the latter from obstructing the former to pass over the road in question to convey tuba to the Hacienda "Sagay." It is indeed strange that it is the plaintiff and not the defendant that should have applied for the remedy. " . . . An injunction will not be granted when good conscience does not require it, where it will operate oppressively or contrary to justice, where it is not reasonable and equitable under the circumstances of the case, or where it will tend to promote, rather than to prevent, fraud and injustice. . . ." (32 C.J., p. 33.) ". . . a court of equity may interfere by injunction to restrain a party from enforcing a legal right against all equity and conscience. . . ." (14 R.C. L., pp. 365, 366, par. 66.) ". . . The comparative convenience or inconvenience of the parties from granting or withholding the injunction sought should be considered, and none should be granted if it would operate oppressively or inequitably, or contrary to the real justice of the case. This doctrine is well established. . . ." (14 R.C.L., pp. 357, 358, par. 60.) "The power of the courts to issue injunctions should be exercised with great caution and only where the reason and necessity therefor are clearly established; and while this rule has been applied more frequently in the case of preliminary and mandatory injunctions, it applies to injunctions of all classes, and to restraining orders. . . ." (32 C.J., pp. 33, 34.) "The writ of injunction will not be awarded in doubtful or new cases not coming within wellestablished principles of equity." (Bonaparte vs. Camden, etc. Railroad Co., 3 Fed. Cas. No. 1617; Hardesty vs. Taft, 87 Am. Dec., 584.)

C.Plaintiff's action is frivolous and baseless. Plaintiff states in the sixth paragraph of its amended complaint: "6.That, in addition, the plaintiff, in the exercise of its property rights, does not want to allow the entry of the defendant in any part of its estate above mentioned in order to avert any friction or ill-feeling against him."

The plaintiff, in petitioning the courts for an injunction to avert "friction or ill-feeling" against the defendant, invoking its sacred property rights, attempts to intrust to them a mission at once beyond those conferred upon them by the Constitution and the laws, and unbecoming of their dignity and decorum. D.Plaintiff has not established the existence, real or probable, of the alleged damage against which the injunction is invoked. As has been seen, the allegations of the amended complaint do not justify the granting of an injunction. The said allegations only state, as the basis of plaintiff's action, that the defendant insists in passing or "making incursions" on plaintiff's property to take tuba to the Hacienda "Sagay," and that the plaintiff wants to avoid "friction and ill-feeling against him." Such allegations do not imply the existence, or probable existence, of any real damage to plaintiff's rights which should be enjoined, and do not, therefore, constitute a legal cause of action. On the other hand, what the plaintiff attempted to establish by its evidence differs from the allegations of its amended complaint. What said evidence really discloses is not, that the plaintiff had forbidden the defendant to convey tuba to the Hacienda "Sagay" through plaintiff's estate, but to introduce tuba into the central or to place tuba on its lands, or, according to Exhibit A, to trespass illegally on plaintiff's estate. The testimony of the gatekeeper Santiago Plagata and the accountant Ankerson is as follows: "Q.Why did you detain him? A.Because the Central forbids the bringing of tuba to the Central. "Q.Why does the Central prohibit the entry of tuba? A.The Central prohibits the entry of tuba there because the laborers, generally, buy tuba, drink it and become drunk, and are unable to work, and sometimes they fight because they are drunk." (S.t., p.5.). "Q.Why did you kick them? A.Because the North Negros Sugar Co. prohibits the placing of tuba on those lands." (S.t., pp. 38, 39.) Exhibit A, the alleged letter addressed by the plaintiff to the defendant, recites: "Mr. SERAFIN HIDALGO, Driver of Auto, License No. 1085-1935. "Present "SIR: Effective this date, you are hereby forbidden to trespass upon any of the Company's properties under penalties of law prescribed for trespass. "NORTH NEGROS SUGAR CO., INC. "By: (Sgd.) Y.E. GREENFIELD "Manager"

It will be noted that according to this letter, the defendant was enjoined by the plaintiff from passing thru its properties, whether he carried tuba or not. Plaintiff's admission in its brief (p. 15) that it has not been established that the defendant has brought tuba to the "mill site," or has sold it within its property, is fatal to the present action charging the defendant with said acts. E.The well-known principle of equity that "he who comes to equity must come with clean hands" bars the granting of the remedy applied for by the plaintiff. It has been already stated that the plaintiff, to obtain a preliminary injunction in this case, alleged under oath in its original complaint facts which it knew to be false, or, at least, unprobable, because it did not only eliminate them from the amended complaint which it filed after the issuance of the preliminary injunction, but it failed to substantiate them at the trial. We refer to the following allegations: "that the defendant used to go to the 'mill site' of the plaintiff passing through plaintiff's private roads and there cause trouble among the peaceful people of the place," and "that notwithstanding the prohibition of the plaintiff, the defendant insists in repeating his incursions into the said private roads and 'mill site' of the plaintiff, disturbing public order and molesting plaintiff's employees and their families.". If said allegations were true, it is evident that plaintiff was entitled to a preliminary injunction at the commencement of the trial, and to a permanent injunction after the decision was rendered. But such is not the case, as the subsequent theory of the plaintiff, announced in its amended complaint, is not that the defendant "made incursions into the 'mill site' and private roads of the plaintiff, causing trouble, disturbing public order, and molesting plaintiff's employees and their families," but only that the defendant, to take tuba to the Hacienda "Sagay," belonging to Luciano Aguirre, insisted in passing through plaintiff's estate. From all this it follows that the plaintiff in order to obtain a preliminary injunction, trifled with the good faith of the lower court by knowingly making untrue allegations on matters important and essential to its cause of action. Consequently, it did not come to court with clean hands. "Coming into Equity with Clean Hands. The maxim that he who comes into equity must come with clean hands is, of course, applicable in suits to obtain relief by injunction. Injunction will be denied even though complainant shows that he has a right and would otherwise be entitled to the remedy in case it appears that he himself acted dishonestly, fraudulently or illegally in respect to the matter in which redress is sought, or where he has encouraged, invited or contributed to the injury sought to be enjoined. However, the general principle that he who comes into equity must come with clean hands applies only to plaintiff's conduct in relation to the very matter in litigation. The want of equity that will bar a right to equitable relief for coming into court with unclean hands must he so directly connected with the matter in litigation that it has affected the equitable relations of the parties arising out of the transaction in question." (32 C.J., pp. 67, 68.) At this point, attention should be directed to other facts of the case indicative of the censurable attitude which the plaintiff has taken in connection therewith. On one occasion, the defendant drove his automobile along the road in question, accompanied by Antonio

Dequia, headed for the Hacienda "Sagay." As they had tuba with them, on reaching the gate they were halted by the gatekeeper. The defendant and his companion got off the car and unloaded the tuba in order to follow the passageway across the lands of the Hacienda "Begoa," through which plaintiff's carabaos passed, until they could reach "Sagay." Thereupon, one Ankerson, accountant and auditor of the plaintiff, arrived and no sooner had he laid eyes on the tuba containers than he indignantly kicked them and uttered a blasphemy to both, spilling the contents thereof. The defendant protested and asked Ankerson to indemnify him for the value of the tuba which had been wasted, to which Ankerson replied that he would make good what should be paid, and he then and there wrote and handed over a note to the defendant for presentation to plaintiff's cashier. The defendant presented the note, but this claim was not paid, and instead he was prosecuted for trespass in the justice of the peace court of Manapla under article 281 of the Revised Penal Code. So absurd and malicious was the charge that the court, in acquitting the defendant, entered the following order (Exhibit 3): "A peaceful citizen who passed through a private road open to the public does not commit the crime of trespass. Although the prohibition to the accused to be in a private property should be manifest, if the latter is not fenced or uninhabited, the mere fact that the accused is found on the place in question, for a lawful purpose, does not constitute the crime of trespass defined and punished under article 281 of the Revised Penal Code." The plaintiff did not stop at this; it filed the present action for injunction which, as has been seen, is nothing more than the culmination of a series of affronts which the plaintiff has perpetrated, privately and through the courts, against the defendant. F.The exercise of discretion by trial courts in matters injunctive should not be interfered with by appellate courts except in cases of manifest abuse. ". . . The court which is to exercise the discretion is the trial court and not the appellate court. The action of the court may be reviewed on appeal or error in case of a clear abuse of discretion, but not otherwise, and ordinarily mandamus will not lie to control such discretion." (32 C.J., sec. 11, p. 33.) True, the rule has particular application to preliminary injunctions, but the rule should not be otherwise with respect to permanent injunctions especially where, as in this case, the trial court, after granting the preliminary injunction, set the same aside in its final decision on a careful review of the evidence. II It is undisputed that the road in question was constructed by the plaintiff on its own land, and that it connects the central or the "mill site" with the provincial road. We have also the admission that the plaintiff made this road accessible to the general public, regardless of class of group of persons or entities. Its use has been extended to employees and laborers of the plaintiff; and so also to all those who have a mind to pass through it, except that, in cases of motor vehicles, a passage fee of P0.15 each should be paid. There is no contention here that the defendant had refused to pay said tolls whenever he wanted to drive his car along the road in question.

We, therefore, have the case of an easement of way voluntarily constituted in favor of a community. Civil Code, article 531 and 594 read: "ART. 531.Easement may also be established for the benefit of one or more persons or a community to whom the encumbered estate does not belong." xxx xxx xxx

"ART. 594.The owner of an estate may burden it with such easements as he may deem fit, and in such manner and form as he may consider desirable, provided he does not violate the law or public order." There is nothing in the constitution of this easement in violation of law or public order, except perhaps that the right to open roads and charge passage fees therefor is the State's by right of sovereignty and may not be taken over by a private individual without the requisite permit. This, however, would effect the right of the plaintiff to charge tools, but not that of the defendant or of any other person to make use of the easement. As may be seen from the language of article 594, in cases of voluntary easements, the owner is given ample liberty to establish them: "as he may deem fit, and in such manner and form as he may consider desirable." The plaintiff "considered it desirable" to open this road to the public in general, without imposing any condition save the payment of a fifteencentavo toll by motor vehicles, and it may not now go back on this and deny the existence of an easement. Voluntary easements under article 594 are not contractual in nature; they constitute the act of the owner. If he exacts any condition, like the payment of a certain indemnity for the use of the easement, any person who is willing to pay it may make use of the easement. If the contention be made that a contract is necessary, it may be stated that a contract exists from the time all those who desire to make use of the easement are disposed to pay the required indemnity. The plaintiff contends that the easement of way is intermittent in nature and can only be acquired by virtue of a title under article 539. The defendant, however, does not lay claim to it by prescription. The title in this case consists in the fact that the plaintiff has offered the use of this road to the general public upon payment of a certain sum as passage fee in the case of motor vehicles. The cases of Roman Catholic Archbishop of Manila vs. Roxas (22 Phil., 450), and Cuaycong vs. Benedicto (37 Phil., 781), are not controlling, as there the attempt was to establish that the right to an easement of way had been acquired by prescription. Here defendant's contention is, that while the road in question remains open to the public, he has a right to its use upon paying the passage fees required by the plaintiff. Indeed the latter may close it at its pleasure, as no period has been fixed when the easement was voluntarily constituted, but while the road is thrown open, the plaintiff may not capriciously exclude the defendant from its use.

Furthermore, plaintiff's evidence disclosed the existence of a forcible right of way in favor of the owner and occupants of the Hacienda "Sagay" under the Civil Code, article 564, because, according to said evidence, those living in the Hacienda "Sagay" have no access to the provincial road except thru the road in question. Santiago Plagata, principal witness of the plaintiff, testified thus: "Emerging from the provincial road, the defendant has necessarily to pass through this private road where the gate of which I am the keeper is situated, and them he gets to the Central." (S.t., p.5.) "Q.To go to the Hacienda 'Sagay,' is there any need to cross the 'mill site' of the Central? A.Yes, sir. "Q.And the property of the Central is passed in going to the Hacienda 'Sagay'? A.Yes, sir. "Q.Is there any other road" A.I am not sure whether there is another road. "Q.For how long have you been a watchman there? A.Nine years to date. "Q.And during that period of nine years, can you not state if there is any road which gives access to the Hacienda 'Sagay'? Or the Central has necessarily to be passed? A.I cannot say because I do not go to those places." "COURT: "Q.But all the others, except the defendant, who go to the Hacienda 'Sagay' necessarily pass thru the Central? A.They pass thru that road of the Central." (S.t., pp. 16, 17.) The evidence for the defendant confirms this: "Q.To go there, thru what road did you have to pass? A.Thru the road of the Central. "Q.And by this road of the Central you mean the Central 'North Negros Sugar Co., Inc.'? A.Yes, sir.

"Q.By this road of the Central which you mentioned, you mean the road where there is a gate, beginning from the Central until the provincial road, where the gate is for the purpose of preventing passage? A.Yes, sir, the very one. "Q.And because of that gate, the Central collects certain toll? A.Yes, sir." (S.t., pp. 20, 21.) III Having been devoted by the plaintiff to the use of the public in general, upon paying the passage fees required in the case of motor vehicles, the road in question is charged with a public interest, and while so devoted, the plaintiff may not establish discriminatory exceptions against any private person. "When private property is affected with a public interest, it ceases to be juris privati only; as if a man set out a street in new building on his own land, it is now no longer bare private interest, but is affected by a public interest." (Lord Chief Justice Hale in his treatise "De Portibus Maris," quoted with approval in Munn vs. Illinois, 94 U.S., 113 [1876], and in Nebbia vs. New York, 291 U.S., 502 [1934].) The above language was used in the seventeenth century, when exceptions to the individualistic regime of ownership were scarcely recognized, and when the ideas on its social function may be said to be in their infancy. "Property does become clothed with a public interest when used in a manner to make it of public consequence, and affect the community at large. When, therefore, one devotes his property to a use in which the public has an interest, he, in effect, grants to the public an interest in that use, and must submit to the controlled by the public for the common good, to the extent of the interest he has thus created. He may withdraw his grant by discontinuing the use; but, so long as he maintains the use, he must submit to the control." (Munn vs. Illinois, 94 U.S., 113; 24 Law. ed., 77.) "Under our form of government the use of property and the making of contracts are normally matters of private and not of public concern. The general rule is that both shall be free of governmental interference. But neither 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. Equally fundamental with the private right is that of the public to regulate it in the common interest. . . . The court has repeatedly sustained curtailment of enjoyment of private property, in the public interest. The owner's rights may be subordinated to the needs of other private owners whose pursuits are vital to the paramount interests of the community." (Nebbia vs. New York, 291 U.S., 502, 521, 525; 78 Law. ed., 940, 948.) "Whenever any business or enterprise becomes so closely and intimately related to the public, or to any substantial part of a community, as to make the welfare of the public, or a

substantial part thereof, dependent upon the proper conduct of such business, it becomes the subject for the exercise of the regulatory power of the state." (Clarksburg Light & Heat Co. vs. Public Service Commission, P. U.R. 1920A, 639; 84 W. Va., 638; 100 S.E., 551.) ". . . If the service is dedicated to the public or some portion thereof, or to persons within a given area, then any member of the public or of the given area, then any member of the public or of the given class, or any person within the given area, may demand such service without discrimination, and the public, or so much of it as has occasion to be served, is entitled to the service of the utility as a matter of right, and not of grace. . . . A corporation becomes a public service corporation, and therefore subject to regulation as a public utility, only when and to the extent that the business of such corporation becomes devoted to a public use. . . ." (Stoehr vs. Natatorium Co., 200 Pac. [Idaho], 132, quoted in 18 A.L.R., 766.) "Tested by the rule laid down in Munn vs. Illinois, it may be conceded that the state has the power to make reasonable regulation of the charges for services rendered by the stockyards company. Its stock yards are situated in one of the gateways of commerce, and so located that they furnish important facilities to all seeking transportation of cattle. While not a common carrier, nor engaged in any distinctively public employment, it is doing a work in which the public has an interest, and therefore must be considered as subject to governmental regulation." (Cotting vs. Godard, 183 U.S., 79; 46 Law. ed., 92.) "Businesses which, though not public at their inception, may be fairly said to have risen to be such, and have become subject in consequence to some government regulation. They have come to hold such a peculiar relation to the public that this is superimposed upon them. In the language of the cases, the owner, by devoting his business to the public use, in effect, grants the public an interest in that use, and subjects himself to public regulation to the extent of that interest, although the property continues to belong to its private owner, and to be entitled to protection accordingly. (Munn vs. Illinois, supra; Spring Valley Waterworks vs. Schottler, 110 U.S., 347; 28 L. ed., 173; 4 Sup. Ct. Rep., 48; People vs. Budd, 117 N.Y., 1, 27; 5 L. R.A., 559; 15 Am. St. Rep., 460; 22 N.E., 670; s.c. 143 U.S., 517; 36 L.ed., 247; 4 Inters. Com. Rep., 45; 12 Sup. Ct. Rep., 468; Brass vs. North Dakota, 153 U.S., 391; 38 L. ed., 757; 4 Inters. Com. Rep., 670; 14 Sup. Ct. Rep., 857; Noble State Bank vs. Haskell, 219 U.S., 104; 55 L. ed., 112; 32 L.R.A. [N.S.], 1062; 31 Sup. Ct. Rep., 186; Ann. Cas., 1912A, 487; German Alliance Ins. Co. vs. Lewis, 233 U.S., 389; 58 L. ed., 1011; L.R.A. 1915C, 1189; 34 Sup. Ct. Rep., 612; VanDyke vs. Geary, 244 U.S., 39, 47; 61 L. ed., 973, 981; 37 Sup. Ct. Rep., 483; Block vs. Hirsh, 256 U.S., 135; 65 L. ed., 865; 16 A.L.R., 165; 41 Sup. Ct. Rep., 458.)" Wolff Packing Co. vs. Court of Industrial Relations, 262 U.S., 522; 27 A.L.R., 1280, 1286.)

Under the facts of the instant case, the road in question is of the nature of the so-called "turnpike road" or "toll-road." The following authorities are, therefore, in point: "'Toll' is the price of the privilege to travel over that particular highway, and it is a quid pro quo. It rests on the principle that he who receives the toll does or has done something as an equivalent to him who pays it. Every traveler has the right to use the turnpike as any other highway, but he must pay the toll." (City of St. Louis vs. Creen, 7 Mo. App., 468, 476.)

"A toll road is a public highway, differing from ordinary public highways chiefly in this: that the cost of its construction in the first instance is borne by individuals, or by a corporation, having authority from the state to built it, and, further, in the right of the public to use the road after its completion, subject only to the payment of toll." (Virginia Caon Toll Road Co. vs. People, 45 Pac., 396, 399; 22 Colo., 429; 37 L.R.A., 711.) "Toll roads are in a limited sense public roads, and are highways for travel, but we do not regard them as public roads in a just sense, since there is in them a private proprietary right. . . . The private right which turnpike companies possess in their roads deprives these ways in many essential particulars of the character of public roads. It seems to us that, strictly speaking, toll roads owned by private corporation, constructed and maintained for the purpose of private gain, are not public roads, although the people have a right to freely travel them upon the payment of the toll prescribed by law. They are, of course, public, in a limited sense, but not in such a sense as are the public ways under full control of the state, for public ways, in the strict sense, are completely under legislative control. (Elliott, Roads & S., p. 5.)" (Board of Shelby County Com'rs vs. Castetter, 33 N.E., 986, 987; 7 Ind. App., 309.) It has been suggested during the consideration of the case at bar that the only transportation companies with motor vehicles who can have an interest in passing over the said road are those which carry laborers of the central and passengers who transact business with the plaintiff, and not all public service motor vehicles with certificates of public convenience, and that the only persons who may have an interest in passing over the said road are the laborers of the plaintiff and persons who do business with it and the occupants of the 21 houses situated in the Hacienda "Sagay," and not everyone for personal convenience. But even if this were true, the plaintiff having subjected the road in question to public use, conditioned only upon the payment of a fifteen-centavo passage fees by motor vehicles, such circumstance would not affect the case at all, because what stamps a public character on a private property, like the road in question, is not the number of persons who may have an interest in its use, but the fact that all those who may desire to use it may do so upon payment of the required indemnity. ". . . The public or private character of the enterprise does not depend, however, upon the number of persons by whom it is used, but upon whether or not it is open to the use and service of all members of the public who may require it, to the extent of its capacity; and the fact that only a limited number of persons may have occasion to use it does not make of it a private undertaking if the public generally has a right to such use. . . ." (51 C.J., sec. 2, p. 5.). "The test is, not simply how many do actually use them, but how many may have a free and unrestricted right in common to use them. If it is free and common to all citizens, then no matter whether it is or is not of great length, or whether it leads to or from a city, village or hamlet, or whether it is much or little used, it is a 'public road.'" (Heninger vs. Peery, 47 S. E., 1013, 1014; 102 Va., 896, quoting Elliott, Roads & S., secs. 11, 192.) The circumstance that the road in question does not properly fall within the definition of a public utility provided in Act No. 3108, does not divest it of this character:

". . . Whether or not a given business, industry, or service is a public utility does not depend upon legislative definition, but upon the nature of the business or service rendered, and an attempt to declare a company or enterprise to be a public utility, where it is inherently not such, is, by virtue of the guaranties of the federal constitution, void wherever it interferes with private rights of property or contract. So a legislature cannot by mere fiat or regulatory order convert a private business or enterprise into a public utility, and the question utility is a judicial one, and must be determined as such by a court of competent jurisdiction;. . .." (51 C.J., sec. 3, p. 5.) The road in question being a public utility, or, to be more exact, a private property affected with a public interest, it is not lawful to make arbitrary exceptions with respect to its use and enjoyment. "Duty to Serve Without Discrimination. A public utility is obligated by the nature of its business to furnish its service or commodity to the general public, or that part of the public which it has undertaken to serve, without arbitrary discrimination, and it must, to the extent of its capacity, serve all who apply, on equal terms and without distinction, so far as they are in the same class and similarly situated. Accordingly, a utility must act toward all member of the public impartially, and treat all alike; and it cannot arbitrarily select the persons for whom it will perform its service or furnish its commodity, nor refuse to one a favor or privilege it has extended to another, since the term 'public utility' precludes the idea of service which is private in its nature and is not to be obtained by the public. Such duties arise from the public nature of a utility, and statutes providing affirmatively therefor are merely declaratory of the common law." (51 C.J., sec. 16, p. 7.) The circumstance that the plaintiff is not the holder of a franchise or of a certificate of public convenience, or that it is a company devoted principally to the manufacture of sugar and not to the business of public service, or that the state has not as yet assumed control or jurisdiction over the operation of the road in question by the plaintiff, does not preclude the idea that the said road is a public utility. "The touchstone of public interest in any business, its practices and charges, clearly is not the enjoyment of any franchise from the state. (Munn vs. Illinois [94 U.S., 113; 24 L. ed., 77, supra].)" (Nebbia vs. New York, supra.) "The fact that a corporation may not have been given power to engage in the business of a public utility is not conclusive that it is not in fact acting as a public utility and to be treated as such." (51 C.J., p. 5.) "The question whether or not it is such does not necessarily depend upon whether it has submitted or refused to submit to the regulatory jurisdiction of the state, nor upon whether or not the state has as yet assumed control and jurisdiction, or has failed or refused so to do." (51 C.J., p. 6.) "The fact that a corporation does other business in addition to rendering a public service does not prevent it from being a public utility, and subject to regulation as such, as to its public business." (51 C.J., p. 6.)

"The term 'public utility' sometimes is used to mean the physical property or plant being used in the service of the public." (51 C.J., p. 6.) "There are . . . decisions in which the incidental service has been held to be of such a nature that it was subject to public regulation and control. (Re Commonwealth Min. & Mill. Co. [1915; Ariz.], P.U.R., 1915B, 536; Nevada, C. & O. Teleg. & Teleph. Co. vs. Red River Lumber Co. [1920; Cal.], P.U.R., 1920E, 625; Sandpoint Water & Light Co. vs. Humberd Lumber Co. [1918; Idaho], P.U.R., 1918B, 535; Public Service Commission vs. Valley Mercantile Co. [1921; Mont.],P.U.R., 1921D, 803; Public Service Commission vs. J.J. Rogers Co. [1918], 184 App. Div., 705; P.U.R., 1919A, 876; 172 N.Y. Supp., 498; Wingrove vs. Public Service Commission [1914], 74 W. Va., 190; L.R.A., 1918A, 210; 81 S.E., 734; Chambers vs. Spruce Lighting Co. [1918], 81 W. Va., 714; 95 S. E. 192. See also Hoff vs. Montgomery [1916; Cal.], P.U.R., 1916D, 880; Re Producers Warehouse [1919; Cal.], P.U.R., 1920A, 919; Ticer vs. Philips [1920; Cal.], P.U.R., 1920E, 582; Re Ontario Invest. Co. [1921; Cal.], P.U.R., 1922A, 181; Bassett vs. Francestown Water Co. [1916; N.H.], P.U.R., 1916B, 815, Re Northern New York Power Co. [1915; N. Y., 2d Dist.], P.U.R., 1915B, 70.)" (Annotation in 18 A.L.R., 766, 767.) The point is made that, there being no contract between the plaintiff and the public interested in the use of the road in question, it should be understood that such use has been by the mere tolerance of the plaintiff, and that said property has not been constituted into a public utility. The contention is devoid of merit. "When private property is devoted to public use in the business of a public utility, certain reciprocal rights and duties are raised by implication of law between the utility and the public it undertakes to serve, and no contract between them is necessary to give rise thereto. . . ." (51 C.J., sec. 12, p. 6.). Wherefore the judgment appealed from is affirmed, with costs to the plaintiff. Abad Santos, J., concurs. Separate Opinions LAUREL, J., concurring and dissenting: I concur in the result. I do not, however, agree to certain conclusions and observations that are made in the foregoing opinion. I.I am of the opinion that no servitude of way under the Civil Code has been created on the tenement of the plaintiff in favor of the defendant. Servitudes constitute legal limitations on the right of ownership. They are considered so among the most ancient of property rights. The early Roman Law allowed the imposition of a servitude of way over intervening tenements for the purpose of enabling strangers to reach the sepulchres of their ancestors. The modern civil law, however, has amplified the principle and invested it with a utilitarian concept for the convenience of landowners, particularly for the cultivation of enclosed rural estates. But the general principles of the Roman Law

regarding servitudes, whether praedial or personal, are preserved intact in the modern civil law, and are now commonly applied to the "easements" of the common law. Among these general principles which have come down to us through the ages are (1) that servitudes are to be considered subordinate to the right of ownership, and (2) that, being a sort of dismemberment of the right of private property, servitudes are never to be presumed but must be proved to have been constituted in the manner prescribed by law.

A servitude of way is either legal or voluntary. A forced servitude of way is constituted in the manner and under the conditions stated in articles 564 to 570 of the Civil Code. Paragraph 1 of article 564 provides that "The owner of a tenement or land, surrounded by others belonging to different owners and without access to a public highway, is entitled to demand a right of way through the neighboring tenements, after payment of the proper indemnity." No legal servitude of way exists in the present case. The defendant has not shown that his right of passage across the tenement of the plaintiff exists by reason of necessity growing out of the peculiar location of his property. He does not even own the tenement where he conducts his business. Said tenement belongs to Luciano Aguirre who, as the owner thereof, would be the one entitled to claim the forced servitude of way, on the hypothesis that it is demanded by the peculiar location of the tenement. A mere lessee can not demand the legal servitude of way (see Manresa, Civil Code, vol. 4, 2d ed., p. 705). Moreover, it does not appear that Luciano Aguirre or the defendant has otherwise fulfilled the requirements of the law. (Art. 564, Civil Code; Cuaycong vs. Benedicto, 37 Phil., 781, 797.). Nor can it be said that a voluntary servitude of way exists. It should be observed that a right of way is discontinuous or intermittent as its use depends upon acts of man (art. 532, Civil Code; 4 Manresa, Civil Code, 2d ed., p. 569; Cuaycong vs. Benedicto, supra). Lacking the element of continuity in its use, a right of way may not be acquired by prescription but solely by title (art. 539, Civil Code). Only continuous and apparent servitudes, like the servitude of light and view, may be acquired by prescription (art. 537, Civil Code). Even assuming, however, that a servitude of way may be acquired by prescription in view of the provisions of the present Code of Civil Procedure, nevertheless, it can not be held that prescription exists in the present case. The free passage over the private way rests on mere tolerance on the part of the plaintiff, and it is a settled principle of law in this jurisdiction that acts merely tolerated can not give rise to prescription (Cortes vs. Yu-Tibo, 2 Phil., 24, 27; Ayala de Roxas vs. Maglonso, 8 Phil., 745; Roman Catholic Archbishop of Manila vs. Roxas, 22 Phil., 450, 452, 453; Municipality of Nueva Caceres vs. Director of Lands and Roman Catholic Bishop of Nueva Caceres, 24 Phil., 485; Cuaycong vs. Benedicto, supra) In what does the title of the plaintiff consist? By title as a mode of acquiring servitude, the Civil Code refers to the "juridical act" which gives birth to the servitude. "Son, pues, titulos constitutivos de los servidumbres cualquiera que sea su clase, la ley, la donacion, el contrato y el testamento" (4 Manresa, Civil Code, 2d ed., pp. 594, 595). Title by law is lacking. There is neither will nor donation, for the making of a donation and the execution of a will require special formalities. It is elementary that the plaintiff, being an artificial person, has no capacity to execute a will. In my opinion, there is no title by contract. The act of the

plaintiff in opening the private way here involved did not constitute an offer to the public to use said way. There being no offer, there could be no acceptance; hence, no contract. The plaintiff did not encumber his tenement with a servitude of way. Property is always presumed free from any and all encumbrances. The act of the plaintiff, performed wholly upon its own exclusive property, should not be construed to constitute the creation of a servitude. Servitus in faciendo consistere nequit. "For a man should not use that which belongs to him as if it were a service only, but as his own property" (Law 13, title 31, third partida, quoted with approval in Cortes vs. Yu-Tibo, 2 Phil., 24, 27). II.The mere opening of the private way in question to the public did not necessarily clothe it with a public interest such as to compel the owner thereof to allow everybody to pass thereon. Even on the hypothesis that such private way is affected with a public interest, still, it is good law that the owner thereof may make reasonable restrictions and limitations on the use thereof by the general public. Public regulation of private property under the police power is often justified on the ground that the property so regulated is affected with a public interest." The phrase "affected with a public interest" was brought into prominence by the discussion in Lord Hale's treatise De Portibus Maris (1 Hargrave's Law Tracts, 78) of more than two centuries ago where the classic statement was made that when private property "is affected with a public interest, it ceases to be juris privati only." Chief Justice Taft, speaking for the Supreme Court of the United States in Wolff Packing Co. vs. Court of Industrial Relations (262 U.S., 522; 67 Law. ed., 1103, 1108), enumerated as follows the businesses and occupations which may be said to be clothed with a public interest: "(1)Those which are carried on under the authority of a public grant of privileges which either expressly or impliedly imposes the affirmative duty of rendering a public service demanded by any member of the public. Such are the railroads, other common carriers and public utilities. "(2)Certain occupations, regarded as exceptional, the public interest attaching to which, recognized from earliest times, has survived the period of arbitrary laws by Parliament or colonial legislatures for regulating all trades and callings. Such are those of the keepers of inns, cabs, and gristmills. (State vs. Edwards, 86 Me., 102; 25 L.R.A., 504; 41 Am. St. Rep., 528; 29 Atl., 947; Terminal Taxicab Co. vs. Kutz, 241 U.S., 252, 254; 60 Law. ed., 984, 986; P.U.R. 1916D, 972; 36 Sup. Ct. Rep., 583; Ann. Cas. 1916D, 765.) "(3)Businesses which, though not public at their inception, may be fairly said to have risen to be such, and have become subject in consequence to some government regulation. They have come to hold such a peculiar relation to the public that this is superimposed upon them. In the language of the cases, the owner, by devoting his business to the public use, in effect grants the public an interest in that use, and subjects himself to public regulation to the extent of that interest, although the property continues to belong to its private owner, and to be entitled to protection accordingly. (Munn vs. Illinois, supra; Spring Valley Waterworks vs. Schottler, 110 U.S., 347; 28 Law. ed., 173; 4 Sup. Ct. Rep., 48; People vs.

Budd, 117 N.Y., 1, 27; 5 L.R.A., 559; 15 Am. St. Rep., 460; 22 N.E., 670; s.c. 143 U.S., 517; 36 Law. ed., 247; 4 Inters. Com. Rep., 45; 12 Sup. Ct. Rep., 468; Brass vs. North Dakota, 153 U.S., 391; 38 Law. ed., 757; 4 Inters. Com. Rep., 670; 14 Sup. Ct. Rep., 857; Noble State Bank vs. Haskell, 219 U. S., 104; 55 Law. ed., 112; 32 L.R.A. [N.S.], 1062; 31 Sup. Ct. Rep., 186; Ann. Cas. 1912A, 487; German Alliance Ins. Co. vs. Lewis, 233 U.S., 389; 58 Law. ed., 1011; L.R.A. 1915C, 1189;34 Sup. Ct. Rep., 612; VanDyke vs. Geary, 244 U.S., 39, 47; 61 Law. ed., 973, 981; 37 Sup. Ct. Rep., 483; Block vs. Hirsh, 256 U.S., 135; 65 Law. ed., 865; 16 A.L.R., 165; 41 Sup. Ct. Rep., 458.) The term "affected with a public interest" is incapable of exact apprehension. "What circumstances shall affect property with a public interest is not very clear." (Cooley, Constitutional Limitations, 7th ed., p. 872.) "It requires no especial acuteness of mind," says Willoughby in his valuable work on the Constitution of the United States, "to see that, in truth, no clear line of distinction can be drawn." (Vol. 3, 2d ed., pp. 1758, 1759. See also German Alliance Ins. Co. vs. Lewis, 233 U.S., 389; 34 Sup. Ct., 612; 58 Law. ed., 1011; L.R.A. [1915C], 1189.) To my mind, the road in question may not be likened unto a turnpike or toll road in the legal sense of the term. The right to construct and maintain a toll or turnpike road and to collect tolls exists only by virtue of an express grant from the legislature. (Powell vs. Sammons and Dotes, 31 Ala., 552; Blood vs. Woods, 30 P., 129; 95 Cal., 78; Volcano Caon Road Co. vs. Placer County, 26 P., 513; 88 Cal., 634; Truckee, and Tahoe Turnpike Road Co. vs. Campbell, 44 Cal., 89; Virginia Caon Toll-Road Co. vs. People, 45 P., 398; 22 Colo., 429; 37 L.R.A., 711; Pike County Justices vs. Griffin, etc., Plank Road Co., 9 Ga., 475; Wadsworth vs. Smith, 11 Me., 278; 26 Am. D., 525; State vs. Louisiana, etc., Gravel Road Co., 92 S.W., 153; 116 Mo. App., 175 String vs. Camden, etc., Turnpike Co., 40 A., 774; 57 N.J. Eq., 227; In re People, 128 N.Y.S., 29; 70 Misc., 72; Turner vs. Eslick, 240 S.W., 786; 146 Tenn., 236; Peru Turnpike Co. vs. Town of Peru, 100 A., 679; 91 Vt., 295; L.R.A. [1917E], 559; Ferguson vs. Board of Sup'rs of Roanoke County, 113 S.E., 860; 133 Va., 561; Rainy Lake River Corp. vs. Rainy River Lumber Co., 27 Ont. L., 151; 6 Dom. L.R., 401; 22 Ont. W.R. 952.) So that if there has been no state grant, there can be no toll or turnpike road. In the case before us, the private way has been established and is being maintained by the plaintiff, a private entity, for its own accommodation and not by virtue of a grant from the state. But even if we were to assume that the private way of the plaintiff here is property clothed with a public interest, the only inference would be that it is subject to governmental or public regulatory and control or, as some courts put it, to the regulatory power of the state, exercised for the common good (Fisher vs. Yangco Steamship Co., 31 Phil., 1; De Villata vs. Stanley, 32 Phil., 541; 51 C.J., p. 9) by the legislature (State vs. Holm, 138 Minn., 281; 164 N.W., 989), either directly or through administrative bodies endowed with power to that end (Atlantic Coast Line R. Co. vs. North Carolina Corp. Comm., 206 U.S., 1; 27 S. Ct., 585; 51 Law. ed., 933; 11 Ann. Case, 398; In re Petition for Increase of Street Car Fares, 179 N.C., 151; 101 S.E., 619).

The philosophy inseparable from the logic of the adjudicated cases is based on the overwhelming power of regulation possessed by the state in the public interest. A finding,

therefore, that the private way in question is property affected with a "public interest" leads to a recognition of the public power or regulation and no more. The fact, for instance, that the plaintiff has opened a way to the public and charges a fee or toll on motor vehicles for hire may lead the legislature or the administrative authorities to intervene and regulate and, if necessary, to determine the reasonableness of the fee charged under its ratefixing authority. Even as regards public utilities, courts have held with unerring uniformity that the utility itself may prescribe rules and regulations for the due and proper conduct of its business, and the protection of itself against fraud, injury or undue risk and liability, the only limitations being that said rules shall be lawful and reasonable. The utility may enforce compliance with its rules by those dealing with it and may refuse or discontinue service to one who does not conform to its rules. (See Thurston vs. Union Pacific R. Co., 4 Dill. [U.S.], 321;23 Fed. Cas. No. 14019; 13 Alb. L.J., 393; 8 Chic. Leg. N., 323; 22 Int. Rev. Rec., 251; Brown vs. Memphis, & C.R. Co., 5 Fed., 499; 7 Fed., 51; Gray vs. Cincinnati Southern R. Co., 11 Fed., 683; Hewlett vs. Western Union Tel. Co. [C.C.], 28 Fed., 181; Bluthenthal vs. Southern Ry. Co., 84 Fed., 920; Armstrong vs. Montgomery St. Ry. Co. vs. 123 Ala., 233; 26 So., 349; Birmingham Ry., L. & P. Co. vs. Littleton, 201 Ala., 141; 77 So., 565, 570; Weigand vs. Alabama Power Co., 177 So., 206; McCook vs. Northup, 65 Ark., 225; 45 S.W., 547; California Powder Works vs. Atlantic & P.R. Co., 113 Cal., 329; 45 Pac., 691; 36 L.R.A., 648; Southern Ry. Co. vs. Watson, 110 Ga., 681; 36 S.E., 209; Southern Ry. Co. vs. Howard, 111 Ga., 842; 36 S.E., 213; Macon, etc. Ry. Co. vs. Johnson, 28 Ga., 409; Coyle vs. Southern Ry. Co. vs. Motes, 117 Ga., 923; 43 S.E., 990; 62 L.R.A., 507; 97 Am. St. Rep., 223; Southern Ry. Co. vs. Bailey, 143 Ga., 610; 85 S.E., 847, 848; L.R.A. [1915E], 1043; Railroad Commn. vs. Louisville, etc., R. Co., 140 Ga., 817; 80 S.E., 327; L.R.A. [1915E], 902; Ann. Cas. [1915A], 1018; Huston vs. City Gas. etc., Co., 158 Ill. App., 307; Chicago, etc., R. Co. vs. Williams, 55 Ill., 185; 8 Am. Rep. 641; Milwaukee Malt Extract Co. vs. Chicago, etc. R. Co., 73 Iowa, 98; 34 N.W., 761; Gregory vs. Chicago, etc. R. Co., 100 Iowa, 345; 69 N.W., 532; Pittsburg, etc., R. Co. vs. Vandyne, 57 Ind., 576; 26 Am. Rep., 68; Louisville, etc., R. Co. vs. Wright, 18 Ind. App., 125; 147 N.E., 491; Cox vs. City of Cynthiana, 123 Ky., 363;96 S.W., 456; 29 Ky. L., 780; Louisville Tobacco Warehouse Co. vs. Louisville Water Co., 162 Ky., 478; 172 S.W., 928; McDaniel vs. Faubush Tel. Co., 106 S.W., 825;32 Ky. L., 572; Day vs. Owen, 5 Mich., 520; 72 Am. Dec., 62; Faber vs. Chicago Great Western R. Co., 62 Minn., 433; 64 N.W., 918; 36 L.R.A., 789; Daniel vs. North Jersey St. Ry. Co., 64 N.J.L., 603;46 Atl., 625; State vs. Water Supply Co. of Albuquerque, 19 N.W., 36; 140 P., 1059,1060; L.R.A. [1915A], 246; Ann. Cas. [1916E0, 1290; People vs. Babcock, 16 Hun. [N.Y.], 313; Freedon vs. New York Cent., etc., R. Co., 24 N.Y. App. Div., 306;48 N.Y. Sup., 584; Montgomery vs. Buffalo Ry. Co., 24 N.Y. App. Div., 454; 48 N.Y. Sup., 849; Dowd vs. Albany Ry. Co., 47 N.Y. App. Div., 202;62 N.Y. Sup., 179; Peck vs. N.Y. Cent., etc., R. Co., 70 N.Y., 587; Texas, etc., R. Co. vs. Johnson, 2 Tex. App. Civ. Cas., sec. 185; Guthrie Gas. Co. vs. Board of Education, 64 Okl., 157; 166 P., 128; L.R.A. [1918D], 900; Henderson Coal Co. vs. Public Serv. Commn., 73 Pa. Super., 45; McMillan vs. Federal St., etc., Ry. Co., 172 Pa. St., 523; 33 Atl., 560; State vs. Goss, 59 Vt., 266; 9 Atl., 829;59 Am. Rep. 706; Stevenson vs. West Seattle Land, Williams, 55 Ill., 185; 8 Am. Rep., 641.) That a corporation engaged in business affected with "public interest" may prescribe reasonable rules and charges for conducting its business is well settled. (McDaniel vs. Faubush Telephone Co., supra.) This is a right which exists independently of any statutory enactment (Weigand vs. Alabama Power Co., supra).

That persons engaged in business clothed with a "public interest" may make reasonable discriminations may, furthermore, be illustrated by taking innkeepers as an example. The keeper of an inn may make reasonable and proper rules governing the conduct of his business (14 R.C.L., p. 502). In so doing, he may refuse to receive as guests those who do not come in a situation in which they are fit to be received (Bonner vs. Welborn, 7 Ga., 296, 334, 337; Bowlin vs. Lyon, 67 Ia., 536; 25 N.W., 766; 56 Am. Rep., 355; Markham vs. Brown, 8 N.H., 523; 31 Am. Dec., 209; State vs. Steele, 106 N.C., 766; 11 S.E., 478; 19 A.S.R., 573; 8 L.R.A., 516; Pidgeon vs. Legge, 5 Week. Rep., 649). He may, therefore, admit to his inn only persons of good character and well demeaned (Clemons vs. Meadows, 123 Ky., 178; 94 S.W., 13; 124 A.S.R., 339;6 L.R.A. [N.S.], 847; Atwater vs. Sawyer, 76 Me., 539;49 Am. Rep., 634), and those who are free from any contagious or infectious disease (Jackson vs. Virginia Hot Springs Co., 213 Fed., 969). A person who is disorderly or is of suspicious, immoral or objectionable character may be refused admission by the innkeeper (Markham vs. Brown, supra; Goodenow vs. Travis, Johns., 427; Holden vs. Carraher, 195 Mass., 392; 81 N.E., 261; 11 Ann. Cas., 724; State vs. Steele, supra; McHugh vs. Schlosser, 159 Pa. St., 480; 28 Atl., 291;39 A.S.R., 699;23 L.R.A., 574; Nelson vs. Bodt, 180 Fed., 779; Watkins vs. Cope, 84 N.J.L., 143;86 Atl., 545; Fraser vs. McGibbon, 10 Ont. Week. Rep., 54; Howell vs. Jackson, 6 Car. & P., 723; Rex vs. Ivens, 7 Car. & P., 213; Thompson vs. McKenzie, 1 K.B., 905; 77 L.J.K.B.N.S., 605; 98 L.T.N.S., 896; 24 Times L. Rep., 330; 72 J.P., 150; 52 Sol. Jo., 302; Goodenow vs. Travis, 3 Jonhs., 427). And a person who, once inside the inn, does not demean properly may be refused further service and may be ejected, by force, if necessary (Lehnan vs. Hines, 88 Kan., 58; 127 Pac., 612;42 L.R.A, [N.S.], 830 and note; Holden vs. Carraher, 195 Mass., 392; 81 N.E., 261; 11 Ann. Cas., 724 and note; De Wolf vs. Ford, 193 N.Y., 397; 86 N.E., 527; 127 A.S.R., 969; 21 L.R.A. [N.S.], 860; State vs. Steele, supra; McHugh vs. Scholsser, supra; Chase vs. Knabel, 46 Wash., 484; 90 Pac., 642; 12 L.R.A. [N.S.], 1155; 2 British Rul. Cas., 692). Even the exclusion of patrons on account of the race to which they belong has been sustained improperly, I believe, on the ground that they are objectionable to other patrons and injure thereby the business of the innkeeper (State vs. Steele, supra). And it has been held that a prize fighter who had broken the laws of various states (Nelson vs. Boldt, 180 Fed., 779; Watkins vs. Cope, supra), or a card sharp (Watkins vs. Cope, supra), or a persons who has the habit of visiting inns with big dogs which were an annoyance to the guests and a nuisance to the innkeeper (Reg. vs. Rymer, L.R. 2 Q.B. Div., 136; 46 L.J. Mag. Cas. N.S., 108; 25 Week Rep., 415; 13 Cox, C.C., 378; 35 L.T.N.S., 774) may be refused admission. In the case at bar, it is not seriously contended that the plaintiff, by opening the road in question, has become a public utility. In this jurisdiction, the term "public utility" has a technical meaning and refers to the enterprises mentioned in section 13 of Act No. 3108, as amended by Act No. 4033. This is admitted in the foregoing opinion. The difficulty arises because "public utility" is confused with "public interest." III.The foregoing opinion, by denying the right of the owner of the private way to impose what I consider is a reasonable limitation upon the use of its property, undermines the right of ownership and its incidents. Briefly stated, the case is this: Plaintiff is the owner of a sugar central and the premises on which it is located in Manapla, Occidental Negros. Realizing the necessity of constructing a private way through its property for its own convenience and the convenience of persons

who may have dealings with it, it did open one to connect its property with the provincial road. The way is about a kilometer in length and terminates at the mill site of the hacienda. It was built at the expense of the power, without any contribution from anyone. It is repaired, maintained and kept at the expense of the same owner. It is guarded by a gate keeper employed and paid by the owner itself. It was opened not at the behest of any public demand or necessity but primarily for the sole convenience of the owner. The defendant, Serafin Hidalgo, is the keeper of a tienda situated in a contiguous hacienda belonging to Luciano Aguirre. The tienda is located almost on the borderline of the hacienda of the plaintiff. Hidalgo in this store sells and otherwise dispenses tuba which intoxicates the laborers of the plaintiff, incapacitates them for work and breaks their morale. The damage to the plaintiff is positive and real. It is not mere "bare possibility" as stated in the foregoing opinion. Upon these facts, the foregoing opinion holds that the defendant can not be prohibited by the plaintiff from using the latter's private way. I hold otherwise. I believe that the plaintiff may prohibit the defendant from using its private property. Stated otherwise, the use by Hidalgo of the private way of the plaintiff may be conditioned upon his not carrying tuba. Plaintiff may not, to be sure, prevent the sale of tuba outside the limits of its property. This is not pretended in this case. But because plaintiff may not prohibit dispensation by the defendant of the intoxicating beverage outside of its property, does it follow that it is in duty bound to offer facility to the defendant for the sale of tuba and the consequent intoxication of its laborers? Is it under any obligation, moral or legal, to do this? In other words, can plaintiff be compelled to contribute, directly or indirectly, to the infliction upon itself of an admittedly real and positive damage and provide the means for its own destruction? To ask these questions is to answer them. That you may, for instance, hang a man because you have the physical or legal power to do so is conceivable, but that you may not only hang him but also compel him to hang himself is only possible among barbarians. Such a result is not possible even under the Declaration of Rights of the Laboring and Exploited People by the Third All-Russian Congress of Soviets of Workers', Soldiers' and Peasants' Deputies." Let me observe that social and economic equilibrium should be maintained by striking the proper balance. One extreme is as vicious and dangerous as the other. There is as much danger of destruction from the devastating winds blowing from the Caucasus and the Ural mountains as from the infectious and hallowed breath originating from the castles of the staggering feudal lords of Europe. Social storm is produced one way or the other.

The inviolability of private property dates as far back as the days long past when primative society employed force to protect its collective ownership. Upon the change of the proprietary tenure from collectivism to individualism, consequent upon the growth of the Roman concept of property, private force was substituted by state authority as the sanctioning power of ownership. Later evolution of civil society manifested the growth of state power. The Philippines finds herself engulfed in the vortex of this modern trend of greater state control of private property. Our Constitution, for instance, expressly authorizes the National Assembly to determine by law the size of private agricultural land which individuals, corporations and associations may acquire and hold, subject only to rights existing prior to the enactment of such law (Art. XII, sec. 3). It also provides that the State, upon payment of just compensation, may transfer to public ownership utilities and other private enterprises to be operated by the Government (Art. XII, sec. 1). And it permits the

National Assembly to authorize, upon payment of just compensation, the expropriation of lands to be subdivided into small lots and conveyed at cost to individuals (Art. XII, sec. 4). This latter provision constitutes an extension of the power of eminent domain. The settled principle is that private property shall be taken only for public use (Visayan Refining Co. vs. Camus and Paredes, 40 Phil., 550; People ex rel. Detroit & H.R. Co. vs. Salem, 20 Mich., 452; 4 Am. Rep., 500). A provision to this effect is found in the Bill of Rights of our Constitution (Art. III, sec. 1, par. 2. See also Ordinance appended to the Constitution, sec. 1, par. 12; Civil Code, art. 349; Code of Civil Procedure, sec. 241; Adm. Code, sec. 2245.) Similar provisions are to be found in the Fifth Amendment to the Constitution of the United States and in the constitutions of the great majority of the states of the Union. Some state constitutions even go to the extent of expressly prohibiting the taking of property for private use (Alabama [1901], I, 23; Arizona [1912], II, 17; Colorado [1876], II, 14, 15; Georgia [1877] I, iii, par. I; Missouri [1875], II, 20; Washington [1889], I, 16; Wyoming [1889], I, 32, 33). But whilst innovations have been introduced to enlarge the control by the public power of private property, the Filipino philosophy of the inviolability of property right has tarried unaltered behind the thin veneer of our Constitution. By providing in the Bill of Rights that no person shall be deprived of property without due process of law, that private property shall not be taken for public use without just compensation, that the people shall be secure in their possessions against unreasonable searches and seizures, that no law impairing the obligation of contracts shall be passed, the Filipino people, for their own protection, stamped upon the right of private ownership an inviolability a deep and sacred impress which can not be easily wiped out or frittered away until it is no more. The protection of private right, it seems to me, is a reflection of our inherent temperament as a people, and albeit fundamental principles must be construed in the light of changing conditions and circumstances, the fabric with which our social and political organizations have been wrought or woven into a lasting whole, has remained unaltered. And not even the principle of social justice, vital and salutary as it is, can be invoked to annihilate property rights. Restrictions upon the paramount property right lodged in the private individual arise only from the superior right of the state, the legal rights of third persons and the general duties resting upon the owner as a law abiding citizen. In the language of Chief Justice Shaw in Commonwealth vs. Alger (7 Cush. [Mass.], 53), "We think it as a settled principle, growing out of the nature of well ordered civil society, that every holder of property, however absolute and unqualified may be his title, holds it under the implied liability that his use of it may be so regulated, that it shall not be injurious to the equal enjoyment of others having an equal right to the enjoyment of their property, nor injurious to the rights of the community. All property in this commonwealth, as well that in the interior as that bordering on tide-waters, is derived directly or indirectly from the government, and held subject to those general regulations, which are necessary to the common good and general welfare. Rights of property, like all other social and conventional rights, are subject to such reasonable limitations in their enjoyment, as shall prevent them from being injurious, and to such reasonable restraints and regulations established by law, as the legislature, under the governing and controlling power vested in them by the Constitution, may think necessary and expedient." (See also Mugler vs. Kansas, 123 U.S., 623;8 Sup. Ct., 273; 31 Law. ed., 205.) IV.From what has been said, it does not, however, follow that plaintiff is entitled to the equitable remedy of injunction. In the first place, the plaintiff styled the relief it is seeking as

an "Accion Negatoria" which, under the old Spanish procedural law and under the Roman law, consisted in the right of a landowner to defend the free dominion of his tenement. This action which has specific application to servitudes has, however, been repealed by the Code of Civil Procedure now in force. The right of the plaintiff should, consequently, be tested by the rules governing the issuance of the new remedy of injunction. The circumstances under which, in accordance with the former procedural law, the accion negatoria could properly issue, would not necessarily justify the issuance of an injunction, as defined and provided in the new Code (as to the other Spanish interdictos de adquirir, de retener and de recobrar or de despojo, see Devesa vs. Arbes, 13 Phil., 273, 279; Liongson vs. Martinez, 36 Phil., 948, 952). In the second place, injunction, being an equitable remedy, the granting thereof is dependent upon the sound discretion of the court (32 C.J., pp. 29-33; 14 R.C. L., pp. 307, 308). It is only in clear cases of abuse of discretion on the part of the trial judge that review on appeal would be made (32 C.J., p. 33). "There is no power the exercise of which is more delicate, which requires greater caution, deliberation, and sound discretion, or more dangerous in a doubtful case, than the issuing an injunction; it is the strong arm of equity, that never ought of law cannot afford an adequate or commensurate remedy in damages. The right must be clear, the injury impending or threatened, so as to be averted only by the protecting preventing process of injunction." (Bonaparte vs. Camden, etc., R. Co., 3 Fed. Cas. No. 1617; Baldw., 205, 217.) In the third place, the remedy sought here is not against the transportation of tuba by the defendant through the premises of the plaintiff, but the entire exclusion therefrom of the defendant regardless of whether he carries tuba or not. In the fourth place, the revocation of the judgment of the court below would exclude the defendant alone from the use of the private way while the general public will be permitted to do so. The defendant would be excluded not only from the use of the private premises of the plaintiff, but also from the way left open to the public, regardless of whether he is carrying tuba or not. The result being clearly unjust, the extraordinary legal remedy of injunction should not be granted. (Truly vs. Wanzer, 5 How., 141; 12 Law. ed., 99; Irwin vs. Dixion, 9 How., 11; 13 Law. ed., 25; Sands vs. Marburg, 36 Ga., 534; 91 Am. Dec., 781; Beindenkopf vs. Des Moines Life Ins. Co., 160 Ia., 629; 142 N.W., 434; 46 L.R.A. [N.S.], 290; Edwards vs. Alluez Min. Co., 38 Mich., 46;31 Am. Rep., 301; Troy, etc., R. Co. vs. Boston, etc., Ry. Co., 86 N.Y., 107; Eastman Kodak Co. vs. Warren, 108 Misc., 680; 178 N.Y.S., 14 [reversed on other grounds, 189 App. Div., 556; 179 N.Y.S., 325; Farmer vs. St. Paul, 65 Minn., 176;67 N.W., 990;33 L.R.A., 199]; Marvel vs. Jonah, 81 N.J. Eq., 369; 86 A., 968 [reversed on other grounds, 83 N.J. Eq., 295;90 A., 1004, L.R.A. (1915B), 206; Rogers vs. O'Brien, 153 N.Y., 357;47 N.E., 456; Wendell vs. Conduit Mach. Co., 74 Misc., 201; 133 N.Y.S., 758; Higgins vs. Higgins, 57 N.H., 224; Atchinson etc., Ry. Co. vs. Meyer, 62 Kan., 696;64 P., 597; Cincinnati, etc. R. Co. vs. Miami, etc. Transp. Co., 1 Oh. Cir. Ct. (N.S.), 117; Ardmore vs. Fraley, 65 Okl., 14; 162 P., 211; Heilman vs. Lebanon, etc., St. Ry. Co., 175 Pa., 188;34 A., 647; Messner vs. Lykens, etc., R.Co., 13 Pa. Super., 429; Mackintyre vs. Jones, 9 Pa. Super., 543; Speese vs. Schuylkill River East Side R.Co., 10 Pa. Dist., 515].). In closing, I cannot but condemn the action of O.P. Ankerson, auditor of the plaintiff company, in overturning the receptacles (balading) of tuba, which the defendant attempted to carry through the premises of the plaintiff company, in defiance of the latter's repeated prohibition. Righteous indignation at the misconduct of an employee of the plaintiff company and the damage caused the defendant, however, should not carry us beyond the merits of the present controversy. The protection of the property rights of the plaintiff is one thing and the condemnation of the acts of vandalism of an employee of the plaintiff another thing.

Avancea, C.J. and Diaz, J., concur. VILLA-REAL, J., dissenting: I concur with the opinion of Justice Laurel in so far as he dissents from the opinion of Justice Recto, but I dissent from it in so far as he concurs with said opinion. In concurring with the opinion of Justice Recto, Justice Laurel says: "In the fourth place, the revocation of the judgment of the court below would exclude the defendant alone from the use of the private way while the general public will be permitted to do so. The defendant would be excluded not only from the use of the private premises of the plaintiff, but also from the way left open to the public, regardless of whether he is carrying tuba or not. The result being clearly unjust, the extraordinary legal remedy of injunction should not be granted." The facts in this case show that said defendant was warned several times not to pass on said road when carrying tuba to the adjoining "Hacienda Sagay" where he sells it to the plaintiff's workmen who become intoxicated and unfit for work. The repeated warnings were disregarded by the defendant, until one day the auditor of the said plaintiff became so disgusted that he could not refrain from stopping his car and compelling him to unload the tuba. If the North Negros Sugar Co., Inc., as the owner of the private road in question, has a right to regulate its use by imposing reasonable restrictions and limitations, to prohibit its use by the defendant who has repeatedly disregarded the warning of its auditor, thus becoming a persona non grata, is certainly not unjust. To force the owner of a private road to allow the use of said road by a person who has incurred his displeasure, if not his hatred, just because he allows other persons to pass through it, cannot under whatever consideration, be just. In order to avoid taking the law into its own hands in excluding the defendant who has become an undesirable person to it, the plaintiff, as a law abiding corporation, has come to the courts to seek help in the enforcement of its property rights. The opinion of Justice Laurel, concurred in by the Chief Justice and Justice Diaz, while recognizing the right of said plaintiff to regulate the use of its private road by imposing upon the users reasonable restrictions and limitations, refuses it the remedy it seeks to help it in preventing an undesirable person to use its private road, leaving to it no alternative except either to take the law into its own hands or to close the road to everybody with the exception of those who deal with it in its business.

I am, therefore, of the opinion that the writ of injunction, as an auxiliary remedy, should be granted, and the judgment of the court below should be revoked. Imperial, J., concurs. Characteristics of easements Continuous and discontinuous easements; positive and negative easements Inseparability of easement Cases: [G.R. No. L-37409. May 23, 1988.]

NICOLAS VALISNO, plaintiff-appellant, vs. FELIPE ADRIANO, defendant-appellee. Honorio Valisno Garcia I for plaintiff-appellant. Felipe K. Medina for defendant-appellee. DECISION GRIO-AQUINO, J p: This case was certified to this Court by the Court of Appeals in a resolution dated August 10, 1973, the sole issue being a question of law and beyond its jurisdiction to decide. Admitted by the parties in their pleadings and established during the trial on the merits are the following material facts: On June 20, 1960, the plaintiff-appellant file against the defendant-appellee an action for damages docketed as Civil Case No. 3472 in the Court of First Instance of Nueva Ecija. The complaint alleged that the plaintiff is the absolute owner and actual possessor of a 557,949square-meter parcel of land in La Fuente, Santa Rosa, Nueva Ecija, and more particularly described in his Transfer Certificate of Title No. NT-16281. The plaintiff-appellant Valisno bought the land from the defendant-appellee's sister, Honorata Adriano Francisco, on June 6, 1959. (Deed of Absolute Sale, Exh. "A".) The land which is planted with watermelon, peanuts, corn, tobacco, and other vegetables adjoins that of the appellee Felipe Adriano on the bank of the Pampanga River. Both parcels of land had been inherited by Honorata Adriano Francisco and her brother, Felipe Adriano, from their father, Eladio Adriano. At the time of the sale of the land to Valisno, the land was irrigated by water from the Pampanga River through a canal about seventy (70) meters long, traversing the appellee's land. On December 16, 1959, the appellee levelled a portion of the irrigation canal so that the appellant was deprived of the irrigation water and prevented from cultivating his 57-hectare land. The appellant filed in the Bureau of Public Works and Communications a complaint for deprivation of water rights. A decision was rendered on March 22, 1960 ordering Adriano to reconstruct the irrigation canal, "otherwise judicial action shall be taken against him under the provisions of Section 47 of Act 2152 (the Irrigation Act), as amended." Instead of restoring the irrigation canal, the appellee asked for a reinvestigation of the case by the Bureau of Public Works and Communications. A reinvestigation was granted. LLphil In the meantime, plaintiff Valisno rebuilt the irrigation canal at his own expense because his need for water to irrigate his watermelon fields was urgent. On June 20, 1960, he filed a complaint for damages in the Court of First Instance (now Regional Trial Court) of Nueva Ecija (Civil Case No. 3472) claiming that he suffered damages amounting to P8,000 when he failed to plant his fields that year (1960) for lack of irrigation

water, P800 to reconstruct the canal on defendant Adriano's land, and P1,500 for attorney's fees and the costs of suit. On October 25, 1961, the Secretary of Public Works and Communications reversed the Bureau's decision by issuing a final resolution dismissing Valisno's complaint. The Secretary held that Eladio Adriano's water rights which had been granted in 1923 ceased to be enjoyed by him in 1936 or 1937, when his irrigation canal collapsed. His non-use of the water right since then for a period of more than five years extinguished the grant by operation of law, hence the water rights did not form part of his hereditary estate which his heirs partitioned among themselves. Valisno, as vendee of the land which Honorata received from her father's estate did not acquire any water rights with the land purchased. In his answer to the damage suit (Civil Case No. 3472), the defendant Felipe Adriano admitted that he levelled the irrigation canal on his land, but he averred: that neither his late father nor his sister Honorata possessed water rights for the land which she sold to the appellant; that he (the appellee) applied for water rights for his land in 1956 and obtained the same in 1958; and that he had a perfect right to level his land for his own use because he merely allowed his sister to use his water rights when she still owned the adjacent land. He set up a counterclaim for P3,000 as damages incurred by him in levelling the land on which the appellant dug an irrigation canal, P2,000 as actual damages, P3,000 as attorney's fees, and expenses of litigation. In a decision dated April 21, 1966, the trial court held that the plaintiff had no right to pass through the defendant's land to draw water from the Pampanga River. It pointed out that under Section 4 of the Irrigation Law, controversies between persons claiming a right to water from a stream are within the jurisdiction of the Secretary of Public Works and his decision on the matter is final, unless an appeal is taken to the proper court within thirty days. The court may not pass upon the validity of the decision of the Public Works Secretary collaterally. Furthermore, there was nothing in the plaintiff's evidence to show that the resolution was not valid. It dismissed the complaint and counterclaim. The plaintiff's motion for reconsideration of the decision was denied by the trial court. The plaintiff appealed to the Court of Appeals which certified the case to Us upon the legal question of whether the provisions of the Irrigation Act (Act No. 2152) or those of the Civil Code should apply to this case. LLpr The plaintiff-appellant argues that while the trial court correctly held that the Secretary of Public Works may legally decide who between the parties is entitled to apply for water rights under the Irrigation Act, it erred in ruling that the Secretary has authority to hear and decide the plaintiff's claim for damages for the defendant's violation of his (plaintiff's) right to continue to enjoy the easement of aqueduct or water through the defendant's land under Articles 642, 643, and 646 of the Civil Code, which provide: "Article 642.Any person who may wish to use upon his own estate any water of which he can dispose shall have the right to make it flow through the intervening estates, with the obligation to indemnify their owners, as well as the owners of the lower estates upon which the waters may filter or descend.

"Article 643.One desiring to make use of the right granted in the preceding article is obliged: "(1)To prove that he can dispose of the water and that it is sufficient for the use for which it is intended; "(2)To show that the proposed right of way is the most convenient and the least onerous to third persons; "(3)To indemnify the owner of the servient estate in the manner determined by the laws and regulations. "Article 646.For legal purposes, the easement of aqueduct shall be considered as continuous and apparent, even though the flow of the water may not be continuous, or its use depends upon the needs of the dominant estate, or upon a schedule of alternate days or hours." The existence of the irrigation canal on defendant's land for the passage of water from the Pampanga River to Honorata's land prior to and at the time of the sale of Honorata's land to the plaintiff was equivalent to a title for the vendee of the land to continue using it, as provided in Article 624 of the Civil Code: "Article 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" (Civil Code) This provision was lifted from Article 122 of the Spanish Law of Waters which provided: prcd "Article 122.Whenever a tract of irrigated land which previously received its waters from a single point is divided through inheritance, sale or by virtue of some other title, between two or more owners, the owners of the higher estates are under obligation to give free passage to the water as an easement of conduit for the irrigation of the lower estates, and without right to any compensation therefore unless otherwise stipulated in the deed of conveyance." (Art. 122, Spanish Law of Waters of August 3, 1866.) No enlightened concept of ownership can shut out the idea of restrictions thereon, such as easements. Absolute and unlimited dominion is unthinkable, inasmuch as the proper enjoyment of property requires mutual service and forbearance among adjoining estates (Amor vs. Florentino, 74 Phil. 403). As indicated in the decision dated March 22, 1960 of the Bureau of Works "the principal issue involved in this case falls under the subject of servitude of waters which are governed by Article 648 of the new Civil Code and the suppletory laws mentioned in the cases of Lunod vs. Meneses (11 Phil. 128) and Osmea vs. Camara (C.A. 380 62773) which are the irrigation law and the Spanish Law of Waters of August 3, 1866, specifically Article 122 thereof.

The deed of sale in favor of Valisno included the "conveyance and transfer of the water rights and improvements" appurtenant to Honorata Adriano's property. By the terms of the Deed of Absolute Sale, the vendor Honorata Adriano Francisco sold, ceded, conveyed and transferred to Dr. Nicolas Valisno all "rights, title, interest and participations over the parcel of land above-described, together with one Berkely Model 6 YRF Centrifugal Pump G" suction, 6" discharge 500-1500 GPM, with Serial No. 5415812 and one (1) set of suction pipe and discharge of pipe with elbow, nipples, flanges and footvalves," and the water rights and such other improvements appertaining to the property subject of this sale. According to the appellant, the water right was the primary consideration for his purchase of Honorata's property, for without it the property would be unproductive.

Water rights, such as the right to use a drainage ditch for irrigation purposes, which are appurtenant to a parcel of land, pass with the conveyance of the land, although not specifically mentioned in the conveyance. The purchaser's easement of necessity in a water ditch running across the grantor's land cannot be defeated even if the water is supplied by a third person (Watson vs. French, 112 Me 371, 19 C.J. 868-897). The fact that an easement by grant may also have qualified as an easement of necessity does not detract from its permanency as property right, which survives the determination of the necessity (Benedicto vs. CA, 25 SCRA 145). cdll As an easement of waters in favor of the appellant has been established, he is entitled to enjoy it free from obstruction, disturbance or wrongful interference (19 CJ 984), such as the appellee's act of levelling the irrigation canal to deprive him of the use of water from the Pampanga River. WHEREFORE, the appealed decision is set aside, and a new one is entered ordering the appellee to grant the appellant continued and unimpeded use of the irrigation ditch traversing his land in order to obtain water from the Pampanga River to irrigate appellant's land. Let the records of this case be remanded to the court a quo for the reception of evidence on the appellant's claim for damages. SO ORDERED. Modes of Acquiring easements Can an easement of right of way be acquired by prescription? Cases: [G.R. No. L-10619. February 28, 1958.] LEOGARIO RONQUILLO, ET AL., plaintiffs-appellants, vs. JOSE ROCO, as Administrator of VICENTE ROCO Y DOMINGUEZ, ET AL., defendants-appellees. Moises B. Cruz for appellants.

Vicente Roco, Jr. for appellees. SYLLABUS 1.EASEMENTS; CLASSIFIED AND HOW THEY ARE ACQUIRED. Under the Old as well as the New Civil Code, easements may be continuous or discontinuous (intermittent), apparent or non-apparent, discontinuous being those used at more or less long intervals and which depend upon acts of man (Articles 532 and 615 of the Old and New Civil Codes, respectively). Continuous and apparent easements are acquired either by title or prescription, continuous non-apparent easements and discontinuous ones whether apparent or not, may be acquired only by virtue of a title. Articles 537 and 539, and 620 and 622 of the Old and New Civil Codes respectively.) 2.ID.; EASEMENT OF RIGHT OF WAY MAY NOT BE ACQUIRED THROUGH PRESCRIPTION. Under the provisions of Articles 537 and 539, and 620 and 622 of the Old and New Civil Codes, respectively, the easement of right of way may not be acquired through prescription. DECISION MONTEMAYOR, J p: Involving as it does only a question of law, the present appeal from the order of the Court of First Instance of Camarines Sur, dated March 6, 1955, dismissing the amended and supplemental complaint of plaintiffs on motion of defendants that it did not state a cause of action, was taken directly to this Court. The facts and the issue involved in the appeal are well and correctly stated in the appealed order, the pertinent portion of which we are reproducing and making our own: "The amended and supplemental complaint alleges that the plaintiffs have been in the continuous and uninterrupted use of a road or passage way which traversed the land of the defendants and their predecessors in interest, in going to Igualdad Street and the market place of Naga City, from their residential land and back, for more than 20 years; that the defendants and the tenants of Vicente Roco, the predecessors in interest of the said defendants have long recognized and respected the private legal easement of road right of way of said plaintiffs; that on May 12, 1953, the defendants Jose Roco thru his codefendants, Raymundo Martinez and their men with malice aforethought and with a view to obstructing the plaintiffs' private legal easement over the property of the late Vicente Roco, started constructing a chapel in the middle of the said right of way construction actually impeded, obstructed and disturbed the continuous exercise of the rights of the plaintiffs over said right of way; that on July 10, 1954 the new defendants Natividad Roco and Gregorio Miras, Jr. with the approval of the defendant, Jose Roco and with the help of their men and laborers, by means of force, intimidation, and threats, illegally and violently planted wooden posts, fenced with barbed wire and closed hermitically the road passage way and their right of way in question against their protests and opposition, thereby preventing them from going to or coming from their homes to Igualdad Street and the public market of the City of Naga.

"It is very clear from the allegations of the plaintiffs in their amended and supplemental complaint, that they claim to have acquired the easement of right of way over the land of the defendants and the latter's predecessors in interest, Vicente Roco, thru prescription by their continuous and uninterrupted use of a narrow strip of land of the defendants as passage way or road in going to Igualdad Street and the public market of Naga City, from their residential land or houses, and return. "The only question therefore to be determined in this case, is whether an easement of right of way can be acquired thru prescription." The dismissal was based on the ground that an easement of right of way though it may be apparent is, nevertheless, discontinuous or intermittent and, therefore, cannot be acquired through prescription, but only by virtue of a title. Under the Old as well as the New Civil Code, easements may be Continuous or discontinuous (intermittent), apparent or nonapparent, discontinuous being those used at more or less long intervals and which depend upon acts of man (Articles 532 and 615 of the Old and New Civil Codes, respectively). Continuous and apparent easements are acquired either by title or prescription, continuous non-apparent easements and discontinuous ones whether apparent or not, may be acquired only by virtue of a title (Articles 537 and 539, and 620 and 622 of the Old and New Civil Codes, respectively). Both Manresa and Sanchez Roman are of the opinion that the easement of right of way is a discontinuous one: "En cambio, las servidumbres discontinuos se ejercitan por un hecho del hombre, y precisamente por eso son y tienen que ser discontinuas, porque es imposible fisicamente que su uso sea incesante. Asi, la servidumbre de paso es discontinua, porque no es posible que el hombre est pasando continuamente por el camino, vereda o senda de que se trate." (4 Manresa, Codigo Civil Espaol, 5th ed., p. 529). . . . "5 Por razon de los modos de disfrutar las servidumbres, en continuas y discontinuas (1). Las continuas son aquellas cuyo uso es o puede ser incesante, sin la intervencion de ningun hecno del hombre, como son las de luces y otras de la misma especie; y las discontinuas, las que se usan intervalos, ms o menos largos, y dependen de actos del hombre, como las de senda, carrera y otras de esta clase." (3 Sanches Roman, Derecho Civil, p. 488). Under the provisions of the Civil Code, old and new, particularly the articles thereof aforecited, it would therefore appear that the easement of right of way may not be acquired through prescription. Even Article 1959 of the Old Civil Code providing for prescription of ownership and other real rights in real property, excludes therefrom the exception established by Article 539, referring to discontinuous easements, such as, easement of right of way. (Bargayo vs. Camumot, 40 Phil., 857, 867). In the case of Cuayong vs. Benedicto, 37 Phil., 781 where the point in issue was whether or not vested rights in a right of way can be acquired through user from time immemorial, this Court said:

"It is evident, therefore, that no vested right by user from time immemorial had been acquired by plaintiffs at the time the Civil Code took effect. Under that Code (Article 539) no discontinuous easement could be acquired by prescription in any event." However, in the case of Municipality of Dumangas vs. Bishop of Jaro, 34 Phil., 545, this same Tribunal held that the continued use by the public of a path over land adjoining the Catholic church in going to and from said church through its side door, has given the church the right to such use by prescription, and that because of said use by the public, an easement of right of way over said land has been acquired by prescription, not only by the church, but also by the public, which without objection or protest on the part of the owner of said land, had continually availed itself of the easement. The minority of which the writer of this opinion is a part, believes that the easement of right of way may now be acquired through prescription, at least since the introduction into this jurisdiction of the special law on prescription through the Old Code of Civil Procedure, Act No. 190. Said law, particularly, Section 41 thereof, makes no distinction as to the real rights which are subject to prescription, and there would appear to be no valid reason, at least to the writer of this opinion, why the continued use of a path or a road or right of way by the party, specially by the public, for ten years or more, not by mere tolerance of the owner of the land, but through adverse use of it, Cannot give said party a vested right to such right of way through prescription. "The uninterrupted and continuous enjoyment of a right of way necessary to constitute adverse possession does not require the use thereof every day for the statutory period, but simply the exercise of the right more or less frequently according to the nature of the use. (17 Am. Jur. 972)" Even under the case of Cuaycong vs. Benedicto (supra), this Tribunal insinuated that the rule that no discontinuous easement, like an easement of right of way, may, under Article 539 of the Old Civil Code, be acquired, might possibly have been changed by the provisions of the Code of Civil Procedure relative to prescription. . . . "Assuming, without deciding, that this rule has been changed by the provisions of the present Code of Civil Procedure relating to prescription, and that since its enactment discontinuous easement may be acquired by prescription, it is clear that this would not avail plaintiffs. The Code of Civil Procedure went into effect on October 1, 1901. The term of prescription for the acquisition of rights in real estate is fixed by the Code (section 41) at ten years. The evidence shows that in February, 1911 before the expiration of the term of ten years since the time the Code of Civil Procedure took effect, the defendants interrupted the use of the road by plaintiffs by constructing and maintaining a toll gate on it and collecting toll from persons making use of it with carts and continued to do so until they were enjoined by the granting of the preliminary injunction by the trial court in December 1912." . . . (Cuayong vs. Benedicto, 37 Phil., 781,796). Professor Tolentino in his Commentaries and Jurisprudence on the Civil Code, Vol. I, p. 340, would appear to be of the opinion that under the provisions of the Code of Civil Procedure

relative to prescription, even discontinuous easements, like the easement of right of way, may be acquired through prescription: . . . "It is submitted that under Act No. 190, even discontinuous servitudes can be acquired by prescription, provided it can be shown that the servitude was 'actual, open, public, continuous, under a claim of title exclusive of any other right and adverse to all other claimants'." However, the opinion of the majority must prevail, and it is held that under the present law, particularly, the provisions of the Civil Code, old and new, unless and until the same is changed or clarified, the easement of right of way may not be acquired through prescription.

In view of the foregoing, the order appealed from is hereby affirmed. No costs. Bengzon, Bautista Angelo, Labrador, Concepcion, Endencia and Flix, JJ., concur. Padilla, J., concurs in the result. Separate Opinions REYES, J. B. L., J., concurring: I would like to elaborate my reasons for concurring with the majority in declaring the easement of right of way not acquirable by prescription. The essence of this easement ("servidumbre de paso") lies in the power of the dominant owner to cross or traverse the servient tenement without being prevented or disturbed by its owner. As a servitude, it is a limitation on the servient owner's rights of ownership, because it restricts his right to exclude others from his property. But such limitation exists only when the dominant owner actually crosses or passes over the servient estate; because when he does not, the servient owner's right of exclusion is perfect and undisturbed. Since the dominant owner can not be continually and uninterruptedly crossing the servient estate, but can do so only at intervals, the easement is necessarily of an intermittent or discontinuous nature. Because possession of a right consists in the enjoyment of that right (old Civil Code, Art. 430; Art. 423, new Civil Code) and to enjoy a right is to exercise it, it follows that the possession (enjoyment or exercise) of a right of way is intermittent and discontinuous. From this premise, it is inevitable to conclude, with Manresa and Sanchez Roman, that such easement can not be acquired by acquisitive prescription (adverse possession) because the latter requires that the possession be continuous or uninterrupted (old Civil Code, Art. 1941; new Civil Code, Art. 1118).The Code of Civil Procedure (Act 190) did not change the situation. Observe that its section 41, in conferring prescriptive title upon "ten years adverse possession" qualifies it by the succeeding words "uninterruptedly continued for ten years", which is the same condition of continuity that is exacted by the Civil Code.

"SEC. 41.Title to Land by Prescription. Ten years actual adverse possession by any person claiming to be the owner for that time of any land or interest in land, uninterruptedly continued for ten years by occupancy, descent, grants, or otherwise, in whatever way such occupancy may have commenced or continued, shall vest in every actual occupant or possessor of such land a full and complete title, saving to the persons under disabilities the rights secured by the next section. In order to constitute such title by prescription or adverse possession, the possession by the claimant or by the person under or through whom he claims must have been actual, open, public, continuous, under a claim of title exclusive of any other right and adverse to all other claimants. But failure to occupy or cultivate land solely by reason of war shall not be deemed to constitute an interruption of possession of the claimant, and his title by prescription shall be complete, if in other respects perfect, notwithstanding such failure to occupy or cultivate the land during the continuance of war." The case of Municipality of Dumangas vs. Bishop of Jaro, 34 Phil. 541, does not, if properly analyzed, constitute authority to hold that the easement of right of way is acquirable by prescription or adverse possession. The Court there said: "The record shows that the church of the pueblo of Dumangas was constructed in or about the year 1887; that its wall on the southeast side adjoins the building lot in question; and that since the construction of the church there has been a side door in this wall through which the worshippers attending divine service enter and leave, they having to pass over and cross the land in question. It is therefore to be presumed that the use of said side door also carries with it the use by faithful Catholics of the municipal land over which they have had to pass in order to gain access to said place of worship, and, as this use of the land has been continuous, it is evident that the Church has acquired a right to such use by prescription, in view of the time that has elapsed since the church was built and dedicated to religious worship, during which period the municipality has not prohibited the passage over the land by the persons who attend services customarily held in said church. The record does not disclose the date when the Government ceded to the Church the land on which the church building was afterwards erected, nor the date of the laying out of the adjacent square that is claimed by the municipality and on which the side door of the church, which is used as an entrance by the people who frequent this building, gives. There are good grounds for presuming that in apportioning lands at the time of the establishment of the pueblo of Dumangas and in designating the land adjacent to the church as a public square, this latter was impliedly encumbered with the easement of a right of way to allow the public to enter and leave the church - a case provided for by article 567 of the Civil Code - for the municipality has never erected any building or executed any work which would have obstructed the passage and access to the side door of the church, and the public has been enjoying the right of way over the land in question for an almost immemorable length of time. Therefore an easement of right of way over said land has been acquired by prescription, not only by the church, but also by the public which, without objection or protest, has continually availed itself of the easement in question." (34 Phil., pp. 545-546). It will be seen that the ratio decidendi of that case lies in the application of Article 567 of the old Civil Code that provides as follows:

"ART. 567.When an estate acquired by purchase, exchange, or partition is enclosed by other estates of the vendor, exchanger, or co-owner, the latter shall be obliged to grant a right of way without indemnity, in the absence of an agreement to the contrary." Bearing in mind the provisions of the article quoted in relation to the wording of the decision in the Dumangas case, it can be seen that what the court had in mind is that when the Spanish Crown apportioned the land Occupied by the Church of Dumangas, it impliedly burdened the neighboring public square (which was also Crown property at the time) with an easement of right of way to allow the public to enter and leave the church, because without such easement the grant in favor of ecclesiastical authorities would be irrisory: what would be the use of constructing a church if no one could enter it? Now, if there was an implied grant of the right of way by the Spanish Crown, it was clearly unnecessary to justify the existence of the easement through prescriptive acquisition. Why then does the decision repeatedly speak of prescription? Plainly, the word "prescription" was used in the decision not in the sense of adverse possession for ten or thirty years, but in the sense of "immemorial usage" that under the law anterior to the Civil Code of 1889, was one of the ways in which the servitude of right of way could be acquired.1 This view is confirmed by the fact that throughout the passages hereinabove quoted, the court's decision stresses that the people of Dumangas have been passing over the public square to go to church since the town was founded and the church was built, an "almost immemorable length of time." It would seem that the term "prescription" used in said case was merely a loose expression that is apt to mislead unless the court's reasoning is carefully analyzed. Since 1889, however, the Civil Code repealed the prior legislation; and thereafter the right of way could only be acquired by title and not by adverse possession (usucapio), saving those servitudes already acquired before the Code came into effect (Decisions, Supreme Court of Spain, 27 Oct. 1900, 1st February 1912; 11 May 1927, and 7 January 1920). Existence of an apparent sign of easement Cases: [G.R. No. 66520. August 30, 1988.] EDUARDO C. TAEDO, petitioner, vs. HON. JUANITO A. BERNAD, Presiding Judge of the Regional Trial Court, 7th Judicial Region, Branch XXI, Cebu City; Spouses ROMEO SIM and PACITA S. SIM; and Spouses ANTONIO CARDENAS and MAE LINDA CARDENAS, respondents. Numeriano F . Capangpangan for petitioner. Meinrado P. Paredes for private respondents. SYLLABUS 1.REMEDIAL LAW; COMPLAINT; DISMISSAL THEREOF FOR LACK OF CAUSE OF ACTION; EXPLAINED. The dismissal of the complaint on the ground of lack of cause of action, is precipitate. The settled rule where dismissal of an action is sought on the ground that the

complaint does not state a cause of action is, that the insufficiency of the cause of action must appear on the face of the complaint. And the test of the sufficiency of the ultimate facts alleged in the complaint to constitute a cause of action, is whether or not, admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer of the complaint. For this purpose, the movant is deemed to admit hypothetically the truth of the facts thus averred. 2.CIVIL LAW; DAMAGES; DETERMINED IN A TRIAL IN CASE OF BREACH OF PROMISE TO SELL. Considering the admission of defendant Cardenas, and that his promise to sell Lot 7501-B to Eduardo Taedo appears to be for a valuable consideration, a trial is necessary to determine, at the very least, the amount of damages suffered by the plaintiff Eduardo Taedo by reason of such breach of promise to sell, if indeed there is such a breach. 3.ID.; EASEMENT; ALIENATION OF DOMINANT AND SERVIENT ESTATES, NOT GROUND FOR ITS EXTINGUISHMENT; CASE AT BAR. The finding of the trial court that petitioner Taedo's right to continue to use the septic tank, erected on Lot 7501-B, ceased upon the subdivision of the land and its subsequent sale to different owners who do not have the same interest, also appears to be contrary to law. Article 631 of the Civil Code enumerates the grounds for the extinguishment of an easement. The alienation of the dominant and servient estates to different persons is not one of the grounds for the extinguishment of an easement. On the contrary, use of the easement is continued by operation of law. Article 624 of the Civil Code 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." In the instant case, no statement abolishing or extinguishing the easement of drainage was mentioned in the deed of sale of Lot 7501-A to Eduardo Taedo. Nor did Antonio Cardenas stop the use of the drain pipe and septic tank by the occupants of Lot 7501-A before he sold said lot to Eduardo Taedo. Hence, the use of the septic tank is continued by operation of law. Accordingly, the spouses Romeo and Pacita Sim, the new owners of the servient estate (Lot 7501-B), cannot impair, in any manner whatsoever, the use of the servitude. DECISION PADILLA, J p: This is a petition for review on certiorari of the Order issued by the respondent judge, Hon. Juanito A. Bernad, on 5 December 1983, which dismissed the complaint for legal redemption filed by the petitioner in Civil Case No. CEB-994 of the Regional Trial Court of Cebu, and the Order of the same respondent judge, dated 20 January 1984, which denied petitioner's motion for reconsideration. llcd The facts, in brief, are as follows:

The private respondent Antonio Cardenas was the owner of two (2) contiguous parcels of land situated in Cebu City which he had inherited from Lourdes Cardenas and more particularly known as Lot 7501-A, with an area of 140 square meters and Lot 7501-B, with an area of 612 square meters. On Lot 7501-A is constructed an apartment building, while the improvements on Lot 7501-B consist of one four-door apartment of concrete and strong materials; one two-storey house of strong materials; a bodega of strong materials; and a septic tank for the common use of the occupants of Lots 7501-A and 7501-B. A small portion of the apartment building on Lot 7501-A also stands on Lot 7501-B. On 5 February 1982, said Antonio Cardenas sold Lot 7501-A to herein petitioner Eduardo C. Taedo. 1 Antonio Cardenas, on that same day, also mortgaged Lot 7501-B to said Eduardo C. Taedo as a security for the payment of a loan in the amount of P10,000.00. 2 Antonio Cardenas further agreed that he would sell Lot 7501-B only to Eduardo Taedo in case he should decide to sell it, as the septic tank in Lot 7501-B services Lot 7501-A and the apartment building on Lot 7501-A has a part standing on Lot 7501-B. This was confirmed in a letter, dated 26 February 1982, wherein Antonio Cardenas asked Taedo not to deduct the mortgage loan of P10,000.00 from the purchase price of Lot 7501-A "because as we have previously agreed, I will sell to you Lot 7501-B." 3 Antonio Cardenas, however, sold Lot 7501-B to the herein respondent spouses Romeo and Pacita Sim. 4 Upon learning of the sale, Eduardo Taedo offered to redeem the property from Romeo Sim. But the latter refused. Instead, Romeo Sim blocked the sewage pipe connecting the building of Eduardo Taedo built on Lot 7501-A, to the septic tank in Lot 7501-B. He also asked Taedo to remove that portion of his building encroaching on Lot 7501-B. As a result, Eduardo Taedo, invoking the provisions of Art. 1622 of the Civil Code, filed an action for legal redemption and damages, with a prayer for the issuance of a writ of preliminary injunction, before the Regional Trial Court of Cebu, docketed therein as Civil Case No. CEB-994, against the spouses Romeo and Pacita Sim, Antonio Cardenas and his wife Mae Linda Cardenas, the Register of Deeds of Cebu City, and Banco Cebuano, Cebu City Development Bank. 5 Answering, the spouses Romeo and Pacita Sim claimed that they are the absolute owners of Lot 7501-B and that Eduardo Taedo has no right to redeem the land under Art. 1622 of the Civil Code as the land sought to be redeemed is much bigger than the land owned by Taedo. 6 Antonio Cardenas, upon the other hand, admitted that he had agreed to sell Lot 7501-B to Eduardo Taedo and claimed by way of cross-claim against the spouses Romeo and Pacita Sim, that the Deed of Sale he had executed in favor of said spouses was only intended as an equitable mortgage, to secure the payment of amounts received by him from said spouses as petty loans. 7 In answer to the cross-claim, the spouses Romeo and Pacita Sim insisted that the sale executed by Antonio Cardenas of Lot 7501-B in their favor was an absolute one. 8

Thereafter, or on 14 October 1983, the spouses Romeo and Pacita Sim filed motions to dismiss the complaint and the cross-claim, for lack of cause of action. 9 Acting upon these motions and other incidental motions, the respondent judge issued the questioned order of 5 December 1983 dismissing the complaint and cross-claim. 10 Taedo filed a motion for reconsideration of the order, but his motion was denied on 20 January 1984. 11 Hence, the present recourse by petitioner Taedo. The Court finds merit in the petition. The dismissal of the complaint on the ground of lack of cause of action, is precipitate. The settled rule where dismissal of an action is sought on the ground that the complaint does not state a cause of action is, that the insufficiency of the cause of action must appear on the face of the complaint. And the test of the sufficiency of the ultimate facts alleged in the complaint to constitute a cause of action, is whether or not, admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer of the complaint. For this purpose, the movant is deemed to admit hypothetically the truth of the facts thus averred. 12 In the instant case, it cannot be denied that petitioner Taedo cannot redeem the entire Lot 7501-B from the spouses Romeo and Pacita Sim pursuant to the provisions of Art. 1622 of the Civil Code, since the lot sought to be redeemed, has an area of 612 square meters which is much bigger, area-wise, than the lot owned by petitioner Taedo. However, the petitioner seeks to purchase only that small portion of Lot 7501-B occupied by his apartment building, because the spouses Romeo and Pacita Sim had told him to remove that portion of his building which encroaches upon Lot 7501-B. Whether or not this is possible should have been determined at the pre-trial stage or trial on the merits. Besides, the action of petitioner Taedo is also one for recovery of damages by reason of breach of promise by the respondent Antonio Cardenas to sell Lot 7501-B. Paragraphs 3 and 4 of the amended complaint read, as follows: "3.That by written agreement, plaintiff and defendant spouses Antonio Cardenas and Mae Linda Cardenas agreed that in the event they decide to sell the adjacent Lot No. 7501-B of the subdivision plan (LRC) Psd. 23638, a portion of Lot No. 7501 of the cadastral survey of Cebu, LRC (GLRC) Cad. Record No. 9465, situated in the City of Cebu, containing an area of SIX HUNDRED TWELVE (612) Square meters more or less which lot is adjacent to Lot No. 7501-A of the plaintiff and where part of the plaintiff's apartment is standing on, the same should be sold to the plaintiff, but far from compliance of the written agreement, defendant spouses Antonio Cardenas and Mae Linda Cardenas sureptiously [sic] sold the aforestated Lot No. -7501-B- to the defendant spouses, Romeo Sim and Pacita Sim on July 23, 1932 as per Deed of Sale notarized by Notary Public, Jorge S. Omega and entered in his Notarial Register as Doc. No. 462; Page No.-94-; Book No. 11, Series of 1982;

"4.That due to the sale by the defendant spouses Antonio Cardenas and Mae Linda Cardenas of the property in question to spouses Romeo Sim and Pacita Lim, plaintiff suffered moral damages in the form of mental anguish, sleepless nights, mental torture, for which he is entitled to a compensation in the amount to be established during the trial of the case and has incurred litigation expenses subject for reimbursement and attorneys fee in the sum of P10,000.00 which should be chargeable to both defendant spouses;" 13 and the plaintiff (herein petitioner) prayed, among others: "(c) That defendant spouses Romeo Sim and Pacita Sim, and spouses Antonio Cardenas and Mae Linda Cardenas be ordered to pay plaintiff moral damages, litigation expenses and attorneys fees in the amount of P50,000.00." 14 That there was a written agreement, as alleged in the complaint, between the plaintiff Eduardo Taedo and the defendant Antonio Cardenas is admitted by the latter. In his answer, he alleged the following: "ALLEGATIONS as to written agreement is ADMITTED, but, specifically denies that herein defendants SUREPTIOUSLY [sic] SOLD the lot in question to the other defendant Spouses Sim, the truth is, that the herein defendants [sic] was required to execute the Deed of Sale described in this paragraph 3 as security for the personal loans and other forms of indebtedness incurred from the Spouses Sims but never as a conveyance to transfer ownership;" 15 Considering this admission of defendant Cardenas, and that his promise to sell Lot 7501-B to Eduardo Taedo appears to be for a valuable consideration, a trial is necessary to determine, at the very least, the amount of damages suffered by the plaintiff Eduardo Taedo by reason of such breach of promise to sell, if indeed there is such a breach. Moreover, the finding of the trial court that petitioner Taedo's right to continue to use the septic tank, erected on Lot 7501-B, ceased upon the subdivision of the land and its subsequent sale to different owners who do not have the same interest, 16 also appears to be contrary to law. Article 631 of the Civil Code enumerates the grounds for the extinguishment of an easement. Said article provides: "Art. 631.Easements are extinguished: (1)By merger in the same person of the ownership of the dominant and servient estates; (2)By non-user for ten years; with respect to discontinuous easements, this period shall be computed from the day on which they ceased to be used; and, with respect to continuous easements, from the day on which an act contrary to the same took place; (3)When either or both of the estates fall into such condition that the easement cannot be used; but it shall revive if the subsequent condition of the estates or either of them should again permit its use, unless when the use becomes possible, sufficient time for prescription has elapsed, in accordance with the provisions of the preceding number; (4)By the expiration of the term or the fulfillment of the condition, if the easement is temporary or conditional;

(5)By the renunciation of the owner of the dominant estate; (6)By the redemption agreed upon between the owners of the dominant and servient estates." As can be seen from the above provisions, the alienation of the dominant and servient estates to different persons is not one of the grounds for the extinguishment of an easement. On the contrary, use of the easement is continued by operation of law. Article 624 of the Civil Code 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." In the instant case, no statement abolishing or extinguishing the easement of drainage was mentioned in the deed of sale of Lot 7501-A to Eduardo Taedo. Nor did Antonio Cardenas stop the use of the drain pipe and septic tank by the occupants of Lot 7501-A before he sold said lot to Eduardo Taedo. Hence, the use of the septic tank is continued by operation of law. Accordingly, the spouses Romeo and Pacita Sim, the new owners of the servient estate (Lot 7501-B), cannot impair, in any manner whatsoever, the use of the servitude. 17 WHEREFORE, the Orders complained of are hereby REVERSED and SET ASIDE. The respondent judge or another one designated in his place is directed to proceed with the trial of this case on the merits. With costs against private respondents. prLL SO ORDERED. Rights and obligation of the owners of dominant and servient estate [G.R. No. 23810. December 18, 1926.] CATALINO VALDERRAMA, plaintiff-appellee, vs. THE NORTH NEGROS SUGAR CO., INC., defendant-appellant. [G.R. No. 23811. December 18, 1925.] EMILIO RODRIGUEZ, plaintiff-appellee, vs. THE NORTH NEGROS SUGAR CO., INC., defendant-appellant. [G.R. No. 23812. December 18, 1925.] SANTOS URRA, ET AL., plaintiffs-appellees, vs. THE NORTH NEGROS SUGAR CO., INC., defendant-appellant.

Ross, Lawrence & Selph and Antonio T. Carrascoso, Jr., for appellant. Camus & Delgado for appellees. SYLLABUS 1.CONTRACTS; INTERPRETATION. In the determination of the scope of a contract, an interpretation which is contrary to the object of the contract shall not be admitted. 2.ID.; ID.; EASEMENT OF WAY. In a contract establishing an easement of way in favor of a sugar company for the construction of a railroad for the transportation of sugar cane from the servient estates to the mill of said company, it is contrary to the nature of the contract to pretend that only sugar cane grown in the servient estates can be transported on said railroad, because it is a well-settled rule that things serve their owner by reason of ownership and not by reason of easement; that is to say, that an easement hang been established in favor of the sugar company, the owners of the servient estates cannot limit its use to the transportation of their cane, there being no express stipulation to that effect, for then there would be no need of the easement, since they could use their estates as owners thereof. 3.ID.; ID.; ALTERATION OF EASEMENT. In the case of an easement of way for the construction of a railroad, the prohibition of the law (art. 543 of the Civil Code) against alteration of easement, making it more burdensome, is not violated by causing to pass thereon wagons carrying goods pertaining to persons who are not the owners of the servient estates and at all times the per son entitled to the easement may please, for in such a case the easement continues to be the same. Said legal prohibition has reference to that case wherein in extending the line or repairing or using the same, a larger area of land is occupied, or excavations or materials deposited outside of the area occupied by the easement. DECISION VILLAMOR, J p: As appears from the record, on November 17, 1916, several hacienda owners of Manapla, Occidental Negros, entered into a contract with Miguel J. Osorio, known as milling contract, wherein Osorio agreed to install in Manapla a sugar central of a minimum capacity of 300 tons, for grinding and milling all the sugar cane to be grown by the hacienda owners, who in turn bound themselves to furnish the central with all the cane they might produce in their estates for thirty years from the execution of the contract, all in accordance with the conditions specified therein. Later on, the defendant North Negros Sugar Co., Inc., acquired the rights and interest of Miguel J. Osorio in the milling contract aforesaid. Two years thereafter, that is to say, on January 29,1919, Catalino Valderrama (case No. 23810) and on February 1st of the same year, Emilio Rodriguez (case No. 23811) and Santos

Urra, Ignacio Benito Huarte, Adolfo Huarte and Pedro Auzmendi (case No. 23812) made with the appellant other milling contracts identical with the first one of November 17, 1916, with some new conditions which are specified in detail in the aforesaid documents Exhibits A and 1. Santos Urra thereafter transferred to Pedro Auzmendi, and the latter to Lorenzo Echarri, their interest in the milling contract executed by them. In view of the fact that the hacienda owners, who were up to that time customers of the central, could not furnish sufficient cane for milling, as required by the capacity of said central, the defendant made other milling contracts with various hacienda owners of Cadiz, Occidental Negros in order to obtain sufficient cane to sustain the central; and this gave rise to the plaintiffs filing their complaint, alleging that the easement of way, which each of them has established in his respective hacienda, was only for the transportation through each hacienda of the sugar cane of the owner thereof, while the defendant maintains that it had the right to transport to its central upon the railroad passing through the haciendas of the plaintiffs, not only the sugar cane harvested in said haciendas, but also that of the hacienda owners of Cadiz, Occidental Negros. The plaintiffs, in separate complaints, prayed the Court of First Instance of Occidental Negros to pronounce judgment, holding that the defendant had no right, under the easement or otherwise, to cause its locomotives and wagons to run across the estates of the plaintiffs for the purpose of transporting sugar cane of any agriculturist of Cadiz, Occidental Negros. The defendant answered the amended complaints, admitting some allegations thereof and denying others. And as special defense, it alleged that the plaintiffs respectively granted the defendant, for the period of fifty years from the date of the aforesaid contracts, an easement of way 7 meters wide upon the lands of the plaintiffs for the construction and operation of a railroad for the transportation of sugar cane; that said easement of way was established without any restriction whatsoever, as regards the ownership of the cane to be transported over the said railroad; that said contract was then in full force and effect and had never been annulled or modified. After hearing the three cases, the trial court entered one single judgment for all of them, holding that the defendant had no right to pass through the lands of the plaintiffs described in their amended complaints for the transportation of sugar cane not grown from any of the haciendas of the plaintiffs. From this judgment, the defendant appealed. In view of the similarity of the facts and questions raised in the three complaints, they will herein be considered jointly, as was done by the trial court. The parties agree that the only question herein involved is as to the extent of the easement of way which the plaintiffs have established in their respective haciendas in favor of the defendant, and therefore it is important to know the terms in which such easement of way was established. In the contract executed by the plaintiff Valderrama with the defendant on January 29, 1919, there appears: "6th. That in order to have the obligations herein entered into by Mr. Valderrama duly registered, in regard to the rural estates belonging to him and which are

described hereinafter, an easement of way 7 meters wide and for the period of 50 years from the date hereof is hereby created in favor of the 'North Negros Sugar Co., Inc.,' upon his property hereinafter described, at such place as said corporation may see fit for the construction of a railroad." And in the contract of the plaintiff Rodriguez of February 1, 1919, there also appears: "6th. That in order to have the obligations herein entered into by Mr. Emilio Rodriguez duly registered, in regard to the rural estates belonging to him which are hereinafter described, an easement of way 7 meters wide and for the period of 50 years from the date hereof is hereby established by said Mr. Emilio Rodriguez in favor of the 'North Negros Sugar Co., Inc.,' upon his estate aforementioned, at such place as said corporation ~y see fit for the construction of a railroad." And lastly in the contract of Santos Urra and others of February 1, 1919, there likewise appears: "7th. That in order to have the obligationg herein entered into by Santos Urra, Ignacio Benito Huarte, Adolfo Huarte and Pedro Auzmendi duly registered, in regard to their estate hereinafter described, an easement of way 7 meters wide and for the period of 50 years from the date hereof is hereby established in favor of the 'North Negros Sugar Co., Inc.,' upon their estate hereinafter described, at such place as said corporation may see fit for the construction of a railroad." As may be seen, the question raised depends upon the interpretation to be given to the clause of the contracts of the plaintiffs above quoted. The plaintiffs allege that the aforesaid clause is ambiguous, and under the first exception of section 285 of the Code of Civil Procedure, they have the right to introduce extraneous evidence to explain the true intent of the parties. And it is ambiguous, according to them, because it may be applied to the transportation of the cane of the plaintiffs or of other producers, which is contrary to the intent of the contracting parties. If the above quoted clause is ambiguous, the plaintiffs have the right to introduce circumstantial evidence to explain the true intent of the parties, but in our opinion said clause is clear enough in its terms to express what the parties have intended to agree upon. Had the clause mentioned only an "easement of way," there might be a doubt as to whether or not the easement of way is for pedestrians, horsemen or carriages. But when the clause says: "easement of way 7 meters wide for the period of 50 years for the construction of a railroad," there can be no doubt about what the contracting parties have agreed upon, to wit, that the plaintiffs have created upon their respective haciendas at a suitable place an easement of way 7 meters wide and for a period of fifty years, in order to enable the defendant to build and maintain a railroad for the transportation of sugar cane to the central. It is clear that the cane of the plaintiffs was to be transported upon the railroad to the central; but to limit the use of the road exclusively to the cane of the plaintiffs and within their respective haciendas would make the contract in question ineffective, except as to the hacienda which is contiguous or nearest to the central. The object of such a milling contract, from which arises the easement in question, is undoubtedly to obtain mutual benefit to the producers of sugar cane and the corporation putting up the central. It is only by taking this principal idea into account that it may be conceived why the parties had come to an agreement to assume such obligations as are set forth in the milling contract. But the contract could not produce any benefit to the parties, if the explanation given by the plaintiffs would be admitted, as to their intention in creating

the aforesaid easement of way upon their respective haciendas, that it was only in favor of their respective haciendas. Such an explanation is inadmissible because it is contrary to the object of the milling contract.

It is against the nature of the easement to pretend that it was established in favor of the servient estates, because it is a well settled rule that things serve their owner by reason of ownership and not by reason of easement. This is a case of an easement for the benefit of a corporation, voluntarily created by the plaintiffs upon their respective estates for the construction of a railroad connecting said estates with the central of the defendant. Once the road is constructed, the easement is apparent because it is continuously exposed to view by the rails which reveal the use and enjoyment of said easement. It is evident, as above stated, that the cane of the plaintiffs is to be transported to the central by means of wagons passing upon the railroad; but as the easement was created for the benefit of the corporation, owner of the central, it may cause its wagons to pass upon the road as many times as it may deem fit, according to the needs of the central. If the plaintiffs do not produce sufficient cane to cover the capacity of the central, it would be unjust to impose upon the defendant corporation the burden of maintaining a central, prohibiting it to obtain from another source sufficient cane with which to maintain its business; this is specially true here, because in the milling contract with the plaintiffs, there is nothing to prohibit the defendant from making milling contracts with other planters, and obtain in that way all the cane necessary to cover the capacity of the central. Another reason advanced by the appellees in support of their theory is that by transporting upon the road, through the servient estates, the cane of the planters of Cadiz, it would alter the easement, making it more burdensome. It is true that the owner of the dominant estate, in making on the servient estate the necessary works for the use and preservation of the easement, cannot alter it, nor make it more burdensome (art. 543 of the Civil Code); but this does not mean that the defendant cannot transport in the wagons passing upon the railroad other cane than that of the plaintiffs. what is prohibited by the legal provision above cited is that the defendant, in extending the road or in repairing it, should occupy a greater area of land of the servient estates, or deposit excavations or building materials outside of the area of 7 meters, because in the first case, the easement will be altered, and in the second it would become more burdensome. But nothing of the kind happens when the defendant transports on the railroad, crossing the servient estates, the cane of the planters of Cadiz; the railroad continues to occupy the same area on the servient estates, and the encumbrance resulting from the easement continues to be the same, whether the tractors traverse the line 10, 20 or 30 times-a day transporting cane for the central. Furthermore, the record shows a circumstance indicating that at the time of the execution of the milling contracts above referred to, there was no intention on the part of the contracting parties to limit the use of the railroad to the transportation of cane grown by the plaintiffs in their respective haciendas, and that is because, while the duration of the milling contracts is fixed at thirty years, that of the easement is at fifty. So that if at the end of thirty years the plaintiffs or their successors should no longer desire to furnish canes for milling in the central of the defendant, the latter shall still have the right to the easement for the

remaining period, but without transporting on the railroad any cane for the central. An interpretation of the clause in question leading to such a result is untenable. For the foregoing, we are of the opinion that the trial court erred in finding that the appellant could not transport on its railroad passing through the haciendas of the appellees, where it has an easement of way established in its favor, the cane grown in the haciendas of the producers of Cadiz, Occidental Negros, to be milled in the central of the appellant. And, therefore, the judgment appealed from must be reversed and the appellant absolved, as it is hereby absolved, from the complaint, without special pronouncement as to costs. So ordered. [G.R. No. 171072. April 7, 2009.] GOLDCREST REALTY CORPORATION, petitioner, vs. CYPRESS GARDENS CONDOMINIUM CORPORATION, respondent. DECISION QUISUMBING, J p: For review on certiorari are the Decision 1 dated September 29, 2005 and the Resolution 2 dated January 16, 2006 of the Court of Appeals in CA G.R. SP No. 79924. caHIAS The antecedent facts in this case are as follows: Petitioner Goldcrest Realty Corporation (Goldcrest) is the developer of Cypress Gardens, a ten-storey building located at Herrera Street, Legaspi Village, Makati City. On April 26, 1977, Goldcrest executed a Master Deed and Declaration of Restrictions 3 which constituted Cypress Gardens into a condominium project and incorporated respondent Cypress Gardens Condominium Corporation (Cypress) to manage the condominium project and to hold title to all the common areas. Title to the land on which the condominium stands was transferred to Cypress under Transfer Certificate of Title No. S-67513. But Goldcrest retained ownership of the two-level penthouse unit on the ninth and tenth floors of the condominium registered under Condominium Certificate of Title (CCT) No. S-1079 of the Register of Deeds of Makati City. Goldcrest and its directors, officers, and assigns likewise controlled the management and administration of the Condominium until 1995. Following the turnover of the administration and management of the Condominium to the board of directors of Cypress in 1995, it was discovered that certain common areas pertaining to Cypress were being occupied and encroached upon by Goldcrest. Thus, in 1998, Cypress filed a complaint with damages against Goldcrest before the Housing and Land Use Regulatory Board (HLURB), seeking to compel the latter to vacate the common areas it allegedly encroached on and to remove the structures it built thereon. Cypress sought to remove the door erected by Goldcrest along the stairway between the 8th and 9th floors, as well as the door built in front of the 9th floor elevator lobby, and the removal of the cyclone wire fence on the roof deck. Cypress likewise prayed that Goldcrest pay damages for its occupation of the said areas and for its refusal to remove the questioned structures.

For its part, Goldcrest averred that it was granted the exclusive use of the roof deck's limited common area by Section 4 (c) 4 of the condominium's Master Deed. It likewise argued that it constructed the contested doors for privacy and security purposes, and that, nonetheless, the common areas occupied by it are unusable and inaccessible to other condominium unit owners. Upon the directive of HLURB Arbiter San Vicente, two ocular inspections 5 were conducted on the condominium project. During the first inspection, it was found that Goldcrest enclosed and used the common area fronting the two elevators on the ninth floor as a storage room. It was likewise discovered that Goldcrest constructed a permanent structure which encroached 68.01 square meters of the roof deck's common area. 6 During the second inspection, it was noted that Goldcrest failed to secure an alteration approval for the said permanent structure. In his Decision 7 dated December 2, 1999, Arbiter San Vicente ruled in favor of Cypress. He required Goldcrest, among other things, to: (1) remove the questioned structures, including all other structures which inhibit the free ingress to and egress from the condominium's limited and unlimited common areas; (2) vacate the roof deck's common areas and to pay actual damages for occupying the same; and (3) pay an administrative fine for constructing a second penthouse and for making an unauthorized alteration of the condominium plan. On review, the HLURB Special Division modified the decision of Arbiter San Vicente. It deleted the award for actual damages after finding that the encroached areas were not actually measured and that there was no evidentiary basis for the rate of compensation fixed by Arbiter San Vicente. It likewise held that Cypress has no cause of action regarding the use of the roof deck's limited common area because only Goldcrest has the right to use the same. The dispositive portion of the decision reads: WHEREFORE, in view of the foregoing, the decision of the office [is] modified as follows: 1.Directing respondent to immediately remove any or all structures which obstruct the use of the stairway from the eighth to tenth floor, the passage and use of the lobbies at the ninth and tenth floors of the Cypress Gardens Condominium; and to remove any or all structures that impede the use of the unlimited common areas. 2.Ordering the respondent to pay an administrative fine of P10,000.00 for its addition of a second penthouse and/or unauthorized alteration of the condominium plan. All other claims are hereby dismissed. SO ORDERED. 8 Aggrieved, Cypress appealed to the Office of the President. It questioned the deletion of the award for actual damages and argued that the HLURB Special Division in effect ruled that Goldcrest could erect structures on the roof deck's limited common area and lease the same to third persons. TaDSCA

The Office of the President dismissed the appeal. It ruled that the deletion of the award for actual damages was proper because the exact area encroached by Goldcrest was not determined. It likewise held that, contrary to the submissions of Cypress, the assailed decision did not favor the building of structures on either the condominium's limited or unlimited common areas. The Office of the President stressed that the decision did not only order Goldcrest to remove the structures impeding the use of the unlimited common areas, but also fined it for making unauthorized alteration and construction of structures on the condominium's roof deck. 9 The dispositive portion of the decision reads: WHEREFORE, premises considered, the appeal of Cypress Gardens Corporation is hereby DISMISSED and the decision of the Board a quo dated May 11, 2000 is hereby AFFIRMED. SO ORDERED. 10 Cypress thereafter elevated the matter to the Court of Appeals, which partly granted its appeal. The appellate court noted that the right of Goldcrest under Section 4 (c) of the Master Deed for the exclusive use of the easement covering the portion of the roof deck appurtenant to the penthouse did not include the unrestricted right to build structures thereon or to lease such area to third persons. Thus the appellate court ordered the removal of the permanent structures constructed on the limited common area of the roof deck. The dispositive portion of the decision reads: WHEREFORE, the petition is PARTIALLY GRANTED. The Decision of the Office of the President dated June 2, 2003 is hereby AFFIRMED with modification. Respondent Goldcrest Realty Corporation is further directed to remove the permanent structures constructed on the limited common area of the roof deck. SO ORDERED. 11 The parties separately moved for partial reconsideration but both motions were denied. Hence this petition, raising the following issues: I. [WHETHER OR NOT] THE APPELLATE COURT ERRED IN RULING THAT GOLDCREST BUILT AN OFFICE STRUCTURE ON A SUPPOSED ENCROACHED AREA IN THE OPEN SPACE OF THE ROOF DECK. II. [WHETHER OR NOT] THE APPELLATE COURT ERRED IN RULING THAT PETITIONER IMPAIRED THE EASEMENT ON THE PORTION OF THE ROOF DECK DESIGNATED AS A LIMITED COMMON AREA. 12 Anent the first issue, Goldcrest contends that since the areas it allegedly encroached upon were not actually measured during the previous ocular inspections, the finding of the Court of Appeals that it built an office structure on the roof deck's limited common area is

erroneous and that its directive "to remove the permanent structures 13 constructed on the limited common area of the roof deck" is impossible to implement. On the other hand, Cypress counters that the Court of Appeals' finding is correct. It also argues that the absence of such measurement does not make the assailed directive impossible to implement because the roof deck's limited common area is specifically identified by Section 4 (c) of the Master Deed, which reads: Section 4.The Limited Common Areas. Certain parts of the common areas are to be set aside and reserved for the exclusive use of certain units and each unit shall have appurtenant thereto as exclusive easement for the use of such limited areas: xxx xxx xxx (c)Exclusive use of the portion of the roof deck (not shaded red in sheet 10 of Annex "B") by the Penthouse unit on the roof deck. 14 xxx xxx xxx We rule in favor of Cypress. At this stage of the proceedings, the failure to measure the supposed encroached areas is no longer relevant because the award for actual damages is no longer in issue. Moreover, a perusal of the records shows that the finding of the Court of Appeals that Goldcrest built an office structure on the roof deck's limited common area is supported by substantial evidence and established facts, to wit: (1) the ocular inspection reports submitted by HLURB Inspector Edwin D. Aquino; (2) the fact that the second ocular inspection of the roof deck was intended to measure the actual area encroached upon by Goldcrest; 15 (3) the fact that Goldcrest had been fined for building a structure on the limited common area; 16 and (4) the fact that Goldcrest neither denied the structure's existence nor its encroachment on the roof deck's limited common area. HEITAD Likewise, there is no merit in Goldcrest's submission that the failure to conduct an actual measurement on the roof deck's encroached areas makes the assailed directive of the Court of Appeals impossible to implement. As aptly pointed out by Cypress, the limited common area of the roof deck is specifically identified by Section 4 (c) of the Master Deed. Anent the second issue, Goldcrest essentially contends that since the roof deck's common limited area is for its exclusive use, building structures thereon and leasing the same to third persons do not impair the subject easement.

For its part, Cypress insists the said acts impair the subject easement because the same are already beyond the contemplation of the easement granted to Goldcrest. The question of whether a certain act impairs an easement is undeniably one of fact, considering that its resolution requires us to determine the act's propriety in relation to the character and purpose of the subject easement. 17 In this case, we find no cogent reason to overturn the similar finding of the HLURB, the Office of the President and the Court of

Appeals that Goldcrest has no right to erect an office structure on the limited common area despite its exclusive right to use the same. We note that not only did Goldcrest's act impair the easement, it also illegally altered the condominium plan, in violation of Section 22 18 of Presidential Decree No. 957. 19 The owner of the dominant estate cannot violate any of the following prescribed restrictions on its rights on the servient estate, to wit: (1) it can only exercise rights necessary for the use of the easement; 20 (2) it cannot use the easement except for the benefit of the immovable originally contemplated; 21 (3) it cannot exercise the easement in any other manner than that previously established; 22 (4) it cannot construct anything on it which is not necessary for the use and preservation of the easement; 23 (5) it cannot alter or make the easement more burdensome; 24 (6) it must notify the servient estate owner of its intention to make necessary works on the servient estate; 25 and (7) it should choose the most convenient time and manner to build said works so as to cause the least convenience to the owner of the servient estate. 26 Any violation of the above constitutes impairment of the easement. Here, a careful scrutiny of Goldcrest's acts shows that it breached a number of the aforementioned restrictions. First, it is obvious that the construction and the lease of the office structure were neither necessary for the use or preservation of the roof deck's limited area. Second, the weight of the office structure increased the strain on the condominium's foundation and on the roof deck's common limited area, making the easement more burdensome and adding unnecessary safety risk to all the condominium unit owners. Lastly, the construction of the said office structure clearly went beyond the intendment of the easement since it illegally altered the approved condominium project plan and violated Section 4 27 of the condominium's Declaration of Restrictions. 28 WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated September 29, 2005 of the Court of Appeals in CA G.R. SP. No. 79924 is hereby AFFIRMED. Costs against the petitioner. SO ORDERED.

Modes of extinguishment of easement Cases: [G.R. No. 90596. April 8, 1991.] SOLID MANILA CORPORATION, petitioner, vs. BIO HONG TRADING CO., INC. and COURT OF APPEALS, respondents. Balgos & Perez for petitioner. Alfredo G. de Guzman for private respondent. SYLLABUS

1.CIVIL LAW; PROPERTY; OWNERSHIP AND ITS MODIFICATIONS; EASEMENTS OR SERVITUDES; NATURE, CONSTRUED. Servitudes are merely accessories to the tenements of which they form part. Although they are possessed of a separate juridical existence, as mere accessories, they can not, however, be alienated from the tenement, or mortgaged separately. 2.ID.; ID.; ID.; A LIMITATION ON THE RIGHT OF THE OWNER TO USE. An easement operates as a limitation on the title of the owner of the servient estate, specifically, his right to use ( jus utendi). 3.ID.; ID.; ID.; MODES OF EXTINGUISHMENT; MERGER, DEFINED. A merger exists when ownership of the dominant and servient estates is consolidated in the same person. Merger then, as can be seen, requires full ownership of both estates. 4.ID.; ID.; ID.; PERSONAL SERVITUDE; CONSTRUED. A personal servitude, is one constituted not in favor of a particular tenement (a real servitude) but rather, for the benefit of the general public. In a personal servitude, there is therefore no "owner of a dominant tenement" to speak of, and the easement pertains to persons without a dominant estate, in this case, the public at large. 5.REMEDIAL LAW; ACTIONS; SUMMARY JUDGMENT; WHEN PROPER. Summary judgments under Rule 34 of the Rules of Court are proper where there is no genuine issue as to the existence of a material fact, and the facts appear undisputed based on the pleadings, depositions, admissions, and affidavits of record. 6.ID.; ID.; ID.; PURPOSE. Summary judgments are meant to rid a proceeding of the ritual of a trial where, from existing records, the facts have been established, and trial would be futile. 7.ID.; ID.; LAW OF THE CASE; CONSTRUED. "Law of the case" has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. (21 C.J.S. 330) 8.ID.; ID.; FORUM SHOPPING. There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another. The principle applies not only with respect to suits filed in the courts but also in connection with litigations commenced in the courts while an administrative proceeding is pending. DECISION SARMIENTO, J p: This is an appeal filed by way of a petition for review on certiorari under Rule 45 of the Rules of Court.

The petitioner raises two questions: (1) whether or not the Court of Appeals 1 erred in reversing the trial court which had rendered summary judgment; and (2) whether or not it erred in holding that an easement had been extinguished by merger. We rule for the petitioner on both counts. It appears that the petitioner is the owner of a parcel of land located in Ermita, Manila, covered by Transfer Certificate of Title No. 157750 of the Register of Deeds of Manila. The same lies in the vicinity of another parcel, registered in the name of the private respondent corporation under Transfer Certificate of Title No. 128784. The private respondent's title came from a prior owner, and in their deed of sale, the parties thereto reserved as an easement of way: . . . a portion thereof measuring NINE HUNDRED FOURTEEN SQUARE METERS, more or less, had been converted into a private alley for the benefit of neighboring estates, this being duly annotated at the back of the covering Transfer Certificate of Title per regulations of the Office of the City Engineer of Manila and that the three meterwide portion of said parcel along the Pasig River, with an area of ONE HUNDRED SEVENTY NINE (179) SQUARE METERS, more or less, had actually been expropriated by the City Government, and developed pursuant to the beautification drive of the Metro Manila Governor. (p. 3, Record). 2 As a consequence, an annotation was entered in the private respondent's title, as follows: Entry No. 7712/T-5000 CONSTRUCTION OF PRIVATE ALLEY It is hereby made of record that a construction of private alley has been undertaken on the lot covered by this title from Concepcion Street to the interior of the aforesaid property with the plan and specification duly approved by the City Engineer subject to the following conditions to wit: (1) That the private alley shall be at least three (3) meters in width; (2) That the alley shall not be closed so long as there's a building exists thereon (sic); (3) That the alley shall be open to the sky; (4) That the owner of the lot on which this private alley has been constituted shall construct the said alley and provide same with concrete canals as per specification of the City Engineer; (5) That the maintenance and upkeep of the alley shall be at the expense of the registered owner; (6) That the alley shall remain open at all times, and no obstructions whatsoever shall be placed thereon; (7) That the owner of the lot on which the alley has been constructed shall allow the public to use the same, and allow the City to lay pipes for sewer and drainage purposes, and shall not act (sic) for any indemnity for the use thereof; and (8) That he shall impose upon the vendee or new owner of the property the conditions abovementioned; other conditions set forth in Doc. No. 4236, Page No. 11, Book No. 84 of Nicasio P. Misa, Not. Pub. of Manila. 3 The petitioner claims that ever since, it had (as well as other residents of neighboring estates) made use of the above private alley and maintained and contributed to its upkeep, until sometime in 1983, when, and over its protests, the private respondent constructed steel gates that precluded unhampered use.

On December 6, 1984, the petitioner commenced suit for injunction against the private respondent, to have the gates removed and to allow full access to the easement. prLL The court a quo shortly issued ex parte an order directing the private respondent to open the gates. Subsequently, the latter moved to have the order lifted, on the grounds that: (1) the easement referred to has been extinguished by merger in the same person of the dominant and servient estates upon the purchase of the property from its former owner; (2) the petitioner has another adequate outlet; (3) the petitioner has not paid any indemnity therefor; and (4) the petitioner has not shown that the right-of-way lies at the point least prejudicial to the servient estate. The private respondent's opposition notwithstanding, the trial court issued a "temporary writ of preliminary injunction to continue up to the final termination of the case upon its merits upon the posting of a P5,000.00 bond by the plaintiff" 4 (the petitioner herein). Thereafter, the respondent corporation answered and reiterated its above defenses. On April 15, 1986, the petitioner moved for summary judgment and the court a quo ruled on the same as follows: In view of the foregoing, this Court finds it unnecessary to try this case on the merit (sic) and hereby resolve (sic) to grant the plaintiff's motion for summary judgment. (pp. 15-107, Record). 5 On January 19, 1987, the trial court rendered judgment against the private respondent, the dispositive portion of which states: WHEREFORE, judgment is hereby rendered making permanent the temporary mandatory injunction, that had been issued against the defendant, and for the defendant to pay the plaintiff the costs of this suit. The defendant's counterclaim against the plaintiff is hereby dismissed, for lack of merit. (Summary Judgment, p. 6). 6 The private respondent appealed to the respondent Court of Appeals. Meanwhile, the private respondent itself went to the Regional Trial Court on a petition for the cancellation of the annotation in question. The court granted cancellation, for which the petitioner instituted CA-G.R. SP No. 13421 of the respondent Court of Appeals which ordered the restoration of the annotation "without prejudice [to] the final outcome of" 7 the private respondent's own appeal (subject of this petition). In reversing the trial court which had, as earlier mentioned, rendered summary judgment, the respondent Court of Appeals held that the summary judgment was improper and that the lower court erroneously ignored the defense set up by the private respondent that the easement in question had been extinguished. According to the Appellate Court, an easement is a mere limitation on ownership and that it does not impair the private

respondent's title, and that since the private respondent had acquired title to the property, "merger" brought about an extinguishment of the easement. The petitioner submits that the respondent Court of Appeals erred, because the very deed of sale executed between the private respondent and the previous owner of the property "excluded" the alley in question, and that in any event, the intent of the parties was to retain the "alley" as an easement notwithstanding the sale. LLpr As already stated at the outset, the Court finds merit in the petition. There is no question that an easement, as described in the deed of sale executed between the private respondent and the seller, had been constituted on the private respondent's property, and has been in fact annotated at the back of Transfer Certificate of Title No. 128784. Specifically, the same charged the private respondent as follows: "(6) That the alley shall remain open at all times, and no obstructions whatsoever shall be placed thereon; (7) That the owner of the lot on which the alley has been constructed shall allow the public to use the same, and allow the City to lay pipes for sewer and drainage purposes, and shall not [ask] for any indemnity for the use thereof . . . " 8 Its act, therefore, of erecting steel gates across the alley was in defiance of these conditions and a violation of the deed of sale, and, of course, the servitude of way.

The Court then is of the opinion that injunction was and is proper and in denying injunctive relief on appeal, the respondent Appellate Court committed an error of judgment and law. It is hardly the point, as the Court of Appeals held, that the private respondent is the owner of the portion on which the right-of-way had been established and that an easement can not impair ownership. The petitioner is not claiming the easement or any part of the property as its own, but rather, it is seeking to have the private respondent respect the easement already existing thereon. The petitioner is moreover agreed that the private respondent has ownership, but that nonetheless, it has failed to observe the limitation or encumbrance imposed on the same. There is therefore no question as to ownership. The question is whether or not an easement exists on the property, and as we indicated, we are convinced that an easement exists. It is true that the sale did include the alley. On this score, the Court rejects the petitioner's contention that the deed of sale "excluded" it, because as a mere right-of-way, it can not be separated from the tenement and maintain an independent existence. Thus: Art. 617.Easements are inseparable from the estate to which they actively or passively belong. 9 Servitudes are merely accessories to the tenements of which they form part. 10 Although they are possessed of a separate juridical existence, as mere accessories, they can not, however, be alienated 12

The fact, however, that the alley in question, as an easement, is inseparable from the main lot is no argument to defeat the petitioner's claims, because as an easement precisely, it operates as a limitation on the title of the owner of the servient estate, specifically, his right to use ( jus utendi). As the petitioner indeed hastens to point out, the deed itself stipulated that "a portion thereof [of the tenement] measuring NINE HUNDRED FOURTEEN SQUARE METERS, more or less, had been converted into a private alley for the benefit of the neighboring estates . . ." 13 and precisely, the former owner, in conveying the property, gave the private owner a discount on account of the easement, thus: WHEREAS, to compensate for the foregoing, the parties hereto agreed to adjust the purchase price from THREE MILLION SEVEN HUNDRED NINETY THOUSAND FOUR HUNDRED FORTY PESOS (P3,790,440.) to THREE MILLION FIVE HUNDRED THREE THOUSAND TWO HUNDRED FORTY PESOS (P3,503,240.00) 14 Hence, and so we reiterate, albeit the private respondent did acquire ownership over the propertyincluding the disputed alley as a result of the conveyance, it did not acquire the right to close that alley or otherwise put up obstructions thereon and thus prevent the public from using it, because as a servitude, the alley is supposed to be open to the public. The Court is furthermore of the opinion, contrary to that of the Court of Appeals, that no genuine merger took place as a consequence of the sale in favor of the private respondent corporation. According to the Civil Code, a merger exists when ownership of the dominant and servient estates is consolidated in the same person. 15 Merger then, as can be seen, requires full ownership of both estates. One thing ought to be noted here, however. The servitude in question is a personal servitude, that is to say, one constituted not in favor of a particular tenement (a real servitude) but rather, for the benefit of the general public. Personal servitudes are referred to in the following article of the Civil Code: Art. 614.Servitudes may also be established for the benefit of a community, or of one or more persons to whom the encumbered estate does not belong. 16 In a personal servitude, there is therefore no "owner of a dominant tenement" to speak of, and the easement pertains to persons without a dominant estate, 17 in this case, the public at large. Merger, as we said, presupposes the existence of a prior servient-dominant owner relationship, and the termination of that relation leaves the easement of no use. Unless the owner conveys the property in favor of the public if that is possible no genuine merger can take place that would terminate a personal easement. prLL For this reason, the trial court was not in error in rendering summary judgment, and insofar as the respondent Court of Appeals held that it (the trial court) was in error, the Court of Appeals is in error.

Summary judgments under Rule 34 of the Rules of Court are proper where there is no genuine issue as to the existence of a material fact, and the facts appear undisputed based on the pleadings, depositions, admissions, and affidavits of record. 18 In one case, this Court upheld a decision of the trial court rendered by summary judgment on a claim for money to which the defendant interposed the defense of payment but which failed to produce receipts. 19 We held that under the circumstances, the defense was not genuine but rather, sham, and which justified a summary judgment. In another case, we rejected the claim of acquisitive prescription over registered property and found it likewise to be sham, and sustained consequently, a summary judgment rendered because the title challenged was covered by a Torrens Certificate and under the law, Torrens titles are imprescriptible. 20 We also denied reconveyance in one case and approved a summary judgment rendered thereon, on the ground that from the records, the plaintiffs were clearly guilty of laches having failed to act until after twenty-seven years. 21 We likewise allowed summary judgment and rejected contentions of economic hardship as an excuse for avoiding payment under a contract for the reason that the contract imposed liability under any and all conditions. 22 In the case at bar, the defense of merger is, clearly, not a valid defense, indeed, a sham one, because as we said, merger is not possible, and secondly, the sale unequivocally preserved the existing easement. In other words, the answer does not, in reality, tender any genuine issue on a material fact and can not militate against the petitioner's clear cause of action. As this Court has held, summary judgments are meant to rid a proceeding of the ritual of a trial where, from existing records, 23 the facts have been established, and trial would be futile. What indeed, argues against the posturing of the private respondent and consequently, the challenged holding of the respondent Court of Appeals as well is the fact that the Court of Appeals itself had rendered judgment, in its CA-G.R. No. 13421, entitled Solid Manila Corporation v. Ysrael, in which it nullified the cancellation of the easement annotated at the back of the private respondent's certificate of title ordered by Judge Ysrael in LRC Case No. 273. As the petitioner now in fact insists, the Court of Appeals' judgment, which was affirmed by this Court in its Resolution dated December 14, 1988, in G.R. No. 83540, is at least, the law of the case between the parties, as "law of the case" is known in law, e.g.: xxx xxx xxx "Law of the case" has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule of decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. (21 C.J.S. 330). It may be stated as a rule of general application that, where the evidence on a second or succeeding appeal is substantially the same as that on the first or preceding appeal, all matters, questions, points, or issues adjudicated on the prior appeal are the law of the case

on all subsequent appeals and will not be considered or readjudicated therein. (5 C.J.S. 1267). In accordance with the general rule stated in Section 1821, where, after a definite determination, the court has remanded the cause for further action below, it will refuse to examine question other than those arising subsequently to such determination and remand, or other than the propriety of the compliance with its mandate; and if the court below has proceeded in substantial conformity to the directions of the appellate court, its action will not be questioned on a second appeal. As a general rule a decision on a prior appeal of the same case is held to be the law of the case whether that decision is right or wrong, the remedy of the party deeming himself aggrieved being to seek a rehearing." (5 C.J.S. 1276-77). Questions necessarily involved in the decision on a former appeal will be regarded as the law of the case on a subsequent appeal, although the questions are not expressly treated in the opinion of the court, as the presumption is that all the facts in the case bearing on the point decided have received due consideration whether all or none of them are mentioned in the opinion. (5 C.J.S. 1286-87). 24 CA-G.R. No. 13421 is the law of the case because clearly, it was brought to determine the rights of the parties regarding the easement, subject of the controversy in this case, although as a petition for "cancellation of annotation" it may have, at a glance, suggested a different cause of action. And for reasons of fair play, the private respondent can not validly reject CA-G.R. No. 13421 as the law of the case, after all, it was the one that initiated the cancellation proceedings with the Regional Trial Court in LRC No. 273 that precipitated that appeal. In the second place, the proceedings for cancellation of annotation was in fact meant to preempt the injunction decreed by the lower court in this case. Plainly and simply, the private respondent is guilty of forum-shopping, as we have described the term: xxx xxx xxx

There is forum-shopping whenever, as a result of an adverse opinion in one forum, a party seeks a favorable opinion (other than by appeal or certiorari) in another. The principle applies not only with respect to suits filed in the courts but also in connection with litigations commenced in the courts while an administrative proceeding is pending, as in this case, in order to defeat administrative processes and in anticipation of an unfavorable administrative ruling and a favorable court ruling. This is specially so, as in this case, where the court in which the second suit was brought, has no jurisdiction. 25 to which contempt is a penalty. 26

As it happened, in its effort to shop for a friendly forum, the private respondent found an unfriendly court and it can not be made to profit from its act of malpractice by permitting it to downgrade its finality and deny its applicability as the law of the case. As a personal servitude, the right-of-way in question was established by the will of the owner. In the interesting case of North Negros Sugar Co., Inc. v. Hidalgo, 27 this Court, speaking through Justice Claro Recto, declared that a personal servitude (also a right of way in that case) is established by the mere "act" 28 of the landowner, and is not "contractual in the nature," 29 and a third party (as the petitioner herein is a third party) has the personality to claim its benefits. In his separate opinion, however, Justice Jose Laurel maintained that a personal or voluntary servitude does require a contract and that "[t]he act of the plaintiff in opening the private way here involved did not constitute an offer .." 30 and "[t]here being no offer, there could be no acceptance; hence no contract." 31 The Court sees no need to relive the animated exchanges between two legal titans (they would contend even more spiritedly in the "larger" world of politics) to whom present scholars perhaps owe their erudition and who, because of the paths they have taken, have shaped history itself; after all, and coming back to the case at bar, it is not disputed that an easement has been constituted, whereas it was disputed in North Negros' case. Rather, the question is whether it is still existing or whether it has been extinguished. As we held, our findings is that it is in existence and as a consequence, the private respondent can not bar the public, by erecting an obstruction on the alley, from its use. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is SET ASIDE and the decision of the Regional Trial Court is hereby REINSTATED. The petitioner and its counsel are hereby required to SHOW CAUSE why they should not be punished for contempt of court, and also administratively dealt with in the case of counsel, for forum shopping. IT IS SO ORDERED. Legal easements Easements relating to waters Easements of right of way, requisites of Cases: [G.R. No. 130845. November 27, 2000.] BRYAN U. VILLANUEVA, petitioner, vs. HON. TIRSO D.C. VELASCO in his capacity as Presiding Judge of the Regional Trial Court of Quezon City, Branch 88, JULIO N. SEBASTIAN and SHIRLEY LORILLA, respondents. The Law Firm of Chan Robles & Associates for petitioner. Pedro I. Rodriguez for private respondents.

SYNOPSIS Petitioner Villanueva is the registered owner of a parcel of land previously owned by spouses Gabriel. When Villanueva bought the land, there was a small house on the southeastern portion, occupying one meter of the two-meter wide easement of right of way the Gabriel spouses granted to the Espinolas, predecessors-in-interest of private respondent. Unknown to Villanueva, even before he bought the land, there was already a final and executory decision enforcing the right to easement where the small house encroaching the same was ordered demolished by Judge Velasco. The easement in the case at bar is both voluntary and legal easement. The settled rule is that the needs of the dominant estate determine the width of the easement. Hence, petitioner ought to demolish the small house on the easement obstructing the entry of private respondents' cement mixer and motor vehicle. And even if the easement was not annotated in the title of the land and the notice of lis pendens was not recorded with the Register of Deeds, in legal easement, the servient estate is bound to provide the dominant estate ingress from and egress to the public highway. Further, the decision enforcing the right of easement against the previous owner, is conclusive and binding upon the successorin-interest. SYLLABUS 1.CIVIL LAW; PROPERTY; EASEMENTS; KINDS; LEGAL EASEMENT; ELUCIDATED. [A] legal easement is one mandated by law, constituted for public use or for private interest, and becomes a continuing property right. As a compulsory easement, it is inseparable from the estate to which it belongs, as provided for in said Article 617 of the Civil Code. The essential requisites for an easement to be compulsory are: (1) the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway; (2) proper indemnity. has been paid; (3) the isolation was not due to acts of the proprietor of the dominant estate; (4) the right of way claimed is at a point least prejudicial to the servient estate; and (5) to the extent consistent with the foregoing rule, where the distance from the dominant estate to a public highway may be the shortest. DAESTI 2.ID.; ID.; ID.; THE NEEDS OF THE DOMINANT ESTATE DETERMINE THE WIDTH OF THE EASEMENT. [T]he small house occupying one meter of the two-meter wide easement obstructs the entry of private respondents' cement mixer and motor vehicle. One meter is insufficient for the needs of private respondents. It is well-settled that the needs of the dominant estate determine the width of the easement. Conformably then, petitioner ought to demolish whatever edifice obstructs the easement in view of the needs of private respondents' estate. 3.ID.; ID.; ID.; LEGAL EASEMENT BINDING EVEN IF NOT ANNOTATED IN THE TITLE AND NOTICE OF LIS PENDENS OF CASE ENFORCING THE SAME NOT RECORDED. Petitioner's second proposition, that he is not bound by the contract of easement because the same was not annotated in the title and that a notice of lis pendens of the complaint to enforce the easement was not recorded with the Register of Deeds, is obviously unmeritorious . . . it is in the nature of legal easement that the servient estate (of petitioner) is legally bound to

provide the dominant estate (of private respondents in this case) ingress from and egress to the public highway. 4.REMEDIAL LAW; CIVIL PROCEDURE; EFFECT OF JUDGMENTS; DECISION IN A CASE BINDING TO THE PARTIES AND SUCCESSOR-IN-INTEREST AFTER CASE COMMENCED. Petitioner's last argument that he was not a party to Civil Case No. Q-91-8703 and that he had not been given his day: in court, is also without merit [in view of] Rule 39, Sec. 47, of the Revised Rules of Court. . . . [A] decision in a case is conclusive and binding upon the parties to said case and those who are their successor in interest by title after said case has been commenced or filed in court. In this case, private respondents. . . initiated; Civil Case No. Q91-8703 on May 8,1991, against the original owners. . . . Title in the name of petitioner was entered in the Register of Deeds on March 24, 1995, after he bought the property from the bank which had acquired it from the Gabriels. Hence, the decision in Civil Case No. Q-918703 binds petitioner. For, although not a party to the suit, he is a successor-in-interest by title subsequent to the commencement of the action in court. DECISION QUISUMBING, J p: This petition for certiorari assails (1) the decision 1 dated December 27, 1996 of the Court of Appeals in CA-G.R. SP No. 39166, dismissing petitioner's petition for review under Rule 65 with prayer for the issuance of a cease and desist order and/or temporary restraining order, and (2) the resolution 2 dated August 14, 1997 denying the subsequent motion for reconsideration. Petitioner Bryan Villanueva is the registered owner of the parcel of land covered by Transfer Certificate of Title No. 127862 of the Register of Deeds of Quezon City. He bought it from Pacific Banking Corporation, the mortgagee of said property. The bank had acquired it from the spouses Maximo and Justina Gabriel at a public auction on March 19, 1983. When petitioner bought the parcel of land there was a small house on its southeastern portion. It occupied one meter of the two-meter wide easement of right of way the Gabriel spouses granted to the Espinolas, predecessors-in-interest of private respondents, in a Contract of Easement of Right of Way. The pertinent portion of the contract dated November 28, 1979, states: . . . in order to have an access to and from their aforementioned land where their houses are constructed and to have an outlet to Tandang Sora Ave. which is the nearest public road and the least burdensome to the servient estate and to third persons, it would be necessary for them to pass through spouses MAXIMO GABRIEL and JUSTINA CAPUNO's land and for this purpose, a path or passageway of not less than two (2) meters wide of said spouses' property is necessary for the use of ROMEO, RODOLFO, NENITA and AURORA ESPINOLA and for all their needs in entering their property. xxx xxx xxx WHEREFORE, in view of the fact that the property of the ESPINOLA had been bought by them from MAXIMO CAPUNO, father of MAXIMO GABRIEL, spouses MAXIMO GABRIEL and

JUSTINA CAPUNO hereby agree and permit RODOLFO, ROMEO, NENITA and AURORA ESPINOLA and their families to have a permanent easement of right of way over the aforementioned property of said spouses limited to not more than two meters wide, throughout the whole length of the southeast side of said property and as specifically indicated in the attached plan which is made an integral part of this Contract as Annex "A"; This Agreement shall be binding between the parties and upon their heirs, successors, assigns, without prejudice in cases of sale of subject property that will warrant the circumstances. 3 Unknown to petitioner, even before he bought the land, the Gabriels had constructed the aforementioned small house that encroached upon the two-meter easement. Petitioner was also unaware that private respondents, Julio Sebastian and Shirley Lorilla, had filed on May 8, 1991, Civil Case No. Q-91-8703, for easement, damages and with prayer for a writ of preliminary injunction and/or restraining order against the spouses Gabriel. 4 As successorsin-interest, Sebastian and Lorilla wanted to enforce the contract of easement. On May 15, 1991, the trial court issued a temporary restraining order. On August 13, 1991, it issued a writ of preliminary mandatory injunction ordering the Gabriels to provide the right of way and to demolish the small house encroaching on the easement. On August 15, 1991, the Gabriels filed a motion for reconsideration which was also denied. Thus, they filed a petition for certiorari before the Court of Appeals. On March 26, 1992, the Eighth Division of the Court of Appeals dismissed the petition and upheld the RTC's issuances. The decision became final and executory on July 31, 1992. 5 On January 5, 1995, Judge Tirso Velasco of the RTC in Quezon City, Branch 88, issued an Alias Writ of Demolition. On June 20, 1995, the sheriff tried to demolish the small house pursuant to the writ. Petitioner filed a Third Party Claim with Prayer to Quash Alias Writ of Demolition. He maintains that the writ of demolition could not apply to his property since he was not a party to the civil case. His Third Party Claim with prayer to quash the writ of demolition was denied for lack of merit on August 16, 1995. 6 The motion for reconsideration as well as the Supplemental Motion for Reconsideration dated September 12, 1995 were denied on October 19, 1995. 7 Petitioner, thereafter, filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 39166, asserting that the existence of the easement of right of way was not annotated in his title and that he was not a party to Civil Case No. Q-91-8703, hence the contract of easement executed by the Gabriels in favor of the Espinolas could not be enforced against him. The Court of Appeals dismissed the petition for lack of merit and denied the reconsideration, disposing thus: WHEREFORE, the instant petition is hereby dismissed by this court for lack of merit. No costs considering the failure of private respondents to file their comment, despite notice. 8 Hence, this instant petition.

Petitioner now avers that the appellate court erred in declaring, (1)THAT FOLLOWING THE ESSENCE OF INHERENCE AND INTRANSMISSIBILITY OF AN EASEMENT, A RIGHT OF WAY CAN EXIST EVEN IF THEY ARE NOT EXPRESSLY STATED OR ANNOTATED ON THE TORRENS TITLE;

(2)THAT PETITIONER, AS PROSPECTIVE BUYER, SHOULD HAVE EXERCISED ORDINARY PRUDENCE BY TAKING THE INITIATIVE TO DETERMINE THAT AN EASEMENT HAS BEEN CONSTITUTED ON THE PROPERTY HE INTENDS TO BUY; AND, (3)THAT IN AS MUCH AS THE HEREIN PETITIONER IS NOT A PARTY TO CIVIL CASE NO. Q-918703, HE CANNOT BE BOUND BY ANY JUDGMENT OR ORDER RENDERED THEREIN. 9 Primarily, the issue is whether the easement on the property binds petitioner. Petitioner argues it could not be enforced against him. First, he says that a right of way cannot exist when it is not expressly stated or annotated on the Torrens title. According to him, even if an easement is inherent and inseparable from the estate to which it actively belongs as provided in Art. 617 of the Civil Code, 10 the same is extinguished when the servient estate is registered and the easement was not annotated in said title conformably with Section 39 of the Land Registration Law. Second, petitioner points out that the trial court erred when it faulted him for relying solely on the clean title of the property he bought, as it is well-settled that a person dealing with registered land is not required to go beyond what is recorded in the title. He adds that it is private respondents who should have made sure their right of way was safeguarded by having the same annotated on the title with the Register of Deeds. He adds that Section 76 of P.D. No. 1529 11 also requires that when a case is commenced involving any right to registered land under the Land Registration Law (now the Property Registration Decree), any decision on it will only be effectual between or among the parties thereto, unless a notice of lis pendens of such action is filed and registered in the registry office where the land is recorded. There was no such annotation in the title of the disputed land, according to petitioner. Lastly, since he was not a party to Civil Case No. Q-91-8703, petitioner argues that he cannot be bound by the writ of demolition and be forcibly divested of a portion of his land without having his day in court. STcADa Private respondents Sebastian and Lorilla, for their part, adopted the disquisition of the appellate court as their Comment and asked for the dismissal of the petition and P100,000.00 in damages. In its decision the appellate court, citing the decision of the lower court, stressed that unlike other types of encumbrance of real property, a servitude like a right of way can exist even if they are not expressly stated or annotated as an encumbrance in a Torrens title because servitudes are inseparable from the estates to which they actively or passively belong. Moreover, Villanueva was bound by the contract of easement, not only as a voluntary easement but as a legal easement. A legal easement is mandated by law, and continues to exists unless its removal is provided for in a title of conveyance or the sign of the easement is removed before the execution of the conveyance conformably with Article 649 12 in accordance with Article 617 13 of the Civil Code.

At the outset, we note that the subject easement (right of way) originally was voluntarily constituted by agreement between the Gabriels and the Espinolas. But as correctly observed by the Court of Appeals, the easement in the instant petition is both (1) an easement by grant or a voluntary easement, and (2) an easement by necessity or a legal easement. A legal easement is one mandated by law, constituted for public use or for private interest, and becomes a continuing property right. 14 As a compulsory easement, it is inseparable from the estate to which it belongs, as provided for in said Article 617 of the Civil Code. The essential requisites for an easement to be compulsory are: (1) the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway; (2) proper indemnity has been paid; (3) the isolation was not due to acts of the proprietor of the dominant estate; (4) the right of way claimed is at a point least prejudicial to the servient estate; and (5) to the extent consistent with the foregoing rule, where the distance from the dominant estate to a public highway may be the shortest. 15 The trial court and the Court of Appeals have declared the existence of said easement (right of way). This finding of fact of both courts below is conclusive on this Court, 16 hence we see no need to further review, but only to re-affirm, this finding. The small house occupying one meter of the two-meter wide easement obstructs the entry of private respondents' cement mixer and motor vehicle. One meter is insufficient for the needs of private respondents. It is well-settled that the needs of the dominant estate determine the width of the easement. 17 Conformably then, petitioner ought to demolish whatever edifice obstructs the easement in view of the needs of private respondents' estate. Petitioner's second proposition, that he is not bound by the contract of easement because the same was not annotated in the title and that a notice of lis pendens of the complaint to enforce the easement was not recorded with the Register of Deeds, is obviously unmeritorious. As already explained, it is in the nature of legal easement that the servient estate (of petitioner) is legally bound to provide the dominant estate (of private respondents in this case) ingress from and egress to the public highway. Petitioner's last argument that he was not a party to Civil Case No. Q-91-8703 and that he had not been given his day in court, is also without merit. Rule 39, Sec. 47, of the Revised Rules of Court: SECTION 47.Effect of judgments or final orders. The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows: (a)In case of a judgment or final order against a specific thing, or in respect to the probate of a will, or the administration of the estate of a deceased person, or in respect to the personal, political, or legal condition or status of a particular person or his relationship to another, the judgment or final order is conclusive upon the title to the thing, the will or administration, or the condition, status or relationship of the person; however, the probate of a will or granting of letters of administration shall only be prima facie evidence of the death of the testator or intestate; (b)In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive

between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and (c)In any other litigation between the same parties or their successors-in-interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. (Italics supplied). Simply stated, a decision in a case is conclusive and binding upon the parties to said case and those who are their successor-in-interest by title after said case has been commenced or filed in court. 18 In this case, private respondents, Julio Sebastian and Shirley Lorilla, initiated Civil Case No. Q-91-8703 on May 8, 1991, 19 against the original owners, the spouses Maximo and Justina Gabriel. Title in the name of petitioner was entered in the Register of Deeds 20 on March 24, 1995, after he bought the property from the bank which had acquired it from the Gabriels. Hence, the decision in Civil Case No. Q-91-8703 binds petitioner. For, although not a party to the suit, he is a successor-in-interest by title subsequent to the commencement of the action in court. WHEREFORE, the instant petition is DENIED. The assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs against petitioner. SO ORDERED. [G.R. No. 75905. October 12, 1987.] REMIGIO O. RAMOS, SR., petitioner, vs. GATCHALIAN REALTY, INC., EDUARDO ASPREC, ENELDA ASPREC, ERNESTO ASPREC, and COURT OF APPEALS, respondents. DECISION GUTIERREZ, JR., J p: In this petition for review on certiorari, the petitioner assails the decision of the Court of Appeals dated August 29, 1986 which affirmed the November 14, 1984 order of the Regional Trial Court, Branch CXI at Pasay City dismissing the petitioner's civil action for a right of way with prayer for preliminary injunction. LexLib Petitioner Ramos is the owner of a house and lot containing an area of 901 square meters covered by Transfer Certificate of Title No. 14927 situated at Barrio San Dionisio, Paraaque, Metro Manila. The lot was acquired by the petitioner from Sobrina Rodriguez Lombos Subdivision. In the subdivision survey plan of Lot 4133-G, (LRC) PSD-172544, the lot is more particularly described as Lot 4133-G-11 (Exhibits 1 and 1-A"). Two road lots abut petitioner's property namely lot 4133-G-12 with an area of 2,160 square meters clearly appearing as a proposed road in the Lombos subdivision plan and Lot 4135 of the Paraaque Cadastre now known as Palanyag Road but more commonly referred to as Gatchalian Avenue. LLpr

Respondents Asprec own Lot 4135. Gatchalian Avenue is alongside Lot 4135. Respondent Gatchalian Realty was granted the road right of way and drainage along Lot 4135 to service the Gatchalian and Asprec subdivisions, by the respondent Asprecs. The records of this case disclose that on April 30, 1981, a complaint for an easement of a right of way with preliminary mandatory injunction was filed by Ramos against the private respondents. Among the allegations in the complaint are: ". . . that he (referring to the petitioner) constructed his house at 27 Gatchalian Avenue (also known as Palanyag Road), Paraaque, and has since resided therein with his family from 1977 up to the present; that during construction of the house, Gatchalian Realty, Inc. built a 7-8 feet high concrete wall right infront of appellant's premises, blocking his entrance/exit to Gatchalian Road, the nearest, most convenient and adequate entrance/exit to the public road or highway, formerly Sucat Road but now known as Dr. A. Santos Avenue, Paraaque; that this house and lot is only about 100 meters from Sucat Road passing thru Gatchalian Avenue; that prior to this, appellant and his counsel addressed separate request/demand letters (Exh. A and Annex B) to defendant company to allow him to exercise a right of way on the subject premises; that in September 1977, a meeting/conference was held between appellant and his counsel on one hand and Mr. Roberto Gatchalian and counsel on the other, during which defendant Corporation manifested its conformity to grant appellant the requested right of way upon payment of proper indemnity, with the request that appellant inform defendants Asprec of their aforesaid agreement; that consequently, appellant wrote Mr. Cleto Asprec on September 16, 1977 (Exh. D); that with the construction of the 7-8 feet concrete wall appellant and his family have been constrained to pass through the back portion of their lot bounded by other lots belonging to different owners, which is grassy and cogonal as temporary ingress/egress with great inconvenience and hardship, and this becomes all the more pronounced during the rainy season due to flood and mud (Exhs. B-1, B-1-A, B-2; B-2-A, B-3, B-3-A, B-3-B and B-4); and, lastly, that the aforesaid concrete wall is dangerously leaning towards appellant's premises posing great danger or hazard." (Court of Appeals Decision, p. 3, Rollo, p. 39). On May 20, 1981, the respondent corporation filed a motion to dismiss on grounds of lack of cause of action and bar by prior judgment alleging that the complaint was merely a reproduction of that filed on October 26, 1972 in Civil Case No. 5930-P which was dismissed on October 30, 1980 for failure to prosecute within a reasonable length of time. Respondents Asprec later joined the respondent company in its motion to dismiss and adopted the grounds and arguments stated therein. On November 20, 1981, after the petitioner had filed his opposition to the above motions, the lower court issued its order denying the motion to dismiss on the ground that the order dismissing the earlier case was not an adjudication on the merits. On November 26, 1981, the petitioner filed an urgent ex-parte motion for the issuance of a preliminary mandatory injunction as well as a preliminary prohibitory injunction. On the same day, the lower court set the motion for hearing on December 1, 1981, later reset to December 10, 1981, and ordered that:

"In the meantime, pending determination of the application or the merits and in order that the reliefs sought therein may not be rendered moot and academic, the defendants and all persons acting upon their orders are hereby temporarily enjoined from building, constructing and/or erecting a wall, fence or any enclosure adjoining or abutting plaintiff's premises and/or from restraining, preventing or prohibiting the plaintiff, his family or persons residing in his premises as well as any person/s who may have any dealing or business with them from using, passing and/or traversing the said Gatchalian Avenue in going to or returning from the plaintiff's premises and in going to or returning from Sucat Road via Gatchalian Avenue, until further orders from this Court. (Order dated November 26, 1981, Records, p. 66). On December 1, 1981, Gatchalian Realty filed its answer and averred, among others, that: xxx xxx xxx "Defendant Corporation has never entered into a verbal agreement with plaintiff to grant the latter a road right of way; xxx xxx xxx "The so-called Gatchalian Avenue or Palanyag Road is not a public road but a private street established and constructed by the defendant Corporation intended for the sole and exclusive use of its residents and lot buyers of its subdivisions, as well as of the subdivisions owned and operated by the various naked owners of the different portions constituting the entire length and breadth of said street; "If plaintiff's property referred to in the complaint is Lot No. 4133-G-11 (LRC) Psd-229001 (sic), then a grant of a right of way to plaintiff is not a legal necessity, because such lot has an existing road right of way, more particularly Lot 4133-G-12, towards Dr. Arcadio Santos Avenue (Sukat Road); xxx xxx xxx "The opening of Gatchalian Avenue to the property of plaintiff will unduly cause great prejudice to defendant Corporation as it can no longer effectively regulate the use of the said private road; . . . "Assuming, though not admitting, that plaintiff may be granted a right of way, still the reasonable compensation for such grant would be some P800,000.00, as such portion of Gatchalian Avenue consists of some 2,000 square meters of prime and valuable property which could readily command a market value of P400.00 per square meter; moreover, plaintiff still has to shoulder his proportionate share of the expenses and upkeep of such street and the real estate taxes imposed thereon." (Answer of Gatchalian Realty, Inc., Records, pp. 81-82). On December 2, 1981, respondent Asprec filed their answer which basically contained the same averments as that of the realty company.

At the hearing of the petitioner's application for issuance of a writ of preliminary injunction to compel the private respondents to remove the wall constructed right in front of the petitioner's premises barring him access to Gatchalian Avenue, both parties presented oral and documentary evidence to support their respective positions. After the hearing, the lower court issued the following order: "Plaintiff is given fifteen (15) days to file a memorandum and the defendant is given another fifteen days from receipt thereof to file a reply, after which the case shall be deemed submitted for resolution. So ordered." (TSN, December 10, 1981, p. 57) After compliance by both parties with the above order, the lower court, on July 9, 1982, rendered a decision the dispositive part of which reads: "WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering the latter to grant the former a right of way through Palanyag Road to and from Don Arcadio Santos Avenue and to and from this residence, upon payment by the plaintiff to the defendants Asprecs the sum of P5,000 as indemnity therefor and under the following terms and conditions to wit: (1) the easement created shall be only in favor of the plaintiff, members of his family and person or persons dealing with them; and (2) the opening to be created through the concrete wall separating plaintiff's residence and Palanyag Road shall only be three (3) meters wide and shall be provided by an iron gate by the plaintiff all at the expense of the plaintiff. Without pronouncement as to costs and damages." (Rollo, p. 30) Thereafter, the respondent company filed a motion to set aside and/or reconsider the lower court's decision for being premature since only the application for the writ of injunction was heard and submitted for resolution and not the entire case. Respondents Asprec, likewise, filed a motion for reconsideration mainly on the ground that the lower court's grant of a right of way through Gatchalian Avenue in petitioner's favor would be in derogation of the "Contract of Easement of Road Right-of-Way and of Drainage" executed between them and Gatchalian Realty. cdphil In his opposition to both motions, the petitioner argued that on the basis of the transcript of stenographic notes taken on December 10, 1981, it was clear that both parties submitted the entire case for resolution inasmuch as the pieces of evidence for the injunction and for the main case were the same and there was nothing left to be presented. Thus, in effect, the petitioner contended that the lower court's decision dated July 9, 1982 was an adjudication on the merits.

On July 8, 1983, the lower court under a new judge by virtue of the reorganization of the judiciary, issued an order setting aside and vacating its previous decision dated July 9, 1982 on the ground that the same was "rendered prematurely as the defendants had not presented their evidence on the main evidence."

After the petitioner had rested his case, the respondent company filed a motion to dismiss based on the insufficiency of the evidence adduced by the petitioner. An opposition to said motion, was, thereafter, filed by the petitioner. On November 14, 1984, the lower court, acting on the respondent company's motion to dismiss, issued an order with the following tenor: "WHEREFORE, finding the motion to dismiss of defendant corporation Gatchalian Realty, Inc. to be impressed with merit, the same is hereby granted. For insufficiency of evidence, plaintiff's complaint is hereby dismissed, without pronouncement as to costs." (Rollo, p. 34) The Court of Appeals on August 29, 1986, found that the petitioner failed to establish the existence of the preconditions in order that he could legally be entitled to an easement of a right of way. It affirmed the lower court's order dated November 14, 1984 in all respects, with costs against the petitioner. Hence, this petition which presents the following assignment of errors: I PUBLIC RESPONDENT ERRED IN AFFIRMING IN TOTO THE ORDER OF DISMISSAL OF THE TRIAL COURT IN ALL RESPECTS WITH COSTS AGAINST THE PETITIONER; II PUBLIC RESPONDENT ERRED IN ITS DECISION TO THE EFFECT THAT PETITIONER HAS NOT SUFFICIENTLY MET THE REQUIREMENTS OF THE LAW AND IN FAILING TO PROVE HIS RIGHT OF WAY THROUGH GATCHALIAN AVENUE OR PALANYAG ROAD AGAINST THE RESPONDENTS HEREIN; III PUBLIC RESPONDENT ERRED IN FAILING TO SET ASIDE THE ORDER OF THE TRIAL COURT, AND NOT ADOPTING THE DECISION OF THE TRIAL COURT DATED JULY 9, 1982 GRANTING TO PETITIONER A RIGHT OF WAY IN THE SUBJECT PREMISES. (Rollo, pp. 14-15). These assigned errors center on the issue of whether or not the petitioner has successfully shown that all the requisites necessary for the grant of an easement of a right of way in his favor are present. An easement or servitude is an encumbrance imposed upon an immovable for the benefit of another immovable belonging to a different owner as defined in Article 613 of the Civil Code. It is established either by law, in which case it is called legal, or by the will of the parties, in which event it is a voluntary easement. (See Article 619, Civil Code of the Philippines; City of Manila v. Entote, 57 SCRA 497, 503). Since there is no agreement between the contending parties in this case granting a right of way by one in favor of the other, the establishment of a voluntary easement between the

petitioner and the respondent company and/or the other private respondents is ruled out. What is left to examine is whether or not the petitioner is entitled to a legal or compulsory easement of a right of way. In the case of Bacolod-Murcia Milling Company, Inc. v. Capitol Subdivision, Inc., et al. (17 SCRA 731, 735-6), we held that: ". . . the Central had to rely strictly on its being entitled to a compulsory servitude of right of way, under the Civil Code, and it could not claim any such servitude without first establishing the preconditions for its grant fixed by Articles 649 and 650 of the Civil Code of the Philippines: (1)That it is surrounded by other immovables and has no adequate outlet to a public highway (Art. 649, par. 1); (2)After payment of proper indemnity (Art. 649, p. 1, end); (3)That the isolation was not due to the Central's own acts (Art. 649, last par.); and (4)That the right of way claimed is '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.' (Art. 650). "By express provision of law, therefore, a compulsory right of way cannot be obtained unless the four requisites enumerated are first shown to exist, and the burden of proof to show their existence was on the Central." (See also Angela Estate, Inc. v. Court of First Instance of Negros Occidental, 24 SCRA 500, 510) On the first requisite, the petitioner contends that since the respondent company constructed the concrete wall blocking his ingress and egress via the Gatchalian Avenue, the "nearest, most convenient and adequate road" to and from a public highway, he has been constrained to use as his "temporary" way the adjoining lots belonging to different persons. Said way is allegedly "bumpy and impassable especially during rainy seasons because of flood waters, mud and tall 'talahib' grasses thereon." Moreover, according to the petitioner, the road right of way which the private respondents referred to as the petitioner's alternative way to Sucat Road is not an existing road but has remained a proposed road as indicated in the subdivision plan of the Sobrina Rodriguez Lombos Subdivision. The petitioner's position is not impressed with merit. We find no reason to disturb the appellate court's finding of fact that the petitioner failed to prove the non-existence of an adequate outlet to the Sucat Road except through the Gatchalian Avenue. As borne out by the records of the case, there is a road right of way provided by the Sobrina Rodriguez Lombos Subdivision indicated as Lot 4133-G-12 in its subdivision plan for the buyers of its lots. The fact that said lot is still undeveloped and causes inconvenience to the petitioner when he uses it to reach the public highway does not bring him within the ambit of the legal requisite. We agree with the appellate court's observation that the petitioner should have, first and foremost, demanded from the Sobrina Rodriguez Lombos Subdivision the improvement and maintenance of Lot 4133-G-12 as his road right of way because it was

from said subdivision that he acquired his lot and not either from the Gatchalian Realty or the respondents Asprec. To allow the petitioner access to Sucat Road through Gatchalian Avenue inspite of a road right of way provided by the petitioner's subdivision for its buyers simply because Gatchalian Avenue allows petitioner a much greater case in going to and coming from the main thoroughfare is to completely ignore what jurisprudence has consistently maintained through the years regarding an easement of a right of way, that "mere convenience for the dominant estate is not enough to serve as its basis. To justify the imposition of this servitude, there must be a real, not a fictitious or artificial, necessity for it." (See Tolentino, Civil Code of the Philippines, Vol. II, 2nd ed., 1972, p. 371) LLpr Considering that the petitioner has failed to prove the existence of the first requisite as aforestated, we find it unnecessary to discuss the rest of the preconditions for a legal or compulsory right of way. Once again, we apply the rule that findings of facts of the Court of Appeals are binding on the Supreme Court and will not be overturned when supported by the evidence on record save in the known exceptions such as gross misappreciation of the evidence or misapprehension of facts. (See Community Savings and Loan Association, Inc. v. Court of Appeals, et al., G.R. No. 75786, promulgated on August 31, 1987; Regalario v. Northwest Finance Corporation, 117 SCRA 45; Agton v. Court of Appeals, 113 SCRA 322). cdrep WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED for lack of merit. The questioned decision of the Court of Appeals is AFFIRMED. SO ORDERED. [G.R. No. 80511. January 25, 1991.] COSTABELLA CORPORATION, petitioner, vs. COURT OF APPEALS, KATIPUNAN LUMBER CO., INC., AURORA BUSTOS LOPEZ, MANUEL S. SATORRE, JR., JOSEFA C. REVILLES, FELIX TIUKINHOY, JR., PERFECTA L. CHUANGCO, and CESAR T. ESPINA, respondents. Roco, Bunag, Kapunan & Migallos for petitioner. Albano, Garcia & Diaz Law Offices for Katipunan Lumber Co., Inc. Zosa & Quijano Law Offices for respondents. SYLLABUS 1.CIVIL LAW; EASEMENT; RIGHT OF WAY; CANNOT BE ACQUIRED BY PRESCRIPTION. It is already well-established that an easement of right of way is discontinous and as such can not be acquired by prescription. 2.ID.; ID.; ID.; REQUISITES OF COMPULSORY DEMAND THEREOF. Based on Articles 649 and 650 of the New Civil Code, the owner of the dominant estate may validly claim a compulsory right of way only after he has established the existence of four requisites, to wit:

(1) the (dominant) estate is surrounded by other immovables and is without adequate outlet to a public highway; (2) after payment of the proper indemnity; (3) the isolation was not due to the proprietor's own acts; and (4) the right of way claimed is at a point least prejudicial to the servient estate. Additionally, the burden of proving the existence of the foregoing prerequisites lies on the owner of the dominant estate. 3.ID.; ID.; ID.; STANDARD FOR GRANT. The true standard for the grant of the legal right is "adequacy." Hence, when there is already an existing adequate outlet from the dominant estate to a public highway, even if the said outlet, for one reason or another, be inconvenient, the need to open up another servitude is entirely unjustified. For to justify the imposition of an easement of right of way, "there must be a real, not a fictitious or artificial necessity for it." 4.ID.; ID.; ID.; DEMANDED BY NECESSITY. Servitudes of right of way are an ancient concept, which date back to the iter, actus, and via of the Romans. They are demanded by necessity, that is, to enable owners of isolated estates to make full use of their properties, which lack of access to public roads has denied them. Under Article 649 of the Civil Code, they are compulsory and hence, legally demandable, subject to indemnity and the concurrence of the other conditions above-referred to. 5.ID.; ID.; ID.; CRITERIA FOR GRANT. But while a right of way is legally demandable, the owner of the dominant estate is not at liberty to impose one based on arbitrary choice. Under Article 650 of the Code, it shall be established upon two criteria: (1) at the point least prejudicial to the servient estate; and (2) where the distance to a public highway may be the shortest. According, however, to one commentator, "least prejudice" prevails over "shortest distance." Yet each case must be weighed according to its individual merits and judged according to the sound discretion of the court. "The Court," says Tolentino, "is not bound to establish what is the shortest; a longer way may be established to avoid injury to the servient tenement, such as when there are constructions or walls which can be avoided by a roundabout way, or to secure the interest of the dominant owner, such as when the shortest distance would place the way on a dangerous decline." DECISION SARMIENTO, J p: The principal issue raised in this petition for review on certiorari of the decision 1 dated May 30, 1986 of the Court of Appeals, 2 which modified the decision 3 rendered by the Regional Trial Court of Lapu-Lapu City in Cebu, is whether or not the private respondents had acquired an easement of right of way, in the form of a passageway, on the petitioner's property. It is admitted that the petitioner owns the real estate properties designated as Lots Nos. 5122 and 5124 of the Opon Cadastre, situated at Sitio Buyong, Maribago, Lapu-Lapu City, on which it had constructed a resort and hotel. The private respondents, on the other hand, are the owners of adjoining properties more particularly known as Lots Nos. 5123-A and 5123-C of the Opon Cadastre.

Before the petitioner began the construction of its beach hotel, the private respondents, in going to and from their respective properties and the provincial road, passed through a passageway which traversed the petitioner's property. In 1981, the petitioner closed the aforementioned passageway when it began the construction of its hotel, but nonetheless opened another route across its property through which the private respondents, as in the past, were allowed to pass. (Later, or sometime in August, 1982, when it undertook the construction of the second phase of its beach hotel, the petitioner fenced its property thus closing even the alternative passageway and preventing the private respondents from traversing any part of it.) As a direct consequence of these closures, an action for injunction with damages was filed against the petitioner by the private respondents on September 2, 1982 before the then Court of First Instance of Cebu. 4 In their complaint, the private respondents assailed the petitioner's closure of the original passageway which they (private respondents) claimed to be an "ancient road right of way" that had been existing before World War II and since then had been used by them, the community, and the general public, either as pedestrians or by means of vehicles, in going to and coming from Lapu-Lapu City and other parts of the country. The private respondents averred that by closing the alleged road right of way in question, the petitioner had deprived them access to their properties and caused them damages. prLL In the same complaint, the private respondents likewise alleged that the petitioner had constructed a dike on the beach fronting the latter's property without the necessary permit, obstructing the passage of the residents and local fishermen, and trapping debris and flotsam on the beach. They also claimed that the debris and flotsam that had accumulated prevented them from using their properties for the purpose for which they had acquired them. The complaint this prayed for the trial court to order the re-opening of the original passageway across the petitioner's property as well as the destruction of the dike. 5 In its answer, 6 the petitioner denied the existence of an ancient road through its property and counter-averred, among others, that it and its predecessors-in-interest had permitted the temporary, intermittent, and gratuitous use of, or passage through, its property by the private respondents and others by mere tolerance and purely as an act of neighborliness. It justified the walling in of its property in view of the need to insure the safety and security of its hotel and beach resort, and for the protection of the privacy and convenience of its hotel patrons and guests. At any rate, the petitioner alleged, the private respondents were not entirely dependent on the subject passageway as they (private respondents) had another existing and adequate access to the public road through other properties. With respect to the dike it allegedly constructed, the petitioner stated that what it built was a breakwater on the foreshore land fronting its property and not a dike as claimed by the private respondents. Moreover, contrary to the private respondents' accusation, the said construction had benefited the community especially the fishermen who used the same as mooring for their boats during low tide. The quantity of flotsam and debris which had formed on the private respondents' beach front on the other hand were but the natural and unavoidable accumulations on beaches by the action of the tides and movement of the waves of the sea. The petitioner's answer then assailed the private respondents' complaint for its failure to implead as defendants the owners of the other properties supposedly

traversed by the alleged ancient road right way, indispensable parties without whom no final adjudication of the controversy could be rendered. 7 After trial, the court a quo rendered a decision on March 15, 1984 finding that the private respondents had acquired a vested right over the passageway in controversy based on its long existence and its continued use and enjoyment not only by the private respondents, but also by the community at large. The petitioner in so closing the said passageway, had accordingly violated the private respondents' vested right. Thus, the trial court ordered the petitioner: 1.To open and make available the road in question to the plaintiffs and the general public at all times free of any obstacle thereof, unless the defendant shall provide another road equally accessible and convenient as the road or passage closed by the defendant; 2.To pay the plaintiff Katipunan Lumber Company, Inc. the amount of FIVE THOUSAND PESOS (P5,000.00) a month beginning January, 1983, and the plaintiff Perfecto Guangco the sum of TWO HUNDRED PESOS (P200.00) a month beginning September, 1982, representing their respective expenditures they had incurred in other beach resorts after the road was closed, until the passageway claimed by them is opened and made available to them, or if the defendant chooses to provide another road, until such road is made available and conveniently passable to the plaintiffs and the general public; and 3.To pay the sum of FIFTEEN THOUSAND PESOS (P15,000.00) attorney's fees, and to pay the costs. 8 Both parties elevated the trial court's decision to the Court of Appeals, with the petitioner questioning the alleged "vested right" of the private respondents over the subject passageway, and the private respondents assailing the dismissal of their complaint insofar as their prayer for the demolition of the petitioner's "dike" is concerned. LLphil In its decision, the respondent Appellate Court held as without basis the trial court's finding that the private respondents had acquired a vested right over the passageway in question by virtue of prescription. 9 The appellate court pointed out that an easement of right of way is a discontinuous one which, under Article 622 of the New Civil Code, may only be acquired by virtue of a title and not by prescription. 10 That notwithstanding, the appellate court went on to rule that ". . . in the interest of justice and in the exercise by this Court of its equity jurisdiction, there is no reason for Us in not treating the easement here sought by appellees Katipunan Lumber Co., Inc. and Perfecta Guangco as one that is not dependent upon the claims of the parties but a compulsory one that is legally demandable by the owner of the dominant estate from the owner of the servient estate." 11 Thus the appellate court: (1) granted the private respondents the right to an easement of way on the petitioner's property using the passageway in question, unless the petitioner should provide another passageway equally accessible and convenient as the one it closed; (2) remanded the case to the trial court for the determination of the just and proper indemnity to be paid to the petitioner by the private respondents for the said easement; and (3) set aside the trial court's award of actual damages and attorney's fees. 12

On petitioner's motion for partial reconsideration, the respondent court issued on October 27, 1987 a resolution 13 denying the said motion. The Appellate Court however in denying the petitioner's motion for reconsideration stated that: . . . While it is true that there is another outlet for the plaintiff to the main road, yet such outlet is a new road constructed in 1979, while the road closed by defendant existed since over 30 years before. Legally, the old road could be closed; but since the existing outlet is inconvenient to the plaintiff, equitably the plaintiff should be given a chance to pay for a more convenient outlet through the land of the defendant at a point least prejudicial to the latter. In any event, the plaintiff shall pay for all damages that defendant corporation may sustain and the defendant regulates the manner of use of the right of way to protect defendant's property and its customers. This is the gist of Our decision. 14 Now before us, the petitioner contends that the decision of the respondent appellate court is grossly erroneous and not in accord with the provisions of Articles 649 and 650 of the Civil Code on easements and the prevailing jurisprudence on the matter. The petition is meritorious. It is already well-established that an easement of right of way, as is involved here, is discontinuous 15 and as such can not be acquired by prescription. 16 Insofar therefore as the appellate court adhered to the foregoing precepts, it stood correct. Unfortunately, after making the correct pronouncement, the respondent Appellate Court did not order the reversal of the trial court's decision and the dismissal of the complaint after holding that no easement had been validly constituted over the petitioner's property. Instead, the Appellate Court went on to commit a reversible error by considering the passageway in issue as a compulsory easement which the private respondents, as owners of the "dominant" estate, may demand from the petitioner the latter being the owner of the "servient" estate. It is provided under Articles 649 and 650 of the New Civil Code that: 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. llcd Should this easement be established in such a manner that its use may be continuous for all the needs of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the land occupied and the amount of the damage caused to the servient estate. In case the right of way is limited to the necessary passage for the cultivation of the estate surrounded by others and for the gathering of its crops through the servient estate without a permanent way, the indemnity shall consist in the payment of the damage caused by such encumbrance.

This easement is not compulsory if the isolation of the immovable is due to the proprietor's own acts. 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. Based on the foregoing, the owner of the dominant estate may validly claim a compulsory right of way only after he has established the existence of four requisites, to wit: (1) the (dominant) estate is surrounded by other immovables and is without adequate outlet to a public highway; (2) after payment of the proper indemnity; (3) the isolation was not due to the proprietor's own acts; and (4) the right of way claimed is at a point least prejudicial to the servient estate. Additionally, the burden of proving the existence of the foregoing prerequisites lies on the owner of the dominant estate. 17 Here, there is absent any showing that the private respondents had established the existence of the four requisites mandated by law. For one, they failed to prove that there is no adequate outlet from their respective properties to a public highway. On the contrary, as alleged by the petitioner in its answer to the complaint, and confirmed by the appellate court, "there is another outlet for the plaintiffs (private respondents) to the main road." 18 Thus, the respondent Court of Appeals likewise admitted that "legally the old road could be closed." 19 Yet, it ordered the re-opening of the old passageway on the ground that "the existing outlet (the other outlet) is inconvenient to the plaintiff." 20 On this score, it is apparent that the Court of Appeals lost sight of the fact that the convenience of the dominant estate has never been the gauge for the grant of compulsory right of way. 21 To be sure, the true standard for the grant of the legal right is "adequacy." Hence, when there is already an existing adequate outlet from the dominant estate to a public highway, even if the said outlet, for one reason or another, be inconvenient, the need to open up another servitude is entirely unjustified. For to justify the imposition of an easement or right of way, "there must be a real, not a fictitious or artificial necessity for it." 22 Further, the private respondents failed to indicate in their complaint or even to manifest during the trial of the case that they were willing to indemnify fully the petitioner for the right of way to be established over its property. Neither have the private respondents been able to show that the isolation of their property was not due to their personal or their predecessors-in-interest's own acts. Finally, the private respondents failed to allege, much more introduce any evidence, that the passageway they seek to be re-opened is at a point least prejudicial to the petitioner. Considering that the petitioner operates a hotel and beach resort in its property, it must undeniably maintain a strict standard of security within its premises. Otherwise, the convenience, privacy, and safety of its clients and patrons would be compromised. That indubitably will doom the petitioner's business. It is therefore of great importance that the claimed right of way over the petitioner's property be located at a point least prejudicial to its business. Hence, the private respondents' properties can not be said to be isolated, for which a compulsory easement is demandable. Insofar therefore as the Appellate Court declared the case to be proper as a controversy for a compulsory right of way, this Court is constrained to hold that it was in error. LexLib

Servitudes of right of way are an ancient concept, which date back to the iter, actus, and via of the Romans. 23 They are demanded by necessity, that is, to enable owners of isolated estates to make full use of their properties, which lack of access to public roads has denied them. 24 Under Article 649 of the Civil Code, they are compulsory and hence, legally demandable, subject to indemnity and the concurrence of the other conditions abovereferred to. As also earlier indicated, there must be a real necessity therefor, and not mere convenience for the dominant estate. Hence, if there is an existing outlet, otherwise adequate, to the highway, the "dominant" estate can not demand a right of way, although the same may not be convenient. Of course, the question of when a particular passage may be said to be "adequate" depends on the circumstances of each case. Manresa, however, says: "In truth, not only the estate which absolutely does not possess it should be considered in this condition, but also that which does not have one sufficiently safe or serviceable; an estate bordering a public road through an inaccessible slope or precipice, is in fact isolated for all the effects of the easement requested by its owner. On the other hand, an estate which for any reason has necessarily lost its access to a public road during certain periods of the year is in the same condition. . . . There are some who propound the query as to whether the fact that a river flows between the estate and the public road should be considered as having the effect of isolating the estate . . . If the river may be crossed conveniently at all times without the least danger, it cannot be said that the estate is isolated; in any other case, the answer is in the affirmative." 25 The isolation of the dominant estate is also dependent on the particular need of the dominant owner, and the estate itself need not be totally landlocked. What is important to consider is whether or not a right of way is necessary to fill a reasonable need therefor by the owner. 2 6 Thus, as Manresa had pointed out, if the passageway consists of an "inaccessible slope or precipice," 27 it is as if there is no passageway, that is, one that can sufficiently fulfill the dominant owner's necessities, although by the existence of that passageway the property can not be truly said that the property is isolated. So also, while an existing right of way may have proved adequate at the start, the dominant owner's need may have changed since then, for which Article 651 of the Code allows adjustments as to width. 28 But while a right of way is legally demandable, the owner of the dominant estate is not at liberty to impose one based on arbitrary choice. Under Article 650 of the Code, it shall be established upon two criteria: (1) at the point least prejudical to the servient state; and (2) where the distance to a public highway may be the shortest. According, however, to one commentator, "least prejudice" prevails over "shortest distance." 29 Yet, each case must be weighed according to its individual merits, and judged according to the sound discretion of the court. "The court," says Tolentino, "is not bound to establish what is the shortest; a longer way may be established to avoid injury to the servient tenement, such as when there are constructions or walls which can be avoided by a roundabout way, or to secure the interest of the dominant owner, such as when the shortest distance would place the way on a dangerous decline." 30

It is based on these settled principles that we have resolved this case. prLL WHEREFORE, the decision dated May 30, 1986, and the resolution dated October 27, 1987, of the respondent Court of Appeals are SET ASIDE and the private respondents' complaint is hereby DISMISSED. Costs against the private respondents. SO ORDERED. [G.R. No. 112331. May 29, 1996.] ANASTACIA QUIMEN, petitioner, vs. COURT OF APPEALS and YOLANDA Q. OLIVEROS, respondents. Benedicto L. Nanca for petitioner. Armando A. San Antonio for private respondent. SYLLABUS 1.REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE COURT OF APPEALS REVERSING THE DECISION OF THE TRIAL COURT, UPHELD ON APPEAL. But we find no cogent reason to disturb the ruling of respondent appellate court granting a right of way to private respondent through petitioner's property. In fact, as between petitioner Anastacia and respondent Yolanda their agreement has already been rendered moot insofar as it concerns the determination of the principal issue herein presented. The voluntary easement in favor of private respondent, which petitioner now denies but which the court is inclined to believe, has in fact become a legal easement or an easement by necessity constituted by law. The trial court found that Yolanda's property was situated at the back of her father's property and held that there existed an available space of about nineteen (19) meters long which could conveniently serve as a right of way between the boundary line and the house of Yolanda's father; that the vacant space ended at the left back of Sotero's store which was made of strong materials; that this explained why Yolanda requested a detour to the lot of Anastacia and cut an opening of one (1) meter wide and five (5) meters long to serve as her right of way to the public highway. But notwithstanding its factual observations, the trial court concluded, although erroneously, that Yolanda was not entitled to a right of way on petitioner's property since a detour through it would not make the line straight and would not be the route shortest to the public highway. In applying Art. 650 of the New Civil Code, respondent Court of Appeals declared that the proposed right of way of Yolanda, which is one (1) meter wide and five (5) meters long at the extreme right of petitioner's property, will cause the least prejudice and/or damage as compared to the suggested passage through the property of Yolanda' s father which would mean destroying the sari-sari store made of strong materials. Absent any showing that these findings and conclusion are devoid of factual support in the records, or are so glaringly erroneous, this Court accepts and adopts them. As between a right of way that would demolish a store of strong materials to provide egress to a public highway, and another right of way which although longer will only require an avocado tree to be cut down, the second alternative should be preferred. After all, it is not the main function of this Court to analyze or weigh the evidence presented all over again

where the petition would necessarily invite calibration of the whole evidence considering primarily the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to each other, and the probabilities of the situation. In sum, this Court finds that the decision of respondent appellate court is thoroughly backed up by law and the evidence. 2.CIVIL LAW; PROPERTY, OWNERSHIP AND ITS MODIFICATIONS; EASEMENT, DEFINED. As defined, an easement is a real right on another's property, corporeal and immovable, whereby the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his property, for the benefit of another person or tenement. It is jus in re aliena, inseparable, indivisible and perpetual, unless extinguished by causes provided by law. A right of way in particular is a privilege constituted by covenant or granted by law to a person or class of persons to pass over another's property when his tenement is surrounded by realties belonging to others without an adequate outlet to the public highway. The owner of the dominant estate can demand a right of way through the servient estate provided he indemnifies the owner thereof for the beneficial use of his property. 3.ID.; ID.; EASEMENTS; RIGHT OF WAY; CONDITIONS FOR GRANT THEREOF. The conditions sine qua non for a valid grant of an easement of right of way are: (a) the dominant estate is surrounded by other immovables without an adequate outlet to a public highway; (b) the dominant estate is willing to pay the proper indemnity; (c) the isolation was not due to the acts of the dominant estate; and, (d) the right of way being claimed is at a point least prejudicial to the servient estate. 4.ID.; ID.; ID.; ID.; CRITERION OF LEAST PREJUDICE TO THE SERVIENT ESTATE, CONSTRUED. Petitioner finally insists that respondent court erroneously concluded that the right of way proposed by private respondent is the least onerous to the parties. We cannot agree. Article 650 of the New Civil Code explicitly states that 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. The criterion of least prejudice to the servient estate must prevail over the criterion of shortest distance although this is a matter of judicial appreciation. While shortest distance may ordinarily imply least prejudice, it is not always so as when there are permanent structures obstructing the shortest distance; while on the other hand, the longest distance may be free of obstructions and the easiest or most convenient to pass through. In other words, where the easement may be established on any of several tenements surrounding the dominant estate, the one where the way is shortest and will cause the least damage should be chosen. However, as elsewhere stated, if these two (2) circumstances do not concur in a single tenement, the way which will cause the least damage should be used, even if it will not be the shortest. DECISION BELLOSILLO, J p: IN EASEMENT OF RIGHT OF WAY that easement where the way is shortest and will cause least prejudice shall be chosen. However, if the two circumstances do not concur in a single tenement, the way where damage will be least shall be used even if not the shortest route.

1 This is so because least prejudice prevails over shortest distance. This means that the court is not bound to establish what is the shortest distance; a longer way may be adopted to avoid injury to the servient estate, such as when there are constructions or walls which can be avoided by a round about way, or to secure the interest of the dominant owner, such as when the shortest distance would place the way on a dangerous decline. Thus we conclude from the succeeding facts: Petitioner Anastacia Quimen together with her brothers Sotero, Sulpicio, Antonio and sister Rufina inherited a piece of property situated in Pandi, Bulacan. They agreed to subdivide the property equally among themselves, as they did, with the shares of Anastacia, Sotero, Sulpicio and Rufina abutting the municipal road. The share of Anastacia, located at the extreme left, was designated as Lot No. 1448-B-1. It is bounded on the right by the property of Sotero designated as Lot No. 1448-B-2. Adjoining Sotero's property on the right are Lots Nos. 1448-B-3 and 1448-B-4 originally owned by Rufina and Sulpicio, respectively, but which were later acquired by a certain Catalina Santos. Located directly behind the lots of Anastacia and Sotero is the share of their brother Antonio designated as Lot No. 1448-B-C which the latter divided into two (2) equal parts, now Lots Nos. 1448-B-6-A and 1448-B-6-B, each with an area of 92 square meters. Lot No. 1448-B-6-A is located behind Anastacia's Lot No. 1448-B-1, while Lot No. 1448-B-6-B is behind the property of Sotero, father of respondent Yolanda. In February 1982 Yolanda purchased Lot No. 1448-B-6-A from her uncle Antonio through her aunt Anastacia who was then acting as his administratrix. According to Yolanda, when petitioner offered her the property for sale she was hesitant to buy as it had no access to a public road. But Anastacia prevailed upon her to buy the lot with the assurance that she would give her a right of way on her adjoining property for P200.00 per square meter. Thereafter, Yolanda constructed a house on the lot she bought using as her passageway to the public highway a portion of Anastacia's property. But when Yolanda finally offered to pay for the use of the pathway Anastacia refused to accept the payment. In fact she was thereafter barred by Anastacia from passing through her property. 2 In February 1986 Yolanda purchased the other lot of Antonio Quimen, Lot No. 1448-B-6-B, located directly behind the property of her parents who provided her a pathway gratis et amore between their house, extending about nineteen (19) meters from the lot of Yolanda behind the sari sari store of Sotero, and Anastacia's perimeter fence. The store is made of strong materials and occupies the entire frontage of the lot measuring four (4) meters wide and nine meters (9) long. Although the pathway leads to the municipal road it is not adequate for ingress and egress. The municipal road cannot be reached with facility because the store itself obstructs the path so that one has to pass through the back entrance and the facade of the store to reach the road. On 29 December 1987 Yolanda filed an action with the proper court praying for a right of way through Anastacia's property. An ocular inspection upon instruction of the presiding judge was conducted by the branch clerk of court. The report was that the proposed right of way was at the extreme right of Anastacia's property facing the public highway, starting from the back of Sotero's sari sari store and extending inward by one (1) meter to her property and turning left for about five (5) meters to avoid the store of Sotero in order to

reach the municipal road 3 and the way was unobstructed except for an avocado tree standing in the middle. 4 But on 5 September 1991 the trial court dismissed the complaint for lack of cause of action, explaining that the right of way through Sotero's property was a straight path and to allow a detour by cutting through Anastacia's property would no longer make the path straight. Hence the trial court concluded that it was more practical to extend the existing pathway to the public road by removing that portion of the store blocking the path as that was the shortest route to the public road and the least prejudicial to the parties concerned than passing through Anastacia's property. 5

On appeal by respondent Yolanda, the Court of Appeals reversed the lower court and held that she was entitled to a right of way on petitioner's property and that the way proposed by Yolanda would cause the least damage and detriment to the servient estate. 6 The appellate court however did not award damages to private respondent as petitioner did not act in bad faith in resisting the claim. Petitioner now comes to us imputing ERROR to respondent Court of Appeals: (a) in disregarding the agreement of the parties; (b) in considering petitioner's property as a servient estate despite the fact that it does not abut or adjoin the property of private respondent; and, (c) in holding that the one-meter by five-meter passage way proposed by private respondent is the least prejudicial and the shortest distance to the public road. Incidentally, petitioner denies having promised private respondent a right of way. She claims that her agreement with private respondent was to provide the latter with a right of way on the other lot of Antonio Quimen under her administration when it was not yet sold to private respondent. Petitioner insists that passing through the property of Yolanda's parents is more accessible to the public road than to make a detour to her property and cut down the avocado tree standing thereon. Petitioner further argues that when Yolanda purchased Lot No. 1448-B-6-B in 1986 the easement of right of way she provided her (petitioner) was ipso jure extinguished as a result of the merger of ownership of the dominant and the servient estates in one person so that there was no longer any compelling reason to provide private respondent with a right of way as there are other surrounding lots suitable for the purpose. Petitioner strongly maintains that the proposed right of way is not the shortest access to the public road because of the detour and that, moreover, she is likely to suffer the most damage as she derives a net income of P600.00 per year from the sale of the fruits of her avocado tree, and considering that an avocado has an average life span of seventy (70) years, she expects a substantial earning from it. 7 But we find no cogent reason to disturb the ruling of respondent appellate court granting a right of way to private respondent through petitioner's property. In fact, as between petitioner Anastacia and respondent Yolanda their agreement has already been rendered moot insofar as it concerns the determination of the principal issue herein presented. The voluntary easement in favor of private respondent, which petitioner now denies but which

the court is inclined to believe, has in fact become a legal easement or an easement by necessity constituted by law. 8 As defined, an easement is a real right on another's property, corporeal and immovable, whereby the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his property, for the benefit of another person or tenement. 9 It is jus in re aliena, inseparable, indivisible and perpetual, unless extinguished by causes provided by law. A right of way in particular is a privilege constituted by covenant or granted by law 10 to a person or class of persons to pass over another's property when his tenement is surrounded by realties belonging to others without an adequate outlet to the public highway. The owner of the dominant estate can demand a right of way through the servient estate provided he indemnifies the owner thereof for the beneficial use of his property. 11 The conditions sine qua non for a valid grant of an easement of right of way are: (a) the dominant estate is surrounded by other immovables without an adequate outlet to a public highway; (b) the dominant estate is willing to pay the proper indemnity; (c) the isolation was not due to the acts of the dominant estate; and, (d) the right of way being claimed is at a point least prejudicial to the servient estate. 12 A cursory examination of the complaint of respondent Yolanda for a right of way 13 readily shows that [E]ven before the purchase of the said parcels of land the plaintiff was reluctant to purchase the same for they are enclosed with permanent improvements like a concrete fence and store and have (sic) no egress leading to the road but because of the assurance of the defendant that plaintiff will be provided one (1) meter wide and five (5) meters long right of way in the sum of P200.00 per square meter to be taken from Anastacia's lot at the side of a concrete store until plaintiff reach(es) her father's land, plaintiff was induced to buy the aforesaid parcels of land . . . That the aforesaid right of way is the shortest, most convenient and the least onerous leading to the road and being used by the plaintiff's predecessors-ininterest from the very inception . . . . The evidence clearly shows that the property of private respondent is hemmed in by the estates of other persons including that of petitioner; that she offered to pay P200.00 per square meter for her right of way as agreed between her and petitioner; that she did not cause the isolation of her property; that the right of way is the least prejudicial to the servient estate. 14 These facts are confirmed in the ocular inspection report of the clerk of court, more so that the trial court itself declared that "[t]he said properties of Antonio Quimen which were purchased by plaintiff Yolanda Quimen Oliveros were totally isolated from the public highway and there appears an imperative need for an easement of right of way to the public highway." 15 Petitioner finally insists that respondent court erroneously concluded that the right of way proposed by private respondent is the least onerous to the parties. We cannot agree. Article 650 of the New Civil Code explicitly states that 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. The criterion of least prejudice to the servient estate must prevail over the criterion

of shortest distance although this is a matter of judicial appreciation. While shortest distance may ordinarily imply least prejudice, it is not always so as when there are permanent structures obstructing the shortest distance; while on the other hand, the longest distance may be free of obstructions and the easiest or most convenient to pass through. In other words, where the easement may be established on any of several tenements surrounding the dominant estate, the one where the way is shortest and will cause the least damage should be chosen. However, as elsewhere stated, if these two (2) circumstances do not concur in a single tenement, the way which will cause the least damage should be used, even if it will not be the shortest. 16 This is the test. In the trial court, petitioner openly admitted Q.You testified during your direct examination about this plan, kindly go over this and please point to us in what portion of this plan is the house or store of the father of the (plaintiff)? A.This one, sir (witness pointed a certain portion located near the proposed right of way). xxx xxx xxx Q.Now, you will agree with me . . . that this portion is the front portion of the lot owned by the father of the plaintiff and which was (sic) occupied by a store made up of strong materials? A.It is not true, sir. Q.What materials does (sic) this store of the father of the plaintiff made of? A.Hollow blocks and the side is made of wood, sir. xxx xxx xxx Q.Just before your brother disposed that 1/2 portion of the lot in question, what right of way does (sic) he use in reaching the public road, kindly point to this sketch that he is (sic) using in reaching the public road? A.In my property, sir. Q.Now you will agree with me . . . the main reason why your brother is (sic) using this property is because there was a store located near this portion? A.Yes, and according to the father of Yolanda there is no other way than this, sir. 17 The trial court found that Yolanda's property was situated at the back of her father's property and held that there existed an available space of about nineteen (19) meters long which could conveniently serve as a right of way between the boundary line and the house of Yolanda's father; that the vacant space ended at the left back of Sotero's store which was made of strong materials; that this explained why Yolanda requested a detour to the lot of Anastacia and cut an opening of one (1) meter wide and five (5) meters long to serve as her

right of way to the public highway. But notwithstanding its factual observations, the trial court concluded, although erroneously, that Yolanda was not entitled to a right of way on petitioner's property since a detour through it would not make the line straight and would not be the route shortest to the public highway. In applying Art. 650 of the New Civil Code, respondent Court of Appeals declared that the proposed right of way of Yolanda, which is one (1) meter wide and five (5) meters long at the extreme right of petitioner's property, will cause the least prejudice and/or damage as compared to the suggested passage through the property of Yolanda's father which would mean destroying the sari sari store made of strong materials. Absent any showing that these findings and conclusion are devoid of factual support in the records, or are so glaringly erroneous, this Court accepts and adopts them. As between a right of way that would demolish a store of strong materials to provide egress to a public highway, and another right of way which although longer will only require an avocado tree to be cut down, the second alternative should be preferred. After all, it is not the main function of this Court to analyze or weigh the evidence presented all over again where the petition would necessarily invite calibration of the whole evidence considering primarily the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to each other, and the probabilities of the situation. 18 In sum, this Court finds that the decision of respondent appellate court is thoroughly backed up by law and the evidence.

WHEREFORE, no reversible error having been committed by respondent Court of Appeals, the petition is DENIED and the decision subject of review is AFFIRMED. Costs against petitioner. SO ORDERED. [G.R. No. 175510. July 28, 2008.] SPOUSES VICTOR VALDEZ AND JOCELYN VALDEZ, represented by their AttorneyIn-Fact, VIRGILIO VALDEZ, petitioners, vs. SPOUSES FRANCISCO TABISULA AND CARIDAD TABISULA, respondents. DECISION CARPIO-MORALES, J p: 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: TAacCE 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 P17,100.00 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: xxx xxx xxx That for and in consideration of the sum of SEVENTY THOUSAND (P70,000.00) PESOS, Philippine Currency [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. ECISAD xxx xxx xxx 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. xxx xxx xxx (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. SEDIaH 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 1/2-meter wide easement and to remove the concrete wall blocking the same. 4 Respondents, in their Answer with Compulsory Counterclaim (for damages and attorney's fees), 5 averred that the 2 1/2-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 Engineer's Office. 9 AcCTaD 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 attorney's fees; 4)P30,000.00 as expenses of litigation; and 5)To pay the costs. ETHSAI 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) ASHICc An easement or servitude is "a real right constituted on another's 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. TAECaD 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. DHATcE 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 1/2 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 1/2 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. CTDAaE 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. SaHcAC

xxx xxx xxx This easement is not compulsory if the isolation of the immovable is due to the proprietor's 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 estate's 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. cAEaSC

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 "1F", 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 earlierquoted particular description of respondents' parcel of land from which the subject property originally formed part. AaSTIH 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 illmotive on petitioners' part. 28 DHESca 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: xxx xxx xxx 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 the pangkat 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. EHSADc xxx xxx xxx (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. xxx xxx xxx 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. TEcAHI Issued this 24th day of November 1998 at the Multi Purpose Hall, Barangay 1 City of San Fernando (LU). xxx xxx xxx (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. HSaCcE Costs against petitioners.

SO ORDERED.

Right to compensation [G.R. No. 175725. October 8, 2008.] NATIONAL POWER CORPORATION, petitioner, vs. ANGEL SUAREZ, CARLOS SUAREZ, MARIA THERESA SUAREZ, AND ROSARIO SUAREZ, respondents. DECISION CARPIO-MORALES, J p: In issue in the present petition is whether petitioner, the National Power Corporation, in its acquisition of an easement of right of way (aerial) over a parcel of land, only a fee, not the full value of the land, must be paid. AcHaTE In order to implement its 350 KV Leyte Luzon HDVC Power Transmission Project which aims to transmit the excess electrical generating capacity from the Leyte Geothermal Plant to Luzon and various load centers, petitioner filed before the Regional Trial Court (RTC) of Sorsogon, Sorsogon, a complaint on August 23, 1996 1 for expropriation of a parcel of land (the property) in Brgy. Bibincahan, Sorsogon, Sorsogon registered in the names of Angel Suarez, Carlos Suarez, Ma. Teresa Suarez and Rosario Suarez (respondents). In accordance with Section 2 of Presidential Decree No. 42, 2 petitioner deposited with the Philippine National Bank, Legazpi City Branch the amount of P7,465.71 "representing the provisional value" of the property, 3 alleged to cover an area of 24,350 square meters. On September 23, 1996, it served a Notice to Take Possession of the property to respondents. On petitioner's Ex-Parte Motion, Branch 52 of the Sorsogon RTC issued a Writ of Possession. Respondents filed on May 5, 1997 their Answer with Counterclaim, alleging that the property covers an area of 34,950, not 24,350 square meters, and that petitioner had already constructed two transmission towers in the middle of the property, cut down more or less 737 trees of different varieties (169 fruit bearing coconut trees, 11 coconut trees seven years old and below, 36 various species of fruit trees, 89 bamboo trees, 77 banana trees, 39 shade trees and 50 madre de cacao trees) 4 and an estimated 562.86 board feet of hardwood trees and 706.80 board feet of softwood trees. 5 They thus moved for the determination of just compensation which was granted by the court which appointed commissioners for the purpose. From the Commissioners' Report 6 dated September 11, 1997, the commissioners determined the just compensation by using "Market Data Analysis, Income Productivity and Zonal Valuation" of the property and arrived at the following: TIESCA FINAL VALUE:

Since the subject land is surrounded by residential subdivisions, and the development thereof to a residential subdivision is what the owners thereof are mulling, the following computation was arrived to reflect said consideration, to wit: 1.MARKET DATAP990,071.00 (70%) =P693,049.70 ANALYSIS 2.INCOMEP335,481.44 (20%) =P67,096.28 PRODUCTIVITY 3.ZONALP237,144.88 (10%) =P23,714.48 VALUATION P783,860.46 =========== After considering all the limitations, the herein undersigned commissioners respectfully manifest that the just compensation of the land in question is in the amount of P783,860.46. (Emphasis supplied) In its Manifestation/Comments by way of Opposition to the Commissioners' Report, 7 petitioner assailed the report as bereft of legal basis, the Market Data Analysis and Income Productivity approaches being mere assumptions, whereas the Zonal Valuation approach is being used only for real estate tax purposes. By Decision of April 15, 1999, 8 the trial court adopted as basis for determining just compensation the recommendation of the Commissioners. Thus it disposed: WHEREFORE, premises considered, judgment is hereby rendered to wit: a.Fixing the just compensation of the entire 24, 350 sq.m. taken by the plaintiff as right-ofway easement from the defendants in the total amount of Seven Hundred Thousand Eight Hundred Three (sic) and Eight Hundred Sixty Pesos & 46/100 (P783,860.46) Philippine Currency. b.Ordering the plaintiff National Power Corporation (NPC) to pay the defendants the amount of P783,860.46 as the just compensation for the property taken less the amount of P7,465.71 representing the provisional value of the property which was deposited at the Philippine National Bank and other sums due the Government for unpaid real estate taxes and other imposts. EaHcDS c.Ordering the dismissal of the counterclaim. d.Without pronouncement as to cost. SO ORDERED. (Underscoring supplied)

The Court of Appeals affirmed the trial court's decision, hence petitioner's present Petition for Review. Petitioner contends that since it merely seeks an aerial easement over the property, the decision of the appellate court affirming the trial court's order for the payment of just compensation in the amount of P783,860.46 representing the total value of the property and excluding the application of Section 3A (b) of RA 6395 9 is erroneous. Petitioner's plea for the application of Section 3A (b) of RA 6395 which directs the payment of an amount equivalent to only 10% of the market value of the property as just compensation for an easement of right of way does not lie. Granting arguendo that what petitioner acquired over respondent's property was purely an easement of a right of way, still, we cannot sustain its view that it should pay only an easement fee and not the full value of the property. The acquisition of such an easement falls within the purview of the power of eminent domain. This conclusion finds support in similar cases in which the Supreme Court sustained the award of just compensation for private property condemned for public use. . . . True, an easement of right of way transmits no rights except the easement itself, and respondent retains full ownership of the property. The acquisition of such easement is, nevertheless, not gratis. As correctly observed by the CA, considering the nature and the effect of the installation of power lines, the limitations on the use of the land for an indefinite period would deprive respondent of normal use of the property. For this reason, the latter is entitled to payment of a just compensation, which must be neither more nor less than the monetary equivalent of the land. 10 (Emphasis and underscoring supplied). Petitioner's assertion that respondents can still make use of the property by planting corn, rice, root crops and similar plants 11 fails to consider that the property was originally tilled and suited for, as reflected in the Commissioners' Report, 234 fruit bearing coconut trees, 617 abaca plants, 50 madre de cacao and 23 jackfruit trees. 12 That petitioner prohibited respondents from planting trees higher than three meters clearly shows that the easement had impaired respondents' beneficial enjoyment of their property to warrant the imposition of payment of its full value. aDcHIS The measure is thus not the taker's gain but the owner's loss. The word "just" is used to intensify the meaning of the word "compensation" and to thereby convey the idea that the equivalent to be rendered for the property to be taken shall be real, substantial, full and ample. 13 The nature, as well as the character of the land at the time of taking is thus the principal criterion in determining just compensation. All the facts as to the condition of the property and its surroundings, as well as its improvements and capabilities, must thus be considered. 14 AcSEHT WHEREFORE, the Petition is DENIED. SO ORDERED.

Width of an easement of right of way [G.R. No. 77628. March 11, 1991.] TOMAS ENCARNACION, petitioner, vs. THE HONORABLE COURT OF APPEALS AND THE INTESTATE ESTATE OF THE LATE EUSEBIO DE SAGUN AND THE HEIRS OF THE LATE ANICETA MAGSINO VIUDA DE SAGUN, * respondents. Esteban M. Mendoza for petitioner. Oscar Gozos for private respondents. SYLLABUS 1.CIVIL LAW; EASEMENTS; RIGHT OF WAY; ABSENCE OF ACCESS TO A PUBLIC ROAD. Where a private property has no access to a public road, it has the right of easement over adjacent servient estates as a matter of law. 2.ID.; ID.; ID.; WIDTH OF THE PASSAGE DETERMINED BY THE NEEDS OF THE DOMINANT PROPERTY. Under Article 651 of the Civil Code, it is the needs of the dominant property which ultimately determine the width of the passage. And these needs may vary from time to time. 3.ID.; ID.; ID.; ID.; CASE AT BAR. When petitioner started out as a plant nursery operator, he and his family could easily make do with a few pushcarts to tow the plants to the national highway. But the business grew and with it the need for the use of modern means of conveyance or transport. Manual hauling of plants and garden soil and use of pushcarts have become extremely cumbersome and physically taxing. To force petitioner to leave his jeepney in the highway, exposed to the elements and to the risk of theft simply because it could not pass through the improvised pathway, is sheer pigheadedness on the part of the servient estate and can only be counter-productive for all the people concerned. Petitioner should not be denied a passageway wide enough to accommodate his jeepney since that is a reasonable and necessary aspect of the plant nursery business. 4.ID.; ID.; ID.; PAYMENT OF INDEMNITY WHERE EASEMENT IS CONTINUOUS AND PERMANENT. Where the easement to be established in favor of petitioner is of a continuous and permanent nature, the indemnity shall consist of the value of the land occupied and the amount of the damage caused to the servient estate pursuant to Article 649 of the Civil Code. DECISION FERNAN, C.J p: Presented for resolution in the instant petition for review is the not-so-usual question of whether or not petitioner is entitled to a widening of an already existing easement of right-

of-way. Both the trial court and the Appellate Court ruled that petitioner is not so entitled, hence the recourse to this Court. We reverse. The facts are undisputed. Petitioner Tomas Encarnacion and private respondent Heirs of the late Aniceta Magsino Viuda de Sagun are the owners of two adjacent estates situated in Buco, Talisay, Batangas ** Petitioner owns the dominant estate which has an area of 2,590 square meters and bounded on the North by Eusebio de Sagun and Mamerto Magsino, on the south by Taal Lake, on the East by Felino Matienso and on the West by Pedro Matienzo. Private respondents co-own the 405-square-meter servient estate which is bounded on the North by the National Highway (Laurel Talisay Highway), on the South by Tomas Encarnacion, on the East by Mamerto Magsino and on the West by Felipe de Sagun. In other words, the servient estate stands between the dominant estate and the national road. Prior to 1960, when the servient estate was not yet enclosed with a concrete fence, persons going to the national highway just crossed the servient estate at no particular point. However, in 1960 when private respondents constructed a fence around the servient estate, a roadpath measuring 25 meters long and about a meter wide was constituted to provide access to the highway. One-half meter width of the path was taken from the servient estate and the other one-half meter portion was taken from another lot owned by Mamerto Magsino. No compensation was asked and none was given for the portions constituting the pathway. 1 It was also about that time that petitioner started his plant nursery business on his land where he also had his abode. He would use said pathway as passage to the highway for his family and for his customers. Petitioner's plant nursery business through sheer hard work flourished and with that, it became more and more difficult for petitioner to haul the plants and garden soil to and from the nursery and the highway with the use of pushcarts. In January, 1984, petitioner was able to buy an owner-type jeep which he could use for transporting his plants. However, that jeep could not pass through the roadpath and so he approached the servient estate owners (Aniceta Vda. de Sagun and Elena Romero Vda. de Sagun) and requested that they sell to him one and one-half (1 1/2) meters of their property to be added to the existing pathway so as to allow passage for his jeepney. To his utter consternation, his request was turned down by the two widows and further attempts at negotiation proved futile. Petitioner then instituted an action before the Regional Trial Court of Batangas, Branch 6 (Tanauan) to seek the issuance of a writ of easement of a right of way over an additional width of at least two (2) meters over the De Saguns' 405-square-meter parcel of land. 2 During the trial, the attention of the lower court was called to the existence of another exit to the highway, only eighty (80) meters away from the dominant estate. On December 2, 1985, the lower court rendered judgment dismissing petitioner's complaint. It ruled: "It is clear, therefore, that plaintiff at present has two outlets to the highway: one, through the defendants' land on a one meter wide passageway, which is bounded on both sides by

concrete walls and second, through the dried river bed eighty meters away. The plaintiff has an adequate outlet to the highway through the dried river bed where his jeep could pass. "The reasons given for his claim that the one-meter passageway through defendants' land be widened to two and one-half meters to allow the passage of his jeep, destroying in the process one of the concrete fences and decreasing defendants' already small parcel to only about 332.5 square meters, just because it is nearer to the highway by 25 meters compared to the second access of 80 meters or a difference of only 65 meters and that passage through defendants' land is more convenient for his (plaintiff's) business and family use are not among the conditions specified by Article 649 of the Civil Code to entitle the plaintiff to a right of way for the passage of his jeep through defendant's land." 3 On appeal, the Court of Appeals affirmed the decision of the trial court on January 28, 1987 and rejected petitioner's claim for an additional easement. In sustaining the trial court, the Court of Appeals opined that the necessity interposed by petitioner was not compelling enough to justify interference with the property rights of private respondents. The Appellate Court took into consideration the presence of a dried river bed only eighty (80) meters away from the dominant estate and conjectured that petitioner might have actually driven his jeep through the river bed in order to get to the highway, and that the only reason why he wanted a wider easement through the De Sagun's estate was that it was more convenient for his business and family needs. After evaluating the evidence presented in the case, the Court finds that petitioner has sufficiently established his claim for an additional easement of right of way, contrary to the conclusions of the courts a quo. While there is a dried river bed less than 100 meters from the dominant tenement, that access is grossly inadequate. Generally, the right of way may be demanded: (1) when there is absolutely no access to a public highway, and (2) when, even if there is one, it is difficult or dangerous to use or is grossly insufficient. In the present case, the river bed route is traversed by a semi-concrete bridge and there is no ingress nor egress from the highway. For the jeep to reach the level of the highway, it must literally jump four (4) to five (5) meters up. Moreover, during the rainy season, the river bed is impassable due to the floods. Thus, it can only be used at certain times of the year. With the inherent disadvantages of the river bed which make passage difficult, if not impossible, it is if there were no outlet at all. LexLib Where a private property has no access to a public road, it has the right of easement over adjacent servient estates as a matter of law. 4 With the non-availability of the dried river bed as an alternative route to the highway, we transfer our attention to the existing pathway which straddles the adjoining properties of the De Sagun heirs and Mamerto Magsino. The courts below have taken against petitioner his candid admission in open court that he needed a wider pathway for the convenience of his business and family. (TSN, August 2, 1985, pp. 24-26). We cannot begrudge petitioner for wanting that which is convenient. But

certainly that should not detract from the more pressing consideration that there is a real and compelling need for such servitude in his favor. Article 651 of the Civil Code provides that "(t)he width of the easement of right of way shall be that which is sufficient for the needs of the dominant estate, and may accordingly be changed from time to time." This is taken to mean that under the law, it is the needs of the dominant property which ultimately determine the width of the passage. And these needs may vary from time to time. When petitioner started out as a plant nursery operator, he and his family could easily make do with a few pushcarts to tow the plants to the national highway. But the business grew and with it the need for the use of modern means of conveyance or transport. Manual hauling of plants and garden soil and use of pushcarts have become extremely cumbersome and physically taxing. To force petitioner to leave his jeepney in the highway, exposed to the elements and to the risk of theft simply because it could not pass through the improvised pathway, is sheer pigheadedness on the part of the servient estate and can only be counter-productive for all the people concerned. Petitioner should not be denied a passageway wide enough to accommodate his jeepney since that is a reasonable and necessary aspect of the plant nursery business.

We are well aware that an additional one and one-half (11/2) meters in the width of the pathway will reduce the servient estate to only about 342.5 square meters. But petitioner has expressed willingness to exchange an equivalent portion of his land to compensate private respondents for their loss. Perhaps, it would be well for respondents to take the offer of petitioner seriously. 5 But unless and until that option is considered, the law decrees that petitioner must indemnify the owners of the servient estate including Mamerto Magsino from whose adjoining lot 1/2 meter was taken to constitute the original path several years ago. Since the easement to be established in favor of petitioner is of a continuous and permanent nature, the indemnity shall consist of the value of the land occupied and the amount of the damage caused to the servient estate pursuant to Article 649 of the Civil Code which states in part: "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. "Should this easement be established in such a manner that its use may be continuous for all the needs of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of the land occupied and the amount of the damage caused to the servient estate. xxx xxx xxx" WHEREFORE, in conformity with the foregoing discussion, the appealed decision of the Court of Appeals dated January 28, 1987 is REVERSED and SET ASIDE. Petitioner Tomas Encarnacion is hereby declared entitled to an additional easement of right of way of twenty-

five (25) meters long by one and one-half (11/2) meters wide over the servient estate or a total area of 62.5 square meters after payment of the proper indemnity. SO ORDERED. Easement of party wall, its nature, co-ownership or easement? Its existence Cases: [G.R. No. 10372. December 24, 1915.] DOMINGO LAO and ALBINA DE LOS SANTOS, applicants-appellants, vs. THE HEIRS OF LORENZA ALBURO, objectors-appellee. Medina, Gabriel & Diaz for appellants. Beunaventura Reyes for appellees. SYLLABUS 1.EASEMENTS; PARTY WALLS. The easement of party walls is presumed in a wall separating two adjoining buildings, unless there is a title, some exterior indication, or proof to the contrary. (Art. 572, Civil Code.) 2.ID.; ID. A wall separating two adjoining buildings, built on the land on which one of these buildings stands, is not a party wall when there is a drain along its top to carry away the water from the roof and eaves of the building belonging to the owner of the land on which the wall is erected; and also when a part of the wall is covered by the roof of the said building, the construction of which demonstrates that the wall belongs exclusively to the owner of the building of which it forms part. The fact that some of the timbers of the adjoining building were surreptitiously inserted in the disputed wall is not sufficient to warrant a finding that the wall was thereby converted into a party wall, because there are various indications that it belongs exclusively to the owner of the building, which conflict with the claim of an easement of party walls. DECISION TORRES, J p: This appeal by bill of exceptions was taken from the judgment of August 17, 1914, in which the honorable judge of the Court of Land Registration decreed that, after the description of the parcel of land No. 2 should have been amended in the manner indicated, the parcels of land in the case at bar should be registered in the name of the applicants, Domingo Lao and his wife Albina de los Santos. It was held in this decree that the wall, called a stone wall in the plan of the said parcel No. 2, was a party wall between the said parcel and the property adjoining it on the northwest. Counsel for the applicants excepted to this finding and moved

for a new trial. His motion was overruled, whereupon the applicants excepted and duly filed their bill of exceptions, which was approved and transmitted to this court. On May 8, 1914, counsel for the said husband and wife filed a written application in the Court of Land Registration for the registration of four parcels of land, together with the buildings thereon, of which they claimed to be the absolute owners. The first of said parcels, Lot No. 1, comprising a house and three other buildings known as accesorias, all of strong materials, is situated in Calle Juan Luna, formerly Calle Jolo or Anloague of the district of Binondo, and has an area of 175.08 square meters; the second parcel, Lot No. 2, comprising a house of strong materials erected thereon, likewise situated in Calle Juan Luna, formerly Calee Jolo or Analoague, Binondo, is 212.05 square meters in area; the third parcel of land, Lot No. 3, comprising two houses and sheds of strong materials is located in Calle Elcano, San Nicolas, Binondo, and measures 596.06 square meters in area; and the fourth parcel of land, Lot No. 2, containing two buildings of strong materials, one of them of three stories, situated in Calle Elcano, San Nicolas, Binondo, 813.01 square meters in area. The street numbers of the two latter properties appear in the said judgment, and their boundaries are given in both the said plan No. 1 and in their respective technical descriptions. The application recites that the first of the four above mentioned properties was appraised in the last assessment, the land at P4,664 and the buildings at P4,000; the second parcel, the land at P5,492 and the buildings at P3,600; the third parcel, the land at P6,329 and the buildings at P22,500; and that the said properties are all unencumbered and no one has any right or share therein except the applicants, who acquired them by purchase, the first parcel applicants, from Felix Zalvidea, by a public instrument of June 11, 1912; the second parcel, from Clara Lichauco and her husband Catalino Arevalo, by a public instrument of September 12, 1912; the third parcel, from Antonio Abraham Brimo, by a public instrument of March 28, 1911; and the fourth parcel, from Marcela Lao, by a public instrument of April 17, 1914. The application recites the names of the tenants who occupy the first three properties and states that the applicants occupy the fourth. The names and addresses if the owners or proprietors of the adjoining properties are also given. After due service of notice, counsel for the administrator of the estate of the deceased Lorenza Alburo filed in court a written objection, alleging that in the part of the application relative to the second parcel of the plan No. 1, a stone wall shown in that plan to be northeast of the said parcel had been improperly included; that this wall had belonged to the said Lorenza Alburo, for it had existed since March 8, 1881; that the principal timbers of the building that had belonged to the said deceased had rested on it for more than thirty-five years, and the latter's successors had been and were now in the quiet, peaceable and uninterrupted possession of the said wall. At the trial of the case both parties thereto introduced documentary and oral evidence, and the judge of the Court of Land Registration made a personal inspection of the wall in question and of the respective properties of the applicants and the objectors. In the judgment appealed from it is held that the applicants, Domingo Lao and Albina de los Santos, conclusively and satisfactorily proved that they were, and had been for about forty years, the lawful owners and possessors of the four properties sought to be registered; wherefore the court decreed the registration thereof in their names, but ordered that record

be made in the decree that the wall marked on the plan of the parcel No. 2 as a stone wall was a party wall. Hence the question to be decided relates solely to the matter of the said wall of the property designated as parcel No. 2-the subject matter of the objection filed by the administrator of the estate of the deceased Lorenza Alburo, owner of the property adjoining that designated on the said plan as parcel No. 2-inasmuch as the said administrator alleges in his objection that the said stone wall forms a part of the property that belonged to the said deceased while the applicants claim that this wall is theirs, being a part of the strong-material house constructed on the said parcel of land, Lot No. 2 according to the plan, Exhibit A. Article 572 of the Civil Code provides that the easement of party walls is presumed, unless there is a title or exterior mark or proof to the contrary in the dividing walls of adjoining buildings up to the common point of elevation. As the court held in th judgment appealed from that the wall which lies between the properties of the applicants and the objectors was a party wall, and as the applicants appealed from this ruling, it devolves upon us to decide whether it is in fact a party wall, as counsel for the administrator of the estate of the deceased Alburo or for her heirs finally admitted that it was in assenting to that decision, although he averred in his written objection that it was the exclusive property of the objectors; or whether, on the contrary, this wall is a part of property marked No. 2 on the plan Exhibit A, as the applicants claim. Article 573 of the Civil Code also declares that it shall be understood that there are exterior signs which conflict with the easement of party wall, when, among other circumstances, the entire wall is built on one of the lots and not on the line dividing the two adjoining parcels; when the dividing wall, being constructed of stone and cement, has stones projecting at intervals from the surface on one side only and not on the other; and when it supports joists, beams, floors, and the roof timbers of one of the houses but not of the adjoining building. The record shows it to have been duly proven that the enclosing wall of Lot No. 2 of the plan Exhibit A, belonging to the applicants, much higher than the adjoining building of the objectors; that along the top of the said wall there is a gutter which catches the rain water from the eaves of the roof of the applicants' building and carries it thence to Calle Juan Luna through an iron pipe fastened to the said wall; that one-half of the top of the said wall is covered by the roof of the applicants' building; that the supports of the said wall project toward the side of the applicants' land and that none of the buttresses are on the side of the objectors' lot; that the stones of the wall in dispute are bound or inset in the rear enclosing wall of the applicants' property in such wise that the two walls that inclose the lot form but a single construction, the exterior signs of which show that the wall in question is not a party wall, but that it forms a part of the applicants' building and belongs to them. Besides the signs just referred to, the evidence also shows that on the objectors' land and flanking the disputed wall there is another and lower wall which has no connection with the one in question. Cayetano Arguelles, a master builder, who climbed to the top of the wall in question and examined it, testified that the aforesaid drain caught the rain water from the eaves of the applicants' roof, and that from the outside the division or space between the applicants' wall and and the wall on the objectors' land could be seen; that the lower part of this latter wall had two archlike hollows; that according to the testimony of the objector,

Ireneo Mendoza, the latter wall was that of an old building that had belonged to the said deceased and was destroyed by an earthquake; and that in the rear of the objectors' land were the ruins, according to the said witness Mendoza were what was left of the wall of a latrine formerly existing there. These exterior signs contrary to the existence of a party-wall easement cannot be offset by the circumstance that the disputed wall projects into Calle Juan Luna 74 centimeters farther than the applicants' building, and neither can the fact that the face of this projecting wall is on the same street line as the objectors' building, for the reason that, in view of the said signs contrary to the existence of the easement of party wall, the projection of the wall does not prove that it was a party wall belonging in common to the applicants and the objectors and that the latter shared in the ownership thereof.

The objectors have not proved that a part or one-half of the wall in litigation was erected on the land that belonged to the deceased Lorenza Alburo. The fact that the owners of the objectors' property may have surreptitiously inserted some of the timbers or joists of their building in the wall belonging to the applicants is not enough to convert this latter into a party wall, when there are do many exterior signs to indicate the exclusive ownership, of the wall and to conflict with the existence of the easement that the objectors endeavor to establish. The wall in litigation is fully proven by the record to belong exclusively to the applicants. All of the applicants' properties, including the wall in question, should therefore be registered. For the foregoing reasons the judgment appealed from is affirmed, but the decree of registration of the property designated as Lot No. 2 shall include the disputed wall as belonging exclusively to the applicants, and that part of the judgment appealed form in which it was held that the said wall is a party wall is hereby reversed; without special finding as to costs. So ordered.

Exterior signs Easement of light and view, kinds of, prescription [G.R. No. L-14652. June 30, 1960.] JUAN GARGANTOS, petitioner, vs. TAN YANON and THE COURT OF APPEALS, respondents. Jose T. Nery for petitioner. Constantino P. Tadena for respondents. SYLLABUS

EASEMENT OF LIGHT AND VIEW; TWO ADJOINING ESTATES FORMERLY OWNED BY ONE PERSON; WHEN EXISTENCE OF DOORS AND WINDOWS IS EQUIVALENT TO A TITLE. Where two adjoining estates were formerly owned by just one person who introduced improvements on both such that the wall of the house constructed on the first estate extends to the wall of the camarin on the second estate; and at the time of the sale of the first estate, there existed on the aforementioned wall of the house, doors and windows which serve as passages for light and view, there being no provision in the deed of sale that the easement of light and view will not be established, the same is covered by Article 624, New Civil code, which provides that the existence of an apparent sign of easement between two estates established by the proprietor of both, shall be considered, if one of them is alienated, as a title so that easement will continue actively and passively, unless at the time the ownership of the estate is divided, the contrary is stated in the deed of alienation of either of them, or the sign is made to disappear before the instrument is executed. The existence of doors and windows on the aforesaid wall of the house is equivalent to a title, for the visible and permanent sign of an easement is the title that characterizes its existence. But while the law declares that the easement is to "continue", the easement actually arises for the first time only upon alienation of either estate, inasmuch as before that time there is no easement to speak of, there being but one owner of both estates (Article 613, N.C.C.). DECISION GUTIERREZ DAVID, J p: Juan Gargantos appeals by certiorari from the decision of the Court of Appeals reversing the judgment of the Court of First Instance of Romblon. The record discloses that the late Francisco Sanz was the former owner of a parcel of land containing 888 square meters, with the buildings and improvements thereon, situated in the poblacion of Romblon. He subdivided the lot into three and then sold each portion to different persons. One portion was purchased by Guillermo Tengtio who subsequently sold it to Vicente Uy Veza. Another portion, with the house of strong materials thereon, was sold in 1927 to Tan Yanon, respondent herein. This house has on its northeastern side, doors and windows overlooking the third portion, which, together with the camarin and small building thereon, after passing through several hands, was finally acquired by Juan Gargantos, petitioner herein. On April 23, 1955, Gargantos applied to the Municipal Mayor of Romblon for a permit to demolish the roofing of the old camarin. The permit having been granted, Gargantos tore down the roof of the camarin. On May 11, 1955, Gargantos asked the Municipal Council of Romblon for another permit, this time in order to construct a combined residential house and warehouse on his lot. Tan Yanon opposed approval of this application. Because both the provincial fiscal and district engineer of Romblon recommended granting of the building permit to Gargantos, Tan Yanon filed against Gargantos an action to restrain him from constructing a building that would prevent plaintiff from receiving light and enjoying the view through the windows of his house, unless such building is erected at a distance of not less than three meters from the boundary line between the lots of plaintiff

and defendant, and to enjoin the members of the Municipal Council of Romblon from issuing the corresponding building permit to defendants. The case as against the members of the Municipal Council was subsequently dismissed with concurrence of plaintiff's council. After trial, the Court of First Instance of Romblon rendered judgment dismissing the complaint and ordering plaintiff to pay defendant the sum of P12,500.00 by way of compensatory, exemplary, moral and moderate damages. On appeal, the Court of Appeals set aside the decision of the Court of First Instance of Romblon and enjoined defendant from constructing his building unless "he erects the same at a distance of not less than three meters from the boundary line of his property, in conformity with Article 673 of the New Civil Code." So Juan Gargantos filed this petition for review of the appellate Court's decision. The focal issue herein is whether the property of respondent Tan Yanon has an easement of light and view against the property of petitioner Gargantos. The kernel of petitioner's argument is that respondent never acquired any easement either by title or by prescription. Assuredly, there is no deed establishing an easement. Likewise, neither petitioner nor his predecessors-in-interest have ever executed any deed whereby they recognized the existence of the easement, nor has there been final judgment to that effect. Invoking our decision in Cortes vs. Yu-Tibo (2 Phil., 24), petitioner maintains that respondent has not acquired an easement by prescription because he has never formally forbidden petitioner from performing any act which would be lawful without the easement, hence the prescriptive period never started. It is obvious, however, that Article 538, O.C.C. (now Article 621, N.C.C.) and the doctrine in the Yu-Tibo case are not applicable herein because the two estates, that now owned by petitioner, and that owned by respondent, were formerly owned by just one person, Francisco Sanz. It was Sanz who introduced improvements on both properties. On that portion presently belonging to respondent, he constructed a house in such a way that the northeastern side thereof extends to the wall of the camarin on the portion now belonging to petitioner. On said northeastern side of the house, there are windows and doors which serve as passages for light and view. These windows and doors were in existence when respondent purchased the house and lot from Sanz. The deed of sale did not provide that the easement of light and view would not be established. This then is precisely the case covered by Article 541, O.C.C. (now Article 624, N.C.C.) which provides that the existence of an apparent sign of easement between two estates, established by the proprietor of both, shall be considered, if one of them is alienated, as a title so that the easement will continue actively and passively, unless at the time the ownership of the two estates is divided, the contrary is stated in the deed of alienation of either of them, or the sign is made to disappear before the instrument is executed. The existence of the doors and windows on the northeastern side of the aforementioned house, is equivalent to a title, for the visible and permanent sign of an easement is the title that characterizes its existence (Amor vs. Florentino, 74 Phil., 403). It should be noted, however, that while the law declares that the easement is to "continue" the easement actually arises for the first time only upon alienation of either estate, inasmuch as before that time there is no easement to speak of, there being but one owner of both estates (Article 530, O.C.C., now Article 613, N.C.C.).

We find that respondent Tan Yanon's property has an easement of light and view against petitioner's property. By reason of this easement, petitioner cannot construct on his land any building unless he erects it at a distance of not less than three meters from the boundary line separating the two estates. Wherefore, the appealed decision is hereby affirmed with costs against petitioner.

[G.R. No. 911 . March 12, 1903.] MAXIMO CORTES, plaintiff-appellant, vs. JOSE PALANCA YU-TIBO, defendantappellee. Felipe G. Calderon for appellant. Simplicio del Rosario for appellee. SYLLABUS 1.REAL PROPERTY; EASEMENTS; LIGHT AND AIR. The easement-of light in the case of windows opened in one's own wall is negative, and can not be acquired by prescription except where sufficient time of possession has elapsed after the owner of the dominant estate, by a formal act, has prohibited the owner of the servient estate from doing something which would be lawful but for the easement. 2.ID.; ID.; ID.. Different doctrines are applicable to the acquisition of easements in favor of windows opened in one's own ,wall and of those opened in a party wall. In the latter case the express or implied consent of the part owner affords a basis for the acquisition of a prescriptive title. 3.ID.; ID.; ID. Different doctrines are applicable to the acquisition of easements in favor of windows opened in one's own wall and those opened in the wall of a neighbor; in the latter case prescription commences to run from the date of the opening of the windows and ripens into title when the specified time was elapsed without opposition on the part of the owner of the wall. 4.ID.; ID.; ID. The judgment of the supreme court of Spain of February 7, 1896, is distinguishable on the ground that the easement there in question, created by the owner of both dominant and servient estates, was positive because it consisted of the active enjoyment of the light as opposed to mere tolerance on the part of an adjoining owner of windows opened in one's own wall. 5.ID.; ID.; ID. With reference to the law of easements of light and air there is no distinction to be made between ordinance windows and others. 6.ID.; ID.; ID. A watershed protecting a window from sun and rain is a mere accessory thereto and follows the condition of the window itself.

7.ID.; ID.; VIEW. Article 582 of the Civil Code, pertaining to easement of view from windows, balconies, or similar projections, has no application to a protecting shed over a window. 8.ID.; ID.; ID. Article 585 of the Civil Code is applicable only to cases in which an easement has been acquired and can not be cited in support of a contention that an easement exists. 9.PLEADING AND PRACTICE; APPEAL; VALUE IN CONTROVERSY. Where the litigation involves an easement in favor of one certain piece of property worth less than $25,000, the Supreme Court of the United States can have no jurisdiction on appeal, since the easement alone can not be worth more than the entire property. 10.ID., ID., ID. Where the value of the property in controversy does not equal $25,000, the fact that plaintiff has similar claims to other property not in controversy whose value exceeds $20,000 can not be considered in the allowance of an appeal to the Supreme Court of the United States. DECISION MAPA, J p: This suit was brought to obtain an injunction, in accordance with the provisions of sections 162 to 172 of the Code of Civil Procedure, for the purpose of restraining the continuation of certain buildings commenced by the defendant. The court below issued a preliminary injunction during the trial, but, upon rendering final judgment, dissolved the injunction, with the costs against the plaintiff. The latter excepted to this judgment and assigns error. In the trial the following facts were admitted without contradiction: (1)That house No. 65 Calle Rosario, this city, property of the wife of the plaintiff, has certain windows therein, through which it receives light and air, said windows opening on the adjacent house, No. 63 of the same street; (2) that these windows have been in existence since the year 1843, and (3) that the defendant, the tenant of the said house No. 63, has commenced certain work with the view to raising the roof of the house in such a manner that one-half of one of the windows in said house No. 65 has been covered, thus depriving the building of a large part of the air and light formerly received through the window. In its decision the court below practically finds the preceding facts, and further finds that the plaintiff has not proven that he has, by any formal act, prohibited the owner of house No. 63 from making improvements of any kind therein at all time prior to the complaint. The contention of the plaintiff is that be the constant and uninterrupted use of the windows referred to above during a period of fifty-nine years he acquired by prescription an easement of light in favor of the house No. 65, and as a servitude upon house No. 63, and, consequently, has acquired the right to restrain the making of any improvements in the latter house which might in an manner be prejudicial to the enjoyment of the said easement. He contends that the easement of light is positive; and that therefore the period of possession for the purposes of the acquisition of a prescriptive title is to begin from the date

on which the enjoyment of the same commenced, or, in other words, applying the doctrine to this case, from the time that said windows were opened with the knowledge of the owner of the house No. 63, and without opposition on his part. The defendant, on the contrary, contends that the easement is negative, and that therefore the time for the prescriptive acquisition thereof must begin from the date on which the owner of the dominant estate may have prohibited, by a formal act, the over of the servient estate from doing something which would be lawful but for the existence of the easement. The court below in its decision held that the easement of light is negative, and this ruling has been assigned by the plaintiff as error to be corrected by this court. A building may receive light in various manners in the enjoyment of an easement of light, because the openings through which the light penetrates may be made in one's own wall, in the wall of one's neighbor, or in a party wall. The legal doctrine applicable in either one of these case is different, owing to the fact that, although anyone may open windows in his own wall, no one has a right to do so in the wall of another without the consent of the owner, and it is also necessary, in accordance with article 580 of the Civil Code, to obtain the consent of the other coowner when the opening is to be made in a party wall. This suit deals with the first case; that is, windows opened in a wall belonging to the wife of the plaintiff, and it is this phase of the easement which it is necessary to consider in this opinion. When a person opens windows in his own building does nothing more than exercise an act of ownership inherent in the right of property, which, under article 348 of the Civil Code, empowers him to deal with his property as he may see fit, with no limitations other than those established by law. By reason of the fact that such an act is performed wholly on a thing which is wholly the property of the one opening the window, it does not in itself establish any easement, because the property is used by its owner in the exercise of dominion, and, not as the exercise of an easement: "For a man," says law 13, title 31, third partida, "should not use that which belongs to him as if it were service only, but as his own property." Coexistent with this right is the right of the owner of the adjacent property to cover up such windows by building on his own land or raising a wall contiguously to the wall in which the windows are opened (art. 581 of the same code), by virtue of the reciprocity of rights which should exist between abutting owners, and which would cease to exist if one could do what he pleased on his property and the other could not do the same on his. Hence it is that the use of the windows opened in a wall on one's own property, in the absence of some covenant or express agreement to the contrary, is regarded as an act of mere tolerance on the part of the owner of the abutting property judgments of the supreme court of Spain of the 17th of May, 1876; 10th of May, 1884; 30th of May, 1890 ), and does not create any right to maintain the windows to the prejudice of the latter (judgment of the supreme court of Spain of the 13th of June, 1877). The mere toleration of such an act does not imply on the part of the abutting owner a waiver of his right to freely build upon his land as he may see fit, nor does it avail the owner of windows for the effects of possession according to article 1942 of the Civil code, because it is a mere possession at will. From all this it follows that the easement of light with respect to the openings made in one's own edifice does not consist precisely in the fact of opening them or using them, inasmuch as

they may be covered up at any time by the owner of the abutting property, and, as Manresa says in his commentaries on the Civil Code, "there is true easement as long as the right to impede its use exists." The easement really consists in prohibiting or restraining the adjacent owner from doing anything which may tend to cut off or interrupt the light; in short, it is limited to the obligation of not impeding the light (ne luminibus officiatur). The latter coincides in its effects, from this point of view, with the obligation of refraining from increasing the height of a building (altius non tollendi), which, although it constitutes a special easement, has for its object, at times, the prevention of any interruption of the light enjoyed by the adjacent owner. It will be readily observed that the owner of the servient estate subject to such an easement is under no obligation whatsoever to allow anything to be done on his tenement, nor to do anything there himself, but is simply restrained from doing anything thereon which may tend to cut off the light from the dominant estate, which he would undoubtedly be entitled to do were it not for the existence of the easement. If, then, the first condition is that which is peculiar to positive easements, and the second condition that which is peculiar to negative easements, according to the definition of article 533 of the Civil Code, it is our opinion that the easement of lights in the case of windows opened in one's own wall is of a negative character, and, as such, can not be acquired by prescription under article 538 of the Civil Code, except by counting the time of possession from the date on which the owner of the dominant estate may, by a formal act, have prohibited the owner of the servient estate from doing something which it would be lawful for him to do were it not for the easement.

The supreme court of Spain, in its decisions upon this subject, has established these principles by a long line of cases. In its judgment of May 14, 1861, the said court holds that "the prescription of the easement of lights does not take place unless there has been some act of opposition on the part of the person attempting to acquire such a right against the person attempting to obstruct its enjoyment." "The easements of light and view," says the judgment of March 6, 1875, "because they are of a negative character, can not be acquired by a prescriptive title, even if continuous, or although they may have been used for more than twenty-eight years, if the indispensable requisite for prescription is absent, which is the prohibition on the one part, and the consent on the other, of the freedom of the tenement which it is sought to charge with the easement." In its judgment of June 13, 1877, it is also held that use does not confer the right to maintain lateral openings or windows in one's own wall to the prejudice of the owner of the adjacent tenement, who, being entitled to make use of the soil and of the space above it, may, without restriction, build on his line or increase the height of existing buildings, unless he has been " forbidden to increase the height of his buildings and to thus cut off the light,'' and such prohibition has been consented to and the time fixed by law subsequently expired. The court also holds that it is error to give the mere existence or use of windows in a wall standing wholly on the land of one proprietor the creative force of a true easement, although they may have existed from time immemorial. Finally, the judgments of the 12th of November, 1889, and the 31st of day, 1890, hold that "as this supreme court has decided, openings made in walls standing wholly on the land of one proprietor and which overlook the land of another exist by mere tolerance in the absence of an agreement to the contrary, and can not be acquired by prescription, except

by computing the time from the execution of some act of possession which tends to deprive the owner of the tenement affected of the right to build thereon." Various other judgments might be cited, but we consider that those above mentioned are sufficient to demonstrate the uniformity of the decisions upon this point. It is true that the supreme court of Spain, in its decisions of February and May 5, 1896, has classified as positive easements of lights which were the object of the suits in which these decisions were rendered in cassation, and from these it might be believed as first glance that the former holdings of the supreme court upon this subject had been overruled. But this is not so, as a matter of fact, inasmuch as there is no conflict between these decisions and the former decisions above cited. In the first of the suits referred to, the question turned upon two houses which had formerly belonged to the same owner, who established a service of light on one of them for the benefit of the other. These properties were subsequently conveyed to the different persons, but at the time of the separation of the property nothing was said as to the discontinuance of the easement, nor were the windows which constituted the visible sign thereof removed. The new owner of the house subject to the easement endeavored to free it from the incumbrance, notwithstanding the fact that the easement had been in existence for thirtyfive years, and alleged that the owner of the dominant estate had not performed any act of opposition which might serve as a starting point for the acquisition of a prescriptive title. The supreme court, in deciding this case, on the 7th of February, 1896, held that the easement in this particular case was positive, because it consisted in the active enjoyment of the light. This doctrine is doubtless based upon article 541 of the Code, which is of the following tenor: "The existence of apparent sign of an easement between two tenements, established by the owner of both of them, shall be considered, should be expressed in the deed of conveyance of either of them, or such sign is taken away before the execution of such deed." The word "active" used in the decision quoted in classifying the particular enjoyment of light referred to therein, presupposes on the part of the owner of the dominant estate a right to such enjoyment arising, in the particular case passed upon by that decision, from the voluntary act of the original owner of the two houses, by which he imposed upon one of them an easement for the benefit of the other. It is well known that easements are established, among other cases, by the will of the owners. (Article 536 of the Code.) It was an act which was, in fact, respected and acquiesced in by the new owner of the servient estate, since he purchased it without making any stipulation against the easement existing thereon, but on the contrary, acquiesced in the continuance of the apparent sign thereof. As is stated in the decision itself, "It is a principle of law that upon a division of a tenement among various persons in the absence of any mention in the contract of a mode of enjoyment different from that to which the former owner was accustomed such easements as may be necessary for the continuation of such enjoyment are understood to subsist." It will be seen, then, that the phrase "active enjoyment" involves an idea directly opposed to the enjoyment" which is result of a mere tolerance on the part of the adjacent owner, and which, as it is not based upon an absolute, enforceable right, may be considered as of a merely passive character. Therefore, the decision in question is not in conflict with the former rulings of the supreme court of Spain upon the subject, inasmuch as it deals with an easement of light established by the owner of the servient estate, and which continued in force after the estate was sold, in accordance with the special provisions of article 541 of the Civil Code.

Nor is the other decision cited, on May 5, 1896, in conflict with the doctrine above laid down, because it refers to windows opened in a party wall, and not in a wall the sole and exclusive property of the owner of the dominant tenement, as in the cases referred to by the other decisions, and as in the case at bar. The reason for the difference of the doctrine in the one and the other case is that no part owner can, without the consent of the other, make in a party wall a window or opening of any kind, as provided by article 580 of the Civil Code. The very fact of making such openings in such a wall might, therefore, be the basis for the acquisition of a prescriptive title without the necessity of any active opposition, because it always presupposes the express or implied consent of the other part owner of the wall, which consent, in turn, implies the voluntary waiver of the right of such part owner to oppose the making of such openings or windows in such a wall. With respect to the provisions of law 15, title 31, third partida, which the appellant largely relied upon in his oral argument before the court, far from being contrary to it, is entirely in accord with the doctrine of the decisions above referred to. This law provides that "if anyone shall open a window in the wall of his neighbor, through which the light enters his house," by this sole fact he shall acquire a prescriptive title to the easement of light, if the time fixed in the same law (ten years as to those in the country and twenty years as to absentees ) expires without opposition on the part of the owner of the wall; but, with the exception of this case, that is to say, when the windows are not opened in the wall of the neighbor, the law referred to requires as a condition to the commencement of the running of the time for the prescriptive acquisition of the easement, that "the neighbor be prohibited from raising his house, and from thereby interrupting the light." That is to say, he must be prohibited from exercising his right to build upon his land, and cover the window of the other. This prohibition, if consented to, serves as a starting point for the prescriptive acquisition of the easement. It is also an indispensable requisite, therefore, in accordance with the law of the partidas, above mentioned, that some act of opposition be performed, in order that an easement may be acquired with respect to openings made in one's own wall. For a proper understanding of this doctrine, it is well to hold in mind that the Code of the partidas, as well as the Roman law, clearly distinguishes two classes of easements with respect to the lights of houses, as may be seen in law " of title 31, of the third partida. One of them consists in "the right to pierce the wall of one's neighbor to open a window through which the light may enter one's house" (equivalent to the so-called easement of luminum of the Romans ); the other is "the easement which one house enjoys over another, whereby the latter can not at any time be raised to a greater height than it had at the time the easement was established, to the end that the light be not interrupted." (Ne luminibus officiator.) For the prescriptive acquisition of the former the time must begin, as we have seen, from the opening of the window in the neighbor's wall. As to the second, the time commences from the date on which he was "prevented from raising his house." Some of the judgments which establish the doctrine above laid down were rendered by the supreme court of Spain interpreting and applying the above-cited law 15, title 31, partida 3, and therefore they can not in any sense be regarded as antagonistic to the law itself. The question as to whether the windows of the house of the plaintiff are, or are not, socalled regulation windows, we consider of but little importance in this case, both because the authority of the decisions of the law of the partidas, above cited, refers to all kinds of

windows, and not to regulation windows solely, and because the record does not disclose, nor has the appellant even stated, the requirements as to such regulation windows under the law in operation prior to the Civil Code, which he asserts should be applied and on which he relies to demonstrate that he has acquired by prescription the easement in question. With respect to the watershed which, according to the plaintiff, exists over the window in question, the record does not disclose that the same has been destroyed by the defendant. He expressly denies it on page 7 of his brief, and affirms (p. 8 ) that the tenant of the appellant's property himself removed it, by reason of the notice served on him; on the other hand, the judgment of the court below contains no findings with respect to this fact, nor does it disclose the former existence of any such watershed. Furthermore, the opinion which we have formed with respect to this matter, in so far as we are able to understand the merits of the case, is that this shed was a mere accessory of the window, apparently having no other purpose than that of protecting it against the inclemency of the weather; this being so, we are of opinion that it should follow the condition of the window itself, in accordance with the legal maxim that the accessory always follows the principal. The appellant contends that the shed should be regarded as a projection within the provisions of article 582 of the Code; but it is sufficient to observe that this article speaks of windows with direct views, balconies, or similar projections, in order to conclude that the article does not refer to such watersheds, which have not the slightest degree of similarity to balconies, nor are they constructed for the purpose of obtaining the view this being the subject-matter which this article expressly purports to control inasmuch as such sheds have rather the effect of limiting the scope of the view than of increasing it.

The fact that the defendant did not cover the windows of the other house adjacent to No. 63 at the time he covered the windows of the appellant, a fact which the latter adduces as proof of the recognition on the part of the former of the prescriptive acquisition of the easement of the light in favor of that house, which, according to his statement, is under precisely the same conditions as the house of the plaintiff, does not necessarily imply, in our opinion, any such recognition, as it might be the result of a mere tolerance on the part of the defendant. Certainly the fact of his tolerating, the use by the owner of that house of such windows, supposing the facts to be as stated, does not carry with it as a result an obligation to exercise the same forbearance with respect to the plaintiff; but whatever may be the legal status of the windows in the house referred to with respect to the house No. 63, we can not pass upon the point, nor can we form suppositions concerning the matter for the purpose of drawing conclusions of any kind therefrom to support our opinion, for the simple reason that it is not a point at issue in this case, and more especially because the defendant not only denied the existence of the alleged easement of light in favor of-the house referred to, but, on the contrary, he affirms that demand has been made that the windows in said house be closed, as may be seen on page 8 of his brief. The point discussed in this trial being whether the plaintiff has acquired the easement which he seeks to enforce over the house of which the defendant is tenant, it is evident that the provisions of article 585 of the Civil Code can not be involved without taking for granted the very point at issue. This article refers to cases in which, under any title, the right has been acquired to have direct views, balconies, or belvederes over contiguous property. The

existence of such a right being the very point at issue, the supposition upon which the article rests is lacking, and it is therefore not in point. As a result of the opinion above expressed, we hold: 1.That the easement of light which is the object of this litigation is of a negative character, and therefore pertains to the class which can not be acquired by prescription as provided by article 638 of the Civil Code, except by counting the time of possession from the date on which the owner of the dominant estate has, in a formal manner, forbidden the owner of the servient estate to do an act which could be lawful were it not for the easement. 2.That, in consequence thereof, the plaintiff, not having executed any formal act of opposition to the right of the owner of house No. 63 Calle Rosario (of which the defendant is tenant ), to make therein improvements which might obstruct the light of house No. 65 of the same street, the property of the wife of the appellant, at any time prior to the complaint, as found by the court below in the judgment assigned as error, he has not acquired, nor could he acquire by prescription, such easement of light, no matter how long a time might have elapsed since the windows were opened in the wall of the said house No. 65, because the period which the law demands for such prescriptive acquisition could not have commenced to run, the act with which it must necessarily commence not having been performed. Therefore, we affirm the judgment of the court below and condemn the appellant to the payment of all damages caused to the plaintiff, and to the payment of the court of this appeal. So ordered. Arellano, C.J., Cooper, Willard and Ladd, JJ., concur. Torres, J., did not sit in this case.

ON MOTION FOR A REHEARING. The plaintiff asks for a rehearing of the decision of the court of March 12th last upon the ground that the same contains error: First, because the decision holds that the window opened in the plaintiff's own wall and the watershed do not constitute the continuous and apparent easements of prospect, light, and ventilation, or jus projitiendi and jus spillitiendi, this ruling being in opposition to the provisions of laws 12, 14, and 15, title 31, third partida, and articles 530, 532, 533, 537, 538, 582, and 585 of the Civil Code. This allegation is entirely unfounded, inasmuch as the decision of the court contains no declaration as to whether the windows and watershed do or do not constitute continuous and apparent easements, or jus projitiendi and jus spillitiendi. These questions were not drawn into issue by the complaint, and therefore any decision thereon one day or the other would have been mere dicta. What the court did hold was that the easement of light, when it

is sought to claim such benefit from a window opened in one's own wall, as does the appellant with respect to the tenement of the defendant, belongs to the class of negative easements, and that on that account the time of possession for prescriptive acquisition of the title thereto must be counted, not from the time of the opening of the windows, but from the time at which the owner thereof has executed some act of opposition tending to deprive the owner of the servient tenement of his right, under the law, to build upon it to such height as he might see fit in the legitimate use of his rights of ownership. With respect to the watershed, the court held that the shed in question in the case is not included within the class of projections referred to in article 582 of the Civil Code, and certain it is that neither this article nor and of the other provisions of law cited by the appellant in his motion papers establish any doctrine contrary to that laid down in the decision, either with regard to the watershed or with respect to the windows. It is not necessary to say anything further upon this point. It is sufficient to read the text of the laws cited to reach the conclusion that the assertion made by the appellant in his motion papers is entirely gratuitous. Article 582 provides that windows with direct views, balconies, or other similar projections opening upon the tenement of one's neighbor are not permissible unless there are two meters distance between the wall in which such openings are constructed and the adjacent tenement. From this the appellant draws the conclusion that he who opens windows in his own wall without respecting the distance mentioned does not exercise an act of ownership, as stated in the decision, inasmuch as he violates an express provision of the law. The conclusion reached is evidently false. The appellant confounds the facts with the law an act of ownership with the right of ownership. The owner of a thing does not cease to be such owner because in his manner of use or enjoyment thereof he violates some provision of law. The acts which he performs, in our opinion, even if abusive or contrary to law, are in a strict sense acts of ownership, acts in the exercise of dominion, because this character is not derived from a greater or less degree of compliance with the provisions of law, but from the existence of the status of owner on the part of the person who exercises such acts. In order that the act performed by the owner of a wall in opening windows therein be a true act of ownership it is a matter of indifference whether or not the distance prescribed by article 582 of the Code has been respected, although, considered from a legal point of view, it might be an illegal act, as not complying with the conditions imposed by law. The doctrine laid down by law 13, title 31, partida 3, cited in the decision, to the effect that "a man should not use that which belongs to him as if it were a service only, but as his own property" is of general application, and does not refer to the easements which a property owner may establish for the benefit of his heirs, as is erroneously believed by the appellant. The very same law provides that easements which "a man imposes upon his house must be for the benefit of the tenement or thing of another, and not that of his own tenement;" and this is because things are of service to their owner by reason of dominion, and not in the exercise of a right of easement. "Res sua," says a legal maxim, "nemini jure servitutis servit." The provision of article 1942 of the Civil Code to the effect that acts which are merely tolerated produce no effect with respect to possession is applicable as much to the prescription of real rights as to the prescription of the fee, it being a glaring and self-evident error to affirm the contrary, as does the appellant in his motion papers. Possession is the

fundamental basis of the prescription. Without it no kind of prescription is possible, not even the extraordinary. Consequently, if acts of mere tolerance produce no effect with respect to possession, as that article provides, in conformity with article 114 of the same Code, it is evident that they can produce no effect with respect to prescription, whether ordinary or extraordinary. This is true whether the prescriptive acquisition be of a fee or of real rights, for the same reason holds in one and the other case; that is, that there has been no true possession in the legal sense of the word. Hence, it is because the use of windows in one s own wall is the result of a mere tolerance that the supreme court of Spain, in its judgment of June 13, 1877, has held that such user lacks the creative force of a true easement, although continued from time immemorial. The citation of article 1959 of the Civil Code and of law 21, title 29, partida 3, made by the petitioner, is therefore not in point, because both of these provisions of law, which refer to the extraordinary period of prescription, presuppose possession as a necessary requisite, even if without either just title or good faith. The second error assigned is that in the decision the court holds that the gravamina constituted by the window and the projection are negative easements, against the provisions of article 533, which define them as positive, which definition, he adds, is supported by the judgments of the supreme court of Spain of February 7 and May 5, 1896, cited in paragraph 1" of the said decision, which judgments declare that the easement resting from a window is positive.

It is not true that article 533 of the Civil Code says that the easement of light is positive, because it does nothing more than give in general terms the definition of positive easements and negative easements, without attempting to specify whether the easement of lights pertains to the first or to the second class. We have declared that the easement is negative, having in mind this very definition of the Code and the doctrine established by the judgments of the supreme court of Spain which have been cited in our opinion. The interpretation which the appellant attempts to give the article of the Civil Code cited is evidently erroneous, and, consequently, the citation made by him in support of his contention is not in point. Our opinion of the true extent and meaning of the judgments of the supreme court of Spain of February 7 and May 5, 1896, has been already sufficiently explained, and it is therefore unnecessary to go into the subject again here. We refer to our decision with respect to what was said therein upon this subject. The decision of the court does not contain the declaration, as gratuitously assumed by the appellant, that the easement resulting from a projection is of a negative character; nor, in fact, had we any occasion to make such a declaration, in view of the nature of the issues raised and discussed during the trial. What we did, indeed, hold was that the watershed mentioned in the complaint, the purpose of which was simply to protect the window in question from sun and rain, was a mere accessory to that window, and that in no case could it be considered as a projection within the provisions of article 582 of the Civil Code, as so erroneously contented by the appellant at the trial. The find nothing in his motion papers which can in any way weaken this holding.

The third error assigned is that the court holds that the easement of light, as negative, can not be acquired by prescription except by counting the period of possession from the time at which the owner of the servient tenement has been prohibited from making improvements which might interfere with said easement, contrary to the provisions of law 14, title 31, partida 3, and articles 538 and 585 of the Civil Code, which establish the contrary. This assertion is entirely destitute of foundation, inasmuch as neither in the law of the partidas nor in the articles of the Civil Code mentioned is to be found the doctrine which the appellant arbitrarily seeks to deduce from them. It is sufficient to read the text to reach the conclusion that the assertion is wholly gratuitous. The fourth error assigned is that the court holds that the watershed, as being an accessory of the window, can not in itself constitute an easement, this being contrary to the provisions of articles 582 and 585 of the Civil Code, and law 2, title 31, partida 3, which do not make any such distinction. Neither of the laws cited speaks expressly of watersheds. We have held that article 582 refers solely to windows, balconies, and other similar projections, and that the watershed in question does not pertain to this class of projections, our holding being based upon the reasons given in our decision. The appellant advances no argument worthy of serious consideration, and therefore we continue to believe that our opinion in this matter is strictly in accordance with the law. The appellant has attached to his motion for a rehearing two judgments, one rendered by the Royal Audiencia of Manila September 6, 1877, and the other by the supreme court of Spain on the 22d of February, 1892, and we think it well to say a few words concerning them. In the opinion of the appellant these judgments support the theory contended for by him at the trial, that the easement of lights is positive and not negative. His error in so believing is evident, inasmuch as neither of the judgments referred to establishes any such doctrine. On the contrary, it appears clear, from the first of these judgments, that the easement referred to is negative in the opinion to the court which rendered it. This appears from the eighth conclusion of law therein, which is literally as follows: "From the evidence introduced by the defendant, and even from the testimony of witnesses of the plaintiff, it has been proven that since 1828 the house in question has suffered no change or alteration in its roof, which projects over Cosio's lot, which constitutes the active opposition necessary in order to acquire by prescription the right to the light." It will be seen, then, that the latter part of the preceding transcript of the conclusion of law lays down precisely the same doctrine as that expressed in our decision that active opposition is a necessary condition for prescriptive acquisition of an easement of light. And this also demonstrates conclusively that the court which rendered the judgment referred to considered the easement to be negative, inasmuch as positive easements do not require any active opposition as a basis for their prescriptive acquisition, such an act being solely necessary to the prescription of negative easements. It would appear, judging from his allegations as a whole, that the appellant confuses positive easements with continuous easements, and the judgment referred to, in fact, declares in its fourth conclusion of law that the easement of light is continuous. If this were really so the

error of the appellant would be manifest, because continuity is not a quality exclusively peculiar to positive easements; there are negative easements which are also continuous. Hence it is that the Civil Code, after classifying easements, in article 532, as continuous and discontinuous, classifies them also as positive and negative (art. 533), thus giving to understand that this latter classification depends upon other characteristics entirely distinct from the continuity or discontinuity of easements. If all continuous easements were positive and all discontinuous easements were negative, then the express division of easements into positive and negative made by the Code, after establishing the division of the same as continuous or discontinuous, would be entirely unnecessary, as they would be entirely merged or included in the latter classification. It is sufficient to read the text of the Code to understand beyond the possibility of a doubt that a negative easement may be continuous, and that a positive easement may be discontinuous, according to the special nature of each one. With respect to the second judgment the judgment of the supreme court of Spain of February 22, 1892 it is certainly difficult to understand how the appellant could have imagined that he had found therein the slightest ground for his contention, inasmuch as it laws down no doctrine which relates even by inference to the subject of easements, and simply holds, in the first of only two paragraphs in which its conclusions are contained, that "judgments should be clear, precise, and responsive to the complaint and the issues properly raised at the trial ;"and in the second, that "the judgment appealed was contradictory as to the questions it decides, because it makes certain declarations favorable to some of the contentions in the plaintiff's complaint and then gives judgment for the defendant, without making any distinction." It was for this reason alone, and for no other, that the judgment appealed as reversed and annulled. In the judgment rendered by the same supreme court upon the merits of the case, as a result of this decision in cassation, no other doctrine is laid down than that "the judgment must be that the defendant comply with those claims advanced by the complaint to which he has consented, and that he must be discharged as to those allegations which have been denied by him and which have not been proved by the plaintiff." 'There is not one word in these judgments which says that the easement of lights is positive, nor that a watershed constitutes a true projection within the meaning attached to this word in article 582 of the Civil Code, as has been vainly contended by the appellant in the trial. Therefore the appellant's motion for a rehearing of the decision of March 12, 1903, is denied. Arellano, C.J., Cooper, Willard and Ladd, JJ., concur. Torres and McDonough, JJ., did not sit in this case.

ON MOTION FOR WRIT OF ERROR TO REMOVE THE CASE OF THE SUPREME COURT OF THE UNITED STATES. WILLARD, J p:

The application to this court for the allowance of a writ of error or appeal for the purpose of removing this case to the Supreme Court of the United States is denied. Section 10 of the act of Congress of July 1, 1902, is as follows: "SEC 10.That the Supreme Court of the United States shall have jurisdiction to review, revise, reverse, modify, or affirm the final judgments and decrees of the Supreme Court of the Philippine Islands in all actions, cases, causes, and proceedings now pending therein or hereafter determined thereby in which the Constitution or any statute, treaty, title, right, or privilege of the United States is involved, or in causes in which the value in controversy exceeds twenty-five thousand dollars, or in which the title or possession of real estate exceeding in value the sum of twenty-five thousand dollars, to be ascertained by the oath of either party or of other competent witnesses, is involved or brought in question; and such final judgments or decrees may and can be reviewed, revised, reversed, modified, or affirmed by said Supreme Court of the United States on appeal or writ of error by the party aggrieved, in the same manner, under the same regulations, and by the same procedure, as far as applicable, as the final judgments and decrees of the circuit courts of the United States." There is no question in the case relating to the Constitution or any statute of the United States. The evidence submitted by the applicant shows that the value of his property over which this litigation turns is $11,867.70, money of the United States.

The fact that the plaintiff owns other houses in different parts of the city as to which he claims an easement of light similar to the one claimed in this case, that the decision in this case destroys all of these claimed easements, and that the value of those other houses exceeds $"5,000, gold, is not important. The test is the value of the matter in controversy. The matter in controversy here was the easement of light and air over the property No. 63 Calle del Rosario and in favor of house No. 65. That easement could not be worth more than the house itself. The easements in favor of other houses of the plaintiff over other lots than No. 63 were not in controversy in this suit. (Town of Elgin vs. Marshall, 106 U. S., 578.) So ordered. Drainage of Buildings Intermediate distances and works for certain constructions and plantings Easements against nuisance Lateral and subjacent support Voluntary easement [G.R. No. 130845. November 27, 2000.]

BRYAN U. VILLANUEVA, petitioner, vs. HON. TIRSO D.C. VELASCO in his capacity as Presiding Judge of the Regional Trial Court of Quezon City, Branch 88, JULIO N. SEBASTIAN and SHIRLEY LORILLA, respondents. The Law Firm of Chan Robles & Associates for petitioner. Pedro I. Rodriguez for private respondents. SYNOPSIS Petitioner Villanueva is the registered owner of a parcel of land previously owned by spouses Gabriel. When Villanueva bought the land, there was a small house on the southeastern portion, occupying one meter of the two-meter wide easement of right of way the Gabriel spouses granted to the Espinolas, predecessors-in-interest of private respondent. Unknown to Villanueva, even before he bought the land, there was already a final and executory decision enforcing the right to easement where the small house encroaching the same was ordered demolished by Judge Velasco. The easement in the case at bar is both voluntary and legal easement. The settled rule is that the needs of the dominant estate determine the width of the easement. Hence, petitioner ought to demolish the small house on the easement obstructing the entry of private respondents' cement mixer and motor vehicle. And even if the easement was not annotated in the title of the land and the notice of lis pendens was not recorded with the Register of Deeds, in legal easement, the servient estate is bound to provide the dominant estate ingress from and egress to the public highway. Further, the decision enforcing the right of easement against the previous owner, is conclusive and binding upon the successorin-interest. SYLLABUS 1.CIVIL LAW; PROPERTY; EASEMENTS; KINDS; LEGAL EASEMENT; ELUCIDATED. [A] legal easement is one mandated by law, constituted for public use or for private interest, and becomes a continuing property right. As a compulsory easement, it is inseparable from the estate to which it belongs, as provided for in said Article 617 of the Civil Code. The essential requisites for an easement to be compulsory are: (1) the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway; (2) proper indemnity. has been paid; (3) the isolation was not due to acts of the proprietor of the dominant estate; (4) the right of way claimed is at a point least prejudicial to the servient estate; and (5) to the extent consistent with the foregoing rule, where the distance from the dominant estate to a public highway may be the shortest. DAESTI 2.ID.; ID.; ID.; THE NEEDS OF THE DOMINANT ESTATE DETERMINE THE WIDTH OF THE EASEMENT. [T]he small house occupying one meter of the two-meter wide easement obstructs the entry of private respondents' cement mixer and motor vehicle. One meter is insufficient for the needs of private respondents. It is well-settled that the needs of the dominant estate determine the width of the easement. Conformably then, petitioner ought

to demolish whatever edifice obstructs the easement in view of the needs of private respondents' estate. 3.ID.; ID.; ID.; LEGAL EASEMENT BINDING EVEN IF NOT ANNOTATED IN THE TITLE AND NOTICE OF LIS PENDENS OF CASE ENFORCING THE SAME NOT RECORDED. Petitioner's second proposition, that he is not bound by the contract of easement because the same was not annotated in the title and that a notice of lis pendens of the complaint to enforce the easement was not recorded with the Register of Deeds, is obviously unmeritorious . . . it is in the nature of legal easement that the servient estate (of petitioner) is legally bound to provide the dominant estate (of private respondents in this case) ingress from and egress to the public highway. 4.REMEDIAL LAW; CIVIL PROCEDURE; EFFECT OF JUDGMENTS; DECISION IN A CASE BINDING TO THE PARTIES AND SUCCESSOR-IN-INTEREST AFTER CASE COMMENCED. Petitioner's last argument that he was not a party to Civil Case No. Q-91-8703 and that he had not been given his day: in court, is also without merit [in view of] Rule 39, Sec. 47, of the Revised Rules of Court. . . . [A] decision in a case is conclusive and binding upon the parties to said case and those who are their successor in interest by title after said case has been commenced or filed in court. In this case, private respondents. . . initiated; Civil Case No. Q91-8703 on May 8,1991, against the original owners. . . . Title in the name of petitioner was entered in the Register of Deeds on March 24, 1995, after he bought the property from the bank which had acquired it from the Gabriels. Hence, the decision in Civil Case No. Q-918703 binds petitioner. For, although not a party to the suit, he is a successor-in-interest by title subsequent to the commencement of the action in court. DECISION QUISUMBING, J p: This petition for certiorari assails (1) the decision 1 dated December 27, 1996 of the Court of Appeals in CA-G.R. SP No. 39166, dismissing petitioner's petition for review under Rule 65 with prayer for the issuance of a cease and desist order and/or temporary restraining order, and (2) the resolution 2 dated August 14, 1997 denying the subsequent motion for reconsideration. Petitioner Bryan Villanueva is the registered owner of the parcel of land covered by Transfer Certificate of Title No. 127862 of the Register of Deeds of Quezon City. He bought it from Pacific Banking Corporation, the mortgagee of said property. The bank had acquired it from the spouses Maximo and Justina Gabriel at a public auction on March 19, 1983. When petitioner bought the parcel of land there was a small house on its southeastern portion. It occupied one meter of the two-meter wide easement of right of way the Gabriel spouses granted to the Espinolas, predecessors-in-interest of private respondents, in a Contract of Easement of Right of Way. The pertinent portion of the contract dated November 28, 1979, states: . . . in order to have an access to and from their aforementioned land where their houses are constructed and to have an outlet to Tandang Sora Ave. which is the nearest public road and the least burdensome to the servient estate and to third persons, it would be necessary for

them to pass through spouses MAXIMO GABRIEL and JUSTINA CAPUNO's land and for this purpose, a path or passageway of not less than two (2) meters wide of said spouses' property is necessary for the use of ROMEO, RODOLFO, NENITA and AURORA ESPINOLA and for all their needs in entering their property. xxx xxx xxx WHEREFORE, in view of the fact that the property of the ESPINOLA had been bought by them from MAXIMO CAPUNO, father of MAXIMO GABRIEL, spouses MAXIMO GABRIEL and JUSTINA CAPUNO hereby agree and permit RODOLFO, ROMEO, NENITA and AURORA ESPINOLA and their families to have a permanent easement of right of way over the aforementioned property of said spouses limited to not more than two meters wide, throughout the whole length of the southeast side of said property and as specifically indicated in the attached plan which is made an integral part of this Contract as Annex "A"; This Agreement shall be binding between the parties and upon their heirs, successors, assigns, without prejudice in cases of sale of subject property that will warrant the circumstances. 3 Unknown to petitioner, even before he bought the land, the Gabriels had constructed the aforementioned small house that encroached upon the two-meter easement. Petitioner was also unaware that private respondents, Julio Sebastian and Shirley Lorilla, had filed on May 8, 1991, Civil Case No. Q-91-8703, for easement, damages and with prayer for a writ of preliminary injunction and/or restraining order against the spouses Gabriel. 4 As successorsin-interest, Sebastian and Lorilla wanted to enforce the contract of easement. On May 15, 1991, the trial court issued a temporary restraining order. On August 13, 1991, it issued a writ of preliminary mandatory injunction ordering the Gabriels to provide the right of way and to demolish the small house encroaching on the easement. On August 15, 1991, the Gabriels filed a motion for reconsideration which was also denied. Thus, they filed a petition for certiorari before the Court of Appeals. On March 26, 1992, the Eighth Division of the Court of Appeals dismissed the petition and upheld the RTC's issuances. The decision became final and executory on July 31, 1992. 5 On January 5, 1995, Judge Tirso Velasco of the RTC in Quezon City, Branch 88, issued an Alias Writ of Demolition. On June 20, 1995, the sheriff tried to demolish the small house pursuant to the writ. Petitioner filed a Third Party Claim with Prayer to Quash Alias Writ of Demolition. He maintains that the writ of demolition could not apply to his property since he was not a party to the civil case. His Third Party Claim with prayer to quash the writ of demolition was denied for lack of merit on August 16, 1995. 6 The motion for reconsideration as well as the Supplemental Motion for Reconsideration dated September 12, 1995 were denied on October 19, 1995. 7 Petitioner, thereafter, filed a petition for certiorari before the Court of Appeals, docketed as CA-G.R. SP No. 39166, asserting that the existence of the easement of right of way was not annotated in his title and that he was not a party to Civil Case No. Q-91-8703, hence the contract of easement executed by the Gabriels in favor of the Espinolas could not be

enforced against him. The Court of Appeals dismissed the petition for lack of merit and denied the reconsideration, disposing thus: WHEREFORE, the instant petition is hereby dismissed by this court for lack of merit. No costs considering the failure of private respondents to file their comment, despite notice. 8 Hence, this instant petition. Petitioner now avers that the appellate court erred in declaring, (1)THAT FOLLOWING THE ESSENCE OF INHERENCE AND INTRANSMISSIBILITY OF AN EASEMENT, A RIGHT OF WAY CAN EXIST EVEN IF THEY ARE NOT EXPRESSLY STATED OR ANNOTATED ON THE TORRENS TITLE;

(2)THAT PETITIONER, AS PROSPECTIVE BUYER, SHOULD HAVE EXERCISED ORDINARY PRUDENCE BY TAKING THE INITIATIVE TO DETERMINE THAT AN EASEMENT HAS BEEN CONSTITUTED ON THE PROPERTY HE INTENDS TO BUY; AND, (3)THAT IN AS MUCH AS THE HEREIN PETITIONER IS NOT A PARTY TO CIVIL CASE NO. Q-918703, HE CANNOT BE BOUND BY ANY JUDGMENT OR ORDER RENDERED THEREIN. 9 Primarily, the issue is whether the easement on the property binds petitioner. Petitioner argues it could not be enforced against him. First, he says that a right of way cannot exist when it is not expressly stated or annotated on the Torrens title. According to him, even if an easement is inherent and inseparable from the estate to which it actively belongs as provided in Art. 617 of the Civil Code, 10 the same is extinguished when the servient estate is registered and the easement was not annotated in said title conformably with Section 39 of the Land Registration Law. Second, petitioner points out that the trial court erred when it faulted him for relying solely on the clean title of the property he bought, as it is well-settled that a person dealing with registered land is not required to go beyond what is recorded in the title. He adds that it is private respondents who should have made sure their right of way was safeguarded by having the same annotated on the title with the Register of Deeds. He adds that Section 76 of P.D. No. 1529 11 also requires that when a case is commenced involving any right to registered land under the Land Registration Law (now the Property Registration Decree), any decision on it will only be effectual between or among the parties thereto, unless a notice of lis pendens of such action is filed and registered in the registry office where the land is recorded. There was no such annotation in the title of the disputed land, according to petitioner. Lastly, since he was not a party to Civil Case No. Q-91-8703, petitioner argues that he cannot be bound by the writ of demolition and be forcibly divested of a portion of his land without having his day in court. STcADa Private respondents Sebastian and Lorilla, for their part, adopted the disquisition of the appellate court as their Comment and asked for the dismissal of the petition and

P100,000.00 in damages. In its decision the appellate court, citing the decision of the lower court, stressed that unlike other types of encumbrance of real property, a servitude like a right of way can exist even if they are not expressly stated or annotated as an encumbrance in a Torrens title because servitudes are inseparable from the estates to which they actively or passively belong. Moreover, Villanueva was bound by the contract of easement, not only as a voluntary easement but as a legal easement. A legal easement is mandated by law, and continues to exists unless its removal is provided for in a title of conveyance or the sign of the easement is removed before the execution of the conveyance conformably with Article 649 12 in accordance with Article 617 13 of the Civil Code. At the outset, we note that the subject easement (right of way) originally was voluntarily constituted by agreement between the Gabriels and the Espinolas. But as correctly observed by the Court of Appeals, the easement in the instant petition is both (1) an easement by grant or a voluntary easement, and (2) an easement by necessity or a legal easement. A legal easement is one mandated by law, constituted for public use or for private interest, and becomes a continuing property right. 14 As a compulsory easement, it is inseparable from the estate to which it belongs, as provided for in said Article 617 of the Civil Code. The essential requisites for an easement to be compulsory are: (1) the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway; (2) proper indemnity has been paid; (3) the isolation was not due to acts of the proprietor of the dominant estate; (4) the right of way claimed is at a point least prejudicial to the servient estate; and (5) to the extent consistent with the foregoing rule, where the distance from the dominant estate to a public highway may be the shortest. 15 The trial court and the Court of Appeals have declared the existence of said easement (right of way). This finding of fact of both courts below is conclusive on this Court, 16 hence we see no need to further review, but only to re-affirm, this finding. The small house occupying one meter of the two-meter wide easement obstructs the entry of private respondents' cement mixer and motor vehicle. One meter is insufficient for the needs of private respondents. It is well-settled that the needs of the dominant estate determine the width of the easement. 17 Conformably then, petitioner ought to demolish whatever edifice obstructs the easement in view of the needs of private respondents' estate. Petitioner's second proposition, that he is not bound by the contract of easement because the same was not annotated in the title and that a notice of lis pendens of the complaint to enforce the easement was not recorded with the Register of Deeds, is obviously unmeritorious. As already explained, it is in the nature of legal easement that the servient estate (of petitioner) is legally bound to provide the dominant estate (of private respondents in this case) ingress from and egress to the public highway. Petitioner's last argument that he was not a party to Civil Case No. Q-91-8703 and that he had not been given his day in court, is also without merit. Rule 39, Sec. 47, of the Revised Rules of Court: SECTION 47.Effect of judgments or final orders. The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows:

(a)In case of a judgment or final order against a specific thing, or in respect to the probate of a will, or the administration of the estate of a deceased person, or in respect to the personal, political, or legal condition or status of a particular person or his relationship to another, the judgment or final order is conclusive upon the title to the thing, the will or administration, or the condition, status or relationship of the person; however, the probate of a will or granting of letters of administration shall only be prima facie evidence of the death of the testator or intestate; (b)In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and (c)In any other litigation between the same parties or their successors-in-interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto. (Italics supplied). Simply stated, a decision in a case is conclusive and binding upon the parties to said case and those who are their successor-in-interest by title after said case has been commenced or filed in court. 18 In this case, private respondents, Julio Sebastian and Shirley Lorilla, initiated Civil Case No. Q-91-8703 on May 8, 1991, 19 against the original owners, the spouses Maximo and Justina Gabriel. Title in the name of petitioner was entered in the Register of Deeds 20 on March 24, 1995, after he bought the property from the bank which had acquired it from the Gabriels. Hence, the decision in Civil Case No. Q-91-8703 binds petitioner. For, although not a party to the suit, he is a successor-in-interest by title subsequent to the commencement of the action in court. WHEREFORE, the instant petition is DENIED. The assailed decision and resolution of the Court of Appeals are AFFIRMED. Costs against petitioner. SO ORDERED.

VIII Nuisance Definition, aspects of, distinctions Public, private nuissnace, per se, and per accidens Doctrine of attractive nuisance Cases: [G.R. No. L-3422. June 13, 1952.] HIDALGO ENTERPRISES, INC., petitioner, vs. GUILLERMO BALANDAN, ANSELMA ANILA and THE COURT OF APPEALS, respondents.

Quisumbing, Sycip, Quisumbing & Salazar for petitioner. Antonio M. Moncado for respondents. SYLLABUS 1.ATTRACTIVE NUISANCE, WHAT CONSTITUTES; MAINTAINER LIABLE FOR INJURIES CAUSED TO CHILD. One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespasser in the premises. 2.ID.; DOCTRINE NOT APPLICABLE TO SWIMMING POOL OR WATER TANK. The attractive nuisance doctrine generally is not applicable to bodies of water, artificial as well as natural, in the absence of some unusual condition or artificial feature other than the mere water and its location. DECISION BENGZON, J p: This is an appeal by certiorari, from a decision of the Court of Appeals requiring Hidalgo Enterprises, Inc. to pay Guillermo Balandan and his wife, damages in the sum of P2,000 for the death of their son Mario. It appears that the petitioner Hidalgo Enterprises, Inc. "was the owner of an ice-plant factory in the City of San Pablo, Laguna, in whose premises were installed two tanks full of water, nine feet deep, for cooling purposes of its engine. While the factory compound was surrounded with fence, the tanks themselves were not provided with any kind of fence or top covers. The edges of the tank were barely a foot high from the surface of the ground. Through the wide gate entrance, which was continually open, motor vehicles hauling ice and persons buying said commodity passed, and any one could easily enter the said factory, as he pleased. There was no guard assigned on the gate. At about noon of April 16, 1948, plaintiffs' son, Mario Balandan, a boy barely 8 years old, while playing with and in company of other boys of his age, entered the factory premises through the gate, to take a bath in one of said tanks; and while thus bathing, Mario sank to the bottom of the tank, only to be fished out later, already a cadaver, having died of 'asphyxia secondary to drowning.'". The Court of Appeals, and the Court of First Instance of Laguna, took the view that the petitioner maintained an attractive nuisance (the tanks), and neglected to adopt the necessary precautions to avoid accident to persons entering its premises. It applied the doctrine of attractive nuisance, of American origin, recognized in this jurisdiction in Taylor vs. Manila Electric 16 Phil., 8. The doctrine may be stated, in short, as follows: One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therewith or

resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespasser in the premises. (See 65 C. J. S., p. 455.) The principal reason for the doctrine is that the condition or appliance in question although its danger is apparent to those of age, is so enticing or alluring to children of tender years as to induce them to approach, get on or use it, and this attractiveness is an implied invitation to such children (65 C. J. S., p. 458). Now, is a swimming pool or water tank an instrumentality or appliance likely to attract little children in play? In other words is the body of water an attractive nuisance? The great majority of American decisions say no. "The attractive nuisance doctrine generally is not applicable to bodies of water, artificial as well as natural, in the absence of some unusual condition or artificial feature other than the mere water and its location." "There are numerous cases in which the attractive nuisance doctrine has been held not to be applicable to ponds or reservoirs, pools of water, streams, canals, dams, ditches, culverts, drains, cesspools or sewer pools, . . . ." (65 C. J. S., p. 476 et seg. citing decisions of California, Georgia, Idaho, Illinois, Kansas, Iowa, Louisiana, Miss., Missouri, Montana, Oklahoma, Pennsylvania, Tennessee, Texas, Nebraska, Wisconsin.) In fairness to the Court of Appeals it should be stated that the above volume of Corpus Juris Secundum was published in 1950, whereas its decision was promulgated on September 30, 1949. The reason why a swimming pool or pond or reservoir of water is not considered an attractive nuisance was lucidly explained by the Indiana Appellate Court as follows: "Nature has created streams, lakes and pools which attract children. Lurking in their waters is always the danger of drowning. Against this danger children are early instructed so that they are sufficiently presumed to know the danger; and if the owner of private property creates an artificial pool on his own property, merely duplicating the work of nature without adding any new danger, . . . (he) is not liable because of having created an 'attractive nuisance.' Anderson vs. Reith-Riley Const. Co., N. E., 2nd, 184, 185; 184, 185; 112 Ind. App., 170. Therefore, as petitioner's tanks are not classified as attractive nuisance, the question whether the petitioner had taken reasonable precautions becomes immaterial. And the other issue submitted by petitioner - that the parents of the boy were guilty of contributory negligence precluding recovery, because they left for Manila on that unlucky day leaving their son under the care of no responsible individual needs no further discussion. The appealed decision is reversed and the Hidalgo Enterprises, Inc. is absolved from liability. No costs. Remedies of abatement

Cases: [G.R. No. 95279. July 25, 1991.] ESTATE OF GREGORIA FRANCISCO, herein represented by SILVESTRE F. TAN, Administrator, petitioner, vs. HON. COURT OF APPEALS, HON. SALVADOR A. MEMORACION, in his capacity as Presiding Judge of the Regional Trial Court of Isabela, Basilan Province, Branch 2, MUNICIPALITY OF ISABELA, Basilan Province, herein represented by BENJAMIN VALENCIA, in his capacity as Municipal Mayor, Isabela, Basilan Province, ROGELIO L. IGOT, FELICISIMO PIOQUINTO, DANIEL PADINAS, ANTONIO CABANGON, FELIX ROXAS, BENJAMIN FERRER, GREGORIO TABADA, EFREN DELOS REYES, FLORENCIO HUGO, JESUS FRANCISCO, ALFREDO TUBILAG, PABLO ANDRES, respondents. Bienvenido G. Martin for petitioner. Laurencio Saavedra for private respondents. SYLLABUS 1.CONSTITUTIONAL LAW; LOCAL GOVERNMENT; MUNICIPAL MAYOR; DUTY TO INSTITUTE JUDICIAL PROCEEDING IN CASE OF VIOLATION OF ORDINANCE. Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extra-judicial remedies. On the contrary, the Local Government Code imposes upon him the duty "to cause to be instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code, Sec. 141 [2] [t]). 2.ID.; ID.; SANGGUNIANG BAYAN; CANNOT DECLARE A PARTICULAR THING AS A NUISANCE PER SE AND ORDER ITS CONDEMNATION. While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code, Sec. 149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The nuisance can only be so adjudged by judicial determination. "[Municipal councils] do not have the power to find as a fact that a particular thing is a nuisance when such thing is not a nuisance per se; nor can they authorize the extra judicial condemnation and destruction of that as a nuisance which, in its nature, situation or use is not such. These things must be determined in the ordinary courts of law. In the present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a legitimate industry . . . . If it be in fact a nuisance due to the manner of its operation, that question cannot be determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial hearing before a judicial tribunal." (Iloilo Cold Storage v. Municipal Council, 24 Phil. 471 [1913]). 3.CIVIL LAW; NUISANCE; RULE IN ABATING THEREOF. Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and property and may be summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1928]). The storage of copra in the quonset building is a legitimate business. By its nature, it can not be said to be injurious to rights of property, of health or of comfort of the community. If it be a nuisance per accidens

it may be so proven in a hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention. 4.ID.; ID.; AUTHORITY TO DEMOLISH BUILDING; MUST BE WITH JUDICIAL ORDER. Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to decide whether the quonset building did constitute a nuisance in law. There was no compelling necessity for precipitate action. It follows then that respondent public officials of the Municipality of Isabela, Basilan, transcended their authority in abating summarily petitioner's quonset building. They had deprived petitioner of its property without due process of law. The fact that petitioner filed a suit for prohibition and was subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the demolition having been a fait accompli prior to hearing and the authority to demolish without a judicial order being a prejudicial issue. DECISION MELENCIO-HERRERA, J p: Litigated herein is a quonset building situated in Port Area, Strong Boulevard, Isabela, Basilan, which was ordered demolished by respondent Municipal Mayor, Benjamin Valencia. Respondent municipal employees implemented the demolition, for which reason they are also impleaded. The quonset was constructed by the American Liberation Forces in 1944. It was purchased in 1946 by Gregoria Francisco, who died in 1976. It stands on a lot owned by the Philippine Ports Authority and faces the municipal wharf. By virtue of Proclamation No. 83 issued by President Elpidio Quirino, said land was declared for the exclusive use of port facilities. llcd On 10 January 1989, the Philippine Ports Authority (Port of Zamboanga) issued to Tan Gin San, surviving spouse of Gregoria Francisco, a permit to occupy the lot where the building stands for a period of one (1) year, to expire on 31 December 1989. The permittee was using the quonset for the storage of copra. On 8 May 1989, Respondent Mayor, through respondent Municipal Action Officer, notified Tan Gin San by mail to remove or relocate its quonset building, citing Zoning Ordinance No. 147 of the municipality; noting its antiquated and dilapidated structure; and stressing the "clear-up campaign on illegal squatters and unsanitary surroundings along Strong Boulevard." This was followed by another letter of 19 May 1989 of the same tenor. Since the notifications remained unheeded by petitioner, Respondent Mayor ordered the demolition on 24 May 1989. Aggrieved, petitioner sought a Writ of Prohibition with Injunction and Damages before the Regional Trial Court of Basilan, Branch 2 (docketed as S.P. No. 4).

On 7 August 1989, the Trial Court 1 denied the Writ of Prohibition and upheld the power of respondent Mayor to order the demolition without judicial authority, adverting to Zoning Ordinance No. 147 of the Municipality of Isabela, Basilan. Petitioner duly interposed an appeal. cdrep On 6 September 1989, petitioner's quonset building was completely demolished (Rollo, p. 49). In its place sprang shanties and nipa huts, photographs of which have been attached to petitioner's Memorandum. On 25 January 1990, the Court of Appeals (in CA-G.R. SP No. 18822) 2 initially reversed the Trial Court and issued a Writ of Prohibition. It ruled that Respondent Mayor was not vested with power to order summarily, and without any judicial proceeding, the demolition of the quonset building, which was not a nuisance per se, and that petitioner is in legal possession of the land on which the building stands by virtue of the permit issued by the Philippine Ports Authority (Zamboanga Province). The restoration to petitioner of the building materials removed upon demolition, and the payment to it of attorney's fees of P10,000.00, were also ordered. However, upon reconsideration sought by respondent officials, Respondent Court 3 reversed itself on 13 June 1990 stating that "although Municipal Mayor Valencia initially issued an order of demolition without judicial process, the deficiency was remedied when appellant (petitioner herein) filed a petition for prohibition and injunction and was heard on oral argument after appellees (respondent officials) filed their answer." Respondent Court then quashed the Writ of Prohibition and set aside the order of restitution and payment of attorney's fees. cdphil Petitioner's plea for reconsideration having been denied, it is now before us seeking a reversal. The focal issue for determination is whether or not Respondent Mayor could summarily, without judicial process, order the demolition of petitioner's quonset building. Respondents justify the demolition in the exercise of police power and for reasons of health, safety and general welfare. It also relies on Ordinance No. 147 (CA Records, pp. 85-104) of the Municipality of Isabela. For its part petitioner consistently denies to the Mayor such power, invoking provisions of the Local Government Code. Ordinance No. 147, enacted on 27 December 1977, and relied upon by respondents, is entitled "An Ordinance Establishing Comprehensive Zoning Regulations for the Municipality of Isabela . . ." It is not disputed that the quonset building, which is being used for the storage of copra, is located outside the zone for warehouses. It is referred to in the Ordinance as a non-conforming structure, which should be relocated. And in the event that an immediate relocation of the building can not be accomplished, Section 16 of the Ordinance provides: cdphil "A certificate of non-conformance for all non-conforming uses shall be applied for by the owner or agent of the property involved within twelve (12) months from the approval of this

Ordinance, otherwise the non-conforming use may be condemned or removed at the owner's expense." Even granting that petitioner failed to apply for a Certificate of Non-conformance, the foregoing provision should not be interpreted as authorizing the summary removal of a nonconforming building by the municipal government. For if it does, it must be struck down for being in contravention of the requirements of due process, as originally held by the respondent Court. Moreover, the enforcement and administration of the provisions of the Ordinance resides with the Zoning Administrator (Article VII, Secs. 1 and 2, Ordinance No. 147). It is said official who may call upon the City Fiscal to institute the necessary legal proceedings to enforce the provisions of the Ordinance (id., Sec. 2, ibid.). And any person aggrieved by the decision of the Zoning Administrator regarding the enforcement of the Ordinance may appeal to the Board of Zoning Appeals (id., Sec. 7, ibid.). That a summary remedy can not be resorted to is further evident from the penal provisions of said Ordinance, reading:

"Any person who violates any of the provisions of this ordinance shall, upon conviction, be punished by a fine of not less than fifty pesos (P50.00) but not more than two hundred pesos (P200.00) or by imprisonment of not less than one (1) month but not exceeding six (6) months, or both, at the discretion of the Court . . ." (ibid., Sec. 11). [Emphasis ours]. Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extrajudicial remedies. On the contrary, the Local Government Code imposes upon him the duty "to cause to be instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code, Sec. 141 [2] [t]). dctai Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and property and may be summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is a legitimate business. By its nature, it can not be said to be injurious to rights of property, of health or of comfort of the community. If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention. "The provincial governor, district engineer or district health officer is not authorized to destroy private property consisting of dams and fishponds summarily and without any judicial proceedings whatever under the pretense that such private property constitutes a nuisance. A dam or a fishery constructed in navigable rivers is not a nuisance per se. A dam or fishpond may be a nuisance per accidens where it endangers or impairs the health or depreciates property by causing water to become stagnant." (Monteverde v. Generoso, supra).

While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code, Sec. 149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The nuisance can only be so adjudged by judicial determination. LexLib "[Municipal councils] do not have the power to find as a fact that a particular thing is a nuisance when such thing is not a nuisance per se; nor can they authorize the extra judicial condemnation and destruction of that as a nuisance which, in its nature, situation or use is not such. These things must be determined in the ordinary courts of law. In the present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a legitimate industry . . . If it be in fact a nuisance due to the manner of its operation, that question cannot be determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial hearing before a judicial tribunal." (Iloilo Cold Storage v. Municipal Council, 24 Phil. 47 [1913]). Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to decide whether the quonset building did constitute a nuisance in law. There was no compelling necessity for precipitate action. It follows then that respondent public officials of the Municipality of Isabela, Basilan, transcended their authority in abating summarily petitioner's quonset building. They had deprived petitioner of its property without due process of law. The fact that petitioner filed a suit for prohibition and was subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the demolition having been a fait accompli prior to hearing and the authority to demolish without a judicial order being a prejudicial issue. For the precipitate demolition, therefore, petitioner should be entitled to just compensation, the amount of which is for the Trial Court to determine. We are not inclined to grant petitioner damages, however, as it simply ignored the demand to remove or relocate its quonset building. cdll WHEREFORE, the judgment under review of respondent Court of Appeals, dated 13 June 1990, is SET ASIDE; its original Decision, promulgated on 25 January 1990, is REINSTATED; and this case is ordered REMANDED to the Regional Trial Court of Basilan, Branch 2, for the determination of the just compensation due petitioner for the demolition of its quonset building. SO ORDERED. [G.R. No. 95279. July 25, 1991.] ESTATE OF GREGORIA FRANCISCO, herein represented by SILVESTRE F. TAN, Administrator, petitioner, vs. HON. COURT OF APPEALS, HON. SALVADOR A. MEMORACION, in his capacity as Presiding Judge of the Regional Trial Court of Isabela, Basilan Province, Branch 2, MUNICIPALITY OF ISABELA, Basilan Province, herein represented by BENJAMIN VALENCIA, in his capacity as Municipal Mayor,

Isabela, Basilan Province, ROGELIO L. IGOT, FELICISIMO PIOQUINTO, DANIEL PADINAS, ANTONIO CABANGON, FELIX ROXAS, BENJAMIN FERRER, GREGORIO TABADA, EFREN DELOS REYES, FLORENCIO HUGO, JESUS FRANCISCO, ALFREDO TUBILAG, PABLO ANDRES, respondents. Bienvenido G. Martin for petitioner. Laurencio Saavedra for private respondents. SYLLABUS 1.CONSTITUTIONAL LAW; LOCAL GOVERNMENT; MUNICIPAL MAYOR; DUTY TO INSTITUTE JUDICIAL PROCEEDING IN CASE OF VIOLATION OF ORDINANCE. Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extra-judicial remedies. On the contrary, the Local Government Code imposes upon him the duty "to cause to be instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code, Sec. 141 [2] [t]). 2.ID.; ID.; SANGGUNIANG BAYAN; CANNOT DECLARE A PARTICULAR THING AS A NUISANCE PER SE AND ORDER ITS CONDEMNATION. While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code, Sec. 149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The nuisance can only be so adjudged by judicial determination. "[Municipal councils] do not have the power to find as a fact that a particular thing is a nuisance when such thing is not a nuisance per se; nor can they authorize the extra judicial condemnation and destruction of that as a nuisance which, in its nature, situation or use is not such. These things must be determined in the ordinary courts of law. In the present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a legitimate industry . . . . If it be in fact a nuisance due to the manner of its operation, that question cannot be determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial hearing before a judicial tribunal." (Iloilo Cold Storage v. Municipal Council, 24 Phil. 471 [1913]). 3.CIVIL LAW; NUISANCE; RULE IN ABATING THEREOF. Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and property and may be summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1928]). The storage of copra in the quonset building is a legitimate business. By its nature, it can not be said to be injurious to rights of property, of health or of comfort of the community. If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention. 4.ID.; ID.; AUTHORITY TO DEMOLISH BUILDING; MUST BE WITH JUDICIAL ORDER. Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to decide whether the quonset building did constitute a nuisance in law. There was no compelling necessity for precipitate action. It follows then that

respondent public officials of the Municipality of Isabela, Basilan, transcended their authority in abating summarily petitioner's quonset building. They had deprived petitioner of its property without due process of law. The fact that petitioner filed a suit for prohibition and was subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the demolition having been a fait accompli prior to hearing and the authority to demolish without a judicial order being a prejudicial issue. DECISION MELENCIO-HERRERA, J p: Litigated herein is a quonset building situated in Port Area, Strong Boulevard, Isabela, Basilan, which was ordered demolished by respondent Municipal Mayor, Benjamin Valencia. Respondent municipal employees implemented the demolition, for which reason they are also impleaded. The quonset was constructed by the American Liberation Forces in 1944. It was purchased in 1946 by Gregoria Francisco, who died in 1976. It stands on a lot owned by the Philippine Ports Authority and faces the municipal wharf. By virtue of Proclamation No. 83 issued by President Elpidio Quirino, said land was declared for the exclusive use of port facilities. llcd On 10 January 1989, the Philippine Ports Authority (Port of Zamboanga) issued to Tan Gin San, surviving spouse of Gregoria Francisco, a permit to occupy the lot where the building stands for a period of one (1) year, to expire on 31 December 1989. The permittee was using the quonset for the storage of copra. On 8 May 1989, Respondent Mayor, through respondent Municipal Action Officer, notified Tan Gin San by mail to remove or relocate its quonset building, citing Zoning Ordinance No. 147 of the municipality; noting its antiquated and dilapidated structure; and stressing the "clear-up campaign on illegal squatters and unsanitary surroundings along Strong Boulevard." This was followed by another letter of 19 May 1989 of the same tenor. Since the notifications remained unheeded by petitioner, Respondent Mayor ordered the demolition on 24 May 1989. Aggrieved, petitioner sought a Writ of Prohibition with Injunction and Damages before the Regional Trial Court of Basilan, Branch 2 (docketed as S.P. No. 4). On 7 August 1989, the Trial Court 1 denied the Writ of Prohibition and upheld the power of respondent Mayor to order the demolition without judicial authority, adverting to Zoning Ordinance No. 147 of the Municipality of Isabela, Basilan. Petitioner duly interposed an appeal. cdrep On 6 September 1989, petitioner's quonset building was completely demolished (Rollo, p. 49). In its place sprang shanties and nipa huts, photographs of which have been attached to petitioner's Memorandum.

On 25 January 1990, the Court of Appeals (in CA-G.R. SP No. 18822) 2 initially reversed the Trial Court and issued a Writ of Prohibition. It ruled that Respondent Mayor was not vested with power to order summarily, and without any judicial proceeding, the demolition of the quonset building, which was not a nuisance per se, and that petitioner is in legal possession of the land on which the building stands by virtue of the permit issued by the Philippine Ports Authority (Zamboanga Province). The restoration to petitioner of the building materials removed upon demolition, and the payment to it of attorney's fees of P10,000.00, were also ordered. However, upon reconsideration sought by respondent officials, Respondent Court 3 reversed itself on 13 June 1990 stating that "although Municipal Mayor Valencia initially issued an order of demolition without judicial process, the deficiency was remedied when appellant (petitioner herein) filed a petition for prohibition and injunction and was heard on oral argument after appellees (respondent officials) filed their answer." Respondent Court then quashed the Writ of Prohibition and set aside the order of restitution and payment of attorney's fees. cdphil Petitioner's plea for reconsideration having been denied, it is now before us seeking a reversal. The focal issue for determination is whether or not Respondent Mayor could summarily, without judicial process, order the demolition of petitioner's quonset building. Respondents justify the demolition in the exercise of police power and for reasons of health, safety and general welfare. It also relies on Ordinance No. 147 (CA Records, pp. 85-104) of the Municipality of Isabela. For its part petitioner consistently denies to the Mayor such power, invoking provisions of the Local Government Code. Ordinance No. 147, enacted on 27 December 1977, and relied upon by respondents, is entitled "An Ordinance Establishing Comprehensive Zoning Regulations for the Municipality of Isabela . . ." It is not disputed that the quonset building, which is being used for the storage of copra, is located outside the zone for warehouses. It is referred to in the Ordinance as a non-conforming structure, which should be relocated. And in the event that an immediate relocation of the building can not be accomplished, Section 16 of the Ordinance provides: cdphil "A certificate of non-conformance for all non-conforming uses shall be applied for by the owner or agent of the property involved within twelve (12) months from the approval of this Ordinance, otherwise the non-conforming use may be condemned or removed at the owner's expense." Even granting that petitioner failed to apply for a Certificate of Non-conformance, the foregoing provision should not be interpreted as authorizing the summary removal of a nonconforming building by the municipal government. For if it does, it must be struck down for being in contravention of the requirements of due process, as originally held by the respondent Court.

Moreover, the enforcement and administration of the provisions of the Ordinance resides with the Zoning Administrator (Article VII, Secs. 1 and 2, Ordinance No. 147). It is said official who may call upon the City Fiscal to institute the necessary legal proceedings to enforce the provisions of the Ordinance (id., Sec. 2, ibid.). And any person aggrieved by the decision of the Zoning Administrator regarding the enforcement of the Ordinance may appeal to the Board of Zoning Appeals (id., Sec. 7, ibid.). That a summary remedy can not be resorted to is further evident from the penal provisions of said Ordinance, reading:

"Any person who violates any of the provisions of this ordinance shall, upon conviction, be punished by a fine of not less than fifty pesos (P50.00) but not more than two hundred pesos (P200.00) or by imprisonment of not less than one (1) month but not exceeding six (6) months, or both, at the discretion of the Court . . ." (ibid., Sec. 11). [Emphasis ours]. Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extrajudicial remedies. On the contrary, the Local Government Code imposes upon him the duty "to cause to be instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code, Sec. 141 [2] [t]). dctai Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and property and may be summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is a legitimate business. By its nature, it can not be said to be injurious to rights of property, of health or of comfort of the community. If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention. "The provincial governor, district engineer or district health officer is not authorized to destroy private property consisting of dams and fishponds summarily and without any judicial proceedings whatever under the pretense that such private property constitutes a nuisance. A dam or a fishery constructed in navigable rivers is not a nuisance per se. A dam or fishpond may be a nuisance per accidens where it endangers or impairs the health or depreciates property by causing water to become stagnant." (Monteverde v. Generoso, supra). While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code, Sec. 149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The nuisance can only be so adjudged by judicial determination. LexLib "[Municipal councils] do not have the power to find as a fact that a particular thing is a nuisance when such thing is not a nuisance per se; nor can they authorize the extra judicial condemnation and destruction of that as a nuisance which, in its nature, situation or use is

not such. These things must be determined in the ordinary courts of law. In the present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a legitimate industry . . . If it be in fact a nuisance due to the manner of its operation, that question cannot be determined by a mere resolution of the board. The petitioner is entitled to a fair and impartial hearing before a judicial tribunal." (Iloilo Cold Storage v. Municipal Council, 24 Phil. 47 [1913]). Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to decide whether the quonset building did constitute a nuisance in law. There was no compelling necessity for precipitate action. It follows then that respondent public officials of the Municipality of Isabela, Basilan, transcended their authority in abating summarily petitioner's quonset building. They had deprived petitioner of its property without due process of law. The fact that petitioner filed a suit for prohibition and was subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the demolition having been a fait accompli prior to hearing and the authority to demolish without a judicial order being a prejudicial issue. For the precipitate demolition, therefore, petitioner should be entitled to just compensation, the amount of which is for the Trial Court to determine. We are not inclined to grant petitioner damages, however, as it simply ignored the demand to remove or relocate its quonset building. cdll WHEREFORE, the judgment under review of respondent Court of Appeals, dated 13 June 1990, is SET ASIDE; its original Decision, promulgated on 25 January 1990, is REINSTATED; and this case is ordered REMANDED to the Regional Trial Court of Basilan, Branch 2, for the determination of the just compensation due petitioner for the demolition of its quonset building. SO ORDERED. [G.R. No. 148408. July 14, 2006.] CONCEPCION PARAYNO, petitioner, vs. JOSE JOVELLANOS and the MUNICIPALITY OF CALASIAO, PANGASINAN, * respondents. DECISION CORONA, J p: This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Court questioning the resolution of the Court of Appeals (CA) which dismissed the petition for certiorari, mandamus and prohibition, with prayer for issuance of a preliminary and mandatory injunction, filed by petitioner Concepcion Parayno against respondents Jose Jovellanos and the Municipality of Calasiao, Pangasinan.

Petitioner was the owner of a gasoline filling station in Calasiao, Pangasinan. In 1989, some residents of Calasiao petitioned the Sangguniang Bayan (SB) of said municipality for the closure or transfer of the station to another location. The matter was referred to the Municipal Engineer, Chief of Police, Municipal Health Officer and the Bureau of Fire Protection for investigation. Upon their advise, the Sangguniang Bayan recommended to the Mayor the closure or transfer of location of petitioner's gasoline station. In Resolution No. 50, it declared: a). . . the existing gasoline station is a blatant violation and disregard of existing law to wit: The Official Zoning Code of Calasiao, Art. 6, Section 44, 1 the nearest school building which is San Miguel Elementary School and church, the distances are less than 100 meters. No neighbors were called as witnesses when actual measurements were done by HLURB Staff, Baguio City dated 22 June 1989. b)The gasoline station remains in thickly populated area with commercial/residential buildings, houses closed (sic) to each other which still endangers the lives and safety of the people in case of fire. Moreover, additional selling and storing of several LPG tanks in the station (sic). c)The residents of our barangay always complain of the irritating smell of gasoline most of the time especially during gas filling which tend to expose residents especially children to frequent colds, asthma, cough and the like nowadays. d). . . the gasoline station violated Building and Fire Safety Codes because the station has 2nd floor storey building used for business rental offices, with iron grilled windows, no firewalls. It also endangers the lives of people upstairs. e)It hampers the flow of traffic, the gasoline station is too small and narrow, the entrance and exit are closed to the street property lines. It couldn't cope situation (sic) on traffic because the place is a congested area. 2 Petitioner moved for the reconsideration of the SB resolution but it was denied. Hence, she filed a special civil action for prohibition and mandamus with the Regional Trial Court (RTC) of Dagupan City, Branch 44 against respondents. The case, docketed as SP Civil Case No. 99-03010-D, was raffled to the sala of Judge Crispin Laron. Petitioner claimed that her gasoline station was not covered by Section 44 of the Official Zoning Code since it was not a "gasoline service station" but a "gasoline filling station" governed by Section 21 thereof. She added that the decision of the Housing and Land Use Regulatory Board (HLURB), 3 in a previous case filed by the same respondent Jovellanos against her predecessor (Dennis Parayno), barred the grounds invoked by respondent municipality in Resolution No. 50. In the HLURB case, respondent Jovellanos opposed the establishment of the gas station on the grounds that: (1) it was within the 100-meter prohibited radius under Section 44 and (2) it posed a pernicious effect on the health and safety of the people in Calasiao. cIADTC

After the hearing on the propriety of issuing a writ of preliminary prohibitory and mandatory injunction, the trial court ruled: There is no basis for the court to issue a writ of preliminary prohibitory and mandatory injunction. Albeit, Section 44 of the Official Zoning Code of respondent municipality does not mention a gasoline filling station, [but] following the principle of ejusdem generis, a gasoline filling station falls within the ambit of Section 44. The gasoline filling station of the petitioner is located under the establishment belonging to the petitioner and is very near several buildings occupied by several persons. Justice dictates that the same should not be allowed to continue operating its business on that particular place. Further, the gasoline filling station endangers the lives and safety of people because once there is fire, the establishment and houses nearby will be razed to the ground. 4 (emphasis supplied) Petitioner moved for reconsideration of the decision but it was denied by the trial court. Petitioner elevated the case to the CA via a petition for certiorari, prohibition and mandamus, 5 with a prayer for injunctive relief. She ascribed grave abuse of discretion, amounting to lack or excess of jurisdiction, on the part of Judge Laron who dismissed her case. After the CA dismissed the petition, petitioner filed a motion for reconsideration but the same was denied. Hence, this appeal. Before us, petitioner insists that (1) the legal maxim of ejusdem generis did not apply to her case; (2) the closure/transfer of her gasoline filling station by respondent municipality was an invalid exercise of the latter's police powers and (3) it was the principle of res judicata that applied in this case. 6 We find merit in the petition. THE PRINCIPLE OF EJUSDEM GENERIS We hold that the zoning ordinance of respondent municipality made a clear distinction between "gasoline service station" and "gasoline filling station." The pertinent provisions read: xxx xxx xxx Section 21.Filling Station. A retail station servicing automobiles and other motor vehicles with gasoline and oil only. 7 xxx xxx xxx Section 42.Service Station. A building and its premises where gasoline oil, grease, batteries, tires and car accessories may be supplied and dispensed at retail and where, in addition, the following services may be rendered and sales and no other.

a.Sale and servicing of spark plugs, batteries, and distributor parts; b.Tire servicing and repair, but not recapping or regrooving; c.Replacement of mufflers and tail pipes, water hose, fan belts, brake fluids, light bulbs, fuses, floor mats, seat covers, windshield wipers and wiper blades, grease retainers, wheel, bearing, mirrors and the like; d.Radiator cleaning and flushing; e.Washing and polishing, and sale of automobile washing and polishing materials; f.Grease and lubricating; g.Emergency wiring repairs; h.Minor servicing of carburators; i.Adjusting and repairing brakes; j.Minor motor adjustments not involving removal of the head or crankcase, or raising the motor. 8 xxx xxx xxx It is evident from the foregoing that the ordinance intended these two terms to be separate and distinct from each other. Even respondent municipality's counsel admitted this dissimilarity during the hearing on the application for the issuance of a writ of preliminary prohibitory and mandatory injunction. Counsel in fact admitted: 1.That there exist[ed] an official zoning code of Calasiao, Pangasinan which [was] not yet amended; 2.That under Article III of said official zoning code there [were] certain distinctions made by said municipality about the designation of the gasoline filling station and that of the gasoline service station as appearing in Article III, Nos. 21 and 42, [respectively]; 3.That the business of the petitioner [was] one of a gasoline filling station as defined in Article III, Section 21 of the zoning code and not as a service station as differently defined under Article 42 of the said official zoning code; 4.That under Section 44 of the official zoning code of Calasiao, the term filling station as clearly defined under Article III, Section 21, [did] not appear in the wordings thereof; 9 (emphasis supplied) The foregoing were judicial admissions which were conclusive on the municipality, the party making them. 10 Respondent municipality thus could not find solace in the legal maxim of

ejusdem generis 11 which means "of the same kind, class or nature." Under this maxim, where general words follow the enumeration of particular classes of persons or things, the general words will apply only to persons or things of the same general nature or class as those enumerated. 12 Instead, what applied in this case was the legal maxim expressio unius est exclusio alterius which means that the express mention of one thing implies the exclusion of others. 13 Hence, because of the distinct and definite meanings alluded to the two terms by the zoning ordinance, respondents could not insist that "gasoline service station" under Section 44 necessarily included "gasoline filling station" under Section 21. Indeed, the activities undertaken in a "gas service station" did not automatically embrace those in a "gas filling station." THE EXERCISE OF POLICE POWERS Respondent municipality invalidly used its police powers in ordering the closure/transfer of petitioner's gasoline station. While it had, under RA 7160, 14 the power to take actions and enact measures to promote the health and general welfare of its constituents, it should have given due deference to the law and the rights of petitioner. TSacAE A local government is considered to have properly exercised its police powers only when the following requisites are met: (1) the interests of the public generally, as distinguished from those of a particular class, require the interference of the State and (2) the means employed are reasonably necessary for the attainment of the object sought to be accomplished and not unduly oppressive. 15 The first requirement refers to the equal protection clause and the second, to the due process clause of the Constitution. 16

Respondent municipality failed to comply with the due process clause when it passed Resolution No. 50. While it maintained that the gasoline filling station of petitioner was less than 100 meters from the nearest public school and church, the records do not show that it even attempted to measure the distance, notwithstanding that such distance was crucial in determining whether there was an actual violation of Section 44. The different local offices that respondent municipality tapped to conduct an investigation never conducted such measurement either. Moreover, petitioner's business could not be considered a nuisance which respondent municipality could summarily abate in the guise of exercising its police powers. The abatement of a nuisance without judicial proceedings is possible only if it is a nuisance per se. A gas station is not a nuisance per se or one affecting the immediate safety of persons and property, 17 hence, it cannot be closed down or transferred summarily to another location. As a rule, this Court does not pass upon evidence submitted by the parties in the lower courts. 18 We deem it necessary, however, to recall the findings of the HLURB which petitioner submitted as evidence during the proceedings before the trial court, if only to underscore petitioner's compliance with the requirements of law before she put up her gasoline station.

Another factor that should not be left unnoticed is the diligence exercised by [petitioner] in complying with the requirements of the several laws prior to the actual implementation of the project as can be attested by the fact that [petitioner] has secured the necessary building permit and approval of [her] application for authority to relocate as per the letter of the Energy Regulatory Board . . . . 19 On the alleged hazardous effects of the gasoline station to the lives and properties of the people of Calasiao, we again note: Relative to the allegations that the project (gasoline station) is hazardous to life and property, the Board takes cognizance of the respondent's contention that the project "is not a fire hazard since petroleum products shall be safely stored in underground tanks and that the installation and construction of the underground tanks shall be in accordance with the Caltex Engineering Procedures which is true to all gasoline stations in the country. . . . Hence, the Board is inclined to believe that the project being hazardous to life and property is more perceived than factual. For, after all, even the Fire Station Commander, after studying the plans and specifications of the subject proposed construction, recommended on 20 January 1989, "to build such buildings after conform (sic) all the requirements of PP 1185." It is further alleged by the complainants that the proposed location is "in the heart of the thickly populated residential area of Calasiao." Again, findings of the [HLURB] staff negate the allegations as the same is within a designated Business/Commercial Zone per the Zoning Ordinance. . . . 20 (emphasis supplied) The findings of fact of the HLURB are binding as they are already final and conclusive vis-vis the evidence submitted by respondents. THE PRINCIPLE OF RES JUDICATA Petitioner points out that the HLURB decision in the previous case filed against her predecessor (Dennis Parayno) by respondent Jovellanos had effectively barred the issues in Resolution No. 50 based on the principle of res judicata. We agree. Res judicata refers to the rule that a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and matters determined in the former suit. 21 For res judicata to apply, the following elements must be present: (1) the judgment or order must be final; (2) the judgment must be on the merits; (3) it must have been rendered by a court having jurisdiction over the subject matter and the parties and (4) there must be, between the first and second actions, identity of parties, of subject matter and of cause of action. 22 Respondent municipality does not contest the first, second and third requisites. However, it claims that it was not a party to the HLURB case but only its co-respondent Jovellanos, hence, the fourth requisite was not met. The argument is untenable. The absolute identity of parties is not required for the principle of res judicata to apply. 23 A shared identity of interests is sufficient to invoke the application of this principle. 24 The proscription may not be evaded by the mere expedient of including an additional party. 25

Res judicata may lie as long as there is a community of interests between a party in the first case and a party in the second case although the latter may not have been impleaded in the first. 26 In the assailed resolution of respondent municipality, it raised the same grounds invoked by its co-respondent in the HLURB: (1) that the resolution aimed to close down or transfer the gasoline station to another location due to the alleged violation of Section 44 of the zoning ordinance and (2) that the hazards of said gasoline station threatened the health and safety of the public. The HLURB had already settled these concerns and its adjudication had long attained finality. It is to the interest of the public that there should be an end to litigation by the parties over a subject matter already fully and fairly adjudged. Furthermore, an individual should not be vexed twice for the same cause. 27 WHEREFORE, the petition is hereby GRANTED. The assailed resolution of the Court of the Appeals is REVERSED and SET ASIDE. Respondent Municipality of Calasiao is hereby directed to cease and desist from enforcing Resolution No. 50 against petitioner insofar as it seeks to close down or transfer her gasoline station to another location. caTIDE No costs. SO ORDERED. [G.R. No. 148339. February 23, 2005.] LUCENA GRAND CENTRAL TERMINAL, INC., petitioner, vs. JAC LINER, INC., respondent. DECISION CARPIO MORALES, J p: Respondent, JAC Liner, Inc., a common carrier operating buses which ply various routes to and from Lucena City, assailed, via a petition for prohibition and injunction 1 against the City of Lucena, its Mayor, and the Sangguniang Panlungsod of Lucena before the Regional Trial Court (RTC) of Lucena City, City Ordinance Nos. 1631 and 1778 as unconstitutional on the ground that, inter alia, the same constituted an invalid exercise of police power, an undue taking of private property, and a violation of the constitutional prohibition against monopolies. The salient provisions of the ordinances are: Ordinance No. 1631 2 AN ORDINANCE GRANTING THE LUCENA GRAND CENTRAL TERMINAL, INC., A FRANCHISE TO CONSTRUCT, FINANCE, ESTABLISH, OPERATE AND MAINTAIN A COMMON BUS-JEEPNEY TERMINAL FACILITY IN THE CITY OF LUCENA xxx xxx xxx

SECTION 1. There is hereby granted to the Lucena Grand Central Terminal, Inc., its successors or assigns, hereinafter referred to as the "grantee", a franchise to construct, finance, establish, operate, and maintain a common bus-jeepney terminal facility in the City of Lucena. SECTION 2. This franchise shall continue for a period of twenty-five years, counted from the approval of this Ordinance, and renewable at the option of the grantee for another period of twenty-five (25) years upon such expiration. xxx xxx xxx SECTION 4. Responsibilities and Obligations of the City Government of Lucena. During the existence of the franchise, the City Government of Lucena shall have the following responsibilities and obligations: xxx xxx xxx (c)It shall not grant any third party any privilege and/or concession to operate a bus, minibus and/or jeepney terminal. xxx xxx xxx Ordinance No. 1778 3 AN ORDINANCE REGULATING THE ENTRANCE TO THE CITY OF LUCENA OF ALL BUSES, MINIBUSES AND OUT-OF-TOWN PASSENGER JEEPNEYS AND FOR THIS PURPOSE, AMENDING ORDINANCE NO. 1420, SERIES OF 1993, AND ORDINANCE NO. 1557, SERIES OF 1995 HEASaC xxx xxx xxx SECTION 1. The entrance to the City of Lucena of all buses, mini-buses and out-of-town passenger jeepneys is hereby regulated as follows: (a)All buses, mini-buses and out-of-town passenger jeepneys shall be prohibited from entering the city and are hereby directed to proceed to the common terminal, for picking-up and/or dropping of their passengers. (b)All temporary terminals in the City of Lucena are hereby declared inoperable starting from the effectivity of this ordinance. xxx xxx xxx SECTION 3. a) Section 1 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows:

Buses, mini-buses, and jeepney type mini-buses from other municipalities and/or local government units going to Lucena City are directed to proceed to the Common Terminal located at Diversion Road, Brgy. Ilayang Dupay, to unload and load passengers. xxx xxx xxx c)Section 3 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows: Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities and/or local government units shall utilize the facilities of the Lucena Grand Central Terminal at Diversion Road, Brgy. Ilayang Dupay, this City, and no other terminals shall be situated inside or within the City of Lucena; cECTaD d)Section 4 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows: Passenger buses, mini-buses, and jeepney type mini-buses coming from other municipalities and/or local government units shall avail of the facilities of the Lucena Grand Central Terminal which is hereby designated as the officially sanctioned common terminal for the City of Lucena; e)Section 5 of Ordinance No. 1557, Series of 1995, is hereby amended to read as follows: The Lucena Grand Central Terminal is the permanent common terminal as this is the entity which was given the exclusive franchise by the Sangguniang Panglungsod under Ordinance No. 1631; (Emphasis and underscoring supplied) These ordinances, by granting an exclusive franchise for twenty five years, renewable for another twenty five years, to one entity for the construction and operation of one common bus and jeepney terminal facility in Lucena City, to be located outside the city proper, were professedly aimed towards alleviating the traffic congestion alleged to have been caused by the existence of various bus and jeepney terminals within the city, as the "Explanatory Note" Whereas Clause adopting Ordinance No. 1778 states: WHEREAS, in line with the worsening traffic condition of the City of Lucena, and with the purpose of easing and regulating the flow of the same, it is imperative that the Buses, MiniBuses and out-of-town jeepneys be prohibited from maintaining terminals within the City, but instead directing to proceed to the Lucena Grand Central Terminal for purposes of picking-up and/or dropping off their passengers; 4 Respondent, who had maintained a terminal within the city, was one of those affected by the ordinances. Petitioner, Lucena Grand Central Terminal, Inc., claiming legal interest as the grantee of the exclusive franchise for the operation of the common terminal, 5 was allowed to intervene in the petition before the trial court. jur2005cd

In the hearing conducted on November 25, 1998, all the parties agreed to dispense with the presentation of evidence and to submit the case for resolution solely on the basis of the pleadings filed. 6 By Order of March 31, 1999, 7 Branch 54 of the Lucena RTC rendered judgment, the dispositive portion of which reads: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered, as follows: 1.Declaring City Ordinance No. 1631 as valid, having been issued in the exercise of the police power of the City Government of Lucena insofar as the grant of franchise to the Lucena Grand Central Terminal, Inc., to construct, finance, establish, operate and maintain common bus-jeepney terminal facility in the City of Lucena; 2.But however, declaring the provision of Sec. 4(c) of Ordinance No. 1631 to the effect that the City Government shall not grant any third party any privilege and/or concession to operate a bus, mini-bus and/or jeepney terminal, as illegal and ultra vires because it contravenes the provisions of Republic Act No. 7160, otherwise known as "The Local Government Code"; 3.Declaring City Ordinance No. 1778 as null and void, the same being also an ultra vires act of the City Government of Lucena arising from an invalid, oppressive and unreasonable exercise of the police power, more specifically, declaring illegal [sections 1(b), 3(c) and 3(e)]; ACIESH 4.Ordering the issuance of a Writ of Prohibition and/or Injunction directing the respondents public officials, the City Mayor and the Sangguniang Panglungsod of Lucena, to cease and desist from implementing Ordinance No. 1778 insofar as said ordinance prohibits or curtails petitioner from maintaining and operating its own bus terminal subject to the conditions provided for in Ordinance No. 1557, Sec. 3, which authorizes the construction of terminal outside the poblacion of Lucena City; and likewise, insofar as said ordinance directs and compels the petitioner to use the Lucena Grand Central Terminal Inc., and furthermore, insofar as it declares that no other terminals shall be situated, constructed, maintained or established inside or within the City of Lucena; and furthermore, 5.The Motion to Dismiss filed by the Intervenor, Lucena Grand Central Terminal Inc., dated October 19, 1998, is hereby DENIED for lack of merit. SO ORDERED. (Emphasis and underscoring supplied) 8 Petitioner's Motion for Reconsideration 9 of the trial court's order having been denied by Order of August 6, 1999, 10 it elevated it via petition for review under Rule 45 before this Court. 11 This Court, by Resolution of November 24, 1999, 12 referred the petition to the Court of Appeals with which it has concurrent jurisdiction, no special and important reason having been cited for it to take cognizance thereof in the first instance. By Decision of December 15, 2000, 13 the appellate court dismissed the petition and affirmed the challenged orders of the trial court. Its motion for reconsideration 14 having

been denied by the appellate court by Resolution dated June 5, 2001, 15 petitioner once again comes to this Court via petition for review, 16 this time assailing the Decision and Resolution of the Court of Appeals. Decision on the petition hinges on two issues, to wit: (1) whether the trial court has jurisdiction over the case, it not having furnished the Office of the Solicitor General copy of the orders it issued therein, and (2) whether the City of Lucena properly exercised its police power when it enacted the subject ordinances. Petitioner argues that since the trial court failed to serve a copy of its assailed orders upon the Office of the Solicitor General, it never acquired jurisdiction over the case, it citing Section 22, Rule 3 of the Rules which provides: SEC. 22.Notice to the Solicitor General. In any action involving the validity of any treaty, law, ordinance, executive order, presidential decree, rules or regulations, the court in its discretion, may require the appearance of the Solicitor General who may be heard in person or through representative duly designated by him. (Emphasis and underscoring supplied) Furthermore, petitioner invokes Sections 3 and 4 of Rule 63 which respectively provide: SEC. 3.Notice on Solicitor General. In any action which involves the validity of a statute, executive order or regulation, or any other governmental regulation, the Solicitor General shall be notified by the party assailing the same and shall be entitled to be heard upon such question. aSADIC

SEC. 4.Local government ordinances. In any action involving the validity of a local government ordinance, the corresponding prosecutor or attorney of the local government unit involved shall be similarly notified and entitled to be heard. If such ordinance is alleged to be unconstitutional, the Solicitor General shall also be notified and entitled to be heard. (Emphasis and underscoring supplied) Nowhere, however, is it stated in the above-quoted rules that failure to notify the Solicitor General about the action is a jurisdictional defect. In fact, Rule 3, Section 22 gives the courts in any action involving the "validity" of any ordinance, inter alia, "discretion" to notify the Solicitor General. Section 4 of Rule 63, which more specifically deals with cases assailing the constitutionality, not just the validity, of a local government ordinance, directs that the Solicitor General "shall also be notified and entitled to be heard." Who will notify him, Sec. 3 of the same rule provides it is the party which is assailing the local government's ordinance. More importantly, however, this Court finds that no procedural defect, fatal or otherwise, attended the disposition of the case. For respondent actually served a copy of its petition upon the Office of the Solicitor General on October 1, 1998, two days after it was filed. The

Solicitor General has issued a Certification to that effect. 17 There was thus compliance with above-quoted rules. Respecting the issue of whether police power was properly exercised when the subject ordinances were enacted: As with the State, the local government may be considered as having properly exercised its police power only if the following requisites are met: (1) the interests of the public generally, as distinguished from those of a particular class, require the interference of the State, and (2) the means employed are reasonably necessary for the attainment of the object sought to be accomplished and not unduly oppressive upon individuals. Otherwise stated, there must be a concurrence of a lawful subject and lawful method. 18 That traffic congestion is a public, not merely a private, concern, cannot be gainsaid. In Calalang v. Williams 19 which involved a statute authorizing the Director of Public Works to promulgate rules and regulations to regulate and control traffic on national roads, this Court held: In enacting said law, therefore, the National Assembly was prompted by considerations of public convenience and welfare. It was inspired by a desire to relieve congestion of traffic, which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty, with property, and with business and occupations. 20 (Emphasis supplied) The questioned ordinances having been enacted with the objective of relieving traffic congestion in the City of Lucena, they involve public interest warranting the interference of the State. The first requisite for the proper exercise of police power is thus present. DAaIEc Respondent's suggestion to have this Court look behind the explicit objective of the ordinances which, to it, was actually to benefit the private interest of petitioner by coercing all bus operators to patronize its terminal does not lie. 21 Lim v. Pacquing 22 instructs: . . . [T]his Court cannot look into allegations that PD No. 771 was enacted to benefit a select group which was later given authority to operate the jai-alai under PD No. 810. The examination of legislative motivation is generally prohibited. (Palmer v. Thompson, 403 U.S. 217, 29 L. Ed. 2d 438 [1971] per Black, J.) There is, in the first place, absolute lack of evidence to support ADC's allegation of improper motivation in the issuance of PD No. 771. In the second place, as already averred, this Court cannot go behind the expressed and proclaimed purposes of PD No. 771, which are reasonable and even laudable. (Underscoring supplied) 23 This leaves for determination the issue of whether the means employed by the Lucena Sangguniang Panlungsod to attain its professed objective were reasonably necessary and not unduly oppressive upon individuals. With the aim of localizing the source of traffic congestion in the city to a single location, 24 the subject ordinances prohibit the operation of all bus and jeepney terminals within Lucena, including those already existing, and allow the operation of only one common terminal

located outside the city proper, the franchise for which was granted to petitioner. The common carriers plying routes to and from Lucena City are thus compelled to close down their existing terminals and use the facilities of petitioner. In De la Cruz v. Paras, 25 this Court declared unconstitutional an ordinance characterized by overbreadth. In that case, the Municipality of Bocaue, Bulacan prohibited the operation of all night clubs, cabarets and dance halls within its jurisdiction for the protection of public morals. Held the Court: It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could qualify under the term reasonable. The objective of fostering public morals, a worthy and desirable end can be attained by a measure that does not encompass too wide a field. Certainly the ordinance on its face is characterized by overbreadth. The purpose sought to be achieved could have been attained by reasonable restrictions rather than by an absolute prohibition. The admonition in Salaveria should be heeded: "The Judiciary should not lightly set aside legislative action when there is not a clear invasion of personal or property rights under the guise of police regulation." It is clear that in the guise of a police regulation, there was in this instance a clear invasion of personal or property rights, personal in the case of those individuals desirous of patronizing those night clubs and property in terms of the investments made and salaries to be earned by those therein employed. (Underscoring supplied) 26 In Lupangco v. Court of Appeals, 27 this Court, in declaring unconstitutional the resolution subject thereof, advanced a similar consideration. That case involved a resolution issued by the Professional Regulation Commission which prohibited examinees from attending review classes and receiving handout materials, tips, and the like three days before the date of examination in order to preserve the integrity and purity of the licensure examinations in accountancy. Besides being unreasonable on its face and violative of academic freedom, the measure was found to be more sweeping than what was necessary, viz: Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged leakages in the licensure examinations will be eradicated or at least minimized. Making the examinees suffer by depriving them of legitimate means of review or preparation on those last three precious days when they should be refreshing themselves with all that they have learned in the review classes and preparing their mental and psychological make-up for the examination day itself would be like uprooting the tree to get rid of a rotten branch. What is needed to be done by the respondent is to find out the source of such leakages and stop it right there. If corrupt officials or personnel should be terminated from their loss, then so be it. Fixers or swindlers should be flushed out. Strict guidelines to be observed by examiners should be set up and if violations are committed, then licenses should be suspended or revoked. . . . (Emphasis and underscoring supplied) 28 As in De la Cruz 29 and Lupangco, 30 the ordinances assailed herein are characterized by overbreadth. They go beyond what is reasonably necessary to solve the traffic problem. Additionally, since the compulsory use of the terminal operated by petitioner would subject the users thereof to fees, rentals and charges, such measure is unduly oppressive, as correctly found by the appellate court. 31 What should have been done was to determine exactly where the problem lies and then to stop it right there. aCTHEA

The true role of Constitutional Law is to effect an equilibrium between authority and liberty so that rights are exercised within the framework of the law and the laws are enacted with due deference to rights. (Underscoring supplied) 32 A due deference to the rights of the individual thus requires a more careful formulation of solutions to societal problems. From the memorandum 33 filed before this Court by petitioner, it is gathered that the Sangguniang Panlungsod had identified the cause of traffic congestion to be the indiscriminate loading and unloading of passengers by buses on the streets of the city proper, hence, the conclusion that the terminals contributed to the proliferation of buses obstructing traffic on the city streets. Bus terminals per sedo not, however, impede or help impede the flow of traffic. How the outright proscription against the existence of all terminals, apart from that franchised to petitioner, can be considered as reasonably necessary to solve the traffic problem, this Court has not been enlightened. If terminals lack adequate space such that bus drivers are compelled to load and unload passengers on the streets instead of inside the terminals, then reasonable specifications for the size of terminals could be instituted, with permits to operate the same denied those which are unable to meet the specifications. In the subject ordinances, however, the scope of the proscription against the maintenance of terminals is so broad that even entities which might be able to provide facilities better than the franchised terminal are barred from operating at all. Petitioner argues, however, that other solutions for the traffic problem have already been tried but proven ineffective. But the grant of an exclusive franchise to petitioner has not been shown to be the only solution to the problem.

While the Sangguniang Panlungsod, via Ordinance No. 1557, 34 previously directed bus owners and operators to put up their terminals "outside the poblacion of Lucena City," petitioner informs that said ordinance only resulted in the relocation of terminals to other well-populated barangays, thereby giving rise to traffic congestion in those areas. 35 Assuming that information to be true, the Sangguniang Panlungsod was not without remedy. It could have defined, among other considerations, in a more precise manner, the area of relocation to avoid such consequences. As for petitioner's argument that the challenged ordinances were enacted pursuant to the power of the Sangguniang Panlungsod to "[r]egulate traffic on all streets and bridges; prohibit encroachments or obstacles thereon and, when necessary in the interest of public welfare, authorize the removal of encroachments and illegal constructions in public places": 36 Absent any showing, nay allegation, that the terminals are encroaching upon public roads, they are not obstacles. The buses which indiscriminately load and unload passengers

on the city streets are. The power then of the Sangguniang Panlungsod to prohibit encroachments and obstacles does not extend to terminals. Neither are terminals public nuisances as petitioner argues. For their operation is a legitimate business which, by itself, cannot be said to be injurious to the rights of property, health, or comfort of the community. But even assuming that terminals are nuisances due to their alleged indirect effects upon the flow of traffic, at most they are nuisance per accidens, not per se. STcDIE Unless a thing is nuisance per se, however, it may not be abated via an ordinance, without judicial proceedings, as was done in the case at bar. In Estate of Gregoria Francisco v. Court of Appeals, 37 this Court held: Respondents can not seek cover under the general welfare clause authorizing the abatement of nuisances without judicial proceedings. That tenet applies to a nuisance per se, or one which affects the immediate safety of persons and property and may be summarily abated under the undefined law of necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is a legitimate business. By its nature, it can not be said to be injurious to rights of property, of health or of comfort of the community. If it be a nuisance per accidens it may be so proven in a hearing conducted for that purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention. (Underscoring supplied) 38 In Pampanga Bus Co., Inc. v. Municipality of Tarlac 39 where the appellant-municipality similarly argued that the terminal involved therein is a nuisance that may be abated by the Municipal Council via an ordinance, this Court held: "Suffice it to say that in the abatement of nuisances the provisions of the Civil Code (Articles 694-707) must be observed and followed. This appellant failed to do." As for petitioner's claim that the challenged ordinances have actually been proven effective in easing traffic congestion: Whether an ordinance is effective is an issue different from whether it is reasonably necessary. It is its reasonableness, not its effectiveness, which bears upon its constitutionality. If the constitutionality of a law were measured by its effectiveness, then even tyrannical laws may be justified whenever they happen to be effective. The Court is not unaware of the resolutions of various barangays in Lucena City supporting the establishment of a common terminal, and similar expressions of support from the private sector, copies of which were submitted to this Court by petitioner. The weight of popular opinion, however, must be balanced with that of an individual's rights. There is no question that not even the strongest moral conviction or the most urgent public need, subject only to a few notable exceptions, will excuse the bypassing of an individual's rights. It is no exaggeration to say that a person invoking a right guaranteed under Article III of the Constitution is a majority of one even as against the rest of the nation who would deny him that right. 40

WHEREFORE, the petition is hereby DENIED. aHCSTD SO ORDERED. IX. Registry of Property X. Modes of acquiring ownership Occupation Intellectual creation Law Tradition or delivery [G.R. No. 133879. November 21, 2001.] EQUATORIAL REALTY DEVELOPMENT, INC., petitioner, vs. MAYFAIR THEATER, INC., respondent. Estelito P. Mendoza for petitioner. De Borja Medialdea Bello Guevarra & Gerodias Law Offices for private respondent. SYNOPSIS Mayfair Theater, Inc. was a lessee of portions of a building owned by Carmelo & Bauermann, Inc. Their lease contracts contained a provision granting Mayfair a right of first refusal to purchase the subject properties. However, before the contracts ended, the subject properties were sold by Carmelo to Equatorial Realty Development, Inc. which prompted Mayfair to file a case for the annulment of the Deed of Absolute Sale between Carmelo and Equatorial, specific performance and damages. In 1996, the Court ruled in favor of Mayfair. Barely five months after Mayfair had submitted its Motion for Execution, Equatorial filed an action for collection of sum of money against Mayfair claiming payment of rentals or reasonable compensation for the defendant's use of the subject premises after its lease contracts had expired. The lower court debunked the claim of Equatorial for unpaid back rentals, holding that the rescission of the Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual propriety rights, even in expectancy. It further ruled that the Court categorically stated that the Deed of Absolute Sale had been rescinded subjecting the present complaint to res judicata. Hence, Equatorial filed the present petition. Theoretically, a rescissible contract is valid until rescinded. However, this general principle is not decisive to the issue of whether Equatorial ever acquired the right to collect rentals. What is decisive is the civil law rule that ownership is acquired, not by mere agreement, but by tradition or delivery. Under the factual environment of this controversy as found by this Court in the mother case, Equatorial was never put in actual and effective control or possession of the property because of Mayfair's timely objection. In the mother case, this Court categorically denied the payment of interest, a fruit of ownership. By the same token,

rentals, another fruit of ownership, cannot be granted without mocking this Court's en banc Decision, which had long become final. SYLLABUS 1.CIVIL LAW; PROPERTY; CIVIL FRUIT OF OWNERSHIP; RENTALS. Rent is a civil fruit that belongs to the owner of the property producing it by right of accession. Consequently and ordinarily, the rentals that fell due from the time of the perfection of the sale to petitioner until its rescission by final judgment should belong to the owner of the property during that period. 2.ID.; SALES; OWNERSHIP OF THE THING SOLD IS TRANSFERRED, NOT BY CONTRACT ALONE, BUT BY TRADITION OR DELIVERY. By a contract of sale, "one of the contracting parties obligates himself to transfer ownership of and to deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent." Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him "in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee." This right is transferred, not by contract alone, but by tradition or delivery. Non nudis pactis sed traditione dominia rerum transferantur. 3.ID.; ID.; ID.; THERE IS DELIVERY WHEN THE THING SOLD IS PLACED UNDER THE CONTROL AND POSSESSION OF THE VENDEE. [T]here is said to be delivery if and when the thing sold "is placed in the control and possession of the vendee." Thus, it has been held that while the execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing sold, such constructive or symbolic delivery, being merely presumptive, is deemed negated by the failure of the vendee to take actual possession of the land sold. Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee." aHDTAI 4.ID.; ID.; ID.; NOT PRESENT IN CASE AT BAR. [T]heoretically, a rescissible contract is valid until rescinded. However, this general principle is not decisive to the issue of whether Equatorial ever acquired the right to collect rentals. What is decisive is the civil law rule that ownership is acquired, not by mere agreement, but by tradition or delivery. Under the factual environment of this controversy as found by this Court in the mother case, Equatorial was never put in actual and effective control or possession of the property because of Mayfair's timely objection. 5.ID.; ID.; ID.; EXECUTION OF CONTRACT OF SALE AS FORM OF CONSTRUCTIVE DELIVERY HOLDS TRUE ONLY WHEN THERE IS NO IMPEDIMENT THAT MAY PREVENT THE PASSING OF THE PROPERTY FROM THE VENDOR TO THE VENDEE. From the peculiar facts of this case, it is clear that petitioner never took actual control and possession of the property sold, in

view of respondent's timely objection to the sale and the continued actual possession of the property. The objection took the form of a court action impugning the sale which, as we know, was rescinded by a judgment rendered by this Court in the mother case. It has been held that the execution of a contract of sale as a form of constructive delivery is a legal fiction. It holds true only when there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. When there is such impediment, "fiction yields to reality the delivery has not been effected." Hence, respondent's opposition to the transfer of the property by way of sale to Equatorial was a legally sufficient impediment that effectively prevented the passing of the property into the latter's hands. 6.ID.; ID.; EXECUTION OF PUBLIC INSTRUMENT GIVES RISE ONLY TO A PRIMA FACIE PRESUMPTION OF DELIVERY. The execution of a public instrument gives rise, . . . only to a prima facie presumption of delivery. Such presumption is destroyed when the instrument itself expresses or implies that delivery was not intended; or when by other means it is shown that such delivery was not effected, because a third person was actually in possession of the thing. In the latter case, the sale cannot be considered consummated. 7.ID.; OBLIGATIONS AND CONTRACTS; RESCISSIBLE CONTRACTS; NOT ONLY THE LAND AND BUILDING SOLD SHALL BE RETURNED TO THE SELLER BUT ALSO THE RENTAL PAYMENTS PAID, IF ANY. [T]he point may be raised that under Article 1164 of the Civil Code, Equatorial as buyer acquired a right to the fruits of the thing sold from the time the obligation to deliver the property to petitioner arose. That time arose upon the perfection of the Contract of Sale on July 30, 1978, from which moment the laws provide that the parties to a sale may reciprocally demand performance. Does this mean that despite the judgment rescinding the sale, the right to the fruits belonged to, and remained enforceable by, Equatorial? Article 1385 of the Civil Code answers this question in the negative, because "[r]escission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest; . . . ." Not only the land and building sold, but also the rental payments paid, if any, had to be returned by the buyer. 8.ID.; SALES; CONTRACT OF SALE; RENTAL PAYMENTS MADE SHOULD NOT BE CONSTRUED AS A RECOGNITION OF THE BUYER AS NEW ORDER BUT MERELY TO AVOID IMMINENT EVICTION; CASE AT BAR. The fact that Mayfair paid rentals to Equatorial during the litigation should not be interpreted to mean either actual delivery or ipso facto recognition of Equatorial's title. The CA Records of the mother case show that Equatorial as alleged buyer of the disputed properties and as alleged successor-in-interest of Carmelo's rights as lessor submitted two ejectment suits against Mayfair. Filed in the Metropolitan Trial Court of Manila, the first was docketed as Civil Case No. 121570 on July 9, 1987; and the second, as Civil Case No. 131944 on May 28, 1990. Mayfair eventually won them both. However, to be able to maintain physical possession of the premises while awaiting the outcome of the mother case, it had no choice but to pay the rentals. The rental payments made by Mayfair should not be construed as a recognition of Equatorial as the new owner. They were made merely to avoid imminent eviction. 9.STATUTORY CONSTRUCTION; GENERAL PROPOSITIONS DO NOT DECIDE SPECIFIC CASES. As pointed out by Justice Holmes, general propositions do not decide specific cases. Rather, "laws are interpreted in the context of the peculiar factual situation of each case.

Each case has its own flesh and blood and cannot be decided on the basis of isolated clinical classroom principles." 10.CIVIL LAW; SALES; VALID FROM INCEPTION BUT JUDICIALLY RESCINDED BEFORE IT COULD BE CONSUMMATED; CASE AT BAR. [T]he sale to Equatorial may have been valid from inception, but it was judicially rescinded before it could be consummated. Petitioner never acquired ownership, not because the sale was void, as erroneously claimed by the trial court, but because the sale was not consummated by a legally effective delivery of the property sold. 11.ID.; ID.; BUYER IN BAD FAITH; NOT ENTITLED TO ANY BENEFIT; ENTITLED SOLELY TO THE RETURN OF THE PURCHASE PRICE; MUST BEAR ANY LOSS. [A]ssuming for the sake of argument that there was valid delivery, petitioner is not entitled to any benefits from the "rescinded" Deed of Absolute Sale because of its bad faith. This being the law of the mother case decided in 1996, it may no longer be changed because it has long become final and executory. . . . Thus, petitioner was and still is entitled solely to the return of the purchase price it paid to Carmelo; no more, no less. This Court has firmly ruled in the mother case that neither of them is entitled to any consideration of equity, as both "took unconscientious advantage of Mayfair." In the mother case, this Court categorically denied the payment of interest, a fruit of ownership. By the same token, rentals, another fruit of ownership, cannot be granted without mocking this Court's en banc Decision, which has long become final. Petitioner's claim of reasonable compensation for respondent's use and occupation of the subject property from the time the lease expired cannot be countenanced. If it suffered any loss, petitioner must bear it in silence, since it had wrought that loss upon itself. Otherwise, bad faith would be rewarded instead of punished. ICaDHT

12.REMEDIAL LAW; CIVIL PROCEDURE; EFFECT OF FINALITY OF JUDGMENT; RES JUDICATA; ELUCIDATED. Under the doctrine of res judicata or bar by prior judgment, a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause. Thus, "[a] final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action." Res judicata is based on the ground that "the party to be affected, or some other with whom he is in privity, has litigated the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again." It frees the parties from undergoing all over again the rigors of unnecessary suits and repetitive trials. At the same time, it prevents the clogging of court dockets. Equally important, it stabilizes rights and promotes the rule of law. 13.ID.; ID.; ID.; ID.; APPLICABLE IN CASE AT BAR. Suffice it to say that, clearly, our ruling in the mother case bars petitioner from claiming back rentals from respondent. Although the court a quo erred when it declared "void from inception" the Deed of Absolute Sale between Carmelo and petitioner, our foregoing discussion supports the grant of the Motion to Dismiss on the ground that our prior judgment in GR No. 106063 has already resolved the issue of back rentals. On the basis of the evidence presented during the hearing of Mayfair's Motion

to Dismiss, the trial court found that the issue of ownership of the subject property has been decided by this Court in favor of Mayfair. . . . Hence, the trial court decided the Motion to Dismiss on the basis of res judicata, even if it erred in interpreting the meaning of "rescinded" as equivalent to "void." In short, it ruled on the ground raised; namely, bar by prior judgment. By granting the Motion, it disposed correctly, even if its legal reason for nullifying the sale was wrong. MELO, J., concurring opinion: 1.REMEDIAL LAW; CIVIL PROCEDURE; FINAL AND EXECUTORY DECISION SHOULD BE RESPECTED. Equatorial profited from the use of the building for all the years when it had no right or, as stated in our decision, had an inferior right over the property. Mayfair, which had the superior right, continued to pay rent but it was the rate fixed in the lease contract with Carmelo. We see no reason for us to now deviate from the reasoning given in our main decision. The decision has been final and executory for five (5) years and petitioner has failed to present any valid and reasonable ground to reconsider, modify or reverse it. Let that which has been fairly adjudicated remain final. 2.CIVIL LAW; OBLIGATIONS AND CONTRACTS; RESCISSIBLE CONTRACTS; REMAINS VALID AND BINDING UPON THE PARTIES UNTIL THE SAME IS RESCINDED; NOT APPLICABLE TO A PERSON WHO IS NOT A PRIVY TO A CONTRACT. Equatorial relies on the Civil Code provision on rescissible contracts to bolster its claim. Its argument is that a rescissible contract remains valid and binding upon the parties thereto until the same is rescinded in an appropriate judicial proceeding. Equatorial conveniently fails to state that the July 31, 1978 Deed of Absolute Sale was between Equatorial and Carmelo only. Respondent Mayfair was not a party to the contract. The deed of sale was surreptitiously entered into between Carmelo and Equatorial behind the back and in violation of the rights of Mayfair. Why should the innocent and wronged party now be made to bear the consequences of an unlawful contract to which it was not privy? Insofar as Equatorial and Carmelo are concerned, their 1978 contract may have validly transferred ownership from one to the other. But not as far as Mayfair is concerned. 3.ID.; ID.; ID.; NON-EXISTENT OR VOID FROM ITS INCEPTION AS FAR AS THE INJURED THIRD PARTY IS CONCERNED. Mayfair starts its arguments with a discussion of Article 1381 of the Civil Code that contracts entered into in fraud of creditors are rescissible. There is merit in Mayfair's contention that the legal effects are not restricted to the contracting parties only. On the contrary, the rescission is for the benefit of a third party, a stranger to the contract. Mayfair correctly states that as far as the injured third party is concerned, the fraudulent contract, once rescinded, is non-existent or void from its inception. Hence, from Mayfair's standpoint, the deed of absolute sale which should not have been executed in the first place by reason of Mayfair's superior right to purchase the property and which deed was cancelled for that reason by this Court, is legally non-existent. There must be a restoration of things to the condition prior to the celebration of the contract[.] 4.ID.; ID.; ID.; INJURED THIRD PARTY SHOULD NOT BE GIVEN AN EMPTY OR VACUOUS VICTORY. [The] Court emphasized in the main case that the contract of sale between Equatorial and Carmelo was characterized by bad faith. The Court described the sale as "fraudulent" in its 1996 decision. It stated that the damages which Mayfair suffered are in

terms of actual injury and lost opportunities, emphasizing that Mayfair should not be given an empty or vacuous victory. Moreover, altogether too many suits have been filed in this case. Four separate petitions have come before us, necessitating full length decisions in at least 3 of them. The 1996 decision stressed that the Court has always been against multiplicity of suits. TADIHE 5.ID.; ID.; ID.; BAD FAITH OF THE PRIVIES ON THE EXECUTION OF THE DEED OF SALE WAS PRESENT. There was bad faith from the execution of the deed of sale because Equatorial and Carmelo affirmatively operated with furtive design or with some motive of self-interest or ill-will or for ulterior purposes (Air France vs. Carrascoso, 18 SCRA 166 [1966]). There was breach of a known duty by the two parties to the unlawful contract arising from motives of interests or ill-will calculated to cause damages to another (Lopez vs. Pan American World Airways, 123 Phil. 264 [1966]). 6.ID.; ID.; ID.; ID.; PRIVIES COULD NOT AVAIL OF ANY CONSIDERATIONS BASED ON EQUITY. We ruled that because of bad faith, neither may Carmelo and Equatorial avail themselves of considerations based on equity which might warrant the grant of interests and, in this case, unconscionably increased rentals. . . . Considering the judgments in our 3 earlier decisions, Mayfair is under no obligation to pay any interests, whether based on law or equity, to Carmelo or Equatorial. Mayfair is the wronged entity, the one which has suffered injury since 1978 or for the 23 years it was deprived of the property. Equatorial has received rentals and other benefits from the use of the property during these 23 years, rents and benefits which would have accrued to Mayfair if its rights had not been violated. There is no obligation on the part of respondent Mayfair to pay any increased, additional, back or future rentals or interests of any kind to petitioner Equatorial under the circumstances of this case. 7.ID.; ID.; ID.; ID.; NATURAL PERSON AFFECTED IS EVEN ENTITLED TO MORAL DAMAGES. [I]f Mayfair were a natural person, it could very well have asked for moral damages instead of facing a lengthy and expensive suit to pay rentals many times higher than those stipulated in the contract of lease. Under the Civil Code, Mayfair is the victim in a breach of contract where Carmelo and Equatorial acted fraudulently and in bad faith. VITUG, J., dissenting opinion: 1.CIVIL LAW; OBLIGATIONS AND CONTRACTS; CLASSIFICATION OF DEFECTIVE CONTRACTS. Civil Law, in its usual sophistication, classifies defective contracts (unlike the seemingly generic treatment in Common Law), into, first, the rescissible contracts, which are the least infirm; followed by, second, the voidable contracts; then, third, the unenforceable contracts; and, finally, fourth, the worst of all or the void contracts. 2.ID.; ID.; RESCISSIBLE CONTRACTS; VALID, BINDING AND EFFECTIVE UNTIL RESCINDED. In terms of their efficaciousness, rescissible contracts are regarded, among the four, as being the closest to perfectly executed contracts. A rescissible contract contains all the requisites of a valid contract and are considered legally binding, but by reason of injury or damage to either of the contracting parties or to third persons, such as creditors, it is susceptible to rescission at the instance of the party who may be prejudiced thereby. A rescissible contract is valid, binding and effective until it is rescinded. The proper way by

which it can be assailed is by an action for rescission based on any of the causes expressly specified by law. 3.ID.; ID.; ID.; VALIDLY TRANSFERRED OWNERSHIP OF THE PROPERTY TO THE BUYER FROM THE TIME THE DEED OF SALE WAS EXECUTED. [W]hen the Court held the contract to be "deemed rescinded" in G.R. No. 106063, the Court did not mean a "declaration of nullity" of the questioned contract. The agreement between petitioner and Carmelo, being efficacious until rescinded, validly transferred ownership over the property to petitioner from the time the deed of sale was executed in a public instrument on 30 July 1978 up to the time that the decision in G.R. No. 106063 became final on 17 March 1997. It was only from the latter date that the contract had ceased to be efficacious. The fact that the subject property was in the hands of a lessee, or for that matter of any possessor with a juridical title derived from an owner, would not preclude a conferment of ownership upon the purchaser nor be an impediment from the transfer of ownership from the seller to the buyer. 4.ID.; ID.; ID.; ID.; GOOD FAITH AND BAD FAITH PLAY NO ROLE; BUYER IS ENTITLED TO ALL INCIDENTS OF OWNERSHIP INCLUSIVE OF THE RIGHT TO THE FRUITS OF THE PROPERTY; APPLICABLE IN CASE AT BAR. Petitioner, being the owner of the property (and none other) until the judicial rescission of the sale in its favor, was entitled to all incidents of ownership inclusive of, among its other elements, the right to the fruits of the property. Rentals or rental value over that disputed property from 30 July 1978 up to 17 March 1997 should then properly pertain to petitioner. In this respect, the much abused terms of "good faith" or "bad faith" play no role; ownership, unlike other concepts, is never described as being either in good faith or in bad faith.

5.ID.; ID.; RESCISSION OF CONTRACTS DIFFERENTIATED FROM THE RESOLUTION OF RECIPROCAL OBLIGATIONS. The remedy of rescission in the case of rescissible contracts under Article 1381 is not to be confused with the remedy of rescission, or more properly termed "resolution," of reciprocal obligations under Article 1191 of the Civil Code. While both remedies presuppose the existence of a juridical relation that, once rescinded, would require mutual restitution, it is basically, however, in this aspect alone when the two concepts coincide. Resolution under Article 1191 would totally release each of the obligors from compliance with their respective covenants. It might be worthwhile to note that in some cases, notably Ocampo vs. Court of Appeals, and Velarde vs. Court of Appeals, where the Court referred to rescission as being likened to contracts which are deemed "void at inception" the focal point is the breach of the obligation involved that would allow resolution pursuant to Article 1191 of the Civil Code. The obvious reason is that when parties are reciprocally bound, the refusal or failure of one of them to comply with his part of the bargain should allow the other party to resolve their juridical relationship rather than to leave the matter in a state of continuing uncertainty. The result of the resolution, when decreed, renders the reciprocal obligations inoperative "at inception." Upon the other hand, the rescission of a rescissible contract under Article 1381, taken in conjunction with Article 1385, is a relief which the law grants for the protection of a contracting party or a third person from injury and damage that the contract may cause, or to protect some incompatible and preferential right created by the contract. Rescissible contracts are not void ab initio, and the principle, "quod nullum est nullum producit effectum," in void and

inexistent contracts is inapplicable. Until set aside in an appropriate action rescissible contracts are respected as being legally valid, binding and in force. It would be wrong to say that rescissible contracts produce no legal effects whatsoever and that no acquisition or loss of rights could meanwhile occur and be attributed to the terminated contract. The effects of the rescission, prospective in nature, can come about only upon its proper declaration as such. cHCaIE SANDOVAL-GUTIERREZ, J., dissenting opinion: 1.CIVIL LAW; SALES; OWNERSHIP IS TRANSFERRED TO THE VENDEE BY MEANS OF DELIVERY. Firmly incorporated in our Law on Sales is the principle that ownership is transferred to the vendee by means of delivery, actual or constructive. There is actual delivery when the thing sold is placed in the control and possession of the vendee. Upon the other hand, there is constructive delivery when the delivery of the thing sold is represented by other signs or acts indicative thereof. Article 1498 of the Civil Code is in point. It provides that "When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred." 2.ID.; ID.; ID.; PRESENT IN CASE AT BAR. To say that this Court found no transfer of ownership between Equatorial and Carmelo is very inaccurate. For one, this Court, in disposing of G.R. No. 106063 explicitly ordered Equatorial to "execute the deeds and documents necessary to return ownership to Carmelo & Bauermann of the disputed lots." I suppose this Court would not have made such an order if it did not recognize the transfer of ownership from Carmelo to Equatorial under the contract of sale. For why would the Court order Equatorial to execute the deeds and documents necessary to return ownership to Carmelo if, all along, it believed that ownership remained with Carmelo? Furthermore, this Court explicitly stated in the Decision that Equatorial received rentals from Mayfair during the pendency of the case. . . . Obviously, this Court acknowledged the delivery of the property from Carmelo to Equatorial. As aptly described by Justice Panganiban himself, the sale between Carmelo and Equatorial had not only been "perfected" but also "consummated." 3.ID.; PROPERTY; RECEIVING RENTALS IS AN EXERCISE OF ACTUAL POSSESSION. That actual possession of the property was turned over by Carmelo to Equatorial is clear from the fact that the latter received rents from Mayfair. Significantly, receiving rentals is an exercise of actual possession. Possession, as defined in the Civil Code, is the holding of a thing or the enjoyment of a right. It may either be by material occupation or by merely subjecting the thing or right to the action of our will. Possession may therefore be exercised through one's self or through another. It is not necessary that the person in possession should himself be the occupant of the property, the occupancy can be held by another in the name of the one who claims possession. In the case at bench, Equatorial exercised possession over the disputed property through Mayfair. When Mayfair paid its monthly rentals to Equatorial, the said lessee recognized the superior right of Equatorial to the possession of the property. And even if Mayfair did not recognize Equatorial's superior right over the disputed property, the fact remains that Equatorial was then enjoying the fruits of its possession.

4.ID.; ID.; DEGREES OF POSSESSION. [I]t will be of aid to lay down the degrees of possession. The first degree is the mere holding, or possession without title whatsoever, and in violation of the right of the owner. Here, both the possessor and the public know that the possession is wrongful. An example of this is the possession of a thief or a usurper of land. The second is possession with juridical title, but not that of ownership. This is possession peaceably acquired, such that of a tenant, depositary, or pledge. The third is possession with a just title, or a title sufficient to transfer ownership, but not from the true owner. An example is the possession of a vendee of a piece of land from one who pretends to be the owner but is in fact not the owner thereof. And the fourth is possession with a just title from the true owner. This is possession that springs from ownership. Undoubtedly, Mayfair's possession is by virtue of juridical title under the contract of lease, while that of Equatorial is by virtue of its right of ownership under the contract of sale. 5.ID.; SALES; TIMELY OBJECTION AND CONTINUED ACTUAL POSSESSION OF THE PROPERTY OF THE INJURED THIRD PARTY DID NOT PREVENT THE PASSING OF THE PROPERTY FROM THE SELLER TO THE BUYER; CASE AT BAR. The fact that Mayfair has remained in "actual possession of the property," after the perfection of the contract of sale between Carmelo and Equatorial up to the finality of this Court's Decision in G.R. No. 106063 (and even up to the present), could not prevent the consummation of such contract. As I have previously intimated, Mayfair's possession is not under a claim of ownership. It cannot in any way clash with the ownership accruing to Equatorial by virtue of the sale. The principle has always been that the one who possesses as a mere holder acknowledges in another a superior right or right of ownership. A tenant possession of the thing leased as a mere holder, so does the usufructuary of the thing in usufruct; and the borrower of the thing loaned in commodatum. None of these holders asserts a claim of ownership in himself over the thing. Similarly, Mayfair does not claim ownership, but only possession as a lessee with the prior right to purchase the property. In G.R. No. 106063, Mayfair's main concern in its action for specific performance was the recognition of its right of first refusal. Hence, the most that Mayfair could secure from the institution of its suit was to be allowed to exercise its right to buy the property upon rescission of the contract of sale. Not until Mayfair actually exercised what it was allowed to do by this Court in G.R. No. 106063, specifically to buy the disputed property for P11,300,000.00, would it have any right of ownership. How then, at that early stage, could Mayfair's action be an impediment in the consummation of the contract between Carmelo and Equatorial? Pertinently, it does not always follow that, because a transaction is prohibited or illegal, title, as between the parties to the transaction, does not pass from the seller, donor, or transferor to the vendee, donee or transferee. 6.ID.; ID.; ID.; BUYER HAS THE RIGHT TO BE PAID WHATEVER MONTHLY RENTALS DURING THE EXISTENCE OF THE CONTRACT. [C]onformably to the foregoing disquisition, I maintain that Equatorial has the right to be paid whatever monthly rentals during the period that the contract of sale was in existence minus the rents already paid. In Guzman vs. Court of Appeals, this Court decreed that upon the purchase of the leased property and the proper notice by the vendee, the lessee must pay the agreed monthly rentals to the new owner since, by virtue of the sale, the vendee steps into the shoes of the original lessor to whom the lessee bound himself to pay. His belief that the subject property should have been sold to him does not justify the unilateral withholding of rental payments due to the new owner of the property. It must be stressed that under Article 1658 of the Civil Code, there are only two instances wherein the lessee may suspend payment of rent, namely: in case the lessor

fails to make the necessary repairs or to maintain the lessee in peaceful and adequate enjoyment of the property leased. In this case, the fact remains that Mayfair occupied the leased property. It derived benefit from such occupation, thus it should pay the corresponding rentals due. Nemo cum alterius detrimento locupletari potest. No one shall enrich himself at the expense of another. TcHCIS 7.ID.; CONTRACTS; PRESENCE OF BAD FAITH DOES NOT PREVENT THE AWARD OF RENT. Neither should the presence of bad faith prevent the award of rent to Equatorial. While Equatorial committed bad faith in entering into the contract with Carmelo, it has been equitably punished when this Court rendered the contract rescissible. That such bad faith was the very reason why the contract was declared rescissible is evident from the Decision itself. To utilize it again, this time, to deprive Equatorial of its entitlement to the rent corresponding to the period during which the contract was supposed to validly exist, would not only be unjust, it would also disturb the very nature of a rescissible contract.

8.ID.; ID.; RESCISSIBLE CONTRACT AND VOID CONTRACT; DIFFERENTIATED. Articles 1380 through 1389 of the Civil Code deal with rescissible contracts. A rescissible contract is one that is validly entered into, but is subsequently terminated or rescinded for causes provided for by law. . . . Necessarily, therefore, a rescissible contract remains valid and binding upon the parties thereto until the same is rescinded in an appropriate judicial proceeding. On the other hand, a void contract, which is treated in Articles 1490 through 1422 of the Civil Code, is inexistent and produces no legal effect whatsoever. The contracting parties are not bound thereby and such contract is not subject to ratification. 9.ID.; ID.; RESCISSIBLE CONTRACT; VALIDLY TRANSFERRED OWNERSHIP OF THE SUBJECT PROPERTY TO THE BUYER. This Court did not declare the Deed of Absolute Sale between Carmelo and Equatorial void but merely rescissible. Consequently, the contract was, at inception, valid and naturally, it validly transferred ownership of the subject property to Equatorial. It bears emphasis that Equatorial was not automatically divested of its ownership. Rather, as clearly directed in the dispositive portion of our Decision, Carmelo should return the purchase price to Equatorial which, in turn, must execute such deeds and documents necessary to enable Carmelo to reacquire its ownership of the property. 10.ID.; ID.; ID.; ID.; BUYER HAS THE RIGHT TO DEMAND PAYMENT OF RENTALS FROM THE LESSEE WITH RIGHT TO REPURCHASE. I must reiterate that Equatorial purchased the subject property from Carmelo and became its owner on July 31, 1978. While the contract of sale was "deemed rescinded" by this Court in G.R. No. 106063, nevertheless the sale had remained valid and binding between the contracting parties until March 17, 1997 when the Decision in G.R. No. 106063 became final. Consequently, being the owner, Equatorial has the right to demand from Mayfair payment of rentals corresponding to the period from July 31, 1978 up to March 17, 1997. DECISION PANGANIBAN, J p:

General propositions do not decide specific cases. Rather, laws are interpreted in the context of the peculiar factual situation of each proceeding. Each case has its own flesh and blood and cannot be ruled upon on the basis of isolated clinical classroom principles. While we agree with the general proposition that a contract of sale is valid until rescinded, it is equally true that ownership of the thing sold is not acquired by mere agreement, but by tradition or delivery. The peculiar facts of the present controversy as found by this Court in an earlier relevant Decision show that delivery was not actually effected; in fact, it was prevented by a legally effective impediment. Not having been the owner, petitioner cannot be entitled to the civil fruits of ownership like rentals of the thing sold. Furthermore, petitioner's bad faith, as again demonstrated by the specific factual milieu of said Decision, bars the grant of such benefits. Otherwise, bad faith would be rewarded instead of punished. The Case Filed before this Court is a Petition for Review 1 under Rule 45 of the Rules of Court, challenging the March 11, 1998 Order 2 of the Regional Trial Court of Manila (RTC), Branch 8, in Civil Case No. 97-85141. The dispositive portion of the assailed Order reads as follows: "WHEREFORE, the motion to dismiss filed by defendant Mayfair is hereby GRANTED, and the complaint filed by plaintiff Equatorial is hereby DISMISSED." 3 Also questioned is the May 29, 1998 RTC Order 4 denying petitioner's Motion for Reconsideration. The Facts The main factual antecedents of the present Petition are matters of record, because it arose out of an earlier case decided by this Court on November 21, 1996, entitled Equatorial Realty Development, Inc. v. Mayfair Theater, Inc. 5 (henceforth referred to as the "mother case"), docketed as GR No. 106063. IHEAcC Carmelo & Bauermann, Inc. ("Carmelo") used to own a parcel of land, together with two 2storey buildings constructed thereon, located at Claro M. Recto Avenue, Manila, and covered by TCT No. 18529 issued in its name by the Register of Deeds of Manila. On June 1, 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. ("Mayfair") for a period of 20 years. The lease covered a portion of the second floor and mezzanine of a two-storey building with about 1,610 square meters of floor area, which respondent used as a movie house known as Maxim Theater. Two years later, on March 31, 1969, Mayfair entered into a second Contract of Lease with Carmelo for the lease of another portion of the latter's property namely, a part of the second floor of the two-storey building, with a floor area of about 1,064 square meters; and two store spaces on the ground floor and the mezzanine, with a combined floor area of about 300 square meters. In that space, Mayfair put up another movie house known as Miramar Theater. The Contract of Lease was likewise for a period of 20 years.

Both leases contained a provision granting Mayfair a right of first refusal to purchase the subject properties. However, on July 30, 1978 within the 20-year-lease term the subject properties were sold by Carmelo to Equatorial Realty Development, Inc. ("Equatorial") for the total sum of P11,300,000, without their first being offered to Mayfair. As a result of the sale of the subject properties to Equatorial, Mayfair filed a Complaint before the Regional Trial Court of Manila (Branch 7) for (a) the annulment of the Deed of Absolute Sale between Carmelo and Equatorial, (b) specific performance, and (c) damages. After trial on the merits, the lower court rendered a Decision in favor of Carmelo and Equatorial. This case, entitled "Mayfair Theater, Inc. v. Carmelo and Bauermann, Inc., et al.," was docketed as Civil Case No. 118019. On appeal (docketed as CA-GR CV No. 32918), the Court of Appeals (CA) completely reversed and set aside the judgment of the lower court. The controversy reached this Court via GR No. 106063. In this mother case, it denied the Petition for Review in this wise: "WHEREFORE, the petition for review of the decision of the Court of Appeals, dated June 23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale between petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby deemed rescinded; Carmelo & Bauermann is ordered to return to petitioner Equatorial Realty Development the purchase price. The latter is directed to execute the deeds and documents necessary to return ownership to Carmelo & Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00." 6 The foregoing Decision of this Court became final and executory on March 17, 1997. On April 25, 1997, Mayfair filed a Motion for Execution, which the trial court granted. However, Carmelo could no longer be located. Thus, following the order of execution of the trial court, Mayfair deposited with the clerk of court a quo its payment to Carmelo in the sum of P11,300,000 less P847,000 as withholding tax. The lower court issued a Deed of Reconveyance in favor of Carmelo and a Deed of Sale in favor of Mayfair. On the basis of these documents, the Registry of Deeds of Manila canceled Equatorial's titles and issued new Certificates of Title 7 in the name of Mayfair. TAIaHE Ruling on Equatorial's Petition for Certiorari and Prohibition contesting the foregoing manner of execution, the CA in its Resolution of November 20, 1998, explained that Mayfair had no right to deduct the P847,000 as withholding tax. Since Carmelo could no longer be located, the appellate court ordered Mayfair to deposit the said sum with the Office of the Clerk of Court, Manila, to complete the full amount of P11,300,000 to be turned over to Equatorial. Equatorial questioned the legality of the above CA ruling before this Court in GR No. 136221 entitled "Equatorial Realty Development, Inc. v. Mayfair Theater, Inc." In a Decision promulgated on May 12, 2000, 8 this Court directed the trial court to follow strictly the Decision in GR No. 106063, the mother case. It explained its ruling in these words:

"We agree that Carmelo and Bauermann is obliged to return the entire amount of eleven million three hundred thousand pesos (P11,300,000.00) to Equatorial. On the other hand, Mayfair may not deduct from the purchase price the amount of eight hundred forty-seven thousand pesos (P847,000.00) as withholding tax. The duty to withhold taxes due, if any, is imposed on the seller, Carmelo and Bauermann, Inc." 9 Meanwhile, on September 18, 1997 barely five months after Mayfair had submitted its Motion for Execution before the RTC of Manila, Branch 7 Equatorial filed with the Regional Trial Court of Manila, Branch 8, an action for the collection of a sum of money against Mayfair, claiming payment of rentals or reasonable compensation for the defendant's use of the subject premises after its lease contracts had expired. This action was the progenitor of the present case. In its Complaint, Equatorial alleged among other things that the Lease Contract covering the premises occupied by Maxim Theater expired on May 31, 1987, while the Lease Contract covering the premises occupied by Miramar Theater lapsed on March 31, 1989. 10 Representing itself as the owner of the subject premises by reason of the Contract of Sale on July 30, 1978, it claimed rentals arising from Mayfair's occupation thereof. Ruling of the RTC Manila, Branch 8 As earlier stated, the trial court dismissed the Complaint via the herein assailed Order and denied the Motion for Reconsideration filed by Equatorial. 11 The lower court debunked the claim of petitioner for unpaid back rentals, holding that the rescission of the Deed of Absolute Sale in the mother case did not confer on Equatorial any vested or residual proprietary rights, even in expectancy.

In granting the Motion to Dismiss, the court a quo held that the critical issue was whether Equatorial was the owner of the subject property and could thus enjoy the fruits or rentals therefrom. It declared the rescinded Deed of Absolute Sale as "void at its inception as though it did not happen." EScHDA The trial court ratiocinated as follows: "The meaning of rescind in the aforequoted decision is to set aside. In the case of Ocampo v. Court of Appeals, G.R. No. 97442, June 30, 1994, the Supreme Court held that, 'to rescind is to declare a contract void in its inception and to put an end as though it never were. It is not merely to terminate it and release parties from further obligations to each other but to abrogate it from the beginning and restore parties to relative positions which they would have occupied had no contract ever been made.' "Relative to the foregoing definition, the Deed of Absolute Sale between Equatorial and Carmelo dated July 31, 1978 is void at its inception as though it did not happen.

"The argument of Equatorial that this complaint for back rentals as 'reasonable compensation for use of the subject property after expiration of the lease contracts presumes that the Deed of Absolute Sale dated July 30, 1978 from whence the fountain of Equatorial's alleged property rights flows is still valid and existing. xxx xxx xxx "The subject Deed of Absolute Sale having been rescinded by the Supreme Court, Equatorial is not the owner and does not have any right to demand backrentals from the subject property. . . . ." 12 The trial court added: "The Supreme Court in the Equatorial case, G.R. No. 106063, has categorically stated that the Deed of Absolute Sale dated July 31, 1978 has been rescinded subjecting the present complaint to res judicata." 13 Hence, the present recourse. 14 Issues Petitioner submits, for the consideration of this Court, the following issues: 15 "A. The basis of the dismissal of the Complaint by the Regional Trial Court not only disregards basic concepts and principles in the law on contracts and in civil law, especially those on rescission and its corresponding legal effects, but also ignores the dispositive portion of the Decision of the Supreme Court in G.R. No. 106063 entitled 'Equatorial Realty Development, Inc. & Carmelo & Bauermann, Inc. vs. Mayfair Theater, Inc.' cSITDa "B. The Regional Trial Court erred in holding that the Deed of Absolute Sale in favor of petitioner by Carmelo & Bauermann, Inc., dated July 31, 1978, over the premises used and occupied by respondent, having been 'deemed rescinded' by the Supreme Court in G.R. No. 106063, is 'void at its inception as though it did not happen.' "C. The Regional Trial Court likewise erred in holding that the aforesaid Deed of Absolute Sale, dated July 31, 1978, having been 'deemed rescinded' by the Supreme Court in G.R. No. 106063, petitioner 'is not the owner and does not have any right to demand backrentals from the subject property,' and that the rescission of the Deed of Absolute Sale by the Supreme Court does not confer to petitioner 'any vested right nor any residual proprietary rights even in expectancy.' "D.

The issue upon which the Regional Trial Court dismissed the civil case, as stated in its Order of March 11, 1998, was not raised by respondent in its Motion to Dismiss. "E. The sole ground upon which the Regional Trial Court dismissed Civil Case No. 97-85141 is not one of the grounds of a Motion to Dismiss under Sec. 1 of Rule 16 of the 1997 Rules of Civil Procedure." Basically, the issues can be summarized into two: (1) the substantive issue of whether Equatorial is entitled to back rentals; and (2) the procedural issue of whether the court a quo's dismissal of Civil Case No. 97-85141 was based on one of the grounds raised by respondent in its Motion to Dismiss and covered by Rule 16 of the Rules of Court. This Court's Ruling The Petition is not meritorious. First Issue: Ownership of Subject Properties We hold that under the peculiar facts and circumstances of the case at bar, as found by this Court en banc in its Decision promulgated in 1996 in the mother case, no right of ownership was transferred from Carmelo to Equatorial in view of a patent failure to deliver the property to the buyer. Rental a Civil Fruit of Ownership To better understand the peculiarity of the instant case, let us begin with some basic parameters. Rent is a civil fruit 16 that belongs to the owner of the property producing it 17 by right of accession. 18 Consequently and ordinarily, the rentals that fell due from the time of the perfection of the sale to petitioner until its rescission by final judgment should belong to the owner of the property during that period. By a contract of sale, "one of the contracting parties obligates himself to transfer ownership of and to deliver a determinate thing and the other to pay therefor a price certain in money or its equivalent." 19 Ownership of the thing sold is a real right, 20 which the buyer acquires only upon delivery of the thing to him "in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee." 21 This right is transferred, not by contract alone, but by tradition or delivery. 22 Non nudis pactis sed traditione dominia rerum transferantur. And there is said to be delivery if and when the thing sold "is placed in the control and possession of the vendee." 23 Thus, it has been held that while the execution of a public instrument of sale is recognized by law as equivalent to the delivery of the thing sold, 24 such constructive or symbolic delivery,

being merely presumptive, is deemed negated by the failure of the vendee to take actual possession of the land sold. 25 Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. 26 In the Law on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee." 27 Possession Never Acquired by Petitioner Let us now apply the foregoing discussion to the present issue. From the peculiar facts of this case, it is clear that petitioner never took actual control and possession of the property sold, in view of respondent's timely objection to the sale and the continued actual possession of the property. The objection took the form of a court action impugning the sale which, as we know, was rescinded by a judgment rendered by this Court in the mother case. It has been held that the execution of a contract of sale as a form of constructive delivery is a legal fiction. It holds true only when there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. 28 When there is such impediment, "fiction yields to reality the delivery has not been effected." 29 Hence, respondent's opposition to the transfer of the property by way of sale to Equatorial was a legally sufficient impediment that effectively prevented the passing of the property into the latter's hands. IcAaSD This was the same impediment contemplated in Vda. de Sarmiento v. Lesaca, 30 in which the Court held as follows: "The question that now arises is: Is there any stipulation in the sale in question from which we can infer that the vendor did not intend to deliver outright the possession of the lands to the vendee? We find none. On the contrary, it can be clearly seen therein that the vendor intended to place the vendee in actual possession of the lands immediately as can be inferred from the stipulation that the vendee 'takes actual possession thereof . . . with full rights to dispose, enjoy and make use thereof in such manner and form as would be most advantageous to herself.' The possession referred to in the contract evidently refers to actual possession and not merely symbolical inferable from the mere execution of the document. "Has the vendor complied with this express commitment? She did not. As provided in Article 1462, the thing sold shall be deemed delivered when the vendee is placed in the control and possession thereof, which situation does not here obtain because from the execution of the sale up to the present the vendee was never able to take possession of the lands due to the insistent refusal of Martin Deloso to surrender them claiming ownership thereof. And although it is postulated in the same article that the execution of a public document is

equivalent to delivery, this legal fiction only holds true when there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. . . . ." 31 The execution of a public instrument gives rise, therefore, only to a prima facie presumption of delivery. Such presumption is destroyed when the instrument itself expresses or implies that delivery was not intended; or when by other means it is shown that such delivery was not effected, because a third person was actually in possession of the thing. In the latter case, the sale cannot be considered consummated. ESacHC However, the point may be raised that under Article 1164 of the Civil Code, Equatorial as buyer acquired a right to the fruits of the thing sold from the time the obligation to deliver the property to petitioner arose. 32 That time arose upon the perfection of the Contract of Sale on July 30, 1978, from which moment the laws provide that the parties to a sale may reciprocally demand performance. 33 Does this mean that despite the judgment rescinding the sale, the right to the fruits 34 belonged to, and remained enforceable by, Equatorial?

Article 1385 of the Civil Code answers this question in the negative, because "[r]escission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest; . . . ." Not only the land and building sold, but also the rental payments paid, if any, had to be returned by the buyer. Another point. The Decision in the mother case stated that "Equatorial . . . has received rents" from Mayfair "during all the years that this controversy has been litigated." The Separate Opinion of Justice Teodoro Padilla in the mother case also said that Equatorial was "deriving rental income" from the disputed property. Even herein ponente's Separate Concurring Opinion in the mother case recognized these rentals. The question now is: Do all these statements concede actual delivery? EDHCSI The answer is "No." The fact that Mayfair paid rentals to Equatorial during the litigation should not be interpreted to mean either actual delivery or ipso facto recognition of Equatorial's title. The CA Records of the mother case 35 show that Equatorial as alleged buyer of the disputed properties and as alleged successor-in-interest of Carmelo's rights as lessor submitted two ejectment suits against Mayfair. Filed in the Metropolitan Trial Court of Manila, the first was docketed as Civil Case No. 121570 on July 9, 1987; and the second, as Civil Case No. 131944 on May 28, 1990. Mayfair eventually won them both. However, to be able to maintain physical possession of the premises while awaiting the outcome of the mother case, it had no choice but to pay the rentals. The rental payments made by Mayfair should not be construed as a recognition of Equatorial as the new owner. They were made merely to avoid imminent eviction. It is in this context that one should understand the aforequoted factual statements in the ponencia in the mother case, as well as the Separate Opinion of Mr. Justice Padilla and the Separate Concurring Opinion of the herein ponente.

At bottom, it may be conceded that, theoretically, a rescissible contract is valid until rescinded. However, this general principle is not decisive to the issue of whether Equatorial ever acquired the right to collect rentals. What is decisive is the civil law rule that ownership is acquired, not by mere agreement, but by tradition or delivery. Under the factual environment of this controversy as found by this Court in the mother case, Equatorial was never put in actual and effective control or possession of the property because of Mayfair's timely objection. As pointed out by Justice Holmes, general propositions do not decide specific cases. Rather, "laws are interpreted in the context of the peculiar factual situation of each case. Each case has its own flesh and blood and cannot be decided on the basis of isolated clinical classroom principles." 36 In short, the sale to Equatorial may have been valid from inception, but it was judicially rescinded before it could be consummated. Petitioner never acquired ownership, not because the sale was void, as erroneously claimed by the trial court, but because the sale was not consummated by a legally effective delivery of the property sold. Benefits Precluded by Petitioner's Bad Faith Furthermore, assuming for the sake of argument that there was valid delivery, petitioner is not entitled to any benefits from the "rescinded" Deed of Absolute Sale because of its bad faith. This being the law of the mother case decided in 1996, it may no longer be changed because it has long become final and executory. Petitioner's bad faith is set forth in the following pertinent portions of the mother case: "First and foremost is that the petitioners acted in bad faith to render Paragraph 8 'inutile.' xxx xxx xxx "Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in question rescissible. We agree with respondent Appellate Court that the records bear out the fact that Equatorial was aware of the lease contracts because its lawyers had, prior to the sale, studied the said contracts. As such, Equatorial cannot tenably claim to be a purchaser in good faith, and, therefore, rescission lies. xxx xxx xxx "As also earlier emphasized, the contract of sale between Equatorial and Carmelo is characterized by bad faith, since it was knowingly entered into in violation of the rights of and to the prejudice of Mayfair. In fact, as correctly observed by the Court of Appeals, Equatorial admitted that its lawyers had studied the contract of lease prior to the sale. Equatorial's knowledge of the stipulations therein should have cautioned it to look further into the agreement to determine if it involved stipulations that would prejudice its own interests.

xxx xxx xxx "On the part of Equatorial, it cannot be a buyer in good faith because it bought the property with notice and full knowledge that Mayfair had a right to or interest in the property superior to its own. Carmelo and Equatorial took unconscientious advantage of Mayfair." 37 (emphasis supplied) Thus, petitioner was and still is entitled solely to the return of the purchase price it paid to Carmelo; no more, no less. This Court has firmly ruled in the mother case that neither of them is entitled to any consideration of equity, as both "took unconscientious advantage of Mayfair." 38 In the mother case, this Court categorically denied the payment of interest, a fruit of ownership. By the same token, rentals, another fruit of ownership, cannot be granted without mocking this Court's en banc Decision, which has long become final. AEDHST

Petitioner's claim of reasonable compensation for respondent's use and occupation of the subject property from the time the lease expired cannot be countenanced. If it suffered any loss, petitioner must bear it in silence, since it had wrought that loss upon itself. Otherwise, bad faith would be rewarded instead of punished. We uphold the trial court's disposition, not for the reason it gave, but for (a) the patent failure to deliver the property and (b) petitioner's bad faith, as above discussed. Second Issue: Ground in Motion to Dismiss Procedurally, petitioner claims that the trial court deviated from the accepted and usual course of judicial proceedings when it dismissed Civil Case No. 97-85141 on a ground not raised in respondent's Motion to Dismiss. Worse, it allegedly based its dismissal on a ground not provided for in a motion to dismiss as enunciated in the Rules of Court. We are not convinced. A review of respondent's Motion to Dismiss Civil Case No. 97-85141 shows that there were two grounds invoked, as follows: "(A) Plaintiff is guilty of forum-shopping. "(B) Plaintiff's cause of action, if any, is barred by prior judgment." 39 The court a quo ruled, inter alia, that the cause of action of petitioner (plaintiff in the case below) had been barred by a prior judgment of this Court in GR No. 106063, the mother case.

Although it erred in its interpretation of the said Decision when it argued that the rescinded Deed of Absolute Sale was "void," we hold, nonetheless, that petitioner's cause of action is indeed barred by a prior judgment of this Court. As already discussed, our Decision in GR No. 106063 shows that petitioner is not entitled to back rentals, because it never became the owner of the disputed properties due to a failure of delivery. And even assuming arguendo that there was a valid delivery, petitioner's bad faith negates its entitlement to the civil fruits of ownership, like interest and rentals. Under the doctrine of res judicata or bar by prior judgment, a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause. 40 Thus, "[a] final judgment on the merits rendered by a court of competent jurisdiction is conclusive as to the rights of the parties and their privies and constitutes an absolute bar to subsequent actions involving the same claim, demand, or cause of action." 41 Res judicata is based on the ground that "the party to be affected, or some other with whom he is in privity, has litigated the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again." 42 It frees the parties from undergoing all over again the rigors of unnecessary suits and repetitive trials. At the same time, it prevents the clogging of court dockets. Equally important, it stabilizes rights and promotes the rule of law. We find no need to repeat the foregoing disquisitions on the first issue to show satisfaction of the elements of res judicata. Suffice it to say that, clearly, our ruling in the mother case bars petitioner from claiming back rentals from respondent. Although the court a quo erred when it declared "void from inception" the Deed of Absolute Sale between Carmelo and petitioner, our foregoing discussion supports the grant of the Motion to Dismiss on the ground that our prior judgment in GR No. 106063 has already resolved the issue of back rentals. On the basis of the evidence presented during the hearing of Mayfair's Motion to Dismiss, the trial court found that the issue of ownership of the subject property has been decided by this Court in favor of Mayfair. We quote the RTC: "The Supreme Court in the Equatorial case, G.R. No. 106063 has categorically stated that the Deed of Absolute Sale dated July 31, 1978 has been rescinded subjecting the present complaint to res judicata." 43 (Emphasis in the original) Hence, the trial court decided the Motion to Dismiss on the basis of res judicata, even if it erred in interpreting the meaning of "rescinded" as equivalent to "void." In short, it ruled on the ground raised; namely, bar by prior judgment. By granting the Motion, it disposed correctly, even if its legal reason for nullifying the sale was wrong. The correct reasons are given in this Decision.

WHEREFORE, the Petition is hereby DENIED. Costs against petitioner. ADCTac

SO ORDERED. Davide, Jr., C.J., Quisumbing, Pardo, Buena, Ynares-Santiago and Carpio, JJ., concur. Melo, J., please see concurring opinion. Puno and Mendoza, JJ., concur and join the concurring opinion of J. Melo. Bellosillo, J., join the dissenting opinion of J. Sandoval-Gutierrez. Vitug, J., please see dissenting opinion. Kapunan, J., I join the dissenting opinions of JJ. Vitug and Sandoval-Gutierrez. De Leon, Jr., J., join the dissenting opinion of J. Vitug. Sandoval-Gutierrez, J., please see my dissenting opinion. Separate Opinions MELO, J., concurring opinion: While I express my conformity to the ponencia of our distinguished colleague, Mr. Justice Artemio V. Panganiban, I would just like to make the following observations: 1.The issue in this case was squarely resolved in our 1996 En Banc decision in the main case. What petitioner is asking us to do now is to reverse or modify a judgment which is accurate in every respect, conformable to law and jurisprudence, and faithful to principles of fairness and justice. 2.Petitioner's submissions are deceiving. It is trying to collect unjustified and unbelievably increased rentals by provoking a purely academic discussion, as far as respondent is concerned, of a non-applicable provision of the Civil Code on contracts. 3.To grant the petition is to reward bad faith, for petitioner has deprived respondent of the latter's property rights for twenty-three (23) years and has forced it to defend its interests in case after case during that lengthy period. Petitioner now tries to inflict further injury in the fantastic and groundless amount of P115,947,867.00. To remand this case to the lower court in order to determine the back rentals allegedly due to petitioner Equatorial Realty Development Corporation, Inc. is to encourage continuation of crafty tactics and to allow the further dissipation of scarce judicial time and resources. The instant petition arose from a complaint for back rentals, increased rentals and interests filed by petitioner Equatorial Realty Development, Inc. (Equatorial) against respondent Mayfair Theater, Inc. (Mayfair). It has to be adjudicated in the context of three earlier petitions decided by this Court.

A dispute between the two parties over the ownership of a commercial lot and building along Claro M. Recto Avenue in Manila has led to 23 years of protracted litigation, including the filing of 4 petitions with the Court, namely, G.R. No. L-106063, decided on November 21, 1996 (264 SCRA 483); G.R. No. 103311 decided on March 4, 1992; G.R. No. 136221, decided on May 12, 2000; and the present petition, G.R. No. 133879. aSECAD The case at bar is a classic illustration of how a dubious interpretation of the dispositive portion of the 1996 decision for petitioner could lead to 5 more years of bitter litigation after the initial 18 years of legal proceedings over the first case. Lease contracts over the subject property were executed on June 1, 1967 and March 31, 1969 by original owner Carmelo and Bauermann, Inc. (Carmelo) in favor of herein respondent Mayfair. The leases expired on May 31, 1987 and March 31, 1989, respectively. The lease contracts embodied provisions giving Mayfair a right-of-first-refusal should Carmelo sell the property. In an act characterized as bad faith by this Court, the property, in violation of the right-offirst-refusal, was sold by Carmelo to herein petitioner Equatorial, on July 31, 1978 for P11,300,000.00. On September 13, 1978, Mayfair filed the first case for annulment of the contract of sale, specific performance of the right-of-first-refusal provision, and damages. The Regional Trial Court (RTC) of Manila decided the case in favor of Equatorial on February 7, 1991. Counterclaims for compensation arising from the use of the premises were awarded to Equatorial by the 1991 RTC decision. On June 23, 1992, the Court of Appeals reversed the RTC decision, thus leading to the first petition, G.R. No. 106063, filed against Mayfair by both Equatorial and Carmelo. On November 21, 1996, this Court En Banc rendered its decision (264 SCRA 483 [1996]), disposing: WHEREFORE, the petition for review of the decision of the Court of Appeals dated June 23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale between petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby rescinded; petitioner Carmelo & Bauermann is ordered to return to petitioner Equatorial Realty Development the purchase price. The latter is directed to execute the deeds and documents necessary to return ownership to Carmelo & Bauermann of the disputed lots. Carmelo and Bauermann is ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00. IScaAE In the Court of Appeals decision (CA-G.R. CV No. 32918, June 23, 1992) in the main case, raised to this Court, Mayfair was ordered to directly pay P11,300,000.00 to Equatorial whereupon Equatorial would execute the deeds and documents necessary for the transfer of ownership to Mayfair and the registration of the property in its name. The execution of documents and the transfer of the property were directly between Equatorial and Mayfair. Our decision in 1996 (G.R. No. 106063) affirmed the appellate decision. However, while the 1978 deed of sale questioned by Mayfair was rescinded, we ordered Carmelo to first return to Equatorial the purchase price of the property, whereupon Equatorial would return

ownership to Carmelo, after which Mayfair would buy the lot for P11,300,000.00 from Carmelo. When the case was remanded to the RTC for execution of the decision, it was ascertained that Carmelo and Bauermann, Inc. was no longer in existence. The Sheriff could not enforce the portions of the judgment calling for acts to be performed by Carmelo. Mayfair, therefore, deposited the amount of P11,300,000.00 with the RTC for payment to Equatorial, hoping that the latter would faithfully comply with this Court's decision. In this regard, it may be mentioned that buyer Mayfair also paid P847,000.00 in taxes which the vendors should have paid. The RTC ordered the execution of deeds of transfer, the cancellation of Equatorial's titles to the property, and the issuance of new titles in favor of Mayfair. Accordingly, the property was registered in the name of Mayfair and titles issued in its favor. Equatorial, however, saw an opening for further litigation. It questioned the method employed by the RTC to execute the Court's judgment, arguing that the directives involving Carmelo's participation were ignored by the trial court. The litigation over the alleged incorrectness of the execution eventually led to the second petition earlier mentioned G.R. No. 136221. It may be mentioned at this point that on July 9, 1987, while the right-of-first-refusal and cancellation case was pending, Equatorial filed an action for ejectment against Mayfair. Because the issue of ownership was still pending in the case for rescission of deed of sale including the enforcement of the right-of-first-refusal provision, the ejectment case was dismissed. Appeals to the RTC and the Court of Appeals were denied. On March 26, 1990, still another ejectment case was filed by Equatorial. In decisions which reached all the way to this Court in G.R. No. 103311, the cases for ejectment did not prosper. Mayfair won the cases on March 4, 1992. The three cases decided by the Court in these litigations between Equatorial and Mayfair, all of them in favor of Mayfair, are antecedents of the present and fourth petition. Equatorial has been adjudged as having unlawfully and in bad faith acquired property that should have belonged to Mayfair since 1978. Ownership and title have been unquestionably transferred to Mayfair. Seemingly, Equatorial now seeks to profit from its bad faith. While the case involving the allegedly incorrect execution of the 1996 decision on cancellation of the deed of sale in G.R. No. 106063 was being litigated, Equatorial filed on September 18, 1997 with the RTC of Manila two complaints for payment of back and increased rentals arising from the use by Mayfair of the lot, building, and other fixed improvements. From the time the property was sold by Carmelo to Equatorial, lessee Mayfair had been paying to Equatorial the rentals fixed in the 1967 and 1969 lease contracts with the original owner. This was during the pendency of the complaint for annulment of the contract of sale, specific performance of the right-offirst-refusal provision, and damages.

As found in our 1998 decision in G.R. No. 106063, the disputed property should have actually belonged to Mayfair at the time. However, to avoid the ejectment cases, which

Equatorial nonetheless later filed, Mayfair was forced to pay rentals to Equatorial. It paid the rentals based on the rates fixed by Carmelo in the lease contracts. Equatorial, claiming the 1967 and 1969 rentals to be inadequate, claimed increased amounts as reasonable compensation. Because the amounts fixed by the lease contract with Carmelo but paid to Equatorial were only at the rate of P17,966.21 monthly while Equatorial wanted P210,000.00 every month plus legal interests, the suit was for the payment of P115,947,867.68 as of June 19, 1997. Citing the 1996 decision in G.R. No. 106063, Mayfair contended that it owned the property under the decision. It stated that the sale by Carmelo to Equatorial had been cancelled, and, as owner, Mayfair owed no increased rentals to Equatorial based on said decision. The present case on back rentals could not be conclusively decided because the execution and finality of the issue of ownership were being contested for 5 years in the petition on the proper execution filed in G.R. No. 136221. This petition had to wait for the resolution of G.R. No. 136221. In its decision dated May 12, 2000, in G.R. No. 136221 (First Division, per Mr. Justice Pardo; Davide, Jr., C.J., Kapunan, and Ynares-Santiago, JJ., concurring), this Court reiterated the judgment in G.R. No. 106063. It emphasized that the 1996 decision awarding the property to Mayfair was clear. It stated that the decision having attained finality, there was nothing left for the parties to do but to adhere to the mandates of the decision. AISHcD

In the dispositive portion, however, the Court ordered the trial court "to carry out the execution following strictly the terms" of the 1996 decision. However, as earlier stated, this could not be done because Carmelo had ceased to exist. There was no longer any Carmelo which could return the P11,300,000.00 consideration of the 1978 sale to Equatorial as ordered in the dispositive portion of the 1996 decision. Equatorial could not and would not also execute the deeds returning the property to Carmelo, as directed in the decision. Neither could the defunct Carmelo sell the property to Mayfair at the sale price in 1978 when the right of first refusal was violated. Mayfair had to file a motion for partial reconsideration, emphasizing that it was impossible for a corporation which has gone out of existence to obey the specific orders of this Court. A resolution was, therefore, rendered on June 25, 2001 putting an end to the controversy over the proper implementation of the 1996 judgment. This June 25, 2001 Resolution in G.R. No. 136221 validated the issuance of new titles in the name of the adjudicated owner, Mayfair. The Court ordered the direct release to Equatorial of the P11,300,000.00 deposited in court for the account of the defunct Carmelo. In the follow-up Resolution of the First Division in G.R. No. 136221 dated June 25, 2001, the Court, after describing the case as a Promethean one involving the execution of a decision which has been long final, and after calling the efforts to stave off execution as a travesty of justice, instructed the trial court:

1.To execute the Court's Decision strictly in accordance with the ruling in G.R. No. 106063 by validating the acts of the sheriff of Manila and the titles in the name of Mayfair Theater, Inc. issued by the Register of Deeds of Manila consistent therewith;

2.In case of failure of Carmelo and Bauermann to accept the amount of P11,300,000.00 deposited by Mayfair Theater, Inc. with the Clerk of Court, Regional Trial Court, Manila, to authorize the Clerk of Court to RELEASE the amount of P11,300,000.00 deposited with the court for the account of Carmelo and Bauermann, Inc. to petitioner; 3.To devolve upon the trial court the determination of other issues that may remain unresolved among the parties, relating to the execution of this Court's final decision in G.R. No. 106063. In light of the Court's judgments in G.R. No. 106063 and G.R. No. 136221, the present petition in G.R. No. 133879 for back rentals should now be finally resolved, applying the rulings in those earlier decisions. Indubitably, the 1978 deed of sale executed by Carmelo in favor of Equatorial over the disputed property has been set aside by this Court. Equatorial was declared a buyer in bad faith. The contract was characterized as a fraudulent sale and the entirety of the indivisible property sold to Equatorial was the property we ordered to be conveyed to Mayfair for the same price paid by Equatorial to Carmelo. It is also beyond question that the method of execution of the 1996 decision by the RTC, the direct payment by Mayfair to Equatorial, bypassing and detouring the defunct Carmelo corporation, has been validated by this Court. There are no longer any procedural obstacles to the full implementation of the decision. And finally, the property sold to Equatorial in violation of Mayfair's right of first refusal is now indisputably possessed by, and owned and titled in the name of, respondent Mayfair. Parenthetically, the issue on the payment of back and increased rentals, plus interests, was actually settled in the 1996 decision in G.R. No. 106063. It could not be enforced at the time only because of the controversy unfortunately raised by Equatorial over the proper execution of the 1996 decision. DTAESI It is now time to reiterate the 1996 decision on interests and settle the dispute between Mayfair and Equatorial once and for all. Thus, we reiterate that: On the question of interest payments on the principal amount of P11,300.000.00, it must be borne in mind that both Carmelo and Equatorial acted in bad faith. Carmelo knowingly and deliberately broke a contract entered into with Mayfair. It sold the property to Equatorial with purpose and intent to withhold any notice or knowledge of the sale coming to the

attention of Mayfair. All the circumstances point to a calculated and contrived plan of noncompliance with the agreement of first refusal. On the part of Equatorial, it cannot be a buyer in good faith because it bought the property with notice and full knowledge the Mayfair had a right to or interest in the property superior to its own. Carmelo and Equatorial took unconscientious advantage of Mayfair. Neither may Carmelo and Equatorial avail of consideration based on equity which might warrant the grant of interests. The vendor received as payment from the vendee what, at the time, was a full and fair price for the property. It has used the P11,300,000.00 all these years earning income or interest from the amount. Equatorial, on the other hand, has received rents and otherwise profited from the use of the property turned over to it by Carmelo. In fact, during all the years that this controversy was being litigated. Mayfair paid rentals regularly to the buyer who had an inferior right to purchase the property. Mayfair is under no obligation to pay any interests arising from this judgment to either Carmelo or Equatorial (264 SCRA 483, pp. 511-512). Worthy quoting too is the concurring opinion in our 1996 decision of Mr. Justice Teodoro R. Padilla as follows: The equities of the case support the foregoing legal disposition. During the intervening years between 1 August 1978 and this date, Equatorial (after acquiring the C.M. Recto property for the price of P11,300,000.00) had been leasing the property and deriving rental income therefrom. In fact, one of the lessees in the property was Mayfair. Carmelo had, in turn, been using the proceeds of the sale, investment-wise and/or operation wise in its own business. cSaADC It may appear, at first blush, that Mayfair is unduly favored by the solution submitted by this opinion, because the price of P11,300,000.00 which it has to pay Carmelo in the exercise of its right of first refusal, has been subjected to the inroads of inflation so that its purchasing power today is less than when the same amount was paid by Equatorial to Carmelo. But then it cannot be overlooked that it was Carmelo's breach of Mayfair's right of first refusal that prevented Mayfair from paying the price of P11,300,000.00 to Carmelo at about the same time the amount was paid by Equatorial to Carmelo. Moreover, it cannot be ignored that Mayfair had also incurred consequential or "opportunity" losses by reason of its failure to acquire and use the property under its right of first refusal. In fine, any loss in purchasing power of the price of P11,300,000.00 is for Carmelo to incur or absorb on account of its bad faith in breaching Mayfair's contractual right of first refusal to the subject property. (ibid., pp. 511-512). It can be seen from the above ruling that the issue of rentals and interests was fully discussed and passed upon in 1996. Equatorial profited from the use of the building for all the years when it had no right or, as stated in our decision, had an inferior right over the property. Mayfair, which had the superior right, continued to pay rent but it was the rate fixed in the lease contract with Carmelo. We see no reason for us to now deviate from the reasoning given in our main decision. The decision has been final and executory for five (5) years and petitioner has failed to present any valid and reasonable ground to reconsider, modify or reverse it. Let that which has been fairly adjudicated remain final. CTEacH

My second observation relates to the clever but, to my mind, deceptive argument foisted by Equatorial on the Court. Equatorial relies on the Civil Code provision on rescissible contracts to bolster its claim. Its argument is that a rescissible contract remains valid and binding upon the parties thereto until the same is rescinded in an appropriate judicial proceeding. Equatorial conveniently fails to state that the July 31, 1978 Deed of Absolute Sale was between Equatorial and Carmelo only. Respondent Mayfair was not a party to the contract. The deed of sale was surreptitiously entered into between Carmelo and Equatorial behind the back and in violation of the rights of Mayfair. Why should the innocent and wronged party now be made to bear the consequences of an unlawful contract to which it was not privy? Insofar as Equatorial and Carmelo are concerned, their 1978 contract may have validly transferred ownership from one to the other. But not as far as Mayfair is concerned. Mayfair starts its arguments with a discussion of Article 1381 of the Civil Code that contracts entered into in fraud of creditors are rescissible. There is merit in Mayfair's contention that the legal effects are not restricted to the contracting parties only. On the contrary, the rescission is for the benefit of a third party, a stranger to the contract. Mayfair correctly states that as far as the injured third party is concerned, the fraudulent contract, once rescinded, is non-existent or void from its inception. Hence, from Mayfair's standpoint, the deed of absolute sale which should not have been executed in the first place by reason of Mayfair's superior right to purchase the property and which deed was cancelled for that reason by this Court, is legally non-existent. There must be a restoration of things to the condition prior to the celebration of the contract (Respondent relies on Almeda vs. J.M. & Company, 43072-R, December 16, 1975, as cited in the Philippine Law Dictionary; IV Arturo M. Tolentino, Civil Code of the Philippines, 570, 1990 Ed., citing Manresa; IV Edgardo L. Paras, Civil Code of the Philippines, 717-718, 1994 Ed.). It is hard not to agree with the explanations of Mayfair, to wit:

4.22.As a consequence of the rescission of the Deed of Absolute Sale, it was as if Equatorial never bought and became the lessor of the subject properties. Thus, the court a quo did not err in ruling that Equatorial is not the owner and does not have any right to demand back rentals from [the] subject property. 4.23.Tolentino, supra, at 577-578 further explains that the effects of rescission in an accion pauliana retroact to the date when the credit or right being enforced was acquired. "While it is necessary that the credit of the plaintiff in the accion pauliana must be prior to the fraudulent alienation, the date of the judgment enforcing it is immaterial. Even if the judgment be subsequent to the alienation, it is merely declaratory, with retroactive effect to the date when the credit was constituted. . . ." (emphasis supplied)

4.24.The clear rationale behind this is to prevent conniving parties, such as Equatorial and Carmelo, from benefiting in any manner from their unlawful act of entering into a contract in fraud of innocent parties with superior rights like Mayfair. Thus, to allow Equatorial to further collect rentals from Mayfair is to allow the former to profit from its own act of bad faith. Ex dolo malo non oritur actio. (Respondent's Comment, pp. 338-339, Rollo). This brings me to my third and final observation in this case. This Court emphasized in the main case that the contract of sale between Equatorial and Carmelo was characterized by bad faith. The Court described the sale as "fraudulent" in its 1996 decision. It stated that the damages which Mayfair suffered are in terms of actual injury and lost opportunities, emphasizing that Mayfair should not be given an empty or vacuous victory. Moreover, altogether too many suits have been filed in this case. Four separate petitions have come before us, necessitating full length decisions in at least 3 of them. The 1996 decision stressed that the Court has always been against multiplicity of suits. There was bad faith from the execution of the deed of sale because Equatorial and Carmelo affirmatively operated with furtive design or with some motive of self-interest or ill-will or for ulterior purposes (Air France vs. Carrascoso, 18 SCRA 166 [1966]). There was breach of a known duty by the two parties to the unlawful contract arising from motives of interests or ill-will calculated to cause damage to another (Lopez vs. Pan American World Airways, 123 Phil. 264 [1966]). The presence of bad faith is clear from the records. Our resolution of this issue in 1996 (G.R. 106063) is res judicata. We stated: First and foremost is that the petitioners (referring to Equatorial and Carmelo) acted in bad faith to render Paragraph 8 "inutile." TcDAHS xxx xxx xxx Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in question rescissible. We agree with respondent Appellate Court that the records bear out the fact that Equatorial was aware of the lease contracts because its lawyers had, prior to the sale, studied the said contracts. As such Equatorial cannot tenably claim to be a purchaser in good faith and, therefore, rescission lies. xxx xxx xxx As also earlier emphasized, the contract of sale between Equatorial and Carmelo is characterized by bad faith, since it was knowingly entered into in violation of the rights of and to the prejudice of Mayfair. In fact, as correctly observed by the Court of Appeals, Equatorial admitted that its lawyers had studied the contract of lease prior to the sale. Equatorial's knowledge of the stipulations therein should have cautioned it to look further into the agreement to determine if it involved stipulations that would prejudice its own interests.

xxx xxx xxx On the part of Equatorial, it cannot be a buyer in good faith because it bought the property with notice and full knowledge that Mayfair had a right to or interest in the property superior to its own. Carmelo and Equatorial took unconscientious advantage of Mayfair (264 SCRA 506, 507-511). We ruled that because of bad faith, neither may Carmelo and Equatorial avail themselves of considerations based on equity which might warrant the grant of interests and, in this case, unconscionably increased rentals. Verily, if Mayfair were a natural person it could very well have asked for moral damages instead of facing a lengthy and expensive suit to pay rentals many times higher than those stipulated in the contract of lease. Under the Civil Code, Mayfair is the victim in a breach of contract where Carmelo and Equatorial acted fraudulently and in bad faith. Considering the judgments in our 3 earlier decisions, Mayfair is under no obligation to pay any interests, whether based on law or equity, to Carmelo or Equatorial. Mayfair is the wronged entity, the one which has suffered injury since 1978 or for the 23 years it was deprived of the property. cETCID Equatorial has received rentals and other benefits from the use of the property during these 23 years, rents and benefits which would have accrued to Mayfair if its rights had not been violated. There is no obligation on the part of respondent Mayfair to pay any increased, additional, back or future rentals or interests of any kind to petitioner Equatorial under the circumstances of this case. I, therefore, concur with the majority opinion in denying due course and dismissing the petition. VITUG, J., dissenting opinion: Civil Law, in its usual sophistication, classifies defective contracts (unlike the seemingly generic treatment in Common Law), into, first, the rescissible contracts, 1 which are the least infirm; followed by, second, the voidable contracts; 2 then, third, the unenforceable contracts; 3 and, finally, fourth, the worst of all or the void contracts. 4 In terms of their efficaciousness, rescissible contracts are regarded, among the four, as being the closest to perfectly executed contracts. A rescissible contract contains all the requisites of a valid contract and are considered legally binding, but by reason of injury or damage to either of the contracting parties or to third persons, such as creditors, it is susceptible to rescission at the instance of the party who may be prejudiced thereby. A rescissible contract is valid, binding and effective until it is rescinded. The proper way by which it can be assailed is by an action for rescission based on any of the causes expressly specified by law. 5 The remedy of rescission in the case of rescissible contracts under Article 1381 is not to be confused with the remedy of rescission, or more properly termed "resolution," of reciprocal

obligations under Article 1191 of the Civil Code. While both remedies presuppose the existence of a juridical relation that, once rescinded, would require mutual restitution, it is basically, however, in this aspect alone when the two concepts coincide. Resolution under Article 1191 would totally release each of the obligors from compliance with their respective covenants. It might be worthwhile to note that in some cases, notably Ocampo vs. Court of Appeals, 6 and Velarde vs. Court of Appeals, 7 where the Court referred to rescission as being likened to contracts which are deemed "void at inception," the focal issue is the breach of the obligation involved that would allow resolution pursuant to Article 1191 of the Civil Code. The obvious reason is that when parties are reciprocally bound, the refusal or failure of one of them to comply with his part of the bargain should allow the other party to resolve their juridical relationship rather than to leave the matter in a state of continuing uncertainty. The result of the resolution, when decreed, renders the reciprocal obligations inoperative "at inception." Upon the other hand, the rescission of a rescissible contract under Article 1381, taken in conjunction with Article 1385, is a relief which the law grants for the protection of a contracting party or a third person from injury and damage that the contract may cause, or to protect some incompatible and preferent right created by the contract. 8 Rescissible contracts are not void ab initio,and the principle, "quod nullum est nullum producit effectum," in void and inexistent contracts is inapplicable. Until set aside in an appropriate action rescissible contracts are respected as being legally valid, binding and in force. It would be wrong to say that rescissible contracts produce no legal effects whatsoever and that no acquisition or loss of rights could meanwhile occur and be attributed to the terminated contract. The effects of the rescission, prospective in nature, can come about only upon its proper declaration as such. Thus, when the Court 9 held the contract to be "deemed rescinded" in G.R. No. 106063, the Court did not mean a "declaration of nullity" of the questioned contract. The agreement between petitioner and Carmelo, being efficacious until rescinded, validly transferred ownership over the property to petitioner from the time the deed of sale was executed in a public instrument on 30 July 1978 up to the time that the decision in G.R. No. 106063 became final on 17 March 1997. It was only from the latter date that the contract had ceased to be efficacious. The fact that the subject property was in the hands of a lessee, or for that matter of any possessor with a juridical title derived from an owner, would not preclude a conferment of ownership upon the purchaser nor be an impediment from the transfer of ownership from the seller to the buyer. Petitioner, being the owner of the property (and none other) until the judicial rescission of the sale in its favor, was entitled to all incidents of ownership inclusive of, among its other elements, the right to the fruits of the property. Rentals or rental value over that disputed property from 30 July 1978 up to 17 March 1997 should then properly pertain to petitioner. In this respect, the much abused terms of "good faith" or "bad faith" play no role; ownership, unlike other concepts, is never described as being either in good faith or in bad faith.

With all due respect, I am thus unable to join in this instance my colleagues in the majority.

SANDOVAL-GUTIERREZ, J., dissenting opinion: "Stare decisis et non quieta movere follow past precedents and do not disturb what has been settled. Adherence to this principle is imperative if this Court is to maintain stability in jurisprudence. I regret that I am unable to agree with the majority opinion. The principal issue in this case is whether a rescissible contract is void and ineffective from its inception. This issue is not a novel one. Neither is it difficult to resolve as it involves the application of elementary principles in the law on contracts, specifically on rescissible contracts, as distinguished from void or inexistent contracts. The facts are simple. On June 1, 1967, respondent Mayfair Theater, Inc. (Mayfair) leased portions of the ground, mezzanine and second floors of a two storey commercial building located along C.M. Recto Avenue, Manila. The building together with the land on which it was constructed was then owned by Carmelo & Bauermann, Inc. (Carmelo). Respondent used these premises as "Maxim Theater." The lease was for a period of twenty (20) years. IEHSDA On March 31, 1969, Mayfair leased from Carmelo another portion of the second floor, as well as two (2) store spaces on the ground and mezzanine floors of the same building. Respondent Mayfair used the premises as a movie theater known as "Miramar Theater." Both leases contained the following identical provisions: "That if the LESSOR should desire to sell the leased premises, the LESSEE shall be given 30days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the LESSEE, the LESSOR is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof. On July 31, 1978, Carmelo entered into a Deed of Absolute Sale whereby it sold the subject land and two-storey building to petitioner Equatorial Realty Development, Inc. (Equatorial) for P11,300,000.00. Having acquired from Carmelo ownership of the subject property, Equatorial received rents from Mayfair for sometime. cEaCTS Subsequently, Mayfair, claiming it had been denied its right to purchase the leased property in accordance with the provisions of its lease contracts with Carmelo, filed with the Regional Trial Court, Branch 7, Manila, a suit for specific performance and annulment of sale with prayer to enforce its "exclusive option to purchase" the property. The dispute between Mayfair, on the one hand, and Carmelo and Equatorial on the other, reached this Court in G.R. No. 106063, "Equatorial Realty Development, Inc. & Carmelo & Bauermann, Inc. vs. Mayfair Theater, Inc." 1 On November 21, 1996, this Court rendered a Decision, the dispositive portion of which reads:

"WHEREFORE, the petition for review of the decision of the Court of Appeals, dated June 23, 1992, in CA-G.R. CV No. 32918, is HEREBY DENIED. The Deed of Absolute Sale between petitioners Equatorial Realty Development, Inc. and Carmelo & Bauermann, Inc. is hereby deemed rescinded; Carmelo & Bauermann is ordered to return to petitioner Equatorial Realty Development the purchase price. The latter is directed to execute the deeds and documents necessary to return ownership to Carmelo & Bauermann of the disputed lots. Carmelo & Bauermann is ordered to allow Mayfair Theater, Inc. to buy the aforesaid lots for P11,300,000.00. SO ORDERED." The Decision of this Court in G.R. No. 106063 became final and executory on March 17, 1997. On April 25, 1997, Mayfair filed with the trial court a motion for execution which was granted. However, Carmelo could no longer be located. Thus, Mayfair deposited with the trial court its payment to Carmelo in the sum of P11,300,000.00 less P847,000.00 as withholding tax. The Clerk of Court of the Manila Regional Trial Court, as sheriff, executed a deed of reconveyance in favor of Carmelo and a deed of sale in favor of Mayfair. On the basis of these documents, the Registry of Deeds of Manila cancelled Equatorial's titles and issued new Certificates of Title 2 in the name of Mayfair. In G.R. No. 136221, 3 "Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc.," this Court instructed the trial court to execute strictly this Court's Decision in G.R. No. 106063. On September 18, 1997, or after the execution of this Court's Decision in G.R. No. 106063, Equatorial filed with the Regional Trial Court of Manila, Branch 8, an action for collection of a sum of money against Mayfair, docketed as Civil Case No. 97-85141. Equatorial prayed that the trial court render judgment ordering Mayfair to pay: (1)the sum of P11,548,941.76 plus legal interest, representing the total amount of unpaid monthly rentals/reasonable compensation from June 1, 1987 (Maxim Theater) and March 31, 1989 (Miramar Theater) to July 31, 1997; cACTaI (2)the sums of P849,567.12 and P458,853.44 a month, plus legal interest, as rental/reasonable compensation for the use and occupation of the subject property from August 1, 1997 to May 31, 1998 (Maxim Theater) and March 31, 1998 (Miramar Theater); (3)the sum of P500,000.00 as and for attorney's fees, plus other expenses of litigation; and (4)the costs of the suit. 4 On October 14, 1997, before filing its answer, Mayfair filed a "Motion to Dismiss" Civil Case No. 97-85141 on the following grounds:

"(A) PLAINTIFF IS GUILTY OF FORUM SHOPPING. (B) PLAINTIFF'S CAUSE OF ACTION, IF ANY, IS BARRED BY PRIOR JUDGMENT." 5 On March 11, 1998, the court a quo issued an order dismissing Civil Case No. 97-85141 on the ground that since this Court, in G.R. No. 106063, rescinded the Deed of Absolute Sale between Carmelo and Equatorial, the contract is void at its inception. 6 Correspondingly, Equatorial is not the owner of the subject property and, therefore, does not have any right to demand from Mayfair payment of rentals or reasonable compensation for its use and occupation of the premises. Equatorial filed a motion for reconsideration but was denied. Hence, the present petition. At this stage, I beg to disagree with the ruling of the majority that (1) Equatorial did not acquire ownership of the disputed property from Carmelo because of lack of delivery; and that (2) Equatorial is not entitled to the payment of rentals because of its bad faith. SHEIDC Firmly incorporated in our Law on Sales is the principle that ownership is transferred to the vendee by means of delivery, actual or constructive. 7 There is actual delivery when the thing sold is placed in the control and possession of the vendee. 8 Upon the other hand, there is constructive delivery when the delivery of the thing sold is represented by other signs or acts indicative thereof. Article 1498 of the Civil Code is in point. It provides that "When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred." 9 Contrary to the majority opinion, the facts and circumstances of the instant case clearly indicate that there was indeed actual and constructive delivery of the disputed property from Carmelo to Equatorial. Let me substantiate my claim. First, I must take exception to the majority's statement that this Court found in G.R. No. 106063 10 that, "no right of ownership was transferred from Carmelo to Equatorial in view of a patent failure to deliver the property to the buyer." 11 A perusal of the Decision dated November 21, 1996 would reveal otherwise. To say that this Court found no transfer of ownership between Equatorial and Carmelo is very inaccurate. For one, this Court, in disposing of G.R. No. 106063, explicitly ordered Equatorial to "execute the deeds and documents necessary to return ownership to Carmelo

& Bauermann of the disputed lots." 12 I suppose this Court would not have made such an order if it did not recognize the transfer of ownership from Carmelo to Equatorial under the contract of sale. For why would the Court order Equatorial to execute the deeds and documents necessary to return ownership to Carmelo if, all along, it believed that ownership remained with Carmelo? Furthermore, is Court explicitly stated in the Decision that Equatorial received rentals from Mayfair during the pendency of the case. Let me quote the pertinent portion of the Decision, thus: ". . . Equatorial, on the other hand, has received rents and otherwise profited from the use of the property turned over to it by Carmelo. In fact, during all the years that this controversy was being litigated, Mayfair paid rentals regularly to the buyer (Equatorial) who had an inferior right to purchase the property. Mayfair is under no obligation to pay any interests arising from this judgment to either Carmelo or Equatorial." 13 Justice Teodoro R. Padilla, in his Separate Opinion, made the following similar observations: "The equities of the case support the foregoing legal disposition. During the intervening years between 1 August 1978 and this date, Equatorial (after acquiring the C.M. Recto property for the price of P11,300,000.00) had been leasing the property and deriving rental income therefrom. In fact, one of the lessees in the property was Mayfair. Carmelo had, in turn, been using the proceeds of the sale, investment-wise and/or operation-wise in its own business." 14 Obviously, this Court acknowledged the delivery of the property from Carmelo to Equatorial. As aptly described by Justice Panganiban himself, the sale between Carmelo and Equatorial had not only been "perfected" but also "consummated." 15 That actual possession of the property was turned over by Carmelo to Equatorial is clear from the fact that the latter received rents from Mayfair. Significantly, receiving rentals is an exercise of actual possession. Possession, as defined in the Civil Code, is the holding of a thing or the enjoyment of a right. 16 It may either be by material occupation or by merely subjecting the thing or right to the action of our will. 17 Possession may therefore be exercised through one's self or through another. 18 It is not necessary that the person in possession should himself be the occupant of the property, the occupancy can be held by another in the name of the one who claims possession. In the case at bench, Equatorial exercised possession over the disputed property through Mayfair. When Mayfair paid its monthly rentals to Equatorial, the said lessee recognized the superior right of Equatorial to the possession of the property. And even if Mayfair did not recognize Equatorial's superior right over the disputed property, the fact remains that Equatorial was then enjoying the fruits of its possession.

At this juncture, it will be of aid to lay down the degrees of possession. The first degree is the mere holding, or possession without title whatsoever, and in violation of the right of the owner. Here, both the possessor and the public know that the possession is wrongful. An

example of this is the possession of a thief or a usurper of land. The second is possession with juridical title, but not that of ownership. This is possession peaceably acquired, such that of a tenant, depositary, or pledge. The third is possession with a just title, or a title sufficient to transfer ownership, but not from the true owner. An example is the possession of a vendee of a piece of land from one who pretends to be the owner but is in fact not the owner thereof. And the fourth is possession with a just title from the true owner. This is possession that springs from ownership. 19 Undoubtedly, Mayfair's possession is by virtue of juridical title under the contract of lease, while that of Equatorial is by virtue of its right of ownership under the contract of sale. Second, granting arguendo that there was indeed no actual delivery, would Mayfair's alleged "timely objection to the sale and continued actual possession of the property" constitute an "impediment" that may prevent the passing of the property from Carmelo to Equatorial? 20 I believe the answer is no. The fact that Mayfair has remained in "actual possession of the property," after the perfection of the contract of sale between Carmelo and Equatorial up to the finality of this Court's Decision in G.R. No. 106063 (and even up to the present), could not prevent the consummation of such contract. As I have previously intimated, Mayfair's possession is not under a claim of ownership. It cannot in any way clash with the ownership accruing to Equatorial by virtue of the sale. The principle has always been that the one who possesses as a mere holder acknowledges in another a superior right or right of ownership. A tenant possesses the thing leased as a mere holder, so does the usufructuary of the thing in usufruct; and the borrower of the thing loaned in commodatum. None of these holders asserts a claim of ownership in himself over the thing. Similarly, Mayfair does not claim ownership, but only possession as a lessee with the prior right to purchase the property. HATICc In G.R. No. 106063, Mayfair's main concern in its action for specific performance was the recognition of its right of first refusal. Hence, the most that Mayfair could secure from the institution of its suit was to be allowed to exercise its right to buy the property upon rescission of the contract of sale. Not until Mayfair actually exercised what it was allowed to do by this Court in G.R. No. 106063, specifically to buy the disputed property for P11,300,000.00, would it have any right of ownership. How then, at that early stage, could Mayfair's action be an impediment in the consummation of the contract between Carmelo and Equatorial? Pertinently, it does not always follow that, because a transaction is prohibited or illegal, title, as between the parties to the transaction, does not pass from the seller, donor, or transferor to the vendee, donee or transferee. 21 And third, conformably to the foregoing disquisition, I maintain that Equatorial has the right to be paid whatever monthly rentals during the period that the contract of sale was in existence minus the rents already paid. In Guzman v. Court of Appeals, 22 this Court decreed that upon the purchase of the leased property and proper notice by the vendee, the lessee must pay the agreed monthly rentals to the new owner since, by virtue of the sale, the vendee steps into the shoes of the original lessor to whom the lessee bound himself to

pay. His belief that the subject property should have been sold to him does not justify the unilateral withholding of rental payments due to the new owner of the property. 23 It must be stressed that under Article 1658 of the Civil Code, there are only two instances wherein the lessee may suspend payment of rent, namely: in case the lessor fails to make the necessary repairs or to maintain the lessee in peaceful and adequate enjoyment of the property leased. 24 In this case, the fact remains that Mayfair occupied the leased property. It derived benefit from such occupation, thus, it should pay the corresponding rentals due. Nemo cum alterius detrimento locupletari potest. No one shall enrich himself at the expense of another. 25 Neither should the presence of bad faith prevent the award of rent to Equatorial. While Equatorial committed bad faith in entering into the contract with Carmelo, it has been equitably punished when this Court rendered the contract rescissible. That such bad faith was the very reason why the contract was declared rescissible is evident from the Decision itself. 26 To utilize it again, this time, to deprive Equatorial of its entitlement to the rent corresponding to the period during which the contract was supposed to validly exist, would not only be unjust, it would also disturb the very nature of a rescissible contract. cAEaSC Let me elucidate on the matter. Articles 1380 through 1389 of the Civil Code deal with rescissible contracts. A rescissible contract is one that is validly entered into, but is subsequently terminated or rescinded for causes provided for by law. This is the clear implication of Article 1380 of the same Code which provides: "Art. 1380.Contracts validly agreed upon may be rescinded in the cases established by law." Rescission has been defined as follows: "Rescission is a remedy granted by law to the contracting parties and even to third persons, to secure the reparation of damages caused to them by a contract, even if this should be valid, by means of the restoration of things to their condition at the moment prior to the celebration of said contract. It is a relief for the protection of one of the contracting parties and third persons from all injury and damage the contract may cause, or to protect some incompatible and preferential right created by the contract. It implies a contract which, even if initially valid, produces a lesion or pecuniary damage to someone. It sets aside the act or contract for justifiable reasons of equity." 27 Necessarily, therefore, a rescissible contract remains valid and binding upon the parties thereto until the same is rescinded in an appropriate judicial proceeding. aCcADT On the other hand, a void contract, which is treated in Articles 1409 through 1422 of the Civil Code, is inexistent and produces no legal effect whatsoever. The contracting parties are not bound thereby and such contract is not subject to ratification.

In dismissing petitioner Equatorial's complaint in Civil Case No. 97-85141, the trial court was apparently of the impression that a rescissible contract has the same effect as a void contract, thus: "However, the words in the dispositive portion of the Supreme Court "is hereby deemed rescinded" does not allow any other meaning. The said Deed of Absolute Sale is void at its inception. xxx xxx xxx The subject Deed of Absolute Sale having been rescinded by the Supreme Court, Equatorial is not the owner and does not have any right to demand back rentals from subject property. The law states that only an owner can enjoy the fruits of a certain property or jus utendi which includes the right to receive from subject property what it produces, . . ." The trial court erred. In G.R. No. 106063 (involving Mayfair's suit for specific performance), this Court clearly characterized the Deed of Absolute Sale between Carmelo and petitioner Equatorial as a rescissible contract. We stated therein that: "Since Equatorial is a buyer in bad faith, this finding renders the sale to it of the property in question rescissible. We agree with respondent Appellate Court that the records bear out the fact that Equatorial was aware of the lease contracts because its lawyers had, prior to the sale, studied the said contracts. As such, Equatorial cannot tenably claim to be a purchaser in good faith, and therefore, rescission lies." This Court did not declare the Deed of Absolute Sale between Carmelo and Equatorial void but merely rescissible. Consequently, the contract was, at inception, valid and naturally, it validly transferred ownership of the subject property to Equatorial. It bears emphasis that Equatorial was not automatically divested of its ownership. Rather, as clearly directed in the dispositive portion of our Decision, Carmelo should return the purchase price to Equatorial which, in turn, must execute such deeds and documents necessary to enable Carmelo to reacquire its ownership of the property. As mentioned earlier, Mayfair deposited with the Regional Trial Court, Branch 7, Manila, the purchase price of P10,452,000.00 (P11,300,000.00 less P847,000.00 as withholding tax). In turn, the Clerk of Court executed the deed of sale of the subject property in favor of Mayfair. In the meantime, Mayfair has continued to occupy and use the premises, the reason why Equatorial filed against it Civil Case No. 97-85141 for sum of money representing rentals and reasonable compensation. At this point, I must reiterate that Equatorial purchased the subject property from Carmelo and became its owner on July 31, 1978. While the contract of sale was "deemed rescinded" by this Court in G.R. No. 106063, nevertheless the sale had remained valid and binding between the contracting parties until March 17, 1997 when the Decision in G.R. No. 106063 became final. Consequently, being the owner, Equatorial has the right to demand from Mayfair payment of rentals corresponding to the period from July 31, 1978 up to March 17, 1997. THIcCA

Records show that the rentals and reasonable compensation which Equatorial demands from Mayfair are those which accrued from the year 1987 to 1998. As earlier stated, prior thereto, Mayfair had been paying the rents to Equatorial.

In line with this Court's finding that Equatorial was the owner of the disputed property from July 31, 1978 to March 17, 1997, it is, therefore, entitled to the payment of rentals accruing to such period. Consequently, whether or not Mayfair paid Equatorial the rentals specified in the lease contracts from June 1, 1987 to March 17, 1997 is for the trial court to resolve. One last word. In effect, the majority have enunciated that: 1.A lessor, in a contract of sale, cannot transfer ownership of his property, occupied by the lessee, to the buyer because there can be no delivery of such property to the latter; and 2.Not only a possessor, but also an owner, can be in bad faith. I cannot subscribe to such doctrines. WHEREFORE, I vote to GRANT the petition.

[G.R. No. 173215. May 21, 2009.] CEBU WINLAND DEVELOPMENT CORPORATION, petitioner, vs. ONG SIAO HUA, respondent. DECISION PUNO, C.J p: Before us is a Petition for Review 1 filed under Rule 45 of the Rules of Court assailing the Decision 2 dated February 14, 2006 of the Court of Appeals and its Resolution 3 dated June 2, 2006 denying petitioner's motion for reconsideration of the said decision. The facts are undisputed. Petitioner, Cebu Winland Development Corporation, is the owner and developer of a condominium project called the Cebu Winland Tower Condominium located in Juana Osmea Extension, Cebu City. Respondent, Ong Siao Hua, is a buyer of two condominium units and four parking slots from petitioner.

Sometime before January 6, 1995 while the Cebu Winland Tower Condominium was under construction, petitioner offered to sell to respondent condominium units at promotional prices. As an added incentive, petitioner offered a 3% discount provided 30% of the purchase price is paid as down payment and the balance paid in 24 equal monthly installments. EcDSHT On January 6, 1995, respondent accepted the offer of petitioner and bought two condominium units designated as Unit Nos. 2405 and 2406, as well as four parking slots designated as slots 91, 99, 101 and 103 (subject properties). The area per condominium unit as indicated in petitioner's price list is 155 square meters and the price per square meter is P22,378.95. The price for the parking slot is P240,000 each. Respondent, therefore, paid P2,298,655.08 as down payment and issued 24 postdated checks in the amount of P223,430.70 per check for the balance of the purchase price in the total amount of P5,362,385.19 computed as follows: 4

155 sq.m./unit x 2 units x P22,378.95/sq.m. P6,937,474.50 4 parking slots at P240,000/slot 960,000.00 Sub-total P7,897,474.50 Less: 3% discount (236,924.23) Net purchase price P7,660,550.27 30% down payment (2,298,165.08) Balance at P223,430.70 per month for 24 months P5,362,385.19 =========== On October 10, 1996, possession of the subject properties was turned over to respondent. 5 After the purchase price was fully paid with the last check dated January 31, 1997, respondent requested petitioner for the condominium certificates of title evidencing ownership of the units. Petitioner then sent to respondent, for the latter's signature, documents denominated as Deeds of Absolute Sale for the two condominium units.

Upon examination of the deed of absolute sale of Unit No. 2405 and the identical document for Unit No. 2406, respondent was distressed to find that the stated floor area is only 127 square meters contrary to the area indicated in the price list which was 155 square meters. Respondent caused a verification survey of the said condominium units and discovered that the actual area is only 110 square meters per unit. Respondent demanded from petitioner to refund the amount of P2,014,105.50 representing excess payments for the difference in the area, computed as follows: 6 155 sq.m. 110 = 45 x 2 units = 90 sq.m. x P22,378.95 = P2,014,105.50 Petitioner refused to refund the said amount to respondent. Consequently, respondent filed a Complaint 7 on August 7, 1998 in the Regional Office of the Housing and Land Use Regulatory Board (HLURB) in Cebu City, praying for the refund of P2,014,105.50 plus interest, moral damages and attorney's fees, including the suspension of petitioner's license to sell. The case was docketed as HLURB Case No. REM-0220-080798. On December 6, 1999, the Housing and Land Use Arbiter (the Arbiter) rendered a Decision 8 dismissing the complaint. The Arbiter found petitioner not guilty of misrepresentation. Considering further that the subject properties have been delivered on October 10, 1996 and respondent filed his complaint only on August 7, 1998, the Arbiter further ruled that respondent's action had already prescribed pursuant to Article 1543, 9 in relation to Articles 1539 and 1542, 10 of the Civil Code. The dispositive portion of the said decision reads: CcaASE WHEREFORE, Premises Considered, judgment is hereby rendered DISMISSING this Complaint, and ordering the parties to do the following, to wit: 1.For the Complainant to SIGN the two (2) Deed[s] of Absolute Sale which this Board finds to be in order within 30 days from finality of this decision; and 2.For the Respondent to DELIVER the corresponding condominium certificate of title for the two units namely units 2405 and 2406 free from all liens and encumbrances. Consequently, the counterclaim is likewise dismissed for it finds no evidence that Complainant acted in bad faith in filing this complaint. Cost against the parties. SO ORDERED. 11 Aggrieved, respondent filed a Petition for Review of said decision with the Board of Commissioners of the HLURB (the Board). In the course of its proceedings, the Board ordered that an ocular inspection of Unit Nos. 2405 and 2406 be conducted by an independent engineer. The Board further ordered that there should be two measurements of the areas in controversy, one based on the master deed and another based on the internal surface of the perimeter wall. After the ocular inspection, the independent geodetic engineer found the following measurements:

Unit 2405 Based on internal face of perimeter wall Based on master deed = 115 sq.m.

109 sq.m.

Unit 2406 Based on internal face of perimeter wall = Based on master deed = 116 sq.m. 12

110 sq.m.

Thereafter, the Board rendered its Decision 13 dated June 8, 2004 affirming the Arbiter's finding that respondent's action had already prescribed. However, the Board found that there was a mistake regarding the object of the sale constituting a ground for rescission based on Articles 1330 and 1331 14 of the Civil Code. Hence, the Board modified the decision of the Arbiter as follows: Wherefore[,] the decision of the [O]ffice below is hereby modified with the following additional directive: In the alternative, and at the option of the complainant, the contract is rescinded and the respondent is directed to refund to (sic) P7,660,550[.]27 while complainant is directed to turn over possession of the units 2405, 2406 and the four parking lots to the respondent. AETcSa So ordered. 15 Not satisfied with the decision of the Board, petitioner filed an appeal to the Office of the President arguing that the Board erred in granting relief to respondent considering that the latter's action had already prescribed. On March 11, 2005, the Office of the President rendered a Decision 16 finding that respondent's action had already prescribed pursuant to Article 1543 of the Civil Code. The dispositive portion of said decision reads as follows: WHEREFORE, premises considered, the Decision dated June 8, 2004 of the HLURB is hereby MODIFIED and the Decision dated December 6, 1999 of the Housing and Land Use Arbiter is hereby REINSTATED. SO ORDERED. 17 Respondent filed a Motion for Reconsideration but the same was denied by the Office of the President in a Resolution 18 dated June 20, 2005. Hence, respondent filed a Petition for Review before the Court of Appeals. On February 14, 2006, the Court of Appeals rendered the assailed Decision finding that respondent's action has not prescribed. The dispositive portion of the Decision reads: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the petition filed in this case, REVERSING and SETTING ASIDE the assailed Decision and Resolution of the Office of the President dated March 11, 2005 and June 20, 2005, respectively, and reinstating the Decision promulgated by the Board of Commissioners of the HLURB on June 8, 2004.

SO ORDERED. 19 Petitioner's Motion for Reconsideration 20 of the assailed decision having been denied in the Resolution dated June 2, 2006, petitioner is now before us, in this petition for review raising the following grounds: I. The Court of Appeals Erred in Holding that in a Contract of Sale Ownership is Not Transferred by Delivery[.] II. The Court of Appeals Erred in Holding that Respondent's Action has Not Prescribed. III. The Court of Appeals Erred and Exceeded its Jurisdiction When it Found Petitioner Guilty of Misrepresentation as the Decision of the HLURB Board of Commissioners on the Same Matter is Final With Respect to Respondent Who Did Not Appeal Said Decision that Petitioner Did Not Commit Misrepresentation. 21 The issue before us is whether respondent's action has prescribed pursuant to Article 1543, in relation to Articles 1539 and 1542 of the Civil Code, to wit: ART. 1539.The obligation to deliver the thing sold includes that of placing in the control of the vendee all that is mentioned in the contract, in conformity with the following rules: If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee, if the latter should demand it, all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract, provided that, in the latter case, the lack in the area be not less than one-tenth of that stated. The same shall be done, even when the area is the same, if any part of the immovable is not of the quality specified in the contract. The rescission, in this case, shall only take place at the will of the vendee, when the inferior value of the thing sold exceeds one-tenth of the price agreed upon. Nevertheless, if the vendee would not have bought the immovable had he known of its smaller area or inferior quality, he may rescind the sale. (1469a) [Emphasis supplied]

ART. 1542.In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or lesser area or number than that stated in the contract. The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. (1471) [Emphasis supplied] ART. 1543.The actions arising from Articles 1539 and 1542 shall prescribe in six months, counted from the day of delivery. (1472a) [Emphasis supplied] Petitioner argues that it delivered possession of the subject properties to respondent on October 10, 1996, hence, respondent's action filed on August 7, 1998 has already prescribed. Respondent, on the one hand, contends that his action has not prescribed because the prescriptive period has not begun to run as the same must be reckoned from the execution of the deeds of sale which has not yet been done. The resolution of the issue at bar necessitates a scrutiny of the concept of "delivery" in the context of the Law on Sales or as used in Article 1543 of the Civil Code. Under the Civil Code, the vendor is bound to transfer the ownership of and deliver the thing which is the object of the sale. The pertinent provisions of the Civil Code on the obligation of the vendor to deliver the object of the sale provide: cCTIaS ART. 1495.The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale. (1461a) ART. 1496.The ownership of the thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. (n) ART. 1497.The thing sold shall be understood as delivered, when it is placed in the control and possession of the vendee. (1462a) ART. 1498.When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. xxx xxx xxx

Under the Civil Code, ownership does not pass by mere stipulation but only by delivery. 22 Manresa explains, "the delivery of the thing . . . signifies that title has passed from the seller to the buyer." 23 According to Tolentino, the purpose of delivery is not only for the enjoyment of the thing but also a mode of acquiring dominion and determines the transmission of ownership, the birth of the real right. The delivery under any of the forms provided by Articles 1497 to 1505 of the Civil Code signifies that the transmission of ownership from vendor to vendee has taken place. 24 Article 1497 above contemplates what is known as real or actual delivery, when the thing sold is placed in the control and possession of the vendee. Article 1498, on the one hand, refers to symbolic delivery by the execution of a public instrument. It should be noted, however, that Article 1498 does not say that the execution of the deed provides a conclusive presumption of the delivery of possession. It confines itself to providing that the execution thereof is equivalent to delivery, which means that the presumption therein can be rebutted by means of clear and convincing evidence. Thus, the presumptive delivery by the execution of a public instrument can be negated by the failure of the vendee to take actual possession of the land sold. 25 In Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., 26 the concept of "delivery" was explained as follows: Delivery has been described as a composite act, a thing in which both parties must join and the minds of both parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both forms of delivery contemplate "the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee." (Emphasis supplied) In light of the foregoing, "delivery" as used in the Law on Sales refers to the concurrent transfer of two things: (1) possession and (2) ownership. This is the rationale behind the jurisprudential doctrine that presumptive delivery via execution of a public instrument is negated by the reality that the vendee actually failed to obtain material possession of the land subject of the sale. 27 In the same vein, if the vendee is placed in actual possession of the property, but by agreement of the parties ownership of the same is retained by the vendor until the vendee has fully paid the price, the mere transfer of the possession of the property subject of the sale is not the "delivery" contemplated in the Law on Sales or as used in Article 1543 of the Civil Code. In the case at bar, it appears that respondent was already placed in possession of the subject properties. However, it is crystal clear that the deeds of absolute sale were still to be executed by the parties upon payment of the last installment. This fact shows that ownership of the said properties was withheld by petitioner. Following case law, it is evident that the parties did not intend to immediately transfer ownership of the subject properties until full payment and the execution of the deeds of absolute sale. 28 Consequently, there is no "delivery" to speak of in this case since what was transferred was possession only and not ownership of the subject properties.

We, therefore, hold that the transfer of possession of the subject properties on October 10, 1996 to respondent cannot be considered as "delivery" within the purview of Article 1543 of the Civil Code. It follows that since there has been no transfer of ownership of the subject properties since the deeds of absolute sale have not yet been executed by the parties, the action filed by respondent has not prescribed. aCTcDH The next issue is whether the sale in the case at bar is one made with a statement of its area or at the rate of a certain price for a unit of measure and not for a lump sum. Article 1539 provides that "If the sale of real estate should be made with a statement of its area, at the rate of a certain price for a unit of measure or number, the vendor shall be obliged to deliver to the vendee . . . all that may have been stated in the contract; but, should this be not possible, the vendee may choose between a proportional reduction of the price and the rescission of the contract . . . ." Article 1542, on the one hand, provides that "In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or lesser area or number than that stated in the contract". The distinction between Article 1539 and Article 1542 was explained by Manresa 29 as follows: . . . If the sale was made for a price per unit of measure or number, the consideration of the contract with respect to the vendee, is the number of such units, or, if you wish, the thing purchased as determined by the stipulated number of units. But if, on the other hand, the sale was made for a lump sum, the consideration of the contract is the object sold, independently of its number or measure, the thing as determined by the stipulated boundaries, which has been called in law a determinate object. This difference in consideration between the two cases implies a distinct regulation of the obligation to deliver the object, because, for an acquittance delivery must be made in accordance with the agreement of the parties, and the performance of the agreement must show the confirmation, in fact, of the consideration which induces each of the parties to enter into the contract. In Rudolf Lietz, Inc. v. Court of Appeals, 30 we held: Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate. In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. The parties agree on a stated purchase price for an immovable the area of which may be declared based on an estimate or where both the area and boundaries are stated.

In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price although there be a greater or lesser area or number than that stated in the contract. However, the discrepancy must not be substantial. A vendee of land, when sold in gross or with the description "more or less" with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency.

Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object. In the case at bar, it is undisputed by the parties that the purchase price of the subject properties was computed based on the price list prepared by petitioner, or P22,378.95 per square meter. Clearly, the parties agreed on a sale at a rate of a certain price per unit of measure and not one for a lump sum. Hence, it is Article 1539 and not Article 1542 which is the applicable law. Accordingly, respondent is entitled to the relief afforded to him under Article 1539, that is, either a proportional reduction of the price or the rescission of the contract, at his option. Respondent chose the former remedy since he prayed in his Complaint for the refund of the amount of P2,014,105.50 representing the proportional reduction of the price paid to petitioner. In its decision, the Court of Appeals held that the action filed by respondent has not prescribed and reinstated the decision of the Board. It is an error to reinstate the decision of the Board. The Board, in its decision, held that there was a mistake regarding the object of the sale constituting a ground for rescission based on Articles 1330 and 1331 of the Civil Code. It then granted the relief of rescission at the option of respondent. Articles 1330 and 1331 of the Civil Code provide: ART. 1330.A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable. (1265a)

ART. 1331.In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. EACIcH We find that these articles are inapplicable to the case at bar. In order that mistake may invalidate consent and constitute a ground for annulment of contract based on Article 1331, the mistake must be material as to go to the essence of the contract; that without such mistake, the agreement would not have been made. 31 The effect of error must be determined largely by its influence upon the party. If the party would have entered into the contract even if he had knowledge of the true fact, then the error does not vitiate consent. 32 In the case at bar, the relief sought by respondent was for a refund and he continued to occupy the subject properties after he found out that the same were smaller in area. All these show that respondent did not consider the error in size significant enough to vitiate the contract. Hence, the Court of Appeals erred in affirming the Board's decision to grant rescission based on Articles 1330 and 1331 of the Civil Code. IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of Appeals is AFFIRMED but with the MODIFICATION that the decision of the HLURB is not reinstated. Petitioner is ordered to refund the amount of Two Million Fourteen Thousand One Hundred Five Pesos and Fifty Centavos (P2,014,105.50) to respondent with legal interest of six percent (6%) per annum from August 7, 1998, the date of judicial demand. A twelve percent (12%) interest per annum, in lieu of six percent (6%), shall be imposed on such amount from the date of promulgation of this decision until the payment thereof. Costs against petitioner. SO ORDERED. Donation Definition, elements Classifiacation of donations Simple, remuneratory, and onerous and modal [G.R. No. 77425. June 19, 1991.] THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners, vs. HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents. [G.R. No. 77450. June 19, 1991.] THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners, vs. HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.

Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite. Dolorfino and Dominguez Law Offices for Sps. Ignao. Joselito R. Enriquez for private respondents. SYLLABUS 1.CIVIL LAW; DEED OF DONATION; WHEN CONTENTS THEREOF PROVIDE FOR AUTOMATIC REVERSION OF PROPERTY DONATED IN CASE OF VIOLATION OF CONDITIONS SET FORTH THEREIN, JUDICIAL ACTION FOR RESCISSION, NOT NECESSARY. The deed of donation involved herein expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not necessary. As aptly stated by the Court of Appeals: "By the very express provision in the deed of donation itself that the violation of the condition thereof would render ipso facto null and void the deed of donation, WE are of the opinion that there would be no legal necessity anymore to have the donation judicially declared null and void for the reason that the very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the donee contemplated a court action during the execution of the deed of donation to have the donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading 'would render ipso facto null and void' would not appear in the deed of donation." In support of its aforesaid position, respondent court relied on the rule that a judicial action for rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions. It called attention to the holding that there is nothing in the law that prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention, and that it is not always necessary for the injured party to resort to court for rescission of the contract. It reiterated the doctrine that a judicial action is proper only when there is absence of a special provision granting the power of cancellation. 2.ID.; ID.; ID.; DE LUNA, ET AL., v. ABRIGO, ET AL. [181 SCRA 150], APPLICABLE IN CASE AT BAR; RATIONALE FOR THE RULE. The validity of such a stipulation in the deed of donation providing for the automatic reversion of the donated property to the donor upon noncompliance of the condition was upheld in the recent case of De Luna, et al. vs. Abrigo, et al., 181 SCRA 150 (1990). It was held therein that said stipulation is in the nature of an agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of going to court, and that, upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. While what was the subject of that case was an onerous donation which, under Article 733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also subject to the same rules because of its provision on automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply. The rationale for the foregoing is that in contracts providing for automatic revocation, judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper.

3.ID.; ID.; ID.; GENERAL RULES ON CONTRACT AND PRESCRIPTION SHOULD APPLY, NOT ART. 764 OF THE CODE. When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on prescription should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs, public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission sought. Where such propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not in itself the revocatory act. 4.ID.; ID.; PROHIBITION AGAINST ALIENATION FOR AN UNREASONABLE LENGTH OF TIME; CONTRARY TO PUBLIC POLICY. The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy. Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time. 5.ID.; ID.; ID.; SHOULD BE DECLARED NULL AND VOID AS AN IMPOSSIBLE CONDITION. It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code. In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail.

6.SUPREME COURT; HAS AUTHORITY TO REVIEW MATTERS EVEN IF THEY ARE NOT ASSIGNED AS ERRORS ON APPEAL; CASE AT BAR. It will readily be noted that the provision in the deed of donation against alienation of the land for one hundred (100) years was the very basis for the action to nullify the deed of donation. At the same time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion was sustained by the trial court and set aside by respondent court, both on the issue of prescription. That ruling of respondent court interpreting said provision was assigned as an error in the present petition. While the issue of the validity of the same provision was not squarely raised, it is ineluctably related to petitioner's aforesaid assignment of error since both issues are grounded on and refer to the very same provision. This Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. Thus, we have held that an unassigned error closely related to an error properly assigned, or upon which the determination of the question properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error. 7.ID.; ID.; FOR THE EXPEDITIOUS ADMINISTRATION OF SUBSTANTIAL JUSTICE, REMAND OF THE CASE TO THE LOWER COURT FOR FURTHER RECEPTION OF EVIDENCE, NOT NECESSARY. We have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case. The aforestated considerations obtain in and apply to the present case with respect to the matter of the validity of the resolutory condition in question.

DECISION REGALADO, J p: These two petitions for review on certiorari 1 seek to overturn the decision of the Court of Appeals in CA-G.R. CV No. 05456 2 which reversed and set aside the order of the Regional Trial Court of Imus, Cavite dismissing Civil Case No. 095-84, as well as the order of said respondent court denying petitioner's motions for the reconsideration of its aforesaid decision. On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of deed of donation, rescission of contract and reconveyance of real property with damages against petitioners Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus, Cavite, together with the Roman Catholic Archbishop of Manila, before the Regional Trial Court, Branch XX, Imus, Cavite and which was docketed as Civil Case No. 095-84 therein. 3 In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro and Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant Roman Catholic Archbishop of Manila covering a parcel of land

(Lot No. 626, Cadastral Survey of Kawit), located at Kawit, Cavite, containing an area of 964 square meters, more or less. The deed of donation allegedly provides that the donee shall not dispose or sell the property within a period of one hundred (100) years from the execution of the deed of donation, otherwise a violation of such condition would render ipso facto null and void the deed of donation and the property would revert to the estate of the donors. It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all properties within the province of Cavite owned by the Archdiocese of Manila was allegedly transferred on April 26, 1962, executed a deed of absolute sale of the property subject of the donation in favor of petitioners Florencio and Soledad C. Ignao in consideration of the sum of P114,000.00. As a consequence of the sale, Transfer Certificate of Title No. 115990 was issued by the Register of Deeds of Cavite on November 15, 1980 in the name of said petitioner spouses. What transpired thereafter is narrated by respondent court in its assailed decision. 4 On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to dismiss based on the grounds that (1) herein private respondents, as plaintiffs therein, have no legal capacity to sue; and (2) the complaint states no cause of action. On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss on three (3) grounds, the first two (2) grounds of which were identical to that of the motion to dismiss filed by the Ignao spouses, and the third ground being that the cause of action has prescribed. On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss on the ground that he is not a real party in interest and, therefore, the complaint does not state a cause of action against him. After private respondents had filed their oppositions to the said motions to dismiss and the petitioners had countered with their respective replies, with rejoinders thereto by private respondents, the trial court issued an order dated January 31, 1985, dismissing the complaint on the ground that the cause of action has prescribed. 5 Private respondents thereafter appealed to the Court of Appeals raising the issues on (a) whether or not the action for rescission of contracts (deed of donation and deed of sale) has prescribed; and (b) whether or not the dismissal of the action for rescission of contracts (deed of donation and deed of sale) on the ground of prescription carries with it the dismissal of the main action for reconveyance of real property. 6 On December 23, 1986, respondent Court of Appeals, holding that the action has not yet prescribed, rendered a decision in favor of private respondents, with the following dispositive portion: Cdpr "WHEREFORE, the Order of January 31, 1985 dismissing appellants' complaint is SET ASIDE and Civil Case No. 095-84 is hereby ordered REINSTATED and REMANDED to the lower court for further proceedings. No costs." 7

Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for reconsideration which were denied by respondent Court of Appeals in its resolution dated February 6, 1987, 8 a hence, the filing of these appeals by certiorari. It is the contention of petitioners that the cause of action of herein private respondents has already prescribed, invoking Article 764 of the Civil Code which provides that "(t)he donation shall be revoked at the instance of the donor, when the donee fails to comply with any of the conditions which the former imposed upon the latter," and that "(t)his action shall prescribe after four years from the non-compliance with the condition, may be transmitted to the heirs of the donor, and may be exercised against the donee's heirs." We do not agree. Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation must be brought within four (4) years from the non-compliance of the conditions of the donation, the same is not applicable in the case at bar. The deed of donation involved herein expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not necessary. As aptly stated by the Court of Appeals: "By the very express provision in the deed of donation itself that the violation of the condition thereof would render ipso facto null and void the deed of donation, WE are of the opinion that there would be no legal necessity anymore to have the donation judicially declared null and void for the reason that the very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the donee contemplated a court action during the execution of the deed of donation to have the donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading 'would render ipso facto null and void' would not appear in the deed of donation." 9 In support of its aforesaid position, respondent court relied on the rule that a judicial action for rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions. 10 It called attention to the holding that there is nothing in the law that prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention, and that it is not always necessary for the injured party to resort to court for rescission of the contract. 11 It reiterated the doctrine that a judicial action is proper only when there is absence of a special provision granting the power of cancellation. 12 It is true that the aforesaid rules were applied to the contracts involved therein, but we see no reason why the same should not apply to the donation in the present case. Article 732 of the Civil Code provides that donations inter vivos shall be governed by the general provisions on contracts and obligations in all that is not determined in Title III, Book III on donations. Now, said Title III does not have an explicit provision on the matter of a donation with a resolutory condition and which is subject to an express provision that the same shall be considered ipso facto revoked upon the breach of said resolutory condition imposed in the deed therefor, as is the case of the deed presently in question. The suppletory

application of the foregoing doctrinal rulings to the present controversy is consequently justified. The validity of such a stipulation in the deed of donation providing for the automatic reversion of the donated property to the donor upon non-compliance of the condition was upheld in the recent case of De Luna, et al. vs. Abrigo, et al. 13 It was held therein that said stipulation is in the nature of an agreement granting a party the right to rescind a contract unilaterally m case of breach, without need of going to court, and that, upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. While what was the subject of that case was an onerous donation which, under Article 733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also subject to the same rules because of its provision on automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply. prcd The rationale for the foregoing is that in contracts providing for automatic revocation, judical intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper. 14 When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on prescription should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs, public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission sought. Where such propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not in itself the revocatory act.

On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the cause of action of herein private respondents has not yet prescribed since an action to enforce a written contract prescribes in ten (10) years. 15 It is our view that Article 764 was intended to provide a judicial remedy in case of non-fulfillment or contravention of conditions specified in the deed of donation if and when the parties have not agreed on the automatic revocation of such donation upon the occurrence of the contingency contemplated therein. That is not the situation in the case at bar. Nonetheless, we find that although the action filed by private respondents may not be dismissed by reason of prescription, the same should be dismissed on the ground that private respondents have no cause of action against petitioners.

The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy. Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time. Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by analogy. Under the third paragraph of Article 494, a donor or testator may prohibit partition for a period which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void. LLphil It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code. In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail. It may be argued that the validity of such prohibitory provision in the deed of donation was not specifically put in issue in the pleadings of the parties. That may be true, but such oversight or inaction does not prevent this Court from passing upon and resolving the same. It will readily be noted that the provision in the deed of donation against alienation of the land for one hundred (100) years was the very basis for the action to nullify the deed of donation. At the same time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion was sustained by the trial court and set aside by

respondent court, both on the issue of prescription. That ruling of respondent court interpreting said provision was assigned as an error in the present petition. While the issue of the validity of the same provision was not squarely raised, it is ineluctably related to petitioner's aforesaid assignment of error since both issues are grounded on and refer to the very same provision. cdphil This Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. 16 Thus, we have held that an unassigned error closely related to an error properly assigned, 17 or upon which the determination of the question properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error. 18 Additionally, we have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case. 19 The aforestated considerations obtain in and apply to the present case with respect to the matter of the validity of the resolutory condition in question. WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is hereby rendered DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX, Imus, Cavite. SO ORDERED. Inter vivos and Mortis causa PAULO LAURETA, as administrator of the estate of Severa Magno y Laureta, deceased, plaintiff-appellee, vs. PEDRO EMILIO MATA and ESTER MAGNO, defendants-appellants. N. Segundo and Pedro L. Valdes for appellants. Jose Fonacier for appellee. SYLLABUS 1. DONATION "IN PRAESENTI." The instrument in the record known as Exhibit A is a donation in praesenti as distinguished from one in futuro. 2. ARTICLES 620 AND 623 OF CIVIL CODE DISTINGUISHED. Where there is an actual delivery of the deed by the grantor and an acceptance by the grantee at the time of its execution, it should be construed under article 623 of the Civil Code as distinguished from article 620.

3. TITLE TO PROPERTY ACQUIRED WHEN INSTRUMENT WAS EXECUTED. By the terms of the instrument Pedro Emilio Mata took and acquired a valid title to the premises in dispute at the time Exhibit A was executed and accepted, subject only to the life estate of the donor. DECISION STATEMENT The following instrument, known in the record as Exhibit A, omitting the description of the lands and other personal property, was executed February 2, 1918: "DEED OF DONATION EXECUTED BY SEVERA MAGNO Y LAURETA IN FAVOR OF PEDRO EMILIO MATA In the municipality of Solsona, Ilocos Norte, Philippine Islands, I, Severa Magno y Laureta, widow, seventy years old and resident of the municipality of Solsona, Ilocos Norte, Philippine Islands, a proprietor by occupation, hereby declare that for the purpose of giving the young Pedro Emilio Mata, single seventeen years old, resident of this municipality and son of Pastor Mata, already deceased, and Ester Magno, a reward for the services which he is rendering me, and as a token of my affection toward him and of the fact that he stands high in my estimation, I hereby donate 'mortis causa' to said youth all the properties described as follows: (Here follows an accurate description of a large number of parcels of real estate, and a large amount of personal property.) "I declare that all the rice lands above mentioned are my exclusive property, and to identify in a clearer manner the halves mentioned in some of the foregoing clauses I hereby state that they are the one-half that was allotted to me in the partition had between me and the heirs of may deceased husband, and, therefore, all the part that was allotted to me in the said partition is the subject of this donation. "I also declare that I likewise donate to the said youth the right to, and usufruct of, two parcels of land situated in Mariquet, on which I hold a mortgage for the sum of P250, subject to the conditions stipulated in the document executed to evidence the said mortgage. "I also declare that it is the condition of this donation that the donee cannot take possession of the properties donated before the death of the donor, and in the event of her death the said donee shall be under obligation to cause a mass to be held annually as a suffrage in behalf of my soul, and also to defray the expenses of my burial and funerals. "I, Ester Magno, widow, of age, resident of the municipality of Solsona, and mother of the young Pedro Emilio Mata, the donee under this document, hereby accept this donation on behalf of my said son, thanking the donor for her liberality and affection toward my said son, Pedro Emilio Mata, the donee, with all the conditions imposed by the donor.

"In testimony whereof we affixed our marks to these presents in Solsona, this 2d day of February, 1918. (Marked) "SEVERA MAGNO (Sgd.) "ESTER MAGNO (Sgd.) "PEDRO EMILIO MATA "Signed in the presence of: (Sgd.) "IGNACIO FLORES (Sgd.) "ELIAS DULDULAO" (Then follows the notarial acknowledgment in due and regular form.) It is admitted that at the time of its execution, the grantor was the owner in fee simple of all the lands therein described. In the course of time the grantor died and at the time of her death Pedro Emilio Mata, the grantee in the deed, and Ester Magno, entered upon and took possession of the lands. The plaintiff applied for and was appointed administrator of the estate of the grantor Severa Magno y Laureta, deceased, and made a demand upon the defendants for possession of the lands which was refused, resulting in this action by the plaintiff as administrator, to recover possession of the premises and the sum of P9,000 as the value of the products of the land from April 9, 1918, until the termination of the case, for the sum of P1,200 damages, for the unlawful and wrongful withholding of possession, and costs. Upon such issues the case was tried ad submitted upon a stipulation of facts to the effect that any title or right of possession which Pedro Emilio Mata has to the possession of the premises is founded upon Exhibit A. The lower court rendered judgment to the effect that the plaintiff was entitled to the possession of the lands in question and the sum P1,050 the agreed rental value and costs, from which the defendants appeal, assigning nine different errors, the combined substance of which is that the lower court erred in holding that the donation made by the deceased, known as Exhibit A, should be construed under the provisions of article 620 of the Civil Code, and that the defendants did not acquire title to the lands under it, that their possession was illegal, and that the land was the property of the heirs of the deceased, and in rendering judgment for the plaintiff, and in overruling the defendants' motion for a new trial. JOHNS, J p: Its execution having been admitted the question involved is the construction, legal force, and effect of Exhibit A. Among other things it recites that I, Severa Magno y Laureta, widow, seventy years old . . . hereby declare that for the purpose of giving the giving the young Pedro Emilio Mata, single, seventeen years old, . . . and son of Pastor Mata, already

deceased, and Ester Magno, "a reward for the services which he is rendering me, and as a token of my affection toward him and of the fact that he stands high in my affection toward him and of the fact that he stands high in my estimation, I hereby donate 'mortis causa' to said youth all the properties described as follows." In the second paragraph it said: "Therefore, all the part that was allotted to me in the said partition is the subject of this donation." In the third it recites: "I also declare that I likewise donate to the said youth the right to, and usufruct of, two parcels of land situated in Mariquet, etc." In the fourth "I also declare that it is the condition of this donation that the donee cannot take possession of the properties donated before the death of the donor, etc." The donee, Pedro Emilio Mata, was the son of Pastor Mata, deceased, and was seventeen years old at the time the instrument was executed. The instrument further recites that Ester Magno, a widow and the mother of Pedro Emilio Mata, with all the conditions imposed by the donor, accepted the donation on behalf of her son, and thanked the donor for her liberality and the affection for her son. The plaintiff contends and the trial court found that Exhibit A should be construed under the terms and provisions of article 620 of the Civil Code as follows: "Donations which are to become effective upon the death of the donor partake of the nature of disposals of property by will and shall be governed by the rules established for testamentary successions." As we analyze it, Exhibit A is a donation in praesenti and conveyed the fee simple title to the lands in question subject only to the life estate of the donor. It must be conceded that during her lifetime the grantor had a legal right to convey the fee simple title to her lands to any person in her discretion, reserving to herself a life estate. In legal effect, that is what she did here. The conveyance of the lands took effect upon the making and delivery of the deed, reserving a life estate only in the donor. The conveyance itself was not to become effective until the death of the donor, but, in legal effect, it recites that an actual conveyance is made subject to the life estate of the donor. Upon its face Exhibit A comes squarely within the provisions of article 623 of the Civil Code, which reads: "A donation is perfected as soon as the donor has knowledge that it has been accepted by the donee." Here, it appears from the instrument itself that Ester Magno accepted the donation on behalf of the son, and the acceptance is incorporated in the body of the instrument and made a part of it, and is signed by the donor and acceptor in the presence of witnesses and the instrument as a whole is legally acknowledged before a notary public. Again, when the instrument is construed as a whole it shows upon its face a delivery and acceptance. The donor conveys the lands, and in and by the same instrument the mother of the donee accepts the conveyance upon the terms and conditions stated in the deed. Corpus Juris, vol. 18, p. 208, says:

"Where, however, a deed containing a provision that it is not to take effect until the grantor's death is actually delivered to the grantee during the lifetime of the grantor, it will be sustained as a present grant of a future interest." That is this case. Legally speaking, it was a delivery and an acceptance of the deed. The facts bring the case squarely within article 623 of the Civil Code. Here, there was a donation and an acceptance both in the same instrument which made it a perfected donation within the meaning of article 623. Commenting on article 620 of the Civil Code in volume 5, page 82, of the 1910 edition, Manresa says: "In pure donations, in donations until an affixed day, and in donations with a resolutory condition the property is of course conveyed to the donee during the life of the donor and as to this point there is no question. "When the time fixed for the commencement of the enjoyment of the property donated be at the death of the donor, or when the suspensive condition is related to his death, confusion might arise. To avoid it we must distinguish between the actual donation and the execution thereof. That the donation is to have effect during the lifetime of the donor or at his death does not mean the delivery of the property must be made during his life or after his death. From the moment that the donor disposes freely of his property and such disposal is accepted by the donee, the donation exists, perfectly and irrevocably (articles 618 and 623). Until the day arrives or until the condition is fulfilled, the donation, although valid when made, cannot be realized. Thus, he who makes the donation effective upon a certain date, even though to take place at his death, disposes of that which he donated and he cannot afterwards revoke the donation nor dispose of the said property in favor of another. If the thing is lost thru the fault of the donor, or if it is damaged, indemnity may be recovered. Regarding donations with suspensive conditions, it is sufficient to read articles 1120 and 1122 to understand the effects which this kind of donation has during the lifetime of the donor. He who makes a donation effective after his death, makes a donation, not a legacy. They mere name of the act, when a different intention does not clearly appear, is enough in order to make applicable thereto the rules of law referring to donations. However, if the ill-named donor not only postpones the date of the execution of the donation until his death but also reserves the right to revoke said act at his pleasure, then this act is not valid as a form of contract; this is in truth a disposition of property mortis causa which requires the same solemnities as required in making a will."

Although it is not included in the stipulation of facts, it does appear from the record that some of the property described in Exhibit A was sold and disposed of by the donee during the lifetime of the donor. In any event, Exhibit A was a donation in praesenti as distinguished from a gift in futuro, hence does not come under the provisions of article 620 of the Civil Code.

The effect of this decision is to hold that Pedro Emilio Mata took and acquired a valid title to the premises in dispute at the time Exhibit A was executed, subject only to the life estate of the donor, and he is now the owner of the lands described in the pleadings. But the defendants made a general denial, and did not ask for affirmative relief, hence none can be granted. The judgment of the lower court is reversed, and the plaintiff's complaint is dismissed, with costs in favor of the defendants. So ordered. [G.R. No. L-4225. August 25, 1952.] LORENZA CONCEPCION, ET AL., plaintiffs-appellees, vs. EMILIA CONCEPCION, defendant-appellant. Enrique J. Corpus and Jose T. Nery for appellant. Nemesio Balonso for appellees. SYLLABUS 1.DONATIONS; BODY OF DOCUMENT AND STATEMENTS CONTAINED THEREIN DETERMINE INTENTION OF DONOR. It is the body of the document of donation and the statements contained therein, and not the title, that should be considered in ascertaining the intention of the donor. 2.ID.; ID. Even when the donor calls the donation mortis causa instead of inter vivos, even if he says it is to take effect after his death, when from the body of the instrument or donation it is to be gathered that the main consideration of the donation is not the death of the donor but rather services rendered to him by the donee or his affection for the latter, then the donation should be considered as inter vivos, and when duly accepted, it transfers title immediately to the donee, and the condition that the donation is to take effect only after the death of donor should be interpreted as meaning that the possession and enjoyment of the fruits of the property donated should take place only after donor's death. DECISION MONTEMAYOR, J p: The present appeal involves the interpretation of Exhibit A, a deed of donation, - whether it is inter vivos or mortis causa, because if the former, it is valid having been duly accepted by the donee, but if the latter it would be void because being in the nature of disposal of property by will, according to article 620 of the Civil Code, it shall be governed by the rules established for testamentary succession. According to the law governing the execution of wills, a will should be attested by three witnesses, and there should be an attestation clause. But here there are only two witnesses to the deed of donation (Exhibit A), and it contains no attestation clause. For a better understanding of and to facilitate reference to said Exhibit A, we reproduce its pertinent provisions.

ESCRITURA DE DONACION ONEROSA MORTIS CAUSA Sepan Todos Por La Presente: "Yo, Manuela Concepcion, mayor de edad, viuda, Filipina, con residencia y direccion postal en el municipio de San Antonio, provincia de Zambales, Filipinas, hago constar que, en consideracion a los buenos servicios prestados a mi por mi sobrina, Emilia Concepcion, antes y durante estos dias y teniendo, ademas, especial predileccion por sus buenas cualidades y el cario que tengo de ella, en quien cifro un porvenir provechoso, por la presente declaro que hago DONACION MORTIS CAUSA a favor de mi citada sobrina, Emilia Concepcion, sujeta a las condiciones que mas abajo se especifican, de las siguientes propiedades que se describen a continuacion, a saber: (Description of the properties donated.) CONDICIONES Que las condiciones de esta DONACION son las siguientes, a saber: (a)Que el producto de una tercera (1/3) parte del terreno arriba descrito como parcela No. 1, o sea la cosecha de una extension superficial de SEIS MIL DOSCIENTOS CINCUENTA METROS CUADRADOS (6,250 m. c.) equivalentes a una balita, hacia el lado Este de dicho terreno, sera separado anualmente y se empleara para los gastos de la celebracion de mi aniversario, en caso de mi muerte, y en memoria tambien de la muerte de mis mayores y parientes y en sufragio de las almas de los difuntos, por lo menos una vez al ao, pero tambien puede hacerse dicha celebracion tantas veces como creyera conveniente y propio la mencionada donatoria, Emilia Concepcion, que no pasara de P50 al ao. xxx xxx xxx Que yo declaro ademas que no tengo hijos, ni ascendientes ni descendientes, ni herederos forzosos, motivo por el cual me he creido con derecho y facultad suficiente para disponer en la forma como lo hice de mis citadas propiedades, habiendome reservado lo necesario para mi mantenimiento. Que estas parcelas de terreno arriba descritas y deslindadas no estan aun registradas bajo la ley del Registro de la Propiedad No. 496 ni bajo la Ley Hipotecaria espaola, por lo que las partes convienen, para los efectos que procedan, registrar esta escritura bajo las disposiciones de la Ley No. 3344. Que yo declaro por ultimo que esta DONACION MORTIS CAUSA como su mismo nombre lo indica, ha de producir efectos solamente por muerte de la donante. ACEPTACION Yo, Emilia Concepcion, mayor de edad, soltera, filipina, con residencia y direccion postal en el municipio de San Antonio, provincia de Zambales, Filipinas, por la presente hago constar que acepto la donacion arriba expresada por lo que quedo sumamente agradecida a mi

dicha tia, Doa Manuela Concepcion, por tal generosidad, y me comprometo a cumplir fielmente todas y cada una de las condiciones arriba impuestas. En testimonio de todo lo cual firmamos la presente en el municipio de San Antonio, provincia de Zambales, Filipinas, hoy a 7 de Marzo de 1944, A.D. (Fda.) MANUELA CONCEPCION (Donante) (Fda.) EMILIA CONCEPCION (Donatoria) A little more than three years after the execution of the above- quoted deed of donation, or rather on November 18, 1947, the donor Manuela Concepcion died. Plaintiffs-appellees who are six nephews and nieces of the donor, all surnamed Concepcion instituted special proceedings No. 491 of the Court of First Instance of Zambales for the summary settlement of the estate of their aunt, the donor. Because the estate or the greater portion thereof sought to be summarily settled and distributed was included in the donation, the donee Emilia Concepcion filed opposition to the petition for summary settlement claiming that the six parcels subject of the donation belonged to her. The Court in said special proceedings without deciding the title and right of possession to the six parcels claimed by Emilia, merely ordered the partition of the estate of Manuela Concepcion among all her heirs who are besides the six petitioners, Emilia Concepcion and her four brothers. Thereafter, and because Emilia refused to give up the parcels said to have been donated to her, including a house and a granary as well as personal properties, the six original petitioners in the special proceedings filed the present action (civil case No. 1230) in the Court of First Instance of Zambales to have themselves declared owners of and entitled to the possession of their shares in those properties claimed by Emilia in the proportion of one-eleventh (1/11) for each. In her answer Emilia claimed title to said properties by reason of the donation and submitted a copy of the deed of donation. After trial, the lower court found that the donation was one mortis causa and because it was not executed in the manner required by the law on wills, it was declared null and void; the properties therein included were all declared part of the estate of the deceased Manuela Concepcion subject to distribution among the heirs in the proportion of 1/11 for each as declared by the court in special proceedings No. 491; defendant Emilia Concepcion was ordered to deliver to each of the plaintiffs their respective shares of the products of the land for the agricultural year 1947-48 and those to be obtained thereafter in the proportion of 1/11 to each heir. Emilia Concepcion appealed the decision to the Court of Appeals where the parties filed their respective briefs, but finding that only questions of law were involved in the appeal, said court by resolution certified the case to this Court. Examining the deed of donation, Exhibit A, we find the title using the phrase mortis causa which phrase was repeated in the paragraph just before the aceptacion with the clause that the donation was to "producir efectos solamente por muerte de la donante." The lower court, evidently, impressed by these features, concluded that the donor intended to make

her donation effective after her death, and that consequently, it was a donation mortis causa. The trial court is not entirely to blame. The deed of donation is really confusing and far from clear. The one who drafted the document would appear to have been himself confused, and in using legal phraseology rather added not a little to the confusion. We confess that the distinction between a donation inter vivos and a donation mortis causa, in spite of the comments of legal writers and the doctrines laid down by the courts is not always sharp and clear, specially when the donation is couched in language which admits of possible different interpretations. But, it is a rule consistently followed by the courts that it is the body of the document of donation and the statements contained therein, and not the title that should be considered in ascertaining the intention of the donor. Here, the donation is entitled and called donacion onerosa mortis causa. From the body, however, we find that the donation was of a nature remunerative rather than onerous. It was for past services rendered, services which may not be considered as a debt to be paid by the donee but services rendered to her freely and in goodwill. The donation instead of being onerous or for a valuable consideration, as in payment of a legal obligation, was more of remuneratory or compensatory nature, besides being partly motivated by affection. We should not give too much importance or significance to or be guided by the use of the phrase "mortis causa" in a donation and thereby to conclude that the donation is not one of inter vivos. In the case of De Guzman et al. vs. Ibea et al. (67 Phil., 633), this Court through Mr. Chief Justice Avancea said that if a donation by its terms is inter vivos, this character is not altered by the fact that the donor styles it mortis causa. In the case of Laureta vs. Mata et al. (44 Phil., 668), the court held that the donation involved was inter vivos. There, the donor Severa Magno y Laureta gave the properties involved as "a reward for the services which he is rendering me, and as a token of my affection toward him and of the fact that he stands high in my estimation, I hereby donate 'mortis causa' to said youth all the properties described as follows:

xxx xxx xxx "I also declare that it is the condition of this donation that the donee cannot take possession of the properties donated before the death of the donor, and in the event of her death the said donee shall be under obligation to cause a mass to be held annually as a suffrage in behalf of my soul, and also to defray the expenses of my burial and funerals." It will be observed that the present case and that of Laureta above cited are similar in that in both cases the donation was being made as a reward for services rendered and being rendered, and as a token of affection for the donee; the phrase "mortis causa" was used; the donee to take possession of the property donated only after the death of the donor; the donee was under obligation to defray the expenses incident to the celebration of the anniversary of the donor's death, including church fees. The donation in both cases were

duly accepted. In said case of Laureta this Court held that the donation was in praesenti and not a gift in futuro. In support of its ruling, this Court reproduced the comment of Manresa on article 620 of the Civil Code reading as follows: "In pure donations, in donations until an affixed day, and in donations with a resolutory condition the property is of course conveyed to the donee during the life of the donor and as to this point there is no question. "When the time fixed for the commencement of the enjoyment of the property donated be at the death of the donor, or when the suspensive condition is related to his death, confusion might arise. To avoid it we must distinguish between the actual donation and the execution thereof. That the donation is to have effect during the lifetime of the donor or at his death does not mean the delivery of the property must be made during his life or after his death. From the moment that the donor disposes freely of his property and such disposal is accepted by the donee, the donation exists, perfectly and irrevocably (articles 618 and 623). Until the day arrives or until the condition is fulfilled, the donation, although valid when made, cannot be realized. Thus, he who makes the donation effective upon a certain date, even though to take place at his death, disposes of that which he donated and he cannot afterwards revoke the donation nor dispose of the said property in favor of another. If the thing is lost thru the fault of the donor, or if it is damaged, indemnity may be recovered. Regarding donations with suspensive conditions, it is sufficient to read articles 1120 and 1122 to understand the effects which this kind of donation has during the lifetime of the donor. He who makes a donation effective after his death, makes a donation, not a legacy. The mere name of the act, when a different intention does not clearly appear, is enough in order to make applicable thereto the rules of law referring to donations. However, if the ill-named donor not only postpones the date of the execution of the donation until his death but also reserves the right to revoke said act at his pleasure, then this act is not valid as a form of contract; this is in truth a disposition of property mortis causa which requires the same solemnities as required in making a will." In the case of Sambaan vs. Villanueva, (71 Phil., 303), the donor made a donation "en consideracion al afecto y cario que profeso a mi ahijado Jesus Flavio Villanueva." The donor furthermore imposed the condition that "esta donacion la otorgo bajo las consideraciones que: solamente surtira efectos despues de occurrida mi muerte, . . .." This court citing the same comment of Manresa just quoted above held that since the donation was simply made in consideration not of the death of the donor but of the affection to the donee, the donation was inter vivos and not mortis causa, and that the condition imposed to the effect that the donation "solamente surtira efectos daspues de ocurrida mi muerte," did not argue against the nature of the donation. Again, in the case of Joya vs. Tiongco (71 Phil., 379); wherein the donor made the donation of a parcel of land to the brothers Agustin and Pedro Joya because of her relationship to them, and where said donation was duly accepted and registered, the decision of the Court of Appeals which found the donation to be mortis causa was reversed by this court and the donation was held to be inter vivos for the reason that the death of the donor was not the consideration of the donation but only a suspensive condition, and that the mere fact that the property donated was not to be delivered immediately to the donee but only after death of donor did not render the donation mortis causa.

From all the preceding considerations, it is clear that even when the donor calls the donation mortis causa instead of inter vivos, even if he says it is to take effect after his death, when from the body of the instrument or donation it is to be gathered that the main consideration of the donation is not the death of the donor but rather services rendered to him, by the donee or his affection for the latter, then the donation should be considered as inter vivos, and when duly accepted, it transfers title immediately to the donee, and the condition that the donation is to take effect only after the death of donor should be interpreted as meaning that the possession and enjoyment of the fruits of the property donated should take place only after donor's death. To this effect, is the holding of this court in the case of Balaqui vs. Dongso (53 Phil., 673), where the donor Hipolita Balaqui made a donation to Placida Dongso in consideration of her good services rendered and because the donee had lived with the donor as a daughter, the donation containing the following paragraph: "This gift to said Placida Dongso resident of Candon, Ilocos Sur, Philippine Islands, in recompense for her services to me, does not pass title to her during my lifetime; but when I die, she shall be the true owner of the two aforementioned parcels, including my house and shed thereon, and she shall be rightfully entitled to transmit them to her children. I also bind myself to answer to said Placida and her heirs and successors for this property, and that none shall question or disturb her right." This court in that case held that the donation was inter vivos and irrevocable, and not mortis causa, notwithstanding the fact that the donor stated in said deed that she did not transfer the ownership of the two parcels of land donated, until upon her death, for such a statement could mean nothing else than that she only reserved to herself the possession and usufruct of said property, and because the donor could not very well guarantee the aforesaid right after her death. In the present case, we may well hold as we do that the donor or rather the person who drafted the deed, in using the phrase "mortis causa" and in providing that the donation should take effect only after the donor's death simply meant that the possession and enjoyment of the fruits of the properties donated should take effect only after the donor's death and not before, although this intention is rendered even dubious due to the fact that in one paragraph of the donation, she stated that she had reserved what was sufficient and necessary for her maintenance which may mean that all the properties donated were deemed transferred to the donee immediately after the donation had been accepted. One other consideration may be mentioned in support of our stand. The donation here was accepted by Emilia; said acceptance is embodied in the deed of donation, and both donor and donee signed below said acceptance conclusively showing that the donor was aware of said acceptance. The deed and acceptance was by agreement of both recorded or registered. Everything was complete. Only donations inter vivos need be accepted, Donation mortis causa being in the nature of a legacy need not be accepted. (Manresa, Vol. 5, Fifth edition [1932], p. 83.) Presuming that the donor Manuela and the donee Emilia knew the law, the fact that they not only agreed to the acceptance but regarded said acceptance necessary argues for their understanding and intention that the donation was inter vivos.

In view of the foregoing, we find that the donation in question is inter vivos and not mortis causa, and that it is valid because the requisites of the law about the execution of wills do not apply to it. The decision appealed from is hereby reversed with costs. [G.R. No. 106755. February 1, 2002.] APOLINARIA AUSTRIA-MAGAT, petitioner, vs. HON. COURT OF APPEALS and FLORENTINO LUMUBOS, DOMINGO COMIA, TEODORA CARAMPOT, ERNESTO APOLO, SEGUNDA SUMPELO, MAMERTO SUMPELO and RICARDO SUMPELO, respondents. Rudolf Philip Jurado for petitioner. Public Attorney's Office for respondents. SYNOPSIS Basilisa Comerciante executed a deed of donation over a parcel of residential land together with the improvements thereon in favor of her four children with express irrevocability and prohibition to alienate the said property. Thereafter, Basilisa executed a Deed of absolute Sale of the subject house and lot in favor of herein petitioner and as a result of which a Transfer Certificate of Title was issued by the Register of Deeds in the name of petitioner. Herein respondents filed an action against the petitioner for annulment of the Transfer Certificate of Title and other relevant documents and for reconveyance and damages. The Regional Trial Court dismissed the case on the ground that the donation was void because it did not comply with the formalities of a will, it being a donation mortis causa. On appeal, the decision of the trial court was reversed by the Court of Appeals declaring null and void the Deed of Sale of the subject property because the donation is inter vivos. Hence, the appeal. The Supreme Court affirmed the appellate court's decision and held that in the case at bar, the donation is inter vivos. The express irrevocability of the same ("hindi na mababawi") is the distinctive standard that identifies the document as a donation inter vivos. The other provisions therein which seemingly make the donation mortis causa do not go against the irrevocable character of the subject donation. SDHITE SYLLABUS 1.CIVIL LAW; DONATIONS; DONATION INTER VIVOS; IRREVOCABILITY, DISTINCTIVE STANDARD THEREOF; CASE AT BAR. Construing together the provisions of the deed of donation, we find and so hold that in the case at bar the donation is inter vivos. The express irrevocability of the same ("hindi na mababawi") is the distinctive standard that identifies that document as a donation inter vivos. The other provisions therein which seemingly make

the donation mortis causa do not go against the irrevocable character of the subject donation. 2.ID.; ID.; ID.; CHARACTERIZED BY TRANSFER OF NAKED OWNERSHIP OF THE PROPERTY TO DONEES DUE TO IRREVOCABLE CHARACTER OF THE DONATION; CASE AT BAR. The prohibition on the donor to alienate the said property during her lifetime is proof that naked ownership over the property has been transferred to the donees. It also support the irrevocable nature of the donation considering that the donor has already divested herself of the right to dispose of the donated property. On the other hand, the prohibition on the donees only meant that they may not mortgage or dispose the donated property while the donor enjoys and possesses the property during her lifetime. However, it is clear that the donees were already the owners of the subject property due to the irrevocable character of the donation. 3.ID.; ID.; ID.; ACCEPTANCE CLAUSE, REQUIREMENT OF. Another indication in the deed of donation that the donation is inter vivos is the acceptance clause therein of the donees. We have ruled that an acceptance clause is a mark that the donation is inter vivos. Acceptance is a requirement for donations inter vivos. 4.ID.; ID.; ID.; SALE OF THE SUBJECT PROPERTY DOES NOT OPERATE AS AN AUTOMATIC REVOCATION OF THE DEED OF DONATION IN CASE AT BAR. The act of selling the subject property to the petitioner herein cannot be considered as a valid act of revocation of the deed of donation for the reason that a formal case to revoke the donation must be filed pursuant to Article 764 of the Civil Code which speaks of an action that has a prescriptive period of four (4) years from non-compliance with the condition stated in the deed of donation. The rule that there can be automatic revocation without benefit of a court action does not apply to the case at bar for the reason that the subject deed of donation is devoid of any provision providing for automatic revocation in the event of non-compliance with any of the conditions set forth therein. Thus, a court action is necessary to be filed within four (4) years from the non-compliance of the condition violated. SEHTAC 5.ID.; TRUSTS; IMPLIED TRUST; PRESCRIPTIVE PERIOD OF ACTIONS BASED THEREON; CASE AT BAR. When one's property is registered in another's name without the former's consent, an implied trust is created by law in favor of the true owner. Article 1144 of the New Civil Code provides: Art. 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. Thus, an action for reconveyance of the title to the rightful owner prescribes in ten (10) years from the issuance of the title. It is only when fraud has been committed that the action will be barred after four (4) years. However, the four-year prescriptive period is not applicable to the case at bar for the reason that there is no fraud in this case. The findings of fact of the appellate court which are entitled to great respect, are devoid of any finding of fraud. The records do not show that the donor, Basilisa, and the petitioner ever intended to defraud the respondents herein with respect to the sale and ownership of the said property. On the other hand, the sale was grounded upon their honest but erroneous interpretation of the deed of donation that it is mortis causa, not inter vivos; and that the donor still had the rights to sell or dispose of the donated property and to revoke the donation. There being no fraud in the trust relationship between the donor and the donees including the herein petitioner, the action for reconveyance prescribes in ten

(10) years. Considering that TCT No. T-10434 in the name of the petitioner and covering the subject property was issued only on February 8, 1979, the filing of the complaint in the case at bar in 1983 was well within the ten-year prescriptive period. DECISION DE LEON, JR., J p: Before us is a petition for review of the Decision 1 of the Court of Appeals, 2 dated June 30, 1989 reversing the Decision, 3 dated August 15, 1986 of the Regional Trial Court (RTC) of Cavite, Branch 17. The Decision of the RTC dismissed Civil Case No. 4426 which is an action for annulment of title, reconveyance and damages. The facts of the case are as follows: Basilisa Comerciante is a mother of five (5) children, namely, Rosario Austria, Consolacion Austria, herein petitioner Apolinaria Austria-Magat, Leonardo, and one of herein respondents, Florentino Lumubos. Leonardo died in a Japanese concentration camp at Tarlac during World War II. In 1953, Basilisa bought a parcel of residential land together with the improvement thereon covered and described in Transfer Certificate of Title No. RT-4036 (T-3268) and known as Lot 1, Block 1, Cavite Beach Subdivision, with an area of 150 square meters, located in Bagong Pook, San Antonio, Cavite City. On December 17, 1975, Basilisa executed a document designated as "Kasulatan sa Kaloobpala (Donation)". The said document which was notarized by Atty. Carlos Viniegra, reads as follows: KASULATANG SA KALOOBPALA (DONATION) TALASTASIN NG LAHAT AT SINUMAN: Na ako, si BASELISA COMERCIANTE, may sapat na gulang, Filipina, balo, at naninirahan sa blg. 809 L. Javier Bagong Pook, San Antonio, Lungsod ng Kabite, Filipinas, sa pamamagitan ng kasulatang ito'y NAGSASALAYSAY Na alang-alang sa mabuting paglilingkod at pagtingin na iniukol sa akin ng apat kong mga tunay na anak na sila: ROSARIO AUSTRIA, Filipina, may sapat na gulang, balo, naninirahan sa 809 L. Javier, Bagong Pook, San Antonio, Lungsod ng Kabite;

CONSOLACION AUSTRIA, Filipino, may sapat na gulang, balo naninirahan sa 809 L. Javier, Bagong Pook, San Antonio, Lungsod ng Kabite; APOLINARIA AUSTRIA, Filipina, may sapat na gulang, may asawa, naninirahan sa Pasong Kawayan, Hen. Trias, Kabite; FLORENTINO LUMUBOS, Filipino, may sapat na gulang, asawa ni Encarnacion Magsino, at naninirahan din sa 809 L. Javier, Bagong Pook, San Antonio, Lungsod ng Kabite; ay Kusang loob na ibinibigay ko at ipinagkakaloob ng ganap at hindi na mababawi sa naulit ng apat na anak ko at sa kanilang mga tagamagmana (sic), ang aking isang lupang residential o tirahan sampu ng aking bahay nahan ng nakatirik doon na nasa Bagong Pook din, San Antonio, Lungsod ng Kabite, at nakikilala bilang Lote no. 7, Block no. 1, of Subdivision Plan Psd-12247; known as Cavite Beach Subdivision; being a portion of Lot No. 1055, of the Cadastral survey of Cavite, GLRO Cadastral Rec. no. 9539; may sukat na 150 metros cuadrados, at nakatala sa pangalan ko sa Titulo Torrens bilang TCT-T-3268 (RT-4036) ng Lungsod ng Kabite; Na ang Kaloob palang ito ay magkakabisa lamang simula sa araw na ako'y pumanaw sa mundo, at sa ilalim ng kondision na: Magbubuhat o babawasin sa halaga ng nasabing lupa at bahay ang anumang magugul o gastos sa aking libing at nicho at ang anumang matitira ay hahatiin ng APAT na parte, parepareho isang parte sa bawat anak kong nasasabi sa itaas nito upang maliwanang (sic) at walang makakalamang sinoman sa kanila; At kaming apat na anak na nakalagda o nakadiit sa kasulatang ito ay TINATANGGAP NAMIN ang kaloob-palang ito ng aming magulang na si Basilisa Comerciante, at tuloy pinasasalamatan namin siya ng taos sa (sic) puso dahil sa kagandahan look (sic) niyang ito sa amin. SA KATUNAYAN, ay nilagdaan o diniitan namin ito sa Nobeleta, Kabite, ngayong ika-17 ng Disyembre taong 1975. HER MARKHER MARK BASELISA COMERCIANTEROSARIO AUSTRIA Tagakaloob-pala (Sgd.) APOLINARIA AUSTRIAHER MARK Tagatanggap-palaCONSOLACION AUSTRIA (Sgd.) FLORENTINO LUMUBOS Tagatanggap-pala (Acknowledgment signed by Notary Public C.T. Viniegra is omitted). 4

Basilisa and her said children likewise executed another notarized document denominated as "Kasulatan" which is attached to the deed of donation. The said document states that: KASULATAN TALASTASIN NG MADLA: Na kaming mga nakalagda o nakadiit sa labak nito sila Basilisa Comerciante at ang kanyang mga anak na sila: Rosario Austria, Consolacion Austria, Apolonio Austria, at Florentino Lumubos, pawang may mga sapat na gulang, na lumagda o dumiit sa kasulatang kaloob pala, na sinangayunan namin sa harap ng Notario Publico, Carlos T. Viniegra, ay nagpapahayag ng sumusunod: Na ang titulo numero TCT-T-2260 (RT-4036) ng Lungsod ng Kabite, bahay sa loteng tirahan ng Bagong Pook na nababanggit sa nasabing kasulatan, ay mananatili sa poder o possession ng Ina, na si Basilisa Comerciante habang siya ay nabubuhay at Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa habang maybuhay ang nasabing Basilisa Comerciante. Sa katunayan ang nagsilagda kaming lahat sa labak nito sa harap ng abogado Carlos T. Viniegra at dalawang saksi. Nobeleta, Kabite. Ika-17 ng Disyembre, 1975. 5 On February 6, 1979, Basilisa executed a Deed of Absolute Sale of the subject house and lot in favor of herein petitioner Apolinaria Austria-Magat for Five Thousand Pesos (P5,000.00). As the result of the registration of that sale, Transfer Certificate of Title (TCT for brevity) No. RT-4036 in the name of the donor was cancelled and in lieu thereof TCT No. T-10434 was issued by the Register of Deeds of Cavite City in favor of petitioner Apolinaria Austria-Magat on February 8, 1979. On September 21, 1983, herein respondents Teodora Carampot, Domingo Comia, and Ernesto Apolo (representing their deceased mother Consolacion Austria), Ricardo, Mamerto and Segunda, all surnamed Sumpelo (representing their deceased mother Rosario Austria) and Florentino Lumubos filed before the Regional Trial Court of Cavite an action, docketed as Civil Case No. 4426 against the petitioner for annulment of TCT No. T-10434 and other relevant documents, and for reconveyance and damages. On August 15, 1986, the trial court dismissed Civil Case No. 4426 per its Decision, the dispositive portion of which reads: WHEREFORE, in view of the foregoing, this Court hereby renders judgment for defendant dismissing this case and ordering plaintiffs to pay the amount of P3,000.00 as attorney's fees and the costs of suit. SO ORDERED. 6

According to the trial court, the donation is a donation mortis causa pursuant to Article 728 of the New Civil Code inasmuch as the same expressly provides that it would take effect upon the death of the donor; that the provision stating that the donor reserved the right to revoke the donation is a feature of a donation mortis causa which must comply with the formalities of a will; and that inasmuch as the donation did not follow the formalities pertaining to wills, the same is void and produced no effect whatsoever. Hence, the sale by the donor of the said property was valid since she remained to be the absolute owner thereof during the time of the said transaction. On appeal, the decision of the trial court was reversed by the Court of Appeals in its subject decision, the dispositive portion of which reads, to wit: WHEREFORE, in view of the foregoing, the appealed decision is hereby SET ASIDE and a new one rendered: 1.declaring null and void the Deed of Sale of Registered Land (Annex B) and Transfer Certificate of Title No. T-10434 of the Registry of Deeds of Cavite City (Annex E) and ordering the cancellation thereof; and 2.declaring appellants and appellee co-owners of the house and lot in question in accordance with the deed of donation executed by Basilisa Comerciante on December 17, 1975. No pronouncement as to costs. SO ORDERED. 7 The appellate court declared in its decision that: In the case at bar, the decisive proof that the deed is a donation inter vivos is in the provision that: Ibinibigay ko at ipinagkakaloob ng ganap at hindi mababawi sa naulit na apat na anak ko at sa kanilang mga tagapagmana, ang aking lupang residential o tirahan sampu ng aking bahay nakatirik doon . . . (emphasis supplied) This is a clear expression of the irrevocability of the conveyance. The irrevocability of the donation is a characteristic of a donation inter vivos. By the words "hindi mababawi", the donor expressly renounced the right to freely dispose of the house and lot in question. The right to dispose of a property is a right essential to full ownership. Hence, ownership of the house and lot was already with the donees even during the donor's lifetime. . . xxx xxx xxx In the attached document to the deed of donation, the donor and her children stipulated that:

Gayon din ang nasabing titulo ay hindi mapapasangla o maipagbibili ang lupa habang may buhay ang nasabing Basilisa Comerciante." The stipulation is a reiteration of the irrevocability of the dispossession on the part of the donor. On the other hand, the prohibition to encumber, alienate or sell the property during the lifetime of the donor is a recognition of the ownership over the house and lot in issue of the donees for only in the concept of an owner can one encumber or dispose a property. 8 Hence this appeal grounded on the following assignment of errors: I THE RESPONDENT COURT OF APPEALS, WITH DUE RESPECT, IGNORED THE RULES OF INTERPRETATION OF CONTRACTS WHEN IT CONSIDERED THE DONATION IN QUESTION AS INTER VIVOS. II THE RESPONDENT COURT OF APPEALS, AGAIN WITH DUE RESPECT, ERRED IN NOT HOLDING THAT THE PRESENT ACTION HAS PRESCRIBED UNDER THE STATUTE OF LIMITATIONS. 9 Anent the first assignment of error, the petitioner argues that the Court of Appeals erred in ruling that the donation was a donation inter vivos. She claims that in interpreting a document, the other relevant provisions therein must be read in conjunction with the rest. While the document indeed stated that the donation was irrevocable, that must be interpreted in the light of the provisions providing that the donation cannot be encumbered, alienated or sold by anyone, that the property donated shall remain in the possession of the donor while she is alive, and that the donation shall take effect only when she dies. Also, the petitioner claims that the donation is mortis causa for the reason that the contemporaneous and subsequent acts of the donor, Basilisa Comerciante, showed such intention. Petitioner cites the testimony of Atty. Viniegra, who notarized the deed of donation, that it was the intent of the donor to maintain control over the property while she was alive; that such intent was shown when she actually sold the lot to herein petitioner. We affirm the appellate court's decision. The provisions in the subject deed of donation that are crucial for the determination of the class to which the donation belongs are, as follows: xxx xxx xxx . . . (I)binibigay ko at ipinagkakaloob ng ganap at hindi mababawi sa naulit na apat na anak ko at sa kanilang mga tagapagmanana, ang aking lupang residential o tirahan sampu ng aking bahay nakatirik doon na nasa Bagong Pook din, San Antonio, Lungsod ng Kabite xxx xxx xxx

Na ang Kaloob palang ito ay magkakabisa lamang simula sa araw na ako'y pumanaw sa mundo, . . . . Na ang titulo numero TCT-T-2260 (RT-4036) ng Lungsod ng Kabite, bahay sa loteng tirahan ng Bagong Pook na nababanggit sa nasabing kasulatan, ay mananatili sa power o possession ng Ina, na si Basilisa Comerciante habang siya ay nabubuhay at Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa habang maybuhay ang nasabing Basilisa Comerciante . . . . It has been held that whether the donation is inter vivos or mortis causa depends on whether the donor intended to transfer ownership over the properties upon the execution of the deed. 10 In Bonsato v. Court of Appeals, 11 this Court enumerated the characteristics of a donation mortis causa, to wit: (1)It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; (2)That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; (3)That the transfer should be void if the transferor should survive the transferee. Significant to the resolution of this issue is the irrevocable character of the donation in the case at bar. In Cuevas v. Cuevas, 12 we ruled that when the deed of donation provides that the donor will not dispose or take away the property donated (thus making the donation irrevocable), he in effect is making a donation inter vivos. He parts away with his naked title but maintains beneficial ownership while he lives. It remains to be a donation inter vivos despite an express provision that the donor continues to be in possession and enjoyment of the donated property while he is alive. In the Bonsato case, we held that: (W)hat is most significant [in determining the type of donation] is the absence of stipulation that the donor could revoke the donations; on the contrary, the deeds expressly declare them to be "irrevocable", a quality absolutely incompatible with the idea of conveyances mortis causa where revocability is of the essence of the act, to the extent that a testator can not lawfully waive or restrict his right of revocation (Old Civil Code, Art. 737; New Civil Code, Art. 828). 13 Construing together the provisions of the deed of donation, we find and so hold that in the case at bar the donation is inter vivos. The express irrevocability of the same ("hindi na mababawi") is the distinctive standard that identifies that document as a donation inter vivos. The other provisions therein which seemingly make the donation mortis causa do not go against the irrevocable character of the subject donation. According to the petitioner, the provisions which state that the same will only take effect upon the death of the donor and that there is a prohibition to alienate, encumber, dispose, or sell the same, are proofs that the donation is mortis causa. We disagree. The said provisions should be harmonized with its

express irrevocability. In Bonsato where the donation per the deed of donation would also take effect upon the death of the donor with reservation for the donor to enjoy the fruits of the land, the Court held that the said statements only mean that "after the donor's death, the donation will take effect so as to make the donees the absolute owners of the donated property, free from all liens and encumbrances; for it must be remembered that the donor reserved for himself a share of the fruits of the land donated." 14

In Gestopa v. Court of Appeals, 15 this Court held that the prohibition to alienate does not necessarily defeat the inter vivos character of the donation. It even highlights the fact that what remains with the donor is the right of usufruct and not anymore the naked title of ownership over the property donated. In the case at bar, the provision in the deed of donation that the donated property will remain in the possession of the donor just goes to show that the donor has given up his naked title of ownership thereto and has maintained only the right to use (jus utendi) and possess (jus possidendi) the subject donated property. Thus, we arrive at no other conclusion in that the petitioner's cited provisions are only necessary assurances that during the donor's lifetime, the latter would still enjoy the right of possession over the property; but, his naked title of ownership has been passed on to the donees; and that upon the donor's death, the donees would get all the rights of ownership over the same including the right to use and possess the same. Furthermore, it also appeared that the provision in the deed of donation regarding the prohibition to alienate the subject property is couched in general terms such that even the donor is deemed included in the said prohibition ("Gayon din ang nasabing Titulo ay hindi mapapasangla o maipagbibili ang lupa habang maybuhay ang nasabing Basilisa Comerciante"). Both the donor and the donees were prohibited from alienating and encumbering the property during the lifetime of the donor. If the donor intended to maintain full ownership over the said property until her death, she could have expressly stated therein a reservation of her right to dispose of the same. The prohibition on the donor to alienate the said property during her lifetime is proof that naked ownership over the property has been transferred to the donees. It also supports the irrevocable nature of the donation considering that the donor has already divested herself of the right to dispose of the donated property. On the other hand, the prohibition on the donees only meant that they may not mortgage or dispose the donated property while the donor enjoys and possesses the property during her lifetime. However, it is clear that the donees were already the owners of the subject property due to the irrevocable character of the donation. The petitioner argues that the subsequent and contemporaneous acts of the donor would show that her intention was to maintain control over her properties while she was still living. We disagree. Respondent Domingo Comia testified that sometime in 1977 or prior to the sale of the subject house and lot, his grandmother, the donor in the case at bar, delivered the title of the said property to him; and that the act of the donor was a manifestation that she was acknowledging the ownership of the donees over the property donated. 16 Moreover, Atty. Viniegra testified that when the donor sold the lot to the petitioner herein, she was not doing so in accordance with the agreement and intent of the parties in the deed of donation; that she was disregarding the provision in the deed of donation prohibiting the

alienation of the subject property; and that she knew that the prohibition covers her as well as the donees. 17 Another indication in the deed of donation that the donation is inter vivos is the acceptance clause therein of the donees. We have ruled that an acceptance clause is a mark that the donation is inter vivos. Acceptance is a requirement for donations inter vivos. On the other hand, donations mortis causa, being in the form of a will, are not required to be accepted by the donees during the donor's lifetime. 18 We now rule on whether the donor validly revoked the donation when one of her daughters and donees, Consolacion Austria, violated the prohibition to encumber the property. When Consolacion Austria mortgaged the subject property to a certain Baby Santos, the donor, Basilisa Comerciante, asked one of the respondents herein, Domingo Comia, to redeem the property, which the latter did. After the petitioner in turn redeemed the property from respondent Domingo, the donor, Basilisa, sold the property to the petitioner who is one of the donees. The act of selling the subject property to the petitioner herein cannot be considered as a valid act of revocation of the deed of donation for the reason that a formal case to revoke the donation must be filed pursuant to Article 764 of the Civil Code 19 which speaks of an action that has a prescriptive period of four (4) years from non-compliance with the condition stated in the deed of donation. The rule that there can be automatic revocation without benefit of a court action does not apply to the case at bar for the reason that the subject deed of donation is devoid of any provision providing for automatic revocation in the event of non-compliance with the any of the conditions set forth therein. Thus, a court action is necessary to be filed within four (4) years from the non-compliance of the condition violated. As regards the ground of estoppel, the donor, Basilisa, cannot invoke the violation of the provision on the prohibition to encumber the subject property as a basis to revoke the donation thereof inasmuch as she acknowledged the validity of the mortgage executed by the donee, Consolacion Austria, when the said donor asked respondent Domingo Comia to redeem the same. Thereafter, the donor, Basilisa likewise asked respondent Florentino Lumubos and the petitioner herein to redeem the same. 20 Those acts implied that the donees have the right of control and naked title of ownership over the property considering that the donor, Basilisa condoned and acknowledged the validity of the mortgage executed by one of the donees, Consolacion Austria. Anent the second issue, the petitioner asserts that the action, against the petitioner, for annulment of TCT No. T-10434 and other relevant documents, for reconveyance and damages, filed by the respondents on September 21, 1983 on the ground of fraud and/or implied trust has already prescribed. The sale happened on February 6, 1979 and its registration was made on February 8, 1979 when TCT No. RT-4036 in the name of the donor was cancelled and in lieu thereof TCT No. T-10434 in the name of the petitioner was issued. Thus, more than four (4) years have passed since the sale of the subject real estate property was registered and the said new title thereto was issued to the petitioner. The petitioner contends that an action for reconveyance of property on the ground of alleged fraud must be filed within four (4) years from the discovery of fraud which is from the date of registration of the deed of sale on February 8, 1979; and that the same prescriptive period

also applies to a suit predicated on a trust relationship that is rooted on fraud of breach of trust. When one's property is registered in another's name without the former's consent, an implied trust is created by law in favor of the true owner. Article 1144 of the New Civil Code provides: Art. 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. (n) Thus, an action for reconveyance of the title to the rightful owner prescribes in ten (10) years from the issuance of the title. 21 It is only when fraud has been committed that the action will be barred after four (4) years. 22 However, the four-year prescriptive period is not applicable to the case at bar for the reason that there is no fraud in this case. The findings of fact of the appellate court which are entitled to great respect, are devoid of any finding of fraud. The records do not show that the donor, Basilisa, and the petitioner ever intended to defraud the respondents herein with respect to the sale and ownership of the said property. On the other hand, the sale was grounded upon their honest but erroneous interpretation of the deed of donation that it is mortis causa, not inter vivos; and that the donor still had the rights to sell or dispose of the donated property and to revoke the donation. There being no fraud in the trust relationship between the donor and the donees including the herein petitioner, the action for reconveyance prescribes in ten (10) years. Considering that TCT No. T-10434 in the name of the petitioner and covering the subject property was issued only on February 8, 1979, the filing of the complaint in the case at bar in 1983 was well within the ten-year prescriptive period. The Court of Appeals, therefore, committed no reversible error in its appealed Decision. WHEREFORE, the appealed Decision dated June 30, 1989 of the Court of Appeals is hereby AFFIRMED. No pronouncement as to costs. ScaCEH SO ORDERED. [G.R. No. 131953. June 5, 2002.] MA. ESTELA MAGLASANG, NICOLAS CABATINGAN and MERLY S. CABATINGAN, petitioners, vs. THE HEIRS OF CORAZON CABATINGAN, namely, LUZ M. BOQUIA, PERLA M. ABELLA, ESTRELLA M. CAETE, LOURDES M. YUSON, and JULIA L. MAYOL, HEIRS OF GENOVIVA C. NATIVIDAD namely, OSCAR C. NATIVIDAD, OLGA

NATIVIDAD, ODETTE NATIVIDAD, OPHELIA NATIVIDAD, RICHARD NATIVIDAD, RAYMUND NATIVIDAD, RICHIE NATIVIDAD, SONIA NATIVIDAD and ENCARNACION CABATINGAN VDA. DE TRINIDAD, ALFREDO CABATINGAN and JESUSA C. NAVADA, respondents. Bienvenido R. Saniel, Jr. for petitioners. Senining Belcia & Atup for private respondents. SYNOPSIS Conchita Cabatingan, during her lifetime, executed four Deeds of Donation in favor of petitioners. The Deeds provide, among others, that the donation will become effective upon the death of the donor and the same shall be rescinded in case the donee predeceased the donor. After Conchita's death, respondents, heirs of Conchita, filed an action before the Regional Trial Court of Mandaue, seeking the annulment of the said four Deeds of Donation. Respondents alleged, inter alia, that the documents were void for failing to comply with the provisions of the Civil Code regarding formalities of wills and testaments, considering that the Deeds were donation mortis causa. The RTC favorably ruled for the respondents. Hence, this petition. Petitioners insisted that the Deeds were inter vivos donations as they were made by the late Conchita "in consideration of the love and affection of the donor" for the donee, and there was nothing in the Deeds which indicate that the donations were made in consideration of Conchita's death. Petitioners further alleged that the stipulation on rescission in case petitioners die ahead of Conchita was a resolutory condition that confirmed the nature of the donations as inter vivos. The Supreme Court found petitioners' arguments bereft of merit. It held that in a donation mortis causa, "the right of disposition is not transferred to the donee while the donor is still alive." In the present case, the nature of the donations as mortis causa was confirmed by the fact that the donations did not contain any clear provision that intends to pass proprietary rights to petitioners prior to Conchita's death. The phrase "to become effective upon the death of the DONOR" admits of no other interpretation but that Conchita did not intend to transfer the ownership of the properties to petitioners during her lifetime. That the donations were made "in consideration of the love and affection of the donor" did not qualify the donations as inter vivos because transfers mortis causa may also be made for the same reason. Considering that the disputed donations were donations mortis causa, and the same partakes of testamentary provisions, the Court held that the trial court did not commit any reversible error in declaring the subject Deeds null and void for failure to comply with the requisites on solemnities of wills and testaments under Articles 805 and 806 of the Civil Code. Petition denied. SYLLABUS 1.CIVIL LAW; DONATIONS; DONATION MORTIS CAUSA; CHARACTERISTICS; RIGHT OF DISPOSITION IS NOT TRANSFERRED TO THE DONEE WHILE THE DONOR IS STILL ALIVE; CASE AT BAR. In a donation mortis causa, "the right of disposition is not transferred to the

donee while the donor is still alive." In determining whether a donation is one of mortis causa, the following characteristics must be taken into account: (1) It conveys no title or ownership to the transferee before the death of the transferor; or what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; (2) That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; and (3) That the transfer should be void if the transferor should survive the transferee. In the present case, the nature of the donations as mortis causa is confirmed by the fact that the donations do not contain any clear provision that intends to pass proprietary rights to petitioners prior to Cabatingan's death. The phrase "to become effective upon the death of the DONOR" admits of no other interpretation but that Cabatingan did not intend to transfer the ownership of the properties to petitioners during her lifetime. 2.ID.; ID.; ID.; MAY BE MADE IN CONSIDERATION OF THE LOVE AND AFFECTION OF THE DONOR TO THE DONEE. That the donations were made "in consideration of the love and affection of the donor" does not qualify the donations as inter vivos because transfers mortis causa may also be made for the same reason. 3.ID.; ID.; ID.; TRANSFER SHALL BE CONSIDERED VOID IF DONOR SHOULD SURVIVE THE DONEE. The herein subject deeds expressly provide that the donation shall be rescinded in case petitioners predecease Conchita Cabatingan. As stated in Reyes v. Mosqueda, one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee. This is exactly what Cabatingan provided for in her donations. If she really intended that the donation should take effect during her lifetime and that the ownership of the properties donated be transferred to the donee or independently of, and not by reason of her death, she would have not expressed such proviso in the subject deeds. 4.ID.; ID.; ID.; MUST BE EXECUTED IN ACCORDANCE WITH REQUISITES ON SOLEMNITIES OF WILLS AND TESTAMENTS; SUBJECT DEEDS OF DONATION CONSIDERED NULL AND VOID IN CASE AT BAR. Considering that the disputed donations are donations mortis causa, the same partake of the nature of testamentary provisions and as such, said deeds must be executed in accordance with the requisites on solemnities of wills and testaments under Articles 805 and 806 of the Civil Code, to wit: . . . The deeds in question although acknowledged before a notary public of the donor and the donee, the documents were not executed in the manner provided for under the above-quoted provisions of law. Thus, the trial court did not commit any reversible error in declaring the subject deeds of donation null and void. DECISION AUSTRIA-MARTINEZ, J p: Posed for resolution before the Court in this petition for review on certiorari filed under Rule 45 of the Rules of Court is the sole issue of whether the donations made by the late Conchita Cabatingan are donations inter vivos or mortis causa. ISaCTE

The facts of the case are as follows: DSEIcT On February 17, 1992, Conchita Cabatingan executed in favor of her brother, petitioner Nicolas Cabatingan, a "Deed of Conditional of Donation (sic) Inter Vivos for House and Lot" covering one-half (1/2) portion of the former's house and lot located at Cot-cot, Liloan, Cebu. 1 Four (4) other deeds of donation were subsequently executed by Conchita Cabatingan on January 14, 1995, bestowing upon: (a) petitioner Estela C. Maglasang, two (2) parcels of land one located in Cogon, Cebu (307 sq. m.) and the other, a portion of a parcel of land in Masbate (50,232 sq. m.); (b) petitioner Nicolas Cabatingan, a portion of a parcel of land located in Masbate (80,000 sq. m.); and (c) petitioner Merly S. Cabatingan, a portion of the Masbate property (80,000 sq. m.). 2 These deeds of donation contain similar provisions, to wit: "That for and in consideration of the love and affection of the DONOR for the DONEE, . . . the DONOR does hereby, by these presents, transfer, convey, by way of donation, unto the DONEE the above-described property, together with the buildings and all improvements existing thereon, to become effective upon the death of the DONOR; PROVIDED, HOWEVER, that in the event that the DONEE should die before the DONOR, the present donation shall be deemed automatically rescinded and of no further force and effect; . . ." 3 (Emphasis Ours) On May 9, 1995, Conchita Cabatingan died. Upon learning of the existence of the foregoing donations, respondents filed with the Regional Trial Court of Mandaue, Branch 55, an action for Annulment And/Or Declaration of Nullity of Deeds of Donations and Accounting, docketed as Civil Case No. MAN-2599, seeking the annulment of said four (4) deeds of donation executed on January 14, 1995. Respondents allege, inter alia, that petitioners, through their sinister machinations and strategies and taking advantage of Conchita Cabatingan's fragile condition, caused the execution of the deeds of donation, and, that the documents are void for failing to comply with the provisions of the Civil Code regarding formalities of wills and testaments, considering that these are donations mortis causa. 4 Respondents prayed that a receiver be appointed in order to preserve the disputed properties, and, that they be declared as coowners of the properties in equal shares, together with petitioner Nicolas Cabatingan. 5 Petitioners in their Amended Answer, deny respondents' allegations contending that Conchita Cabatingan freely, knowingly and voluntarily caused the preparation of the instruments. 6 On respondents' motion, the court a quo rendered a partial judgment on the pleadings on December 2, 1997 in favor of respondents, with the following dispositive portion: "WHEREFORE, and in consideration of all the foregoing, judgment is hereby rendered in favor of the plaintiffs and against the defendant and unwilling co-plaintiff with regards (sic) to the four Deeds of Donation Annexes "A", "A-1", "B" and Annex "C" which is the subject of this partial decision by:

a)Declaring the four Deeds of Donation as null and void ab initio for being a donation Mortis Causa and for failure to comply with formal and solemn requisite under Art. 806 of the New Civil Code; b)To declare the plaintiffs and defendants as well as unwilling co-plaintiff as the heirs of the deceased Conchita Cabatingan and therefore hereditary co-owners of the properties subject of this partial decision, as mandated under Art. 777 of the New Civil Code;

SO ORDERED." 7 The court a quo ruled that the donations are donations mortis causa and therefore the four (4) deeds in question executed on January 14, 1995 are null and void for failure to comply with the requisites of Article 806 of the Civil Code on solemnities of wills and testaments. 8 Raising questions of law, petitioners elevated the court a quo's decision to this Court, 9 alleging that: "THE LOWER COURT PALPABLY DISREGARDED THE LONG-AND-WELL-ESTABLISHED RULINGS OF THIS HONORABLE SUPREME COURT ON THE CHARACTERIZATION OF DONATIONS AS INTER VIVOS OR MORTIS CAUSA AND, INSTEAD, PROCEEDED TO INTERPRET THE DONATIONS IN QUESTION IN A MANNER CONTRARY THERETO." 10 Petitioners insist that the donations are inter vivos donations as these were made by the late Conchita Cabatingan "in consideration of the love and affection of the donor" for the donee, and there is nothing in the deeds which indicate that the donations were made in consideration of Cabatingan's death. 11 In addition, petitioners contend that the stipulation on rescission in case petitioners die ahead of Cabatingan is a resolutory condition that confirms the nature of the donation as inter vivos. Petitioners' arguments are bereft of merit. In a donation mortis causa, "the right of disposition is not transferred to the donee while the donor is still alive." 12 In determining whether a donation is one of mortis causa, the following characteristics must be taken into account: (1)It conveys no title or ownership to the transferee before the death of the transferor; or what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; (2)That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; and (3)That the transfer should be void if the transferor should survive the transferee. 13

In the present case, the nature of the donations as mortis causa is confirmed by the fact that the donations do not contain any clear provision that intends to pass proprietary rights to petitioners prior to Cabatingan's death. 14 The phrase "to become effective upon the death of the DONOR" admits of no other interpretation but that Cabatingan did not intend to transfer the ownership of the properties to petitioners during her lifetime. Petitioners themselves expressly confirmed the donations as mortis causa in the following Acceptance and Attestation clauses, uniformly found in the subject deeds of donation, to wit: "That the DONEE does hereby accept the foregoing donation mortis causa under the terms and conditions set forth therein, and avail herself of this occasion to express her profound gratitude for the kindness and generosity of the DONOR." xxx xxx xxx "SIGNED by the above-named DONOR and DONEE at the foot of this Deed of Donation mortis causa, which consists of two (2) pages . . . ." 15 That the donations were made "in consideration of the love and affection of the donor" does not qualify the donations as inter vivos because transfers mortis causa may also be made for the same reason. 16 Well in point is National Treasurer of the Phils. v. Vda. de Meimban. 17 In said case, the questioned donation contained the provision: "That for and in consideration of the love and affection which the DONOR has for the DONEE, the said Donor by these presents does hereby give, transfer, and convey unto the DONEE, her heirs and assigns a portion of ONE HUNDRED THOUSAND (100,000) SQUARE METERS, on the southeastern part Pro-indiviso of the above described property. (The portion herein donated is within Lot 2-B of the proposed amendment Plan Subdivision of Lots Nos. 1 and 2, Psu-109393), with all the buildings and improvements thereon, to become effective upon the death of the DONOR. (emphasis supplied)" 18 Notably, the foregoing provision is similar to that contained in the donation executed by Cabatingan. We held in Meimban case that the donation is a mortis causa donation, and that the above quoted provision establishes the donor's intention to transfer the ownership and possession of the donated property to the donee only after the former's death. Further: "As the donation is in the nature of a mortis causa disposition, the formalities of a will should have been complied with under Article 728 of the Civil Code, otherwise, the donation is void and would produce no effect. As we have held in Alejandro v. Geraldez (78 SCRA 245, 253), "If the donation is made in contemplation of the donor's death, meaning that the full or naked ownership of the donated properties will pass to the donee because of the donor's death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a last will and testament. (Citing Bonsato v. Court of Appeals, 95 Phil. 481)." 19

We apply the above rulings to the present case. The herein subject deeds expressly provide that the donation shall be rescinded in case petitioners predecease Conchita Cabatingan. As stated in Reyes v. Mosqueda, 20 one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee. This is exactly what Cabatingan provided for in her donations. If she really intended that the donation should take effect during her lifetime and that the ownership of the properties donated be transferred to the donee or independently of, and not by reason of her death, she would have not expressed such proviso in the subject deeds. Considering that the disputed donations are donations mortis causa, the same partake of the nature of testamentary provisions 21 and as such, said deeds must be executed in accordance with the requisites on solemnities of wills and testaments under Articles 805 and 806 of the Civil Code, to wit: "ART. 805.Every will, other than a holographic will, must be subscribed at the end thereof by the testator himself or by the testator's name written by some other person in his presence, and by his express direction, and attested and subscribed by three or more credible witnesses in the presence of the testator and of one another. The testator or the person requested by him to write his name and the instrumental witnesses of the will, shall also sign, as aforesaid, each and every page thereof, except the last, on the left margin, and all the pages shall be numbered correlatively in letters placed on the upper part of each page. The attestation shall state the number of pages used upon which the will is written, and the fact that the testator signed the will and every page thereof, or caused some other person to write his name, under his express direction, in the presence of the instrumental witnesses, and that the latter witnessed and signed the will and all the pages thereof in the presence of the testator and of one another. If the attestation clause is in a language not known to the witnesses, it shall be interpreted to them. (n) ART. 806.Every will must be acknowledged before a notary public by the testator and the witnesses. The notary public shall not be required to retain a copy of the will, or file another with the office of the Clerk of Court. (n)" The deeds in question although acknowledged before a notary public of the donor and the donee, the documents were not executed in the manner provided for under the abovequoted provisions of law. Thus, the trial court did not commit any reversible error in declaring the subject deeds of donation null and void. WHEREFORE, the petition is hereby DENIED for lack of merit. SO ORDERED.

Validity of conditions in an onerous donation [G.R. No. 77425. June 19, 1991.] THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners, vs. HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents. [G.R. No. 77450. June 19, 1991.] THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners, vs. HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents. Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite. Dolorfino and Dominguez Law Offices for Sps. Ignao. Joselito R. Enriquez for private respondents. SYLLABUS 1.CIVIL LAW; DEED OF DONATION; WHEN CONTENTS THEREOF PROVIDE FOR AUTOMATIC REVERSION OF PROPERTY DONATED IN CASE OF VIOLATION OF CONDITIONS SET FORTH THEREIN, JUDICIAL ACTION FOR RESCISSION, NOT NECESSARY. The deed of donation involved herein expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not necessary. As aptly stated by the Court of Appeals: "By the very express provision in the deed of donation itself that the violation of the condition thereof would render ipso facto null and void the deed of donation, WE are of the opinion that there would be no legal necessity anymore to have the donation judicially declared null and void for the reason that the very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the donee contemplated a court action during the execution of the deed of donation to have the donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading 'would render ipso facto null and void' would not appear in the deed of donation." In support of its aforesaid position, respondent court relied on the rule that a judicial action for rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions. It called attention to the holding that there is nothing in the law that prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention, and that it is not always necessary for the injured party to resort to court for rescission of the contract. It reiterated the doctrine that a judicial action is proper only when there is absence of a special provision granting the power of cancellation.

2.ID.; ID.; ID.; DE LUNA, ET AL., v. ABRIGO, ET AL. [181 SCRA 150], APPLICABLE IN CASE AT BAR; RATIONALE FOR THE RULE. The validity of such a stipulation in the deed of donation providing for the automatic reversion of the donated property to the donor upon noncompliance of the condition was upheld in the recent case of De Luna, et al. vs. Abrigo, et al., 181 SCRA 150 (1990). It was held therein that said stipulation is in the nature of an agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of going to court, and that, upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. While what was the subject of that case was an onerous donation which, under Article 733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also subject to the same rules because of its provision on automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply. The rationale for the foregoing is that in contracts providing for automatic revocation, judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper. 3.ID.; ID.; ID.; GENERAL RULES ON CONTRACT AND PRESCRIPTION SHOULD APPLY, NOT ART. 764 OF THE CODE. When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on prescription should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs, public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission sought. Where such propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not in itself the revocatory act. 4.ID.; ID.; PROHIBITION AGAINST ALIENATION FOR AN UNREASONABLE LENGTH OF TIME; CONTRARY TO PUBLIC POLICY. The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy. Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time.

5.ID.; ID.; ID.; SHOULD BE DECLARED NULL AND VOID AS AN IMPOSSIBLE CONDITION. It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code. In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail. 6.SUPREME COURT; HAS AUTHORITY TO REVIEW MATTERS EVEN IF THEY ARE NOT ASSIGNED AS ERRORS ON APPEAL; CASE AT BAR. It will readily be noted that the provision in the deed of donation against alienation of the land for one hundred (100) years was the very basis for the action to nullify the deed of donation. At the same time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion was sustained by the trial court and set aside by respondent court, both on the issue of prescription. That ruling of respondent court interpreting said provision was assigned as an error in the present petition. While the issue of the validity of the same provision was not squarely raised, it is ineluctably related to petitioner's aforesaid assignment of error since both issues are grounded on and refer to the very same provision. This Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. Thus, we have held that an unassigned error closely related to an error properly assigned, or upon which the determination of the question properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error. 7.ID.; ID.; FOR THE EXPEDITIOUS ADMINISTRATION OF SUBSTANTIAL JUSTICE, REMAND OF THE CASE TO THE LOWER COURT FOR FURTHER RECEPTION OF EVIDENCE, NOT NECESSARY. We have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case. The aforestated considerations obtain in and apply to the present case with respect to the matter of the validity of the resolutory condition in question.

DECISION

REGALADO, J p: These two petitions for review on certiorari 1 seek to overturn the decision of the Court of Appeals in CA-G.R. CV No. 05456 2 which reversed and set aside the order of the Regional Trial Court of Imus, Cavite dismissing Civil Case No. 095-84, as well as the order of said respondent court denying petitioner's motions for the reconsideration of its aforesaid decision. On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of deed of donation, rescission of contract and reconveyance of real property with damages against petitioners Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus, Cavite, together with the Roman Catholic Archbishop of Manila, before the Regional Trial Court, Branch XX, Imus, Cavite and which was docketed as Civil Case No. 095-84 therein. 3 In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro and Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant Roman Catholic Archbishop of Manila covering a parcel of land (Lot No. 626, Cadastral Survey of Kawit), located at Kawit, Cavite, containing an area of 964 square meters, more or less. The deed of donation allegedly provides that the donee shall not dispose or sell the property within a period of one hundred (100) years from the execution of the deed of donation, otherwise a violation of such condition would render ipso facto null and void the deed of donation and the property would revert to the estate of the donors. It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all properties within the province of Cavite owned by the Archdiocese of Manila was allegedly transferred on April 26, 1962, executed a deed of absolute sale of the property subject of the donation in favor of petitioners Florencio and Soledad C. Ignao in consideration of the sum of P114,000.00. As a consequence of the sale, Transfer Certificate of Title No. 115990 was issued by the Register of Deeds of Cavite on November 15, 1980 in the name of said petitioner spouses. What transpired thereafter is narrated by respondent court in its assailed decision. 4 On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to dismiss based on the grounds that (1) herein private respondents, as plaintiffs therein, have no legal capacity to sue; and (2) the complaint states no cause of action. On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss on three (3) grounds, the first two (2) grounds of which were identical to that of the motion to dismiss filed by the Ignao spouses, and the third ground being that the cause of action has prescribed. On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss on the ground that he is not a real party in interest and, therefore, the complaint does not state a cause of action against him.

After private respondents had filed their oppositions to the said motions to dismiss and the petitioners had countered with their respective replies, with rejoinders thereto by private respondents, the trial court issued an order dated January 31, 1985, dismissing the complaint on the ground that the cause of action has prescribed. 5 Private respondents thereafter appealed to the Court of Appeals raising the issues on (a) whether or not the action for rescission of contracts (deed of donation and deed of sale) has prescribed; and (b) whether or not the dismissal of the action for rescission of contracts (deed of donation and deed of sale) on the ground of prescription carries with it the dismissal of the main action for reconveyance of real property. 6 On December 23, 1986, respondent Court of Appeals, holding that the action has not yet prescribed, rendered a decision in favor of private respondents, with the following dispositive portion: Cdpr "WHEREFORE, the Order of January 31, 1985 dismissing appellants' complaint is SET ASIDE and Civil Case No. 095-84 is hereby ordered REINSTATED and REMANDED to the lower court for further proceedings. No costs." 7 Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for reconsideration which were denied by respondent Court of Appeals in its resolution dated February 6, 1987, 8 a hence, the filing of these appeals by certiorari. It is the contention of petitioners that the cause of action of herein private respondents has already prescribed, invoking Article 764 of the Civil Code which provides that "(t)he donation shall be revoked at the instance of the donor, when the donee fails to comply with any of the conditions which the former imposed upon the latter," and that "(t)his action shall prescribe after four years from the non-compliance with the condition, may be transmitted to the heirs of the donor, and may be exercised against the donee's heirs." We do not agree. Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation must be brought within four (4) years from the non-compliance of the conditions of the donation, the same is not applicable in the case at bar. The deed of donation involved herein expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not necessary. As aptly stated by the Court of Appeals: "By the very express provision in the deed of donation itself that the violation of the condition thereof would render ipso facto null and void the deed of donation, WE are of the opinion that there would be no legal necessity anymore to have the donation judicially declared null and void for the reason that the very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the donee contemplated a court action during the execution of the deed of donation to have the donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading 'would render ipso facto null and void' would not appear in the deed of donation." 9

In support of its aforesaid position, respondent court relied on the rule that a judicial action for rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions. 10 It called attention to the holding that there is nothing in the law that prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention, and that it is not always necessary for the injured party to resort to court for rescission of the contract. 11 It reiterated the doctrine that a judicial action is proper only when there is absence of a special provision granting the power of cancellation. 12 It is true that the aforesaid rules were applied to the contracts involved therein, but we see no reason why the same should not apply to the donation in the present case. Article 732 of the Civil Code provides that donations inter vivos shall be governed by the general provisions on contracts and obligations in all that is not determined in Title III, Book III on donations. Now, said Title III does not have an explicit provision on the matter of a donation with a resolutory condition and which is subject to an express provision that the same shall be considered ipso facto revoked upon the breach of said resolutory condition imposed in the deed therefor, as is the case of the deed presently in question. The suppletory application of the foregoing doctrinal rulings to the present controversy is consequently justified. The validity of such a stipulation in the deed of donation providing for the automatic reversion of the donated property to the donor upon non-compliance of the condition was upheld in the recent case of De Luna, et al. vs. Abrigo, et al. 13 It was held therein that said stipulation is in the nature of an agreement granting a party the right to rescind a contract unilaterally m case of breach, without need of going to court, and that, upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. While what was the subject of that case was an onerous donation which, under Article 733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also subject to the same rules because of its provision on automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply. prcd The rationale for the foregoing is that in contracts providing for automatic revocation, judical intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper. 14 When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on prescription should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs, public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission sought. Where such propriety

is sustained, the decision of the court will be merely declaratory of the revocation, but it is not in itself the revocatory act.

On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the cause of action of herein private respondents has not yet prescribed since an action to enforce a written contract prescribes in ten (10) years. 15 It is our view that Article 764 was intended to provide a judicial remedy in case of non-fulfillment or contravention of conditions specified in the deed of donation if and when the parties have not agreed on the automatic revocation of such donation upon the occurrence of the contingency contemplated therein. That is not the situation in the case at bar. Nonetheless, we find that although the action filed by private respondents may not be dismissed by reason of prescription, the same should be dismissed on the ground that private respondents have no cause of action against petitioners. The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy. Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time. Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by analogy. Under the third paragraph of Article 494, a donor or testator may prohibit partition for a period which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void. LLphil It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code.

In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail. It may be argued that the validity of such prohibitory provision in the deed of donation was not specifically put in issue in the pleadings of the parties. That may be true, but such oversight or inaction does not prevent this Court from passing upon and resolving the same. It will readily be noted that the provision in the deed of donation against alienation of the land for one hundred (100) years was the very basis for the action to nullify the deed of donation. At the same time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion was sustained by the trial court and set aside by respondent court, both on the issue of prescription. That ruling of respondent court interpreting said provision was assigned as an error in the present petition. While the issue of the validity of the same provision was not squarely raised, it is ineluctably related to petitioner's aforesaid assignment of error since both issues are grounded on and refer to the very same provision. cdphil This Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. 16 Thus, we have held that an unassigned error closely related to an error properly assigned, 17 or upon which the determination of the question properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error. 18 Additionally, we have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case. 19 The aforestated considerations obtain in and apply to the present case with respect to the matter of the validity of the resolutory condition in question. WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is hereby rendered DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX, Imus, Cavite. SO ORDERED. Perfection of donation

[G.R. No. 72908. August 11, 1989.] EUFEMIA PAJARILLO, CLAUDIO SUTERIO, JR., NYMIA SUTERIO and MARILYN SUTERIO, petitioners, vs. INTERMEDIATE APPELLATE COURT, THIRD CIVIL CASES DIVISION, SALUD SUTERIO and PEDRO MATIAS, respondents. Agustin A Ferrer for petitioners. Alfredo L Raya for respondents. SYLLABUS 1.CIVIL LAW; MODES OF ACQUIRING OWNERSHIP; DONATION; INTRINSIC VALIDITY THEREOF; CASE AT BAR. The petitioners assail the intrinsic validity of the extrajudicial settlement and submit that it is not really a donation as conceptually understood in civil law. Their argument is that the real donor of the property was Perfecta, the deceased sister, who, however, could no longer bestow the intended gift. For their part, Felipe and Juana could not have made the donation either because they ware not moved by the same sentiments Perfecta had for her niece Salud. That feeling would have provided the required consideration if Perfecta herself had made the donation, but not the other two. Felipe and Juana had declared themselves the heirs of Perfecta and the owners of the property in question. As such, they were free to give the land to whomever they pleased and for whatever reason they saw fit. Hence, if they chose to respect Perfecta's wishes and carry out her intentions by donating the land to Salud, there was no legal impediment to their doing so. In fact, that was not only the legal but also the moral thing to do. There is no question that Felipe and Juana could have simply disregarded their sister's sentiments and decided not to donate the property to Salud, keeping the same for themselves. The fact that they did not do this speaks well indeed of their integrity and their loyalty as well to their deceased sister. The extrajudicial settlement also reflects their own affection for Salud which constituted the valid consideration for their own act of liberality. Notably, in her acceptance of the donation, Salud referred to the donors Felipe Balane and Juana Balane de Suterio," and not Perfecta. 2.ID.; ID.; ID.; GIVEN FORCE AND EFFECT EVEN IN THE ABSENCE OF NOTATION IN THE EXTRAJUDICIAL SETTLEMENT; REASON. In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that the donated land be not registered during her lifetime by Salud. Given this significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance. That would be placing too much stress on mere form over substance. It would also disregard the clear reality of the acceptance of the donation as manifested in these separate instrument dated June 20, 1946, and as later acknowledged by Juana. 3.ID.; ID.; ID.; ARTICLE 633 OF THE OLD CIVIL CODE; APPLICABLE RULE; LITERAL ADHERENCE TO THE REQUIREMENT OF THE LAW PROVED UPON; CASE AT BAR. It is pointed out that the donation is defective in form because of non-compliance with the requirements of the law regarding its acceptance. As it was executed in 1946, the applicable rule is Article 633 of the old Civil Code reading as follows: Art. 633. In order that a donation of real property be

valid it must be made by public instrument in which the property donated must be optically described and the amount of the charges to be assumed by the donee expressed. The acceptance may be made in the deed of gift or in a separate public writing; but it shall produce no effect if not made during the lifetime of the donor. If the acceptance is made by separate public instrument, authentic notice thereof shall be given the donor, and this proceeding shall be noted in both instruments. A strict interpretation of Article 633 can lead to no other conclusion than the annulment of the donation for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable language of the above-quoted provision. However, we find that under the circumstances of the present case, a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions. It is also a policy of the Court to avoid such an interpretation. 4.ID.; ID.; ID.; REGISTRATION NOT NECESSARY TO MAKE THE DONATION A BINDING COMMITMENT SO FAR AS THE DONORS AND THE DONEE WERE CONCERNED; CASE AT BAR. There is nothing in the subject instrument to suggest that the donation was to take effect upon the death of the donors as to make it a donation mortis causa, as urged by the petitioners. The donation became effective upon acceptance by Salud except that, in obedience to her mother's request, she chose not to register the land in the meantime and to allow her mother to enjoy its fruits. What was deferred was not its effectivity but only its enjoyment by Salud. Registration was not necessary to make the donation a binding commitment insofar as the donors and the donee were concerned. 5.ID.; ID.; LACHES NOT APPLIED IN SUITS AMONG RELATIVES IN CASE AT BAR. As for respondents inaction against the deed of sale in favor of her brother Claudio, it should be noted in the first place that she was not aware of it when it was executed in 1956. Her mother, who was already 76 years old at the time, never informed her about it, nor did her brother or any of the defendants, for reasons of their own. It was only later, when the sale was registered in 1958 and a new title to the land was issued to Claudio, that she started asking questions. Even then, being a sister to Claudio, she did not immediately take legal steps. It is natural, even among non-relatives, to seek a non-judicial settlement through extra-legal measures before going to court. The petitioners stress that it took Salud all of seven years from the registration of the land in Claudios's name before she filed the complaint for reconveyance against them. That is true. But if one remembers that her brother died only in 1961 and her own mother only in 1963, at the age of 83, it will be easy to understand the reason for the delay, which would otherwise have been unjustified. Suits among brothers and sisters are especially painful to their parents. Salud must have thought many times about filing her complaint against her brother Claudio while her old mother was still alive. In fact, Salud hesitated still even after her mother's death and took two more years before she finally filed her complaint against Claudio's wife and children. 6.ID.; IMPLIED TRUST; CREATED IN FAVOR OF PRIVATE RESPONDENT PURSUANT TO ARTICLE 1456 OF THE CIVIL CODE; CASE AT BAR. It is clear that Juana Balane de Suterio had no right to sell the subject land to Claudio because she was no longer its owner, having previously donated it to her daughter Salud. Juana herself was holding the land merely as a trustee of Salud, who had transferred possession to her mother at the old woman's request. The deed of sale was itself vitiated by bad faith as Claudio is presumed to have known of the previous donation to his sister Salud, whose acceptance of the donation was formally

witnessed by his own wife, the herein principal petitioner. When Claudio registered the land in his name knowing there was a flaw in his title, an implied trust was created in favor of Salud as the real owner of the property in accordance with Article 1456 of the Civil Code, reading as follows: If the 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. As trustor, Salud had every right to sue for the recovery of the land in the action for reconveyance against Claudio's heirs. 7.ID.; LAND REGISTRATION; ACTION FOR RECONVEYANCE MAY BE FILED BY REAL OWNER WITHIN A PERIOD OF TEN YEARS. The petitioners do not insist on prescription as a bar to the action for reconveyance, and understandably so. The legal principle is that if the registration of the land is fraudulent and the person in whose name the land is registered thus holds it as a mere trustee, the real owner is entitled to file an action for reconveyance of the property within a period of ten years. The record shows that while the land was registered in the name of Claudio Suterio, Sr. in 1958, the complaint for reconveyance was filed by the petitioners in 1965, or still within the ten-year prescriptive period. 8.REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT BY TRIAL COURT UPHELD. The last issue raised by the petitioners, viz., the validity of the deed of sale executed by Juana Balane de Suterio on January 29, 1950, in favor of Salud Suterio, need not detain us too long. The trial court sustained the contract for lack of sufficient evidence to invalidate it and was upheld by the respondent court. We see no reason to disturb their factual finding, absents showing that it was reached arbitrarily. Interestingly, it occurred to the petitioners to question the transaction only when they were sued by the private respondents, after fifteen years from the date of the sale. This is an even longer period than the nine years during which the petitioners say Salud Suterio was sleeping on her rights following the sale of her land to Claudio Suterio. DECISION CRUZ, J p: This is one of those distasteful litigations involving a controversy among close relatives over properties left by a common ascendant. The petitioners are the widow and children of the brother of the principal private respondent. She and her brother appear to be the only remaining issue of the mother who seems to have caused all the present confusion. The record does not show how close, if at all, the members of this small family were. What is certain is that there is no affection now among the protagonists in this case. The mother was Juana Balane de Suterio, who had a brother named Felipe Balane and a sister named Perfecta Balane de Cordero. Perfecta died in 1945 leaving inter alia a tract of land consisting of about 28 hectares and covered by TCT No. 4671 in the Registry of Deeds of Quezon Province. On May 20, 1946, Juana and Felipe executed a public instrument entitled "Extra-judicial Settlement of the Estate of the Deceased Perfecta Balane de Cordero. 1 In it they disposed of the said property as follows:

EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF DECEASED PERFECTA BALANE DE CORDERO. This agreement made this 20th day of May, 1946, by and between Felipe Balane and Juana Balane de Suterio, both of age and residents of Macalelon, Tayabas, Philippines. W I T N E S S E T H: That whereas, the said Felipe Balane and Juana Balane de Suterio are the only brother and sister respectively and forced heirs of Perfects Balane de Cordero who dies intestate on January 21, 1945; That whereas, the said Perfects Balane de Cordero, deceased, left property described as follows: TRANSFER CERTIFICATE OF TITLE NO. 4671. Province of Tayabas. A parcel of land (Lot No. 6-A, Plan Psu-12210), with all buildings and improvements except those herein expressly noted as belonging to other person, situated in the barrio of Luctol, Municipality of Macalelon. Bounded on the NE., by Lot No. 6-B; on the E., by property by Andrea Fernandez, the sapa Luctob and the sapa Patay; on the SE., by properties of Andrea Fernandez and Silvestra Mereis; on the SW., by properties of Felix Rodriguez, Dionisio Fornea, Placido Abistado and Adriano Abistado and the mangrove of the government; and on the NW., by properties of Orilleneda, Mariano Glindro, Maxima Orilleneda, Placida Forcados and Basilio Rabe. . . containing an area of TWO HUNDRED EIGHTY-FIVE THOUSAND THREE HUNDRED FIFTY-THREE SQUARE METERS (285,358) more or less. That whereas, we Felipe Balane and Juana Balane de Suterio, the only heirs of the property described above left by the deceased Perfects Balane de Cordero, do hereby agree in carrying out the antemortem wish of our beloved deceased sister that in consideration of love and affection the property described above be donated to Salud Suterio de Matias. That whereas, the estate left by the said Perfecta Balane de Castro, deceased, is not free from obligation or debt. It has an incumbrance of about ONE THOUSAND PESOS (P1,000.00) to the Philippine National Bank, Tayabas Branch. That whereas, Salud Suterio de Matias, to whom this property is donated extra-judicially as agreed upon by both heirs, shall assume the said obligation to the Philippine National Bank, Tayabas Branch. NOW, THEREFORE, we Felipe Balane and Juana Balane de Suterio have mutually agreed and covenanted to adjudicate, give, transfer and convey the property described above to Salud Suterio de Matias heirs, executors, administrators and assign. And the donee does hereby accept this donation and does hereby express her gratitude for the kindness and liberality of the donor.

IN WITNESS WHEREOF, we have hereunto set our hands this 20th day of May, 1946. (Sgd.) FELIPE BALANE FELIPE BALANE (Sgd.) JUANA BALANE DE SUTERIO JUANA BALANE DE SUTERIO (Acknowledgment) On June 20,1946, Salud Suterio executed the following public instrument, 2 with petitioner Eufemia Pajarillo was one of the witnesses: KNOW ALL MEN BY THESE PRESENTS: That on May 20, 1946, FELIPE BALANE and JUANA BALANE DE SUTERIO, the only heirs to the properties of the late PERFECTA BALANE DE CORDERO, executed a DEED OF DONATION in favor of the undersigned and the said donation was made in accordance to the antemortem wish of my late aunt, Parfecta Balane de Cordero, to the effect that the property described in the Deed of Donation, be given to me because of her love and affection for me, being her only niece. That, I, SALUD SUTERIO DE MATIAS, the only DONEE, do hereby receive and accept this donation and further express my gratitude for the kindness and liberality of the DONORS, FELIPE BALANE and JUANA BALANE DE SUTERIO. IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1946. (Sgd.) SALUD SUTERIO DE MATIAS SALUD SUTERIO DE MATIAS Donee Signed in the presence of: (Sgd.) SOFRONIO BALANE.

(Sgd.) EUFEMIA P. SUTERIO (Acknowledgment)

These instruments were never registered nor was title transferred in Salud's name although she says she immediately took possession of the land. Meantime, intestate proceedings were instituted on the estate of Perfecta and the said land was among those included in the inventory of the properties belonging to the decedent. 3 Salud interposed no objection to its inclusion nor did she oppose its subsequent adjudication to her mother Juana in the project of partition. It is not clear if the land was ever registered in Juana's name. However, there is evidence that Juana confirmed the earlier donation of the land to Salud but requested that she be allowed to possess the same and enjoy its fruits until her death. 4 It has also not been controverted that Salud paid the P1,000.00 loan for which the land was mortgaged. Salud says that sometime in 1951, acceding to this request, she transferred the possession of the land to her mother, who was then staying with Claudio and his family. During the period they were occupying the land, Claudio paid the realty taxes thereon. 5 On May 25, 1956, Juana executed a deed of absolute sale conveying the land to Claudio for the declared consideration of P12,000.00. 7 Claudio died in 1961 and his mother in 1963. On June 30, 1965, the private respondents filed a complaint for the reconveyance of the property on the ground that the deed of sale in favor of Claudio was fictitious and its registration in his name was null and void. 8 Salud (joined by her husband) alleged that she was unaware until later of the supposed sale of the land to Claudio. She faulted it as having been procured through fraud and improper influence on her sick and aged mother. She claimed that no compensation was actually paid by Claudio and that the transaction was deliberately concealed from her by her brother and the defendants. 9 For their part, the defendants assailed the donation to Salud as legally in efficacious and defective and contended that her complaint was barred by prescription, estoppel and res judicata. They also filed a counter claim questioning the sale to Salud by her mother of another tract of land, in which they said they were entitled to share as Juana's heirs. 10 On April 17, 1979, Judge Juan M. Montecillo of the Court of First Instance of Quezon rendered judgment upholding the donation to the plaintiff and annulling the deed of sale and the registration of the land in favor of Claudio Suterio, Sr. The defendants were required to reconvey the land to Salud Suterio even as their counter claim was dismissed for lack of evidence. 11 On appeal, the decision was affirmed in toto. 12 The respondent court is now sought to be reversed in this petition for certiorari under Rule 45 of the Rules of Court. We hold at the outset that, contrary to the ruling in the challenged decision, the petitioners have the legal personality to challenge the validity of the donation on which Salud bases her claim to the property under litigation. As defendants in the complaint for reconveyance, they had every right to resist the plaintiffs' allegation that she was the owner of the subject property by virtue of the claimed donation. Recognition of that donation would topple the props of their own contention that Juana could dispose of the property as its owner when she sold it to Claudio Suterio in 1956. Cdpr

The petitioners also assail the intrinsic validity of the extrajudicial settlement and submit that it is not really a donation as conceptually understood in civil law. Their argument is that the real donor of the property was Perfecta, the deceased sister, who, however, could no longer bestow the intended gift. For their part, Felipe and Juana could not have made the donation either because they ware not moved by the same sentiments Perfecta had for her niece Salud. That feeling would have provided the required consideration if Perfecta herself had made the donation, but not the other two. This appears to be too muck nit-picking, if not sophistry. Felipe and Juana had declared themselves the heirs of Perfecta and the owners of the property in question. As such, they were free to give the land to whomever they pleased and for whatever reason they saw fit. Hence, if they chose to respect Perfecta's wishes and carry out her intentions by donating the land to Salud, there was no legal impediment to their doing so. In fact, that was not only the legal but also the moral thing to do. There is no question that Felipe and Juana could have simply disregarded their sister's sentiments and decided not to donate the property to Salud, keeping the same for themselves. The fact that they did not do this speaks well indeed of their integrity and their loyalty as well to their deceased sister. The extrajudicial settlement also reflects their own affection for Salud which constituted the valid consideration for their own act of liberality. Notably, in her acceptance of the donation, Salud referred to the donors Felipe Balane and Juana Balane de Suterio," and not Perfects. It is also pointed out that the donation is defective in form because of non-compliance with the requirements of the law regarding its acceptance. As it was executed in 1946, the applicable rule is Article 633 of the old Civil Code reading as follows: Art. 633.In order that a donation of real property be valid it must be made by public instrument in which the property donated must be optically described and the amount of the charges to be assumed by the donee expressed. The acceptance may be made in the deed of gift or in a separate public writing; but it shall produce no effect if not made during the lifetime of the donor. If the acceptance is made by separate public instrument, authentic notice thereof shall be given the donor, and this proceeding shall be noted in both instruments. There is no question that the donation was accepted in a separate public instrument and that it was duly communicated to the donors. Even the petitioners cannot deny this. But what they do contend is that such acceptance was not "noted in both instruments," meaning the extrajudicial partition itself and the instrument of acceptance, as required by the Civil Code.

That is perfectly true. There is nothing in either of the two instrument's showing that "authentic notice" of the acceptance was made by Salud to Juana and Felipe. And while the first instrument contains the statement that "the donee does hereby accept this donation

and does hereby express her gratitude for the kindness and liberality of the donor," the only signatories thereof were Felipe Balane and Juana Balane de Suterio. That was in fact the reason for the separate instrument of acceptance signed by Salud a month later. A strict interpretation of Article 633 can lead to no other conclusion than the annulment of the donation for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable language of the above-quoted provision. However, we find that under the circumstances of the present case, a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions. It is also a policy of the Court to avoid such an interpretation. The purpose of the formal requirement is to insure that the acceptance of the donation is duly communicated to the donor. In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that the donated land be not registered during her lifetime by Salud. 13 Given this significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance. That would be placing too much stress on mere form over substance. It would also disregard the clear reality of the acceptance of the donation as manifested in these separate instrument dated June 20, 1946, and as later acknowledged by Juana. The cases cited by the parties in their respective memoranda are not really in point. In Legasto v. Verzosa, 14 there was no evidence whatsoever that the claimed donations had been accepted, as stressed by Justice Villa-Real. The same observation is made of Santos v. Robledo, 15 where Justice Torres noted that the acceptance of the donation did not appear in the deed of donation or in any other instrument. The petitioners would also fault the private respondents for laches and argue that Salud's inaction in protection of her rights should bar her from asserting them at this late hour. Specifically, it is pointed out that she failed to register the deed of donation and its acceptance in 1946; did not oppose the inclusion of the subject land in the inventory of Perfecta's properties submitted in the intestate proceedings in 1946; did not object to the adjudication of the land to Juana in the project of partition in 1951; did not protest the sale of the land to Claudio Suterio in 1956; and did not question its registration in his name in 1958. It is contended that all these acts constitute inches, which has been described by this Court thus: An estoppel by laches arises from the negligence or omission to assert a right with a a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. 16 The problem with the petitioners' theory is that it would regard Juana and Salud as strangers when they are in fact mother and daughter. One may expect a person to be vigilant of his rights when dealing with an acquaintance or associate, or even with a friend, but not when the other person is a close relative, as in the case at bar. To begin with, the land came from Juana herself Secondly, she requested her daughter not to register the land as long as she was still alive so she could enjoy its fruits until her death. To Salud, it was not difficult to comply with this request, coming as it did from her own mother. There was no reason to

disobey her. She did not have to protect herself against her own mother. Indeed, what would have been unseemly was her registering the land against her mother's request as if she had no confidence in her. Salud did no less than what any dutiful daughter would have done under the circumstances. If Salud did not protest the inclusion of the land in the inventory of Perfecta's properties and its subsequent adjudication to Juana in the intestate proceedings, it was because she did not feel threatened by these acts. She did not distrust her mother. Moreover, Juana had herself acknowledged the donation when she was asked in whose name the property would be registered following the intestate proceedings. Salud felt safe because she had the extrajudicial settlement to rely on to prove that her mother and her uncle had donated the subject land to her. There is nothing in this instrument to suggest that the donation was to take effect upon the death of the donors as to make it a donation mortis causa, as urged by the petitioners. The donation became effective upon acceptance by Salud except that, in obedience to her mother's request, she chose not to register the land in the meantime and to allow her mother to enjoy its fruits. What was deferred was not its effectivity but only its enjoyment by Salud. Registration was not necessary to make the donation a binding commitment insofar as the donors and the donee were concerned. 17 As for her inaction against the deed of sale in favor of her brother Claudio, it should be noted in the first place that she was not aware of it when it was executed in 1956. Her mother, who was already 76 years old at the time, never informed her about it, nor did her brother or any of the defendants, for reasons of their own. It was only later, when the sale was registered in 1958 and a new title to the land was issued to Claudio, that she started asking questions. Even then, being a sister to Claudio, she did not immediately take legal steps. prLL It is natural, even among non-relatives, to seek a non-judicial settlement through extra-legal measures before going to court. It is more so in the case of relatives, who should avoid as much as possible the asperity and bitterness of litigation. That is what Salud did when she repeatedly asked the petitioners for the return of the property albeit to no avail. It was only when it became clear that amicable persuasion was not possible that she decided to sue the wife and children of her departed brother. The petitioners stress that it took Salud all of seven years from the registration of the land in Claudios's name before she filed the complaint for reconveyance against them. That is true. But if one remembers that her brother died only in 1961 and her own mother only in 1963, at the age of 83, it will be easy to understand the reason for the delay, which would otherwise have been unjustified. Suits among brothers and sisters are especially painful to their parents. Salud must have thought many times about filing her complaint against her brother Claudio while her old mother was still alive. In fact, Salud hesitated still even after her mother's death and took two more years before she finally filed her complaint against Claudio's wife and children. It is clear that Juana Balane de Suterio had no right to sell the subject land to Claudio because she was no longer its owner, having previously donated it to her daughter Salud.

Juana herself was holding the land merely as a trustee of Salud, who had transferred possession to her mother at the old woman's request. The deed of sale was itself vitiated by bad faith as Claudio is presumed to have known of the previous donation to his sister Salud, whose acceptance of the donation was formally witnessed by his own wife, the herein principal petitioner. 18 When Claudio registered the land in his name knowing there was a flaw in his title, an implied trust was created in favor of Salud as the real owner of the property in accordance with Article 1456 of the Civil Code, reading as follows: If the 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. As trustor, Salud had every right to sue for the recovery of the land in the action for reconveyance against Claudio's heirs. As we said in Vda. de Jacinto, et al. v. Vda. de Jacinto, et al.: 19 Public policy demands that a person guilty of fraud or at least, of breach of trust, should not be allowed to use a Torrens title as a shield against the consequences of his own wrongdoing. The petitioners do not insist on prescription as a bar to the action for reconveyance, and understandably so. The legal principle is that if the registration of the land is fraudulent and the person in whose name the land is registered thus holds it as a mere trustee, the real owner is entitled to file an action for reconveyance of the property within a period of ten years. As we have held in many cases: Where the action is one for reconveyance based on constructive trust, a ten-year period is allowed. 20 An action for reconveyance of realty, based upon a constructive or implied trust resulting from fraud, may be barred by prescription. The prescriptive period is reckoned from the issuance of the title which operates as a constructive notice. 21 While actions to enforce a constructive trust prescribe in 10 years from registration of the property, private respondents' right commenced from actual discovery of petitioner's act of defraudation. 22 The record shows that while the land was registered in the name of Claudio Suterio, Sr. in 1958, the complaint for reconveyance was filed by the petitioners in 1965, or still within the ten-year prescriptive period. The last issue raised by the petitioners, viz., the validity of the deed of sale executed by Juana Balane de Suterio on January 29, 1950, in favor of Salud Suterio, 23 need not detain us too long. The trial court sustained the contract for lack of sufficient evidence to invalidate it and was upheld by the respondent court. We see no reason to disturb their factual finding, absents showing that it was reached arbitrarily. Interestingly, it occurred to the petitioners to question the transaction only when they were sued by the private respondents, after fifteen years from the date of the sale. This is an even longer period than the nine years

during which the petitioners say Salud Suterio was sleeping on her rights following the sale of her land to Claudio Suterio. WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered. Persons who may give or receive a donation [G.R. No. 146683. November 22, 2001.] CIRILA ARCABA, petitioner, vs. ERLINDA TABANCURA VDA. DE BATOCAEL, SEIGFREDO C. TABANCURA, DORIS C. TABANCURA, LUZELLI C. TABANCURA, BELEN C. TABANCURA, RAUL A. COMILLE, BERNADETTE A. COMILLE, and ABNER A. COMILLE, respondents. Pacatang Barbaso and Pacatang Law Offices for petitioner. Feliciano M. Maraon for respondents. SYNOPSIS Having no children to take care of him after his retirement, Francisco Comille, then a widower, asked his niece Leticia Bellosillo, the latter's cousin, Luzviminda Paghacian, and petitioner Cirila Arcaba to take care of his house, as well as the store inside. A few months before his death, Francisco executed an instrument denominated "Deed of Donation Inter Vivos," in which he ceded a portion of his lot consisting of 150 square meters, together with his house, to Cirila, who accepted the donation in the same instrument. Respondents filed a complaint against petitioner for declaration of nullity of a deed of donation inter vivos, recovery of possession, and damages. Respondents, who are Francisco's nephews and nieces and his heirs by intestate succession, alleged that Cirila was the common-law wife of Francisco, and the donation inter vivos made by Francisco in her favor is void under Article 87 of the Family Code. Conflicting testimonies were offered as to the nature of the relationship between Cirila and Francisco. Leticia Bellosillo said Francisco and Cirila were lovers since they slept in the same room, while Erlinda Tabancura, another niece of Francisco, claimed that the latter had told her that Cirila was his mistress. On the other hand, Cirila said she was a mere helper who could enter the master's bedroom only when the old man asked her to and that Francisco in any case was too old for her. She denied they ever had sexual intercourse. The trial court rendered judgment in favor of respondents, holding the donation void under the provision of the Family Code. On appeal, the Court of Appeals affirmed the decision of the trial court. Hence, the present petition. The main issue is whether Cirila is an employee or the common-law wife of Francisco. The Supreme Court affirmed the decision of the Court of Appeals. According to the Court, human reason would lead to the conclusion that Cirila was Francisco's common-law spouse. Cirila admitted that she and Francisco resided under one roof for a long time and the possibility that the two consummated their relationship could be established from Leticia Bellosillo's testimony that Cirila and Francisco slept in the same bedroom. The Court also considered the fact that Cirila signed some documents using Francisco's surname clearly indicating that she saw herself as Francisco's common-law wife, otherwise, she would not have used his last name. Also, the fact that Cirila did not demand from Francisco a regular

cash wage is an indication that she was not simply a caregiver-employee, but Francisco's common law spouse. She was, after all, entitled to a regular cash wage under the law and it is difficult to believe that she stayed with Francisco and served him out of pure beneficence. Their public conduct, therefore, indicated that theirs was not just a relationship of caregiver and patient, but that of exclusive partners akin to husband and wife. SYLLABUS 1.CIVIL LAW; FAMILY CODE; PROPERTY RELATIONS BETWEEN HUSBAND AND WIFE; VOID DONATIONS; COHABITATION IS THE PUBLIC ASSUMPTION BY A MAN A WOMAN OF THE MARITAL RELATION, AND DWELLING TOGETHER AS MAN AND WIFE, THEREBY HOLDING THEMSELVES OUT TO THE PUBLIC AS SUCH. We previously held that the term "cohabitation" or "living together as husband and wife" means not only residing under one roof, but also having repeated sexual intercourse. Cohabitation, of course, means more than sexual intercourse, especially when one of the parties is already old and may no longer be interested in sex. At the very least, cohabitation is the public assumption by a man and a woman of the marital relation, and dwelling together as man and wife, thereby holding themselves out to the public as such. Secret meetings or nights clandestinely spent together, even if often repeated, do not constitute such kind of cohabitation; they are merely meretricious. In this jurisdiction, this Court has considered as sufficient proof of common-law relationship the stipulations between the parties, a conviction of concubinage or the existence of illegitimate children. 2.ID.; ID.; ID.; DONATION MADE IN FAVOR OF A COMMON-LAW SPOUSE IS VOID UNDER THE FAMILY CODE; CASE AT BAR. Cirila admitted that she and Francisco resided under one roof for a long time. It is very possible that the two consummated their relationship, since Cirila gave Francisco therapeutic massage and Leticia said they slept in the same bedroom. At the very least, their public conduct indicated that theirs was not just a relationship of caregiver and patient, but that of exclusive partners akin to husband and wife. Aside from Erlinda Tabancura's testimony that her uncle told her that Cirila was his mistress, there are other indications that Cirila and Francisco were common-law spouses. Seigfredo Tabancura presented documents apparently signed by Cirila using the surname "Comille." As previously stated, these are an application for a business permit to operate as a real estate lessor, a sanitary permit to operate as real estate lessor with a health certificate, and the death certificate of Francisco. These documents show that Cirila saw herself as Francisco's common-law wife, otherwise, she would not have used his last name. Similarly, in the answer filed by Francisco's lessees in "Erlinda Tabancura, et al. vs. Gracia Adriatico Sy and Antonio Sy," RTC Civil Case No. 4719 (for collection of rentals), these lessees referred to Cirila as "the common-law spouse of Francisco." Finally, the fact that Cirila did not demand from Francisco a regular cash wage is an indication that she was not simply a caregiveremployee, but Francisco's common law spouse. She was, after all, entitled to a regular cash wage under the law. It is difficult to believe that she stayed with Francisco and served him out of pure beneficence. Human reason would thus lead to the conclusion that she was Francisco's common-law spouse. Respondents having proven by a preponderance of evidence that Cirila and Francisco lived together as husband and wife without a valid marriage, the inescapable conclusion is that the donation made by Francisco in favor of Cirila is void under Art. 87 of the Family Code. IEaATD

DECISION MENDOZA, J p: Petitioner Cirila Arcaba seeks review on certiorari of the decision 1 of the Court of Appeals, which affirmed with modification the decision 2 of the Regional Trial Court, Branch 10, Dipolog City, Zamboanga del Norte in Civil Case No. 4593, declaring as void a deed of donation inter vivos executed by the late Francisco T. Comille in her favor and its subsequent resolution 3 denying reconsideration. The facts are as follows: On January 16, 1956, Francisco Comille and his wife Zosima Montallana became the registered owners of Lot No. 437-A located at the corner of Calle Santa Rosa (now Balintawak Street) and Calle Rosario (now Rizal Avenue) in Dipolog City, Zamboanga del Norte. The total area of the lot was 418 square meters. 4 After the death of Zosima on October 3, 1980, Francisco and his mother-in-law, Juliana Bustalino Montallana, executed a deed of extrajudicial partition with waiver of rights, in which the latter waived her share consisting of one-fourth (1/4) of the property to Francisco. 5 On June 27, 1916, Francisco registered the lot in his name with the Registry of Deeds. 6 Having no children to take care of him after his retirement, Francisco asked his niece Leticia Bellosillo, 7 the latter's cousin, Luzviminda Paghacian, 8 and petitioner Cirila Arcaba, then a widow, to take care of his house, as well as the store inside. 9

Conflicting testimonies were offered as to the nature of the relationship between Cirila and Francisco. Leticia Bellosillo said Francisco and Cirila were lovers since they slept in the same room, 10 while Erlinda Tabancura, 11 another niece of Francisco, claimed that the latter had told her that Cirila was his mistress. 12 On the other hand, Cirila said she was a mere helper who could enter the master's bedroom only when the old man asked her to and that Francisco in any case was too old for her. She denied they ever had sexual intercourse. 13 It appears that when Leticia and Luzviminda were married, only Cirila was left to take care of Francisco. 14 Cirila testified that she was a 34-year old widow while Francisco was a 75-year old widower when she began working for the latter; that he could still walk with her assistance at that time; 15 and that his health eventually deteriorated and he became bedridden. 16 Erlinda Tabancura testified that Francisco's sole source of income consisted of rentals from his lot near the public streets. 17 He did not pay Cirila a regular cash wage as a househelper, though he provided her family with food and lodging. 18 On January 24, 1991, a few months before his death, Francisco executed an instrument denominated "Deed of Donation Inter Vivos," in which he ceded a portion of Lot 437-A, consisting of 150 square meters, together with his house, to Cirila, who accepted the donation in the same instrument. Francisco left the larger portion of 268 square meters in his name. The deed stated that the donation was being made in consideration of "the faithful services [Cirila Arcaba] had rendered over the past ten (10) years." The deed was

notarized by Atty. Vic T. Lacaya, Sr. 19 and later registered by Cirila as its absolute owner. 20 On October 4, 1991, Francisco died without any children. In 1993, the lot which Cirila received from Francisco had a market value of P57,105.00 and an assessed value of P28,550.00. 21

On February 18, 1993, respondents filed a complaint against petitioner for declaration of nullity of a deed of donation inter vivos, recovery of possession, and damages. Respondents, who are the decedent's nephews and nieces and his heirs by intestate succession, alleged that Cirila was the common-law wife of Francisco and the donation inter vivos made by Francisco in her favor is void under Article 87 of the Family Code, which provides: Every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void, except moderate gifts which the spouses may give each other on the occasion of any family rejoicing. The prohibition shall also apply to persons living together as husband and wife without a valid marriage. On February 25, 1999, the trial court rendered judgment in favor of respondents, holding the donation void under this provision of the Family Code. The trial court reached this conclusion based on the testimony of Erlinda Tabancura and certain documents bearing the signature of one "Cirila Comille." The documents were (1) an application for a business permit to operate as real estate lessor, dated January 8, 1991, with a carbon copy of the signature "Cirila Comille"; 22 (2) a sanitary permit to operate as real estate lessor with a health certificate showing the signature "Cirila Comille" in black ink; 23 and (3) the death certificate of the decedent with the signature "Cirila A. Comille" written in black ink. 24 The dispositive portion of the trial court's decision states: WHEREFORE, in view of the foregoing, judgment is rendered: 1.Declaring the Deed of Donation Inter Vivos executed by the late Francisco Comille recorded as Doc. No. 7; Page No. 3; Book No. V; Series of 1991 in the Notarial Register of Notary Public Vic T. Lacaya (Annex "A" to the Complaint) null and void; 2.Ordering the defendant to deliver possession of the house and lot subject of the deed unto the plaintiffs within thirty (30) days after finality of this decision; and finally 3.Ordering the defendant to pay attorney's fees in the sum of P10,000.00. SO ORDERED. 25 Petitioner appealed to the Court of Appeals, which rendered on June 19, 2000 the decision subject of this appeal. As already stated, the appeals court denied reconsideration. Its conclusion was based on (1) the testimonies of Leticia, Erlinda, and Cirila; (2) the copies of documents purportedly showing Cirila's use of Francisco's surname; (3) a pleading in

another civil case mentioning payment of rentals to Cirila as Francisco's common-law wife; and (4) the fact that Cirila did not receive a regular cash wage. Petitioner assigns the following errors as having been committed by the Court of Appeals: (a)The judgment of the Court of Appeals that petitioner was the common-law wife of the late Francisco Comille is not correct and is a reversible error because it is based on a misapprehension of facts, and unduly breaks the chain of circumstances detailed by the totality of the evidence, its findings being predicated on totally incompetent or hearsay evidence, and grounded on mere speculation, conjecture or possibility. (Salazar v. Gutierrez, 33 SCRA 243 and other cases; cited in Quiason, Philippine Courts and their Jurisdictions, 1993 ed., p. 604) (b)The Court of Appeals erred in shifting the burden of evidence from the plaintiff to defendant. (Bunyi v. Reyes, 39 SCRA 504; Quiason, id.) (c)The Court of Appeals decided the case in a way probably not in accord with law or with the applicable jurisprudence in Rodriguez v. Rodriguez, 20 SCRA 908, and Liguez v. CA, 102 Phil. 577, 584. 26 The issue in this case is whether the Court of Appeals correctly applied Art. 87 of the Family Code to the circumstances of this case. After a review of the records, we rule in the affirmative. The general rule is that only questions of law may be raised in a petition for review under Rule 45 of the Rules of Court, subject only to certain exceptions: (a) when the conclusion is a finding grounded entirely on speculations, surmises, or conjectures; (b) when the inference made is manifestly mistaken, absurd, or impossible; (c) where there is grave abuse of discretion; (d) when the judgment is based on a misapprehension of facts; (e) when the findings of fact are conflicting; (f) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee; (g) when the findings of the Court of Appeals are contrary to those of the trial court; (h) when the findings of fact are conclusions without citation of specific evidence on which they are based; (i) when the finding of fact of the Court of Appeals is premised on the supposed absence of evidence but is contradicted by the evidence on record; and j) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion. 27 It appearing that the Court of Appeals based its findings on evidence presented by both parties, the general rule should apply. In Bitangcor v. Tan, 28 we held that the term "cohabitation" or "living together as husband and wife" means not only residing under one roof, but also having repeated sexual intercourse. Cohabitation, of course, means more than sexual intercourse, especially when one of the parties is already old and may no longer be interested in sex. At the very least, cohabitation is the public assumption by a man and a woman of the marital relation, and dwelling together as man and wife, thereby holding themselves out to the public as such. Secret meetings or nights clandestinely spent together, even if often repeated, do not constitute such kind of cohabitation; they are merely meretricious. 29 In this jurisdiction, this

Court has considered as sufficient proof of common-law relationship the stipulations between the parties, 30 a conviction of concubinage, 31 or the existence of illegitimate children. 32 Was Cirila Francisco's employee or his common-law wife? Cirila admitted that she and Francisco resided under one roof for a long time. It is very possible that the two consummated their relationship, since Cirila gave Francisco therapeutic massage and Leticia said they slept in the same bedroom. At the very least, their public conduct indicated that theirs was not just a relationship of caregiver and patient, but that of exclusive partners akin to husband and wife. Aside from Erlinda Tabancura's testimony that her uncle told her that Cirila was his mistress, there are other indications that Cirila and Francisco were common-law spouses. Seigfredo Tabancura presented documents apparently signed by Cirila using the surname "Comille." As previously stated, these are an application for a business permit to operate as a real estate lessor, 33 a sanitary permit to operate as real estate lessor with a health certificate, 34 and the death certificate of Francisco. 35 These documents show that Cirila saw herself as Francisco's common-law wife, otherwise, she would not have used his last name. Similarly, in the answer filed by Francisco's lessees in "Erlinda Tabancura, et al. vs. Gracia Adriatico Sy and Antonio Sy," RTC Civil Case No. 4719 (for collection of rentals), these lessees referred to Cirila as "the common-law spouse of Francisco." Finally, the fact that Cirila did not demand from Francisco a regular cash wage is an indication that she was not simply a caregiver-employee, but Francisco's common law spouse. She was, after all, entitled to a regular cash wage under the law. 36 It is difficult to believe that she stayed with Francisco and served him out of pure beneficence. Human reason would thus lead to the conclusion that she was Francisco's common-law spouse. Respondents having proven by a preponderance of evidence that Cirila and Francisco lived together as husband and wife without a valid marriage, the inescapable conclusion is that the donation made by Francisco in favor of Cirila is void under Art. 87 of the Family Code. WHEREFORE, the decision of the Court of Appeals affirming the decision of the trial court is hereby AFFIRMED. SO ORDERED. Making and acceptance of donation [G.R. No. 132681. December 3, 2001.] RICKY Q. QUILALA, petitioner, vs. GLICERIA ALCANTARA, LEONORA ALCANTARA, INES REYES and JOSE REYES, respondent. Feria Feria Lugtu D'Noche for petitioner. Teddy C. Macapagal for respondents. SYNOPSIS

Catalina Quilala executed a Donation of Real Property Inter Vivos in favor of Violeta Quilala over a parcel of land. Here in issue is the validity of the said Deed of Donation. As the Deed of Donation complied with the requirements provided under Art. 749 of the Civil Code, the Deed is valid. The fact that the second page of the Deed of Donation on which only the Acknowledgment appeared was signed by the donor and one witness on the lefthand margin, and by the donee and the other witness on the right-hand margin, the same does not affect the validity of the instrument. The requirement that the contracting parties and their witnesses should sign on the left-hand margin of the instrument is merely to ensure that each and every page of the instrument is authenticated by the parties. Further, although the donee was not mentioned by the notary public in the Acknowledgment, the same does not render the page a private instrument as the donee nevertheless signed on that second page. The acceptance, which was explicitly set forth on the first page of the notarized Deed of Donation, was, therefore, made in a public instrument. SYLLABUS 1.CIVIL LAW; MODES OF ACQUIRING OWNERSHIP; DONATION OF AN IMMOVABLE; REQUIREMENTS. Under Article 749 of the Civil Code, the donation of an immovable must be made in a public instrument in order to be valid, specifying therein the property donated and the value of the charges which the donee must satisfy. As a mode of acquiring ownership, donation results in an effective transfer of title over the property from the donor to the donee, and is perfected from the moment the donor knows of the acceptance by the donee, provided the donee is not disqualified or prohibited by law from accepting the donation. Once the donation is accepted, it is generally considered irrevocable, and the donee becomes the absolute owner of the property. The acceptance, to be valid, must be made during the lifetime of both the donor and the donee. It may be made in the same deed or in a separate public document, and the donor must know the acceptance by the donee. 2.ID.; ID.; ID.; CONSIDERATION OF AFFECTION AND GENEROSITY VALID. The Deed of Donation stipulated that the donation was made for and in consideration of the "love and affection which the DONEE inspires in the DONOR, and as an act of liberality and generosity." This was sufficient cause for a donation. Indeed, donation is legally defined as "an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it." 3.ID.; ID.; ID.; REGISTRATION THEREOF UNDER PD 1529; REQUIREMENT THAT CONTRACTING PARTIES AND WITNESSES SIGN ON THE LEFT-HAND MARGIN, NOT ABSOLUTE. The second page of the deed of donation, on which the Acknowledgment appears, was signed by the donor and one witness on the left-hand margin, and by the donee and the other witness on the right-hand margin. Surely, the requirement under Section 112, par. 2 of PD No. 1529 that the contracting parties and their witnesses should sign on the left-hand margin of the instrument is not absolute. The intendment of the law merely is to ensure that each and every page of the instrument is authenticated by the parties. The requirement is designed to avoid the falsification of the contract after the same has already been duly executed by the parties. Hence, a contracting party affixes his signature on each page of the instrument to certify that he is agreeing to everything that is written thereon at the time of signing. Simply put, the specification of the location of the signature is merely directory: The fact that one of

the parties signs on the wrong side of the page does not invalidate the document. The purpose of authenticating the page is served, and the requirement in the above-quoted provision is deemed substantially complied with. 4.ID.; ID.; ID.; NATURE OF THE INSTRUMENT AND ITS VALIDITY, NOT AFFECTED BY DONEE'S LACK OF ACKNOWLEDGMENT BEFORE THE NOTARY PUBLIC. The lack of an acknowledgment by the donee before the notary public does not also render the donation null and void. The instrument should be treated in its entirety. It cannot be considered a private document in part and a public document in another part. The fact that it was acknowledged before a notary public converts the deed of donation in its entirety a public instrument. The fact that the donee was not mentioned by the notary public in the acknowledgment is of no moment. To be sure, it is the conveyance that should be acknowledged as a free and voluntary act. In any event, the donee signed on the second page, which contains the Acknowledgment only. Her acceptance, which is explicitly set forth on the first page of the notarized deed of donation, was made in a public instrument. 5.ID.; ID.; ID.; RELATED MATTERS IN CONSIDERATION. The donation, which we declare herein to be valid, will still be subjected to a test on its inofficiousness under Article 771, in relation to Articles 752, 911 and 912 of the Civil Code. Moreover, property donated inter vivos is subject to collation after the donor's death, whether the donation was made to a compulsory heir or a stranger, unless there is an express prohibition if that had been the donor's intention. EaICAD DECISION YNARES-SANTIAGO, J p: On February 20, 1981, Catalina Quilala executed a "Donation of Real Property Inter Vivos" in favor of Violeta Quilala over a parcel of land located in Sta. Cruz, Manila, containing an area of 94 square meters, and registered in her name under Transfer Certificate of Title No. 17214 of the Register of Deeds for Manila. EITcaD The "Donation of Real Property Inter Vivos" consists of two pages. The first page contains the deed of donation itself, and is signed on the bottom portion by Catalina Quilala as donor, Violeta Quilala as donee, and two instrumental witnesses. 1 The second page contains the Acknowledgment, which states merely that Catalina Quilala personally appeared before the notary public and acknowledged that the donation was her free and voluntary act and deed. There appear on the left-hand margin of the second page the signatures of Catalina Quilala and one of the witnesses, and on the right-hand margin the signatures of Violeta Quilala and the other witness. 2 The Acknowledgment reads: REPUBLIC OF THE PHILIPPINES ) QUEZON CITY) S.S. Before Me, a Notary Public, for and in the City of Quezon, Philippines, this 20th day of Feb. 1981, personally appeared CATALINA QUILALA, with Residence Certificate No. 19055265 issued at Quezon City on February 4, 1981, known to me and to me known to be the same

person who executed the foregoing instruments and acknowledged to me that the same is her own free and voluntary act and deed. I hereby certify that this instrument consisting of two (2) pages, including the page on which this acknowledgment is written, has been signed by CATALINA QUILALA and her instrumental witnesses at the end thereof and on the left-hand margin of page 2 and both pages have been sealed with my notarial seal. In witness whereof, I have hereunto set my hand, in the City of Quezon, Philippines, this 20th day of Feb., 1981. (SGD.) NOTARY PUBLIC Until December 31, 1981 (illegible) DOC NO. 22; PAGE NO. 6; BOOK NO. XV; SERIES OF 1981. The deed of donation was registered with the Register of Deeds and, in due course, TCT No. 17214 was cancelled and TCT No. 143015 was issued in the name of Violeta Quilala. On November 7, 1983, Catalina Quilala died. Violeta Quilala likewise died on May 22, 1984. Petitioner Ricky Quilala alleges that he is the surviving son of Violeta Quilala. Meanwhile, respondents Gliceria Alcantara, Leonora Alcantara, Ines Reyes and Juan Reyes, claiming to be Catalina's only surviving relatives within the fourth civil degree of consanguinity, executed a deed of extrajudicial settlement of estate, dividing and adjudicating unto themselves the above-described property. On September 13, 1984, respondents instituted against petitioner and Guillermo T. San Pedro, the Registrar of Deeds of Manila, an action for the declaration of nullity of the donation inter vivos, and for the cancellation of TCT No. 143015 in the name of Violeta Quilala. The case was docketed as Civil Case No. 84-26603 of the Regional Trial Court of Manila, Branch 17. Subsequently, respondents withdrew their complaint as against Guillermo T. San Pedro and he was dropped as a party-defendant. The trial court found that the deed of donation, although signed by both Catalina and Violeta, was acknowledged before a notary public only by the donor, Catalina. Consequently, there was no acceptance by Violeta of the donation in a public instrument, thus rendering the donation null and void. Furthermore, the trial court held that nowhere in Catalina's SSS records does it appear that Violeta was Catalina's daughter. Rather, Violeta was referred to

therein as an adopted child, but there was no positive evidence that the adoption was legal. On the other hand, the trial court found that respondents were first cousins of Catalina Quilala. However, since it appeared that Catalina died leaving a will, the trial court ruled that respondents' deed of extrajudicial settlement can not be registered. The trial court rendered judgment as follows: WHEREFORE, judgment is hereby rendered in favor of plaintiffs Gliceria Alcantara, Leonarda Alcantara, Ines Reyes and Juan Reyes and against defendant Ricky A. Quilala, as follows: 1.Declaring null and void the deed of donation of real property inter vivos executed on February 20, 1981 by Catalina Quilala in favor of Violeta Quilala (Exhs. A as well as 11 and 11-A.); 2.Ordering the Register of Deeds of Manila to cancel Transfer Certificate of Title No. 143015 in the name of Violeta Quilala and to issue a transfer certificate of title in the name of the Estate of Catalina Quilala;.

3.Dismissing the complaint insofar as it seeks the registration of the deed of extrajudicial settlement (Exhs. B and B-1.) and the issuance by the Register of Deeds of Manila of a transfer certificate of title in the names of the plaintiffs; and 4.Dismissing the counterclaim of defendant Ricky A. Quilala. No costs. SO ORDERED. 3 Petitioner appealed the aforesaid decision. On July 30, 1997, the Court of Appeals rendered a decision affirming with modification the decision of the trial court by dismissing the complaint for lack of cause of action without prejudice to the filing of probate proceedings of Catalina's alleged last will and testament. 4 WHEREFORE, the appealed decision is hereby AFFIRMED with the following MODIFICATION: (3)DISMISSING the complaint for lack of cause of action without prejudice to the filing of the necessary probate proceedings by the interested parties so as not to render nugatory the right of the lawful heirs. Petitioner filed a motion for reconsideration, which the Court of Appeals denied on February 11, 1998. 5 Hence, this petition for review, raising the following assignment of errors: A.THE COURT OF APPEALS ERRED IN RULING THAT THE DEED OF DONATION OF REAL PROPERTY INTER-VIVOS IS NOT REGISTRABLE. B.THE COURT OF APPEALS ERRED ON UPHOLDING THE LOWER COURT'S RULING THAT VIOLETA QUILALA IS NOT THE DAUGHTER OF CATALINA QUILALA. 6

The principal issue raised is the validity of the donation executed by Catalina in favor of Violeta. Under Article 749 of the Civil Code, the donation of an immovable must be made in a public instrument in order to be valid, 7 specifying therein the property donated and the value of the charges which the donee must satisfy. As a mode of acquiring ownership, donation results in an effective transfer of title over the property from the donor to the donee, 8 and is perfected from the moment the donor knows of the acceptance by the donee, 9 provided the donee is not disqualified or prohibited by law from accepting the donation. Once the donation is accepted, it is generally considered irrevocable, 10 and the donee becomes the absolute owner of the property. 11 The acceptance, to be valid, must be made during the lifetime of both the donor and the donee. 12 It may be made in the same deed or in a separate public document, 13 and the donor must know the acceptance by the donee. 14 In the case at bar, the deed of donation contained the number of the certificate of title as well as the technical description of the real property donated. It stipulated that the donation was made for and in consideration of the "love and affection which the DONEE inspires in the DONOR, and as an act of liberality and generosity." 15 This was sufficient cause for a donation. Indeed, donation is legally defined as "an act of liberality whereby a person disposes gratuitously of a thing or right in favor of another, who accepts it." 16 The donee's acceptance of the donation was explicitly manifested in the penultimate paragraph of the deed, which reads: DHcSIT That the DONEE hereby receives and accepts the gift and donation made in her favor by the DONOR and she hereby expresses her appreciation and gratefulness for the kindness and generosity of the DONOR. 17 Below the terms and stipulations of the donation, the donor, donee and their witnesses affixed their signature. However, the Acknowledgment appearing on the second page mentioned only the donor, Catalina Quilala. Thus, the trial court ruled that for Violeta's failure to acknowledge her acceptance before the notary public, the same was set forth merely on a private instrument, i.e., the first page of the instrument. We disagree. The pertinent provision is Section 112, paragraph 2 of Presidential Decree No. 1529, which states: Deeds, conveyances, encumbrances, discharges, powers of attorney and other voluntary instruments, whether affecting registered or unregistered land, executed in accordance with law in the form of public instruments shall be registrable: Provided, that, every such instrument shall be signed by person or persons executing the same in the presence of at least two witnesses who shall likewise sign thereon, and shall be acknowledged to be the free act and deed of the person or persons executing the same before a notary public or other public officer authorized by law to take acknowledgment. Where the instrument so acknowledged consists of two or more pages including the page whereon acknowledgment is written, each page of the copy which is to be registered in the office of the Register of Deeds, or if registration is not contemplated, each page of the copy to be kept by the notary public, except the page where the signatures already appear at the foot of the instrument,

shall be signed on the left margin thereof by the person or persons executing the instrument and their witnesses, and all the pages sealed with the notarial seal, and this fact as well as the number of pages shall be stated in the acknowledgment. Where the instrument acknowledged relates to a sale, transfer, mortgage or encumbrance of two or more parcels of land, the number thereof shall likewise be set forth in said acknowledgment." (italics ours). As stated above, the second page of the deed of donation, on which the Acknowledgment appears, was signed by the donor and one witness on the left-hand margin, and by the donee and the other witness on the right hand margin. Surely, the requirement that the contracting parties and their witnesses should sign on the left-hand margin of the instrument is not absolute. The intendment of the law merely is to ensure that each and every page of the instrument is authenticated by the parties. The requirement is designed to avoid the falsification of the contract after the same has already been duly executed by the parties. Hence, a contracting party affixes his signature on each page of the instrument to certify that he is agreeing to everything that is written thereon at the time of signing. Simply put, the specification of the location of the signature is merely directory. The fact that one of the parties signs on the wrong side of the page, does not invalidate the document. The purpose of authenticating the page is served, and the requirement in the above-quoted provision is deemed substantially complied with. In the same vein, the lack of an acknowledgment by the donee before the notary public does not also render the donation null and void. The instrument should be treated in its entirety. It cannot be considered a private document in part and a public document in another part. The fact that it was acknowledged before a notary public converts the deed of donation in its entirety a public instrument. The fact that the donee was not mentioned by the notary public in the acknowledgment is of no moment. To be sure, it is the conveyance that should be acknowledged as a free and voluntary act. In any event, the donee signed on the second page, which contains the Acknowledgment only. Her acceptance, which is explicitly set forth on the first page of the notarized deed of donation, was made in a public instrument. It should be stressed that this Court, not being a trier of facts, can not make a determination of whether Violeta was the daughter of Catalina, or whether petitioner is the son of Violeta. These issues should be ventilated in the appropriate probate or settlement proceedings affecting the respective estates of Catalina and Violeta. Suffice it to state that the donation, which we declare herein to be valid, will still be subjected to a test on its inofficiousness under Article 771, 18 in relation to Articles 752, 911 and 912 of the Civil Code. Moreover, property donated inter vivos is subject to collation after the donor's death, 19 whether the donation was made to a compulsory heir or a stranger, 20 unless there is an express prohibition if that had been the donor's intention. 21 DaTICc WHEREFORE, in view of the foregoing, the petition is GRANTED. The appealed decision of the Court of Appeals is REVERSED and SET ASIDE, and a new judgment is rendered dismissing Civil Case No. 84-26603. SO ORDERED.

[G.R. No. 110644. October 30, 1998.] THE HEIRS OF SALUD DIZON SALAMAT, represented by Lucio Salamat and Danilo Salamat, VALENTA DIZON GARCIA, represented by Raymundo D. Garcia, Jr. as Attorney-in-Fact, THE HEIRS OF ANSELMA REYES DIZON, represented by Catalina Dizon Espinosa, petitioners, vs. NATIVIDAD DIZON TAMAYO, THE HEIRS OF EDUARDO DIZON, represented by Angela R. Dizon, THE HEIRS OF GAUDENCIO DIZON, represented by Maria Dizon Jocson, respondents. SYLLABUS 1.CIVIL LAW; PROPERTY; POSSESSION; TO CONSTITUTE THE FOUNDATION OF A PRESCRIPTIVE RIGHT, MUST BE ADVERSE AND UNDER A CLAIM OF TITLE; CASE AT BAR. Assuming that Agustin really made the donation to respondent, albeit orally, respondent cannot still claim ownership over the property. While it is true that a void donation may be the basis of ownership which may ripen into title by prescription, it is well settled that possession, to constitute the foundation of a prescriptive right, must be adverse and under a claim of title. cdasia 2.ID.; ID.; ID.; ACTUAL POSSESSION BY A POSSESSOR WILL NOT GIVE RISE TO THE INFERENCE THAT THE POSSESSION WAS ADVERSE; CASE AT BAR. Respondent was never in adverse and continuous possession of the property. It is undeniable that petitioners and respondent, being heirs of the deceased, are co-owners of the properties left by the latter. A co-ownership is a form of a trust, with each owner being a trustee for each other and possession of a co-owner shall not be regarded as adverse to other co-owners but in fact is beneficial to them. Mere actual possession by one will not give rise to the inference that the possession was adverse because a co-owner is, after all, entitled to possession of the property. In the case of Salvador v. Court of Appeals (243 SCRA 239 [1995]) we had occasion to state that a mere silent possession by a co-owner, his receipt of rents, fruits or profits from the property, the erection of buildings and fences and the planting of trees thereon and the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear and convincing evidence that he exercised acts of possession which unequivocably constituted an ouster or deprivation of the rights of the other co-owners. 3.ID.; ID.; CO-OWNERSHIP; ELEMENTS IN ORDER THAT A CO-OWNERSHIP'S POSSESSION MAY BE DEEMED ADVERSE; CASE AT BAR. The elements in order that a co-owner's possession may be deemed adverse to the cestui que trust or the co-owner are: (1) that he has performed unequivocal acts of repudiation amounting to ouster of the cestui que trust or other co-owners (2) that such positive acts or repudiation have been made known to the cestui que trust or other co-owners and (3) that the evidence thereon must be clear and convincing. Not one of the aforesaid requirements is present in the case at bar. There are two houses standing on the subject property. One is the house where respondent presently resides while the other is a house built by respondent's sister Valenta. Records show that the house on Lot 227 where the respondent lives is actually the ancestral house of the Dizons although respondent has remodelled it, constructed a piggery and has planted trees thereon. TIDcEH DECISION

ROMERO, J p: Before us is a petition for certiorari under Rule 45 of the Rules of Court seeking the reversal of the decision rendered by the Court of Appeals dated June 15, 1993. LLjur Agustin Dizon died intestate on May 15, 1942 leaving behind his five children Eduardo, Gaudencio, Salud, Valenta and Natividad as surviving heirs. Among the properties left by the decedent was a parcel of land in Barrio San Nicolas, Hagonoy, Bulacan, with an area of 2,188 square meters covered by Original Certificate of Title No. 10384. 1 On January 8, 1944, Eduardo sold his hereditary rights in the sum of P3,000 to his sister Salud Dizon Salamat. The sale was evidenced by a private document bearing the signatures of his sisters Valenta and Natividad as witnesses. 2 On June 2, 1949, Gaudencio likewise sold his hereditary rights for the sum of P4,000 to his sister Salud. The sale was evidenced by a notarized document which bore the signature of Eduardo Dizon and a certain Angela Ramos as witnesses. 3 Gaudencio died on May 30, 1951 leaving his daughters Priscila D. Rivera and Maria D. Jocson as heirs. Sometime in 1987, petitioners instituted an action for compulsory judicial partition of real properties registered in the name of Agustin Dizon with the Regional Trial Court, Branch 18 of Malolos, Bulacan. The action was prompted by the refusal of herein respondent Natividad Dizon Tamayo to agree to the formal distribution of the properties of deceased Agustin Dizon among his heirs. Respondent's refusal stemmed from her desire to keep for herself the parcel of land covered by OCT 10384 where she presently resides, claiming that her father donated it to her sometime in 1936 with the conformity of the other heirs. The subject property is also declared for taxation purposes under Tax Declaration No. 10376 in the name of respondent. The trial court noted that the alleged endowment which was made orally by the deceased Agustin Dizon to herein respondent partook of the nature of a donation which required the observance of certain formalities set by law. Nevertheless, the trial court rendered judgment in favor of respondent, the dispositive portion of which reads as follows: "WHEREFORE, finding that the partition of the estate of Agustin Dizon is in order, let a project of partition be drawn pursuant to Sec 2, Rule 69, Rules of Court assigning to each heir the specific share to which he is entitled taking into consideration the disposition made in favor of Salud Dizon Salamat and the adjudication of Lot 2557, Hagonoy Cadastre 304-D owned by Natividad Dizon Tamayo, together with the improvements thereon, in her favor and the house owned by Valenta Dizon Garcia, executing, if necessary, proper instruments of conveyance for confirmation and approval by the Court. Parties are enjoined to draw the prospect of partition as equitably and equally as possible with the least inconvenience and disruption of those in possession or in actual occupation of the property. Should the parties fail to come up with an acceptable project of partition, the Court will appoint commissioners as authorized by Sec 3, Rule 69, Rules of Court, who will be guided by the dispositive portion hereof.

All costs and expenses incurred in connection with the partition are to be shared equally by the parties. SO ORDERED." Petitioners contend that Lot 2557, Cad 304-D, described and covered by OCT 10364 in the name of the heirs of Agustin Dizon is part of the Dizon estate while respondent claims that her father donated it to her sometime in 1936 with the consent of her co-heirs. In support of her claim, respondent Natividad presented a private document of conformity which was allegedly signed and executed by her elder brother, Eduardo, in 1936. Petitioners, however, question the authenticity of the document inasmuch as it is marred by unexplained erasures and alterations. The Court of Appeals, in affirming the decision of the RTC, stated that notwithstanding the unexplained erasures and alterations, a cursory reading of the signed statement of Eduardo Dizon, which execution is undisputed, showed that there was an oral donation of the litigated land from Agustin Dizon to Natividad Dizon Tamayo 4 in 1936. The Court of Appeals further stated that the attestation by Eduardo, of the oral donation of the subject land made by his father to respondent Natividad, in 1936, coupled with the tax declaration and payment of taxes in respondent's name would show that the trial court did not err in ruling that the subject land should pertain to Natividad Tamayo as inheritance from her parents. We reverse. Art. 749 of the Civil Code reads: In order that the donation of an immovable may be valid, it must be made in a public document, specifying therein the property donated and the value of the charges which the donee must satisfy. The acceptance may be made in the same deed of donation or in a separate public document, unless it is done during the lifetime of the donor. If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form and this step shall be noted in both instruments. It is clear from Article 749 that a transfer of real property from one person to another cannot take effect as a donation unless embodied in a public document. LibLex The alleged donation in the case at bar was done orally and not executed in a public document. Moreover, the document which was presented by respondent in support of her claim that her father donated the subject parcel of land to her was a mere private document of conformity which was executed by her elder brother, Eduardo in 1956. 5 It may not be

amiss to point out that the brothers Eduardo and Gaudencio had already ceded their hereditary interests to petitioner Salud Dizon Salamat even before 1950. The Court of Appeals, however, placed much reliance on the said document and made the dubious observation that ". . . a cursory reading of the signed statement of Eduardo Dizon, which execution is undisputed, shows that there was an oral donation . . ." Significantly, the document relied upon by the Court of Appeals could hardly satisfy the requirements of the rule on ancient documents on account of unexplained alterations. An ancient document refers to a private document which is more than thirty (30) years old, produced from a custody in which it would naturally be found if genuine, and is unblemished by alterations or circumstances of suspicion. 6 To repeat, the document which was allegedly executed by Eduardo was marred by unexplained erasures and alterations. While the document was originally penned in black ink, the number thirty-six (36) in blue ink was superimposed on the number fifty-six (56) to make it appear that the document was executed in 1936 instead of in 1956. Moreover, a signature was blotted out with a black pentel pen and the three other signatures 7 of the alleged witnesses to the execution of the document at the lower portion of the document were dated June 1, 1951. This could only mean that the witnesses attested to the veracity of the document 5 years earlier, if the document was executed in 1956 or 15 years later, if we are to give credence to respondent's claim, that the document was executed in 1936. Curiously, two of the signatories, namely, Priscila D. Rivera and Maria D. Jocson signed the document as witnesses two days after the death of their father Gaudencio, who, as earlier mentioned, had already sold his hereditary rights to his sister Salud in 1949.

In any case, assuming that Agustin really made the donation to respondent, albeit orally, respondent cannot still claim ownership over the property. While it is true that a void donation may be the basis of ownership which may ripen into title by prescription, 8 it is well settled that possession, to constitute the foundation of a prescriptive right, must be adverse and under a claim of title. Respondent was never in adverse and continuous possession of the property. It is undeniable that petitioners and respondent, being heirs of the deceased, are co-owners of the properties left by the latter. A co-ownership is a form of a trust, with each owner being a trustee for each other 9 and possession of a co-owner shall not be regarded as adverse to other co-owners but in fact is beneficial to them. Mere actual possession by one will not give rise to the inference that the possession was adverse because a co-owner is, after all, entitled to possession of the property. In the case of Salvador v. Court of Appeals, 10 we had occasion to state that a mere silent possession by a co-owner, his receipt of rents, fruits or profits from the property, the erection of buildings and fences and the planting of trees thereon and the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear and

convincing evidence that he exercised acts of possession which unequivocably constituted an ouster or deprivation of the rights of the other co-owners. The elements in order that a co-owner's possession may be deemed adverse to the cestui que trust or the co-owner are: (1) that he has performed unequivocal acts of repudiation amounting to ouster of the cestui que trust or other co-owners (2) that such positive acts or repudiation have been made known to the cestui que trust or other co-owners and (3) that the evidence thereon must be clear and convincing. 11 Not one of the aforesaid requirements is present in the case at bar. There are two houses standing on the subject property. One is the house where respondent presently resides while the other is a house built by respondent's sister Valenta. Records show that the house on Lot 227 where the respondent lives is actually the ancestral house of the Dizons although respondent has remodelled it, constructed a piggery and has planted trees thereon. 12 Respondent herself testified: "xxx xxx xxx Q:Now who is in possession of this particular residential land in Bo. San Nicolas, Hagonoy, Bulacan? A:I am in possession of that land, Sir. Q:Do you have your residential house there? A:Yes, sir. Q:Now, you said that you have your residential house there, since when have you stayed there? A:I was born there, Sir. Q:And you are staying there up to the present?" A:Yes, Sir. xxx xxx xxx." 13 It is obvious from the foregoing that since respondent never made unequivocal acts of repudiation, she cannot acquire ownership over said property through acquisitive prescription. The testimony of her son that she merely allowed her sister Valenta to build a house on the lot 14 is pure hearsay as respondent herself could have testified on the matter but chose not to. Finally, the fact that the subject property is declared for taxation purposes in the name of respondent who pays realty taxes thereon under Tax Declaration No. 14376 is of no moment. It is well settled that tax declarations or realty tax payments are not conclusive evidence of ownership. 15

As regards the improvements introduced by the respondent on the questioned lot, the parties should be guided by Article 500 of the Civil Code which states that: "Upon partition, there shall be a mutual accounting for benefits received and reimbursements for expenses made. . ." WHEREFORE, the decision of the Court of Appeals is hereby REVERSED. Lot 2557, Hagonoy Cadastre 304-D covered by Original Certificate of Title No. 10384 is hereby declared to belong the estate of Agustin Dizon. No costs. SO ORDERED. [G.R. No. 72908. August 11, 1989.] EUFEMIA PAJARILLO, CLAUDIO SUTERIO, JR., NYMIA SUTERIO and MARILYN SUTERIO, petitioners, vs. INTERMEDIATE APPELLATE COURT, THIRD CIVIL CASES DIVISION, SALUD SUTERIO and PEDRO MATIAS, respondents. Agustin A Ferrer for petitioners. Alfredo L Raya for respondents. SYLLABUS 1.CIVIL LAW; MODES OF ACQUIRING OWNERSHIP; DONATION; INTRINSIC VALIDITY THEREOF; CASE AT BAR. The petitioners assail the intrinsic validity of the extrajudicial settlement and submit that it is not really a donation as conceptually understood in civil law. Their argument is that the real donor of the property was Perfecta, the deceased sister, who, however, could no longer bestow the intended gift. For their part, Felipe and Juana could not have made the donation either because they ware not moved by the same sentiments Perfecta had for her niece Salud. That feeling would have provided the required consideration if Perfecta herself had made the donation, but not the other two. Felipe and Juana had declared themselves the heirs of Perfecta and the owners of the property in question. As such, they were free to give the land to whomever they pleased and for whatever reason they saw fit. Hence, if they chose to respect Perfecta's wishes and carry out her intentions by donating the land to Salud, there was no legal impediment to their doing so. In fact, that was not only the legal but also the moral thing to do. There is no question that Felipe and Juana could have simply disregarded their sister's sentiments and decided not to donate the property to Salud, keeping the same for themselves. The fact that they did not do this speaks well indeed of their integrity and their loyalty as well to their deceased sister. The extrajudicial settlement also reflects their own affection for Salud which constituted the valid consideration for their own act of liberality. Notably, in her acceptance of the donation, Salud referred to the donors Felipe Balane and Juana Balane de Suterio," and not Perfecta. 2.ID.; ID.; ID.; GIVEN FORCE AND EFFECT EVEN IN THE ABSENCE OF NOTATION IN THE EXTRAJUDICIAL SETTLEMENT; REASON. In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that

the donated land be not registered during her lifetime by Salud. Given this significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance. That would be placing too much stress on mere form over substance. It would also disregard the clear reality of the acceptance of the donation as manifested in these separate instrument dated June 20, 1946, and as later acknowledged by Juana. 3.ID.; ID.; ID.; ARTICLE 633 OF THE OLD CIVIL CODE; APPLICABLE RULE; LITERAL ADHERENCE TO THE REQUIREMENT OF THE LAW PROVED UPON; CASE AT BAR. It is pointed out that the donation is defective in form because of non-compliance with the requirements of the law regarding its acceptance. As it was executed in 1946, the applicable rule is Article 633 of the old Civil Code reading as follows: Art. 633. In order that a donation of real property be valid it must be made by public instrument in which the property donated must be optically described and the amount of the charges to be assumed by the donee expressed. The acceptance may be made in the deed of gift or in a separate public writing; but it shall produce no effect if not made during the lifetime of the donor. If the acceptance is made by separate public instrument, authentic notice thereof shall be given the donor, and this proceeding shall be noted in both instruments. A strict interpretation of Article 633 can lead to no other conclusion than the annulment of the donation for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable language of the above-quoted provision. However, we find that under the circumstances of the present case, a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions. It is also a policy of the Court to avoid such an interpretation. 4.ID.; ID.; ID.; REGISTRATION NOT NECESSARY TO MAKE THE DONATION A BINDING COMMITMENT SO FAR AS THE DONORS AND THE DONEE WERE CONCERNED; CASE AT BAR. There is nothing in the subject instrument to suggest that the donation was to take effect upon the death of the donors as to make it a donation mortis causa, as urged by the petitioners. The donation became effective upon acceptance by Salud except that, in obedience to her mother's request, she chose not to register the land in the meantime and to allow her mother to enjoy its fruits. What was deferred was not its effectivity but only its enjoyment by Salud. Registration was not necessary to make the donation a binding commitment insofar as the donors and the donee were concerned. 5.ID.; ID.; LACHES NOT APPLIED IN SUITS AMONG RELATIVES IN CASE AT BAR. As for respondents inaction against the deed of sale in favor of her brother Claudio, it should be noted in the first place that she was not aware of it when it was executed in 1956. Her mother, who was already 76 years old at the time, never informed her about it, nor did her brother or any of the defendants, for reasons of their own. It was only later, when the sale was registered in 1958 and a new title to the land was issued to Claudio, that she started asking questions. Even then, being a sister to Claudio, she did not immediately take legal steps. It is natural, even among non-relatives, to seek a non-judicial settlement through extra-legal measures before going to court. The petitioners stress that it took Salud all of seven years from the registration of the land in Claudios's name before she filed the complaint for reconveyance against them. That is true. But if one remembers that her brother died only in 1961 and her own mother only in 1963, at the age of 83, it will be easy to understand the reason for the delay, which would otherwise have been unjustified. Suits

among brothers and sisters are especially painful to their parents. Salud must have thought many times about filing her complaint against her brother Claudio while her old mother was still alive. In fact, Salud hesitated still even after her mother's death and took two more years before she finally filed her complaint against Claudio's wife and children. 6.ID.; IMPLIED TRUST; CREATED IN FAVOR OF PRIVATE RESPONDENT PURSUANT TO ARTICLE 1456 OF THE CIVIL CODE; CASE AT BAR. It is clear that Juana Balane de Suterio had no right to sell the subject land to Claudio because she was no longer its owner, having previously donated it to her daughter Salud. Juana herself was holding the land merely as a trustee of Salud, who had transferred possession to her mother at the old woman's request. The deed of sale was itself vitiated by bad faith as Claudio is presumed to have known of the previous donation to his sister Salud, whose acceptance of the donation was formally witnessed by his own wife, the herein principal petitioner. When Claudio registered the land in his name knowing there was a flaw in his title, an implied trust was created in favor of Salud as the real owner of the property in accordance with Article 1456 of the Civil Code, reading as follows: If the 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. As trustor, Salud had every right to sue for the recovery of the land in the action for reconveyance against Claudio's heirs. 7.ID.; LAND REGISTRATION; ACTION FOR RECONVEYANCE MAY BE FILED BY REAL OWNER WITHIN A PERIOD OF TEN YEARS. The petitioners do not insist on prescription as a bar to the action for reconveyance, and understandably so. The legal principle is that if the registration of the land is fraudulent and the person in whose name the land is registered thus holds it as a mere trustee, the real owner is entitled to file an action for reconveyance of the property within a period of ten years. The record shows that while the land was registered in the name of Claudio Suterio, Sr. in 1958, the complaint for reconveyance was filed by the petitioners in 1965, or still within the ten-year prescriptive period. 8.REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT BY TRIAL COURT UPHELD. The last issue raised by the petitioners, viz., the validity of the deed of sale executed by Juana Balane de Suterio on January 29, 1950, in favor of Salud Suterio, need not detain us too long. The trial court sustained the contract for lack of sufficient evidence to invalidate it and was upheld by the respondent court. We see no reason to disturb their factual finding, absents showing that it was reached arbitrarily. Interestingly, it occurred to the petitioners to question the transaction only when they were sued by the private respondents, after fifteen years from the date of the sale. This is an even longer period than the nine years during which the petitioners say Salud Suterio was sleeping on her rights following the sale of her land to Claudio Suterio. DECISION CRUZ, J p: This is one of those distasteful litigations involving a controversy among close relatives over properties left by a common ascendant. The petitioners are the widow and children of the brother of the principal private respondent. She and her brother appear to be the only remaining issue of the mother who seems to have caused all the present confusion. The

record does not show how close, if at all, the members of this small family were. What is certain is that there is no affection now among the protagonists in this case. The mother was Juana Balane de Suterio, who had a brother named Felipe Balane and a sister named Perfecta Balane de Cordero. Perfecta died in 1945 leaving inter alia a tract of land consisting of about 28 hectares and covered by TCT No. 4671 in the Registry of Deeds of Quezon Province. On May 20, 1946, Juana and Felipe executed a public instrument entitled "Extra-judicial Settlement of the Estate of the Deceased Perfecta Balane de Cordero. 1 In it they disposed of the said property as follows:

EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF DECEASED PERFECTA BALANE DE CORDERO. This agreement made this 20th day of May, 1946, by and between Felipe Balane and Juana Balane de Suterio, both of age and residents of Macalelon, Tayabas, Philippines. W I T N E S S E T H: That whereas, the said Felipe Balane and Juana Balane de Suterio are the only brother and sister respectively and forced heirs of Perfects Balane de Cordero who dies intestate on January 21, 1945; That whereas, the said Perfects Balane de Cordero, deceased, left property described as follows: TRANSFER CERTIFICATE OF TITLE NO. 4671. Province of Tayabas. A parcel of land (Lot No. 6-A, Plan Psu-12210), with all buildings and improvements except those herein expressly noted as belonging to other person, situated in the barrio of Luctol, Municipality of Macalelon. Bounded on the NE., by Lot No. 6-B; on the E., by property by Andrea Fernandez, the sapa Luctob and the sapa Patay; on the SE., by properties of Andrea Fernandez and Silvestra Mereis; on the SW., by properties of Felix Rodriguez, Dionisio Fornea, Placido Abistado and Adriano Abistado and the mangrove of the government; and on the NW., by properties of Orilleneda, Mariano Glindro, Maxima Orilleneda, Placida Forcados and Basilio Rabe. . . containing an area of TWO HUNDRED EIGHTY-FIVE THOUSAND THREE HUNDRED FIFTY-THREE SQUARE METERS (285,358) more or less. That whereas, we Felipe Balane and Juana Balane de Suterio, the only heirs of the property described above left by the deceased Perfects Balane de Cordero, do hereby agree in carrying out the antemortem wish of our beloved deceased sister that in consideration of love and affection the property described above be donated to Salud Suterio de Matias.

That whereas, the estate left by the said Perfecta Balane de Castro, deceased, is not free from obligation or debt. It has an incumbrance of about ONE THOUSAND PESOS (P1,000.00) to the Philippine National Bank, Tayabas Branch. That whereas, Salud Suterio de Matias, to whom this property is donated extra-judicially as agreed upon by both heirs, shall assume the said obligation to the Philippine National Bank, Tayabas Branch. NOW, THEREFORE, we Felipe Balane and Juana Balane de Suterio have mutually agreed and covenanted to adjudicate, give, transfer and convey the property described above to Salud Suterio de Matias heirs, executors, administrators and assign. And the donee does hereby accept this donation and does hereby express her gratitude for the kindness and liberality of the donor. IN WITNESS WHEREOF, we have hereunto set our hands this 20th day of May, 1946. (Sgd.) FELIPE BALANE FELIPE BALANE (Sgd.) JUANA BALANE DE SUTERIO JUANA BALANE DE SUTERIO (Acknowledgment) On June 20,1946, Salud Suterio executed the following public instrument, 2 with petitioner Eufemia Pajarillo was one of the witnesses: KNOW ALL MEN BY THESE PRESENTS: That on May 20, 1946, FELIPE BALANE and JUANA BALANE DE SUTERIO, the only heirs to the properties of the late PERFECTA BALANE DE CORDERO, executed a DEED OF DONATION in favor of the undersigned and the said donation was made in accordance to the antemortem wish of my late aunt, Parfecta Balane de Cordero, to the effect that the property described in the Deed of Donation, be given to me because of her love and affection for me, being her only niece. That, I, SALUD SUTERIO DE MATIAS, the only DONEE, do hereby receive and accept this donation and further express my gratitude for the kindness and liberality of the DONORS, FELIPE BALANE and JUANA BALANE DE SUTERIO. IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1946. (Sgd.) SALUD SUTERIO DE MATIAS SALUD SUTERIO DE MATIAS

Donee Signed in the presence of: (Sgd.) SOFRONIO BALANE.

(Sgd.) EUFEMIA P. SUTERIO (Acknowledgment) These instruments were never registered nor was title transferred in Salud's name although she says she immediately took possession of the land. Meantime, intestate proceedings were instituted on the estate of Perfecta and the said land was among those included in the inventory of the properties belonging to the decedent. 3 Salud interposed no objection to its inclusion nor did she oppose its subsequent adjudication to her mother Juana in the project of partition. It is not clear if the land was ever registered in Juana's name. However, there is evidence that Juana confirmed the earlier donation of the land to Salud but requested that she be allowed to possess the same and enjoy its fruits until her death. 4 It has also not been controverted that Salud paid the P1,000.00 loan for which the land was mortgaged. Salud says that sometime in 1951, acceding to this request, she transferred the possession of the land to her mother, who was then staying with Claudio and his family. During the period they were occupying the land, Claudio paid the realty taxes thereon. 5 On May 25, 1956, Juana executed a deed of absolute sale conveying the land to Claudio for the declared consideration of P12,000.00. 7 Claudio died in 1961 and his mother in 1963. On June 30, 1965, the private respondents filed a complaint for the reconveyance of the property on the ground that the deed of sale in favor of Claudio was fictitious and its registration in his name was null and void. 8 Salud (joined by her husband) alleged that she was unaware until later of the supposed sale of the land to Claudio. She faulted it as having been procured through fraud and improper influence on her sick and aged mother. She claimed that no compensation was actually paid by Claudio and that the transaction was deliberately concealed from her by her brother and the defendants. 9 For their part, the defendants assailed the donation to Salud as legally in efficacious and defective and contended that her complaint was barred by prescription, estoppel and res judicata. They also filed a counter claim questioning the sale to Salud by her mother of another tract of land, in which they said they were entitled to share as Juana's heirs. 10 On April 17, 1979, Judge Juan M. Montecillo of the Court of First Instance of Quezon rendered judgment upholding the donation to the plaintiff and annulling the deed of sale and the registration of the land in favor of Claudio Suterio, Sr. The defendants were required to reconvey the land to Salud Suterio even as their counter claim was dismissed for lack of evidence. 11

On appeal, the decision was affirmed in toto. 12 The respondent court is now sought to be reversed in this petition for certiorari under Rule 45 of the Rules of Court. We hold at the outset that, contrary to the ruling in the challenged decision, the petitioners have the legal personality to challenge the validity of the donation on which Salud bases her claim to the property under litigation. As defendants in the complaint for reconveyance, they had every right to resist the plaintiffs' allegation that she was the owner of the subject property by virtue of the claimed donation. Recognition of that donation would topple the props of their own contention that Juana could dispose of the property as its owner when she sold it to Claudio Suterio in 1956. Cdpr The petitioners also assail the intrinsic validity of the extrajudicial settlement and submit that it is not really a donation as conceptually understood in civil law. Their argument is that the real donor of the property was Perfecta, the deceased sister, who, however, could no longer bestow the intended gift. For their part, Felipe and Juana could not have made the donation either because they ware not moved by the same sentiments Perfecta had for her niece Salud. That feeling would have provided the required consideration if Perfecta herself had made the donation, but not the other two. This appears to be too muck nit-picking, if not sophistry. Felipe and Juana had declared themselves the heirs of Perfecta and the owners of the property in question. As such, they were free to give the land to whomever they pleased and for whatever reason they saw fit. Hence, if they chose to respect Perfecta's wishes and carry out her intentions by donating the land to Salud, there was no legal impediment to their doing so. In fact, that was not only the legal but also the moral thing to do. There is no question that Felipe and Juana could have simply disregarded their sister's sentiments and decided not to donate the property to Salud, keeping the same for themselves. The fact that they did not do this speaks well indeed of their integrity and their loyalty as well to their deceased sister. The extrajudicial settlement also reflects their own affection for Salud which constituted the valid consideration for their own act of liberality. Notably, in her acceptance of the donation, Salud referred to the donors Felipe Balane and Juana Balane de Suterio," and not Perfects. It is also pointed out that the donation is defective in form because of non-compliance with the requirements of the law regarding its acceptance. As it was executed in 1946, the applicable rule is Article 633 of the old Civil Code reading as follows: Art. 633.In order that a donation of real property be valid it must be made by public instrument in which the property donated must be optically described and the amount of the charges to be assumed by the donee expressed. The acceptance may be made in the deed of gift or in a separate public writing; but it shall produce no effect if not made during the lifetime of the donor. If the acceptance is made by separate public instrument, authentic notice thereof shall be given the donor, and this proceeding shall be noted in both instruments.

There is no question that the donation was accepted in a separate public instrument and that it was duly communicated to the donors. Even the petitioners cannot deny this. But what they do contend is that such acceptance was not "noted in both instruments," meaning the extrajudicial partition itself and the instrument of acceptance, as required by the Civil Code.

That is perfectly true. There is nothing in either of the two instrument's showing that "authentic notice" of the acceptance was made by Salud to Juana and Felipe. And while the first instrument contains the statement that "the donee does hereby accept this donation and does hereby express her gratitude for the kindness and liberality of the donor," the only signatories thereof were Felipe Balane and Juana Balane de Suterio. That was in fact the reason for the separate instrument of acceptance signed by Salud a month later. A strict interpretation of Article 633 can lead to no other conclusion than the annulment of the donation for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable language of the above-quoted provision. However, we find that under the circumstances of the present case, a literal adherence to the requirement of the law might result not in justice to the parties but conversely a distortion of their intentions. It is also a policy of the Court to avoid such an interpretation. The purpose of the formal requirement is to insure that the acceptance of the donation is duly communicated to the donor. In the case at bar, it is not even suggested that Juana was unaware of the acceptance for she in fact confirmed it later and requested that the donated land be not registered during her lifetime by Salud. 13 Given this significant evidence, the Court cannot in conscience declare the donation ineffective because there is no notation in the extrajudicial settlement of the donee's acceptance. That would be placing too much stress on mere form over substance. It would also disregard the clear reality of the acceptance of the donation as manifested in these separate instrument dated June 20, 1946, and as later acknowledged by Juana. The cases cited by the parties in their respective memoranda are not really in point. In Legasto v. Verzosa, 14 there was no evidence whatsoever that the claimed donations had been accepted, as stressed by Justice Villa-Real. The same observation is made of Santos v. Robledo, 15 where Justice Torres noted that the acceptance of the donation did not appear in the deed of donation or in any other instrument. The petitioners would also fault the private respondents for laches and argue that Salud's inaction in protection of her rights should bar her from asserting them at this late hour. Specifically, it is pointed out that she failed to register the deed of donation and its acceptance in 1946; did not oppose the inclusion of the subject land in the inventory of Perfecta's properties submitted in the intestate proceedings in 1946; did not object to the adjudication of the land to Juana in the project of partition in 1951; did not protest the sale of the land to Claudio Suterio in 1956; and did not question its registration in his name in 1958. It is contended that all these acts constitute inches, which has been described by this Court thus:

An estoppel by laches arises from the negligence or omission to assert a right with a a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. 16 The problem with the petitioners' theory is that it would regard Juana and Salud as strangers when they are in fact mother and daughter. One may expect a person to be vigilant of his rights when dealing with an acquaintance or associate, or even with a friend, but not when the other person is a close relative, as in the case at bar. To begin with, the land came from Juana herself Secondly, she requested her daughter not to register the land as long as she was still alive so she could enjoy its fruits until her death. To Salud, it was not difficult to comply with this request, coming as it did from her own mother. There was no reason to disobey her. She did not have to protect herself against her own mother. Indeed, what would have been unseemly was her registering the land against her mother's request as if she had no confidence in her. Salud did no less than what any dutiful daughter would have done under the circumstances. If Salud did not protest the inclusion of the land in the inventory of Perfecta's properties and its subsequent adjudication to Juana in the intestate proceedings, it was because she did not feel threatened by these acts. She did not distrust her mother. Moreover, Juana had herself acknowledged the donation when she was asked in whose name the property would be registered following the intestate proceedings. Salud felt safe because she had the extrajudicial settlement to rely on to prove that her mother and her uncle had donated the subject land to her. There is nothing in this instrument to suggest that the donation was to take effect upon the death of the donors as to make it a donation mortis causa, as urged by the petitioners. The donation became effective upon acceptance by Salud except that, in obedience to her mother's request, she chose not to register the land in the meantime and to allow her mother to enjoy its fruits. What was deferred was not its effectivity but only its enjoyment by Salud. Registration was not necessary to make the donation a binding commitment insofar as the donors and the donee were concerned. 17 As for her inaction against the deed of sale in favor of her brother Claudio, it should be noted in the first place that she was not aware of it when it was executed in 1956. Her mother, who was already 76 years old at the time, never informed her about it, nor did her brother or any of the defendants, for reasons of their own. It was only later, when the sale was registered in 1958 and a new title to the land was issued to Claudio, that she started asking questions. Even then, being a sister to Claudio, she did not immediately take legal steps. prLL It is natural, even among non-relatives, to seek a non-judicial settlement through extra-legal measures before going to court. It is more so in the case of relatives, who should avoid as much as possible the asperity and bitterness of litigation. That is what Salud did when she repeatedly asked the petitioners for the return of the property albeit to no avail. It was only when it became clear that amicable persuasion was not possible that she decided to sue the wife and children of her departed brother.

The petitioners stress that it took Salud all of seven years from the registration of the land in Claudios's name before she filed the complaint for reconveyance against them. That is true. But if one remembers that her brother died only in 1961 and her own mother only in 1963, at the age of 83, it will be easy to understand the reason for the delay, which would otherwise have been unjustified. Suits among brothers and sisters are especially painful to their parents. Salud must have thought many times about filing her complaint against her brother Claudio while her old mother was still alive. In fact, Salud hesitated still even after her mother's death and took two more years before she finally filed her complaint against Claudio's wife and children. It is clear that Juana Balane de Suterio had no right to sell the subject land to Claudio because she was no longer its owner, having previously donated it to her daughter Salud. Juana herself was holding the land merely as a trustee of Salud, who had transferred possession to her mother at the old woman's request. The deed of sale was itself vitiated by bad faith as Claudio is presumed to have known of the previous donation to his sister Salud, whose acceptance of the donation was formally witnessed by his own wife, the herein principal petitioner. 18 When Claudio registered the land in his name knowing there was a flaw in his title, an implied trust was created in favor of Salud as the real owner of the property in accordance with Article 1456 of the Civil Code, reading as follows: If the 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. As trustor, Salud had every right to sue for the recovery of the land in the action for reconveyance against Claudio's heirs. As we said in Vda. de Jacinto, et al. v. Vda. de Jacinto, et al.: 19 Public policy demands that a person guilty of fraud or at least, of breach of trust, should not be allowed to use a Torrens title as a shield against the consequences of his own wrongdoing. The petitioners do not insist on prescription as a bar to the action for reconveyance, and understandably so. The legal principle is that if the registration of the land is fraudulent and the person in whose name the land is registered thus holds it as a mere trustee, the real owner is entitled to file an action for reconveyance of the property within a period of ten years. As we have held in many cases: Where the action is one for reconveyance based on constructive trust, a ten-year period is allowed. 20 An action for reconveyance of realty, based upon a constructive or implied trust resulting from fraud, may be barred by prescription. The prescriptive period is reckoned from the issuance of the title which operates as a constructive notice. 21 While actions to enforce a constructive trust prescribe in 10 years from registration of the property, private respondents' right commenced from actual discovery of petitioner's act of defraudation. 22

The record shows that while the land was registered in the name of Claudio Suterio, Sr. in 1958, the complaint for reconveyance was filed by the petitioners in 1965, or still within the ten-year prescriptive period. The last issue raised by the petitioners, viz., the validity of the deed of sale executed by Juana Balane de Suterio on January 29, 1950, in favor of Salud Suterio, 23 need not detain us too long. The trial court sustained the contract for lack of sufficient evidence to invalidate it and was upheld by the respondent court. We see no reason to disturb their factual finding, absents showing that it was reached arbitrarily. Interestingly, it occurred to the petitioners to question the transaction only when they were sued by the private respondents, after fifteen years from the date of the sale. This is an even longer period than the nine years during which the petitioners say Salud Suterio was sleeping on her rights following the sale of her land to Claudio Suterio. WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered. Void donation as basis for title by acquisitive prescription [G.R. No. 155080. February 5, 2004.] SOLEDAD CALICDAN, represented by her guardian GUADALUPE CASTILLO, petitioner, vs. SILVERIO CENDAA, substituted by his legal heir CELSA CENDAAALARAS, respondent. DECISION YNARES-SANTIAGO, J p: This petition for review seeks the reversal of the April 4, 2002 decision of the Court of Appeals in CA-G.R. CV No. 67266, 1 which set aside the November 12, 1996 decision of the Regional Trial Court of Dagupan City, Branch 44 in Civil Case No. D-10270. 2

The instant controversy involves a 760 square meter parcel of unregistered land located in Poblacion, Mangaldan, Pangasinan. The land was formerly owned by Sixto Calicdan, who died intestate on November 4, 1941. He was survived by his wife, Fermina, and three children, namely, petitioner Soledad, Jose and Benigno, all surnamed Calicdan. 3 On August 25, 1947, Fermina executed a deed of donation inter vivos whereby she conveyed the land to respondent Silverio Cendaa, 4 who immediately entered into possession of the land, built a fence around the land and constructed a two-storey residential house thereon sometime in 1949, where he resided until his death in 1998. 5 On June 29, 1992, petitioner, through her legal guardian Guadalupe Castillo, filed a complaint for "Recovery of Ownership, Possession and Damages" against the respondent, alleging that the donation was void; that respondent took advantage of her incompetence in acquiring the land; and that she merely tolerated respondent's possession of the land as well as the construction of his house thereon. 6

In his "Answer with Motion to Dismiss", respondent alleged, by way of affirmative defenses, that the land was donated to him by Fermina in 1947; and that he had been publicly, peacefully, continuously, and adversely in possession of the land for a period of 45 years. Moreover, he argued that the complaint was barred by prior judgment in the special proceedings for the "Inventory of Properties of Incompetent Soledad Calicdan", where the court decreed the exclusion of the land from the inventory of properties of the petitioner. 7 On November 12, 1996, the trial court rendered a decision in favor of the petitioner, the dispositive portion of which reads as follows: ADEaHT WHEREFORE, judgment is rendered in favor of plaintiff and against the defendant as follows: 1.Ordering defendant Silverio Cendaa to vacate the land in question and surrender ownership and possession of the same to plaintiff; and 2.Ordering defendant to pay plaintiff P20,000.00 as moral damages, P20,000.00 as exemplary damages, P10,000.00 by way of attorney's fees and other litigation expenses, plus cost of suit. SO ORDERED. 8 On appeal by the respondent, the Court of Appeals reversed the trial court's decision and declared that the donation was valid. Furthermore, it held that petitioner lost her ownership of the property by prescription. Hence, the instant petition for review on the following issues: (1)whether or not the donation inter vivos is valid; and (2)whether or not petitioner lost ownership of the land by prescription. As a rule, our jurisdiction in cases brought from the Court of Appeals is limited to the review and revision of errors of law allegedly committed by the appellate court. This is because its findings of fact are deemed conclusive and we are not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below. 9 The rule, however, admits of the following exceptions: (1)when the findings are grounded on speculation, surmises or conjectures; (2)when the inference made is manifestly mistaken, absurd or impossible; (3)when there is grave abuse of discretion in the appreciation of facts; (4)when the factual findings of the trial and appellate courts are conflicting;

(5)when the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee; (6)when the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to consider certain relevant facts which, if properly taken into account, will justify a different conclusion; (7)when the findings of fact are conclusions without citation of specific evidence upon which they are based; and (8)when findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence on record. 10 In the case at bar, the factual findings of the trial court and the Court of Appeals are conflicting; thus, we are constrained to review the findings of facts. The trial court found the donation of the land void because Fermina was not the owner thereof, considering that it was inherited by Sixto from his parents. Thus, the land was not part of the conjugal property of the spouses Sixto and Fermina Calicdan, because under the Spanish Civil Code, the law applicable when Sixto died in 1941, the surviving spouse had a right of usufruct only over the estate of the deceased spouse. Consequently, respondent, who derived his rights from Fermina, only acquired the right of usufruct as it was the only right which the latter could convey. After a review of the evidence on record, we find that the Court of Appeals' ruling that the donation was valid was not supported by convincing proof. Respondent himself admitted during the cross examination that he had no personal knowledge of whether Sixto Calicdan in fact purchased the subject land from Felomino Bautista. Pertinent portions of his testimony read: Q.And Sixto Calicdan inherited this property from his parents? A.No, sir. Q.What do you mean by no? A.To my knowledge and information, Sixto Calicdan bought the property from his cousin, I think Flaviano or Felomino Bautista. Q.So, in other words, you have no personal knowledge about how Sixto Calicdan acquired this property? A.I think it was by purchase. Q.According to information, so you have no actual personal knowledge how Sixto Calicdan acquired this property?

A.Yes, because when the property was bought by my uncle, I was not yet born, so information only. Q.So when you were born, you came to know already that Sixto Calicdan is the owner of this property? A.Yes, thru the son of Felomino Bautista who is now, I think, in Baguio. Q.You have not seen any document to show that Sixto Calicdan purchased the property from one Felomino Bautista? A.None, sir. 11 In People v. Guittap, 12 we held that: Under Rule 130, Section 36 of the Rules of Court, a witness can testify only to those facts which he knows of his own personal knowledge, i.e., which are derived from his own perception; otherwise, such testimony would be hearsay. Hearsay evidence is defined as "evidence not of what the witness knows himself but of what he has heard from others." The hearsay rule bars the testimony of a witness who merely recites what someone else has told him, whether orally or in writing. In Sanvicente v. People, we held that when evidence is based on what was supposedly told the witness, the same is without any evidentiary weight for being patently hearsay. Familiar and fundamental is the rule that hearsay testimony is inadmissible as evidence. The Court of Appeals thus erred in ruling based on respondent's bare hearsay testimony as evidence of the donation made by Fermina. Notwithstanding the invalidity of the donation, we find that respondent has become the rightful owner of the land by extraordinary acquisitive prescription. IATHaS Prescription is another mode of acquiring ownership and other real rights over immovable property. It is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse. Acquisitive prescription is either ordinary or extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just title for ten years. In extraordinary prescription ownership and other real rights over immovable property are acquired through uninterrupted adverse possession thereof for thirty years without need of title or of good faith. 13 The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership. 14 For purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right. 15 Assuming arguendo that ordinary acquisitive prescription is unavailing in the case at bar as it demands that the possession be "in good faith and with just title," 16 and there is no

evidence on record to prove respondent's "good faith", nevertheless, his adverse possession of the land for more than 45 years aptly shows that he has met the requirements for extraordinary acquisitive prescription. The records show that the subject land is an unregistered land. When the petitioner filed the instant case on June 29, 1992, respondent was in possession of the land for 45 years counted from the time of the donation in 1947. This is more than the required 30 years of uninterrupted adverse possession without just title and good faith. Such possession was public, adverse and in the concept of an owner. Respondent fenced the land and built his house in 1949, with the help of Guadalupe's father as his contractor. His act of cultivating and reaping the fruits of the land was manifest and visible to all. He declared the land for taxation purposes and religiously paid the realty taxes thereon. 17 Together with his actual possession of the land, these tax declarations constitute strong evidence of ownership of the land occupied by him. As we said in the case of Heirs of Simplicio Santiago v. Heirs of Mariano Santiago: 18

Although tax declarations or realty tax payment of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept of 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. The voluntary declaration of a piece of property for taxation purposes manifests not only one's sincere and honest desire to obtain title to the property and announces his adverse claim against the State and all other interested parties, but also the intention to contribute needed revenues to the Government. Such an act strengthens one's bona fide claim of acquisition of ownership. Moreover, the deed of donation inter vivos, albeit void for having been executed by one who was not the owner of the property donated, may still be used to show the exclusive and adverse character of respondent's possession. Thus, in Heirs of Segunda Maningding v. Court of Appeals, 19 we held: Even assuming that the donation propter nuptias is void for failure to comply with formal requisites, it could still constitute a legal basis for adverse possession. With clear and convincing evidence of possession, a private document of donation may serve as basis for a claim of ownership. In Pensader v. Pensader we ruled that while the verbal donation under which the defendant and his predecessors-in-interest have been in possession of the lands in question is not effective as a transfer of title, still it is a circumstance which may explain the adverse and exclusive character of the possession. (Emphasis ours) In sum, the Court of Appeals correctly ordered the dismissal of Civil Case No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, and declared respondent the rightful owner of the subject property, not on the basis of the Deed of Donation Inter Vivos, which is hereby declared void, but on extraordinary acquisitive prescription.

WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals dated April 4, 2002 in CA-G.R. CV No. 67266, which ordered the dismissal of Civil Case No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, is AFFIRMED. SO ORDERED. Effect of donations and limitations Revocation and reduction of donations [G.R. No. 77425. June 19, 1991.] THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners, vs. HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents. [G.R. No. 77450. June 19, 1991.] THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners, vs. HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents. Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite. Dolorfino and Dominguez Law Offices for Sps. Ignao. Joselito R. Enriquez for private respondents. SYLLABUS 1.CIVIL LAW; DEED OF DONATION; WHEN CONTENTS THEREOF PROVIDE FOR AUTOMATIC REVERSION OF PROPERTY DONATED IN CASE OF VIOLATION OF CONDITIONS SET FORTH THEREIN, JUDICIAL ACTION FOR RESCISSION, NOT NECESSARY. The deed of donation involved herein expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not necessary. As aptly stated by the Court of Appeals: "By the very express provision in the deed of donation itself that the violation of the condition thereof would render ipso facto null and void the deed of donation, WE are of the opinion that there would be no legal necessity anymore to have the donation judicially declared null and void for the reason that the very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the donee contemplated a court action during the execution of the deed of donation to have the donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading 'would render ipso facto null and void' would not appear in the deed of donation." In support of its aforesaid position, respondent court relied on the rule that a

judicial action for rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions. It called attention to the holding that there is nothing in the law that prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention, and that it is not always necessary for the injured party to resort to court for rescission of the contract. It reiterated the doctrine that a judicial action is proper only when there is absence of a special provision granting the power of cancellation. 2.ID.; ID.; ID.; DE LUNA, ET AL., v. ABRIGO, ET AL. [181 SCRA 150], APPLICABLE IN CASE AT BAR; RATIONALE FOR THE RULE. The validity of such a stipulation in the deed of donation providing for the automatic reversion of the donated property to the donor upon noncompliance of the condition was upheld in the recent case of De Luna, et al. vs. Abrigo, et al., 181 SCRA 150 (1990). It was held therein that said stipulation is in the nature of an agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of going to court, and that, upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. While what was the subject of that case was an onerous donation which, under Article 733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also subject to the same rules because of its provision on automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply. The rationale for the foregoing is that in contracts providing for automatic revocation, judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper. 3.ID.; ID.; ID.; GENERAL RULES ON CONTRACT AND PRESCRIPTION SHOULD APPLY, NOT ART. 764 OF THE CODE. When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on prescription should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs, public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission sought. Where such propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not in itself the revocatory act. 4.ID.; ID.; PROHIBITION AGAINST ALIENATION FOR AN UNREASONABLE LENGTH OF TIME; CONTRARY TO PUBLIC POLICY. The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy. Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may

impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time. 5.ID.; ID.; ID.; SHOULD BE DECLARED NULL AND VOID AS AN IMPOSSIBLE CONDITION. It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code. In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail. 6.SUPREME COURT; HAS AUTHORITY TO REVIEW MATTERS EVEN IF THEY ARE NOT ASSIGNED AS ERRORS ON APPEAL; CASE AT BAR. It will readily be noted that the provision in the deed of donation against alienation of the land for one hundred (100) years was the very basis for the action to nullify the deed of donation. At the same time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion was sustained by the trial court and set aside by respondent court, both on the issue of prescription. That ruling of respondent court interpreting said provision was assigned as an error in the present petition. While the issue of the validity of the same provision was not squarely raised, it is ineluctably related to petitioner's aforesaid assignment of error since both issues are grounded on and refer to the very same provision. This Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. Thus, we have held that an unassigned error closely related to an error properly assigned, or upon which the determination of the question properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error. 7.ID.; ID.; FOR THE EXPEDITIOUS ADMINISTRATION OF SUBSTANTIAL JUSTICE, REMAND OF THE CASE TO THE LOWER COURT FOR FURTHER RECEPTION OF EVIDENCE, NOT NECESSARY. We have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice,

would not be subserved by the remand of the case. The aforestated considerations obtain in and apply to the present case with respect to the matter of the validity of the resolutory condition in question.

DECISION REGALADO, J p: These two petitions for review on certiorari 1 seek to overturn the decision of the Court of Appeals in CA-G.R. CV No. 05456 2 which reversed and set aside the order of the Regional Trial Court of Imus, Cavite dismissing Civil Case No. 095-84, as well as the order of said respondent court denying petitioner's motions for the reconsideration of its aforesaid decision. On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of deed of donation, rescission of contract and reconveyance of real property with damages against petitioners Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus, Cavite, together with the Roman Catholic Archbishop of Manila, before the Regional Trial Court, Branch XX, Imus, Cavite and which was docketed as Civil Case No. 095-84 therein. 3 In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro and Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant Roman Catholic Archbishop of Manila covering a parcel of land (Lot No. 626, Cadastral Survey of Kawit), located at Kawit, Cavite, containing an area of 964 square meters, more or less. The deed of donation allegedly provides that the donee shall not dispose or sell the property within a period of one hundred (100) years from the execution of the deed of donation, otherwise a violation of such condition would render ipso facto null and void the deed of donation and the property would revert to the estate of the donors. It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all properties within the province of Cavite owned by the Archdiocese of Manila was allegedly transferred on April 26, 1962, executed a deed of absolute sale of the property subject of the donation in favor of petitioners Florencio and Soledad C. Ignao in consideration of the sum of P114,000.00. As a consequence of the sale, Transfer Certificate of Title No. 115990 was issued by the Register of Deeds of Cavite on November 15, 1980 in the name of said petitioner spouses. What transpired thereafter is narrated by respondent court in its assailed decision. 4 On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to dismiss based on the grounds that (1) herein private respondents, as plaintiffs therein, have no legal capacity to sue; and (2) the complaint states no cause of action. On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss on three (3) grounds, the first two (2) grounds of which were identical to that of the

motion to dismiss filed by the Ignao spouses, and the third ground being that the cause of action has prescribed. On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss on the ground that he is not a real party in interest and, therefore, the complaint does not state a cause of action against him. After private respondents had filed their oppositions to the said motions to dismiss and the petitioners had countered with their respective replies, with rejoinders thereto by private respondents, the trial court issued an order dated January 31, 1985, dismissing the complaint on the ground that the cause of action has prescribed. 5 Private respondents thereafter appealed to the Court of Appeals raising the issues on (a) whether or not the action for rescission of contracts (deed of donation and deed of sale) has prescribed; and (b) whether or not the dismissal of the action for rescission of contracts (deed of donation and deed of sale) on the ground of prescription carries with it the dismissal of the main action for reconveyance of real property. 6 On December 23, 1986, respondent Court of Appeals, holding that the action has not yet prescribed, rendered a decision in favor of private respondents, with the following dispositive portion: Cdpr "WHEREFORE, the Order of January 31, 1985 dismissing appellants' complaint is SET ASIDE and Civil Case No. 095-84 is hereby ordered REINSTATED and REMANDED to the lower court for further proceedings. No costs." 7 Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for reconsideration which were denied by respondent Court of Appeals in its resolution dated February 6, 1987, 8 a hence, the filing of these appeals by certiorari. It is the contention of petitioners that the cause of action of herein private respondents has already prescribed, invoking Article 764 of the Civil Code which provides that "(t)he donation shall be revoked at the instance of the donor, when the donee fails to comply with any of the conditions which the former imposed upon the latter," and that "(t)his action shall prescribe after four years from the non-compliance with the condition, may be transmitted to the heirs of the donor, and may be exercised against the donee's heirs." We do not agree. Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation must be brought within four (4) years from the non-compliance of the conditions of the donation, the same is not applicable in the case at bar. The deed of donation involved herein expressly provides for automatic reversion of the property donated in case of violation of the condition therein, hence a judicial declaration revoking the same is not necessary. As aptly stated by the Court of Appeals: "By the very express provision in the deed of donation itself that the violation of the condition thereof would render ipso facto null and void the deed of donation, WE are of the

opinion that there would be no legal necessity anymore to have the donation judicially declared null and void for the reason that the very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the donee contemplated a court action during the execution of the deed of donation to have the donation judicially rescinded or declared null and void should the condition be violated, then the phrase reading 'would render ipso facto null and void' would not appear in the deed of donation." 9 In support of its aforesaid position, respondent court relied on the rule that a judicial action for rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions. 10 It called attention to the holding that there is nothing in the law that prohibits the parties from entering into an agreement that a violation of the terms of the contract would cause its cancellation even without court intervention, and that it is not always necessary for the injured party to resort to court for rescission of the contract. 11 It reiterated the doctrine that a judicial action is proper only when there is absence of a special provision granting the power of cancellation. 12 It is true that the aforesaid rules were applied to the contracts involved therein, but we see no reason why the same should not apply to the donation in the present case. Article 732 of the Civil Code provides that donations inter vivos shall be governed by the general provisions on contracts and obligations in all that is not determined in Title III, Book III on donations. Now, said Title III does not have an explicit provision on the matter of a donation with a resolutory condition and which is subject to an express provision that the same shall be considered ipso facto revoked upon the breach of said resolutory condition imposed in the deed therefor, as is the case of the deed presently in question. The suppletory application of the foregoing doctrinal rulings to the present controversy is consequently justified. The validity of such a stipulation in the deed of donation providing for the automatic reversion of the donated property to the donor upon non-compliance of the condition was upheld in the recent case of De Luna, et al. vs. Abrigo, et al. 13 It was held therein that said stipulation is in the nature of an agreement granting a party the right to rescind a contract unilaterally m case of breach, without need of going to court, and that, upon the happening of the resolutory condition or non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. While what was the subject of that case was an onerous donation which, under Article 733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also subject to the same rules because of its provision on automatic revocation upon the violation of a resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply. prcd The rationale for the foregoing is that in contracts providing for automatic revocation, judical intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper. 14

When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of the property donated, the rules on contract and the general rules on prescription should apply, and not Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs, public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties providing for automatic revocation of the deed of donation, without prior judicial action for that purpose, is valid subject to the determination of the propriety of the rescission sought. Where such propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not in itself the revocatory act.

On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the cause of action of herein private respondents has not yet prescribed since an action to enforce a written contract prescribes in ten (10) years. 15 It is our view that Article 764 was intended to provide a judicial remedy in case of non-fulfillment or contravention of conditions specified in the deed of donation if and when the parties have not agreed on the automatic revocation of such donation upon the occurrence of the contingency contemplated therein. That is not the situation in the case at bar. Nonetheless, we find that although the action filed by private respondents may not be dismissed by reason of prescription, the same should be dismissed on the ground that private respondents have no cause of action against petitioners. The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory condition in the deed of donation that the property donated should not be sold within a period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is, therefore, contrary to public policy. Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the property donated. Although the donor may impose certain conditions in the deed of donation, the same must not be contrary to law, morals, good customs, public order and public policy. The condition imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on the right of the donee to dispose of the property donated, which right is an indispensable attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an unreasonable period of time. Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by analogy. Under the third paragraph of Article 494, a donor or testator may prohibit partition for a period which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void. LLphil

It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the devolution of property by gratuitous title hence, as is generally the case of donations, being an act of liberality, the imposition of an unreasonable period of prohibition to alienate the property should be deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the normative policy expressed in the aforesaid Articles 494 and 870 of the Code. In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership, should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of cause of action, the case for private respondents must fail. It may be argued that the validity of such prohibitory provision in the deed of donation was not specifically put in issue in the pleadings of the parties. That may be true, but such oversight or inaction does not prevent this Court from passing upon and resolving the same. It will readily be noted that the provision in the deed of donation against alienation of the land for one hundred (100) years was the very basis for the action to nullify the deed of donation. At the same time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion was sustained by the trial court and set aside by respondent court, both on the issue of prescription. That ruling of respondent court interpreting said provision was assigned as an error in the present petition. While the issue of the validity of the same provision was not squarely raised, it is ineluctably related to petitioner's aforesaid assignment of error since both issues are grounded on and refer to the very same provision. cdphil This Court is clothed with ample authority to review matters, even if they are not assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a just decision of the case. 16 Thus, we have held that an unassigned error closely related to an error properly assigned, 17 or upon which the determination of the question properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error. 18 Additionally, we have laid down the rule that the remand of the case to the lower court for further reception of evidence is not necessary where the Court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and for the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice, would not be subserved by the remand of the case. 19 The aforestated considerations obtain in and apply to the present case with respect to the matter of the validity of the resolutory condition in question.

WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is hereby rendered DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX, Imus, Cavite. SO ORDERED. [G.R. No. 57455. January 18, 1990.] EVELYN DE LUNA, ROSALINA DE LUNA, PRUDENCIO DE LUNA, JR., WILLARD DE LUNA, ANTONIO DE LUNA, and JOSELITO DE LUNA, petitioners, vs. HON. SOFRONIO F. ABRIGO, Presiding Judge of the Court of First Instance of Quezon, Branch IX, and LUZONIAN UNIVERSITY FOUNDATION, INC., respondents. Milberto B. Zurbano for petitioners. Jovito E. Talabong for private respondent. SYLLABUS 1.CIVIL LAW; DONATION; CLASSIFICATION AS TO MOTIVE, PURPOSE OR CAUSE. From the viewpoint of motive, purpose or cause, donations may be 1) simple, 2) remuneratory or 3) onerous. A simple donation is one the cause of which is pure liberality (no strings attached). A remuneratory donation is one where the donee gives something to reward past or future services or because of future charges or burdens, when the value of said services, burdens or charges is less than the value of the donation. An onerous donation is one which is subject to burdens, charges or future services equal (or more) in value than that of the thing donated (Edgardo L. Paras, Civil Code of the Philippines Annotated, 11 ed., 726). 2.ID.; ONEROUS DONATION GOVERNED BY RULES ON CONTRACT AND GENERAL RULES ON PRESCRIPTION OF ACTION. Under the old Civil Code, it is settled rule that donations with an onerous cause are governed not by the law on donations but by the rules on contracts, as held in the cases of Carlos v. Ramil, L-6736, September 5, 1911, 20 Phil. 183, Manalo vs. de Mesa, L-9449, February 12, 1915, 29 Phil. 495. On the matter of prescription of actions for the revocation of onerous donation, it was held that the general rules on prescription applies. (Parks v. Province of Tarlac, supra.) The same rules apply under the New Civil Code as provided in Article 733 thereof which provides: "Article 733. Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed." 3.ID.; CONTRACTS; PARTIES THERETO HAVE THE RIGHT TO ESTABLISH STIPULATIONS NOT CONTRARY TO LAW. Under Article 1306 of the New Civil Code, the parties to a contract have the right "to establish such stipulations, clauses, terms and conditions as they may deemed convenient, provided they are not contrary to law, morals, good customs, public orders or public policy." Paragraph 11 of the "Revival of Donation Intervivos, has provided that" violation of any of the conditions (herein) shall cause the automatic reversion of the donated area to the donor, his heirs, . . . , without the need of executing any other document for that purpose and without obligation on the part of the DONOR". Said

stipulation not being contrary to law, morals, good customs, public order or public policy, is valid and binding upon the foundation who voluntarily consented thereto. 4.ID.; ID.; JUDICIAL ACTION FOR RESCISSION OF CONTRACT NOT NECESSARY WHEN SO STIPULATED. The validity of the stipulation in the contract providing for the automatic reversion of the donated property to the donor upon non-compliance cannot be doubted. It is in the nature of an agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of going to court. Upon the happening of the resolutory condition of non-compliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. In the case of University of the Philippines v. de los Angeles, L-28602, September 29, 1970, 35 SCRA 102107, it was held: ". . . There is nothing in the law that prohibits the parties from entering into agreement that violation of the terms of the contract would cause cancellation thereof, even without court intervention. In other words, it is not always necessary for the injured party to resort to court for rescission of the contract (Froilan v. Pan Oriental Shipping Co., et al., L11897, 31 October 1964,12 SCRA 276)." This was reiterated in the case of Angeles v. Calasanz, L-42283, March 18, 1985: "Well settled is, however, the rule that a judicial action for the rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions (Lopez v. Commissioner of Customs, 37 SCRA 327, 334, and cases cited therein). Resort to judicial action for rescission is obviously not contemplated. The validity of the stipulation can not be seriously disputed. It is in the nature of a facultative resolutory condition which in many cases has been upheld, by this court. (Ponce Enrile v. Court of Appeals, 29 SCRA 504)" 5.REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT ON THE PLEADING; MOTION OF PARTY NECESSARY. On the matter of the donee's non-compliance with the conditions of the donation have been contested by private respondents who claimed that improvements more valuable than the donated property had been introduced, a judgment on the pleadings is not proper. Moreover, in the absence of a motion for judgment on the pleadings, the court cannot motu proprio render such judgment. Section 1 of Rule 19 provides: "Where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party's pleading, the court may, on motion of that party, direct judgment on such pleading." DECISION MEDIALDEA, J p: This is a petition for review on certiorari of the Order dated July, 7, 1981 of respondent judge Sofronio F. Abrigo of the Court of First Instance of Quezon, Branch IX in Civil Case No. 8624 dismissing the complaint of petitioners on the ground of prescription of action. The antecedent facts are as follows: On January 24, 1965, Prudencio de Luna donated a portion of 7,500 square meters of Lot No. 3707 of the Cadastral Survey of Lucena covered by Transfer Certificate of Title No. 1-5775 to the Luzonian Colleges, Inc., (now Luzonian University Foundation, Inc., herein referred to as the foundation). The donation, embodied in a Deed of Donation Intervivos (Annex "A" of Petition) was subject to certain terms and conditions and provided for the automatic

reversion to the donor of the donated property in case of violation or non-compliance (pars. 7 and 10 of Annex "A", p. 20, Rollo). The foundation failed to comply with the conditions of the donation. On April 9, 1971, Prudencio de Luna "revived" the said donation in favor of the foundation, in a document entitled "Revival of Donation Intervivos" (Annex "B" of Petition) subject to terms and conditions which among others, required: xxx xxx xxx "3.That the DONEE shall construct at its own expense a Chapel, a Nursery and Kindergarten School, to be named after St. Veronica, and other constructions and accessories shall be constructed on the land herein being donated strictly in accordance with the plans and specifications prepared by the O.R. Quinto & Associates and made part of this donation; provided that the flooring of the Altar and parts of the Chapel shall be of granoletic marble. "4.That the construction of the Chapel, Nursery and Kindergarten School shall start immediately and must be at least SEVENTY (70) PER CENTUM finished by the end of THREE (3) YEARS from the date hereof, however, the whole project as drawn in the plans and specifications made parts of this donation must be completed within FIVE (5) YEARS from the date hereon, unless extensions are granted by the DONOR in writing; " . . . ." (p. 23, Rollo) As in the original deed of donation, the "Revival of Donation Intervivos" also provided for the automatic reversion to the donor of the donated area in case of violation of the conditions thereof, couched in the following terms: xxx xxx xxx "11.That violation of any of the conditions herein provided shall cause the automatic reversion of the donated area to the donor, his heirs, assigns and representatives, without the need of executing any other document for that purpose and without obligation whatever on the part of the DONOR." (p. 24, Rollo) The foundation, through its president, accepted the donation in the same document, subject to all the terms and conditions stated in the donation (p. 24, Rollo). The donation was registered and annotated on April 15, 1971 in the memorandum of encumbrances as Entry No. 17939 of Transfer Certificate of Title No. T-5775 (p. 15, Rollo) On August 3, 1971, Prudencio de Luna and the foundation executed a "Deed of Segregation" (Annex "C" of Petition) whereby the area donated which is now known as Lot No. 3707-B of Subdivision Plan Psd-40392 was adjudicated to the foundation. As a result, Transfer Certificate of Title No. T-16152 was issued in the name of the foundation. The remaining portion known as Lot No. 3707-A was retained by the donor. (p. 16, Rollo). On September 23, 1980, herein petitioners, Evelyn, Rosalina, Prudencio, Jr., Willard, Antonio and Joselito, all surnamed de Luna, who claim to be the children and only heirs of the late Prudencio de Luna who died on August 18, 1980, filed a complaint (pp. 14-17, Rollo) with the Regional Trial Court of Quezon alleging that the terms and conditions of the donation were

not complied with by the foundation. Among others, it prayed for the cancellation of the donation and the reversion of the donated land to the heirs. The complaint was docketed as Civil Case No. 8624. In its answer (pp. 29-36, Rollo), respondent foundation claimed that it had partially and substantially complied with the conditions of the donation and that the donor has granted the foundation an indefinite extension of time to complete the construction of the chapel. It also invoked the affirmative defense of prescription of action and prayed for the dismissal of the complaint. prcd During the pre-trial of the case, the foundation moved for a preliminary hearing of its affirmative defense of prescription of action which was opposed by the plaintiffs. After the parties have filed their respective written motions, oppositions and memoranda, an Order (pp. 40-43, Rollo) dated July 7, 1981 was issued dismissing the complaint. The dispositive portion of the Order states:

"In view of the foregoing considerations, this Court finds the motion to dismiss deemed filed by the defendant on the ground of prescription to be well-taken and the same is hereby GRANTED. "WHEREFORE, the instant complaint is hereby ordered DISMISSED. "No pronouncement as to costs. "SO ORDERED." (pp. 42-43, Rollo) No motion for reconsideration was filed by petitioners. On July 22, 1981, petitioners brought the instant petition for review with the following assignments of error: "I.THE LOWER COURT ERRED IN HOLDING THAT THE DONEE'S CONSENT TO THE REVOCATION OF A DONATION TO BE VALID MUST BE GIVEN SUBSEQUENT TO THE EFFECTIVITY OF THE DONATION OR VIOLATION OF (THE) ANY OF THE CONDITIONS IMPOSED THEREIN. "II.THE LOWER COURT ERRED IN TREATING THE COMPLAINT AS ONE FOR JUDICIAL DECREE OF REVOCATION OF THE DONATION IN QUESTION AS CONTEMPLATED IN ARTICLE 764 OF THE CIVIL CODE OF THE PHILIPPINES AND WHICH PRESCRIBES IN FOUR (4) YEARS AND IN NOT CONSIDERING IT AS AN ACTION TO ENFORCE A WRITTEN CONTRACT WHICH PRESCRIBES IN TEN (10) YEARS AS PROVIDED IN ARTICLE 1144, HENCE, THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT. "III.THE LOWER COURT ERRED IN NOT RENDERING JUDGMENT ON THE MERITS BY WAY OF JUDGMENT ON THE PLEADINGS." (pp. 1-2, Petitioner's Brief)

We gave due course to the petition on August 3, 1981 (p. 45, Rollo). After the parties' submission of their respective briefs, the Court resolved to consider the petition submitted for decision on January 27, 1982 (p. 62, Rollo). The assailed order of the trial court stated that revocation (of a donation) will be effective only either upon court judgment or upon consent of the donee as held in the case of Parks v. Province of Tarlac, No. 24190, July 13, 1926, 49 Phil. 143. The trial court dismissed the claim of petitioners that the stipulation in the donation providing for revocation in case of noncompliance of conditions in the donation is tantamount to the consent of the donee, opining that the consent contemplated by law should be such consent given by the donee subsequent to the effectivity of the donation or violation of the conditions imposed therein. The trial court further held that, far from consenting to the revocation, the donee claimed that it had already substantially complied with the conditions of the donation by introducing improvements in the property donated valued at more than the amount of the donated land. In view thereof, a judicial decree revoking the subject donation is necessary. Accordingly, under Article 764 of the New Civil Code, actions to revoke a donation on the ground of noncompliance with any of the conditions of the donation shall prescribe in four years counted from such non-compliance. In the instant case, the four-year period for filing the complaint for revocation commenced on April 9, 1976 and expired on April 9, 1980. Since the complaint was brought on September 23, 1980 or more than five (5) months beyond the prescriptive period, it was already barred by prescription. LLjur On the other hand, petitioners argue that Article 764 of the New Civil Code was adopted to provide a judicial remedy in case of non-fulfillment of conditions when revocation of the donation has not been agreed upon by the parties. By way of contrast, when there is a stipulation agreed upon by the parties providing for revocation in case of non-compliance, no judicial action is necessary. It is then petitioners' claim that the action filed before the Court of First Instance of Quezon is not one for revocation of the donation under Article 764 of the New Civil Code which prescribes in four (4) years, but one to enforce a written contract which prescribes in ten (10) years. The petition is impressed with merit. From the viewpoint of motive, purpose or cause, donations may be 1) simple, 2) remuneratory or 3) onerous. A simple donation is one the cause of which is pure liberality (no strings attached). A remuneratory donation is one where the donee gives something to reward past or future services or because of future charges or burdens, when the value of said services, burdens or charges is less than the value of the donation. An onerous donation is one which is subject to burdens, charges or future services equal (or more) in value than that of the thing donated (Edgardo L. Paras, Civil Code of the Philippines Annotated, 11 ed., 726). It is the finding of the trial court, which is not disputed by the parties, that the donation subject of this case is one with an onerous cause. It was made subject to the burden requiring the donee to construct a chapel, a nursery and a kindergarten school in the donated property within five years from execution of the deed of donation.

Under the old Civil Code, it is settled rule that donations with an onerous cause are governed not by the law on donations but by the rules on contracts, as held in the cases of Carlos v. Ramil, L-6736, September 5, 1911, 20 Phil. 183, Manalo vs. de Mesa, L-9449, February 12, 1915, 29 Phil. 495. On the matter of prescription of actions for the revocation of onerous donation, it was held that the general rules on prescription applies. (Parks v. Province of Tarlac, supra.) The same rules apply under the New Civil Code as provided in Article 733 thereof which provides: "Article 733.Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory donations by the provisions of the present Title as regards that portion which exceeds the value of the burden imposed." It is true that Article 764 of the New Civil Code, actions for the revocation of a donation must be brought within for (4) years from the non-compliance of the conditions of the donation. However, it is Our opinion that the said article does not apply to onerous donations in view of the specific provision of Article 733 providing that onerous donations are governed by the rules on contracts. In the light of the above, the rules on contracts and the general rules on prescription and not the rules on donations are applicable in the case at bar. Under Article 1306 of the New Civil Code, the parties to a contract have the right "to establish such stipulations, clauses, terms and conditions as they may deemed convenient, provided they are not contrary to law, morals, good customs, public orders or public policy." Paragraph 11 of the "Revival of Donation Intervivos, has provided that" violation of any of the conditions (herein) shall cause the automatic reversion of the donated area to the donor, his heirs, . . . , without the need of executing any other document for that purpose and without obligation on the part of the DONOR". Said stipulation not being contrary to law, morals, good customs, public order or public policy, is valid and binding upon the foundation who voluntarily consented thereto. prcd The validity of the stipulation in the contract providing for the automatic reversion of the donated property to the donor upon non-compliance cannot be doubted. It is in the nature of an agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of going to court. Upon the happening of the resolutory condition of noncompliance with the conditions of the contract, the donation is automatically revoked without need of a judicial declaration to that effect. In the case of University of the Philippines v. de los Angeles, L-28602, September 29, 1970, 35 SCRA 102-107, it was held: " . . . There is nothing in the law that prohibits the parties from entering into agreement that violation of the terms of the contract would cause cancellation thereof, even without court intervention. In other words, it is not always necessary for the injured party to resort to court for rescission of the contract (Froilan v. Pan Oriental Shipping Co., et al., L-11897, 31 October 1964,12 SCRA 276)." This was reiterated in the case of Angeles v. Calasanz, L-42283, March 18, 1985:

"Well settled is, however, the rule that a judicial action for the rescission of a contract is not necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms and conditions (Lopez v. Commissioner of Customs, 37 SCRA 327, 334, and cases cited therein). "Resort to judicial action for rescission is obviously not contemplated. The validity of the stipulation can not be seriously disputed. It is in the nature of a facultative resolutory condition which in many cases has been upheld, by this court. (Ponce Enrile v. Court of Appeals, 29 SCRA 504)". However, in the University of the Philippines v. Angeles case, (supra), it was held that in cases where one of the parties contests or denies the rescission, "only the final award of the court of competent jurisdiction can conclusively settle whether the resolution is proper or not." It was held, thus:. " . . . since in every case, where the extrajudicial resolution is contested, only the final award of the court of competent jurisdiction can conclusively settle whether the resolution was proper or not. It is in this sense that judicial action will be necessary as without it, the extrajudicial resolution will remain contestable and subject to judicial invalidation, unless attack thereon should become barred by acquiescence, estoppel or prescription." It is clear, however, that judicial intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract already deemed rescinded by virtue of an agreement providing for rescission even without judicial intervention, but in order to determine whether or not the rescission was proper. prcd The case of Parks v. Province of Tarlac, supra, relied upon by the trial court, is not applicable in the case at bar. While the donation involved therein was also onerous, there was no agreement in the donation providing for automatic rescission, thus, the need for a judicial declaration revoking said donation. The trial court was therefore not correct in holding that the complaint in the case at bar is barred by prescription under Article 764 of the New Civil Code because Article 764 does not apply to onerous donations.

As provided in the donation executed on April 9, 1971, compliance with the terms and conditions of the contract of donation, shall be made within five (5) years from its execution. The complaint which was filed on September 23, 1980 was then well within the ten (10) year prescriptive period to enforce a written contract (Article 1144[1], New Civil Code), counted from April 9, 1976. Finally, considering that the allegations in the complaint on the matter of the donee's noncompliance with the conditions of the donation have been contested by private respondents who claimed that improvements more valuable than the donated property had been introduced, a judgment on the pleadings is not proper. Moreover, in the absence of a motion for judgment on the pleadings, the court cannot motu proprio render such judgment. Section

1 of Rule 19 provides: "Where an answer fails to tender an issue, or otherwise admits the material allegations of the adverse party's pleading, the court may, on motion of that party, direct judgment on such pleading." (Emphasis Ours) ACCORDINGLY, the petition is GRANTED. Civil Case No. 8624 is hereby ordered reinstated. Respondent judge is ordered to conduct a trial on the merits to determine the propriety of the revocation of the subject donation. SO ORDERED. Prescriptive period to revoke donation [G.R. No. 112483. October 8, 1999.] ELOY IMPERIAL, petitioner, vs. COURT OF APPEALS, REGIONAL TRIAL COURT OF LEGASPI CITY, CESAR VILLALON, JR., TERESA VILLALON, ANTONIO VILLALON, AUGUSTO VILLALON, ROBERTO VILLALON, RICARDO VILLALON and ESTHER VILLALON, respondents. Joaquin "Bobby" Yuseco for petitioner. De Leoz Madarieta & Nieva Law Offices for private respondents. SYNOPSIS Leoncio Imperial filed Civil Case No. 1177 to annul the donation (evidenced by a deed of absolute sale in the amount of P1.00) of a parcel of land to petitioner Eloy Imperial, his acknowledged natural child. A compromise judgment was approved by the trial court whereby Leoncio recognized the rights of petitioner over the land while petitioner agreed to sell a portion of the lot for the benefit of Leoncio. Leoncio, upon his death, was substituted by his adopted son, Atty. Victor Imperial, who moved for the execution of the compromise judgment. Victor died single, and survived by his natural father, Ricardo Villalon, who became a lessee of a portion of the disputed land. Five years after Ricardo's death, his 2 children, Cesar and Teresa, filed Civil Case No. 7646 for the annulment of the donation on the ground of fraud, deceit, and inofficiousness as Leoncio had no other property at the time of his death. Petitioner moved to dismiss the complaint on the ground of res judicata. The complaint was amended in 1989 to allege that the conveyance impaired the legitime of Victor, their natural brother and predecessor-in-interest. The trial court rendered judgment finding the donation inofficious which impaired Victor's legitime and ruled that the action has not yet prescribed. It computed Victor's legitime based on the area donated. The assailed decision was affirmed on appeal by the Court of Appeals, hence, this petition. The Court held that res judicata does not apply when there is no identity of causes of action and identity of parties between the two actions filed. In the case at bar, Civil Case No. 1177 was an action for annulment filed by the donor against the donee for fraud, while Civil Case No. 7646 was filed by private respondents in representation of a compulsory heir for inofficious character of the donation. aSEHDA

Repudiation cannot be presumed by mere substitution of an heir to a case affecting the subject property, as tacit repudiation of inheritance is not countenanced and that the death of a compulsory heir does not even preclude his heirs from impugning an inofficious donation. In the absence of any specific provision on prescription for an action for reduction or revocation of donation, Article 1144 of the Civil Code applies. It provides for a 10-year prescriptive period commencing upon the death of the donor-decedent when the net estate may be ascertained and on the basis of which the legitimes may be determined. Thus, the failure of a compulsory heir to contest the donations for more than 10 years constitutes estoppel. While the parties may limit the scope of the trial by the terms of the pre-trial, the same may be disregarded as an issue such as prescription was manifest in the pleadings of the parties as well as the findings of fact of the lower courts. SYLLABUS 1.REMEDIAL LAW; CIVIL PROCEDURE; JUDGMENT; RES JUDICATA; REQUIREMENTS; NOT MET IN CASE AT BAR. It is an indispensable requirement in res judicata that there be, between the first and second action, identity of parties, of subject matter and of cause of action. A perusal of the records leads us to conclude that there is no identity of parties and of cause of action as between Civil Case No. 1177 and Civil Case No. 7646. Civil Case No. 1177 was instituted by Leoncio in his capacity as donor of the questioned donation. While it is true that upon his death, Victor was substituted as plaintiff of the action, such does not alter the fact that Victor's participation in the case was in representation of the interests of the original plaintiff, Leoncio. The purpose behind the rule on substitution of parties is to ensure that the deceased party would continue to be properly represented in the suit through the duly appointed legal representative of the estate, or his heir, as in this case, for which no court appointment is required. Petitioner's argument, therefore, that there is substantial identity between Leoncio and private respondents, being heirs and successors-in-interest of Victor, is unavailing. Moreover, Leoncio's cause of action as donor of the property was fraud, purportedly employed upon him by petitioner in the execution of the donation. While the same circumstances of fraud and deceit are alleged in private respondents' complaint, it also raises the additional ground of inofficiousness of donation. 2.ID.; ID.; ACTIONS; CAUSE OF ACTION; INOFFICIOUSNESS AS CAUSE OF ACTION MAY ARISE ONLY UPON DEATH OF DONOR. Contrary to petitioner's contentions, inofficiousness of donation does not, and could not, form part of Leoncio's cause of action in Civil Case No. 1177. Inofficiousness as a cause of action may arise only upon the death of the donor, as the value of the donation will then be contrasted with the net value of the estate of the donordeceased. 3.CIVIL LAW; MODES OF ACQUIRING OWNERSHIP; SUCCESSION; LEGITIME NOT RENOUNCED BY SUBSTITUTION OF HEIR AS PLAINTIFF IN ACTION CONTESTING DONATION. As argued by petitioner, when Leoncio died on January 8, 1962, it was only Victor who was entitled to question the donation. However, instead of filing an action to contest the donation, Victor asked to be substituted as plaintiff in Civil Case No. 1177 and even moved for execution of

the compromise judgment therein. No renunciation of legitime may be presumed from the foregoing acts. It must be remembered that at the time of the substitution, the judgment approving the compromise agreement has already been rendered. Victor merely participated in the execution of the compromise judgment. He was not a party to the compromise agreement. More importantly, our law on succession does not countenance tacit repudiation of inheritance. Rather, it requires an express act on the part of the heir. (Article 1051 of Civil Code) Thus, when Victor substituted Leoncio in Civil Case No. 1177 upon the latter's death, his act of moving for execution of the compromise judgment cannot be considered an act of renunciation of his legitime. He was, therefore, not precluded or estopped from subsequently seeking the reduction of the donation, under Article 772. Nor are Victor's heirs, upon his death, precluded from doing so, as their right to do so is expressly recognized under Article 772, and also in Article 1053. 4.ID.; ID.; ID.; CLAIM FOR LEGITIME DOES NOT AMOUNT TO CLAIM OF TITLE; VALUE OF PROPERTY AT TIME OF DONATION BROUGHT TO COLLATION. A claim for legitime does not amount to a claim of title. In the recent case of Vizconde vs. Court of Appeals, we declared that what is brought to collation is not the donated property itself, but the value of the property at the time it was donated. The rationale for this is that the donation is a real alienation which conveys ownership upon its acceptance, hence, any increase in value or any deterioration or loss thereof is for the account of the heir or donee. Thus, it is the value of the property at the time it is donated, and not the property itself, which is brought to collation. Consequently, even when the donation is found inofficious and reduced to the extent that it impaired Victor's legitime, private respondents will not receive a corresponding share in the property donated. Thus, in this case where the collatable property is an immovable, what may be received is: (1) an equivalent, as much as possible, in property of the same nature, class and quality; (2) if such is impracticable, the equivalent value of the impaired legitime in cash or marketable securities; or (3) in the absence of cash or securities in the estate, so much of such other property as may be necessary, to be sold in public auction. 5.ID.; PRESCRIPTION OF ACTIONS; ACTION FOR REDUCTION OF INOFFICIOUS DONATION; PRESCRIBES IN TEN YEARS FROM DEATH OF DONOR; ACTION FILED IN CASE AT BAR, PRESCRIBED. What, then, is the prescriptive period for an action for reduction of an inofficious donation? The Civil Code specifies the following instances of reduction or revocation of donations: (1) four years, in cases of subsequent birth, appearance, recognition or adoption of a child; (2) four years, for non-compliance with conditions of the donation; and (3) at any time during the lifetime of the donor and his relatives entitled to support, for failure of the donor to reserve property for his or their support. Interestingly, donations as in the instant case, the reduction of which hinges upon the allegation of impairment of legitime, are not controlled by a particular prescriptive period, for which reason we must resort to the ordinary rules of prescription. Under Article 1144 of the Civil Code, actions upon an obligation created by law must be brought within ten years from the time the right of action accrues. Thus, the ten-year prescriptive period applies to the obligation to reduce inofficious donations, required under Article 771 of the Civil Code, to the extent that they impair the legitime of compulsory heirs. From when shall the ten-year period be reckoned? The case of Mateo vs. Lagua, 29 SCRA 864, which involved the reduction for inofficiousness of a donation propter nuptias, recognized that the cause of action to enforce a legitime accrues upon the death of the donor-decedent. Clearly so, since

it is only then that the net estate may be ascertained and on which basis, the legitimes may be determined. It took private respondents 24 years since the death of Leoncio to initiate this case. The action, therefore, has long prescribed. 6.REMEDIAL LAW; ACTIONS; PRE-TRIAL; DEFENSE NOT RAISED, NOT WAIVED. As for the trial court's holding that the defense of prescription had been waived, it not being one of the issues agreed upon at pre-trial, suffice it to say that while the terms of the pre-trial order bind the parties as to the matters to be taken up in trial, it would be the height of injustice for us to adhere to this technicality when the fact of prescription is manifest in the pleadings of the parties, as well as the findings of fact of the lower courts.

7.ID.; ID.; ESTOPPEL BY LACHES; CONSTRUED. Estoppel by laches is the failure or neglect for an unreasonable or unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, warranting a presumption that the person has abandoned his right or declined to assert it. 8.ID.; ID.; ID.; CASE AT BAR. A perusal of the factual antecedents reveals that not only has prescription set in, private respondents are also guilty of estoppel by laches. It may be recalled that Leoncio died on January 8, 1962. Fifteen years later, Victor died, leaving as his sole heir Ricardo Villalon, who also died four years later. While Victor was alive, he gave no indication of any interest to contest the donation of his deceased father. As we have discussed earlier, the fact that he actively participated in Civil Case No. 1177 did not amount to a renunciation of his inheritance and does not preclude him from bringing an action to claim his legitime. These are matters that Victor could not possibly be unaware of, considering that he is a lawyer. Ricardo Villalon was even a lessee of a portion of the donated property, and could have instituted the action as sole heir of his natural son, or at the very least, raised the matter of legitime by way of counterclaim in an ejectment case filed against him by petitioner in 1979. Neither does it help private respondents' cause that five years have elapsed since the death of Ricardo in 1981 before they filed their complaint with the RTC. 9.CIVIL LAW; MODES OF ACQUIRING OWNERSHIP; SUCCESSION; STEPS TO BE TAKEN BEFORE LEGAL SHARE DUE COMPULSORY HEIR MAY BE REACHED. Our rules of succession require that before any conclusion as to the legal share due to a compulsory heir may be reached, the following steps must be taken: (1) the net estate of the decedent must be ascertained, by deducting all the payable obligations and charges from the value of the property owned by the deceased at the time of his death; (2) the value of all donations subject to collation would be added to it. TSIaAc DECISION GONZAGA-REYES, J p: Petitioner seeks to set aside the Decision of the Court of Appeals in C.A.-G.R. CV No. 31976 1 , affirming the Decision of the Regional Trial Court of Legazpi City 2 , which rendered inofficious the donation made by Leoncio Imperial in favor of herein petitioner, to the extent

that it impairs the legitime of Victor Imperial, and ordering petitioner to convey to herein private respondents, heirs of said Victor Imperial, that portion of the donated land proportionate to Victor Imperial's legitime. LLjur Leoncio Imperial was the registered owner of a 32,837-square meter parcel of land covered by Original Certificate of Title No. 200, also known as Lot 45 of the Cadastral Survey of Albay. On July 7, 1951, Leoncio sold the said lot for P1.00 to his acknowledged natural son, petitioner herein, who then acquired title over the land and proceeded to subdivide it into several lots. Petitioner and private respondents admit that despite the contract's designation as one of "Absolute Sale", the transaction was in fact a donation. On July 28, 1953, or barely two years after the donation, Leoncio filed a complaint for annulment of the said Deed of Absolute Sale, docketed as Civil Case No. 1177, in the then Court of First Instance of Albay, on the ground that he was deceived by petitioner herein into signing the said document. The dispute, however, was resolved through a compromise agreement, approved by the Court of First Instance of Albay on November 3, 1961 3 , under which terms: (1) Leoncio recognized the legality and validity of the rights of petitioner to the land donated; and (2) petitioner agreed to sell a designated 1,000-square meter portion of the donated land, and to deposit the proceeds thereof in a bank, for the convenient disposal of Leoncio. In case of Leoncio's death, it was agreed that the balance of the deposit will be withdrawn by petitioner to defray burial costs. On January 8, 1962, and pending execution of the above judgment, Leoncio died, leaving only two heirs the herein petitioner, who is his acknowledged natural son, and an adopted son, Victor Imperial. On March 8, 1962, Victor was substituted in place of Leoncio in the above-mentioned case, and it was he who moved for execution of judgment. On March 15, 1962, the motion for execution was duly granted. Fifteen years thereafter, or on July 26, 1977, Victor died single and without issue, survived only by his natural father, Ricardo Villalon, who was a lessee of a portion of the disputed land. Four years hence, or on September 25, 1981, Ricardo died, leaving as his only heirs his two children, Cesar and Teresa Villalon. Five years thereafter, or sometime in 1986, Cesar and Teresa filed a complaint for annulment of the donation with the Regional Trial Court of Legazpi City, docketed as Civil Case No. 7646. Petitioner moved to dismiss on the ground of res judicata, by virtue of the compromise judgment rendered by the Court of First Instance of Albay. The trial court granted the motion to dismiss, but the Court of Appeals reversed the trial court's order and remanded the case for further proceedings. On October 18, 1989, Cesar and Teresa filed an amended complaint in the same case, Civil Case No. 7646, for "Annulment of Documents, Reconveyance and Recovery of Possession" with the Regional Trial Court of Legazpi City, seeking the nullification of the Deed of Absolute Sale affecting the above property, on grounds of fraud, deceit and inofficiousness. In the amended complaint, it was alleged that petitioner caused Leoncio to execute the donation by taking undue advantage of the latter's physical weakness and mental unfitness, and that the conveyance of said property in favor of petitioner impaired the legitime of Victor Imperial, their natural brother and predecessor-in-interest. 4

In his Answer, petitioner: (1) alleged that Leoncio had conveyed sufficient property to Victor to cover his legitime, consisting of 563 hectares of agricultural land in Manito, Albay; (2) reiterated the defense of res judicata, and (3) raised the additional defenses of prescription and laches. Plaintiff Cesar Villalon died on December 26, 1989, while the case was pending in the Regional Trial Court, and was substituted in this action by his sons, namely, Antonio, Roberto, Augusto, Ricardo and Cesar, Jr., all surnamed Villalon, and his widow, Esther H. Villalon. The RTC held the donation to be inofficious and impairing the legitime of Victor, on the basis of its finding that at the time of Leoncio's death, he left no property other than the 32,837square meter parcel of land which he had donated to petitioner. The RTC went on further to state that petitioner's allegation that other properties existed and were inherited by Victor was not substantiated by the evidence. 5 The legitime of Victor was determined by the trial court in this manner: Considering that the property donated is 32,837 square meters, one half of that or 16,418 square meters becomes the free portion of Leoncio which could be absorbed in the donation to defendant. The other half, which is also 16,418 square meters is where the legitime of the adopted son Victor Imperial has to be taken. The proportion of the legitime of the legitimate child (including the adopted child) in relation to the acknowledged natural child (defendant) is 10 is to 5[,] with the acknowledged natural child getting 1/2 of the legitime of the legitimate (adopted) child, in accordance with Art. 895 of the New Civil Code which provides: LibLex "The legitime of each of the acknowledged natural children and each of the natural children by legal fiction shall consist of one-half of the legitime of each of the legitimate children or descendants." From the 16,418 square meters left (after the free portion has been taken) plaintiffs are therefore entitled to 10,940 square meters while defendant gets 5,420 square meters. 6 The trial court likewise held that the applicable prescriptive period is 30 years under Article 1141 of the Civil Code 7 , reckoned from March 15, 1962, when the writ of execution of the compromise judgment in Civil Case 1177 was issued, and that the original complaint having been filed in 1986, the action has not yet prescribed. In addition, the trial court regarded the defense of prescription as having been waived, this not being one of the issues agreed upon at pre-trial. Thus, the dispositive portion of the RTC's Decision of December 13, 1990 reads: WHEREFORE, premises considered, the Deed of Absolute Sale otherwise known as Doc. No. 8; Book No. 14; Page No. 1; Series of 1951 of the Notarial file of Pompeyo B. Calleja which is considered a donation, is hereby reduced proportionately insofar as it affected the legitime

of the late Victor Imperial, which share is inherited by the plaintiffs herein, to the extent that plaintiffs are ordered to be given by defendant a portion of 10,940 square meters thereof. In order to avoid further conflict, the 10,940 share to be given to plaintiffs should include the portion which they are presently occupying, by virtue of the extended lease to their father Ricardo Villalon, where the bungalow in question stands. The remaining portion to be given to plaintiffs may come from any other portion that may be agreed upon by the parties, otherwise, this court will appoint a commissioner to undertake the partition. The other 21,897 square meters should go to the defendant as part of his legitime and by virtue of the reduced donation. No pronouncement as to damages as they were not sufficiently proved. SO ORDERED. 8 The Court of Appeals affirmed the RTC Decision in toto. Before us, petitioner questions the following findings of respondent court: (1) that there was no res judicata, there being no identity of parties and cause of action between the instant case and Civil Case No. 1177; (2) that private respondents had a right to question the donation; (3) that private respondents' action is barred by prescription, laches and estoppel; and (4) that the donation was inofficious and should be reduced.

It is an indispensable requirement in res judicata that there be, between the first and second action, identity of parties, of subject matter and of cause of action. 9 A perusal of the records leads us to conclude that there is no identity of parties and of cause of action as between Civil Case No. 1177 and Civil Case No. 7646. Civil Case No. 1177 was instituted by Leoncio in his capacity as donor of the questioned donation. While it is true that upon his death, Victor was substituted as plaintiff of the action, such does not alter the fact that Victor's participation in the case was in representation of the interests of the original plaintiff, Leoncio. The purpose behind the rule on substitution of parties is to ensure that the deceased party would continue to be properly represented in the suit through the duly appointed legal representative of the estate 10 , or his heir, as in this case, for which no court appointment is required. 11 Petitioner's argument, therefore, that there is substantial identity between Leoncio and private respondents, being heirs and successors-in-interest of Victor, is unavailing. Moreover, Leoncio's cause of action as donor of the property was fraud, purportedly employed upon him by petitioner in the execution of the donation. While the same circumstances of fraud and deceit are alleged in private respondents' complaint, it also raises the additional ground of inofficiousness of donation.

Contrary to petitioner's contentions, inofficiousness of donation does not, and could not, form part of Leoncio's cause of action in Civil Case No. 1177. Inofficiousness as a cause of action may arise only upon the death of the donor, as the value of the donation will then be contrasted with the net value of the estate of the donor-deceased. 12 Consequently, while in Civil Case No. 1177, Leoncio sought the revocation in full of the donation on ground of fraud, the instant case actually has two alternative causes of action. First, for fraud and deceit, under the same circumstances as alleged in Leoncio's complaint, which seeks the annulment in full of the donation, and which the trial court correctly dismissed because the compromise agreement in Civil Case No. 1177 served as a ratification and waiver on the part of Leoncio of whatever defects in voluntariness and consent may have been attendant in the making of the donation. The second cause of action is the alleged inofficiousness of the donation, resulting in the impairment of Victor's legitime, which seeks the annulment, not of the entire donation, but only of that portion diminishing the legitime. 13 It is on the basis of this second cause of action that private respondents prevailed in the lower courts. Petitioner next questions the right of private respondents to contest the donation. Petitioner sources his argument from Article 772 of the Civil Code, thus: Only those who at the time of the donor's death have a right to the legitime and their heirs and successors in interest may ask for the reduction of inofficious donations. . . . As argued by petitioner, when Leoncio died on January 8, 1962, it was only Victor who was entitled to question the donation. However, instead of filing an action to contest the donation, Victor asked to be substituted as plaintiff in Civil Case No. 1177 and even moved for execution of the compromise judgment therein. prcd No renunciation of legitime may be presumed from the foregoing acts. It must be remembered that at the time of the substitution, the judgment approving the compromise agreement has already been rendered. Victor merely participated in the execution of the compromise judgment. He was not a party to the compromise agreement. More importantly, our law on succession does not countenance tacit repudiation of inheritance. Rather, it requires an express act on the part of the heir. Thus, under Article 1051 of Civil Code: The repudiation of an inheritance shall be made in a public or authentic instrument, or by petition presented to the court having jurisdiction over the testamentary or intestate proceedings. Thus, when Victor substituted Leoncio in Civil Case No. 1177 upon the latter's death, his act of moving for execution of the compromise judgment cannot be considered an act of renunciation of his legitime. He was, therefore, not precluded or estopped from subsequently seeking the reduction of the donation, under Article 772. Nor are Victor's heirs, upon his death, precluded from doing so, as their right to do so is expressly recognized under Article 772, and also in Article 1053:

If the heir should die without having accepted or repudiated the inheritance, his right shall be transmitted to his heirs. Be that as it may, we find merit in petitioner's other assignment of errors. Having ascertained this action as one for reduction of an inofficious donation, we cannot sustain the holding of both the trial court and the Court of Appeals that the applicable prescriptive period is thirty years, under Article 1141 of the Civil Code. The sense of both courts that this case is a "real action over an immovable" allots undue credence to private respondents' description of their complaint, as one for "Annulment of Documents, Reconveyance and Recovery of Possession of Property", which suggests the action to be, in part, a real action enforced by those with claim of title over the disputed land. Unfortunately for private respondents, a claim for legitime does not amount to a claim of title. In the recent case of Vizconde vs. Court of Appeals 14 , we declared that what is brought to collation is not the donated property itself, but the value of the property at the time it was donated. The rationale for this is that the donation is a real alienation which conveys ownership upon its acceptance, hence, any increase in value or any deterioration or loss thereof is for the account of the heir or donee. 15 What, then, is the prescriptive period for an action for reduction of an inofficious donation? The Civil Code specifies the following instances of reduction or revocation of donations: (1) four years, in cases of subsequent birth, appearance, recognition or adoption of a child; 16 (2) four years, for non-compliance with conditions of the donation; 17 and (3) at any time during the lifetime of the donor and his relatives entitled to support, for failure of the donor to reserve property for his or their support. 18 Interestingly, donations as in the instant case, 19 the reduction of which hinges upon the allegation of impairment of legitime, are not controlled by a particular prescriptive period, for which reason we must resort to the ordinary rules of prescription. Under Article 1144 of the Civil Code, actions upon an obligation created by law must be brought within ten years from the time the right of action accrues. Thus, the ten-year prescriptive period applies to the obligation to reduce inofficious donations, required under Article 771 of the Civil Code, to the extent that they impair the legitime of compulsory heirs. From when shall the ten-year period be reckoned? The case of Mateo vs. Lagua, 29 SCRA 864, which involved the reduction for inofficiousness of a donation propter nuptias, recognized that the cause of action to enforce a legitime accrues upon the death of the donor-decedent. Clearly so, since it is only then that the net estate may be ascertained and on which basis, the legitimes may be determined. It took private respondents 24 years since the death of Leoncio to initiate this case. The action, therefore, has long prescribed. As for the trial court's holding that the defense of prescription had been waived, it not being one of the issues agreed upon at pre-trial, suffice it to say that while the terms of the pretrial order bind the parties as to the matters to be taken up in trial, it would be the height of injustice for us to adhere to this technicality when the fact of prescription is manifest in the pleadings of the parties, as well as the findings of fact of the lower courts. 20

A perusal of the factual antecedents reveals that not only has prescription set in, private respondents are also guilty of estoppel by laches. It may be recalled that Leoncio died on January 8, 1962. Fifteen years later, Victor died, leaving as his sole heir Ricardo Villalon, who also died four years later. While Victor was alive, he gave no indication of any interest to contest the donation of his deceased father. As we have discussed earlier, the fact that he actively participated in Civil Case No. 1177 did not amount to a renunciation of his inheritance and does not preclude him from bringing an action to claim his legitime. These are matters that Victor could not possibly be unaware of, considering that he is a lawyer. 21 Ricardo Villalon was even a lessee of a portion of the donated property, and could have instituted the action as sole heir of his natural son, or at the very least, raised the matter of legitime by way of counterclaim in an ejectment case 22 filed against him by petitioner in 1979. Neither does it help private respondents' cause that five years have elapsed since the death of Ricardo in 1981 before they filed their complaint with the RTC. cdll Estoppel by laches is the failure or neglect for an unreasonable or unexplained length of time to do that which, by exercising due diligence, could or should have been done earlier, warranting a presumption that the person has abandoned his right or declined to assert it. 23 We find the necessity for the application of the principle of estoppel by laches in this case, in order to avoid an injustice. A final word on collation of donations. We observe that after finding the donation to be inofficious because Leoncio had no other property at the time of his death, the RTC computed the legitime of Victor based on the area of the donated property. Hence, in its dispositive portion, it awarded a portion of the property to private respondents as Victor's legitime. This was upheld by the Court of Appeals.

Our rules of succession require that before any conclusion as to the legal share due to a compulsory heir may be reached, the following steps must be taken: (1) the net estate of the decedent must be ascertained, by deducting all the payable obligations and charges from the value of the property owned by the deceased at the time of his death; (2) the value of all donations subject to collation would be added to it. 24 Thus, it is the value of the property at the time it is donated, and not the property itself, which is brought to collation. Consequently, even when the donation is found inofficious and reduced to the extent that it impaired Victor's legitime, private respondents will not receive a corresponding share in the property donated. Thus, in this case where the collatable property is an immovable, what may be received is: (1) an equivalent, as much as possible, in property of the same nature, class and quality; 25 (2) if such is impracticable, the equivalent value of the impaired legitime in cash or marketable securities; 26 or (3) in the absence of cash or securities in the estate, so much of such other property as may be necessary, to be sold in public auction. 27 We believe this worth mentioning, even as we grant the petition on grounds of prescription and laches.

ACCORDINGLY, the decision of the Court of Appeals in C.A. G.R. CV No. 31976, affirming in toto the decision of the Regional Trial Court in Civil Case No. 7646, is reversed and set aside. No costs. SO ORDERED.