Artiicle 540 Magdalena, Sorsogon, particularly described as follows:
1. Heirs of Gamos vs Heirs of Frando : 149117 :
December 16, 2004 : J. Panganiban : Third Division
: Decision
11/25/16 10:50 PM
THIRD DIVISION
[G.R. No. 149117. December 16, 2004]
HEIRS OF CERILA GAMOS and RICARDO GALAG,
Namely, FELICITAS G.
GARCERA, ENCARNACION G. FORTE, NARCISA
G. GALAN; and DOMINGO,
EDILBERTO, ROBERTO, HELEN, VIRGILIO,
RICARDO, CONSTANTINO and
VIOLETA, All Surnamed GALAG, Represented by
VIOLETA GALAG as Their
Attorney-in-Fact; AMBROCIO GUATAO, MIGUEL
FUNGO and The DIRECTOR,
BUREAU OF LANDS, petitioners, vs. HEIRS OF
JULIANO FRANDO,
Namely, PACIENCIA GALLANOSA FUELLAS; and
RODOLFO, NERI,
JUAN and ANTONIO, All Surnamed GIMPES,
respondents.
DECISION
PANGANIBAN, J.:
A sales patent applicant who has complied with all the
legal requirements is entitled to a grant
of the disposable land of the public domain applied for.
The execution and formal delivery of the
patent becomes merely ministerial. Under these
circumstances, the property applied for is, for all
purposes, considered segregated from the public
domain. Hence, the subsequent issuance to a
third person of a free patent covering the same property
is null and void. The government can nolonger convey
the ownership of a parcel of land it no longer owns.
The Case
Before the Court is a Petition for Review under Rule 45,
seeking to nullify the August 23, 2000 Decision and the
July 12, 2001 Resolution of the Court of Appeals (CA)
in GR CV No.
61230. The decretal portion of the assailed Decision
reads:
WHEREFORE, upon the premises, the appealed
decision is AFFIRMED in toto.
The challenged Resolution denied petitioners Motion
for Reconsideration.
The Facts
The subject of the present controversy is a parcel of
agricultural land located in Sta.
Location: Poblacion, Sta. Magdalena, Sorsogon
Area: 2.4969 hectares
Boundaries: N-R. Frando & P. Frilles
E-I. Gallanosa & P. Frilles
S-I. Gallanosa & P. Frilles
W. Marcela de Galag
Juliana Frando, respondents predecessor-in-interest,
was in possession of the abovedescribed property. Since
1925, she had planted several trees and other plants
thereon, including coconuts, pili, bananas and cacao.
Sometime in 1946, the property was traversed by a
national
road that effectively divided it into two portions,
denominated as Lot Nos. 7 and 1855, respectively.
The latter, Lot No. 1855, is the subject of the present
controversy.
Evident from certified copies of existing records of the
Bureau of Lands introduced in evidence
is the fact that on February 14, 1952, Frando filed
Insular Government Property Sales (IGPS)
Application No. 162 for the parcel in question. Pursuant
thereto, a representative of the Bureau of Lands
inspected the area and found it to be inside an
agricultural zone, free from private claims and conflicts.
After the secretary of agriculture appraised the property
at P240, a notice calling for bids was published. At the
auction sale conducted on April 22, 1955, the only
bidder was Frando. On even date she deposited P24,
which represented 10 percent of the appraised value, as
evidenced by Official Receipt (OR) No. 9654851 dated
April 22, 1955.
Full payment of the purchase price was effected
approximately a year later, on April 6, 1956,
when Frando paid the balance of P216 as evidenced by
OR No. A-2675530. On the same day, an Order/Award
was made in her favor by Director of Lands Zoilo
Castrillo. Apparent from a survey plan executed
pursuant to an Order of the Bureau was the fact that the
property awarded to her covered both Lots 7 and 1855
with an aggregate area of 4.000 hectares.
One of her two children, Salvacion Gallanosa who was
married to Abdon Gimpes, continued
possession of the property. Sometime in 1940, the
couple constructed their house on the
southwestern portion thereof.
The other child of Frando, Paciencia Gallanosa-Fuellas,
chose to settle in Manila. The Gimpes
spouses helped her in the administration of the land.
Their children -- particularly Respondents
Rodolfo, Neri, Juan and Antonio -- were born on the
property, where they also grew up. After their parents
death, they continued possession of the land; and
harvested and received the fruits of the improvements
for themselves and on behalf of their grandmother,
Juliana Frando, even after her death in 1971.
Purportedly unknown to private respondents, a cadastral
survey of the Municipality of Sta.
Magdalena, Sorsogon, was conducted in 1958.
According to the Bureau of Lands, during the said
survey, Lot No. 1855 became the subject of Case No.
P1s-611-D, Sta. Magdalena Public Land Subdivision; as
a result, Free Patent No. 459501 dated July 24, 1969 was
awarded to Defendant Cerila Gamos on October 27,
1969. Allegedly, the free patent became the basis for the
issuance of OCT No. P-10548 in her name. Private
respondents claimed to be unaware of these
developments, as neither she nor her heirs had taken
possession of the disputed portion until 1981. In that
year, Ambrocio Guatno and the other petitioners, who
had joined him later, entered the property, gathered its
produce and built their houses thereon.
On August 3, 1988, the heirs of Juliana Frando filed
with the Regional Trial Court (RTC) a
Complaint against Cerila Gamos and the director of the
Bureau of Lands. The complainants
challenged the validity of Free Patent No. 459501 and
OCT No. P-10548. As the plaintiffs therein, they alleged
that the Bureau of Lands had no authority to award the
patent covering an area it had earlier awarded to Frando.
They further alleged that fraud had attended the issuance
of the subject OCT when Miguel Fungo, an employee
of the Office of the Provincial Assessor of Sorsogon,
purportedly forged the signature of Cerila Gamos in all
the documents. Those documents were used in the
transfer of the Tax Declaration to her name, as well as
in the application for the issuance of Free Patent No.
459501 and OCT No. P-10548.
In their Answer, Cerila Gamos and her co-defendants
alleged that they had been in actual and
open possession of the land as early as 1952; and that
the Bureau of Lands October 27, 1969
issuance in their favor of a free patent title, which
subsequently became the basis of OCT No. P10548, was
valid and lawful. They pointed out that respondents suit
to contest a title nineteen years after its issuance was
already barred by prescription.
In its Answer, the Bureau of Lands, represented by the
Office of the Solicitor General (OSG),
admitted that Juliana Frando had filed an IGPS
application for a parcel of land with an area of
2.4969 hectares located at Poblacion, Sta. Magdalena,
Sorsogon, Sorsogon. Admittedly, she won the public
bidding and deposited the amount of P24 under OR No.
9654851 dated April 22, 1955, but allegedly failed to
pay the balance price of P216. Thus, concluded the
Bureau, while the land had previously been awarded to
her, the Complaint was rendered dismissible for lack of
merit, as a consequence of her failure to pay the balance
price to assert her right to perfect her title thereto, and
to controvert the subsequent cadastral survey covering a
portion thereof. In its Answer,however, the Bureau
made no mention of OCT No. P-10548.
On July 7, 1998, the Sorsogon RTC rendered the
following judgment in favor of respondents
(the plaintiffs therein):
WHEREFORE, the court renders judgment:
a. Finding the defendant Cerila Gamos of having
fraudulently secured a free patent title to that
portion of the property in question described in
paragraph 3 of the complaint and indicated in
Exhibit X-1 as that portion shaded by red lines;
b. Ordering the defendant Cerila Gamos or her
successors-in-interest to execute a deed of
reconveyance of that portion of Lot No. 1855 under
Original Certificate of Title No. 10548 as
delineated and described in Exhibit X-1, shaded by red
lines;
c. Ordering the defendants to surrender the possession
of the same to the plaintiffs and to remove
whatever improvements said defendants had introduced
on said property;
d. Ordering the defendants to pay the plaintiffs the
amount of P15,000.00 x x x as damages
representing attorneys fees and necessary litigation
expenses, jointly and severally and;
e. To pay the costs.
Aggrieved, petitioners appealed to the Court of Appeals.
Ruling of the Court of Appeals Affirming the RTC, the
appellate court noted that the trial courts Decision was
fully supported by the evidence on record. The CA
dismissed petitioners submission that, on the basis of the
Report of the Bureau of Lands, the claim of Juliana
Frando had yet to be perfected, because she had paid
only 10 percent of the total value of the land covered by
her application. The appellate court pointed out that the
foregoing argument was belied by the Bureaus
Order/Award to her in1956.
Further, the CA upheld the lower courts award of
attorneys fees, because the appellees had
been compelled to litigate or incur expenses to protect
their interest by reason of the unjustified act of the
[appellants].
Hence, this Petition.
Issues
In their Memorandum, petitioners raise the following
issues for our consideration:
I
Whether or not the order award given to Juliana Frando
has been perfected
II
Whether or not Cerila Gamos free patent was secured
through fraud
III
Whether or not action of the heirs of Juliana Frando has
already been barred by laches/prescription
The Courts Ruling
The Petition has no merit. However, the challenged
judgment should be partly modified.
First Issue:
Perfection of Sales Patent
The Philippine Constitution provides that all lands of the
public domain x x x are owned by the
State. They are classified into agricultural, forest or
timber, mineral lands and national parks. xx. Alienable
lands of the public domain shall be limited to
agricultural lands.
The origin of the foregoing provisions can be traced to
the Roman law concept of dominium,
the power of the State to own or acquire property. Under
this concept, which became the basis for the regalian
theory predominant during the Spanish times, all lands
belonged to the Spanish
Crown. In our present republican form of government,
the concept remains, albeit stripped of its
colonial overtones. Now, ownership of all lands of the
public domain is vested in the State.
As in ordinary ownership, dominium embraces the
capacity to alienate the property owned. The
constitutional limitation on the States power to alienate
agricultural lands of the public domain is
intended to prevent monopoly and foreign control of our
natural resources, as well as to enable the government
to control the exploitation, development and utilization
thereof for the benefit of all.
Private persons gain title to agricultural lands of the
public domain by virtue of a public grant,
adverse possession (or prescription), accretion and -- in
certain cases -- reclamation. One who
seeks to register ones title has the burden of proving that
it has been acquired through any of the foregoing
modes, by virtue of which the land has effectively been
segregated from the public domain.
A perusal of the Complaint filed by private respondents
before the trial court shows that their
asserted claim over the disputed portion ostensibly
rested on the Order/Award issued to their
predecessor-in-interest, Juliana Frando, in 1956. The
issue is now narrowed down to whether this piece of
evidence sufficiently vested private respondents with an
uncontroverted and indefeasible title over the disputed
property.
Acquisition of Public Land Through a Sales Patent
Disposal of public agricultural land through a sales
patent, as in the instant case, is governed by
Commonwealth Act No. 141, the Public Land Act.
Under this law, a sales patent may be granted to a
Filipino citizen who may or may not be of lawful age,
provided that one who is below the age of majority is
the head of a family. The law provides that after winning
the bid and paying the purchase price, the applicant must
comply with the necessary requirements -- specifically
the cultivation, occupation and introduction of
improvements over at least one fifth of the land
appliedfor.
After the applicant meets the legal requirements, the
director of lands then orders the survey of
the land and the issuance of the sales patent in the
applicants favor. Section 107 of
Commonwealth Act 141 further requires the registration
of the patent under the Land Registration
Act by furnishing the registrar of deeds a certified copy
thereof, after which the corresponding
certificate of title would accordingly be issued to the
patentee.
In the present case, the Bureau of Lands did not issue
the patent to Frando, because she had
allegedly failed to pay the P216 balance of the sale price.
The Bureaus assertion is, however, soundly disproved
by evidence. Clearly appearing on the Order/Award is
the following proviso:
issued to Frando in 1956
That at the auction sale of the land held on April 22,
1955, the only bid received was that of the applicant
who offered P240.00 for the whole tract and deposited
the amount of P24.00 under O.R. No. 9654851 dated
April 22, 1955 which is equivalent to 10% of the bid.
Subsequently, the applicant again paid the amount of
P216.00 under O.R. No. A-2675530 dated April 6, 1956
to complete the full purchase price of the land.
Given the full payment of the purchase price as well as
the compliance with all the
requirements for the grant of a sales patent, the Bureau
had no reason to deny the issuance of
such patent to Frando. Her compliance with all the
requirements effectively vested in her and her
successors-in-interest an equitable title to the property
applied for. Applicable to the instant case is our time-
honored pronouncement in Balboa v. Farrales, which
we quote:
A party 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 interest therein,
and is to be regarded as the equitable owner thereof.
Where the right to a patent has once become vested in a
purchaser of public lands, it is equivalent, so far as the
Government is concerned, to a patent actually issued.
The execution and delivery of the patent after the right
to it has become complete are the mere ministerial acts
of the officers charged with that duty. x x x. Even
without a patent, a perfected homestead is a property
right in the fullest sense, unaffected by the fact that the
paramount title to the land is still in the Government.
Such land may be conveyed or inherited.
Thus, when the cadastral survey was subsequently
conducted in Sta. Magdalena in 1958, the
disputed property -- already held in private ownership -
- was no longer part of the public domain. The director
of lands had no more authority to grant to a third person
a patent covering the same tract that had already passed
to private ownership.
Thus, the issuance of the free patent to Cerila Gamos,
insofar as it encroached the portion already granted to
Frando, had no legal basis at all.
Open, Continuous, Exclusive and Notorious Possession
and Occupation
of Alienable and Disposable Lands The denial of the
sales patent notwithstanding, Juliana Frando is deemed
to have acquired equitable title to the property, because
private respondents adequately proved during trial her
open, continuous, exclusive and notorious possession
and occupation of alienable and disposable land of the
public domain. Introduced in evidence was a
Declaration of Real Property covering the same tract of
land. The Declaration had been issued to Basilio Frando,
father of Juliana Frando, sometime in 1906.
Witness accounts of long time residents of the adjoining
properties confirmed her possession for a period not
later than 1925; and her introduction thereon of various
trees and other plants, including bananas, cacao, pili and
coconuts.
They also attested to the continued possession of the
property by Frandos daughter, Salvacion
Gimpes; and subsequently by her children, herein
private respondents. Aside from showing the
Order/Award, the children bolstered their claim by
introducing in evidence several Tax
Declarations, sketch plans, survey returns and the
reports of the court-appointed commissioner.
While asserting possession of the property as early as
1952, petitioners have not presented
any document or witness to prove their bare claim.
Moreover, Ambrosio Guatno -- one of herein
petitioners -- testified that he had entered the property
upon the permission of Ricardo Galag, an heir of
Gamos; later, he admitted that its true owner was Juliana
Frando.
In line with Susi v. Razon, possession of a parcel of
agricultural land of the public domain for
the prescribed period of 30 years ipso jure converts the
lot into private property. In that case, the application of
Valentin Susi for a free patent was denied by the Bureau
of Lands, despite the fact that he had been in possession
of the property for a far longer period than the grantee.
Still true to this day is this Courts ruling on the matter,
which we quote:
It clearly appears from the evidence that Valentin Susi
has been in possession of the land in question openly,
continuously, adversely and publicly, personally and
through his predecessors, since the year 1880, that is, for
about forty-five years. x x x. When on August 15, 1914,
Angela Razon applied for the purchase of the land,
Valentin Susi had already been in possession thereof
personally and through his predecessors for thirty four
years. x x x In favor of Valentin Susi, there is, moreover,
the presumption juris et de jure x x x that all
the necessary requirements for a grant by the
Government were complied with, for he has been in
actual and physical possession personally and through
his predecessors, of an agricultural land of the public
domain openly, continuously, exclusively and publicly
since July 26, 1894, with a right to a certificate of title
to said land under the provisions of Chapter VIII of said
Act. So that when Angela Razon applied for a grant in
her favor, Valentin Susi had already acquired, by
operation of law, not only a right to a grant, but a grant
of the government, for it is not necessary that a
certificate of title should be issued in order that a
grant may be sanctioned by the courts, an application
therefore is sufficient, under the provision of Section 47
of Act No. 2874. If by a legal fiction, Valentin Susi had
acquired the land in question by a grant of the State, it
had already ceased to be of the public domain and had
become the privat property, at least by presumption of
Valentin Susi, beyond the control of the Director of
Lands.
Consequently, in selling the land in question to Angela
Razon, the Director of Lands disposed of a land over
which he no longer had title or control, and the sale thus
made was void and of no effect and Angela Razon did
not thereby acquire any right. (Emphasis supplied)
Clearly, the mere application for a patent, coupled with
the fact of exclusive, open, continuous
and notorious possession for the required period is
sufficient to vest in the applicant the grant
applied for. In sum, the application by Juliana Frando
for a sales patent, coupled with her open,
exclusive, uninterrupted and notorious possession of the
land applied for is, for all purposes,
equivalent to a patent already perfected and granted.
The subsequent entry of petitioners and their occupation
of the property in question was in bad
faith, given the prior possession thereof by private
respondents. Thus, when the former were
ordered by the RTC to remove whatever improvements
they might have introduced thereon, the
court committed no error.
Evidentiary Matters and the Attempt to Deceive this
Court . The Complaint before the Sorsogon RTC prayed
mainly for the cancellation of OCT No. P10548, which
had allegedly been issued to Cerila Gamos by the
Register of Deeds of Sorsogon on October 27, 1969. An
examination of the records shows that no copy of the
said OCT was even presented in evidence at any stage
of the proceedings. The complainants (herein
respondents) failed to present the document that was
central to their action. That omission was in no way
alleviated by the ominous failure of the defendants
themselves (herein petitioners) to present the very
evidence upon which they had based their claim of
superior title. In fact, the latter never presented any
documentary evidence at all and merely adopted that of
the former. Inasmuch as neither party had presented the
subject OCT in evidence and, hence, the Sorsogon RTC
never had the opportunity to examine it, there was no
basis for trial courts Decision (as affirmed by the
appellate court) -- more particularly, the part ordering
petitioners to execute a deed of reconveyance of that
portion of Lot No. 1855 under Original Certificate of
Title No. 10548.
As worded, the RTCs ruling may lead to mischievous
consequences. For all we know, OCT No.
10548 may be in the name of a third person who is not
a party to the present proceedings, or it may cover a
property different from that in dispute. On these
grounds, the foregoing portion of the trial courts
Decision should be modified. The metes and bounds of
the property in dispute -- the title to and possession of
which is confirmed to belong properly to private
respondents -- should in no way be defined by any
reference to OCT No. 10548. Rather, such definition
should be based on the documentary evidence at hand;
more particularly, the technical description in the survey
plan made-- pursuant to Frandos application for a sales
patent -- as confirmed by the survey later conducted by
the court-appointed commissioner.
By subsequently attaching Free Patent No. 459501
(which was in the name of Gamos) as
Annex J to their Petition, petitioners are resorting to a
belated remedy to a fatal omission. They
should have offered the document before the trial court,
not -- as they have done -- in the last
stretch of the proceedings, when such document can no
longer be considered. Time and time
again, we have pronounced that this Court is not a trier
of facts.
Assuming arguendo that the patent is still admissible, it
is nonetheless bereft of any evidentiary
value. While it refers to Lot No. 1855, it is -- unlike the
Order/Award issued to Frando -accompanied neither by
a survey sketch duly approved by the Bureau of Lands,
nor by a technical description that would enable us to
determine whether the patent refers to the property in
dispute.
We also note that the said document was admittedly
issued to Gamos on October 27, 1969, a mere seventeen
years after she had allegedly entered into possession of
the property -- in 1952, according to herein petitioners.
Clearly then, Free Patent No. 459501 was issued despite
the applicants possession of the property for a period
shorter than the 30 years required by law.
Further compounding the procedural lapse committed
by petitioners is their apparent attempt to mislead this
Court. Likewise attached to the Petition is a copy of an
alleged Deed of Sale executed between one Felipa
Bongais and Cerila Gamos, as well as several copies of
Tax Declarations apparently showing that the Deed
covers the contested property.
A perusal of the said documents shows that they involve
a rice land situated in Adgao,
Poblacion, Sta. Magdalena, with an area of 11,300
square meters; not the property subject of the present
controversy, which covers 2.4969 to 4.0000 hectares.
By introducing the alleged Deed of Sale, petitioners
obviously want to bolster their claim of ownership by
impressing upon this Court that they have purchased the
property from Bongais. They are, however, thereby
contradicting their prior assertion of title on the basis of
a free patent. These contradictory assertions not only
cast serious doubt on the veracity of their claim; they
also constitute an apparent attempt to mislead the Court.
Second Issue:
Fraud
Petitioners argue that the trial court erred in holding that
the free patent issued to Cerila Gamos
had fraudulently been secured. Both parties failed,
though, to present a copy of Free Patent No.
459501. This lapse resulted in the trial courts failure to
examine the document and to appreciate the
circumstances under which it had allegedly been issued.
Thus, any determination of whether fraud indeed
attended its issuance is not possible now.
Third Issue:
Prescription and Laches In their last assignment of error,
petitioners argue that private respondents action to
annul the free patent issued to Cerila Gamos has already
prescribed and is barred by laches. We do not agree.
As testified to by the Gilda Bongais -- one of Juliana
Frandos heirs -- when petitioners first
invaded the property in 1979 by constructing a house
thereon, her aunt (Paciencia Gallenosa) filed an action
contesting such intrusion. The action was later dropped
due to the financial burdens of the litigation, definitely
not because of any concession of rights by private
respondents. Thus, the legal inaction on their part was
due, not to their lack of vigilance, but merely to their
lack of resources to defend their property.
On the witness stand, Guatno himself recognized
Juliana Frando and her heirs as the true
owners of the property, even as he admitted that it was
Galag -- one of herein petitioners -- who had given him
permission to erect a house on the land in 1980.
Petitioners possession of the disputed property, based as
it was on mere tolerance, could neither ripen into
ownership nor
operate to bar any action by private respondents to
recover absolute possession thereof.
WHEREFORE, the Petition is DENIED. However,
paragraph (b) of the RTC decision is
MODIFIED to read as follows:
b. Ordering the successors-in-interest of Cerila Gamos
to execute a deed of reconveyance of that portion of
Lot No. 1855 with an area of 1,626 square meters as
delineated and described in Exhibit X-1, shaded by red
lines.
Counsels for petitioners -- Attys. Arceli A. Rubin,
Amelia C. Garchitorena, Marvin R. Osias and
Beatriz Teves de Guzman -- are hereby ordered to
SHOW CAUSE, within ten days from receipt
hereof, why they should not be subjected to
administrative sanction for their attempt to deceive this
Court through the introduction of misleading evidence.
Costs against petitioners.
SO ORDERED.
[G.R. No. 160421. October 4, 2004.]
2. SPOUSES PHILIP RECTO and ESTER
C.zRECTO, represented by their Attorney-in-fact,
GENEROSO R. GENEROSO, petitioners, vs.
REPUBLIC OF THE PHILIPPINES, respondent.
DECISION
YNARES-SANTIAGO, J p:
This is a petition for review on certiorari challenging the
January 16, 2003 decision of the Court of Appeals in
CA-G.R. CV No. 65407 which reversed the September
7, 1998 decision of the Regional Trial Court of Tanauan,
Batangas, Branch 6 in Land Registration Case No. T-
320. Likewise assailed is the appellate court's October
17, 2003 resolution denying petitioners' motion for
reconsideration. TcDHSI
On February 19, 1997, petitioner spouses Philip Recto
and Ester C. Recto, filed with the Regional Trial Court
of Tanauan, Batangas, Branch 6, an application for
registration of title over a 23,209 square meter lot,
designated as Lot 806, Cad-424, Sto. Tomas Cadastre,
Plan Ap-04-010485, situated in Barangay San Rafael,
Municipality of Sto. Tomas, Province of Batangas,
under Presidential Decree (P.D.) No. 1529, otherwise
known as the Property Registration Decree. They also
prayed in the alternative that their petition for
registration be granted pursuant to Commonwealth Act
(C.A.) No. 141, or the Public Land Act.
Petitioners alleged that on June 4, 1996, they purchased
Lot 806 from sisters Rosita Medrana Guevarra and
Maria Medrana Torres for the amount of P6,943,534.40.
The two, in turn, inherited the lot from their deceased
parents, Vicente and Eufemia Medrana. Maria, born on
October 22, 1917, declared that since 1945, her father
was already the owner of Lot 806. She became aware of
her father's possession of the subject lot in the concept
of owner in 1930 when she was 13 years of age. The
possession of the subject lot by the Medrana family
prior to 1945 was corroborated by Rosita, who testified
that in 1935 when she was 13 years of age, she first came
to know that her father was the owner of Lot 806. The
sisters added that during the lifetime of Vicente, he
planted rice and corn on the lot with the help of their
tenant. After his demise, they continued to plant the
same crops through hired farmers.
Petitioners presented the following documentary
evidences
(1) Blue Print Copy of the Plan and Technical
Description of Lot 806, both certified by Land
Management Services (formerly the Bureau of Lands),
of the Department of Environment and Natural
Resources (DENR);
(2) Tax Declarations of the lot for the years 1948, 1955,
1968, 1974, 1980, 1987, 1989 and 1994 (in the name of
Vicente Medrana); 1996 (in the name of Rosita
Guevarra and Maria Torres); and 1998 (in the name of
Philip and Ester Recto).
(3) Certification of Non-Delinquency for the year 1998
from the Municipal Treasurer of Sto. Tomas, Batangas;
(4) Report from the Community Environment and
Natural Resources Office, Department of Environment
and Natural Resources (DENR) stating, among others,
that
(a) the entire area is within the alienable and disposable
zone as classified under Project No. 30 L.C. Map No.
582 and released and certified as such on December 31,
1925; (Emphasis, supplied)
(b) the lot is not within a reservation area nor within the
forest zone;
(c) the lot is not within a previously issued patent,
decree or title.
(d) there is no public land application filed for the same
land by the applicant or any other person;
(e) the land is covered by Tax Declaration No. 021-
02166-A in the name of the predecessor-in-interest and
that there is no difference in area;
(f) the lot is agricultural in nature; and
(g) the lot does not encroach upon an established
watershed, riverbed and river bank protection.
(5) Report from the Land Management Bureau that the
land involved is not covered by any land patent or by
land application pending issuance of patent.
(6) Report from the Forest Management Service, DENR
that the subject lot falls within Alienable and Disposable
lands, Project No. 30 of Sto. Tomas, Batangas, per BFD
LC Map No. 582 certified on December 31, 1925.
(7) Report from the Land Management Sector, DENR
that Plan Ap-04-010485, Lot 806, Cad-424, Sto. Tomas
Cadastre, situated in the Barangay of San Rafael,
Municipality of Sto. Tomas, Province of Batangas, is
not a portion of nor identical to any previously approved
isolated survey.
There being no opposition to the petition from any
private individual, an Order of General Default was
issued by the trial court.
On September 7, 1998, the court a quo rendered a
decision granting the petition for registration. The
dispositive portion thereof, reads:
WHEREFORE, and upon previous confirmation of the
Order of General Default, this Court hereby adjudicates
and decrees Lot 806, Cad-424, Sto. Tomas Cadastre on
plan Ap-04-010485, situated in San Rafael, Sto. Tomas,
Batangas, with an area of 23,209 square meters, in favor
of and in the names of Spouses Philip Recto and Ester
C. Recto, Filipino citizens and residents of 1322 Palm
Avenue, Dasmarias Village, Makati City.
Once this Decision shall have become final let the
corresponding decree of registration be issued.
SO ORDERED.
The Republic, represented by the Solicitor General
appealed to the Court of Appeals contending that
petitioners failed to (1) offer in evidence the original
tracing cloth plan of the land; (2) prove possession of
the lot for the period required by law; and (3) overthrow
the presumption that subject property forms part of the
public domain.
On January 16, 2003, the Court of Appeals reversed the
decision of the trial court on the sole ground of failure
to offer in evidence the original tracing cloth plan of the
land.
Petitioners filed a motion for reconsideration praying
that in view of their compliance with all the substantive
and procedural requirements for registration, save for
the submission of the tracing cloth plan, the case be
remanded to the trial court for the presentation of the
said tracing cloth plan. The Solicitor General, on the
other hand, interposed no objection to petitioners'
motion for reconsideration.
On October 17, 2003, the Court of Appeals denied
petitioners' motion for reconsideration. Hence, the
instant petition praying for the remand of the case before
the trial court. ASIDTa
In its Comment, the Solicitor General manifested that in
the interest of justice, he will not oppose the petition.
Section 14 (1) of Presidential Decree No. 1529 states:
SEC. 14. Who may apply. The following persons
may file in the proper Court of First Instance [now the
Regional Trial Court] an application for registration of
title to land, whether personally or through their duly
authorized representatives:
(1) Those who by themselves or through their
predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of
alienable and disposable lands of the public domain
under a bona fide claim of ownership since June 12,
1945, or earlier.
On the other hand, Section 48 (b) of Commonwealth Act
No. 141, as amended by Section 4 of Presidential
Decree No. 1073, provides:
The provisions of Section 48(b) and Section 48(c),
Chapter VIII, of the Public Land Act are hereby
amended in the sense that these provisions shall apply
only to alienable and disposable lands of the public
domain which have been in open, continuous, exclusive
and notorious possession and occupation by the
applicant himself or thru his predecessor-in-interest,
under a bona fide claim of acquisition of ownership,
since June 12, 1945.
Thus, before one can register his title over a parcel of
land, the applicant must show that (a) he, by himself
or through his predecessors-in-interest, has been in
open, continuous, exclusive and notorious possession
and occupation of the subject land under a bona
fideclaim of ownership since June 12, 1945 or earlier;
and (b) the land subject of the application is alienable
and disposable land of the public domain.
In the instant case, Rosita and Maria the predecessors-
in-interest of petitioners, categorically testified that
they, and prior to them their father, had been cultivating
and possessing Lot 806 in the concept of owners. Maria,
having been born on October 22, 1917, and Rosita on
October 29, 1922, were 13 years of age when they
became aware of their family's possession of Lot 806 in
1930 and 1935, respectively. At 13, they were
undoubtedly capable and competent to perceive their
father's possession of Lot 806 in the concept of owner.
Moreover, the trial court found their testimonies to be
worthy of belief and credence. Considering that the
judge below is in a better position to pass judgment on
the issue, having personally heard the witnesses testify
and observed their deportment and manner of testifying,
her findings deserve the highest respect.
The fact that the earliest Tax Declaration of the subject
lot was for the year 1948 will not militate against
petitioners. Note that said 1948 Tax Declaration cancels
a previous Tax Declaration (No. 26472), thus
substantiating petitioners' possession of Lot 806 through
their predecessor-in-interest even prior to said date. At
any rate, in Republic v. Court of Appeals, it was held
that the belated declaration of the lot for tax purposes
does not necessarily mean that possession by the
previous owners thereof did not commence in 1945 or
earlier. As long as the testimony supporting possession
for the required period is credible, the court will grant
the petition for registration. Pertinent portion of the
decision, reads
Petitioner questions the credibility of claimant
Divinaflor who testified on the possession of Marcial
Listana for the period required by law. The issue of
credibility is unavailing considering that the judge
below is in a better position to pass judgment on the
issue having personally heard the witnesses testify and
observed their deportment and manner of testifying.
Being in a better position to observe the witnesses, the
trial court's appreciation of the witness' testimony,
truthfulness, honesty, and candor, deserves the highest
respect.
xxx xxx xxx
. . . [A] person is competent to be a witness if (a) he is
capable of perceiving at the time of the occurrence of
the fact and (b) he can make his perception known. True,
in 1939, Divinaflor was not born yet, but in 1945, he
was four years old, residing in Maramba, Oas, Albay,
where the subject lot is located. As his testimony goes,
he and Marcial Listana were barrio mates, and that he
usually passes by the subject land. The fact that
Divinaflor was only a child at the required inception of
possession does not render him incompetent to testify
on the matter. It is well-established that any child
regardless of age, can be a competent witness if he can
perceive, and perceiving can make known his
perception to others and that he is capable of relating
truthfully facts for which he is examined. The
requirements of a child's competence as a witness are:
(a) capacity of observation; (b) capacity of recollection;
and (c) capacity of communication. There is no showing
that as a child, claimant did not possess the foregoing
qualifications. It is not necessary that a witness'
knowledge of the fact to which he testifies was obtained
in adulthood. He may have first acquired knowledge of
the fact during childhood, that is, at the age of four,
which knowledge was reinforced through the years, up
until he testified in court in 1990. There is reason to
reject petitioner's claim that Divinaflor is incompetent
to testify regarding Listana's possession since it appears
undisputed that Divinaflor grew up in Maramba, Oas,
Albay, and had occasion to see Listana possessing the
land.
Finally, we agree with the Court of Appeals that the
belated declaration of the property for tax purposes does
not necessarily lead to the conclusion that the
predecessors were not in possession of the land as
required by law since 1945. Petitioner capitalizes on the
fact that the earliest tax declaration presented took effect
only in 1980 while the certificate of tax payment is dated
1990. While this Court has held in a long line of cases
that tax declarations or tax receipts are good indicia of
possession in the concept of owner, it does not
necessarily follow that belated declaration of the same
for tax purposes negates the fact of possession,
especially in the instant case where there are no other
persons claiming any interest in Lot 10739.
So also, there is no doubt that Lot 806 is an alienable
land of the public domain having been released and
certified as such on December 31, 1925. As further
certified by the Community Environment and Natural
Resources Office of the DENR, the entire area of Lot
806 is an agricultural land; within an alienable and
disposable zone; not within a reservation area nor within
a forest zone; and does not encroach upon an established
watershed, riverbed, and riverbank protection.
Petitioners were thus able to successfully meet the
requisite for original registration of title, to wit: open,
continuous, exclusive and notorious possession and
occupation of an alienable and disposable land under a
bona fide claim of ownership since June 12, 1945 or
earlier. EIaDHS
Nevertheless, the Court of Appeals reversed the
decision of the trial court granting the petition for
registration on the ground of petitioners' failure to
submit in evidence the original tracing cloth plan of Lot
806. Indeed, the submission of the tracing cloth is a
mandatory requirement for registration. However, it was
held that while the best evidence to identify a piece of
land for registration purposes is the original tracing
cloth plan from the Bureau of Lands, blue print copies
and other evidence could also provide sufficient
identification. In Republic v. Court of Appeals, the
Court ruled that the blueprint copy of the cloth plan
together with the lot's technical description duly
certified as to their correctness by the Bureau of Lands
(Now the Land Management Bureau of the DENR) are
sufficient to identify the land applied for registration,
thus
On the first challenge, the petitioner invokes the case of
Director of Lands v. Reyes, where it was held that "the
original tracing cloth plan of the land applied for which
must be approved by the Director of Lands" was "a
statutory requirement of mandatory character" for the
identification of the land sought to be registered. As
what was submitted in the case at bar to identify the
subject property was not the tracing cloth plan but only
the blueprint copy of the survey plan, the respondent
court should have rejected the same as insufficient.
We disagree with this contention. The Court of Appeals
was correct when it observed that in that case the
applicant in effect "had not submitted anything at all to
identify the subject property" because the blueprint
presented lacked the approval of the Director of Lands.
By contrast
In the present case, there was considerable compliance
with the requirement of the law as the subject property
was sufficiently identified with the presentation of
blueprint copy of Plan AS-06-000002 (San Pedro v.
Director of Lands, CA-G.R. No. 65332-R, May 28,
1981). It should be noted in this connection that the
Bureau of Lands has certified to the correctness of the
blueprint copy of the plan including the technical
description that go with it. Hence, we cannot ignore the
fact, absent in the Reyes case, that applicant has
provided ample evidence to establish the identity of the
subject property. (Emphasis supplied)
Such a view was affirmed by the Court in Republic of
the Philippines v. Intermediate Appellate Court, where
we held that while the best evidence to identify a piece
of land for registration purposes was the original tracing
cloth plan from the Bureau of Lands, blueprint copies
and other evidence could also provide sufficient
identification. This rule was bolstered only recently in
the case of Director of Lands v. Court of Appeals, where
the Court declared through Chief Justice Marcelo B.
Fernan:
We affirm. No reversible error was committed by the
appellate court in ruling that Exhibit "O," the true
certified copy of the white paper plan, was sufficient for
the purpose of identifying the land in question. Exhibit
"O" was found by the appellate court to reflect the land
as surveyed by a geodetic engineer. It bore the approval
of the Land Registration Commission, and was re-
verified and approved by the Bureau of Lands on April
25, 1974 pursuant to the provisions of P.D. No. 239
withdrawing from the Land Registration Commission
the authority to approve original survey plans. It
contained the following material data: the barrio
(poblacion), municipality (Amadeo) and province
(Cavite) where the subject land is located, its area of 379
square meters, the land as plotted, its technical
descriptions and its natural boundaries. Exhibit "O" was
further supported by the Technical Descriptions signed
by a geodetic surveyor and attested by the Land
Registration Commission. In fine, Exhibit "O"
contained all the details and information necessary for a
proper and definite identification of the land sought to
be registered, thereby serving the purpose for which the
original tracing cloth plan is required. The fact therefore
that the original survey plan was recorded on white
paper instead of a tracing cloth should not detract from
the probative value thereof. . . ..
In the case at bar, Lot 806 was sufficiently identified by
the blue print copy of the plan (Exhibit "R") and the
technical description (Exhibit "S") thereof both
approved by Land Management Services, DENR. Also,
per report of the Land Management Sector, Plan Ap-04-
010485, Lot 806, Cad-424, Sto. Tomas Cadastre,
situated in the Barangay of San Rafael, Municipality of
Sto. Tomas, Province of Batangas, is not a portion of,
nor identical to any previously approved isolated
survey. Petitioners also submitted before the Court of
Appeals a certified true copy of the original tracing cloth
plan as well as a certification from the Land Registration
Authority attesting to the fact that the original plan of
Plan-Ap-04-010485 in Diazo Polyester film is on file
with their office. Under the circumstances, therefore, the
Court of Appeals erred in reversing the decision of the
trial court solely on the ground that petitioners failed to
present the original tracing cloth plan.
Having met all the requirements for registration of title
including the presentation of sufficient evidence to
identify the land sought to be registered, there is no more
need to remand the case before the trial court for the
presentation of the tracing cloth plan.
WHEREFORE, the January 16, 2003 decision and
October 17, 2003 resolution of the Court of Appeals in
CA-G.R. CV No. 65407 are REVERSED and SET
ASIDE. The September 7, 1998 decision of the
Regional Trial Court of Tanauan, Batangas, Branch 6 in
Land Registration Case No. T-320, ordering the
issuance of a decree of registration over Lot 806, Cad-
424, Sto. Tomas Cadastre, Plan Ap-04-010485 in the
name of petitioners is REINSTATED.
No pronouncement as to costs.
SO ORDERED.
Article 541
1. TITONG v. CA
For one to file an action to quiet title to a parcel of land,
the requisites in Art 476 of the NCC must be complied
with meaning there should be an instrument, record,
claim, encumbrance setting forth the cloud or doubt
over the title. Otherwise, the action to be filed can either
be ejectment, forcible entry, unlawful detainer, accion
reivindicatoria or accion publiciana.
FACTS:
A 20,592 square meter parcel of land located at Barrio
Titiong, Masbate is the subject property being disputed
in this case. The property is being claimed by 2
contestants, however legal title over the property can
only be given to one of them.
The case originated from an action for quieting of title
filed by petitioner Mario Titong. The RTC of Masbate
decided in favor of private respondents, Vicente Laurio
and Angeles Laurio as the true and lawful owners of the
disputed land. The CA affirmed the decision of the
RTC.
Titong asserts that he is the owner of an unregistered
parcel of land with an area of 3.2800 hectares and
declared for taxation purposes. He claims that on three
separate occasions, private resps, with their hired
laborers, forcibly entered a portion of the land
containing an approximate area of 2 hectares and began
plowing the same under pretext of ownership. On the
other hand, private resps denied the claim and said that
the subject land formed part of the 5.5 hectare
agricultural land which they had purchased from their
predecessor-in-interest, Pablo Espinosa.
Titong identified Espinosa as the his adjoining owner
asserting that no controversy had sprouted between
them for 20 years until the latter sold lot 3749 to V.
Laurio. The boundary between the land sold to Espinosa
and what remained of Titongs property was the old
Bugsayon river. When Titong employed Lerit as his
tenant, he instructed the latter to change the course of
the old river and direct the flow of water to the lowland
at the southern portion of Titongs property, thus
converting the old river into a Riceland.
Private resps, on the other hand, denied claim of
Titongs, saying that the area and boundaries of disputed
land remained unaltered during the series of
conveyances prior to its coming into his hands. Accdg
to him, Titong first declared land for taxation purposes
which showed that the land had an area of 5.5 hectares
and was bounded on the north by the B. River; on the
east by property under ownership by Zaragoza, and on
the west by property owned by De la Cruz. He also
alleges that Titong sold property to Verano. The latter
reacquired the property pursuant to mutual agreement to
repurchase the same.
However, the property remained in Titongs hands only
for 4 days because he sold it to Espinosa. It then became
a part of the estate of Espinosas wife, late Segundina
Espinosa. Later on, her heirs executed an Extrajudicial
Settlement of Estate with Simultaneous Sale whereby
the 5.5 hectares was sold to Laurio for 5,000 pesos. In
all these conveyances, the area and boundaries of the
property remained exactly the same as those appearing
in the name of Titongs.
The court found out that 2 surveys were made of the
property. First survey was made by Titong, while the
second was the relocation survey ordered by the lower
court. Because of which, certain discrepancies surfaced.
Contrary to Titongs allegation, he was actually
claiming 5.9789 hectares, the total areas of lot nos 3918,
3918-A and 3606. The lot 3479 pertaining to Espinosas
was left with only an area of 4.1841 hectares instead of
the 5.5 hectares sold by Titong to him.
Apprised of the discrepancy, private resps filed a protest
before Bureau of Lands against 1st survey, and filing a
case for alteration of boundaries before the MTC,
proceedings of which were suspended because of instant
case.
Private resps. Avers that Titong is one of the four heirs
of his mother, Leonida Zaragoza. In the Extrajudicial
Settlement with Sale of Estate of late Zaragoza, the heirs
adjudicated unto themselves the 3.6 hectares property of
the deceased. The property was bounded by the north by
Verano, on the east by Bernardo Titong, on the south by
the Bugsayon River and on the west by Benigno Titong.
Instead of reflecting only .9000 hectares as his rightful
share in the extrajud settlement, Titongs share bloated
to 2.4 hectares. It then appeared to Laurio that Titong
encroached upon his property and declared it as part of
his inheritance.
The boundaries were likewise altered so that it was
bounded on the north by Verano, on the east by B.
Titong, on the south by Espinosa and on the west by
Adolfo Titong. Laurio also denied that Titong diverted
course of the B. river after he had repurchased the land
from Verano because land was immediately sold to
Espinosa thereafter.
ISSUE:
Whether or not Titong is the rightful owner of the
subject property
RULING: NO
The remedy for quieting of title may be availed of under
the circumstances mentioned in Art 476 of the NCC
wherein it says that action to quiet title may be made as
a remedial or preventive measure. Under 476, a claimant
must show that there is an instrument, record, claim,
encumbrance or proceeding which casts a cloud, doubt,
question or shadow upon owners title to or interest in
real property. The ground for filing a complaint for
quieting title must be instrument, record, claim,
encumbrance or proceeding.
In the case at bar, Titong failed to allege that there was
an instrument, claim etc be clouded over his property.
Through his allegations, what Titong imagined as
clouds cast on his title were Laurios alleged acts of
physical intrusion into his purported property. The
grounds mentioned are for action for forcible entry and
not quieting title.
In addition, the case was considered to be a boundary
dispute. The RTC and CA correctly held that when
Titong sold the 5.5 hectare land to Espinosa, his rights
and possession ceased and were transferred to Laurio
upon its sale to the latter.
Thus, it is now a contract of sale wherein it is a contract
transferring dominion and other real rights in the thing
sold. Titong also cannot rely on the claim of prescription
as ordinary acquisitive prescription requires possession
in good faith and with just title for the time fixed by law.
Article 546
1.SPOUSES JOSE CHUA and MARGARITA
CHUA, Petitioners, versus THE HONORABLE
PEDRO GUTIERREZ, in his capacity as Presiding
Judge of Branch 119, Regional Trial Court, Pasay
City, PEDRO A. ABADILLA, in his capacity as
Sheriff IV of Branch 119, Regional Trial C
2010
December
DECISION
PERALTA, J.:
Before this Court is a petition for review on
certiorari,[1] under Rule 45 of the Rules of Court,
seeking to set aside the February 7, 2006 Decision[2]
and April 17, 2006 Resolution[3] of the Court of
Appeals (CA), in CA-G.R. SP No. 81382.
The facts of the case are as follows:
The dispute involves Townhouse Unit 320, located at
Roxas Sea Front Garden, Roxas Boulevard, Pasay City,
which was previously covered by Transfer Certificate of
Title (TCT) No. 127330 in the name of Benito Chua
(Benito). Petitioners, spouses Jose and Margarita Chua,
claim that Benito sold the property to them on July 20,
1994 for P2,800,000.00. Said sale, however, was only
registered on January 5, 1995.
Meanwhile, on November 11, 1994, respondent Tan
Tek Sing filed with the Regional Trial Court (RTC) of
Pasay City, a suit for collection, docketed as Civil Case
No. 94-1160, against Benito, among others, with a
prayer for the issuance of a writ of attachment. On
November 15, 1994, a writ of preliminary attachment
was issued by the trial court prompting the Sheriff to
levy on Townhouse Unit 320. On November 18, 1994,
entry number 94-3278/T-127330, a notice of levy on
attachment, was inscribed in TCT No. 127330 by the
Register of Deeds of Pasay City. At the time of said
inscription, TCT No. 127330 was still in the name of
Benito.
On December 5, 1994, petitioners filed with the RTC of
Pasay City a Motion to Exclude and Remove Writ of
Attachment from Townhouse Unit 320 on the ground
that the subject property was already owned by them by
virtue of an unregistered Deed of Absolute Sale[4]
executed in their favor by Benito on July 20, 1994.
On January 5, 1995, petitioners registered the Deed of
Absolute Sale with the Register of Deeds of Pasay City.
As a result, TCT No. 127330 was cancelled and TCT
No. 134590 was issued in petitioners name. The notice
of levy on attachment, however, was carried over in the
new title.
On April 26, 1995, the RTC rendered a Decision[5]
finding Benito liable to respondent. It, however,
excluded Townhouse Unit 320 from attachment. The
pertinent portions of the Decision read:
WHEREFORE, judgment is hereby rendered in favor of
plaintiff and against the defendants BENITO NG
CHUA, HENRY A. CHENG and MASTER
FOOTWEAR SALES, INC., ordering the said
defendants to pay the plaintiff the sum of P2.6 million,
with legal interest thereon from September 3, 1994 until
the amount shall have been fully paid; x x x.
xxxx
As prayed for by movants PHILAM, Jose Chua and
Chua Tiu Ning Ning, the Unit 320 of the Townhouse
within Roxas Seaport Garden Compound, Aurora III
Road, Roxas Boulevard, Pasay City, is hereby excluded
from the attachment enforced by the Sheriff of this
Court on November 18, 1994.
SO ORDERED.[6]
Respondent partially appealed the RTC Decision to the
CA in so far as it excluded Townhouse Unit 320 from
attachment. The appeal was docketed as CA-G.R. CV
No. 49959. On February 18, 1999, the CA rendered a
Decision,[7] granting respondent's appeal, the
dispositive portion of which reads:
IN LIGHT OF ALL THE FOREGOING, the herein
assailed decision is hereby AFFIRMED, but
MODIFIED in that:
1. The subject Townhouse Unit 320 covered by TCT
No. 134590, which is located within the Roxas Seafront
Garden Compound, Aurora III Road, Roxas Boulevard
corner Russel Avenue, Pasay City, is hereby made
subject to the writ of attachment enforced by the Sheriff
of the court a quo on November 18, 1994; x x x.
xxxx
SO ORDERED.[8]
Aggrieved, petitioners filed a motion for
reconsideration, but the same was denied by the CA in
a Resolution[9] dated March 1, 2001.
Petitioners then appealed the CA Decision to this Court,
where it was docketed as G.R. No. 147339. On June 20,
2001, this Court issued a Resolution dismissing the
same for failure to (a) submit a certification against
forum shopping duly executed by petitioners
themselves, and (2) properly verify the petition.
After the denial of petitioners appeal by this Court,
respondent then moved for execution against
Townhouse Unit 320. The RTC granted respondent's
motion. Notwithstanding, the finality of the CA
Decision in CA-G.R. CV No. 49959, petitioners,
however, moved to quash the writ of execution and
notice of levy on the grounds that they are not the
judgment debtors and the property levied upon was
already sold to them prior to the institution of the suit.
On August 5, 2003, the RTC issued an Order[10]
denying petitioners motion, the dispositive portion of
which reads:
WHEREFORE, the movant's motion to quash writ of
execution and notice of levy and motion to issue
temporary restraining order and/or injunction is hereby
denied for lack of merit.[11]
Aggrieved, petitioners filed a Motion for
Reconsideration,[12] which was, however, denied by
the RTC in its Order[13] dated December 3, 2003.
Adamant in excluding Townhouse Unit 320 from
execution, petitioners then filed a petition for
certiorari[14] with the CA assailing the August 5, 2003
and December 3, 2003 Orders of the RTC. On February
7, 2006, the CA issued a Decision denying petitioners
petition, the dispositive portion of which reads:
WHEREFORE, the petition is DENIED DUE COURSE
and DISMISSED.
SO ORDERED.[15]
The CA ruled that a prior registration of a lien creates a
preference and that whatever right over the property
petitioners acquired became subordinate and subject to
the duly recorded and annotated attachment and levy.
Petitioners filed a motion for reconsideration, which
was, however denied by the CA in a Resolution dated
April 17, 2006.
Hence, herein petition, with petitioners raising a lone
issue for this Court's resolution, to wit:
THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN NOT CONSIDERING THAT
THE POWER OF THE COURT IN [THE]
EXECUTION OF JUDGMENT EXTENDS ONLY TO
PROPERTIES UNQUESTIONABLY BELONGING
TO THE JUDGMENT DEBTOR.[16]
The petition is not meritorious.
The main issue in this case is whether or not a registered
writ of attachment is a superior lien over that of an
unregistered deed of sale. The same is not novel.
Petitioners argue that at the time the property was
levied, the same was already in their names. Petitioners
thus posit that, since they are not the judgment debtors,
their property should not be the subject of execution.
Petitioners arguments deserve scant consideration.
Since the subject property is covered by a Torrens Title,
the law applicable is Section 51[17] of Presidential
Decree (PD) No. 1529. Said provision provides:
SEC. 51. Conveyance and other dealings by registered
owner. - An owner of registered land may convey,
mortgage, lease, charge or otherwise deal with the same
in accordance with existing laws. He may use such
forms of deeds, mortgages, leases or other voluntary
instruments as are sufficient in law. But no deed,
mortgage, lease, or other voluntary instrument, except a
will purporting to convey or affect registered land shall
take effect as a conveyance or bind the land, but shall
operate only as a contract between the parties and as
evidence of authority to the Registry of Deeds to make
registration.
The act of registration shall be the operative act to
convey or affect the land insofar as third persons are
concerned, and in all cases under this Decree, the
registration shall be made in the office of the Register of
Deeds for the province or the city where the land
lies.[18]
The preference given to a duly registered levy on
attachment or execution over a prior unregistered sale is
well settled in our jurisdiction. This is because
registration is the operative act that binds or affects the
land insofar as third persons are concerned.[19] It is
upon registration that there is notice to the whole
world.[20]
Petitioners cannot escape the fact that when they
registered the Deed of Absolute Sale on January 5,
1995, a writ of attachment was already inscribed on
TCT No. 127330 as early as November 18,
1994. Accordingly, when TCT No. 127330 was
cancelled and TCT No. 134590 was issued in
petitioners name, the notice of levy on attachment was
carried over in the new title. It bears stressing that at the
time of the inscription of the writ of attachment,
Townhouse Unit 320 was still in the name of Benito.
In Valdevieso v. Damalerio,[21] this Court explained
that an attachment is a proceeding in rem and that the
right of ownership of an individual over a sale registered
after such attachment is limited and subject to the prior
registered lien, to wit:
The preference created by the levy on attachment is not
diminished even by the subsequent registration of the
prior sale. This is so because an attachment is a
proceeding in rem. It is against the particular property,
enforceable against the whole world. The attaching
creditor acquires a specific lien on the attached property
which nothing can subsequently destroy except the very
dissolution of the attachment or levy itself. Such a
proceeding, in effect, means that the property attached
is an indebted thing and a virtual condemnation of it to
pay the owners debt. The lien continues until the debt
is paid, or sale is had under execution issued on the
judgment, or until the judgment is satisfied, or the
attachment discharged or vacated in some manner
provided by law.
Thus, in the registry, the attachment in favor of
respondents appeared in the nature of a real lien when
petitioner had his purchase recorded. The effect of the
notation of said lien was to subject and subordinate the
right of petitioner, as purchaser, to the lien. Petitioner
acquired ownership of the land only from the date of the
recording of his title in the register, and the right of
ownership which he inscribed was not absolute but a
limited right, subject to a prior registered lien of
respondents, a right which is preferred and superior to
that of petitioner.[22]
It is doctrinal that a levy on attachment, duly registered,
has preference over a prior unregistered sale and, even
if the prior unregistered sale is subsequently registered
before the sale on execution but after the levy is made,
the validity of the execution sale should be upheld
because it retroacts to the date of levy. The priority
enjoyed by the levy on attachment extends, with full
force and effect, to the buyer at the auction sale
conducted by virtue of such levy.[23]
The sale between petitioners and Benito was
undoubtedly a valid transaction between them.
However, in view of the prior levy on attachment on the
same property, petitioners took the property subject to
the attachment. Petitioners, in buying registered land,
stood exactly in the shoes of their vendor, Benito, and
their title ipso facto became subject to the incidents or
results of the pending litigation[24] between Benito and
respondent.
Petitioners may have been in good faith when they
bought the property from Benito. So also, petitioners
may not have known about the case filed by respondent
against Benito and the resulting grant of a writ of
attachment over Townhouse Unit 320. Be that as it may,
this Court is concerned not with actual or personal
knowledge, but constructive notice through registration
in the Register of Deeds. Otherwise stated, what this
Court should follow is the annotation (or lack thereof)
on the original title on file with the Register of Deeds,
not on the duplicate title in the hands of private
parties.[25] Furthermore, when a conveyance has been
properly recorded, such record is constructive notice of
its contents and all interests, legal and equitable,
included therein. Under the rule on notice, it is
presumed that the purchaser has examined every
instrument on record affecting the title. Such
presumption is irrefutable and cannot be overcome by
any claim of innocence or good faith.[26]
There is, however, a known exception to the above-
mentioned rules, that is, when a party has knowledge of
a prior existing interest which is unregistered at that
time he acquired a right to the same land, his knowledge
of that prior unregistered interest has the effect of
registration as to him.[27] Knowledge of an
unregistered sale is equivalent to registration.[28] Thus,
if it can be proven that respondent, at the time of the
institution of the proceedings before the RTC, had
knowledge of the sale between petitioners and Benito,
the same would be considered equivalent to registration
as to him. As far as petitioners are concerned, however,
other than their bare allegation that respondent was
aware of the sale of the subject property to them by
Benito, the records of the case show no evidentiary
proof that respondent had knowledge of such
transaction prior to the institution of the proceedings
before the RTC.
This Court is mindful of one of the arguments raised by
petitioners in the proceedings below which was that they
derived their right over the property from Philippine
American Life Insurance (PHILAM). Petitioners argue
that prior to the annotation of the attachment lien in
favor of respondent, the subject property was already
mortgaged to PHILAM. Thus, petitioners theorize that
the mortgage lien in favor of PHILAM is superior to the
attachment lien in favor of respondent.[29]
The same is without merit.
Petitioners claim in their narration of facts that after the
execution of the Deed of Absolute Sale on July 27,
1994, they notified PHILAM and coordinated with it for
the release of the mortgage upon the full payment of
Benitos debt. PHILAM allegedly required petitioners
to first secure a mortgage, but because of the tedious
process, PHILAM finally decided to forego the said
plan. Instead, PHILAM allowed petitioners to pay of the
mortgage debt of Benito. It was only on January 3, 1995
when petitioners finally settled Benitos obligation.
Two days after, a Release of Real Estate Mortgage[30]
was executed by PHILAM.[31]
In Bian Steel Corporation v. Court of Appeals,[32] this
Court ruled that the approval of the mortgagee is
essential for the perfection of a sale with assumption of
mortgage, to wit:
The Garcias claim they acquired the subject property by
means of a deed of sale with assumption of mortgage
dated June 29, 1998, meaning they purchased the
property ahead of the inscription of the levy on
attachment thereon on July 27, 1994. But, even if
consensual, not all contracts of sale become
automatically and immediately effective. In Ramos vs.
Court of Appeals we held:
In sales with assumption of mortgage, the assumption of
mortgage is a condition precedent to the sellers consent
and, therefore, without approval of the mortgagee, the
sale is not perfected.[33]
Applied to the case at bar, it is undisputed that the
release of the mortgage only occurred on January 5,
1995, when a Release of Real Estate Mortgage was
issued by PHILAM. In addition, notwithstanding
PHILAM's approval of the sale and the assumption of
mortgage entered into by petitioners and Benito, there
was still another step petitioners had to take and it was
the registration of the sale from Benito to them. To
stress, as provided for in Section 51 of PD No. 1529, the
act of registration shall be the operative act to convey or
affect the land insofar as third persons are concerned.
Thus, as far as respondent is concerned, his attachment
lien, inscribed on November 18, 1994, is superior to
whatever right petitioners had by virtue of the Deed of
Sale which was only duly registered on January 5, 1995.
Lastly, this Court notes of the finality of the CA
Decision in CA-G.R. CV No. 49959, granting
respondent's partial appeal to have Townhouse Unit 320
subject to attachment. The finality of said decision is a
necessary consequence of this Court's denial of
petitioners' appeal in G.R. No. 147339. This Court may
have disposed of petitioners' appeal via a minute
resolution, but it is settled that when a minute resolution
denies or dismisses a petition for failure to comply with
formal and substantive requirements, the challenged
decision, together with its findings of fact and legal
conclusions, are deemed sustained.[34] Petitioners once
came to this Court asking for the exclusion of the subject
property from attachment, it would certainly be
iniquitous to allow them to raise the same issue all over
again a second time.
Withal, while this Court sympathizes with petitioners
plight, law and jurisprudence support respondent's case.
It bears to stress that a levy on attachment, duly
registered, has preference over a prior unregistered sale
and, even if the prior unregistered sale is subsequently
registered before the sale on execution but after the levy
is made, the validity of the execution sale should be
upheld because it retroacts to the date of levy. At any
rate, petitioners, however, are not without recourse, as
they may seek reimbursement from Benito.
WHEREFORE, premises considered, the petition is
DENIED. The February 7, 2006 Decision and April 17,
2006 Resolution of the Court of Appeals, in CA-G.R.
SP No. 81382, are AFFIRMED.
SO ORDERED.
Article 555
1.CATHOLIC VICAR APOSTOLIC OF THE
MOUNTAIN PROVINCE, petitioner, vs. COURT
OF APPEALS, HEIRS OF EGMIDIO
OCTAVIANO and JUAN VALDEZ, respondents.,
G.R. Nos. 80294-95, 1990 March 23, 1st Division
1990
March
RESOLUTION
GANCAYCO, J.:
Before the Court are a motion for reconsideration and a
supplemental motion for reconsideration filed by
petitioner relating to the decision of the Court dated
September 21, 1988. The comment and opposition
thereto have been filed by the private respondents and a
reply was filed by petitioner.
Petitioner argues that the findings of facts of the Court
of Appeals in CA-G.R. No. 38830-R are: (1) contrary to
the law; (2) contrary to the findings of the trial court; (3)
contrary to the findings of the Court of Appeals in CA-
G.R. No. 08890-R; (4) contrary to the admissions of the
parties; and (5) based on a clear misapprehension of
historical and ecclesiastical facts made of judicial
notice, which are well within the exceptions consistently
adhered to by this
Court as in Republic vs. Court of Appeals. 1
The Court finds no merit in this contention. The said
decision of the Court of Appeals dated May 4, 1977 in
CA-G.R. No. 38830-R was already elevated to this
Court by petitioner through a petition for review in G.R.
No. L-46832 entitled Catholic Vicar Apostolic of the
Mountain Province vs. Court of Appeals and Heirs of
Egmidio Octaviano, while the heirs of Juan Valdez and
Pacita Valdez also filed a petition for review of the same
decision in this Court docketed as G.R. No. L-46872
entitled Heirs of Juan Valdez and Pacita Valdez vs. CA,
et al. In a minute resolution dated January 13, 1978, this
Court denied both petitions for lack of merit.
It is in said petition for review wherein the petitioner
should have questioned the findings of facts of the
appellate court in CA-G.R. No. 38830-R but since said
petition had been denied outright, the aforestated
decision of the appellate court which has long become
final and executory, is res judicata as between the parties
and the findings of facts therein are conclusive. Thus,
the factual findings in said final judgment cannot be
reviewed anew in the present proceedings.
The relevant question that should now be asked is,
considering the aforestated decision of the appellate
court and guided by the findings of facts therein, who is
entitled to the possession of the lots in question? Who
owns these lots?
CA-G.R. No. 38830-R was a land registration case
where petitioner and private respondents were asking
for confirmation of their alleged imperfect titles to the
lots in question under Section 49 (b) of the Public Land
Act. 2
In the said decision, the appellate court found that the
petitioner was not entitled to confirmation of its
imperfect title to Lots 2 and 3. In separate motions for
reconsideration filed by private respondents Heirs of
Octaviano and Heirs of Juan Valdez relating to the same
decision, they also asked that said two lots be registered
in their names. On August 12, 1977, the Court of
Appeals denied both motions. Effectively, therefore, in
the said decision the appellate court ruled that neither
the petitioner nor the private respondents are entitled to
the confirmation of imperfect title over said two lots.
That is now res judicata.
What is the nature of these two lots? Pursuant to the said
decision in CA-G.R. No. 38830-R, the two lots in
question remained part of the public lands. This is the
only logical conclusion when the appellate court found
that neither the petitioner nor private respondents are
entitled to confirmation of imperfect title over said
lots.
Hence, the Court finds the contention of petitioner to be
well-taken in that the trial court and the appellate court
have no lawful basis in ordering petitioner to return and
surrender possession of said lots to private respondents.
Said property being a public land its disposition is
subject to the provision of the Public Land Act, as
amended. 3
The present actions that were instituted in the Regional
Trial Court by private respondents are actions for
recovery of possession (accion publiciana) and not for
recovery of ownership (accion reivindicatoria).
In the aforestated decision of the appellate court in CA-
G.R. No. 38830-R, the following are among the findings
of facts:
"9th. The totality of foregoing together with evidence
of oppositors must convince this Court that as to lots 2
and 3, it was oppositors who were possessors under
bona fide claim of ownership thru their predecessors
since around 1906; and that appellee came in only in the
concept of a borrower in commodatum, but that appellee
took it upon itself to claim and repudiate the trust
sometime in 1951, and since from that time at least,
possession of oppositors had been interrupted, neither
can they claim registration under Sec. 48, par. b of the
Public Land Law, Com. Act 141, as amended by R.A.
1942; this must be the final result, and there would be
no more need to rule on the errors impugning the
personality of appellee to secure registration;" 4
From the foregoing, it appears that the petitioner was in
possession of the said property as borrower in
commodatum from private respondents since 1906 but
in 1951 petitioner repudiated the trust when it declared
the property for tax purposes under its name. When it
filed its application for registration of the said property
in 1962, petitioner had been in adverse possession of the
same for at least 11 years.
Article 555 of the Civil Code provides as follows:
"Art. 555. A possessor may lose his possession:
(1) By the abandonment of the thing;
(2) By an assignment made to another either by
onerous or gratuitous title;
(3) By the destruction or total loss of the thing or
because it goes out of commerce;
(4) By the possession of another, subject to the
provisions of Article 537, if the new possession has
lasted longer than one year. But the real right of
possession is not lost till after the lapse of ten years.
(460a)".
From the foregoing provision of the law, particularly
paragraph 4 thereof, it is clear that the real right of
possession of private respondents over the property was
lost or no longer exists after the lapse of 10 years that
petitioner had been in adverse possession thereof. Thus,
the action for recovery of possession of said property
filed by private respondents against petitioner must fail.
The Court, therefore, finds that the trial court and the
Court of Appeals erred in declaring the private
respondents to be entitled to the possession thereof.
Much less can they pretend to be owners thereof. Said
lots are part of the public domain.
WHEREFORE, the motion for reconsideration is
GRANTED and the decision of this Court dated
September 21, 1988 is hereby set aside and another
judgment is hereby rendered reversing and setting aside
the decision of the appellate court in CA-G.R. Nos.
05148-49 dated August 31, 1987 and dismissing the
complaints for recovery of possession, without
pronouncement as to costs.
SO ORDERED.
[G.R. No. L-16084. November 30, 1962.]
2. JOHN O. YU, Plaintiff-Appellee, v. MAXIMO DE
LARA, JUAN PANLILIO, LUCIA RIVERO,
FLORENTINO ROQUE and DOMINGO
SAMSON, Defendants-Appellants.
SYLLABUS
1. PROPERTY; LOSS OF OWNERSHIP;
ABANDONMENT WHICH CONVERTS THE
THING INTO Res Nullius NOT APPLICABLE TO
LAND. Abandonment requires not only physical
relinquishment of the thing but also a clear intention not
to reclaim or reassume ownership or enjoyment thereof.
Abandonment which converts the thing into res nullius,
ownership of which may be acquired by occupation, can
hardly apply to land, as to which said mode of
acquisition is not available (Article 714, Civil Code), let
alone to registered land, to which "no title . . . in
derogation to that of the registered owner shall be
acquired by prescription or adverse possession"
(Section 46, Act No. 496).
2. ID.; OCCUPATION OF LAND AT OWNERS
TOLERANCE; REMEDY WHERE OCCUPANT
FAILS TO VACATE UPON DEMAND. A person
who occupies the land of another at the latters tolerance
or permission, without any contract between them, is
necessarily bound by an implied promise that he will
vacate upon demand, failing which a summary action
for ejectment in the proper remedy against him.
DECISION
MAKALINTAL, J.:
This is an ejectment case decided first by the Justice of
the Peace Court of Caloocan and, on appeal, by the
Court of First Instance of Rizal, Pasig branch, which
ordered the defendants "to vacate the premises in
question, to pay the monthly rental of P15.00 to begin
from the time this action was filed up to the time they
vacate the premises, and to pay the costs."cralaw
virtua1aw library
The pertinent facts are the subject of stipulation below.
Lot No. 14, block No. 51-C of the Grace Park
subdivision, with an area of 682.5 meters, is the disputed
property. It was originally registered in 1916 (O.C.T.
No. 868 of the Registry of Deeds of Rizal), subsequently
acquired by the Philippine Realty Corporation (T.C.T.
No. 22104) and sold by it on 28 November 1956 to
plaintiff-appellee, John O. Yu, a Filipino citizen, who
obtained T.C.T. No. 11267 in his name. In 1945 several
persons settled on the property and constructed houses
thereon without permission from, or contract with, the
Philippine Realty Corporation, then the registered
owner. On various dates thereafter, between 1947 and
1952, appellants here bought the houses of those settlers
and continued in occupancy thereof without paying any
rents to the owner of the land. In February 1957
plaintiff- appellee advised them in writing to vacate
within 30 days, and in view of their refusal filed a
complaint of unlawful detainer within the statutory
period of one year.
The first point raised by appellants is that the Philippine
Realty Corporation had lost possession of the property
by abandonment, under Article 555, paragraph 1, of the
Civil Code, in failing to take action against them and
showing lack of interest in said property since they
started their occupancy. The circumstances adverted to
are insufficient to constitute abandonment, which
requires not only physical relinquishment of the thing
but also a clear intention not to reclaim or reassume
ownership or enjoyment thereof. Indeed, abandonment
which according to Manresa (Vol. 4, 5th ed., p. 277)
converts the thing into res nullius, ownership of which
may be acquired by occupation, can hardly apply to
land, as to which said mode of acquisition is not
available (Art. 714, Civil Code), let alone to registered
land, to which "no title . . . in derogation to that of the
registered owner shall be acquired by prescription or
adverse possession" (Sec. 46, Act No. 496). No
possessory rights whatsoever can be recognized in favor
of appellants, because they are in fact nothing but
squatters, who settled on the land without any
agreement with the owner, paying neither rents to him
nor land taxes to the government, and who impliedly
recognized their squatters status by purchasing only the
houses built by the original settlers. Their occupancy of
the land was at the owners sufferance, and their acts
were merely tolerated which could not affect the
owners possession (Arts. 537 and 1119, Civil Code).
Appellants next contend that since there is no showing
that there was any promise on their part, express or
implied, to return the land to appellee, or that they failed
to do so after their right to retain it had expired, they
cannot be considered as unlawfully withholding
possession within the meaning of Section 1 of Rule 72.
The implication of the argument is that this action of
unlawful detainer was improperly brought against them
in the Justice of the Peace Court of Caloocan. A person
who occupies the land of another at the latters tolerance
or permission, without any contract between them, is
necessarily bound by an implied promise that he will
vacate upon demand, failing which a summary action
for ejectment is the proper remedy against him. In any
event, whatever might be said on this point in so far as
it relates to the original jurisdiction of the Justice of the
Peace Court and hence to the appellate jurisdiction
of the Court of First Instance it does not appear that
the question was raised in the former court at all.
Consequently the latter court could take cognizance of
the case as one for recovery by the owner of the right
of possession in the exercise of its original
jurisdiction, pursuant to section 11 of Rule 40.
The third and last contention of appellants is that the
Court of First Instance lacked jurisdiction to decide this
case because there were prejudicial questions pending
before us on appeal in cases G. R. Nos. L-12614 and L-
12615 concerning the same property. The issue in those
two cases was the propriety of the registration of
appellants adverse claim to the said land, which was
resolved against them by the Land Registration
Commissioner. In the first place the issue was not
prejudicial in nature: it could not affect appellees right
to the possession of his land, which has nothing to do
with the registrability or non-registrability of
appellants alleged adverse claim; and secondly, the said
cases have already been decided by us on January 29,
1960, by upholding the action taken by the Land
Registration Commissioner.
The judgment appealed from is affirmed, with costs
against appellants.
Article 559
1. LEDESMA vs CA
FACTS:
Petioner is the owner-lessor of an
apartment building in Malate, Manila. Two units of said
apartment were leased
Said lease was originally covered by
written contracts of lease both dated December 10,
1984, and except for the rates and duration, the terms
and conditions of said contracts were impliedly renewed
on a month-to-month basis pursuant to Article 1670
of the Civil Code
One of the terms and conditions of the
said Contract of Lease, that of monthly rental payments,
was violated by private respondent and that as of
October 31, 1988, said private respondent has incurred
arrears for both units in the total sum of P14,039.00 for
which letters of demand were sent to, and received by,
private respondent
Petitioner referred the matter to Barangay
for conciliation when the private respondents failed to
honor the demand letter.
Petitioner was assisted by her son
Raymond, not a lawyer, because of her recurring
psychogical and emotional ailment as evidenced of her
receipts and prescriptions issued by her psychiatrist.
Private respondent refused to vacate the
premises, petitioner filed a case for ejectment proceed
in MTC Branch 10, Manila which ordered respondent to
vacate the premises and to pay the rentals and the
attorneys fees in the amount of P2,500
RTC of Manila affirmed the MTCs
decision except for the award of attorneys fees which
reduced it to P1000
Private Respondent filed a petition for
review in CA which reversed the ruling of the LC due
to lack of cause of action
Section 6 and 9 of P.D. 1508 states:
Sec. 6. Conciliation pre-condition to
filing of complaint. No complaint, petition, action or
proceeding involving any matter within the authority of
the Lupon as provided in Section 2 hereof shall be filed
or instituted in court or any other government office for
adjudication unless there has been a confrontation of the
parties before the Lupon Chairman or the Pangkat and
no conciliation or settlement has been reached as
certified by the Lupon Secretary or the Pangkat
Secretary, attested by the Lupon or Pangkat Chairman,
or unless the settlement has been repudiated. . . .
Sec. 9. Appearance of parties in person.
In all proceedings provided for herein, the parties
must appear in person without the assistance of
counsel/representative, with the exception of minors
and incompetents who may be assisted by their next of
kin who are not lawyers.
ISSUE:
Whether or not private respondent did not
comply with Sec. 6 and 9 of PD 1508 in the lower
court?
Whether or not Private Respondent had
waived his right to question the lack of cause of action
Whether or not private respondent was
not served summons?
RULING:
The court does not agree with petitioner
that the issue of non-compliance with Sections 6 and 9
of P.D. 1508 was raised only for the first time in the
Court of Appeals
When private respondent stated that he
was never summoned or subpoenaed by the Barangay
Chairman, he, in effect, was stating that since he was
never summoned, he could not appear in person for the
needed confrontation of the parties before the Lupon
Chairman for conciliation and/or amicable settlement
Private respondent's allegation in
paragraph 4 of his Answer that he was never summoned
or subpoenaed by the Barangay Chairman; that plaintiff
has no cause of action against him as alleged in
paragraph 7 of the Answer; and that the certification to
file action was improperly issued in view of the
foregoing allegations thereby resulting in non-
compliance with the mandatory requirements of P.D.
No. 1508, as stated in paragraph 8 of the Answer are in
substantial compliance with the raising of said issues
and/or objections in the court below.
Petitioner tries to show that her failure to
personally appear before the barangay Chairman was
because of her recurring psychological ailments. But for
the entire year of 1988, there is no indication at all that
petitioner went to see her psychiatrist for consultation.
The only conclusion is that 1988 was a lucid interval for
petitioner. There was, therefore, no excuse then for her
non-appearance at the Lupon Chairman's office.
Petitioner, not having shown that she is
incompetent, cannot be represented by counsel or even
by attorney-in-fact who is next of kin.
To ensure compliance with the
requirement of personal confrontation between the
parties, and thereby, the effectiveness of the barangay
conciliation proceedings as a mode of dispute
resolution, the above-quoted provision is couched in
mandatory language. Moreover, pursuant to the familiar
maxim in statutory construction dictating that
"expressio unius est exclusio alterius", the express
exceptions made regarding minors and incompetents
must be construed as exclusive of all others not
mentioned.
Petitioner's non-compliance with Secs. 6
and 9 of P.D. 1508 legally barred her from pursuing the
ejectment case in the MTC of Manila
LEDESMA v. CA- Perfected Unconditional Contract of
Sale
Property, Ownership and Its Modifications
LEDESMA v. CA- Perfected Unconditional Contract of
Sale
FACTS:
Citiwide sold 2 cars to a certain Jojo Consunji evidenced
by 2 invoices. Upon delivery of the cars, Jojo paid with
a Managers Check (PhP101,000.00). When Citiwide
deposited the check, it was dishonored for being
tampered. Amount was changed from 101.00 to
101,000.00.
Citiwide reported the crime to the Phil. Constabulary
where he found that Consunji was actually Armando
Suarez, a professional criminal.
One car was found abandoned, while the other was
discovered to be in the possession of Jaime Ledesma,
who claims to have purchased the car in good faith from
the registered owner, evidenced by the LTO
Registration.
RTC ordered the car to remain in the possession of
Ledesma.
CA overruled RTC, stating that Citiwide was unlawfully
deprived of property through false pretenses amounting
to fraud.
ISSUE:
Whether or not the owner was unlawfully deprived of
the property?
HELD:
No. There was a perfected unconditional contract of
sale. Failure to pay by Suarez through the subsequent
dishonor of the check did not render the contract of sale
void. Ownership was already transferred by the delivery
of the cars to Suarez.
2. EDCA PUBLISHING AND DISTRIBUTING
CORP. V. SANTOS 184 SCRA 614- Possession
Property, Ownership and Its Modifications
EDCA PUBLISHING AND DISTRIBUTING CORP.
V. SANTOS
184 SCRA 614
FACTS:
On a relevant date, one person who identified himself as
Professor Jose Cruz placed an order through telephone
with Edca Publishing. He ordered 400+ books and
issued a personal check as payment. Then he sold some
of the books to Santos who, after verifying the sellers
ownership from the invoice shown, paid Cruz.
Meanwhile, Edca being suspicious over the
second order placed by Cruz verified with De La Salle
College where he had claimed to be dean and was
informed that no such person was under its employ. It
was also found out that there was no account with the
bank against which he had drawn his check. It was later
found out that his real name was Tomas de la Pena. Edca
reported this to the police and through an entrapment, de
la Pena was captured. On the same date, Edca sought the
assistance of the police in recovery of the books bought
from it. They forced their way inside Santos store and
seized the books without any warrant.
HELD:
First, the contention of petitioner that Santos has not
established ownership over the disputed books because
they have not even shown the receipt evidencing the
purchase, is without merit. The possession of movable
property acquired in good faith is equivalent to title.
Second, Santos acquired the books in good faith as
found by the lower courts. She first ascertained the
ownership and relied on the invoice shown to her by de
la Pena. Santos was in the business of buying and
selling books and often deal with hard-up sellers who
urgently have to part with their books at reduced prices.
Third, and on the real issue, on whether Edca had been
unlawfully deprived of the books, Edca argued that the
impostor acquired no title to the books because of the
lack of funds in the check issued and want of
consideration. This is without merit. Nonpayment of
purchase price only gives rise to the right to demand
payment or rescission of the contract. Actual delivery
was made to the impostor and thus, ownership was
acquired by him. Non-payment was a matter privy to
him and Edca and
doesn't involve Santos who later acquired the books.
3. BPI FAMILY BANK, Petitioner, versus AMADO
FRANCO and COURT OF APPEALS,
Respondents., G.R. No. 123498, 2007 November 23,
3rd Division
2007
November
DECISION
NACHURA, J.:
Banks are exhorted to treat the accounts of their
depositors with meticulous care and utmost fidelity. We
reiterate this exhortation in the case at bench.
Before us is a Petition for Review on Certiorari
seeking the reversal of the Court of Appeals (CA)
Decision[1] in CA-G.R. CV No. 43424 which affirmed
with modification the judgment[2] of the Regional Trial
Court, Branch 55, Manila (Manila RTC), in Civil Case
No. 90-53295.
This case has its genesis in an ostensible fraud
perpetrated on the petitioner BPI Family Bank (BPI-FB)
allegedly by respondent Amado Franco (Franco) in
conspiracy with other individuals,[3] some of whom
opened and maintained separate accounts with BPI-FB,
San Francisco del Monte (SFDM) branch, in a series of
transactions.
On August 15, 1989, Tevesteco Arrastre-
Stevedoring Co., Inc. (Tevesteco) opened a savings and
current account with BPI-FB. Soon thereafter, or on
August 25, 1989, First Metro Investment Corporation
(FMIC) also opened a time deposit account with the
same branch of BPI-FB with a deposit of
P100,000,000.00, to mature one year thence.
Subsequently, on August 31, 1989, Franco opened
three accounts, namely, a current,[4] savings,[5] and
time deposit,[6] with BPI-FB. The current and savings
accounts were respectively funded with an initial
deposit of P500,000.00 each, while the time deposit
account had P1,000,000.00 with a maturity date of
August 31, 1990. The total amount of P2,000,000.00
used to open these accounts is traceable to a check
issued by Tevesteco allegedly in consideration of
Francos introduction of Eladio Teves,[7] who was
looking for a conduit bank to facilitate Tevestecos
business transactions, to Jaime Sebastian, who was then
BPI-FB SFDMs Branch Manager. In turn, the funding
for the P2,000,000.00 check was part of the
P80,000,000.00 debited by BPI-FB from FMICs time
deposit account and credited to Tevestecos current
account pursuant to an Authority to Debit purportedly
signed by FMICs officers.
It appears, however, that the signatures of
FMICs officers on the Authority to Debit were
forged.[8] On September 4, 1989, Antonio Ong,[9]
upon being shown the Authority to Debit, personally
declared his signature therein to be a forgery.
Unfortunately, Tevesteco had already effected several
withdrawals from its current account (to which had been
credited the P80,000,000.00 covered by the forged
Authority to Debit) amounting to P37,455,410.54,
including the P2,000,000.00 paid to Franco.
On September 8, 1989, impelled by the need to protect
its interests in light of FMICs forgery claim, BPI-FB,
thru its Senior Vice-President, Severino Coronacion,
instructed Jesus Arangorin[10] to debit Francos
savings and current accounts for the amounts remaining
therein.[11] However, Francos time deposit account
could not be debited due to the capacity limitations of
BPI-FBs computer.[12]
In the meantime, two checks[13] drawn by Franco
against his BPI-FB current account were dishonored
upon presentment for payment, and stamped with a
notation account under garnishment. Apparently,
Francos current account was garnished by virtue of an
Order of Attachment issued by the Regional Trial Court
of Makati (Makati RTC) in Civil Case No. 89-4996
(Makati Case), which had been filed by BPI-FB against
Franco et al.,[14] to recover the P37,455,410.54
representing Tevestecos total withdrawals from its
account.
Notably, the dishonored checks were issued by Franco
and presented for payment at BPI-FB prior to Francos
receipt of notice that his accounts were under
garnishment.[15] In fact, at the time the Notice of
Garnishment dated September 27, 1989 was served on
BPI-FB, Franco had yet to be impleaded in the Makati
case where the writ of attachment was issued.
It was only on May 15, 1990, through the service
of a copy of the Second Amended Complaint in Civil
Case No. 89-4996, that Franco was impleaded in the
Makati case.[16] Immediately, upon receipt of such
copy, Franco filed a Motion to Discharge Attachment
which the Makati RTC granted on May 16, 1990. The
Order Lifting the Order of Attachment was served on
BPI-FB on even date, with Franco demanding the
release to him of the funds in his savings and current
accounts. Jesus Arangorin, BPI-FBs new manager,
could not forthwith comply with the demand as the
funds, as previously stated, had already been debited
because of FMICs forgery claim. As such, BPI-FBs
computer at the SFDM Branch indicated that the current
account record was not on file.
With respect to Francos savings account, it
appears that Franco agreed to an arrangement, as a favor
to Sebastian, whereby P400,000.00 from his savings
account was temporarily transferred to Domingo
Quiaoits savings account, subject to its immediate
return upon issuance of a certificate of deposit which
Quiaoit needed in connection with his visa application
at the Taiwan Embassy. As part of the arrangement,
Sebastian retained custody of Quiaoits savings account
passbook to ensure that no withdrawal would be
effected therefrom, and to preserve Francos deposits.
On May 17, 1990, Franco pre-terminated his time
deposit account. BPI-FB deducted the amount of
P63,189.00 from the remaining balance of the time
deposit account representing advance interest paid to
him.
These transactions spawned a number of cases,
some of which we had already resolved.
FMIC filed a complaint against BPI-FB for the
recovery of the amount of P80,000,000.00 debited from
its account.[17] The case eventually reached this Court,
and in BPI Family Savings Bank, Inc. v. First Metro
Investment Corporation,[18] we upheld the finding of
the courts below that BPI-FB failed to exercise the
degree of diligence required by the nature of its
obligation to treat the accounts of its depositors with
meticulous care. Thus, BPI-FB was found liable to
FMIC for the debited amount in its time deposit. It was
ordered to pay P65,332,321.99 plus interest at 17% per
annum from August 29, 1989 until fully restored. In
turn, the 17% shall itself earn interest at 12% from
October 4, 1989 until fully paid.
In a related case, Edgardo Buenaventura, Myrna
Lizardo and Yolanda Tica (Buenaventura, et al.),[19]
recipients of a P500,000.00 check proceeding from the
P80,000,000.00 mistakenly credited to Tevesteco,
likewise filed suit. Buenaventura et al., as in the case of
Franco, were also prevented from effecting
withdrawals[20] from their current account with BPI-
FB, Bonifacio Market, Edsa, Caloocan City Branch.
Likewise, when the case was elevated to this Court
docketed as BPI Family Bank v. Buenaventura,[21] we
ruled that BPI-FB had no right to freeze Buenaventura,
et al.s accounts and adjudged BPI-FB liable therefor, in
addition to damages.
Meanwhile, BPI-FB filed separate civil and
criminal cases against those believed to be the
perpetrators of the multi-million peso scam.[22] In the
criminal case, Franco, along with the other accused,
except for Manuel Bienvenida who was still at large,
were acquitted of the crime of Estafa as defined and
penalized under Article 351, par. 2(a) of the Revised
Penal Code.[23] However, the civil case[24] remains
under litigation and the respective rights and liabilities
of the parties have yet to be adjudicated.
Consequently, in light of BPI-FBs refusal to heed
Francos demands to unfreeze his accounts and release
his deposits therein, the latter filed on June 4, 1990 with
the Manila RTC the subject suit. In his complaint,
Franco prayed for the following reliefs: (1) the interest
on the remaining balance[25] of his current account
which was eventually released to him on October 31,
1991; (2) the balance[26] on his savings account, plus
interest thereon; (3) the advance interest[27] paid to him
which had been deducted when he pre-terminated his
time deposit account; and (4) the payment of actual,
moral and exemplary damages, as well as attorneys
fees.
BPI-FB traversed this complaint, insisting that it
was correct in freezing the accounts of Franco and
refusing to release his deposits, claiming that it had a
better right to the amounts which consisted of part of the
money allegedly fraudulently withdrawn from it by
Tevesteco and ending up in Francos accounts. BPI-FB
asseverated that the claimed consideration of
P2,000,000.00 for the introduction facilitated by Franco
between George Daantos and Eladio Teves, on the one
hand, and Jaime Sebastian, on the other, spoke volumes
of Francos participation in the fraudulent transaction.
On August 4, 1993, the Manila RTC rendered
judgment, the dispositive portion of which reads as
follows:
WHEREFORE, in view of all the foregoing,
judgment is hereby rendered in favor of [Franco] and
against [BPI-FB], ordering the latter to pay to the former
the following sums:
1. P76,500.00 representing the legal rate of interest on
the amount of P450,000.00 from May 18, 1990 to
October 31, 1991;
2. P498,973.23 representing the balance on [Francos]
savings account as of May 18, 1990, together with the
interest thereon in accordance with the banks
guidelines on the payment therefor;
3. P30,000.00 by way of attorneys fees; and
4. P10,000.00 as nominal damages.
The counterclaim of the defendant is DISMISSED
for lack of factual and legal anchor.
Costs against [BPI-FB].
SO ORDERED.[28]
Unsatisfied with the decision, both parties filed
their respective appeals before the CA. Franco confined
his appeal to the Manila RTCs denial of his claim for
moral and exemplary damages, and the diminutive
award of attorneys fees. In affirming with modification
the lower courts decision, the appellate court decreed,
to wit:
WHEREFORE, foregoing considered, the
appealed decision is hereby AFFIRMED with
modification ordering [BPI-FB] to pay [Franco]
P63,189.00 representing the interest deducted from the
time deposit of plaintiff-appellant. P200,000.00 as
moral damages and P100,000.00 as exemplary
damages, deleting the award of nominal damages (in
view of the award of moral and exemplary damages)
and increasing the award of attorneys fees from
P30,000.00 to P75,000.00.
Cost against [BPI-FB].
SO ORDERED.[29]
In this recourse, BPI-FB ascribes error to the CA
when it ruled that: (1) Franco had a better right to the
deposits in the subject accounts which are part of the
proceeds of a forged Authority to Debit; (2) Franco is
entitled to interest on his current account; (3) Franco can
recover the P400,000.00 deposit in Quiaoits savings
account; (4) the dishonor of Francos checks was not
legally in order; (5) BPI-FB is liable for interest on
Francos time deposit, and for moral and exemplary
damages; and (6) BPI-FBs counter-claim has no factual
and legal anchor.
The petition is partly meritorious.
We are in full accord with the common ruling of
the lower courts that BPI-FB cannot unilaterally freeze
Francos accounts and preclude him from withdrawing
his deposits. However, contrary to the appellate courts
ruling, we hold that Franco is not entitled to unearned
interest on the time deposit as well as to moral and
exemplary damages.
First. On the issue of who has a better right to the
deposits in Francos accounts, BPI-FB urges us that the
legal consequence of FMICs forgery claim is that the
money transferred by BPI-FB to Tevesteco is its own,
and considering that it was able to recover possession of
the same when the money was redeposited by Franco, it
had the right to set up its ownership thereon and freeze
Francos accounts.
BPI-FB contends that its position is not unlike that
of an owner of personal property who regains
possession after it is stolen, and to illustrate this point,
BPI-FB gives the following example: where Xs
television set is stolen by Y who thereafter sells it to Z,
and where Z unwittingly entrusts possession of the TV
set to X, the latter would have the right to keep
possession of the property and preclude Z from
recovering possession thereof. To bolster its position,
BPI-FB cites Article 559 of the Civil Code, which
provides:
Article 559. The possession of movable property
acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been
unlawfully deprived thereof, may recover it from the
person in possession of the same.
If the possessor of a movable lost or of which the
owner has been unlawfully deprived, has acquired it in
good faith at a public sale, the owner cannot obtain its
return without reimbursing the price paid therefor.
BPI-FBs argument is unsound. To begin with,
the movable property mentioned in Article 559 of the
Civil Code pertains to a specific or determinate
thing.[30] A determinate or specific thing is one that is
individualized and can be identified or distinguished
from others of the same kind.[31]
In this case, the deposit in Francos accounts consists of
money which, albeit characterized as a movable, is
generic and fungible.[32] The quality of being fungible
depends upon the possibility of the property, because of
its nature or the will of the parties, being substituted by
others of the same kind, not having a distinct
individuality.[33]
Significantly, while Article 559 permits an owner who
has lost or has been unlawfully deprived of a movable
to recover the exact same thing from the current
possessor, BPI-FB simply claims ownership of the
equivalent amount of money, i.e., the value thereof,
which it had mistakenly debited from FMICs account
and credited to Tevestecos, and subsequently traced to
Francos account. In fact, this is what BPI-FB did in
filing the Makati Case against Franco, et al. It staked its
claim on the money itself which passed from one
account to another, commencing with the forged
Authority to Debit.
It bears emphasizing that money bears no earmarks of
peculiar ownership,[34] and this characteristic is all the
more manifest in the instant case which involves money
in a banking transaction gone awry. Its primary function
is to pass from hand to hand as a medium of exchange,
without other evidence of its title.[35] Money, which
had passed through various transactions in the general
course of banking business, even if of traceable origin,
is no exception.
Thus, inasmuch as what is involved is not a specific or
determinate personal property, BPI-FBs illustrative
example, ostensibly based on Article 559, is
inapplicable to the instant case.
There is no doubt that BPI-FB owns the deposited
monies in the accounts of Franco, but not as a legal
consequence of its unauthorized transfer of FMICs
deposits to Tevestecos account. BPI-FB conveniently
forgets that the deposit of money in banks is governed
by the Civil Code provisions on simple loan or
mutuum.[36] As there is a debtor-creditor relationship
between a bank and its depositor, BPI-FB ultimately
acquired ownership of Francos deposits, but such
ownership is coupled with a corresponding obligation to
pay him an equal amount on demand.[37] Although
BPI-FB owns the deposits in Francos accounts, it
cannot prevent him from demanding payment of BPI-
FBs obligation by drawing checks against his current
account, or asking for the release of the funds in his
savings account. Thus, when Franco issued checks
drawn against his current account, he had every right as
creditor to expect that those checks would be honored
by BPI-FB as debtor.
More importantly, BPI-FB does not have a unilateral
right to freeze the accounts of Franco based on its mere
suspicion that the funds therein were proceeds of the
multi-million peso scam Franco was allegedly involved
in. To grant BPI-FB, or any bank for that matter, the
right to take whatever action it pleases on deposits
which it supposes are derived from shady transactions,
would open the floodgates of public distrust in the
banking industry.
Our pronouncement in Simex International (Manila),
Inc. v. Court of Appeals[38] continues to resonate, thus:
The banking system is an indispensable institution
in the modern world and plays a vital role in the
economic life of every civilized nation. Whether as
mere passive entities for the safekeeping and saving of
money or as active instruments of business and
commerce, banks have become an ubiquitous presence
among the people, who have come to regard them with
respect and even gratitude and, most of all, confidence.
Thus, even the humble wage-earner has not hesitated to
entrust his lifes savings to the bank of his choice,
knowing that they will be safe in its custody and will
even earn some interest for him. The ordinary person,
with equal faith, usually maintains a modest checking
account for security and convenience in the settling of
his monthly bills and the payment of ordinary expenses.
x x x.
In every case, the depositor expects the bank to
treat his account with the utmost fidelity, whether such
account consists only of a few hundred pesos or of
millions. The bank must record every single transaction
accurately, down to the last centavo, and as promptly as
possible. This has to be done if the account is to reflect
at any given time the amount of money the depositor can
dispose of as he sees fit, confident that the bank will
deliver it as and to whomever directs. A blunder on the
part of the bank, such as the dishonor of the check
without good reason, can cause the depositor not a little
embarrassment if not also financial loss and perhaps
even civil and criminal litigation.
The point is that as a business affected with
public interest and because of the nature of its functions,
the bank is under obligation to treat the accounts of its
depositors with meticulous care, always having in mind
the fiduciary nature of their relationship. x x x.
Ineluctably, BPI-FB, as the trustee in the fiduciary
relationship, is duty bound to know the signatures of its
customers. Having failed to detect the forgery in the
Authority to Debit and in the process inadvertently
facilitate the FMIC-Tevesteco transfer, BPI-FB cannot
now shift liability thereon to Franco and the other
payees of checks issued by Tevesteco, or prevent
withdrawals from their respective accounts without the
appropriate court writ or a favorable final judgment.
Further, it boggles the mind why BPI-FB, even without
delving into the authenticity of the signature in the
Authority to Debit, effected the transfer of
P80,000,000.00 from FMICs to Tevestecos account,
when FMICs account was a time deposit and it had
already paid advance interest to FMIC. Considering that
there is as yet no indubitable evidence establishing
Francos participation in the forgery, he remains an
innocent party. As between him and BPI-FB, the latter,
which made possible the present predicament, must bear
the resulting loss or inconvenience.
Second. With respect to its liability for interest on
Francos current account, BPI-FB argues that its non-
compliance with the Makati RTCs Order Lifting the
Order of Attachment and the legal consequences
thereof, is a matter that ought to be taken up in that
court.
The argument is tenuous. We agree with the succinct
holding of the appellate court in this respect. The Manila
RTCs order to pay interests on Francos current
account arose from BPI-FBs unjustified refusal to
comply with its obligation to pay Franco pursuant to
their contract of mutuum. In other words, from the time
BPI-FB refused Francos demand for the release of the
deposits in his current account, specifically, from May
17, 1990, interest at the rate of 12% began to accrue
thereon.[39]
Undeniably, the Makati RTC is vested with the
authority to determine the legal consequences of BPI-
FBs non-compliance with the Order Lifting the Order
of Attachment. However, such authority does not
preclude the Manila RTC from ruling on BPI-FBs
liability to Franco for payment of interest based on its
continued and unjustified refusal to perform a
contractual obligation upon demand. After all, this was
the core issue raised by Franco in his complaint before
the Manila RTC.
Third. As to the award to Franco of the deposits in
Quiaoits account, we find no reason to depart from the
factual findings of both the Manila RTC and the CA.
Noteworthy is the fact that Quiaoit himself testified that
the deposits in his account are actually owned by Franco
who simply accommodated Jaime Sebastians request to
temporarily transfer P400,000.00 from Francos savings
account to Quiaoits account.[40] His testimony cannot
be characterized as hearsay as the records reveal that he
had personal knowledge of the arrangement made
between Franco, Sebastian and himself.[41]
BPI-FB makes capital of Francos belated allegation
relative to this particular arrangement. It insists that the
transaction with Quiaoit was not specifically alleged in
Francos complaint before the Manila RTC. However, it
appears that BPI-FB had impliedly consented to the trial
of this issue given its extensive cross-examination of
Quiaoit.
Section 5, Rule 10 of the Rules of Court provides:
Section 5. Amendment to conform to or
authorize presentation of evidence. When issues not
raised by the pleadings are tried with the express or
implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings. 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 to amend does not
affect the result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is now within
the issues made by the pleadings, the court may allow
the pleadings to be amended and shall do so with
liberality if the presentation of the merits of the action
and the ends of substantial justice will be subserved
thereby. The court may grant a continuance to enable
the amendment to be made. mphasis supplied)
In all, BPI-FBs argument that this case is not the
right forum for Franco to recover the P400,000.00 begs
the issue. To reiterate, Quiaoit, testifying during the
trial, unequivocally disclaimed ownership of the funds
in his account, and pointed to Franco as the actual owner
thereof. Clearly, Francos action for the recovery of his
deposits appropriately covers the deposits in Quiaoits
account.
Fourth. Notwithstanding all the foregoing, BPI-
FB continues to insist that the dishonor of Francos
checks respectively dated September 11 and 18, 1989
was legally in order in view of the Makati RTCs
supplemental writ of attachment issued on September
14, 1989. It posits that as the party that applied for the
writ of attachment before the Makati RTC, it need not
be served with the Notice of Garnishment before it
could place Francos accounts under garnishment.
The argument is specious. In this argument, we
perceive BPI-FBs clever but transparent ploy to
circumvent Section 4,[42] Rule 13 of the Rules of
Court. It should be noted that the strict requirement on
service of court papers upon the parties affected is
designed to comply with the elementary requisites of
due process. Franco was entitled, as a matter of right,
to notice, if the requirements of due process are to be
observed. Yet, he received a copy of the Notice of
Garnishment only on September 27, 1989, several days
after the two checks he issued were dishonored by BPI-
FB on September 20 and 21, 1989. Verily, it was
premature for BPI-FB to freeze Francos accounts
without even awaiting service of the Makati RTCs
Notice of Garnishment on Franco.
Additionally, it should be remembered that the
enforcement of a writ of attachment cannot be made
without including in the main suit the owner of the
property attached by virtue thereof. Section 5, Rule 13
of the Rules of Court specifically provides that no levy
or attachment pursuant to the writ issued x x x shall be
enforced unless it is preceded, or contemporaneously
accompanied, by service of summons, together with a
copy of the complaint, the application for attachment,
on the defendant within the Philippines.
Franco was impleaded as party-defendant only on
May 15, 1990. The Makati RTC had yet to acquire
jurisdiction over the person of Franco when BPI-FB
garnished his accounts.[43] Effectively, therefore, the
Makati RTC had no authority yet to bind the deposits of
Franco through the writ of attachment, and
consequently, there was no legal basis for BPI-FB to
dishonor the checks issued by Franco.
Fifth. Anent the CAs finding that BPI-FB was in
bad faith and as such liable for the advance interest it
deducted from Francos time deposit account, and for
moral as well as exemplary damages, we find it proper
to reinstate the ruling of the trial court, and allow only
the recovery of nominal damages in the amount of
P10,000.00. However, we retain the CAs award of
P75,000.00 as attorneys fees.
In granting Francos prayer for interest on his time
deposit account and for moral and exemplary damages,
the CA attributed bad faith to BPI-FB because it (1)
completely disregarded its obligation to Franco; (2)
misleadingly claimed that Francos deposits were under
garnishment; (3) misrepresented that Francos current
account was not on file; and (4) refused to return the
P400,000.00 despite the fact that the ostensible owner,
Quiaoit, wanted the amount returned to Franco.
In this regard, we are guided by Article 2201 of
the Civil Code which provides:
Article 2201. In contracts and quasi-contracts,
the damages for which the obligor who acted in good
faith is liable shall be those that are the natural and
probable consequences of the breach of the obligation,
and which the parties have foreseen or could have
reasonable foreseen at the time the obligation was
constituted.
In case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all damages
which may be reasonably attributed to the non-
performance of the obligation. ( mphasis supplied.)
We find, as the trial court did, that BPI-FB acted
out of the impetus of self-protection and not out of
malevolence or ill will. BPI-FB was not in the corrupt
state of mind contemplated in Article 2201 and should
not be held liable for all damages now being imputed to
it for its breach of obligation. For the same reason, it is
not liable for the unearned interest on the time deposit.
Bad faith does not simply connote bad judgment
or negligence; it imports a dishonest purpose or some
moral obliquity and conscious doing of wrong; it
partakes of the nature of fraud.[44] We have held that it
is a breach of a known duty through some motive of
interest or ill will.[45] In the instant case, we cannot
attribute to BPI-FB fraud or even a motive of self-
enrichment. As the trial court found, there was no denial
whatsoever by BPI-FB of the existence of the accounts.
The computer-generated document which indicated that
the current account was not on file resulted from the
prior debit by BPI-FB of the deposits. The remedy of
freezing the account, or the garnishment, or even the
outright refusal to honor any transaction thereon was
resorted to solely for the purpose of holding on to the
funds as a security for its intended court action,[46] and
with no other goal but to ensure the integrity of the
accounts.
We have had occasion to hold that in the absence
of fraud or bad faith,[47] moral damages cannot be
awarded; and that the adverse result of an action does
not per se make the action wrongful, or the party liable
for it. One may err, but error alone is not a ground for
granting such damages.[48]
An award of moral damages contemplates the
existence of the following requisites: (1) there must be
an injury clearly sustained by the claimant, whether
physical, mental or psychological; (2) there must be a
culpable act or omission factually established; (3) the
wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant;
and (4) the award for damages is predicated on any of
the cases stated in Article 2219 of the Civil Code.[49]
Franco could not point to, or identify any
particular circumstance in Article 2219 of the Civil
Code,[50] upon which to base his claim for moral
damages.
Thus, not having acted in bad faith, BPI-FB cannot
be held liable for moral damages under Article 2220 of
the Civil Code for breach of contract.[51]
We also deny the claim for exemplary damages.
Franco should show that he is entitled to moral,
temperate, or compensatory damages before the court
may even consider the question of whether exemplary
damages should be awarded to him.[52] As there is no
basis for the award of moral damages, neither can
exemplary damages be granted.
While it is a sound policy not to set a premium on
the right to litigate,[53] we, however, find that Franco is
entitled to reasonable attorneys fees for having been
compelled to go to court in order to assert his
right. Thus, we affirm the CAs grant of P75,000.00 as
attorneys fees.
 Attorneys fees may be awarded when a party is
compelled to litigate or incur expenses to protect his
interest,[54] or when the court deems it just and
equitable.[55] In the case at bench, BPI-FB refused to
unfreeze the deposits of Franco despite the Makati
RTCs Order Lifting the Order of Attachment and
Quiaoits unwavering assertion that the P400,000.00
was part of Francos savings account. This refusal
constrained Franco to incur expenses and litigate for
almost two (2) decades in order to protect his interests
and recover his deposits. Therefore, this Court deems it
just and equitable to grant Franco P75,000.00 as
attorneys fees. The award is reasonable in view of the
complexity of the issues and the time it has taken for this
case to be resolved.[56]
Sixth. As for the dismissal of BPI-FBs counter-
claim, we uphold the Manila RTCs ruling, as affirmed
by the CA, that BPI-FB is not entitled to recover
P3,800,000.00 as actual damages. BPI-FBs alleged loss
of profit as a result of Francos suit is, as already pointed
out, of its own making. Accordingly, the denial of its
counter-claim is in order.
WHEREFORE, the petition is PARTIALLY
GRANTED. The Court of Appeals Decision dated
November 29, 1995 is AFFIRMED with the
MODIFICATION that the award of unearned interest
on the time deposit and of moral and exemplary
damages is DELETED.
No pronouncement as to costs.
SO ORDERED.
4. AZNAR V.YAPDIANGCO 13 SCRA 486- Effects
of Possession
Property, Ownership and Its Modifications
AZNAR V.YAPDIANGCO
13 SCRA 486
FACTS:
Theodoro Santos advertised in the newspapers the sale
of his Ford Fairlane 500. After the advertisement, a
certain de Dios, claiming to be the nephew of Marella,
went to the residence of Santos and expressing his
uncles intent to purchase the car. Since Santos wasn't
around, it was Irineo who talked with de Dios. On being
informed, Santos advised his son to see
Marella, which the son did. Marella expressed his
intention to purchase the car. A deed of sale was
prepared and Irineo was instructed by his father not to
part with the deed and the car without receiving the
purchase price from Marella. When irineo and de Dios
arrived at the residence of Marella, the latter averred that
his money was short and had to borrow from his sister.
He then instructed de Dios and Irineo to go the supposed
house of the sister to obtain the money with an
unidentified person. He also asked Irineo to leave the
deed to have his lawyer see it. Relying on the good faith
of Marella, Irineo did as requested. Upon arriving at the
house of Marellas supposed to be sister, de Dios and
the unidentified person then disappeared together with
the car. This prompted Santos to report the incident to
the authorities. Thereafter, Marella was able to sell the
land to Aznar. And while in possession of the car, police
authorities confiscated the same. This prompted Aznar
to file an action for replevin.
HELD:
Marella never had title to the car as the car wasn't ever
delivered to him. While there was a deed of sale in his
favor, he was only able to obtain possession of the car
since he stole it from Santos. The applicable law is
Article 559. The rule is to the effect that if the owner has
lost a thing, or if he has been unlawfully deprived of it,
he has a right to recover it, not only from its finder, thief
or robber, but also from third persons who may have
acquired it in good faith from such finder, thief or
robber. The said article establishes 2 exceptions to the
general rule of irrevindicabiltyto wit, the owner has
lost the thing or has been unlawfully deprived thereof.
In these cases, the possessor cannot retain the thing as
against the owner who may recover it without paying
any indemnity, except when the possessor acquired it in
a public sale. Furthermore, the common law principle
that where one of two innocent persons must suffer a
fraud perpetrated by another, the law imposes the loss
upon the party who, by his misplaced confidence, has
enable the fraud to be committed, cannot be applied in
this case, which is covered by an express provision of
law.