ROSA J. SALES, EARL RYAN CHENG and EMIL RALPH CHENG, petitioners, vs.WILLIAM BARRO, respondent.

This case originated from the ejectment complaint filed by the petitioners against the respondent, his
wife, and all persons claiming rights. petitioners alleged among others that (1) they are owners of the lot
described and embraced in Transfer Certificate of Title (2) the respondent constructed a shanty thereon
without their consent; (3) the respondent and his co-defendants have not been paying any rent to the
petitioners for their occupation thereof; (4) the respondent and his co-defendants refused the formal
demand made by the petitioners for them to vacate the subject lot;
In his answer, the respondent denied the allegations of the complaint, and essentially claimed that (1)
his construction of the temporary makeshift house on the lot was tolerated by the petitioners,
considering that he acted as the caretaker thereof; and (2) he does not remember receiving any demand
letter and summons from the barangay and so he was surprised to know that an ejectment complaint
was filed against him.
In its Decision7 dated September 27, 2004, the MeTC found in favor of the petitioners. It held that the
respondent, his wife, and all persons claiming rights under them, being possessors by tolerance, can be
validly ejected from the lot at any time and after due notice. It then directed them to vacate the lot, pay
P5,000 a month from January 2004 up to such time that the lot is actually turned over to the petitioners,
and pay P10,000 as attorneys fees.
After finding the complaint to be substantially lacking in the requisite allegations that would make out a
case either for forcible entry or unlawful detainer,8 the Court of Appeals reversed the RTC decision and
accordingly dismissed the petitioners complaint.
Simply put, we are asked to resolve: (1) whether the Court of Appeals correctly dismissed the complaint;
Anent the first issue, the petitioners argue that the complaint was for unlawful detainer, and hence,
there was no need for them to allege prior physical possession of the lot. They further contend that their
position that the complaint was for unlawful detainer is supported by the claim of the respondent in his
answer that "he made a temporary makeshift structure on the lot to serve as his living place and that
the same was tolerated by the petitioners considering that he acted as caretaker of the property."11 For
his part, the respondent insists that the Court of Appeals was correct in dismissing the complaint.12
After carefully examining the averments of the petitioners complaint and the character of the reliefs
sought therein,13 we hold that the Court of Appeals did not err in finding that the complaint was for
forcible entry, and that the Court of Appeals correctly dismissed it.
There are two reasons why we could not subscribe to the petitioners submission that their complaint
was for unlawful detainer. Firstly, the petitioners own averment in the complaint "that the defendant
constructed a shanty in the lot of the plaintiffs without their consent,"14 and the relief asked for by the
petitioners that the respondent and his wife "pay the amount of P10,000 a month beginning January
2004 as for reasonable rent of the subject premises,"15 clearly contradict their claim. It must be
highlighted that as admitted by the petitioners in their motion for reconsideration16 before the
appellate court, and as evidenced by the TCT No. 262237 annexed to the complaint, the petitioners
became owners of the property only on January 6, 2004. By averring that the respondent constructed
his shanty on the lot without their consent and then praying that the MeTC direct the respondent to pay
them rent from January 2004, or from the inception of the respondents occupation of the lot, no other
conclusion can be made except that the petitioners had always considered respondents occupation of
the same to be unlawful from the very beginning. Hence, the complaint can never support a case for
unlawful detainer. "It is a settled rule that in order to justify an action for unlawful detainer, the owners
permission or tolerance must be present at the beginning of the possession."17
Secondly, the nature of the complaint is neither changed nor dependent upon the allegations and/or
defenses made in the answer. As we had previously stated in Caiza v. Court of Appeals,18 "it is
axiomatic that what determines the nature of an action as well as which court has jurisdiction over it,
are the allegations of the complaint and the character of the relief sought."
As correctly found by the Court of Appeals, what the petitioners actually filed was a fatally defective
complaint for forcible entry, considering that there was no allegation therein regarding the petitioners
prior physical possession of the lot.19 In Tirona v. Alejo, we held that "in actions for forcible entry, two
allegations are mandatory for the municipal trial court to acquire jurisdiction: first, the plaintiff must
allege his prior physical possession of the property; and second, he must also allege that he was
deprived of his possession by any of the means provided for in Section 1,20 Rule 70 of the Rules of
Court, namely, force, intimidation, threats, strategy, and stealth." 21
The petitioners allegation that they are the registered owners of the lot miserably falls short of
satisfying the required averment of prior physical possession. As we had clarified and stressed in Tirona,
"the word possessionas used in forcible entry and unlawful detainer, means nothing more than physical
possession, not legal possession in the sense contemplated in civil law."22
WHEREFORE, the instant petition is DENIED for lack of merit. Costs against the petitioners.
MEDINA, petitioners, vs. GREENFIELD DEVELOPMENT CORPORATION,respondent.
Petitioners are the grandchildren of Pedro Medina from two marriages. In his first marriage to Isadora
San Jose, Pedro sired three children: Rafael, Rita and Remegia; in his second marriage, this time to
Natalia Mullet, Pedro had five: Cornelio, Brigida, Balbino, Crisanta and Rosila. Except for Balbino and
Crisanta, all of Pedros children likewise bore children, the petitioners in this case.*1+
On June 5, 1962, Pedro, his brother Alberto Medina and his niece Nazaria Cruz (Albertos daughter)
executed a notarized Contract to Sell in favor of respondent Greenfield Development Corporation over a
parcel of land located in Muntinlupa City, then in the Province of Rizal, covered by Transfer Certificate of
Title (TCT) No. 100177 (Lot 90-A) and measuring 17,121 square meters.[2] A notarized Deed of Sale
covering said property was subsequently entered into on June 27, 1962, in favor of respondent, and this
time signed by Pedro, Cornelio, Brigida, Balbino, Gregoria, Crisanta, Rosila, and Alberto, all surnamed
Medina, and Nazaria Cruz, as vendors.[3]
Thereafter, a notarized Deed of Absolute Sale with Mortgage was executed on September 4, 1964 in
favor of respondent over Lot 90-B covered by TCT No. 100178, measuring 16,291 square meters.
Signing as vendors were Pedro, Cornelio, Brigida, Balbino, Gregoria, Crisanta, Rosila, and Alberto, all
surnamed Medina, and Nazaria Cruz.[4]
By virtue of these sales, respondent was able to register in its name the title to the two parcels of land
with TCT No. 100578 covering Lot 90-A and TCT No. 133444 covering Lot 90-B. These properties were
consolidated with other lots and were eventually registered on July 19, 1995, in the name of respondent
under TCT Nos. 202295, 202296 and 202297.[5]
On November 6, 1998, petitioners instituted Civil Case No. 98-233, an action for annulment of titles and
deeds, reconveyance, damages with preliminary injunction and restraining order, against respondent
and the Register of Deeds of Makati.[6] Included in the complaint are the heirs of Nazaria Cruz, as
unwilling co-plaintiffs.[7] Petitioners allege in their complaint that they are co-owners of these two
parcels of land. While the titles were registered in the names of Pedro, Alberto, Cornelio, Brigida and
Gregoria, all surnamed Medina, they alleged that they were recognized as co-owners thereof. In
support of their case, petitioners maintain that the deeds of sale on these properties were simulated
and fictitious, and the signatures of the vendors therein were fake. Despite the transfer of the title to
respondents name, they remained in possession thereof and in fact, their caretaker, a certain Santos
Arevalo and his family still reside on a portion of the property. On July 13, 1998, petitioners caused an
adverse claim to be annotated on the titles. After discovering the annotation, respondent constructed a
fence on the property and posted security personnel, barring their ingress and egress. Thus, petitioners
sought, among others, the issuance of a temporary restraining order and a writ of preliminary injunction
enjoining respondent and its agents and representatives from preventing petitioners to exercise their
rights over the properties.[8]
Respondent denied the allegations, stating that petitioners have no valid claim on the properties as it is
already titled in its name by virtue of the public documents executed by their predecessors. As
counterclaim, respondent alleged that Santos Arevalo is not petitioners caretaker and it was them who
employed him as caretaker.[9]
On January 18, 1999, the trial court issued its resolution granting petitioners prayer for injunctive relief.
Let therefore an injunction issue, enjoining and directing defendant GREENFIELD DEVELOPMENT
CORPORATION, its security guards, agents, representatives, and all those claiming rights under it, from
preventing plaintiffs and their caretaker Santos Arevalo, from entering and going out of the subject
premises, and from preventing them to exercise their property rights, upon payment of a bond in the
amount of P100,000.00.
THE COURT OF APPEALS COMMITTED A MISTAKE IN HOLDING THAT RESPONDENT WAS IN
CONSTRUCTIVE POSSESSION OF THE SUBJECT PREMISES NOTWITHSTANDING THAT PETITIONERS ARE IN
ACTUAL POSSESSION THEREOF
The Court however holds suspect the acquisition by Greenfield Development Corporation of the two
parcels. Lot 90-A covered by Transfer Certificate of Title No. 100177, was promised to be sold to
defendant under a contract to sell but the other co-owners did not sign this Contract to Sell, who all
denied knowledge of the same. No contract of Sale followed this Contract to Sell which cannot be the
bases of the issuance of a new title. A Contract to Sell is only a promise to sell, and is not a deed of sale,
specially as this Contact to Sell is not signed by all of the registered owners.
This Court cannot also understand how the document, denominated as DEED OF ABSOLUTE SALE WITH
MORTGAGE can be the bases (sic) of a new title. The absoluteness of the sale, is contradicted by the
mortgage it also provides. There is absoluteness of sale only when the buyer upon execution of the
contract, pay (sic) in full the consideration and ownership passes to the Vendee. The registered owners
of Lot 90-B covered by Transfer Certificate of Title No. 100178 even deny having executed this
document of Deed of Absolute Sale with Mortgage.
Until these matters are threshed out at the trial on the merits, and after this is fully explained and
determined, whether the properties were actually sold to Defendant Greenfield Development
Corporation, irreparable injury will visit the landowner if the claim of ownership by Greenfield
Development Corporation is allowed and not enjoined.[14]
The Court of Appeals, however, disagreed with the trial court. It noted that the trial court relied mainly
on petitioners allegations in the complaint, which were not supported by substantial evidence, and
ignored the presumption of validity ascribed to the duly notarized deeds of conveyances and the titles
issued to respondent. The Court of Appeals also found that respondent is in constructive possession of
the properties in dispute considering that it is already the registered owner thereof since 1962. Lastly,
the Court of Appeals held that petitioners right to impugn respondents title to the property has already
prescribed.[15]
Section 3, Rule 58 of the Rules of Court provides for the grounds justifying the issuance of a preliminary
injunction, to wit:
SEC. 3. Grounds for issuance of preliminary injunction. - A preliminary injunction may be granted when it
is established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief consists
in restraining the commission or continuance of the act or acts complained of, or in requiring the
performance of an act or acts, either for a limited period or perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained of during the
litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening or is attempting to do, or is procuring
or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting
the subject of the action or proceeding, and tending to render the judgment ineffectual.
The purpose of a preliminary injunction is to prevent threatened or continuous irremediable injury to
some of the parties before their claims can be thoroughly studied and adjudicated. Its sole aim is to
preserve the status quo until the merits of the case can be heard fully.[16] Thus, to be entitled to an
injunctive writ, the petitioner has the burden to establish the following requisites:[17]
1) a right in esse or a clear and unmistakable right to be protected;
(2) a violation of that right;
(3) that there is an urgent and permanent act and urgent necessity for the writ to prevent serious
damage.
Hence, petitioners entitlement to the injunctive writ hinges on their prima facie legal right to the
properties subject of the present dispute. The Court notes that the present dispute is based solely on
the parties allegations in their respective pleadings and the documents attached thereto. We have on
one hand, petitioners bare assertion or claim that they are co-owners of the properties sold by their
predecessors to respondent, and on the other, respondents claim of ownership supported by deeds of
conveyances and torrens titles in their favor. From these alone, it is clear that petitioners failed to
discharge the burden of clearly showing a clear and unmistakable right to be protected. Where the
complainants right or title is doubtful or disputed, injunction is not proper. The possibility of
irreparable damage without proof of actual existing right is not a ground for an injunction.[18]
Petitioners, however, argue that the presumption of validity of the notarized documents and titles
cannot be applied in respondents case as it is not an innocent purchaser.*22+According to petitioners,
respondent is fully aware that at the time that the Contract to Sell was entered into in 1962, Leon
Medina who is a co-owner of the property then covered by TCT No. 21314, was already dead. Suffice it
to say that these arguments already involve the merits of the main case pending before the trial court,
which should not even be preliminarily dealt with, as it would be premature.
Petitioners also claim that they are in actual possession of the property. As alleged in their complaint,
they instituted Santos Arevalo, a co-petitioner, as caretaker.[26] They also alleged in their petition filed
before this Court that Balbino and Yolanda Medina and their respective families are still residing on a
portion of the property.[27] Respondent belies their claim, declaring that it employed Arevalo as
caretaker. Respondent presented a notarized Receipt and Quitclaim dated April 26, 1994, signed by
Arevalo, who attested that he was employed by respondent as caretaker and that his stay on the
property was a mere privilege granted by respondent.
Possession and ownership are two different legal concepts. Just as possession is not a definite proof of
ownership, neither is non-possession inconsistent with ownership. Even assuming that petitioners
allegations are true, it bears no legal consequence in the case at hand because the execution of the
deeds of conveyances is already deemed equivalent to delivery of the property to respondent, and prior
physical delivery or possession is not legally required.*28+ Under Article 1498 of the Civil Code, when
the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of
the object of the contract, if from the deed the contrary does not appear or cannot be inferred.
Possession is also transferred, along with ownership thereof, to respondent by virtue of the notarized
deeds of conveyances.[29]
The Court, however, finds that it was precipitate for the Court of Appeals to rule that petitioners action
is barred by prescription. As previously stressed, the parties are yet to prove their respective allegations
and the trial court is yet to receive the evidence. There is nothing on record that can conclusively
support the conclusion that the action is barred by prescription. Hence, the Court of Appeals should not
have made such ruling.
WHEREFORE, the petition is hereby DENIED for lack of merit. G.R. No. 162787 June 13, 2008
REPUBLIC OF THE PHILIPPINES, petitioners, vs.LOURDES F. ALONTE, respondent.
This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the
Decision1of the Court of Appeals (CA) dated February 26, 2004 which affirmed the Decision of the
Regional Trial Court of Quezon City, Branch 82 (RTC) granting respondent's petition for reconstitution,
be reversed and set aside.
The CA accurately summarized the facts as culled from the records, thus:
On August 10, 2001, the petitioner-appellee [herein respondent] Lourdes F. Alonte filed a Petition for
the Reconstitution of the Original of Transfer Certificate of Title No. 335986 and Issuance of the
Corresponding Owner's Duplicate thereof supposedly over lot 18-B of the subd. Plan (LRC) Psd-328326
containing an area of Eighty Square Meters and Ninety Five Square Decimeters (80.95) situated in the
Municipality of Caloocan (now Quezon City).
The petitioner-appellee alleged in its [sic] petition that she is the owner in fee simple of a parcel of land
with its improvement situated in Quezon City, bounded and described as follows:
x x x x
It is further alleged that the original copy of the aforesaid title which used to be kept in the Office of the
Register of Deeds of Quezon City was among those declared either destroyed or burned during the fire
which razed the said office on June 11, 1988 (Annex "E", Certification From the Register of Deeds,
Records, p. 9).
Likewise, the petitioner-appellee alleged that the owner's Duplicate copy thereof was lost and an
affidavit to that effect was executed and accordingly filed in the Office of the Registry of Deeds for
Quezon City (Annex "F").
At the ex-parte hearing conducted on January 4, 2002, the petitioner-appellee was represented by her
attorney-in-fact, Editha Alonte as evidenced by a Special Power of Attorney (Exh. "H"). The petitioner-
appellee is presently in the United States and the witness and her family together with her sisters-in-law
are the ones presently occupying the house erected thereon.
The following documents were presented to prove the jurisdictional facts:
Exhibit "A" - copy of the Petition dated July 27, 2001.
Exhibit "B" - Order dated August 29, 2001.
Exhibit "C", "C-1" to "C-5" - the proof of service of the said Order to the City Prosecutor's Office, the
Registry of Deeds of Quezon City, the Quezon City Legal Department, the Land Registration Authority,
the Office of the Solicitor General, and the Land Management Bureau of the DENR;
Exhibit "D" - Certificate of Publication dated October 26, 2001 issued by the National Printing Office;
Exhibit "E" - Volume 97 No. 43, October 22, 2001 issue of the Official Gazette;
Exhibit "E-1" - Volume 97 No. 44, October 29, 2001 issue of the Official Gazette;
Exhibit "F" - Certificate of Posting and Service dated November 19, 2001 by the Deputy Sheriff of this
Court.
In addition to the abovementioned documents, the petitioner-appellee presented the following:
Annex "A" - Photocopy of TCT No. 335986;
Annex "B" - Tax Declaration No. D-074-00504 for 1996;
Annex "C" - Tax Declaration No. D-074-00921 for 1997;
Annex "D" - Certification from the Office of the City Treasurer dated July 25, 2001;
? Annex "E" - Certification from the Register of Deeds of Quezon City dated February 4, 2000;
Annex "F" - Affidavit of Loss dated July 9, 2001;
Annex "G" - Technical Description;
Annex "H" - Certification from the Office of the City Assessor dated August 1, 2001 (Records, pp. 5-
12).2
The CA further adopted the following factual findings of the RTC, to wit:
The adjoining owners of the subject property were also furnished with copies of the Order dated August
29, 2001 by registered mail, as evidenced by the registry return cards (Exhibits "G", "G-1" and "G-2")
attached to the records. There being no opposition thereto, the petitioner was allowed to present her
evidence ex-parte before a Hearing Officer designated by the Court.
x x x x
In its Report dated August 2, 2002, the Land Registration Authority submitted its findings as follows:
(1) The present petition seeks the reconstitution of Transfer Certificate of Title No. 335986, allegedly lost
or destroyed and supposedly covering Lot 18-B of the subdivision plan (LRC) Psd-328326, situated in the
Municipality of Caloocan (now Quezon City).
(2) The plan and technical description of Lot 18-B of the subdivision plan (LRC) Psd 328326, were
verified correct by this Authority to represent the aforesaid lot and the same have been approved under
(LRA) PR-19193 pursuant to the provision of Section 12 of Republic Act No. 26.3(Emphasis supplied)
On August 13, 2002, the RTC promulgated its Decision, the dispositive portion of which reads as follows:
WHEREFORE, the Petition dated July 27, 2001 is hereby GRANTED and the Register of Deeds of Quezon
City is hereby directed to reconstitute in the files of his Office the original copy of TCT No. 335986 based
on the corresponding technical description and survey plan of the property in question in the name of
petitioner Lourdes F. Alonte.
The owner's duplicate copy of TCT No. 335986 which was lost is hereby declared null and void and the
Register of Deeds of Quezon City is hereby directed to issue a new owner's duplicate copy of the
reconstituted title to the petitioner, after payment of the prescribed fees and after their Order shall
have become final.
SO ORDERED.4
Thereafter, the RTC Branch Clerk of Court issued a Certificate of Finality dated September 3, 2002.5
However, on September 10, 2002, the RTC issued an Order reading as follows:
It appearing from the records that the Notice of Appeal filed by the Office of the Solicitor General thru
registered mail on August 29, 2002 and received by this Court on September 4, 2002, was within the
reglementary period, the Certificate of Finality earlier issued on September 3, 2002 is hereby
REVOKEDand/or otherwise RECALLED.
ACCORDINGLY, the Notice of Appeal is hereby given due course. Let, therefore, the records hereof be
elevated to the Court of Appeals for appropriate proceedings and disposition.
SO ORDERED.6
On February 26, 2004, the CA then issued the assailed Decision affirming the RTC judgment. The CA held
that the RTC did not err in ordering the reconstitution of the original copy of Transfer Certificate of Title
(TCT) No. 335986 based on a photocopy because the court applied Section 3(f) of Republic Act (R.A.) No.
26, entitled "An Act Providing a Special Procedure for the Reconstitution of Torrens Certificate of Title
Lost or Destroyed", which took effect on September 26, 1946. Said provision states that "transfer
certificates of title shall be reconstituted from x x x any other document which, in the judgment of the
court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title."
Hence, the present petition for review on certiorari on the following grounds:
I
The Court of Appeals erred in finding that there is sufficient and proper basis for reconstitution of TCT
No. 335986.
II
The Court of Appeals erred in affirming the lower court's decision granting the petition for
reconstitution despite respondent's failure to comply with the mandatory requirements prescribed
under Republic Act No. 26.7
Petitioner alleges that the trial court did not acquire jurisdiction to hear the petition for respondent's
failure to allege the following mandatory and jurisdictional facts in her petition:
1. the names and addresses of the occupants or persons in possession of the property, of the owners of
the adjoining properties and of all persons who may have any interest in the property;
2. a detailed description of the encumbrance appearing on the title; and
3. the restrictions and liabilities allegedly appearing on the subject title as referred to in paragraph 8 of
the Petition.8
Petitioner also pointed out other supposed defects in the petition, i.e., it was not accompanied by a plan
and technical description of the property duly approved by the Chief of the General Land Registration
Office (now Land Registration Authority [LRA]) or by a certified copy of the description taken from a
prior certificate of title covering the same property as prescribed under the last condition under Section
12 of R.A. No. 26; there was no tracing cloth plan attached to the petition as prescribed by Section 5 (a)
of LRC Circular No. 35; and there is no showing that the Affidavit of Loss executed on July 9, 2001 by the
petitioner stating the alleged fact of loss of the owner's duplicate copy of TCT No. T-335986 had been
sent or registered with the Office of the Registry of Deeds of Quezon City.9
The petition is unmeritorious.
The Court emphasizes its ruling in Republic of the Philippines v. Casimiro,10 to wit:
The findings of fact of the RTC, affirmed by the Court of Appeals, cannot be disturbed by this Court,
since
As a rule, only questions of law may be appealed to the Court by certiorari. The Court is not a trier of
facts, its jurisdiction being limited to errors of law. Moreover, where as in this case the Court of Appeals
affirms the factual findings of the trial court, such findings generally become conclusive and binding
upon the Court. The Court will not disturb the factual findings of the trial and appellate courts unless
there are compelling or exceptional reasons, and there is none in the instant petition.
Petitioner failed to present before this Court any compelling or exceptional argument or evidence that
would justify a departure from the foregoing general rule. This Court defers to the findings of both the
RTC and the Court of Appeals as to the weight accorded to respondents evidence and the sufficiency
thereof to substantiate his right to a reconstitution of the original copy of TCT No. 305917.11 (Emphasis
supplied)
In the present case, the RTC declared the petition to be sufficient in form and substance in its Order12
dated August 29, 2001. Both the RTC and the CA found the evidence presented by petitioner as
adequate to order the reconstitution of TCT No. 335986. Akin to Casimiro,13 herein petitioner also
failed to convince the Court that there are compelling reasons for it to deviate from the general rule that
the findings of fact of the RTC, affirmed by the CA, are binding on this Court.
A thorough examination of the record reveals that there is no factual basis for petitioner's claim that
respondent failed to comply with the requirements for a petition for reconstitution as enumerated in
Sections 12 and 13 of R.A. No. 26, to wit:
Section 12. Petitions for reconstitution from sources enumerated in Section x x x 3(f) of this Act, shall be
filed with the proper Court of First Instance, by the registered owner, his assigns, or any person having
an interest in the property. The petition shall state or contain, among other things, the following: (a)
that the owner's duplicate of the certificate of title had been lost or destroyed; (b) that no co-owner's,
mortgagee's or lessee's duplicate had been issued, or, if any had been issued, the same had been lost or
destroyed; (c ) the location, area and boundaries of the property; (d) the nature and description of the
buildings or improvements, if any, which do not belong to the owner of the land, and the names and
addresses of the owners of such buildings or improvements; (e) the names and addresses of the
occupants or persons in possession of the property, of the owners of the adjoining properties and of all
persons who may have any interest in the property; (f) a detailed description of the encumbrances, if
any, affecting the property; and (g) a statement that no deeds or other instruments affecting the
property have been presented for registration, or, if there be any, the registration thereof has not been
accomplished, as yet. All documents, or authenticated copies thereof, to be introduced in evidence in
support of the petition for reconstitution shall be attached thereto and filed with the same: Provided,
That in case the reconstitution is to be made exclusively from sources enumerated in Sections 2(f) or 3(f)
of this Act, the petition shall be further accompanied with a plan and technical description of the
property duly approved by the Chief of the General Land Registration Office, or with a certified copy of
the description taken from a prior certificate of title covering the same property.
Section 13. The Court shall cause a notice of the petition, filed under the preceding section, to be
published, at the expense of the petitioner, twice in successive issues of the Official Gazette, and to be
posted on the main entrance of the provincial building and of the municipal building of the municipality
or city in which the land is situated, at least thirty days prior to the date of hearing. The court shall
likewise cause a copy of the notice to be sent, by registered mail or otherwise, at the expense of the
petitioner, to every person named therein whose address is known, at least thirty days prior to the date
of hearing. Said notice shall state, among other things, the number of the lost or destroyed certificate of
title, if known, the name of the registered owner, the names of the occupants or persons in possession
of the property, the owners of the adjoining properties and all other interested parties, the location,
area and boundaries of the property, and the date on which all persons having any interest therein,
must appear and file their claim or objections to the petition. The petitioner shall, at the hearing, submit
proof of the publication, posting and service of the notice as directed by the court.
The petition for reconstitution alleged that respondent is in possession of the subject lot and it listed the
names and addresses of adjoining owners enumerated in the Certification from the Office of the City
Assessor dated August 1, 2001; it stated that the title is free from any and all liens and encumbrances;
and it stated that a copy of TCT No. 335986 is attached to the petition and made an integral part of the
petition, hence, the restrictions and liabilities appearing at the back of the copy of the TCT are deemed
part of the petition for reconstitution. Said petition was also accompanied by a technical description of
the property approved by the Commissioner of the National Land Titles and Deeds Registration
Administration, the predecessor of the LRA, as prescribed under the last condition of Section 12 of R.A.
No. 26. Thus, the petition clearly complied with the requirements of Section 12, R.A. No. 26.
The fact that Editha Alonte, respondent's attorney-in-fact, testified that it is she and her family who are
residing on the subject lot does not negate the statement in the petition for reconstitution that it is
respondent who is in possession of the lot. After all, Article 524 of the New Civil Code provides that
possession may be exercised in one's own name or in that of another. Obviously, Editha Alonte was
exercising possession over the land in the name of respondent Lourdes Alonte. This is supported by the
Certification14 from the Office of the City Treasurer of Quezon City which states that the real property
taxes on said property, declared in the name of Lourdes Alonte, had been paid.
Furthermore, as stated above, the LRA submitted to the trial court a Report15 dated August 2, 2002
stating that "[t]he plan and technical description of Lot 18-B of the subdivision plan (LRC) Psd-328326,
were verified correct by this Authority to represent the aforesaid lot and the same have been approved
under (LRA) PR-19193 pursuant to the provisions of Section 12 of R.A. No. 26." Attached to said Report
were the print copy of plan (LRA) PR-1919316 and the corresponding technical description.17 Since the
LRA issued a Report that is highly favorable to respondent, and considering further the presumption that
official duty has been regularly performed,18 the only conclusion would be that respondent has fully
complied with the requirements of LRC Circular No. 35.
It also appears that the Affidavit of Loss dated July 9, 2001 executed by respondent has indeed been
submitted to the Register of Deeds as the photocopy of TCT No. 335986 bears an inscription at the back
regarding the submission of such document to the Register of Deeds.
In fine, petitioner miserably failed to present any matter that would warrant the reversal or modification
of the factual findings of the RTC, as affirmed by the CA.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED.
[G.R. No. 79688. February 1, 1996]
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT OF APPEALS, WILSON KEE, C.T.
TORRES ENTERPRISES, INC. and ELDRED JARDINICO, respondents.
D E C I S I O N
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on the wrong property erroneously delivered by the
owners agent, a builder in good faith? This is the main issue resolved in this petition for review on
certiorari to reverse the Decision[1] of the Court of Appeals[2] in CA-G.R. SP No. 11040, promulgated on
August 20, 1987.
By resolution dated November 13, 1995, the First Division of this Court resolved to transfer this case
(along with several others) to the Third Division. After due deliberation and consultation, the Court
assigned the writing of this Decision to the undersigned ponente.
The Facts
The facts, as found by respondent Court, are as follows:
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II and located at
Taculing Road, Pleasantville Subdivision, Bacolod City. In 1975, respondent Eldred Jardinico bought the
rights to the lot from Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of Deeds of Bacolod City on
December 19, 1978 Transfer Certificate of Title No. 106367 in his name. It was then that he discovered
that improvements had been introduced on Lot 9 by respondent Wilson Kee, who had taken possession
thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same subdivision from C.T.
Torres Enterprises, Inc. (CTTEI), the exclusive real estate agent of petitioner. Under the Contract to Sell
on Installment, Kee could possess the lot even before the completion of all installment payments. On
January 20, 1975, Kee paid CTTEI the relocation fee of P50.00 and another P50.00 on January 27, 1975,
for the preparation of the lot plan. These amounts were paid prior to Kees taking actual possession of
Lot 8. After the preparation of the lot plan and a copy thereof given to Kee, CTTEI through its employee,
Zenaida Octaviano, accompanied Kees wife, Donabelle Kee, to inspect Lot 8. Unfortunately, the parcel
of land pointed by Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence, a store,
an auto repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The parties tried to reach
an amicable settlement, but failed.
On January 30, 1981, Jardinicos lawyer wrote Kee, demanding that the latter remove all improvements
and vacate Lot 9. When Kee refused to vacate Lot 9, Jardinico filed with the Municipal Trial Court in
Cities, Branch 3, Bacolod City (MTCC), a complaint for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI. It further ruled
that petitioner and CTTEI could not successfully invoke as a defense the failure of Kee to give notice of
his intention to begin construction required under paragraph 22 of the Contract to Sell on Installment
and his having built a sari-sari store without. the prior approval of petitioner required under paragraph
26 of said contract, saying that the purpose of these requirements was merely to regulate the type of
improvements to be constructed on the lot[3].
However, the MTCC found that petitioner had already rescinded its contract with Kee over Lot 8 for the
latters failure to pay the installments due, and that Kee had not contested the rescission. The rescission
was effected in 1979, before the complaint was instituted. The MTCC concluded that Kee no longer had
any right over the lot subject of the contract between him and petitioner. Consequently, Kee must pay
reasonable rentals for the use of Lot 9, and, furthermore, he cannot claim reimbursement for the
improvements he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:
1. Defendant Wilson Kee is ordered to vacate tithe premises of Lot 9, covered by TCT No. 106367 and to
remove all structures and improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P 15.00 a day computed
from the time this suit was filed on March 12, 1981 until he actually vacates the premises. This amount
shall bear interests (sic) at the rate of 12 per cent (sic) per annum.
3. Third-Party Defendant CT. Torres Enterprises, Inc. and Pleasantville Subdivision are ordered to pay the
plaintiff jointly and severally the sum of P3,000.00 as attorneys fees and P700.00 as cost and litigation
expenses.*4+
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that petitioner and CTTEI were
not at fault or were not negligent, there being no preponderant evidence to show that they directly
participated in the delivery of Lot 9 to Kee.[5] It found Kee a builder in bad faith. It further ruled that
even assuming arguendo that Kee was acting in good faith, he was, nonetheless, guilty of unlawfully
usurping the possessory right of Jardinico over Lot 9 from the time he was served with notice to vacate
said lot, and thus was liable for rental.
The RTC thus disposed:
WHEREFORE, the decision appealed from is affirmed with respect to the order against the defendant to
vacate the premises of Lot No. 9 covered by Transfer Certificate of Title No. T-106367 of the land
records of Bacolod City; the removal of all structures and improvements introduced thereon at his
expense and the payment to plaintiff (sic) the sum of Fifteen (P 15.00) Pesos a day as reasonable rental
to be computed from January 30, 1981, the date of the demand, and not from the date of the filing of
the complaint, until he had vacated (sic) the premises, with interest thereon at 12% per annum. This
Court further renders judgment against the defendant to pay the plaintiff the sum of Three Thousand
(P3,000.00) Pesos as attorneys fees, plus costs of litigation.
The third-party complaint against Third-Party Defendants Pleasantville Development Corporation and
C.T. Torres Enterprises, Inc. is dismissed. The order against Third-Party Defendants to pay attorneys
fees to plaintiff and costs of litigation is reversed.*6+
Following the denial of his motion for reconsideration on October 20, 1986, Kee appealed directly to the
Supreme Court, which referred the matter to the Court of Appeals.
The appellate court ruled that Kee was a builder in good faith, as he was unaware of the mix-up when
he began construction of the improvements on Lot 8. It further ruled that the erroneous delivery was
due to the negligence of CTTEI, and that such wrong delivery was likewise imputable to its principal,
petitioner herein. The appellate court also ruled that the award of rentals was without basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and judgment is rendered
as follows:
1. Wilson Kee is declared a builder in good faith with respect to the improvements he introduced on Lot
9, and is entitled to the rights granted him under Articles 448, 546 and 548 of the New Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are
solidarily liable under the following circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these
structures, the third-party defendants shall answer for all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount
representing the value of Lot 9 that Kee should pay to Jardinico.
3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are
ordered to pay in solidum the amount of P3,000.00 to Jardinico as attorneys fees, as well as litigation
expenses.
4. The award of rentals to Jardinico is dispensed with.
Furthermore, the case is REMANDED to the court of origin for the determination of the actual value of
the improvements and the property (Lot 9), as well as for further proceedings in conformity with Article
448 of the New Civil Code.*7]
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the respondent Courts Decision, as
follows:
1. The Court of Appeals has decided the case in a way probably not in accord with law or the the (sic)
applicable decisions of the Supreme Court on third-party complaints, by ordering third-party defendants
to pay the demolition expenses and/or price of the land;
2. The Court of Appeals has so far departed from the accepted course of judicial proceedings, by
granting to private respondent-Kee the rights of a builder in good faith in excess of what the law
provides, thus enriching private respondent Kee at the expense of the petitioner;
3. In the light of the subsequent events or circumstances which changed the rights of the parties, it
becomes imperative to set aside or at least modify the judgment of the Court of Appeals to harmonize
with justice and the facts;
4. Private respondent-Kee in accordance with the findings of facts of the lower court is clearly a builder
in bad faith, having violated several provisions of the contract to sell on installments;
5. The decision of the Court of Appeals, holding the principal, Pleasantville Development Corporation
(liable) for the acts made by the agent in excess of its authority is clearly in violation of the provision of
the law;
6. The award of attorneys fees is clearly without basis and is equivalent to putting a premium in (sic)
court litigation.
From these grounds, the issues could be re-stated as follows:
(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises, Inc.? and
(3) Is the award of attorneys fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the RTCs ruling that Kee was a builder
in bad faith.
Petitioner fails to persuade this Court to abandon the findings and conclusions of the Court of Appeals
that Kee was a builder in good faith. We agree with the following observation of the Court of Appeals:
The roots of the controversy can be traced directly to the errors committed by CTTEI, when it pointed
the wrong property to Wilson Kee and his wife. It is highly improbable that a purchaser of a lot would
knowingly and willingly build his residence on a lot owned by another, deliberately exposing himself and
his family to the risk of being ejected from the land and losing all improvements thereon, not to mention
the social humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent man in ascertaining the identity of
his property. Lot 8 is covered by Transfer Certificate of Title No. T-69561, while Lot 9 is identified in
Transfer Certificate of Title No. T-106367. Hence, under the Torrens system of land registration, Kee is
presumed to have knowledge of the metes and bounds of the property with which he is dealing. x x x
xxx xxx xxx
But as Kee is a layman not versed in the technical description of his property, he had to find a way to
ascertain that what was described in TCT No. 69561 matched Lot 8. Thus, he went to the subdivision
developers agent and applied and paid for the relocation of the lot, as well as for the production of a lot
plan by CTTEIs geodetic engineer. Upon Kees receipt of the map, his wife went to the subdivision site
accompanied by CTTEIs employee, Octaviano, who authoritatively declared that the land she was
pointing to was indeed Lot 8. Having full faith and confidence in the reputation of CTTEI, and because of
the companys positive identification of the property, Kee saw no reason to suspect that there had been
a misdelivery. The steps Kee had taken to protect his interests were reasonable. There was no need for
him to have acted ex-abundantia cautela, such as being present during the geodetic engineers
relocation survey or hiring an independent geodetic engineer to countercheck for errors, for the final
delivery of subdivision lots to their owners is part of the regular course of everyday business of CTTEI.
Because of CTTEIs blunder, what Kee had hoped to forestall did in fact transpire. Kees efforts all went
to naught.*8+
Good faith consists in the belief of the builder that the land he is building on is his and his ignorance of
any defect or flaw in his title.[9] And as good faith is presumed, petitioner has the burden of proving bad
faith on the part of Kee.[10]
At the time he built improvements on Lot 8, Kee believed that said lot was what he bought from
petitioner. He was not aware that the lot delivered to him was not Lot 8. Thus, Kees good faith.
Petitioner failed to prove otherwise.
To demonstrate Kees bad faith, petitioner points to Kees violation of paragraphs 22 and 26 of the
Contract of Sale on Installment.
We disagree. Such violations have no bearing whatsoever on whether Kee was a builder in good faith,
that is, on his state of mind at the time he built the improvements on Lot 9. These alleged violations may
give rise to petitioners cause of action against Kee under the said contract (contractual breach), but
may not be bases to negate the presumption that Kee was a builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of Sale on Installment covering
Lot 8 between it and Kee was rescinded long before the present action was instituted. This has no
relevance on the liability of petitioner, as such fact does not negate the negligence of its agent in
pointing out the wrong lot to Kee. Such circumstance is relevant only as it gives Jardinico a cause of
action for unlawful detainer against Kee.
Petitioner next contends that Kee cannot claim that another lot was erroneously pointed out to him
because the latter agreed to the following provision in the Contract of Sale on Installment, to wit:
13. The Vendee hereby declares that prior to the execution of his contract he/she has personally
examined or inspected the property made subject-matter hereof, as to its location, contours, as well as
the natural condition of the lots and from the date hereof whatever consequential change therein made
due to erosion, the said Vendee shall bear the expenses of the necessary fillings, when the same is so
desired by him/her.*11+
The subject matter of this provision of the contract is the change of the location, contour and condition
of the lot due to erosion. It merely provides that the vendee, having examined the property prior to the
execution of the contract, agrees to shoulder the expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee contracted away his right to recover
damages resulting from petitioners negligence. Such waiver would be contrary to public policy and
cannot be allowed. Rights may be waived, unless the waiver is contrary to law, public order, public
policy, morals, or good customs, or prejudicial to a third person with a right recognized by law.*12+
The Second Issue: Petitioners Liability
Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed by the RTC after
ruling that there was no evidence from which fault or negligence on the part of petitioner and CTTEI can
be inferred. The Court of Appeals disagreed and found CTTEI negligent for the erroneous delivery of the
lot by Octaviano, its employee.
Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the erroneous
delivery of Lot 9 to Kee was an act which was clearly outside the scope of its authority, and
consequently, CTTEI alone should be liable. It asserts that while *CTTEI+ was authorized to sell the lot
belonging to the herein petitioner, it was never authorized to deliver the wrong lot to Kee.*13+
Petitioners contention is without merit.
The rule is that the principal is responsible for the acts of the agent, done within the scope of his
authority, and should bear the damage caused to third persons.[14] On the other hand, the agent who
exceeds his authority is personally liable for the damage.[15]
CTTEI was acting within its authority as the sole real estate representative of petitioner when it made
the delivery to Kee. In acting within its scope of authority, it was, however, negligent. It is this
negligence that is the basis of petitioners liability, as principal of CTTEI, per Articles 1909 and 1910 of
the Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico and Kee on July 24, 1987 entered
into a deed of sale, wherein the former sold Lot 9 to Kee. Jardinico and Kee did not inform the Court of
Appeals of such deal.
The deed of sale contained the following provision:
1. That Civil Case No. 3815 entitled Jardinico vs. Kee which is now pending appeal with the Court of
Appeals, regardless of the outcome of the decision shall be mutually disregarded and shall not be
pursued by the parties herein and shall be considered dismissed and without effect whatsoever;[16]
Kee asserts though that the terms and conditions in said deed of sale are strictly for the parties
thereto and that (t)here is no waiver made by either of the parties in said deed of whatever favorable
judgment or award the honorable respondent Court of Appeals may make in their favor against herein
petitioner Pleasantville Development Corporation and/or private respondent C.T. Torres Enterprises,
Inc.*17+
Obviously, the deed of sale can have no effect on the liability of petitioner. As we have earlier stated,
petitioners liability is grounded on the negligence of its agent. On the other hand, what the deed of
sale regulates are the reciprocal rights of Kee and Jardinico; it stressed that they had reached an
agreement independent of the outcome of the case.
Petitioner further assails the following holding of the Court of Appeals:
2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development Corporation are
solidarily liable under the following circumstances:
a. If Eldred Jardinico decides to appropriate the improvements and, thereafter, remove these
structures, the third-party defendants shall answer for all demolition expenses and the value of the
improvements thus destroyed or rendered useless;
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer for the amount
representing the value of Lot 9 that Kee should pay to Jardinico.*18+
Petitioner contends that if the above holding would be carried out, Kee would be unjustly enriched at its
expense. In other words, Kee would be -able to own the lot, as buyer, without having to pay anything on
it, because the aforequoted portion of respondent Courts Decision would require petitioner and CTTEI
jointly and solidarily to answer or reimburse Kee there for.
We agree with petitioner.
Petitioners liability lies in the negligence of its agent CTTEI. For such negligence, the petitioner should
be held liable for damages. Now, the extent and/or amount of damages to be awarded is a factual issue
which should be determined after evidence is adduced. However, there is no showing that such
evidence was actually presented in the trial court; hence no damages could now be awarded.
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and owner in good faith,
respectively, are regulated by law (i.e., Arts. 448, 546 and 548 of the Civil Code). It was error for the
Court of Appeals to make a slight modification in the application of such law, on the ground of
equity. At any rate, as it stands now, Kee and Jardinico have amicably settled through their deed of
sale their rights and obligations with regards to Lot 9. Thus, we delete items 2 (a) and (b) of the
dispositive portion of the Court of Appeals Decision *as reproduced above+ holding petitioner and CTTEI
solidarily liable.
The Third Issue: Attorneys Fees
The MTCC awarded Jardinico attorneys fees and costs in the amount of P3,000.00 and P700.00,
respectively, as prayed for in his complaint. The RTC deleted the award, consistent with its ruling that
petitioner was without fault or negligence. The Court of Appeals, however, reinstated the award of
attorneys fees after ruling that petitioner was liable for its agents negligence.
The award of attorneys fees lies within the discretion of the court and depends upon the circumstances
of each case.[19] We shall not interfere with the discretion of the Court of Appeals. Jardinico was
compelled to litigate for the protection of his interests and for the recovery of damages sustained as a
result of the negligence of petitioners agent.[20]
In sum, we rule that Kee is a builder in good faith. The disposition of the Court of Appeals that Kee is
entitled to the rights granted him under Articles 448, 546 and 548 of the New Civil Code is deleted, in
view of the deed of sale entered into by Kee and Jardinico, which deed now governs the rights of
Jardinico and Kee as to each other. There is also no further need, as ruled by the appellate Court, to
remand the case to the court of origin for determination of the actual value of the improvements and
the property (Lot 9), as well as for further proceedings in conformity with Article 448 of the New Civil
Code.
WHEREFORE, the petition is partially GRANTED. The Decision of the Court of Appeals is hereby
MODIFIED as follows:
(1) Wilson Kee is declared a builder in good faith;
(2) Petitioner Pleasantville Development Corporation and respondent C.T. Tones Enterprises, Inc. are
declared solidarily liable for damages due to negligence; however, since the amount and/or extent of
such damages was not proven during the trial, the same cannot now be quantified and awarded;
(3) Petitioner Pleasantville Develpment Corporation and respondent C.T. Torres Enterprises, Inc. are
ordered to pay in solidum the amount of P3,000.00 to Jardinico as attorneys fees, as well as litigation
expenses; and
(4) The award of rentals to Jardinico is dispensed with.

G.R. No. 3088 February 6, 1907
EL BANCO ESPAOL-FILIPINO, plaintiff-appellant,
vs.
JAMES PETERSON, sheriff of the city of Manila, ET AL., defendants-appellees.
Del-Pan, Ortigas & Fisher for appellant.
Hartigan, Marple, Rohde, & Gutierrez for appellees.
TORRES, J.:
On the 24th of October, 1905, the Spanish-Filipino Bank, a corporation, through its attorneys, Del-Pan,
Ortigas and Fisher, filed a complaint against the sheriff of the city of Manila and the other defendant,
Juan Garcia, praying that judgment be rendered against the said sheriff, declaring that the execution
levied upon the property referred to in the complaint, to wit, wines, liquors, canned goods, and other
similar merchandise, was illegal, and directing the defendants to return the said goods to the plaintiff
corporation, and in case that he had disposed of the same, to pay the value thereof, amounting to
P30,000, Philippine currency, and further that it be declared that the said plaintiff corporation, under
the contract of pledge referred to in the complaint had the right to apply the proceeds of the sale of the
said goods to the payment of the debt of P40,000, Philippine currency, for the security of which the said
merchandise was pledged, with preference over the claim of the other defendant, Juan Garcia and that
both defendants be held jointly liable to the plaintiff for the sum of P500, Philippine currency, as
damages, and the said defendants to pay the costs of the proceedings, and for such other and further
relief as the plaintiff might be entitled to under the law. Plaintiff alleges in its complaint that under the
contract entered into on the 4th of March, 1905, by and between the Spanish-Filipino Bank and
Francisco Reyes, the former, loaned to the latter the sum of P141,702, Philippine currency; that on the
same date Francisco Reyes was already indebted to the bank in the sum of P84,415.38, Philippine
currency, which, added to the amount of the loan, made a total of P226,117.38, Philippine currency,
received by the said Reyes as a loan from the plaintiff bank, the entire sum at an annual interest of 8 per
cent; that to secure the payment of these two sums and the interest thereon, the debtor, Francisco
Reyes, by a public instrument executed before a notary on the aforesaid date mortgaged in favor of the
plaintiff bank several pieces of property belonging to him, and pledged to the said bank part of his
personal property, specifying the proportion on which the said real and personal property thus
mortgaged and pledged in favor of the plaintiff corporation would be respectively liable for the payment
of the debt; that the property pledged by the debtor to the bank included a stock or merchandise,
consisting of wines, liquors, canned goods, and other similar articles valued at P90,591.75, Philippine
currency, then stored in the warehouses of the debtor, Reyes, No. 12 Plaza Moraga, in the city of
Manila, which said goods and merchandise were liable for the payment of the said sum of P90,591.75,
Philippine currency; that in the aforesaid deed of pledge it was agreed by and between the bank and the
debtor, Reyes, that the goods should be delivered to Ramon Garcia y Planas for safe-keeping, the debtor
having actually turned over to the said Garcia y Planas the goods in question by delivering to him the
keys of the warehouse in which they were kept; that in a subsequent contract entered into by and
between the debtor, Reyes, and the plaintiff bank on the 29th of September, 1905, the said contract
executed on the 4th of March was modified so as to provide that the goods then (September 29) in
possession the depositary should only be liable for the sum of P40,000, Philippine currency, the said
contract of the 4th of March remaining in all other respects in full force and effect, Luis M.a Sierra
having been subsequently appointed by agreement between the bank and the debtor as depositary of
the goods thus pledged in substitution for the said Ramon Garcia y Planas.
On the 19th of October, 1905, in an action brought in the Court of First Instance of the city of Manila by
Juan Garcia y Planas against Francisco Reyes and Ramon Agtarat, judgment was rendered against the
last-mentioned two for the sum of P15,000, Philippine currency, to be paid by them severally or jointly,
upon which judgment execution was issued against the property of the defendants, Reyes and Agtarap.
On the aforesaid 19th day of October, for the purpose of levying upon the property of the defendants,
the sheriff at the request of Garcia, the plaintiff in that case, entered the warehouse where the goods
pledged to the plaintiff bank were stored under the custody of the depositary, Sierra, and levied upon
them as per list attached to the complaint marked "Exhibit A." The sheriff seized the goods which had
been pledged to the bank, depriving the latter of the possession of the same, to which said contract
executed on the 4th of March, 1905. Without the authority of the bank, Reyes could not dispose of the
said goods. The value of the goods seized by the sheriff was P30,000, Philippine currency, the said
sheriff, having refused, and still refusing, to return to the same to the bank, notwithstanding repeated
demands made upon him to this effect, and it being alleged in the complaint that unless prohibited by
the court the sheriff would proceed to sell the said goods at public auction and apply the proceeds to
the satisfaction of the judgment rendered in favor of the Juan Garcia y Planas, while the other debtor
Reyes had not paid to the bank the P40,000, Philippine currency, to secure the payment of which the
goods mentioned in Exhibit A had been pledged to the bank, that is, to secure the payment of a sum in
excess of the actual value of the goods in the hands of the sheriff.
The defendant sheriff, James J. Peterson, and Juan Garcia, his codefendant, through their attorneys,
Hartigan, Marple, Rohde and Gutierrez, answering the complaint, stated that they admitted the
allegations contained in paragraphs 1, 2, 3, 4, 5, 12, and 17 of the complaint, but denied the allegations
contained in paragraphs 6, 7, 8, 9, 10, 11, 14, 16, and 18. They further denied the allegations contained
in paragraph 12, with the exception that the defendant sheriff levied upon the goods mentioned in
Exhibit A attached to the complaint for the purpose of satisfying the judgment referred to therein; and
also the allegations contained in paragraph 13 of the complaint, with the exception that the sheriff
seized the property mentioned in Exhibit A under the execution referred to therein; and finally
defendants denied the allegation contained in paragraph 15 of the complaint, with the exception of the
allegation that the value of the property seized is P30,000. They accordingly asked that the action be
dismissed and that it be adjudged that the plaintiff had no interest whatever in the property described
in the complaint, and that the plaintiff be taxed with the costs of these proceedings.
The testimony introduced by the parties having been received, and the exhibits having been attached to
the record, the court below entered judgment on the 4th of January, 1906, dismissing plaintiff's action
and directing that the defendant recover from the Spanish-Filipino Bank the costs of this action, for
which execution was duly issued. To this judgment counsel for plaintiff excepted and announced his
intention of prosecuting a bill of exceptions, and further made a motion for a new trial on the ground
that the judgment of the court below was contrary to law and that the findings of fact were plainly and
manifestly contrary to the weight of the evidence.
The decision of this case depends mainly upon the question as to whether the contract of pledge
entered into by and between the Spanish-Filipino Bank and Francisco Reyes to secure a loan made by
the former to the latter was valid, all the requisites prescribed by the Civil Code having been complied
with.
If so, the bank's claim had preference over the claim of a third person not secured, as was the bank's, by
a pledge, with reference to the property pledged to the extent of its value, and therefore such property
could not have been legally levied upon by the sheriff at the request of the defendant, Juan Garcia.
(Arts. 1921, 1922, Civil Code.)
The contract in question complies with all the requisites provided in article 1857 of the Civil Code, such
as that the property was pledged to secure a debt, the date of the execution, the terms of the pledge,
and the property pledged, all of which appears in a public document, and the property pledged was
placed in the hands of a third person by common consent of the debtor and creditor, under the
supervision of an agent of the bank. (Arts. 1863, 1865, 1866, 1869, 1871, Civil Code.) The defect alleged
to exist in the said contract is that the debtor, Reyes, continued in possession of the property pledged;
that he never parted with the said property, and that neither the creditor nor the depositary appointed
by common consent of the parties were ever in possession of the property pledged, and for this reason,
and upon the further ground that the contract was fraudulent, the court below dismissed the complaint
with the costs against the plaintiff.
In the motion for a new trial it was alleged by the plaintiff that the judgment of the court below was
contrary to law, and that the findings of fact contained therein were plainly and manifestly against the
weight of the evidence. If plaintiffs contention is correct, then the judgment of the court below should
be reversed.
From the evidence introduced at the trial, both oral and documentary, it appears that a third person,
appointed by the common consent of the debtor and creditor, was in possession of the goods pledged in
favor of the bank under the direct supervision of an agent of the bank expressly appointed for this
purpose, and it has not been shown that the said Reyes continued in the possession of the goods after
they had been pledged to the plaintiff bank.
Exhibit C and the testimony of Francisco Reyes, Luis M.a Sierra, and Mariano Rodriguez corroborate the
existence and authenticity of the contract of pledge recorded in a public instrument and conclusively
and satisfactorily show that the debtor, after the pledge of the property, parted with the possession of
the same, and that it was delivered to a third person designated by common consent of the parties. For
the purpose of giving this possession greater effect, the pledgee appointed a person to examine daily
the property in the warehouse where the same was kept.
The witness Matias Garcia also testified as to the status of these goods, and informed Juan Garcia of
such status before the same were levied upon.
The sheriff's testimony supports the allegation that the depositary, Sierra, was present at the place
where the goods were kept, as well as the representative of the bank, Rodriguez, when he, the sheriff,
went there for the purpose of levying upon the said property. He further testified that Rodriguez, the
representative of the bank, then protested and notified him that the property in question was pledged
to the Spanish-Filipino Bank.
The contract in question was, therefore, a perfect contract of pledge under articles 1857 and 1863 of the
Civil Code, it having been conclusively shown that the pledgee took charge and possession of the goods
pledged through a depository and a special agent appointed by it, each of whom had a duplicate key to
the warehouse wherein the said goods were stored, and that the pledgee, itself, received and collected
the proceeds of the goods as they were sold.
The fact that the said goods continued in the warehouse which was formerly rented by the pledgor,
Reyes, does not affect the validity and legality of the pledge, it having been demonstrated that after the
pledge had been agreed upon, and after the depository appointed with the common consent of the
parties had taken possession of the said property, the owner, the pledgor, could no longer dispose of
the same, the pledgee being the only one authorized to do so through the depositary and special agent
who represented it, the symbolical transfer of the goods by means of the delivery of the keys to the
warehouse where the goods were stored being sufficient to show that the depositary appointed by the
common consent of the parties was legally placed in possession of the goods. (Articles 438, 1463, Civil
Code.)
The fact that the debtor, Reyes, procured purchasers and made arrangements for the sale of the goods
pledged and that the bills for the goods thus sold were signed by him does not affect the validity of the
contract, for the pledgor, Reyes, continued to be the owner of the goods, (art. 1869, Civil Code), he
being the one principally interested in the sale of the property on the best possible terms.
As to the reservation stipulated in paragraph 13 of the contract executed on the 4th of March, 1905, it
could not affect the contract in question for the reason that reservation referred to the rent from the
property mortgaged, to the bank and the dividends from the shares of stock also pledged to the bank,
and not the merchandise so pledged, and such reservation could not have rendered the contract of
pledge null.
If the case is to be decided in accordance with the facts alleged and established, the defendant not
having introduced any evidence to show that the said contract of pledge was fraudulent as to other
creditors, there was no legal ground upon which the court below could have held that the contract
evidenced by the instrument in question was entered into to defraud other creditors of the pledgor.
For the reason hereinbefore set out, and the judgment of the court below being contrary to the
evidence, the said judgment is hereby reversed, and it is hereby adjudged that the plaintiff corporation,
under and by virtue of the contract of pledge in question, had a preferential right over that of the
defendant, Juan Garcia, to the goods pledged or the value thereof, the value to be applied to the
payment of the debt of P40,000, Philippine currency, for the security of which the said property was
pledged, and the defendants are accordingly hereby ordered to return to the plaintiff corporation the
property improperly levied upon, or to pay its value, amounting to P30,000, Philippine currency, without
special provision as to costs. After the expiration of twenty days let judgment be entered in accordance
herewith, and ten days thereafter the case be remanded to the court below for execution. So ordered.
G.R. No. L-9989 March 13, 1918
EDUARDO CUAYCONG, ET AL., plaintiffs-appellees,
vs.
RAMONA BENEDICTO, ET AL., defendants-appellants.
Ruperto Montinola and Aurelio Montinola for appellants.
No appearance for appellees.
FISHER, J.:
The issues in this case relate to the right of plaintiffs to make use of two roads existing on the Hacienda
Toreno, a tract of land in the municipality of Victorias, Negros Occidental, the property of the
defendants, Blasa Benedicto and Ramona Benedicto. One of these roads is referred to in the
proceedings as the Nanca-Victorias road and the other as the Dacuman Toreno road. The Court of
First Instance held that those of the plaintiffs who claimed to be entitled to make use of the Dacuman
Toreno road had failed to establish the asserted right, and dismissed the action as to them. From this
decision they appealed to this court but, their brief not having been filed within the time prescribed by
the rules, their appeal was dismissed, on motion of defendants, by resolution dated February 14, 1916.
Consequently, the issues presented on this appeal are limited to those which relate to the rights of the
parties with respect to the Nanca-Victorias road, and the determination of the correctness of the
decision of the court concerning that part of the controversy submitted to its decision.
The allegations in the complaint with respect to the Nanca-Victorias road are that the appellees,
Eduardo Cuaycong, Lino Cuaycong, and Eulalio Dolor, are the owners of a group of haciendas situated
between the southern boundary of the Hacienda Toreno and the barrio of Nanca, of the municipality of
Seravia, and that the appellees Silverio Ginoo, Gervasio Ascalon, and Juan Ledesma, are the lessees of
part of said haciendas; that more than twenty years the appellees and their predecessors in interest
have made use of the Nanca-Victorias road, which crosses the Hacienda Toreno, openly, publicly, and
continiously, with the knowledge of the owners of the said hacienda, for the purpose of conveying the
products of their haciendas to the town of Victorias and to the landing place there situated, and for the
purpose of transporting supplies from those points to their haciendas, making use of the said road by
means of carts, carabaos, and other usual means of transportation; that there is no outlet to a public
road from the hacienda occupied by these plaintiffs, the only road and way by which the products of the
plaintiffs' property can be taken to the town of Victorias and to the landing place there being across the
Hacienda Toreno by the road marked on the plan attached to the complaint; that on the fifteenth day of
November, 1912, the defendants closed the road in question at the point at which it crosses the
Hacienda Toreno, and refused to permit plaintiffs to continue using it; that plaintiffs were about to
commence to grind their crop of sugar cane, and that, if prevented from transporting their sugar across
the Hacienda Toreno to their point of embarkation, would suffer damages difficult to estimate. Upon
these averments of fact the plaintiffs prayed for a judgment that they are entitled to use the road in
question as they have been using it in the past, and that a perpetual injunction be issued against
plaintiffs restraining them from impending such use. Upon the filing of the complaint, plaintiffs moved
the court to issue a preliminary injunction restraining defendants from interfering with the use of the
road during the pendency of the suit, which motion was granted by the court.
Defendants in their answer put in issue all the special averments of the complaint, as above set forth,
and by way of counterclaim and special defense, averred that the road crossing the Hacienda Toreno,
over which plaintiffs claim the right of passage, is the private property of defendants; and, further, that
they have not refused plaintiffs permission to pass over this road but have required them to pay toll for
the privilege of doing so. Defendants also claimed damages for the use of the road by plaintiffs during
the pendency of the suit, alleging that the preliminary injunction had been improvidently issued upon
false statements contained in the verified complaint filed by plaintiffs.
The case was tried in July, 1913. The court on December 8, 1913, rendered judgment, dismissing the
complaint with respect to the plaintiffs Felix Suarez, Probo Jereza, Enrique Azcona, and Melecio Pido,
these being the plaintiffs who claimed the right to use the Dacuman Toreno road. With respect to the
Nanca-Victorias road, the court held that it was a public highway over which the public had acquired a
right of use by immemorial prescription, and ordered the issuance of a perpetual injunction against
plaintiffs, restraining them from interfering in any manner with the use of the said road.
The conclusion of the court with respect to the facts affecting the Nanca-Victorias road are as follows:
Turning to a consideration of the evidence relative to the Nanca-Victorias road we find incontestable
proof that it has been in existence for at least forty years. That the hacenderos located in the
southwestern section of Victorias and the public generally passed over it freely and that it was used for
all purposes of transportation of farm produce, animals, etc. and by pedestrians as well as carromatas
and other conveyances without break or interruption until two or three years ago when the defendants
announced that the road was private and that those who wished to pass over it with sugar carts would
be obliged to pay a toll of ten centavos all other vehicles, it appears, were permitted to pass free
charge. This arrangement seems to have existed during the years of 1911 and 1912 and part of 1913,
the money being collected apparently from some hacenderos and not from others. There is some
reason to believe from the evidence presented by defendants themselves that the practice of making
these payments to hacienda 'Toreno' originated in an attempt to raise a fund for the repair of the road.
There is no evidence that any other hacenderos between Nanca and Victorias or any other person made
any attempt to close the road or to collect toll. On the contrary the road appears to have been repaired
by the hacenderos when it needed repairing and everyone used it on equal terms until the defendants
in 1910 or 1911 interposed the objection that the road in dispute was private. This we think is a fair
deduction from the evidence and although it is asserted that toll was collected at an earlier date by the
late Leon Montinola, brother of the defendant Ruperto Montinola, there is no tangible evidence that
this was so and that toll has been paid only during the years of 1911, 1912, and part of 1913.
The question presented by the assignment of error are in effect:
(a) Is the Nanca-Victorias road at the point at which it traverses the Hacienda Toreno a public highway or
not?
(b) If it be held that the road in question is not a public highway, have plaintiffs proven their acquisition
of an easement of way over the Hacienda Toreno at the point traversed by the road in question?
The trial judge, in holding that the road in question is public, bases in conclusion upon the fact, which he
deems to have been proven, that the road has been in existence "from time immemorial," and had been
"continiously used as a public road . . . and open to public as such for thirty or forty years . . . until . . .
the defendants undertook to claim it as private and to collect toll for the passage of carts." (Bill of
Exceptions, p. 56.) There is no doubt that for the past thirty or forty years a road has existed between
the former site of the town of Victorias and the barrio of Nanca, of the municipality of Seravia, and that
this road crosses defendants' hacienda. It is also true that during this period the plaintiffs and their
predecessors in the ownership of the hacienda now held by them have made use of this road for the
purpose of going and coming from their haciendas to the town of Victorias; but the question is whether
this use was limited to the plaintiffs, and their tenants and employees, or whether it was, as held by the
lower court, a use enjoyed by the public in general. Plaintiffs produced only two witnesses, Segundo de
Leon (stet. notes, pp. 21-22) and Eduardo Cuaycong, (stet. notes, pp. 27-33) to testify as regards the use
of the Nanca-Victorias road. Several other witnesses testified on behalf of plaintiffs, but their testimony
relates to the Dacuman Toreno road, which is not involved in this appeal. We have carefully read the
testimony of the witnesses Leon and Cuaycong, given upon their direct and cross examination, but we
have been unable to find that either of them has testified that the road in question was ever used by the
public in general. These witnesses testified with regard to the use of the road by the present and former
owners and occupants of the estates of Bacayan, Esperanza, Alcaigan, Pusot, and Dolores for the
transportation of the products of these estates to the town of Victorias, and of supplies and agricultural
implements from Victorias to the haciendas, but neither of them testified expressly that any other use
had been made of said road. Nevertheless, it may be reasonably inferred from the testimony of these
witnesses that all persons having occasion to travel between Victorias and the haciendas of Bacayan,
Esperanza, Alacaigan, Pusot, and Dolores, whether or not they were owners, tenants, or employees of
said estates, made use of the road now in dispute, crossing the Hacienda Toreno, and to this limited
extent it may be said that the public made use of the road, but there is nothing in the evidence to
indicate that the so called public use extended beyond this.
Apart from the fact that there is no direct evidence to support the finding of the court concerning the
general public use of the road in dispute, the record contains data strongly tending to show that when
the complaint was filed plaintiffs did not contend that the road was a public highway, but merely
contended that they had acquired by prescription an easement of way across the Hacienda Toreno. For
example, the action is entitled an "action concerning a right of away." (Bill of Exceptions, pp. 64 and 65.)
It is not averred in the complaint that the road in question was used by the public. On the contrary, it is
averred that it was used by the plaintiffs and their predecessors. The averment in paragraph 8 of the
complaint that the plaintiffs have no other "outlet to a public road" than that which they have been
accustomed to used by going across the defendants' hacienda for the purpose of going to the town of
Victorias also shows that when they commenced this action they had in mind the provisions of articles
564, et seq. of the Civil Code, which relate to the method of establishing the compulsory easement of
way. The owners of an existing easement, as well as those whose properties are adjacent with a public
road, have no occasion to invoke these provisions of the Code, which relate to the creation of new
rights, and not the enforcement of rights already in existence.
It is true in the opening statement made to the court, counsel for plaintiffs, who was not the same
attorney by whom the complaint was signed, stated that plaintiffs contend that the road in question is
public, but as no evidence was introduced tending to establish this contention concerning the Nanca
Victorias road, counsel for defendants had no occasion to object upon the ground that such testimony
was not relevant to the averments of the complaint. No evidence was taken to indicate that at any time
since the road in question has been in existence any part of the expense of its upkeep has been defrayed
by the general government, the province, or the municipality. The trial judge said upon this subject:
It is true that whatever repairs were made on the road were made irregularly. The municipality of
Victorias had no funds to devote to the construction and repair of roads, and the upkeep of the road
depending entirely therefore on the initiative of the persons who used it, was attended to only at such
times as repairs were absolutely necessary. (Bill of Exceptions, p. 49.)
The court also held that it appears from the government grant issued in 1885 to the original owner of
the hacienda adjacent to the Hacienda Toreno on its western boundary, that the Nanca-Victorias road at
that time separated that estate from the Jalbuena Hacienda, and that these facts constitute
"circumstantial evidence that the road was in existence in 1885." We have examined the document to
which the court refers, and we agree that the road in question existed in 1885; but we do not believe
that the document in question proves that the road was public highway.
Another circumstance established by the evidence, and which is some importance in the determination
of this issue, is that although the defendants closed the Nanca-Victorias road in the month of February,
1911, and since that time have collected toll from persons passing over it with carts loaded with sugar,
including those belonging to several of the plaintiffs, nothing was done by them to prevent the
continuation of this restriction until December, 1912, when this action was commenced. It is natural to
assume that if plaintiffs had considered that the road in question was public, they would have protested
immediately against the action of the defendants, and would have either commenced a civil action, as
they subsequently did, or would have brought about a prosecution under section 16 of Act No. 1511.
Upon the evidence taken and admissions contained in the pleadings and those made during the course
of the trial we consider that the following findings are warranted:
1. The town of Victorias has always been the shipping point of the products of the Hacienda Toreno, and
of the haciendas of appellees, as well as the place from which supplies were brought to those
properties.
2. For thirty or forty years before the commencement of the suit a wagon road, herein called the Nanca-
Victorias road, has been in existence, connecting the haciendas of appellees with the town of Victorias,
and this road traverses the property of defendants. Since the removal of the town of Victorias to a new
site the Nanca-Victorias road has been used by appellees in travelling between their properties and the
provincial road which crosses the Hacienda Toreno from east to west.
3. No public funds have at any time been expended on the construction or upkeep of the Nanca-
Victorias road, but from time to time work has been done on it by the laborers employed by the present
and former owners of the Hacienda Toreno and the haciendas owned by the appellees and their
predecessors in title.
4. The Nanca-Victorias wagon road, including that part of it which crosses the Hacienda Toreno, has for
thirty-five or forty years been used by the appellees and their predecessors in title for the
transportation, by the usual means, of the products of their estates to their shipping points in or near
the town of Victorias, and the transportation to their estates of all supplies required by them, and has
been used by all persons having occasion to travel to and from all or any of the estates now owned by
the appellees.
5. The use of the Nanca-Victorias road in the manner and by the person above mentioned was
permitted without objection by the owners of the Hacienda Toreno until the year 1911, when they
closed it, and began charging a toll of 5 centavos for each cart which passed over the road, including
carts belonging to the appellants, until restrained from continuing to do so by the preliminary injunction
granted in this case.
6. The Nanca-Victorias road constitutes the only outlet from the estates of appellants to the nearest
public road which is the provincial road which crosses the Hacienda Toreno from east to west.
Upon these facts the questions of law to be decided are:
(a) Is the Nanca-Victorias road a public highway?
(b) If the Nanca-Victoria road, or that part of it which crosses the Hacienda Toreno, is not a public
highway, is it subject to a private easement of way in favor of the appellees?
The defendants are the owners of the Hacienda Toreno under a Torrens title issued in accordance with
the Land Registration Act, conferring to them its absolute ownership, subject only to the limitations of
paragraph four of section 39 of said Act. It is admitted that there is no annotation on the certificate of
title regarding the road here in question, either as a "public road" or as a "private way established by
law," and, therefore, the questions presented by this appeal are to be determined precisely as they
would be had the Hacienda Toreno not been brought under the operation of the Land Registration Act.
The plaintiffs being the owners of the property in question, the presumption of law is that it is free from
any lien or encumbrance whatever, and the burden therefore rests upon plaintiffs to establish the
contrary. As this court said in case of Fabie vs. Lichauco and the children of Francisco L. Roxas (11 Phil.
Rep., 14):
It is settled of law that a property is assumed to be free from all encumbrance unless the contrary is
proved.
There is admittedly no evidence to show that the land occupied by the road here in question was any
time conveyed to the general government or any of its political subdivisions by the present or any of the
former owners of the Hacienda Toreno. There is no evidence, even remotely, tending to show that the
road existed prior to the time when the property now known as the Hacienda Toreno passed from the
State into private ownership. The record fails to disclose any evidence whatever tending to show that
the Government has at any time asserted any right or title in or to the land occupied by the road, or that
it has incurred any expense whatever in its upkeep or construction. The Civil Code defines as public
roads those which are constructed by the State (art. 339), and as provincial and town roads those "the
expense of which is borne by such towns or provinces." (Civil Code, art. 344.) While it is not contended
that this definition is exclusive, it does show that during the Spanish regime, under normal conditions,
roads which were public were maintained at the public expense, and that the fact that at no time was
any expense incurred by the Government with respect to the road here in question tends strongly to
support the contention of the defendants that it is private way.
During the Spanish regime the law required each able to bodied citizen not within one of the exempted
classes to work a certain number of days in each year, his labor to be devoted to "services of general
utility" to the municipality of his residence. (Royal Decree of July 11, 1883, art. 5.) Under this Decree and
the Regulations for its enforcement (Berriz, vol. 11, 258) the greater part of the work on the public road
of the Islands was accomplished. Had the road here in question been a public way, it is reasonable to
assume that the polistas of the town of Victorias would have been employed in maintaining it. It is most
significant that no mention is made in the testimony of the plaintiffs' witnesses of any work of this
character having been done on the road at any time, particularly in view of the fact that their attention
was drawn to this point. (Stet. note, pp. 8, 10, 11, 12, 13 and 14.)
The evidence shows that the repairs were made by the owners of the estates benefited by the road, and
by their laborers, as a pure voluntary act for their own convenience and interest. There being no
evidence of a direct grant to the government of the land occupied by the road in question or that any
Government funds or labor were expended upon it, the question presents itself whether the use to
which the road has been put was such as to justify the conclusion of the lower court that it has become
public property. There being no evidence that the original use of the road by plaintiffs' predecessors was
based upon any grant of the fee to the road or of an easement of way, or that it began under the
assertion of a right on their part, the presumption must be that the origin of the use was the mere
tolerance or license of the owners of the estates affected.
This being so, has that merely permissive use been converted into a title vested in the public at large, or
in the plaintiffs by reason of their ownership of the land beneficially affected by the use?
Had it been shown that the road had been maintained at the public expense, with the acquiescence of
the owners of the estates crossed by it, this would indicate such adverse possession by the government
as in course of time would ripen into title or warrant the presumption of a grant or of a dedication. But
in this case there is no such evidence, and the claims of plaintiffs, whether regarded as members of the
public asserting a right to use the road as such, or as persons claiming a private easement of way over
the land of another must be regarded as resting upon the mere fact of user.
If the owner of a tract of land, to accommodate his neighbors or the public in general, permits them to
cross his property, it is reasonable to suppose that it is not his intention, in so doing, to divest himself of
the ownership of the land so used, or to establish an easement upon it and that the persons to whom
such permission, tacit or express, is granted, do not regard their privilege of use as being based upon an
essentially revocable license. If the use continues for a long period of time, no change being made in the
relations of the parties by any express or implied agreement, does the owner of the property affected
lose his right of revocation? Or, putting the same question in another form, does the mere permissive
use ripen into title by prescription?
It is a fundamental principle of the law in this jurisdiction concerning the possession of real property that
such possession is not affected by acts of a possessory character which are "merely tolerated" by the
possessor, or which are due to his license (Civil Code, arts. 444 and 1942). This principle is applicable not
only with respect to the prescription of the dominium as a whole, but to the prescription of right in rem.
In the case of Cortes vs. Palanca Yu Tibo (2 Phil. Rep., 24, 38), the Court said:
The provision of article 1942 of the Civil Code to the effect that acts which are merely tolerated produce
no effect with respect to possession is applicable as much to the prescription of real rights as to the
prescription of the fee, it being a glaring and self-evident error to affirm the contrary, as does the
appellant in his motion papers. Possession is the fundamental basis of the prescription. Without it no
kind of prescription is possible, not even the extraordinary. Consequently, if acts of mere tolerance
produce no effect with respect to possession, as that article provides, in conformity with article 444 of
the same Code, it is evident that they can produce no effect with respect to prescription, whether
ordinary or extraordinary. This is true whether the prescriptive acquisition be of a fee or of real rights,
for the same reason holds in one and the other case; that is, that there has been no true possession in
the legal sense of the word. (See also Ayala de Roxas vs. Maglonso, 8 Phil Rep., 745; Municipality of
Nueva Caceres vs. Director of Lands and Roman Catholic Bishop of Nueva Caceres, 24 Phil. Rep., 485.)
Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be possession
under claim of title (en concepto de dueno), or use the common law equivalent of the term, it must be
adverse. Acts of a possessory character performed by one who holds by mere tolerance of the owner
are clearly not en concepto de dueo, and such possessory acts, no matter how long so continued, do
not start the running of the period of prescription.
A similar question was presented in the case of the Roman Catholic Archbishop of Manila vs. Roxas (22
Phil. Rep., 450), in which case it appeared that Roxas, the owner of the Hacienda de San Pedro Macati,
claimed a right of way across the property of the church to Calle Tejeron, a public street of the town of
San Pedro Macati. The proof showed that the road in question had been used by the tenants of the
Hacienda de San Pedro Macati for the passage of carts in coming and leaving the hacienda "from time
immemorial," and further that the road had been used for time out of mind, not only by the tenants of
the hacienda but by many other people in going and coming from a church half-way between the
boundary line of the hacienda and Calle Tejeron. The court held that the facts did not give rise to a
prescriptive right of easement in favor of the owner of the hacienda, upon the ground that such use "is
to be regarded as permissive and under an implied license, and not adverse. Such a use is not
inconsistent with the only use which the proprietor thought fit to make of the land, and until the
appellee thinks proper to inclose it, such use is not adverse and will not preclude it from enclosing the
land when other views of its interest render it proper to do so. And though an adjacent proprietor may
make such use of the open land more frequently than another, yet the same rule will apply unless there
be some decisive act indicating a separate and exclusive use under a claim of right. A different doctrine
would have a tendency to destroy all neighborhood accommodations in the way of travel; for if it were
once understood that a man, by allowing his neighbor to pass through his farm without objection over
the pass-way which he used himself, would thereby, after the lapse of time, confer a right on such
neighbor to require the pass-way to be kept open for his benefit and enjoyment, a prohibition against all
such travel would immediately ensue."
The decisions of the supreme court of Louisiana, a State whose jurisdiction is based, as is our own, upon
the Roman Law, and whose Civil Code is taken, as is our own,. very largely from the Code of Napoleon,
are particularly persuasive in matters of this character. In the case of Torres vs. Fargoust (37 La. Ann.,
497), cited by appellants in their brief, in which the issues were very similar to those of the present case,
the court held that
The mere fact that for thirty or forty years the public was permitted to pass over this ground would not
of itself constitute the place a locus publicus . . . dedication must be shown by evidence so conclusive as
to exclude all idea of private ownership; . . . such dedication cannot be inferred from ere user alone; . . .
no one is presumed to give away his property. The burden is on him who avers a divestiture of
ownership to prove it clearly.
We are, therefore, of the opinion, and so hold, that upon the facts established by the evidence it does
not appear that the road in question is a public road or way. We are also of the opinion that plaintiffs
have failed to show that they have acquired by prescription a private right of passage over the lands of
defendants. The supreme court of Spain has decided that under the law in force before the enactment
of the Civil Code, the easement of way was discontinous, and that while such an easement might be
acquired by prescription, it must be used in good faith, in the belief of the existence of the right, and
such user must have been continuous from time immemorial. (Judgment of December 15, 1882.) In the
appealed decision the court below says that the plaintiffs and their predecessors made use of the road
in question "from time immemorial," but there is no evidence whatever in the record to sup[port this
finding, although it is true that the evidence shows the existence of the road and its use by the plaintiffs
and their predecessors for thirty-five or forty years. Speaking of the evidence required under the
present Code of Civil Procedure to show immemorial use of an easement, this court said in the case of
Ayal de Roxas vs. Case (8 Phil. Rep., 197, 198):
Third Partida in title 31, law 15 . . . says that discontinues servitudes . . . must be proved by usage or a
term so long that men can not remember its commencement. . . . In many judgments the supreme court
of Spain has refused to accept proof of any definite number of years as a satisfaction of this requirement
of the law. . . . We are of the opinion that in order to establish a right of prescription [title of prescription
based upon use from time immemorial] something more required than memory of living witnesses.
Whether this something should be the declaration of persons long dead, repeated by those who testify,
as exacted by the Spanish law, or should be the common reputation of ownership recognized by the
Code of Procedure, it is unnecessary for us to decide. On either theory the appellant has failed in his
proof . . . .
The same thing may be said in this case. Witnesses have testified that they have known the road for a
certain period of years, beginning at a time prior to the enactment of the Civil Code, but no evidence has
been made to prove immemorial use by either of the means of proof mentioned in this decision cited,
nor is immemorial user averred in the complaint as the basis of the right. It is evident, therefore, that no
vested right by user from time immemorial had been acquired by plaintiffs at the time the Civil Code
took effect. Under that Code (art 539) no discontinuous easement could be acquired by prescription in
any event. Assuming, without deciding, that this rule has been changed by the provisions of the present
Code of Civil Procedure relating to prescription, and that since its enactment discontinuous easement
may be required by prescription, it is clear that this would not avail plaintiffs. The Code of Civil
Procedure went into effect on October 1, 1901. The term of prescription for the acquisition of rights in
real estate is fixed by the Code (sec. 41) at ten years. The evidence shows that in February, 1911, before
the expiration of the term of ten years since the time the Code of Civil Procedure took effect, the
defendants interrupted the use of the road by the plaintiffs by constructing and maintaining a toll gate
on it and collecting toll from persons making use of it with carts and continued to do so until they were
enjoined by the granting of the preliminary injunction by the trial court in December, 1912. Our
conclusion is, therefore, that the plaintiffs have not acquired by prescription a right to an easement of
way over the defendant's property; that their use of the Nanca-Victorias road across the Hacienda
Toreno was due merely to the tacit license and tolerance of the defendants and their predecessors in
title; that license was essentially revokable; and that, therefore, the defendants were within their rights
when they closed the road in 1911.
While in the allegations from the plaintiffs' complaint it might be inferred that it was their purpose to
seek to impose upon the defendants the easement to which arts. 564 et seq. of the Civil Code relate,
that purpose was evidently abandoned, and the case was tried upon a wholly different theory. Proof
was offered to show that the right of passage across defendants' land is necessary to enable plaintiffs to
get their products to market, but there was no offer on their part to pay defendants the indemnity
required by section 564.
For the reasons stated the judgment of the court below is reversed, the injunction issued against
defendants is allowed on this appeal. So ordered.
G.R. No. L-57259 October 13, 1983
ANGEL P. PERAN, petitioner,
vs.
THE HONORABLE PRESIDING JUDGE, BRANCH II, COURT OF FIRST INSTANCE OF SORSOGON, 10th
JUDICIAL DISTRICT, RAMON ESPERA and ENCARNACION EVASCO, as private-respondents, respondents.
Irene P. Escandor for petitioner.
Esteban Escalante, Jr. for private respondents.

MELENCIO-HERRERA, J.:
The decision of the then Court of First Instance of Sorsogon, Branch II, Gubat, Sorsogon, rendered in the
exercise of its appellate jurisdiction, dismissing Civil Case No. 1277, entitled "Angel P. Peran vs.
Encarnacion Evasco, et al.", for Forcible Entry and Illegal Detainer, is being assailed in this Petition for
Review on certiorari on a question of law. Said Decision reversed the judgment of the 2nd Municipal
Circuit Court of Bulusan-Barcelona, Sorsogon, for Forcible Entry & Illegal Detainer.
The antecedent facts follow:
The property in question, an unregistered residential land, with an area of 1,225 square meters more or
less, situated at Tagdon Barcelona, Sorsogon, was originally owned by Jose Evasco. On December 29,
1950, Jose Evasco executed a "Reparticion Ex-trajudicial" whereby he partitioned his properties among
his five heirs. 1 Subject property was one of those alloted to his son, Alejandro Evasco, who had it
surveyed in 1956 (Exhibits "I" and "I-1") who had it declared in his name under Tax Declaration No.
1900. The other heirs received their own shares, one of them, the deceased Anacleto Evasco, one of
whose children was listed as Encarnacion, possibly, the principal private respondent herein.
Alejandro Evasco sold his property to Jose E. Torella on December 31, 1972, 2 who declared it for
taxation purposes under Tax Declaration No. 5157. 3 On July 10, 1977, Jose E. Torella, in turn, sold the
land to Jose Enriquez Sabater, 4 and the latter also declared the property in his name under Tax
Declaration No. 7127. 5 Petitioner Angel P. Peran acquired the land by purchase from Jose Enriquez
Sabater on December 27, 1978, 6 and subsequently declared it, too, in his name under Tax Declaration
No. 7310. 7 The sale was duly recorded in the Register of Deeds' Office of the province of Sorsogon on
January 3, 1979 in accordance with the provisions of Sec. 194 of the Revised Administrative Code as
amended by Act No. 3344.
Sometime in January 1979, petitioner personally asked private respondents, Encarnacion Evasco and her
common-law husband Ramon Espera, whose house is erected on a 440 square meter portion (44 sq, ms.
according to petitioner) of the lot in question, to remove the same and vacate the premises.
Respondents refused, and consequently, a confrontation between the parties was had before the,
Municipal Mayor of Barcelona and later before the Municipal Judge of Bulusan-Barcelona to settle the
dispute, but to no avail.
On February 8, 1979, petitioner filed a complaint for Forcible Entry and Illegal Detainer against private
respondents before the 2nd Municipal Circuit Court of Bulusan-Barcelona, seeking the ejectment of the
latter from the portion in question contending that respondents are mere squatters thereon; that they
had prevented plaintiff from entering the property and deprived him of possession; and that they were
tolerating persons in getting soil and bringing about a gradual erosion of the land to his extreme
prejudice.
Private respondents answered denying the material allegations of the Complaint, and alleging that they
are the lawful possessors for more than twenty (20) years of the said portion, which formerly belonged
to Jose Evasco, grandfather of Encarnacion Evasco and that petitioner has no right to eject them
therefrom.
On September 1, 1979, the 2nd Municipal Circuit Court of Bulusan-Barcelona rendered its Decision
ordering private respondents to vacate the lot in question, return its possession to petitioner, reimburse
him attorney's fees of P300.00 and litigation expenses, and to pay the costs. Reconsideration of the said
decision filed by private respondents was denied by said Court on November 12, 1979. Private
respondents appealed to respondent Court of First Instance of Sorsogon, Branch II.
Respondent Court reversed the Municipal Circuit Court and dismissed the case on March 28, 1980,
ruling that said Court had no jurisdiction over the case as the same was filed only on February 4, (8),
1979, which was well beyond the one-year-period of limitation, the cause of action having accrued from
the sale of the property by Alejandro Evasco to Jose E. Torella on December 31, 1972; and that since the
only issue in an illegal detainer case is physical possession, "whoever has prior possession, no matter in
what character, is protected by law."
Reconsideration of the said Decision sought by petitioner was denied by respondent Court.
Petitioner appealed said judgment directly to this Tribunal on a question of law, raising as the lone issue:
... whether the respondent court was in error when for purposes of determining the jurisdiction of the
2nd Municipal Circuit Court of Bulusan-Barcelona, to try Civil Case No. 1227, for Illegal Detainer:
(a) it reckoned the counting of one-year period within which to file the action from the sale of the
property in question by Alejandro Evasco to Jose Torella on December 31, 1972 and not from the date of
demand made by the petitioner upon the respondents; and
(b) by assuming that "prior possession in whatever character is protected by law.
We rule for petitioner.
Private respondents admit that the land in question was originally owned by Jose Evasco. The tax
declarations covering their house clearly state "house built on land owned by Jose Evasco under Tax No.
1599". 8 Since the land had been partitioned to Alejandro Evasco by his father, Jose Evasco, respondent
Encarnacion can lay no claim to the property even as a grand-daughter of Jose Evasco. Respondents may
have been in possession of the portion they occupy prior to petitioner but they have not proved their
title thereto, nor their right to possess the same. As the 2nd Municipal Circuit Court of Bulusan-
Barcelona found, no concrete evidence was introduced by respondents on this point. Moreover, it is
noteworthy that the validity of the "Reparticion Extrajudicial" whereby said lot was adjudicated to
Alejandro Evasco by his father Jose Evasco, predecessors-in-interest of petitioner, had never been
challenged.
If at all, private respondents' possession of their portion of the property was by mere tolerance of
petitioner's predecessors-in-interest, which, however, does not vest in them a right which they can
assert against petitioner. Possession by tolerance is lawful but this becomes illegal when, upon demand
to vacate by the owner, the possessor refuses to comply with such demand. 9 A possessor by tolerance
is necessarily bound by an implied promise to vacate upon demand, failing which a summary action for
ejectment is the proper remedy against him. 10 It is not necessary that there be a formal agreement or
contract of lease before an unlawful detainer suit may be filed against a possessor by tolerance. 11
Neither is prior physical possession of the property by petitioner an indispensable requisite. 12The ruling
of respondent Court, therefore, that "since the only issue in forcible entry and illegal detainer action is
the physical possession of real propertypossession de facto and n t possession de jurewhoever has
prior possession, no matter in what character, is protected by law," is erroneous under the factual
milieu herein,
A Forcible Entry and Unlawful Detainer action must be brought within one year from the unlawful
deprivation or withholding of possession. 13 The one-year-period of limitation commences from the
time of demand to vacate, and when several demands are made, the same is counted from the last
letter of demand. 14 Demand may either be personal or in writing. 15 The demand to vacate having
been made by petitioner in January 1979, and the ejectment suit having been instituted on February 8,
1979, the 2nd Municipal Circuit Court of Bulusan-Barcelona acted well within its jurisdiction in taking
cognizance of the case.
WHEREFORE, the assailed Decision of respondent Court of First Instance of Sorsogon, Branch II, in Civil
Case No.1227, is SET ASIDE, and the Decision of the 2nd Municipal Circuit Court of Bulusan-Barcelona is
hereby reinstated,
Costs against private respondents.
[G.R. No. 111737. October 13, 1999]
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. THE HONORABLE COURT OF APPEALS AND
SPOUSES TIMOTEO and SELFIDA S. PIEDA, respondents.
D E C I S I O N
GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari of the decision of the Court of Appeals[1] in CA-G.R. CV
No. 28549 entitled SPOUSES TIMOTEO PIEDA, ET. AL. vs. DEVELOPMENT BANK OF THE PHILIPPINES
which affirmed the decision of the Regional Trial Court (RTC), Branch 16[2], Roxas City in Civil Case No.
V-4590, for cancellation of certificate of title and/or specific performance, accounting and damages with
a prayer for the issuance of a writ of preliminary injunction.
The records show that respondent spouses Pieda (PIEDAS) are the registered owners of a parcel of
land (Lot 11-14-1-14) situated at barangay Astorga Dumarao, Capiz containing an area of 238,406 square
meters, more or less, and covered by Homestead Patent No. 0844 and Original Certificate of Title No. P-
1930. On March 7, 1972, the PIEDAS mortgaged the above described parcel of land to petitioner,
Development Bank of the Philippines (DBP) to secure their agricultural loan in the amount of
P20,000.00. The PIEDAS failed to comply with the terms and conditions of the mortgage compelling
DBP to extrajudicially foreclose on February 2, 1977. In the foreclosure sale, DBP was the highest bidder
and a Sheriff Certificate of Sale was executed in its favor. In the corresponding Certificate of Sale, the
sheriff indicated that This property is sold subject to the redemption within five (5) years from the date
of registration of this instrument and in the manner provided for by law applicable to this case. The
certificate of sale was registered in the Register of Deeds of Capiz on April 25, 1977. On March 10, 1978,
after the expiration of the one-year redemption period provided for under Section 6, ACT 3135, DBP
consolidated its title over the foreclosed property by executing an Affidavit of Consolidation of
Ownership. Subsequently, a Final Deed of Sale was executed in DBPs favor, which was registered
together with the Affidavit of Consolidation of Ownership with the Register of Deeds of Capiz on May
30, 1978. Consequently, Original Certificate of Title No. P-1930 was cancelled and TCT No. T-15559 was
issued in the name of DBP. Thereafter, DBP took possession of the foreclosed property and
appropriated the produce thereof.
On July 5, 1978, the Ministry of Justice issued Opinion No. 92, Series of 1978[3] which declared that
lands covered by P.D. No. 27[4], like the herein subject property, may not be the object of foreclosure
proceedings after the promulgation of said decree on Oct. 21, 1972.
On August 24, 1981, the PIEDAS offered to redeem the foreclosed property by offering P10,000.00 as
partial redemption payment. This amount was accepted by DBP who issued O.R. No. 1665719 and
through a letter, conditionally approved the offer of redemption considering the P10,000.00 as down
payment.[5] However, on November 11, 1981, DBP sent the PIEDAS another letter informing them
that pursuant to P.D. 27, their offer to redeem and/or repurchase the subject property could not be
favorably considered for the reason that said property was tenanted.[6] On November 16, 1981, in
deference to the above-mentioned opinion, DBP through Ramon Buenaflor sent a letter to the Acting
Register of Deeds of Capiz requesting the latter to cancel TCT No. T-15559 and to restore Original
Certificate of Title No. P-1930 in the name of the PIEDAS. The Acting Register of Deeds, in reply to
such request, suggested that DBP file a petition in court pursuant to Section 108 of Presidential Decree
1529[7]. In compliance with said suggestion, DBP petitioned for the cancellation of TCT No. T-15559
with then Court of First Instance of Capiz, Branch II, docketed as Special Case No. 2653. The petition was
favorably acted upon on February 22, 1982. Thus, the foreclosure proceeding conducted on February 2,
1977 was declared null and void and the Register of Deeds of Capiz was ordered to cancel TCT No.
15559; OCT No. 1930 was ordered revived.
Meanwhile, on December 21, 1981, the PIEDAS filed the instant complaint against DBP for cancellation
of certificate of title and/or specific performance, accounting and damages with a prayer for the
issuance of a writ of preliminary injunction averring that DBP, in evident bad faith, caused the
consolidation of its title to the parcel of land in question in spite of the fact that the 5-year redemption
period expressly stated in the Sheriffs Certificate of Sale had not yet lapsed and that their offer to
redeem the foreclosed property was made well within said period of redemption.[8]
After trial, the RTC ruled in favor of the PIEDAS stating that DBP violated the stipulation in the Sheriffs
Certificate of Sale which provided that the redemption period is five (5) years from the registration
thereof in consonance with Section 119[9] of CA No. 141[10]. DBP should therefore assume liability for
the fruits that said property produced from said land considering that it prematurely took possession
thereof. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the defendant
Development Bank of the Philippines as follows:
1. Condemning the defendant DBP to pay the plaintiffs P201,138.28 less whatever amount the plaintiffs
still have to pay the said defendant DBP as balance of their loan account reckoned up to the date of this
decision; P20,000.00 as attorneys fees; P5,000.00 as litigation expenses and costs.
SO ORDERED.*11+
DBP appealed to the Court of Appeals, which affirmed the decision of the RTC. The Court of Appeals
stated that since DBP was in evident bad faith when it unlawfully took possession of the property
subject of the dispute and defied what was written on the Sheriffs Certificate of Sale, the PIEDAS were
entitled to recover the fruits produced by the property or its equivalent valued at P72,000.00 per annum
or a total of P216,000.00 for the three-year period. Respondent court stated that said amount was not
rebutted by DBP and was fair considering the size of the land in question. The court added that any
discussion with respect to the redemption period was of little significance since the foreclosure
proceeding was declared null and void in Special Civil Case No. 2653[12] on February 22, 1982. Thus, the
right of the PIEDAS to redeem the property has become moot and academic. Finally, the award of
attorneys fees amounting to P10,000.00*13+ was justified considering that the PIEDAS were compelled
to protect their interests.[14]
DBPs Motion for Reconsideration*15+ was denied; hence this petition where it assigns the following
errors:
Ground No. 1 The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quos Decision
Awarding Actual Damages In The Amount Of P216,000.00 In Favor Of The Private Respondents
Notwithstanding The Absence Of Evidence Substantiating Said Award. Thus, The Honorable Court Of
Appeals Had Decided This Instant Case In A Way Not In Accord With Applicable Law And Jurisprudence.
2. Ground No. 2 - The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quos Finding
That DBP Was In Bad Faith When It Took Possession Of The Property In Question Notwithstanding the
Contrary Evidence Adduced By Petitioner DBP. Thus, The Honorable Court Of Appeals Departed From
The Accepted And Usual Course of Judicial Proceedings.
3. Ground No. 3 - The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quos Decision
Awarding Attorneys Fees And Litigation Costs In Favor Of The Private Respondents Notwithstanding
Absence Of Evidence Proving the Same. Clearly, The Lower Court Committed Misapprehension Of Facts
That Can Be Considered A Question Of Law.*16+
DBP maintains that the valuation of the income derived from the property in dispute allegedly
amounting to P216,000.00 was not proven by the PIEDAS. DBP argues that they granted the PIEDAS
a loan of P20,000.00 in March 7, 1972 and up to the time of the foreclosure of the property, the
PIEDAS have paid only P2,000.00 on their principal. The failure of the PIEDAS to pay this loan is
attributable to the fact that said property did not produce income amounting to P72,000.00 per annum.
According to DBP, in the absence of receipts or other evidence to support such a claim, the Court of
Appeals should not have granted said amount considering that the PIEDAS had the burden of proving
actual damages. Furthermore, Selfida Pieda herself admitted that the property never produced
income amounting to P72,000.00 per annum. At any rate, the actual amount earned by the property in
terms of rentals turned over by the tenant-farmers or caretakers of the land were duly receipted and
were duly accounted for by the DBP.
DBP also alleges that the mere fact that DBP took possession and administration of the property does
not warrant a finding that DBP was in bad faith. First, records show that the PIEDAS consented to and
approved the takeover of DBP. Second, Sec. 7[17] of Act No. 3135[18] allows the mortgagee-buyer to
take possession of the mortgaged property even during the redemption period. Third, DBPs act of
consolidating the title of the property in its name does not constitute bad faith as there is no law which
prohibits the purchaser at public auction from consolidating title in its name after the expiration of the
one (1) year redemption period reckoned from the time the Certificate of Sale was registered; and
neither is there any law or jurisprudence which prohibits the PIEDAS from exercising their right of
redemption over said property within five (5) years even if title is consolidated in the name of the
purchaser. When DBP consolidated title over the property in its name, the new TCT issued in its favor
was subject to the lien i.e. the right of redemption of the PIEDAS; if there was a failure to register this
in the TCT, DBP should not be faulted. Besides, even if the five (5) year period of redemption was not
indicated therein, Sec. 44[19] and 46[20] of Presidential Decree No. 1529[21] attaches such lien by
operation of law even in the absence of an annotation in the title. Moreover, Sec. 119 of CA No. 141
also makes said right of redemption a statutory lien, which subsists and binds the whole world despite
the absence of registration.
DBP also could not have been in bad faith when it denied the PIEDAS offer to redeem the property
since the denial was premised on Opinion No. 92 of the Minister of Justice series of 1978 which stated
that said land was covered under P.D. 27 and could not be the subject of foreclosure proceedings. For
this reason, DBP immediately filed a petition to nullify the foreclosure proceedings which was favorably
acted upon prior to the service of summons and the complaint in the present case on DBP on June
30,1982. If DBP was really in bad faith, it would not have filed said petition for said petition was against
its own interests.
Further, DBP asserts that PIEDAS appointed DBP as their attorney-in-fact or agent in case of
foreclosure of the property under Section 4 of the mortgage contract, which provides:
4. xxx In case of foreclosure, the Mortgagor hereby consents to the appointment of the mortgagee or
any of its employees as receiver, without any bond, to take charge of the mortgage property at once,
and to hold possession of the case and the rents and profits derived from the mortgaged property
before the sale. xxx*22+
DBP was therefore entitled to take possession of the property pursuant to the mortgage contract.
Finally, considering that DBP lawfully had material possession of the property after it consolidated its
title, DBP was entitled to the fruits and income thereof pursuant to Section 34, Rule 39 of the Rules of
Court:
Sec. 34. Rents and Profits Pending Redemption. Statement thereof and credit therefor on redemption.
The purchaser, from the time of the sale until a redemption, and a redemptioner, from the time of his
redemption until another redemption, is entitled to receive the rents of the property sold or the value of
the use or occupation thereof when such property is in the possession of a tenant. xxx
Taking all this into consideration, DBP cannot be faulted for taking over possession of the property in
question.
The core issue in this case is whether DBP was in bad faith when it took possession of the disputed lot.
We rule in the negative and find DBPs contentions meritorious.
A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any
flaw, which invalidates it.[23] Good faith is always presumed, and upon him who alleges bad faith on the
part of a possessor rests the burden of proof.[24] It was therefore incumbent on the PIEDAS to prove
that DBP was aware of the flaw in its title i.e. the nullity of the foreclosure. This, they failed to do.
Respondent PIEDAS argue that DBPs bad faith stems from the fact that DBP consolidated title over the
disputed property despite the statement in the Sheriffs Certificate of Sale to the effect that said land
was subject to a five year redemption period. The period of redemption of extrajudicially foreclosed
land is provided under Section 6 of ACT No. 3135 to wit:
Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred
to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or
any person having a lien on the property subsequent to the mortgage or deed of trust under which the
property is sold, may redeem the same at any time within the term of one year from and after the date
of sale; and such redemption shall be governed by the provisions of section four hundred and sixty-four
to four hundred and sixty-six, inclusive, of the Code of Civil Procedure[25], in so far as these are not
inconsistent with the provisions of this Act.
If no redemption is made within one year, the purchaser is entitled as a matter of right to
consolidate*26+ and to possess*27+ the property.*28+ Accordingly, DBPs act of consolidating its title and
taking possession of the subject property after the expiration of the period of redemption was in
accordance with law. Moreover, it was in consonance with Section 4 of the mortgage contract between
DBP and the PIEDAS where they agreed to the appointment of DBP as receiver to take charge and to
hold possession of the mortgage property in case of foreclosure. DBPs acts cannot therefore be tainted
with bad faith.
The right of DBP to consolidate its title and take possession of the subject property is not affected by the
PIEDAS right to repurchase said property within five years from the date of conveyance granted by
Section 119 of CA No. 141. In fact, without the act of DBP consolidating title in its name, the PIEDAS
would not be able to assert their right to repurchase granted under the aforementioned section.
Respondent PIEDAS are of the erroneous belief that said section prohibits a purchaser of homestead
land in a foreclosure sale from consolidating his title over said property after the one-year period to
redeem said property has expired. Section 119 does not contain any prohibition to convey homestead
land but grants the homesteader, his widow or legal heirs a right to repurchase said land within a period
of five years in the event that he conveys said land. This is in consonance with the policy of homestead
laws to distribute disposable agricultural lands of the State to land-destitute citizens for their home and
cultivation.[29] The right to repurchase under Section 119 aims to preserve and keep in the family of the
homesteader that portion of public land which the State had gratuitously given him.[30] Such right is
based on the assumption that the person under obligation to reconvey the property has the full title to
the property because it was voluntarily conveyed to him or that he consolidated his title thereto by
reason of a redemptioners failure to exercise his right of redemption.*31+ It is also settled that the five-
year period of redemption fixed in Section 119 of the Public Land Law of homestead sold at extrajudicial
foreclosure begins to run from the day after the expiration of the one-year period of repurchase allowed
in an extrajudicial foreclosure.*32+ Thus DBPs consolidation of title did not derogate from or impair the
right of the PIEDAS to redeem the same under C.A. No. 141.
It may be argued that P.D. 27 was already in effect when DBP foreclosed the property. However, the
legal propriety of the foreclosure of the land was put into question only after Opinion No. 92 series of
1978 of the Ministry of Justice declared that said land was covered by P.D. 27 and could not be subject
to foreclosure proceedings. The Opinion of the Ministry of Justice was issued on July 5, 1978 or almost
two months after DBP consolidated its title to the property on March 10, 1978. By law and
jurisprudence, a mistake upon a doubtful or difficult question of law may properly be the basis of good
faith.[33]
In the case of Maneclang vs. Baun,[34] we held that when a contract of sale is void, the possessor is
entitled to keep the fruits during the period for which it held the property in good faith. Good faith of
the possessor ceases when an action to recover possession of the property is filed against him and he is
served summons therefore.[35] In the present case, DBP was served summons on June 30, 1982.[36] By
that time, it was no longer in possession of the disputed land as possession thereof was given back to
the PIEDAS after the foreclosure of DBP was declared null and void on February 22, 1982. Therefore,
any income collected by DBP after it consolidated its title and took possession of the property on May
30, 1978 up to February 22, 1982 belongs to DBP as a possessor in good faith since its possession was
never legally interrupted.
Finally, we delete the award for attorneys fees. Although attorneys fees may be awarded if the
claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason
of an unjustified act or omission of the party from whom it is sought*37+, we hold that DBPs acts were
clearly not unjustified.
WHEREFORE, the instant petition is hereby GRANTED, and the appealed decision of the Court of Appeals
is REVERSED. The Development Bank of the Philippines is absolved from any liability to Timoteo and
Selfida Pieda in so far as it orders the DBP to pay the PIEDAS P216,000.00 as annual produce value of
the land; P20,000.00 in attorneys fees, P5,000.00 in litigation expenses and the costs of the suit. This
decision is without prejudice to whatever liability the PIEDAS may still have to the DBP with respect to
their loan.
G.R. No. 159578 February 18, 2009
ROGELIA DACLAG and ADELINO DACLAG (deceased), substituted by RODEL M. DACLAG, and ADRIAN M.
DACLAG, Petitioners,
vs.
ELINO MACAHILIG, ADELA MACAHILIG, CONRADO MACAHILIG, LORENZA HABER and BENITA DEL
ROSARIO, Respondents.
R E S O L U T I O N
AUSTRIA-MARTINEZ, J.:
Before us is petitioners' Motion for Reconsideration of our Decision dated July 28, 2008 where we
affirmed the Decision dated October 17, 2001 and the Resolution dated August 7, 2003 of the Court of
Appeals (CA) in CA-G.R. CV No. 48498.
Records show that while the land was registered in the name of petitioner Rogelia in 1984, respondents
complaint for reconveyance was filed in 1991, which was within the 10-year prescriptive period.
We ruled that since petitioners bought the property when it was still an unregistered land, the defense
of having purchased the property in good faith is unavailing. We affirmed the Regional Trial Court (RTC)
in finding that petitioners should pay respondents their corresponding share in the produce of the
subject land from the time they were deprived thereof until the possession is restored to them.
In their Motion for Reconsideration, petitioners contend that the 10-year period for reconveyance is
applicable if the action is based on an implied or a constructive trust; that since respondents' action for
reconveyance was based on fraud, the action must be filed within four years from the discovery of the
fraud, citing Gerona v. De Guzman,1 which was reiterated in Balbin v. Medalla.2
We do not agree.
In Caro v. Court of Appeals,3 we have explicitly held that "the prescriptive period for the reconveyance
of fraudulently registered real property is 10 years reckoned from the date of the issuance of the
certificate of title x x x."4
However, notwithstanding petitioners' unmeritorious argument, the Court deems it necessary to make
certain clarifications. We have earlier ruled that respondents' action for reconveyance had not
prescribed, since it was filed within the 10-year prescriptive period.
However, a review of the factual antecedents of the case shows that respondents' action for
reconveyance was not even subject to prescription.
The deed of sale executed by Maxima in favor of petitioners was null and void, since Maxima was not
the owner of the land she sold to petitioners, and the one-half northern portion of such land was owned
by respondents. Being an absolute nullity, the deed is subject to attack anytime, in accordance with
Article 1410 of the Civil Code that an action to declare the inexistence of a void contract does not
prescribe. Likewise, we have consistently ruled that when there is a showing of such illegality, the
property registered is deemed to be simply held in trust for the real owner by the person in whose name
it is registered, and the former then has the right to sue for the reconveyance of the property.5 An
action for reconveyance based on a void contract is imprescriptible.6 As long as the land wrongfully
registered under the Torrens system is still in the name of the person who caused such registration, an
action in personam will lie to compel him to reconvey the property to the real owner.7 In this case, title
to the property is in the name of petitioner Rogelia; thus, the trial court correctly ordered the
reconveyance of the subject land to respondents.
Petitioners next contend that they are possessors in good faith, thus, the award of damages should not
have been imposed. They further contend that under Article 544, a possessor in good faith is entitled to
the fruits received before the possession is legally interrupted; thus, if indeed petitioners are jointly and
severally liable to respondents for the produce of the subject land, the liability should be reckoned only
for 1991 and not 1984.
We find partial merit in this argument.
Article 528 of the Civil Code provides that possession acquired in good faith does not lose this character,
except in a case and from the moment facts exist which show that the possessor is not unaware that he
possesses the thing improperly or wrongfully. Possession in good faith ceases from the moment defects
in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the
property by the true owner. Whatever may be the cause or the fact from which it can be deduced that
the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered
sufficient to show bad faith.8 Such interruption takes place upon service of summons.9lawphil.net
Article 544 of the same Code provides that a possessor in good faith is entitled to the fruits only so long
as his possession is not legally interrupted. Records show that petitioners received a summons together
with respondents' complaint on August 5, 1991;10 thus, petitioners' good faith ceased on the day they
received the summons. Consequently, petitioners should pay respondents 10 cavans of palay per annum
beginning August 5, 1991 instead of 1984.
Finally, petitioner would like this Court to look into the finding of the RTC that "since Maxima died in
October 1993, whatever charges and claims petitioners may recover from her expired with her"; and
that the proper person to be held liable for damages to be awarded to respondents should be Maxima
Divison or her estate, since she misrepresented herself to be the true owner of the subject land.
We are not persuaded.
Notably, petitioners never raised this issue in their appellants' brief or in their motion for
reconsideration filed before the CA. In fact, they never raised this matter before us when they filed their
petition for review. Thus, petitioners cannot raise the same in this motion for reconsideration without
offending the basic rules of fair play, justice and due process, specially since Maxima was not substituted
at all by her heirs after the promulgation of the RTC Decision.
WHEREFORE, petitioners Motion for Reconsideration is PARTLY GRANTED. The Decision of the Court of
Appeals dated July 28, 2008 is MODIFIED only with respect to prescription as discussed in the text of
herein Resolution, and the dispositive portion of the Decision is MODIFIED to the effect that petitioners
are ordered to pay respondents 10 cavans of palay per annum beginning August 5, 1991 instead of 1984.
G.R. No. 146259 September 13, 2007
FLORENTINO, TROADIO and PEDRO, all surnamed OCHOA, petitioners,
vs.
MAURO APETA and APOLONIA ALMAZAN, respondents.
D E C I S I O N
SANDOVAL-GUTIERREZ, J.:
Challenged in this Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, are the Decision1 dated September 8, 2000 and Resolution2 dated November 20, 2000 of the
Court of Appeals in CA G.R. CV No. 56109.
The facts are:
Since 1910, the above-named petitioners and their predecessors-in-interest have been occupying Lot
No. 1580 consisting of 886 square meters situated in Malaban, Bian, Laguna. The lot is covered by
Transfer Certificate of Title (TCT) No. T-40624 of the Registry of Deeds of that province. They built their
houses and apartment building thereon.
Sometime in May 10, 1982, Mauro Apeta and Apolonia Almazan, respondents, found that they are the
true owners of Lot No. 1580 being occupied by petitioners.
On January 22, 1988, respondents filed with the Regional Trial Court (RTC), Branch 24, Bian, Laguna a
complaint for recovery of possession and damages against petitioners, docketed as Civil Case No. B-
2777. Respondents alleged in the main that they are the lawful owners of Lot No. 1580 covered by
Certificate of Title No. RT-599 (10731) issued by the Registry of Deeds of Laguna.
In their answer to the complaint, petitioners specifically denied the allegations in the complaint,
contending that they are the owners of Lot No. 1580 as shown by TCT No. T-40624 issued by the
Registry of Deeds of Laguna.
During the proceedings before the RTC, upon agreement of the parties, the trial judge commissioned
Engr. Romulo Unciano of the Bureau of Lands of Region IV to conduct a resurvey of the disputed
property. The result of the resurvey (approved by the Bureau of Lands) shows that Lot No. 1580,
occupied by petitioners, was registered in the name of Margarita Almada, respondents predecessor-in-
interest; and that the lot covered by TCT No. T-40624 is not Lot No. 1580, but Lot No. 1581 registered in
the name of Servillano Ochoa, petitioners predecessor-in-interest. This lot has been occupied by Isidro
Jasmin.
On March 24, 1995, the trial court rendered a Decision in favor of respondents, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against
the defendants as follows:
1. Declaring plaintiffs as the true and lawful owners of Lot 1580 of the Bian Estate Subdivision covered
by Transfer Certificate of Title No. RT-599 (10731) and declaring the defendants without right
whatsoever to continue in possession thereof.
2. Ordering the defendants and all those acting in their behalf to deliver peacefully the physical
possession of Lot 1580 to the plaintiffs and to remove their houses and apartment building thereon.
3. Ordering the defendants to pay, jointly and severally to plaintiffs the amount of P30,000 as and for
attorneys fees and litigation expenses.
SO ORDERED.3
On appeal, the Court of Appeals, in its Decision dated September 8, 2000, affirmed the judgment of the
RTC.
Petitioners filed a motion for reconsideration, but it was denied by the appellate court in its Resolution4
dated November 20, 2000.
Hence, the instant petition.
Petitioners contend that Lot No. 1580 belongs to them and that respondents action is barred by
prescription.
Petitioners contention lacks merit.
On petitioners claim that they are the owners of Lot No. 1580, it is a well-established principle that in
an appeal viaa petition for review on certiorari, only questions of law may be raised. Here, the issue
posed by petitioners requires us to weigh anew the evidence submitted by the parties already passed
upon by the Court of Appeals. It is basic that this Court is not a trier of facts. Thus, it may not review the
findings of the Court of Appeals except, among others: (a) when its factual findings and those of the trial
court are contradictory; (b) when its inference is manifestly mistaken or absurd; (c) when its judgment is
premised on its misapprehension of the facts; and (d) when it failed to resolve relevant facts which, if
properly considered, would justify a modification or reversal of the decision of the appellate court.5 The
issue raised by petitioners that they are the actual owners of Lot No. 1580 is factual in nature and
requires a review of the pieces of evidence presented by the parties. Thus, we can no longer pass upon
and evaluate the lower courts finding that based on the evidence presented before them, specifically
the result of the resurvey conducted by Engr. Romulo Unciano, respondents are "the true and lawful
owners of Lot 1580."
Anent petitioners second contention that respondents action has been barred by prescription, suffice it
to state that no title to registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession.6 Neither can prescription be allowed against the hereditary
successors of the registered owner, because they step into the shoes of the decedent and are merely
the continuation of the personality of their predecessor-in-interest.7
Verily, the Court of Appeals did not err when it ruled that respondents are the true and lawful owners of
Lot No. 1580. Hence, they "should now be placed in possession thereof."
Parenthetically, considering that petitioners and their predecessors-in-interest have built their houses
and apartment building on Lot No. 1580, should respondents be allowed to take possession of those
improvements? In order to settle this matter, we should determine whether petitioners were builders in
good faith.
Good faith is an intangible and abstract quality with no technical meaning or statutory definition, and it
encompasses, among other things, an honest belief, the absence of malice and the absence of design to
defraud or to seek an unconscionable advantage. It implies honesty of intention, and freedom from
knowledge of circumstances which ought to put the holder upon inquiry.8 The essence of good faith lies
in an honest belief in the validity of ones right, ignorance of a superior claim and absence of intention
to overreach another.9 Applied to possession, one is considered in good faith if he is not aware that
there exists in his title or mode of acquisition any flaw which invalidates it.10
Using the above parameters, we are convinced that petitioners and their predecessors-in-interest were
in good faith when they built their houses and apartment building on Lot No. 1580 since they were
convinced it was covered by their TCT No. T-40624.
The following provisions of the Civil Code are relevant:
Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy
the land if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the
court shall fix the terms thereof.
Article 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good
faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of retention,
the person who has defeated him in the possession having the option of refunding the amount of the
expenses or of paying the increase in value which the thing may have acquired by reason thereof.
Article 548. Expense for pure luxury or mere pleasure shall not be refunded to the possessor in good
faith; but he may remove the ornaments with which he has embellished the principal thing if it suffers
no injury thereby, and if his successors in the possession do not prefer to refund the amount expended.
Under the foregoing provisions, the landowner can make a choice - either by appropriating the building
by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs
to the owner of the land, a rule that accords with the principle of accession that the accessory follows
the principal and not the other way around. He must choose only one.
Following the above provisions, respondents, as owners of Lot No. 1580, may choose between
appropriating as their own the houses and apartment building constructed thereon by petitioners and
their predecessors-in-interest by paying the proper indemnity or value; or obliging petitioners to pay the
price of Lot No. 1580 which is not more than that of the improvements.
WHEREFORE, we DENY the petition. The assailed Decision and Resolution of the Court of Appeals in CA
G.R. CV No. 56109 are AFFIRMED with MODIFICATION in the sense that respondents have the option to
pay for the houses and apartment building constructed by petitioners and their predecessors-in-interest
on Lot No. 1580; or to oblige petitioners to pay the price of the lot in an amount not more than the
value of the said improvements.