1

RODOLFO SANTOS,
Petitioner,

- versus -


RONALD C. MANALILI as Heir or Representative of
Deceased Defendants NOLI BELEN C. MANALILI
and REYNALDO MANALILI & BOARD OF LIQUIDATORS,
Respondents.

G.R. No. 157812

Present:

PANGANIBAN, J., Chairman
SANDOVAL-GUTIERREZ,
CORONA,
CARPIO MORALES, and
GARCIA, JJ.

Promulgated:

_November 22, 2005

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


D E C I S I O N

GARCIA, J.:

Thru this petition for review on certiorari, petitioner Rodolfo Santos seeks the reversal of the Decision
[1]
dated July 24, 2002 of the Court
of Appeals (CA) in CA-G.R. CV No. 46890, affirming the September 20, 1993 decision of the Regional Trial Court at Davao City, Branch 14, which
dismissed petitioners complaint for Reconveyance, Damages, Attorneys Fees and/or Annulment of Title against the herein public and private
respondents.

At the core of the controversy is a 4,608 square-meter parcel of land which originally formed part of the Furukawa Plantation owned by
a Japanese national and situated in the District of Toril, Davao City. After the war, the land was turned over to the Philippine government and
administered by the National Abaca and Other Fibers Corporation, and thereafter by the respondent Board of Liquidators (BOL).

On August 6, 1970, Reynaldo Manalili, predecessor-in-interest of respondent Ronald C. Manalili, filed with the BOL an application to purchase
the subject property, attaching therewith his Occupants Affidavit. The application was favorably acted upon and on March 27, 1972, the BOL
required Manalili to pay the downpayment of 10% of the purchase price or P1,865.28. Thereafter, Manalili declared the land for taxation purposes.

On March 25, 1981, after the lapse of nine (9) years and even as the BOL had already issued a Certification of Full Payment endorsing the
approval of the sale of the land in question to applicant Reynaldo Manalili, herein petitioner Rodolfo Santos wrote an undated letter to the BOL
protesting Manalilis application. On account thereof, Land Examiner Ildefonso S. Carrillo issued a Memorandum addressed to the BOL Senior
Executive Assistant, recommending a formal investigation.

On October 7, 1981, the BOLs Alien Property Unit came out with a report that petitioner was not actually occupying the lot and that he only
hired certain Abalahin and Lumaad to plant bananas and coconut trees and maintain a vegetable garden thereon presumably to establish a bona-
fide occupancy over the lot, and accordingly recommended the dismissal of petitioners protest and the approval of the sale to Manalili.


Meanwhile, Manalili, thru counsel, made known to the barrio captain of the place of petitioners illegal entry into the premises.

On December 16, 1981, following Manalilis compliance with other requirements, the BOL issued to him the corresponding Deed of Absolute
Sale which was duly approved by the Office of the President on December 21, 1981. And, on January 6, 1982, upon request of the BOL, the Register
of Deeds, Davao City, issued TCT 86414 covering the land in question in the name of Manalili.

On April 26, 1982, petitioner filed the aforementioned complaint for Reconveyance, Damages, Attorneys Fees and/or Annulment of
Title against the BOL and the Manalilis.

Initially, the trial court dismissed the complaint on grounds of lack of jurisdiction and non-exhaustion of administrative remedies. However, on
petitioners appeal to the then Intermediate Appellate Court (IAC), the latter reversed the trial courts order of dismissal and remanded the case to
it for trial. Upon further elevation, this Court affirmed the IAC.

After the remand and trial of the case, the trial court rendered its September 20, 1993 decision in favor of the Manalilis. Dispositively, the
decision reads:

IN VIEW OF THE FOREGOING, judgment is hereby rendered against the plaintiff [petitioner], dismissing his Complaint
and ordering him to immediately vacate the land in question which is covered by T.C.T. No. T-86414, deliver the possession
thereof to the private defendants, as substituted, pay the private defendants TWENTY THOUSAND PESOS (P20,000.00) as
damages and another amount of TEN THOUSAND PESOS (P10,000.00) as attorneys fees and the costs of suit.
[2]


Therefrom, petitioner went on appeal to the Court of Appeals (CA), thereat docketed as CA-G.R. CV No. 46890 .

In the herein challenged Decision
[3]
dated July 24, 2002, the appellate court dismissed petitioners appeal and affirmed the appealed
decision of the trial court, thus:

WHEREFORE, upon the premises, then (sic) instant appeal is DISMISSED and the Decision appealed from
is AFFIRMED.

SO ORDERED.


2

In time, petitioner moved for a reconsideration but his motion was denied by the appellate court in its resolution of March 3, 2003.
[4]


Hence, petitioners present recourse, faulting the appellate court, as follows:

I

THE COURT A QUO ERRED IN UPHOLDING THAT RESPONDENT MANALILI HAS THE BETTER RIGHT OF POSSESSION OVER
THE LOT IN QUESTION.

II

THE COURT A QUO ERRED IN DECLARING THAT THE SALE OF THE LOT TO THE RESPONDENT WAS NOT FRAUDULENT AND
THAT THE PETITIONERS PROTEST WAS DULY INVESTIGATED.

We DENY.

In its assailed decision of July 24, 2002, supra, the Court of Appeals upheld the findings of the chief of the Alien Property Unit, BOL that
petitioners protest was unfounded and was only meant to disturb the sale of the subject land to respondent Manalili. To the appellate court, the
BOLs findings were duly supported by evidence, as in fact the sale of the land to Manalili was approved by no less than the Office of the President.

Presently, petitioner submits that he has clearly established a better right of possession over the subject property. Per his testimony and
those of his two (2) witnesses, namely Ernesto Abalahin and Corenelio Mundan, petitioner belabored to show that the land in dispute was
originally occupied by one Col. Agsalud in 1956 up to 1959, the latter being given preference as a guerilla veteran. Later, Col. Agsalud
transferred his rights in favor of one Ernesto Abalahin who continuously occupied the land and from whom petitioner acquired the property
sometime in February 1969, after which he himself introduced various improvements thereon and continuously occupied the same up to the
present.

Petitioner insists that sometime in 1981, he came to learn that the land was surreptitiously applied for and was already awarded by BOL
to Manalili, whereupon he immediately filed a protest which triggered an investigation by a BOL land examiner who submitted a report dated
September 1981 to the effect that he (petitioner) is the actual occupant thereof and introduced considerable improvements thereon, as against
respondent Manalili who was never in possession, occupation and cultivation of the same.

We are not persuaded.

The two (2) courts below, in unanimously upholding the validity of the sale of the land in question to the Manalilis, likewise affirmed the
BOLs finding that the Manalilis had a better right of possession thereto. Preponderant evidence of respondent have sufficiently established that as
early as 1970, Reynaldo Manalili, respondents predecessor-in-interest, had already filed an Affidavit of Occupancy with the BOL, the government
agency tasked to administer it; that the Manalilis administered the land before they left for Manila in 1972; that after they moved to Manila they
appointed an administrator to oversee the land and the improvements and crops they have planted thereon, such as bananas and coconut trees;
and that the Manalilis have been paying the real estate taxes for the subject land even before the sale thereof to them.

The circumstance that after the sale, the Manalilis resided in Manila and Pangasinan is of no moment. As it is, possession may be
exercised in ones own name or in that of another.
[5]
It is not necessary that the owner or holder of the thing exercise personally the rights of
possession. Rights of possession may be exercised through agents.
[6]


In contrast, petitioners claim of having bought the land from a certain Ernesto Abalahin who, in turn, bought it from one Col. Agsalud,
allegedly a guerrilla veteran who occupied the lot from 1956 to 1959, is without basis. For one, no proof has been presented by petitioner as
to the alleged title of Col. Agsalud or the transfer of any rights from the latter to Ernesto Abalahin, petitioners alleged immediate transferor.
For another, the supposed Deed of Absolute Sale between petitioner and Ernesto Abalahin does not even sufficiently identify the lot which was the
subject of the sale. Worse, that same deed is not notarized and is unregistered. A sale of a piece of land appearing in a private deed cannot be
considered binding on third persons if it is not embodied in a public instrument and recorded in the Registry of Deeds.
[7]
Verily, it was only in 1981
that Abalahin entered the subject land without permission, and that in 1982, petitioner, together with Abalahin and one Lumaad, illegally cut trees
on the land, thereby prompting the Manalilis to report their unlawful entry to the local barrio captain.

True, there is petitioners claim that the BOLs sale of the land to Reynaldo Manalili was fraudulent. Basic it is in the law of evidence,
however, that mere assertion of an alleged fact is not enough. It behooves petitioner to substantiate his claim by credible evidence, of which there
is none, more so, because the law
[8]
presumes BOL to have acted regularly in recommending the sale of the disputed land to Manalili and the Office
of the President, in approving the sale.

As it is, petitioners evidence do not support his allegation of fraud. It is a matter of record that petitioners protest, filed nine (9) years
after Reynaldo Manalili filed his application with attached occupants affidavit, and after the BOL had already issued a Certification of Final
Payment in Manalilis favor, was duly investigated by the BOL, after which it recommended the sale of the land to Manalili, which recommendation
was formally acted upon by the Office of the President which ultimately approved the Deed of Sale for Manalili. It is well-settled that fraud must
be established by clear and convincing evidence.
[9]
Petitioner failed in this venture.

To cap it all, it is a settled rule in this jurisdiction that factual findings of an administrative agency deserve utmost respect, more so,
when, as here, they are supported by substantial evidence, albeit such evidence may not be overwhelming or merely preponderant. By reason of
their special knowledge and expertise on matters falling under their jurisdiction, administrative agencies are in a better position to pass judgment
thereon, and their findings of fact relative thereto are generally accorded great respect, if not finality, by the courts.
[10]
It is not the task of this
Court to weigh once more the evidence submitted before administrative bodies and to substitute its own for that of the latter.

In fine, we rule and so hold that no reversible error was committed by the Court of Appeals in affirming the decision of the trial court
upholding the validity of the sale of the disputed property to the Manalilis.

WHEREFORE, the petition is DENIED and the assailed Decision of the Court of Appeals AFFIRMED.

3

Costs against petitioner.

SO ORDERED.









































































4

ARIA CARLOS, represented by G.R. No. 164823
TERESITA CARLOS VICTORIA,
Petitioner, Present:

Puno, J.
Chairman,
Austria-Martinez,
- versus - Callejo, Sr.,
Tinga, and
Chico-Nazario, JJ.

Promulgated:
REPUBLIC OF THE PHILIPPINES,
Respondent. August 31, 2005

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

Puno, J.:

This is a petition for review on certiorari to annul the decision of the Court of Appeals in CA-G.R. CV No. 76824 entitled Re: Application for
Land Registration of a Parcel of Land in Taguig, Metro Manila, Maria Carlos represented by Teresita Carlos Victoria, Applicant-Appellee vs. Republic
of the Philippines through the Office of the Solicitor General, Oppositor-Appellant.

On December 19, 2001, petitioner Maria Carlos, represented by her daughter, Teresita Carlos Victoria, filed an application for registration and
confirmation of title over a parcel of land with an area of 3,975 square meters located at Pusawan, Ususan, Taguig, Metro Manila, covered by Plan
Psu-244418. Petitioner alleged, among others, that she is the owner of said parcel of land which she openly, exclusively and notoriously possessed
and occupied since July 12, 1945 or earlier under a bona fide claim of ownership; that there is no mortgage or encumbrance affecting said property,
nor is it part of any military or naval reservation; that the property is being used for industrial purposes; and that there are no tenants or lessees on
the property. Petitioner further claimed that she has been in possession of the subject land in the concept of an owner; that her possession has
been peaceful, public, uninterrupted and continuous since 1948 or earlier; and tacking her possession with that of her predecessors-in-interest,
petitioner has been in possession of the land for more than 50 years.
[1]


The Republic of the Philippines, represented by the Director of Lands, filed an opposition to petitioners application.
[2]

During the initial hearing, however, only petitioner and her counsel appeared. They presented documentary evidence to prove the
jurisdictional requirements.
[3]


Petitioner later presented testimonial evidence consisting of the testimonies of her neighbors, Sergio Cruz and Daniel Castillo, and Teresita
Carlos Victoria herself.
[4]


Sergio Cruz, 83 years old, a native of Ususan, Taguig, and neighbor of Maria Carlos, testified that the property subject of the application
was previously owned and possessed by Jose Carlos. He planted it with palay and sold the harvest. Everyone in the community knew him as the
owner of said parcel of land. He also paid the taxes thereon. After the death of Jose Carlos in 1948, his daughter, Maria Carlos, inherited the
property and immediately took possession thereof. Her possession was peaceful, open, public, continuous, uninterrupted, notorious, adverse and
in the concept of an owner. When Maria Carlos died, her heirs took over the property.
[5]


Cruzs testimony was corroborated by Daniel Castillo, 76 years old, Barangay Captain of Ususan, Taguig.
[6]


Teresita Carlos Victoria stated on the witness stand that her mother, Maria Carlos, was in possession of the subject property until she passed
away on January 6, 2001. Upon the demise of Maria Carlos, Victoria took possession of the property with the consent of her brothers and
sisters. She characterized Maria Carloss possession as peaceful, open, public, continuous, adverse, notorious and in the concept of an owner. She
has never been disturbed in her possession; the whole community recognized her as the owner of the land; she declared the land for tax purposes;
and she paid the taxes thereon. In addition, Victoria informed the court that the heirs of Maria Carlos have not yet instituted a settlement of her
estate. However, they have agreed to undertake the titling of the property and promised to deliver the certificate of title to Ususan Development
Corporation which bought the property from Maria Carlos. Victoria admitted that her mother had sold the land to Ususan Development
Corporation in 1996 but failed to deliver the title. Hence, the heirs of Maria Carlos made a commitment to the corporation to deliver the certificate
of title so that they could collect the unpaid balance of the purchase price.
[7]


Petitioner also presented in court the concerned officers of the Department of Environment and Natural Resources (DENR) to establish that
the land in question is alienable and disposable.

Elvira R. Reynaldo, Records Officer, DENR Lands Management Bureau, appeared to certify that their office has no record of any kind of
public land application/land patent covering the parcel of land situated at Ususan, Taguig, Rizal, identified/described in Plan Psu-244418.
[8]


Ulysses Sigaton, Land Management Inspector, DENR National Capital Region, stated that he conducted an ocular inspection of the subject
property and found that it is within the alienable and disposable area under Project No. 27-B, LC Map No. 2623, certified by the Bureau of Forest
Development on January 4, 1968. He also noted that the land is being used for industrial purposes. It had several warehouses, four big water tanks
and is enclosed by a fence.
[9]


The trial court granted the application in its decision dated October 24, 2002. It held:
After considering the applicants evidence ex-parte which is based on factual and meritorious grounds, and considering
that the applicant acquired the property under registration through inheritance from her father, Jose Carlos, and considering
further that her possession thereof, tacked with that of her predecessor-in-interest, is open, continuous, exclusive, notorious
and undisturbed, under claim of ownership since time immemorial up to the present time; and considering further that the
subject parcel of land is part of the disposable and alienable land (Tsn, July 3, 2002, p.6) and considering further that the realty
taxes due thereon have been religiously paid (Exhs. HH, II, JJ, and JJ-1), and considering finally that the subject parcel of
5

land belong[s] to the applicant and that she possess[es] a perfect title thereto which may be confirmed and registered in her
name under the (P)roperty Registration Decree (P.D. 1529), the herein application is hereby GRANTED.
[10]


On appeal, the Court of Appeals reversed and set aside the decision of the trial court. It noted that:
In the instant case, the applicant at the time she filed her application for registration of title was no longer in possession
and occupation of the land in question since on October 16, 1996, the applicants mother and predecessor-in-interest sold the
subject land to Ususan Development Corporation. This was admitted by witness Teresita Carlos Victoria x x x

Clearly, as early as 1996, possession and occupation of the land in question pertains not to the applicant but to Ususan
Development Corporation, thus it can be said that the applicant has no registrable title over the land in question.
[11]


Hence, this petition.

We affirm the findings of the appellate court.

Applicants for confirmation of imperfect title must prove the following: (a) that the land forms part of the disposable and alienable
agricultural lands of the public domain; and (b) that they have been in open, continuous, exclusive, and notorious possession and occupation of the
same under a bona fide claim of ownership either since time immemorial or since June 12, 1945.
[12]


As found by the Court of Appeals, petitioner has met the first requirement but not the second.

The Court held in Republic vs. Alconaba
[13]
that the applicant must show that he is in actual possession of the property at the time of the
application, thus:
The law speaks of possession and occupation. Since these words are separated by the conjunction *+and*+, the clear
intention of the law is not to make one synonymous with the other. Possession is broader than occupation because it includes
constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit the all-encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word occupation
serves to highlight the fact that for an applicant to qualify, his possession must not be a mere fiction. Actual possession of a
land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own
property.

It is clear in the case at bar that the applicant, Maria Carlos, no longer had possession of the property at the time of the application for the
issuance of a certificate of title. The application was filed in court on December 19, 2001. Teresita Carlos Victoria, the daughter of Maria Carlos,
admitted during the hearing that her mother had sold the property to Ususan Development Corporation in 1996. They also presented as evidence
the deed of absolute sale executed by and between Maria Carlos and Ususan Development Corporation on October 16, 1996.
[14]
The document
states, among others:
xxx

4. That the VENDOR, by this Deed hereby transfer(s) possession of the property to the VENDEE.
[15]


This contradicts petitioners claim that she was in possession of the property at the time that she applied for confirmation of title.

Nonetheless, even if it were true that it was petitioner who had actual possession of the land at that time, such possession was no longer in
the concept of an owner. Possession may be had in one of two ways: possession in the concept of an owner and possession of a holder. A
possessor in the concept of an owner may be the owner himself or one who claims to be so. On the other hand, one who possesses as a mere
holder acknowledges in another a superior right which he believes to be ownership, whether his belief be right or wrong.
[16]
Petitioner herein
acknowledges the sale of the property to Ususan Development Corporation in 1996 and in fact promised to deliver the certificate of title to the
corporation upon its obtention. Hence, it cannot be said that her possession since 1996 was under a bona fide claim of ownership. Under the law,
only he who possesses the property under a bona fide claim of ownership is entitled to confirmation of title.

We therefore find that the Court of Appeals did not err in denying the issuance of a certificate of title to petitioner.

IN VIEW WHEREOF, the petition is DENIED.

SO ORDERED.





















6

FELICIANO GAITERO G.R. No. 181812
and NELIA GAITERO,
Petitioners, Present:

CARPIO, J., Chairperson,
- versus - NACHURA,
BRION,
*

PERALTA, and
ABAD, JJ.
GENEROSO ALMERIA and
TERESITA ALMERIA, Promulgated:
Respondents.
June 8, 2011
x --------------------------------------------------------------------------------------- x

DECISION

ABAD, J.:


Will laches, a rule of equity, benefit one who himself slept on his supposed right?

The Facts and the Case

Following a cadastral survey in Barangay Ysulat, Tobias Fornier, Antique, a land registration court issued an original certificate of title
[1]
to
Rosario O. Tomagan (Tomagan) covering a 10,741 square-meter land, designated as Lot 9960.
[2]
Subsequently in 1993, Tomagan subdivided the lot
awarded to her into four: Lot 9960-A
[3]
covering 3,479 sq m; Lot 9960-B covering 1,305 sq m; Lot 9960-C
[4]
covering 3,073 sq m; and Lot 9960-D
covering the remaining 2,884 sq m. Tomagan waived her rights over Lots 9960-A and 9960-C in favor of petitioner Feliciano Gaitero (Gaitero)
and Lot 9960-B in favor of Barangay Ysulat, Tobias Fornier. She retained Lot 9960-D.
[5]


Lot 9960-A that went to Gaitero adjoined Lot 9964 which belonged to respondent spouses Generoso and Teresita Almeria (the Almerias) and
was covered by OCT P-14556. In June 2000, the Almerias commissioned a relocation survey of their lot and were astonished to find that Gaitero,
who owned adjoining Lot 9960-A, intruded into their lot by as much as 737 sq m (the disputed area).

On August 9, 2000, apparently to settle the dispute, the Almerias waived their rights over a 158 sq m portion of the disputed area in Gaiteros
favor but maintained their claim over the remaining 579 sq m. Subsequently, however, Gaitero filed an affidavit of adverse claim on the Almerias
title over the remaining 579 sq m.
[6]


When barangay conciliation proceedings failed to settle the differences between the two neighbors, Gaitero filed an action for recovery of
possession against the Almerias
[7]
before the Municipal Circuit Trial Court (MCTC) of Tobias Fornier-Anini-Y-Hamtic. Gaitero prayed for the return
of the possession of the remaining 579 sq m, moral damages of P100,000.00, exemplary damages of P25,000.00, attorneys fees of P15,000.00, and
litigation expenses of P10,000.00.

Gaitero claimed that he was the registered owner of Lot 9960-A, which was covered by TCT T-2544 and had an assessed value
of P11,050.00; that he inherited the same from his mother, Maria Obay, who in turn inherited it from her father, Bonifacio Obay; that before the
cadastral survey, Lot 9960-A was erroneously lumped with Lot 9960 in Tomagans name; that, acknowledging the mistake, Tomagan subdivided Lot
9960 into four lots and waived her rights over Lots 9960-A and 9960-C in Gaiteros favor; that the Almerias claimed a portion of Lot 9960-A by
virtue of a relocation survey and fenced it close to Gaiteros house, obstructing the latters passageway; and that while the Almerias returned 158
sq m of the disputed portion, they refused to return to him the remaining 579 sq m.

Answering the complaint and instituting a counterclaim, the Almerias alleged that they bought Lot 9964
[8]
in 1985 by virtue of an Extra-
Judicial Settlement of Estate and Sale; that it was Gaitero who unlawfully encroached on the 737 sq m portion of Lot 9964; and that, while they had
waived a portion of the disputed area, Gaiteros incessant claim to the remaining 579 sq m prompted them to cancel their previous waiver of the
158 sq m.
[9]
The Almerias prayed for the dismissal of the complaint and the award of damages in their favor.

In his reply, Gaitero claimed that the cadastral survey was erroneous in that it included a 737 sq m portion of Lot 9960-A into Lot 9964.

After trial, on December 9, 2002 the MCTC rendered a decision, dismissing the complaint and ordering Gaitero to pay the
Almerias P20,000.00 in moral damages andP20,000.00 in attorneys fees. The MCTC held that the Almerias were entitled to the possession of the
disputed area considering that it is included in the technical description of their registered title. Further, the MCTC held that Gaitero acknowledged
the true boundaries of 9960-A when Lot 9960 was subdivided in 1993. Indeed, the subdivision plan clearly shows that the disputed area is
excluded from 9960-A.

On appeal,
[10]
the Regional Trial Court (RTC) reversed the decision of the MCTC.
[11]
The RTC held that, while the Almerias were the rightful
owners of the disputed area, laches prevented them from asserting their right over the same since it took them 15 years before they did so. The
RTC also ordered the Almerias to pay Gaitero moral damages of P50,000.00, attorneys fees of P15,000.00 and litigation expenses of P30,000.00.

On review,
[12]
the Court of Appeals (CA) rendered judgment on May 21, 2007, reversing the decision of the RTC and reinstating that of the
MCTC. The CA held that the Almerias owned the disputed area since, between a registered title and a verbal claim of ownership, the former must
prevail. The CA did not consider the Almerias in laches since no one had lodge a claim of ownership against their title to the disputed property. On
motion for reconsideration, the CA deleted the award of moral damages, litigation expenses, and attorneys fees in its resolution of February 11,
2008.

The Issue Presented

7

The sole issue presented to the Court is whether or not the CA erred in holding that the Almerias are entitled to the possession of the
disputed area as against Gaitero.

The Courts Ruling

Possession is an essential attribute of ownership. Necessarily, whoever owns the property has the right to possess it.
[13]
Here, between the
Almerias registered title of ownership and Gaiteros verbal claim to the same, the formers title is far superior.

As the MCTC, the RTC, and the CA found, the disputed area forms part of the Almerias registered title. Upon examination, this fact is also
confirmed by the subdivision plan which partitioned Tomagans original Lot 9960. The evidence shows that the Almerias bought Lot 9964, which
includes the disputed area, from the Asenjo heirs in whose names the land was originally registered. Since Gaitero was unable to prove that fraud
attended the titling of the disputed area, the Almerias right over the same became indefeasible and incontrovertible a year from registration.
[14]


The Court cannot consider Gaiteros claim of ownership of the disputed area, based on his alleged continuous possession of the same,
without running afoul of the rule that bars collateral attacks of registered titles.
[15]
Gaiteros action before the MCTC is one for recovery of
possession of the disputed area. An adjudication of his claim of ownership over the same would be out of place in such kind of action. A registered
title cannot be impugned, altered, changed, modified, enlarged, or diminished, except in a direct proceeding permitted by law. Otherwise, reliance
on registered titles would be lost.
[16]
Gaiteros action is prohibited by law and should be dismissed.

Gaiteros theory of laches cannot vest on him the ownership of the disputed area. To begin with, laches is a consideration in equity
[17]
and
therefore, anyone who invokes it must come to court with clean hands, for he who has done inequity shall not have equity.
[18]
Here, Gaiteros
claim of laches against the Almerias can be hurled against him. When the lot that the Almerias acquired (Lot 9964) was registered in 1979, Gaitero
had constructive, if not actual, notice that the cadastral survey included the disputed area as part of the land that Leon Asenjo claimed. Yet,
neither Gaitero nor his mother complained or objected to such inclusion.

Worse, when Gaitero saw the subdivision plan covering Tomagans original Lot 9960 in 1993, it showed that the disputed area fell outside
the boundaries of Lot 9960-A which he claimed. Still, Gaitero did nothing to correct the alleged mistake. He is by his inaction clearly estopped
from claiming ownership of the disputed area. He cannot avail himself of the law of equity.

WHEREFORE, the Court DISMISSES the petition and AFFIRMS the decision and resolution of the Court of Appeals in CA-G.R. SP 80285 dated
May 21, 2007 and February 11, 2008, respectively.

SO ORDERED.











































8


RODOLFO V. ROSALES, (represented by his heirs,
Rodolfo, Jr., Romeo Allan, Lillian Rhodora, Roy
Victor, Roger Lyle and Alexander Nicolai, all
surnamed Rosales) and LILY ROSQUETA-ROSALES,
Petitioners,

- versus -

MIGUEL CASTELLTORT, JUDITH CASTELLTORT, and
LINA LOPEZ-VILLEGAS, assisted by her Attorney-in-
Fact, Rene Villegas,
Respondents.


G.R. No. 157044

Present:

PANGANIBAN, J., Chairman,
SANDOVAL-GUTIERREZ,
CORONA,
CARPIO MORALES, and GARCIA, JJ.








Promulgated:
October 5, 2005
xx - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xx

D E C I S I O N

CARPIO MORALES, J.:
The present petition for review on certiorari assails the October 2, 2002 Decision
[1]
and February 6, 2003 Resolution
[2]
of the Court of
Appeals (CA) in CA G.R. CV No. 64046 and seeks to reinstate the April 21, 1999 Decision
[3]
of the Regional Trial Court (RTC) of Calamba, Laguna,
Branch 34 in Civil Case No. 2229-95-C.
Spouses-petitioners Rodolfo V. Rosales and Lily Rosqueta-Rosales (petitioners) are the registered owners of a parcel of land with an area
of approximately 315 square meters, covered by Transfer Certificate of Title (TCT) No. 36856
[4]
and designated as Lot 17, Block 1 of Subdivision Plan
LRC Psd-55244 situated in Los Baos, Laguna.

On August 16, 1995, petitioners discovered that a house was being constructed on their lot, without their knowledge and consent,
by respondent Miguel Castelltort (Castelltort).
[5]


It turned out that respondents Castelltort and his wife Judith had purchased a lot, Lot 16 of the same Subdivision Plan, from respondent
Lina Lopez-Villegas (Lina) through her son-attorney-in-fact Rene Villegas (Villegas) but that after a survey thereof by geodetic engineer Augusto
Rivera, he pointed to Lot 17 as the Lot 16 the Castelltorts purchased.

Negotiations for the settlement of the case thus began, with Villegas offering a larger lot near petitioners lot in the same subdivision as a
replacement thereof.
[6]
In the alternative, Villegas proposed to pay the purchase price of petitioners lot with legal interest.
[7]
Both proposals
were, however, rejected by petitioners
[8]
whose counsel, by letter
[9]
of August 24, 1995, directed Castelltort to stop the construction of and
demolish his house and any other structure he may have built thereon, and desist from entering the lot.
Petitioners subsequently filed on September 1, 1995 a complaint
[10]
for recovery of possession and damages with prayer for the issuance
of a restraining order and preliminary injunction against spouses-respondents Miguel and Judith Castelltort before the RTC of Calamba, Laguna,
docketed as Civil Case No. 2229-95-C.

To the complaint, the Castelltorts claimed in their Answer with Counterclaim
[11]
that they were builders in good faith.

Lina, represented by her son-attorney-in-fact Villegas, soon filed a Motion for Intervention
[12]
before the RTC which was granted by
Order
[13]
of December 19, 1995.

In her Answer to the complaint,
[14]
Lina alleged that the Castelltorts acted in good faith in constructing the house on petitioners lot as
they in fact consulted her before commencing any construction thereon, they having relied on the technical description of the lot sold to them, Lot
16, which was verified by her officially designated geodetic engineer.

Nevertheless, Lina proposed to give petitioners a lot containing an area of 536 square meters together with the house and duplex
structure built thereon or, if petitioners choose, to encumber the 536 square meter lot as collateral to get immediate cash through a financing
scheme in order to compensate them for the lot in question.
[15]


Ruling out good faith, the RTC, by Decision of April 21, 1999, found for petitioners in this wise:

In the instant case, there is no well-founded belief of ownership by the defendants of the land upon which they built
their house. The title or mode of acquisition upon which they based their belief of such ownership stemmed from a Contract
to Sell (Exhibit P) of which they were not even parties, the designated buyer being Elizabeth Yson Cruz and the sale even
subjected to the judicial reconstitution of the title. And by their own actions, particularly defendant Miguel Castelltort,
defendants betrayed this very belief in their ownership when realizing the inutility of anchoring their ownership on the basis of
the Contract of Sale, defendant Miguel Castelltort in his testimony declared Elizabeth Yson Cruz as his wife (tsn, pp. 7-8, March
24, 1998) despite an admission in their answer that they are the spouses named as defendants (tsn, p. 8, January 12, 1998) and
which declaration is an utter falsehood as the Contract to Sell itself indicates the civil status of said Elizabeth Yson Cruz to be
single.

Even if we are to concede that defendants built their house in good faith on account of the representation of
attorney-in-fact Rene Villegas, their failure to comply with the requirements of the National Building Code, particularly the
procurement of a building permit, stained such good faith and belief.

9

x x x

From any and all indications, this deliberate breach is an unmitigated manifestation of bad faith. And from the
evidence thus adduced, we hold that defendants and the intervenor were equally guilty of negligence which led to the
construction of the defendants house on plaintiffs property and therefore jointly and severally liable for all the damages
suffered by the plaintiffs.
[16]
(Underscoring supplied)



The dispositive portion of the trial courts Decision reads, quoted verbatim:

ACCORDINGLY, in view of all the foregoing, judgment is hereby rendered in favor of plaintiffs and against the
defendants, ordering the latter to surrender the possession of the property covered by TCT No. 36856 of the Register of Deeds of
Laguna including any and all improvements built thereon to the plaintiffs.

Defendants and intervenors are likewise jointly and severally directed to pay to plaintiffs the following damages:

a) TWO THOUSAND (P2,000.00) PESOS per month from February 1995 by way of reasonable
compensation for the use of plaintiffs property until the surrender of the same;
b) FIFTY THOUSAND (P50,000.00) PESOS by way of moral damages;
c) THIRTY THOUSAND (P30,000.00) PESOS as exemplary damages;
d) TWENTY THOUSAND (P20,000.00) PESOS as attorneys fees and cost of suit.

The counterclaim interposed by the defendants in their responsive pleading is hereby dismissed for lack of merit.

SO ORDERED.
[17]



Respondents thereupon filed their respective appeals with the CA.

Petitioner Rodolfo Rosales, in the meantime, died on December 7, 2001. His heirs Rodolfo, Jr., Romeo Allan, Lillian Rhodora, Roy Victor,
Roger Lyle and Alexander Nicolai, all surnamed Rosales, filed their Appearance
[18]
as his substitute.

By Decision of October 2, 2002, the CA granted the appeal and set aside the April 21, 1999 RTC Decision. The dispositive portion of the
Decision reads, quoted verbatim:

WHEREFORE, premises considered, the instant appeal is hereby GRANTED and the assailed decision of the court a
quo REVERSED AND SET ASIDE. In accordance with the cases ofTechnogas Philippines Manufacturing Corp. vs. Court of
Appeals and Depra vs. Dumlao, applying Article 448 of the Civil Code, this case is REMANDED to the Regional Trial Court of
Calamba, Laguna, Branch 34, for further proceedings, as follows:

1. to determine the present fair price of appellees 315 square meter area of land and the amount of the expenses
actually spent by the appellants for building the house as of 21 August 1995, which is the time they were notified of appellees
rightful claim over Lot 17.

2. to order the appellees to exercise their option under the law (Article 448, Civil Code), whether to appropriate the
house as their own by paying to the appellants the amount of the expenses spent for the house as determined by the court a
quo in accordance with the limitations as aforestated or to oblige the appellants to pay the price of the land.

In case the appellees exercise the option to oblige the appellants to pay the price of the land but the latter reject such
purchase because, as found by the court, the value of the land is considerably more than that of the house, the court shall
order the parties to agree upon the terms of a forced lease, and give the court a quo a formal written notice of such agreement
and its provisos. If no agreement is reached by the parties, the court a quo shall then fix the terms of the forced lease,
provided that the monthly rental to be fixed by the Court shall not be less that Two Thousand Pesos (P2,000.00) per month,
payable within the first five (5) days of each calendar month and the period thereof shall not be more than two (2) years,
counted from the finality of the judgment.

Upon the expiration of the forced lease, or upon default by the appellants in the payment of rentals for two (2)
consecutive months, the appellees shall be entitled to terminate the forced lease, to recover their land, and to have the
improvement removed by the appellants at the latters expense. The rentals herein provided shall be tendered by the
appellants to the court for payment to the appellees, and such tender shall constitute evidence of whether or not compliance
was made within the period fixed by the court.

In any event, the appellants shall pay the appellees the amount of Two Thousand Pesos (P2,000.00) as reasonable
compensation for their occupancy of the encroached property from the time said appellants good faith cease (sic) to exist until
such time the possession of the property is delivered to the appellees subject to the reimbursement of the aforesaid expenses
in favor of the appellants or until such time the payment of the purchase price of the said lot be made by the appellants in
favor of the appellees in case the latter opt for the compulsory sale of the same.

SO ORDERED.
[19]
(Emphasis in the original)


In reversing the trial court, the CA held:

x x x

10

x x x A perusal of the records readily reveals that said court instead relied on flimsy, if not immaterial, allegations of
the appellees, which have no direct bearing in the determination of whether the appellants are builders in bad faith.

For one, the pivotal issue to be resolved in this case, i.e. whether appellant Miguel is a builder in good faith, was
ignored by the court a quo. The instant case does not in any way concern the personal and property relations of spouses-
appellants and Elizabeth Yson Cruz which is an altogether different matter that can be ventilated by the concerned parties
through the institution of a proper action. xxx The court a quo should have focused on the issue of whether appellant Miguel
built, in good faith, the subject house without notice of the adverse claim of the appellees and under the honest belief that the
lot which he used in the construction belongs to him. xxx

xxx As it is, appellant Miguel relied on the title which the intervenor showed to him which, significantly, has no
annotation that would otherwise show a prior adverse claim. Thus, as far as appellant Miguel is concerned, his title over the
subject lot, as well as the title of the intervenor thereto, is clean and untainted by an adverse claim or other irregularities.

For another, the appellants failure to secure a building permit from the Municipal Engineers Office on their
construction on Lot 17 does not impinge on the good faith of the appellants. In fact, it can be told that a building permit was
actually filed by appellant Miguel with respect to Lot 16 and it was only due to the confusion and misapprehension by the
intervenor of the exact parameters of the property which caused appellants belief that Lot 17 *the questioned lot+, is his. This
fact bolsters appellant Miguels good faith in building his house on appellees lot under the mistaken belief that the same is his
property. Otherwise, he should have secured a building permit on Lot 17 instead or should not have bothered to take the
necessary measures to obtain a building permit on Lot 16 in the first place.

By and large, the records show that, as testified to by Engr. Rebecca T. Lanuang, appellant Miguel had already applied
for a building permit as early as February 1994 and was in fact issued a temporary building permit pending the completion of
the requirements for said permit. Although the building permit was belatedly issued in January 1996, this does not in any way
detract from appellant Miguels good faith.

x x x

In holding the appellants as builders in bad faith, the court a quo defied law and settled jurisprudence considering
that the factual basis of its findings and the incontrovertible evidence in support thereof prove that the appellant Miguel, in
good faith, built the house on appellees land without knowledge of an adverse claim or any other irregularities that might cast
a doubt as to the veracity of the assurance given to him by the intervenor. Having been assured by the intervenor that the
stone monuments were purposely placed, albeit wrongfully, by the land surveyor in said land to specifically identify the lot and
its inclusive boundaries, the appellants cannot be faulted for having relied on the expertise of the land surveyor who is more
equipped and experienced in the field of land surveying. Although under the Torrens system of land registration, the appellant
is presumed to have knowledge of the metes and bounds of the property with which he is dealing, appellant however,
considering that he is a layman not versed in the technical description of his property, cannot be faulted in his reliance on the
survey plan that was delivered to him by the intervenor and the stone monuments that were placed in the encroached
property.

x x x

Peremptorily, contrary to the flawed pronouncements made by the court a quo that appellant Miguel is deemed as a
builder in bad faith on the basis of a mere assertion that he built his house without initially satisfying himself that he owns the
said property, this Court finds reason to maintain good faith on the part of the appellant. Admittedly, the appellants house
erroneously encroached on the property of the appellees due to a mistake in the placement of stone monuments as indicated
in the survey plan, which error is directly attributable to the fault of the geodetic engineer who conducted the same. This fact
alone negates bad faith on the part of appellant Miguel.

x x x

Moreover, it is quite illogical for appellant Miguel to knowingly build his house on a property which he knew belongs
to another person. x x x
x x x

In view of the good faith of both parties in this case, their rights and obligations are to be governed by Article 448,
which has been applied to improvements or portions of improvements built by mistaken belief on land belonging to the
adjoining owner. x x x

x x x
[20]
(Emphasis and underscoring supplied)


Petitioners Motion for Reconsideration
[21]
dated October 22, 2002 having been denied by the CA by Resolution of March 13, 2002, the
present petition was filed raising the following issues:

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN MAKING A FINDING
THAT IS CONTRARY TO THE ADMISSIONS BY THE PARTIES

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW IN CONCLUDING THAT THE
TRIAL COURT, IN DECIDING THE CASE, RELIED ON FLIMSY, IF NOT IMMATERIAL, ALLEGATIONS OF THE PETITIONERS, WHICH HAVE
NO DIRECT BEARING IN THE DETERMINATION OF WHETHER THE RESPONDENTS ARE BUILDERS IN GOOD FAITH
11


III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR OF LAW IN RENDERING A DECISION
THAT IS UNENFORCEABLE AGAINST BOTH RESPONDENT JUDITH CASTELLTORT AND THIRD-PARTY ELIZABETH CRUZ
[22]



Petitioners initially hammer against respondents proving that Castelltort and a certain Elizabeth Cruz are the builders of the house on the
subject property, they faulting them with estoppel for alleging in their Answer before the trial court that they (respondents Castelltort and Judith)
caused the construction of their house which they bought from a certain Lina Lopez-Villegas.

Petitioners rely on the following doctrine established in Elayda v. Court of Appeals:
[23]


an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive
as to him and that all proofs submitted by him contrary thereto or inconsistent therewith, should be ignored, whether
objection is interposed by the party or not x x x


Petitioners contention is hardly relevant to the case at bar. Whether it was Castelltort and Judith or Castelltort and Elizabeth Cruz who
purchased the property from Lina is not material to the outcome of the instant controversy. As found by the CA:

The fact remains that appellant [Castelltort] is the builder of the house on Lot 17 xxx The court a quo should have
focused on the issue of whether appellant Miguel built, in good faith, the subject house without notice of the adverse claim of
the appellees and under the honest belief that the lot which he used in the construction belongs to him. xxx it cannot be
gainsaid that appellant Miguel has a title over the land that was purchased from the intervenor x x x
[24]


At all events, as this Court held in the case of Gardner v. Court of Appeals:
[25]


In its Resolution reversing the original Decision, respondent Court discredited the testimony of Ariosto SANTOS for
being at variance with the allegations in his Answer. The fact, however, that the allegations made by Ariosto SANTOS in his
pleadings and in his declarations in open Court differed will not militate against the findings herein made nor support the
reversal by respondent Court. As a general rule, facts alleged in a partys pleading are deemed admissions of that party and
binding upon it, but this is not an absolute and inflexible rule. An Answer is a mere statement of fact which the party filing it
expects to prove, but it is not evidence. As Ariosto SANTOS himself, in open Court, had repudiated the defenses he had raised
in his Answer and against his own interest, his testimony is deserving of weight and credence.
[26]
(Underscoring supplied)


The issue determinative of the controversy in the case at bar hinges on whether Castelltort is a builder in good faith.

A builder in good faith is one who builds with the belief that the land he is building on is his, or that by some title one has the right to
build thereon, and is ignorant of any defect or flaw in his title.
[27]


Article 527 of the Civil Code provides that good faith is always presumed, and upon him who alleges bad faith on the part of a possessor
rests the burden of proof.
[28]

In the case at bar, Lot 16 was sold by Lina, through her attorney-in-fact Villegas, to Castelltort and a certain Elizabeth Cruz
[29]
for a
consideration of P500,000.00. While prior to the sale, what Villegas showed Castelltort as evidence of his mother Linas ownership of the property
was only a photocopy of her title TCT No. (T-42171) T-18550
[30]
he explaining that the owners duplicate of the title was lost and that judicial
reconstitution thereof was ongoing, Castelltort acted in the manner of a prudent man and went to the Registry of Deeds of Laguna to procure a
certified true copy of the TCT.
[31]
The certified true copy bore no annotation indicating any prior adverse claim on Lot 16.

The records indicate that at the time Castelltort began constructing his house on petitioners lot, he believed that it was the Lot 16 he
bought and delivered to him by Villegas.

In his cross-examination, Villegas testified:

Q: You said the surveyor placed a mujon along boundary of the property?
A: Yes.

Q: When were the mujons placed in the boundary of the property?
A: These mujons were the basis for my locating the property in pointing to Mr. Castelltort.

x x x

Q: Is it not a fact that before Miguel Castelltort started constructing that house he sought your advice or permission to
construct the same over that particular lot?
A: Yes.

Q: And you gave your consent?
A: Yes, because based on my knowledge also that that was the lot as pointed by Engr. Rivera.

x x x

Q: Was there any remarkable difference between lot 16 and 17 at the time that this particular lot was sold to Miguel Castelltort
and Elizabeth Cruz?

x x x
12


A: Both lots 16 and 17 are practically the same. The (sic) have the same frontage. There is only a difference of 4 square
meters, one is 311 square meters and the other 315 square meters. Both sides were fenced, as drawn they were facing
the same road. They are practically the same.

Q: But at the time or immediately before Mr. Castelltort started the construction of the house, was there any remarkable
distinction between these two properties?
A: None.
[32]
(Emphasis and underscoring supplied)


The confusion in the identification of Lot 16 was eventually traced to the error committed by geodetic engineer Augusto Riveras
employees in placing stone monuments on petitioners property, instead of on Lot 16, the lot sold to Castelltort, based on the survey made by the
engineer in 1992.

The engineer so testified:

Q: Now, aside from inspecting personally the site, what else did your men or assistants do?
A: After computing the subdivision lots, they went back to the field to plant those subdivision corners with concrete
monuments.


Q: Which is (sic) also called as mohons?
A: Yes, sir.


Q: Now, can you point to this Honorable Court where exactly did your men place these additional mohons and how many?
A: Later on we discovered that they placed the mohons in the adjoining lot, lot 17.

x x x

Q: x x x when again did you meet Mr. Rene Villegas or after how many months or year?
A: Maybe after a year, sir.

Q: And you met him again because he had a problem regarding the property of one Engr. Rosales?
A: Yes, sir.

Q: And when he confided to you this matter, did you go to the site of Lot 16 or 17?
A: Yes, sir.

Q: And what did you see there?
A: A house being constructed then I rechecked the location of the house and it turned out to be in Lot 17.

x x x

Q: Considering that you found out that a mistake was actually made by your assistants Dennis Orencio, Mario Carpio and
Sovejano when you allowed them to proceed on their own to make this computation, did you confront these men of
yours afterwards?
A: Yes, sir.

Q: In what manner?
A: I actually reprimanded them verbally and also I dismissed Mario Carpio from my office.

x x x

Q: And did you investigate how your men committed this mistake of planting these monuments on another lot when corners 4
& 1 were clearly planted on the ground?
A: I myself rechecked it and found out that they committed an error.

x x x

Q: And now, you are saying that your men committed a mistake by placing thereon monuments by planting these monuments
not on Lot 16 but on Lot 17?
A: When I investigated how did they commit (sic) a mistake it came to be like this. Before when we surveyed first this in 1992,
at that time Dante Villegas contracted my services there was a fence here then when we went back, the road was already
removed so they committed an error that this point is Lot 19, they thought that it was Lot 19, the back portion.

x x x

Q: In this particular case, did you find out how your men checked the succeeding lots, how they determine (sic) the exact
location of lot 16?
A: They just relied on one side of the subdivision.

Q: By just counting the number of lots?
A: Yes, sir.

Q: Without making any actual measurement?
13

A: They made an actual measurement but the reference point is not the one, the correct one because they also checked it
with the other corner of the road going back.

x x x

Q: And how did they commit a mistake when you said they checked the lot at the back of Lot 16?
A: Because they were quite confident since we had already relocated the property two years ago so they thought that they get
(sic) the right lot without checking the other side of the subdivision.

x x x

Q: Now, you said that when you went to the place because you heard from Rene Villegas that there was a mistake you no
longer could find the monuments on lines 1 and 4 and according to you the reason is that a fence was already
constructed?
A: Yes, sir.

Q: For clarification, is this line 1 & 4 on Lot 16 a common line 1 &4 on Lot 17?
A: Yes, sir a common line.

Q: In other words, this line 1 &4 devides (sic) Lot 16 & 17?
A: Yes, sir.

Q: So that when these monuments were placed on lines 1 & 4 somebody could mistake it for Lot 17 also because there were
monuments now 1 &4 for lot 16 since these are common lines for
Lot 17 also with Lot 16, it could also be construed that these are monuments for Lot 17?
A: Yes, sir possible.
[33]
(Underscoring supplied)


As correctly found by the CA, both parties having acted in good faith at least until August 21, 1995, the applicable provision in this case is
Article 448 of the Civil Code which reads:

Art. 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.


Under the foregoing provision, the landowner can choose between appropriating the building by paying the proper indemnity or obliging
the builder to pay the price of the land, unless its value is considerably more than that of the structures, in which case the builder in good faith shall
pay reasonable rent.
[34]
If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof.

The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the
principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive.
[35]
The
landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land.
[36]


The raison detre for this provision has been enunciated thus:

Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it
becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of
the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the
land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay
for the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is
authorized to exercise the option, because his right is older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing.
[37]


Possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the
possessor is not unaware that he possesses the thing improperly or wrongfully.
[38]
The good faith ceases or is legally interrupted from the moment
defects in the title are made known to the possessor, by extraneous evidence or by suit for recovery of the property by the true owner.
[39]


In the case at bar, Castelltorts good faith ceased on August 21, 1995 when petitioners personally apprised him of their title over the
questioned lot. As held by the CA, should petitioners then opt to appropriate the house, they should only be made to pay for that part of
the improvement built by Castelltort on the questioned property at the time good faith still existed on his part or until August 21, 1995.

The CA, however, failed to qualify that said part of the improvement should be pegged at its current fair market value consistent with this
Courts pronouncement in Pecson v. Court of Appeals.
[40]


And, as correctly found by the CA, the commencement of Castelltorts payment of reasonable rent should start on August 21, 1995 as
well, to be paid until such time that the possession of the property is delivered to petitioners, subject to the reimbursement of expenses, that is, if
such option is for petitioners to appropriate the house.




14

This Court quotes the CAs ratiocination with approval:

x x x Generally, Article 448 of the Civil Code provides that the payment of reasonable rent should be made only up to
the date appellees serve notice of their option as provided by law upon the appellants and the court a quo; that is, if such
option is for appellees to appropriate the encroaching structure. In such event, appellants would have a right to retain the land
on which they have built in good faith until they are reimbursed the expenses incurred by them. This is so because the right to
retain the improvements while the corresponding indemnity is not paid implies the tenancy or possession in fact of the land on
which it is built, planted or sown.

However, considering that appellants had ceased as builders in good faith at the time that appellant Miguel was
notified of appellees lawful title over the disputed property, the payment of reasonable rent should accordingly commence at
that time since he can no longer avail of the rights provided under the law for builders in good faith.
[41]



If the option chosen by petitioners is compulsory sale, however, the payment of rent should continue up to the actual transfer of
ownership.
[42]


Respecting petitioners argument that the appellate court erred in rendering a decision that is unenforceable against Judith who is not
the owner of the house and Elizabeth Cruz who was found to be a part owner of the house built on their lot but is not a party to the case, the
same does not lie.

While one who is not a party to a proceeding shall not be affected or bound
[43]
by a judgment rendered therein,
[44]
like Elizabeth Cruz, this
does not detract from the validity and enforceability of the judgment on petitioners and respondents Castelltorts.

WHEREFORE, the petition is DENIED. The Decision dated October 2, 2002 and Resolution dated February 6, 2003 of the Court of Appeals
are AFFIRMED withMODIFICATION such that the trial court shall include for determination the increase in value (plus value) which petitioners
315 square meter lot may have acquired by reason of the existence of that portion of the house built before respondents Miguel and Judith
Castelltort were notified of petitioners rightful claim on said lot, and the current fair market value of said portion.

SO ORDERED.














































15

SPOUSES LYDIA FLORES-CRUZ G.R. No. 172217
and REYNALDO I. CRUZ,
Petitioners,
Present:

PUNO, C.J., Chairperson,
CORONA,
- v e r s u s - CHICO-NAZARIO,
*

LEONARDO-DE CASTRO and
BERSAMIN, JJ.

SPOUSES LEONARDO and
ILUMINADA GOLI-CRUZ,
SPOUSES RICO and FELIZA
DE LA CRUZ, SPOUSES BOY
and LANI DE LA CRUZ,
ZENAIDA A. JACINTO and
ROGELIO DE LOS SANTOS,
Respondents. Promulgated:

September 18, 2009

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

R E S O L U T I O N
CORONA, J.:


This is a petition for review on certiorari
[1]
of the August 23, 2005 decision
[2]
and April 5, 2006 resolution
[3]
of the Court of Appeals (CA) in
CA-G.R. CV No. 81099.
On December 15, 1999,
[4]
petitioner spouses Lydia Flores-Cruz and Reynaldo I. Cruz purchased a 5,209-sq. m. lot situated in Pulong
Yantok, Angat, Bulacan
[5]
from Lydias siblings, namely, Teresita, Ramon and Daniel (all surnamed Flores). Their father, Estanislao Flores, used to
own the land as an inheritance from his parents Gregorio Flores and Ana Mangahas. Estanislao died in 1995. Estanislao and, later, petitioners paid
the realty taxes on the land although neither of them occupied it. Petitioners sold portions thereof to third parties sometime in September 2000.
[6]


After the death of Estanislao, petitioners found out that respondent spouses Leonardo and Iluminada Goli-Cruz et al. were occupying a
section of the land. Initially, petitioner Lydia talked to respondents and offered to sell them the portions they were occupying but the talks failed as
they could not agree on the price. On March 2, 2001, petitioners lawyer sent respondents letters asking them to leave. These demands, however,
were ignored. Efforts at barangay conciliation also failed.
[7]

Respondents countered that their possession of the land ranged from 10 to 20 years. According to respondents, the property was
alienable public land.
[8]
Prior to petitioners demand, they had no knowledge of petitioners and their predecessors ownership of the land. They
took steps to legitimize their claim and paid the realty tax on their respective areas for the taxable year 2002. Subsequently, however, the tax
declarations issued to them were cancelled by the Provincial Assessors Office and re-issued to petitioners.
[9]


On August 6, 2001, petitioners filed a complaint for recovery of possession of the land in the Regional Trial Court (RTC) of Malolos,
Bulacan, Branch 82.
[10]
Respondents filed a motion to dismiss claiming, among others, that the RTC had no jurisdiction over the case as it should
have been filed in the Municipal Trial Court (MTC) since it was a summary action for ejectment under Rule 70 of the Rules of Court. The RTC denied
the motion in an order dated November 9, 2001.
[11]


After trial, the RTC rendered a decision dated October 3, 2003 in favor of petitioners and ordered respondents to vacate the land, and
pay attorneys fees and costs of suit.
[12]


On appeal by respondents to the CA, the latter, in a decision dated August 23, 2005, ruled that the RTC had no jurisdiction over the action
for recovery of possession because petitioners had been dispossessed of the property for less than a year. It held that the complaint was one for
unlawful detainer which should have been filed in the MTC. Thus, it ruled that the RTC decision was null and void. Reconsideration was denied on
April 5, 2006.

Hence, this petition.

The issue for our resolution is whether the RTC had jurisdiction over this case.

The petition has no merit.

It is axiomatic that the nature of the action on which depends the question of whether a suit is within the jurisdiction of the court is
determined solely by the allegations in the complaint
[13]
and the law at the time the action was commenced.
[14]
Only facts alleged in the complaint
can be the basis for determining the nature of the action and the courts competence to take cognizance of it.
[15]
One cannot advert to anything
not set forth in the complaint, such as evidence adduced at the trial, to determine the nature of the action thereby initiated.
[16]


Petitioners complaint contained the following allegations:

xxx xxx xxx

3. That, [petitioners] are owners of a piece of land known as Lot 30-part, Cad. 349 located at Pulong Yantok, Angat,
Bulacan as shown by a copy of Tax Declaration No. 99-01010-01141 made *an+ integral *part+ hereof as Annex A;
4. That, said Lot No. 30-part was acquired through [purchase] on December 15, 1999, as shown by [a] Deed of
Absolute Sale of Unsubdivided Land made [an+ integral *part+ hereof as Annex B, B-1 & B-2;
16


5. That, when [petitioners] inspected subject property, they found it to be occupied by at least five (5) households
under the names of herein [respondents], who, when asked about their right to stay within the premises replied that they were
allowed to live thereat by the deceased former owner;

6. That, *petitioners+ informed the *respondents+ that as far as they are concerned, the latters occupancy was not
communicated to them so it follows that they do not have any right to remain within subject piece of land;
7. That, [respondents] seem to be unimpressed and made no move to leave the premises or to come to terms with
the [petitioners] so much so that [the latter] asked their lawyer to write demand letters to each and every one of the
*respondents+ as shown by the demand letters dated March 2, 2001 made integral part hereof as Annex C, C-1, C-2, C-3, & C-
4;

8. That, there is no existing agreement or any document that illustrate whatever permission, if any were given, that
the [respondents] presented to [petitioners] in order to legitimize the claim;

9. That, it is clear that [respondents] occupy portions of subject property either by stealth, stratagem, force or any
unlawful manner which are just bases for ejectment;

xxx xxx xxx
[17]


According to the CA, considering that petitioners claimed that respondents were possessors of the property by mere tolerance only and
the complaint had been initiated less than a year from the demand to vacate, the proper remedy was an action for unlawful detainer which should
have been filed in the MTC.

We agree.

The necessary allegations in a complaint for ejectment are set forth in Section 1, Rule 70 of the Rules of Court.
[18]
Petitioners alleged that
the former owner (Estanislao, their predecessor) allowed respondents to live on the land. They also stated that they purchased the property on
December 15, 1999 and then found respondents occupying the property. Yet they demanded that respondents vacate only on March 2, 2001. It
can be gleaned from their allegations that they had in fact permitted or tolerated respondents occupancy.

Based on the allegations in petitioners complaint, it is apparent that such is a complaint for unlawful detainer based on possession by
tolerance of the owner.
[19]
It is a settled rule that in order to justify such an action, the owners permission or tolerance must be present at the
beginning of the possession.
[20]
Such jurisdictional facts are present here.

There is another reason why petitioners complaint was not a proper action for recovery of possession cognizable by the RTC. It is no
longer true that all cases of recovery of possession or accion publiciana lie with the RTC regardless of the value of the property.
[21]


When the case was filed in 2001, Congress had already approved Republic Act No. 7691
[22]
which expanded the MTCs jurisdiction to
include other actions involving title to or possession of real property (accion publiciana and reinvindicatoria)
[23]
where the assessed value of the
property does not exceed P20,000 (or P50,000, for actions filed in Metro Manila).
[24]
Because of this amendment, the test of whether an action
involving possession of real property has been filed in the proper court no longer depends solely on the type of action filed but also on the assessed
value of the property involved.
[25]
More specifically, since MTCs now have jurisdiction over accion publiciana and accion
reinvindicatoria (depending, of course, on the assessed value of the property), jurisdiction over such actions has to be determined on the basis of
the assessed value of the property.
[26]


This issue of assessed value as a jurisdictional element in accion publiciana was not raised by the parties nor threshed out in their
pleadings.
[27]
Be that as it may, the Court can motu proprio consider and resolve this question because jurisdiction is conferred only by law.
[28]
It
cannot be acquired through, or waived by, any act or omission of the parties.
[29]


To determine which court (RTC or MTC) has jurisdiction over the action, the complaint must allege the assessed value of the real property
subject of the complaint or the interest thereon.
[30]
The complaint did not contain any such allegation on the assessed value of the property. There
is no showing on the face of the complaint that the RTC had jurisdiction over the action of petitioners.
[31]
Indeed, absent any allegation in the
complaint of the assessed value of the property, it cannot be determined whether it is the RTC or the MTC which has original and exclusive
jurisdiction over the petitioners action.
[32]


Moreover, the complaint was filed (August 6, 2001) within one year from the demand to vacate was made (March 2, 2001). Petitioners
dispossession had thus not lasted for more than one year to justify resort to the remedy of accion publiciana.
[33]


Since petitioners complaint made out a case for unlawful detainer which should have been filed in the MTC and it contained no
allegation on the assessed value of the subject property, the RTC seriously erred in proceeding with the case. The proceedings before a court
without jurisdiction, including its decision, are null and void.
[34]
It follows that the CA was correct in dismissing the case.

WHEREFORE, the petition is DENIED.

Costs against petitioners.

SO ORDERED.








17




AQUALAB PHILIPPINES, INC., Petitioner,
- versus -
HEIRS OF MARCELINO PAGOBO, Respondents.
G.R. No. 182673
Promulgated:
October 5, 2009
x-----------------------------------------------------------------------------------------x
D E C I S I O N
VELASCO, JR., J.:
The Case
In this Petition for Review on Certiorari under Rule 45, Aqualab Philippines, Inc. (Aqualab) assails the March 15, 2007 Decision
[1]
and April
22, 2008 Resolution
[2]
of the Court of Appeals (CA) in CA-G.R. CV No. 58540, which reversed the September 30, 1997 Order
[3]
of the Regional Trial
Court (RTC), Branch 53 in Lapu-lapu City, Cebu. The RTC dismissed Civil Case No. 4086-L for Partition, Declaration of Nullity of Documents,
Cancellation of Transfer Certificate of Titles, Reconveyance with Right of Legal Redemption, Damages and Attorneys Fees filed by respondents.
The Facts
Subject of the complaint initiated by respondents are Lots 6727-Q and 6727-Y of the Opon Cadastre, situated in Punta Engao, Lapu-
lapu City, Mactan Island, Cebu, particularly described as follows:

LOT NO. 6727-Q

A parcel of land (Lot 6727-Q of the subdivision on plan (LRC) Psd-117050, being a portion of Lot 6727 of the Cadastral
Survey of Opon, L.R.C. (GLRO) Cad. Rec. No. 1004), situated in the Barrio of Punta Engao, City of Lapu-lapu, Island of Mactan x
x x containing an area of ONE THOUSAND (1,000) SQUARE METERS, more or less. All points referred to are indicated on the
plan and marked on the ground as follows: x x x date of the original survey, Aug. 1927 Dec. 1928, and that of the subdivision
survey, Aug. 7, and 10, 1963, and Sept. 27 and 30, 1967.

LOT NO. 6727-Y

A parcel of land (Lot 6727-Y of the subdivision on plan (LRC) Psd-117050, being a portion of Lot 6727 of the Cadastral
Survey of Opon, L.R.C. (GLRO) Cad. Rec. No. 1004), situated in the Barrio of Punta Engao, City of Lapu-lapu, Island of Mactan x
x x containing an area of SIXTEEN THOUSAND ONE HUNDRED SIXTY SEVEN (16,167) SQUARE METERS, more or less. All points
referred to are indicated on the plan and marked on the ground as follows: x x x date of the original survey, Aug. 1927 Dec.
1928, and that of the subdivision survey, Aug. 7, and 10, 1963, and Sept. 27 and 30, 1967.

Lot 6727-Q and Lot 6727-Y used to form part of Lot 6727 owned by respondents great grandfather, Juan Pagobo, covered by Original
Certificate of Title No. (OCT) RO-2246
[4]
containing an area of 127,436 square meters.

Lot 6727 was once covered by Juan Pagobos homestead application. Upon his death on January 18, 1947,
[5]
his homestead application
continued to be processed culminating in the issuance on December 18, 1969 of Homestead Patent No. 128470 for Lot 6727. On the basis of this
homestead patent, OCT RO-2246 was issued in the name of Juan Pagobo. Apparently, from the description of the subdivision lots of Lot 6727,
particularly those of subject Lots 6727-Q and 6727-Y above, and even before the issuance of OCT RO-2246, the mother Lot 6727 was surveyed in
1963 and 1967 and eventually subdivided into 34 subdivision lots denominated as Lots 6727-A to 6727-HH.

Incidentally, on the same date that OCT RO-2246 was issued covering Lot 6727, OCT RO-1277
[6]
was likewise issued also covering Lot 6727
in the name of the late Juan Pagobo also pursuant to Homestead Patent No. 128470. Subsequently, however, on August 10, 1977, OCT RO-1277
was canceled for being null and void pursuant to an Order issued on August 4, 1977 by the Court of First Instance in Lapu-lapu City in view of the
issuance of OCT RO-2246.
[7]


Shortly after OCT RO-1277 and OCT RO-2246 were issued, subject Lots 6727-Q and 6727-Y were subsequently sold to Tarcela de Espina
who then secured Transfer Certificate of Title No. (TCT) 3294
[8]
therefor on April 21, 1970. The purchase by Tarcela de Espina of subject Lot 6727-Y
from the heirs of Juan Pagobo and subject Lot 6727-Q from one Antonio Alcantara was duly annotated on the Memorandum of Incumbrances of
both OCT RO-1277
[9]
and OCT RO-2246.
[10]


Subsequently, Tarcela de Espina sold subject lots to Rene Espina who was issued, on September 28, 1987, TCT 17830
[11]
for Lot 6727-Q
and TCT 17831
[12]
for Lot 6727-Y. Thereafter, Rene Espina sold subject lots to Anthony Gaw Kache, who in turn was issued TCT 17918
[13]
and TCT
18177,
[14]
respectively, on November 9, 1987. Finally, Aqualab acquired subject lots from Anthony Gaw Kache and was issued TCT 18442
[15]
and TCT
18443,
[16]
respectively, on May 4, 1988.

On August 10, 1994, respondents, alleging that Aqualab has disturbed their peaceful occupation of subject lots in 1991, filed a
Complaint
[17]
for Partition, Declaration of Nullity of Documents, Cancellation of Transfer Certificate of Titles, Reconveyance with Right of Legal
Redemption, Damages and Attorneys Fees against Aqualab, the Register of Deeds of Lapu-Lapu City, Cebu, and, for being unwilling co-plaintiffs and
alleged refusal to have subject lots partitioned, the Heirs of Bernabe Pagobo, namely: Anastacio Pagobo, Demetrio Pagobo, Felix Pagobo, Olympia
P. Tampus, Damasa Pagobo, Salud P. Maloloy-on, Candida Pagobo, and Adriana P. Mahusay.

The Complaint pertinently alleged that:

ALLEGATIONS COMMON TO ALL CAUSE OF ACTION

4. Plaintiffs are the absolute and legal owners and rightful possessors of Lot [no.] 6727-Q and Lot no. 6727-
Y. These are ancestral lands which are part of a bigger parcel of land, registered in the name of the plaintiffs great grandfather
Juan Pagobo and more particularly described as follows:

x x x x
18


5. Ownership and Possession by plaintiffs *sic+ predecessors-in-interest, and plaintiffs herein, respectively, over
the said land, have been peaceful, continuous [sic] open, public and adverse, since the year 1936 or even earlier. Their peaceful
possession was disturbed only in 1991 as hereinafter described.

x x x x

15. In the records with the office of the Registry of Deeds of Lapu-Lapu City, Lot No. 6727 of the Opon Cadastre
has been subdivided in to THIRTY-FOUR (34) lots and are denominated as Lots Nos. 6727-A to 6727-HH, respectively, as per
subdivision plan, a machine copy of which is hereto attached and marked as Annex A hereof.

16. Defendants Anastacio Pagobo, x x x are the surviving children and grandchildren, respectively, of the late
BERNABE PAGOBO and are herein joined as party-defendants for being unwilling co-plaintiffs; and also because despite
demands by plaintiffs upon these aforenamed defendants for the partition of the aforesaid land, the latter refused and still
refuses to have the same partitioned.

FIRST CAUSE OF ACTION AGAINST DEFENDANT
AQUALAB PHILIPPINES, INC. AND SANTIAGO TANCHAN, JR.

17. Sometime in 1991, defendant Aqualab Philippines Inc. represented by Santiago Tanchan, Jr., claiming
ownership of Lot Nos. 6727-Q and 6727-Y, forcibly entered, and without any court Order, and against the will of the plaintiffs,
said Lot no. 6727-Q and Lot no. 6727-Y. The truth of the matter is that these defendants despite full knowledge that absolute
and legal ownership of Lot no. 6727-Q and Lot no. 6727-Y belonged to plaintiffs, and despite knowledge that peaceful, public
and adverse possession were being continuously exercised by plaintiff over said land for a period in excess of THIRTY (30) years,
did there and then, by the use of fraud and misrepresentation and without informing the plaintiffs, caused the transfer into the
name of defendant Aqualab Philippines Inc., Lot no. 6727-Q and Lot no. 6727-Y, consisting of an area of ONE THOUSAND
(1,000) SQUARE METERS and SIXTEEN THOUSAND ONE HUNDRED SIXTY SEVEN (16,167) SQUARE METERS, respectively. Lots
No. 6727-Q and Lot no. 6727-Y are presently covered by Transfer Certificate of Titles No. 18442 and CTC No. 18443,
respectively, copies of which are hereto attached as Annexes B and C, respectively.

18. The defendants entered into transactions of the lands subject matter of this case, without the knowledge of
plaintiffs and their predecessors-in-interest, and defendants did so despite full knowledge that ownership of said lands
belonged to plaintiffs and their predecessors-in-interest; and that defendants entered into said transactions despite full
knowledge by them and their predecessors-in-interest that the lots was [sic] covered by a homestead patent and as such
cannot be alienated within twenty-five (25) years from its issuance on February 10, 1970.

SECOND CAUSE OF ACTION

x x x x

20. Granting, without necessarily admitting, that the transaction entered into by the defendants are legal and
binding; Plaintiffs then have not been duly notified of the said sale and therefore, have the right to redeem the same under
Article 1620 in relation to Article 1623 of the New Civil Code, and also under Commonwealth Acts [sic] No. 141, as amended.
[18]


On August 26, 1994, the heirs of Bernabe Pagobo filed their Answer,
[19]
asserting that subject Lot 6727-Y was owned by their predecessor
Bernabe Pagobo as evidenced by Tax Declaration No. (TD) 00520.
[20]
They maintained that even before the Second World War and before the
death of Juan Pagobo on January 18, 1947, Bernabe Pagobo already had possession of subject Lot 6727-Y which was the portion assigned to
him. Moreover, they contended that respondents never made any demands for partition of subject Lot 6727-Y.

On September 12, 1994, Aqualab filed its Motion to Dismiss
[21]
on the grounds of: (1) prescription of the action for declaration of nullity
of documents, cancellation of transfer certificates of title, and reconveyance; and (2) no cause of action for partition and legal redemption of the
mother title of subject lots, i.e., OCT RO-2246 had already been subdivided and several conveyances made of the subdivided lots.

Ruling of the Trial Court

By Order dated September 30, 1997, the RTC granted Aqualabs motion and dismissed respondents complaint, disposing as follows:

Wherefore, in the light of the foregoing considerations, defendant Aqualabs motion to dismiss, being impressed with
merit, is hereby granted. The complaint in the above-entitled case is hereby dismissed.

SO ORDERED.
[22]



In granting Aqualabs motion to dismiss, the trial court ruled that prescription has set in. Moreover, the trial court held that Aqualab is an
innocent purchaser for value and, thus, its rights are protected by law. Finally, it concluded that legal redemption or reconveyance was no longer
available to respondents.

Undaunted, respondents appealed the above dismissal to the CA. The parties thereafter filed their respective briefs.

Ruling of the Appellate Court

The CA saw things differently. On March 15, 2007, it rendered the assailed decision, reversing the September 30, 1997 Order of dismissal
by the RTC, declaring the sale of subject lots as null and void, and remanding the case to the trial court for partition proceedings. The fallo reads:

WHEREFORE, in view of the foregoing premises, the Order of the Regional Trial Court dismissing the instant Complaint
for Partition, Declaration of Nullity of Documents, Cancellation of Transfer Certificates of Title, Reconveyance with Right of
19

Legal Redemption, Damages and Attorneys Fees, and other Reliefs is REVERSED and SET ASIDE, and the instant appeal is
GRANTED, hereby declaring the sale of the homestead and TCT Nos. 18442 and 18443 under the name of Aqualab null and
void, and ordering the Register of Deeds for the City of Lapu-lapu to cancel both certificates of title and to issue new certificates
of title over Lots 6727-Q and 6727-Y under the name of appellants, and let this case be REMANDED to the trial court for the
presentation of evidence on the claim for partition and for damages.

SO ORDERED.
[23]


The CA resolved the following issues: (1) the propriety of the dismissal of the complaint by the RTC; and, (2) whether respondents have
the right to redeem subject lots. The CA ruled that the trial court erred in dismissing the complaint as the sale of subject lots to Tarcela de Espina
was void, thus making the subsequent conveyances ineffective and no titles were validly transferred. Moreover, it ruled that Aqualab is not an
innocent purchaser for value, and held that respondents, as heirs of the homestead grantee, never lost their valid title to the subject lots.

Through the equally assailed April 22, 2008 Resolution, the CA denied Aqualabs motion for reconsideration.

Hence, we have this petition.

The Issues

(A)

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A RADICAL DEPARTURE FROM THE USUAL AND ACCEPTED
COURSE OF JUDICIAL PROCEEDINGS THAT WOULD WARRANT THE REVERSAL OF THE COURT OF APPEALS DECISION

(B)

WHETHER OR NOT THE COMPLAINT SHOULD BE DISMISSED COMPLAINT [SIC] ON THE GROUND OF LACK OF CAUSE OF
ACTION

(C)

WHETHER OR NOT THE TRANSFERS OF THE DISPUTED PROPERTY TO HEREIN PETITIONERS PREDECESSORS-IN-INTEREST
WERE VIOLATIVE OF THE FIVE (5) YEAR PROHIBITIVE PERIOD UNDER SECTION 118 OF THE PUBLIC LAND ACT SO AS TO
WARRANT THEIR NULLIFICATION

(D)

WHETHER OR NOT THE PETITIONER IS AN INNOCENT PURCHASER IN GOOD FAITH

(E)

WHETHER OR NOT THE RESPONDENTS CAUSE OF ACTION HAS PRESCRIBED WARRANTING THE DISMISSAL OF THEIR
COMPLAINT ON THE GROUND OF PRESCRIPTION

(F)

WHETHER OR NOT THE RESPONDENTS COMPLAINT CONSTITUTES A COLLATERAL ATTACK AGAINST THE TITLES OF
HEREIN PETITIONERS PREDECESSORS-IN-INTEREST WARRANTING THE DISMISSAL THEREOF

(G)

WHETHER OR NOT THE RESPONDENTS APPEAL BEFORE THE COURT OF APPEALS SHOULD HAVE BEEN DISMISSED IN
VIEW OF THE RESPONDENTS ADMISSION THAT THE CONVEYANCE OF THE DISPUTED PROPERTY TO HEREIN PETITIONER WAS
VALID

(H)

WHETHER OR NOT THE COURT OF APPEALS DEPRIVED THE PETITIONER OF ITS PROPERTY WITHOUT DUE PROCESS OF
LAW WHEN IT NULLIFIED THE PETITIONERS TITLE AND OWNERSHIP OVER SUBJECT PROPERTY WITHOUT TRIAL THEREBY
DEPRIVING THE PETITIONER OF ITS PROPERTY WITHOUT DUE PROCESS OF LAW
[24]



The Courts Ruling

The petition is partly meritorious.

The core issues raised in the instant petition are factual in nature and can be summed up into two: first, whether the action of
respondents is barred by prescription; andsecond, whether Aqualab is an innocent purchaser for value.

Hypothetical Admission of Factual Allegations
in the Complaint by Filing a Motion to Dismiss

In filing a motion to dismiss, the movant hypothetically admits the truth of the material and relevant facts alleged and pleaded in the
complaint. The court, in resolving the motion to dismiss, must consider such hypothetical admission, the documentary evidence presented during
the hearing thereof, and the relevant laws and jurisprudence bearing on the issues or subject matter of the complaint.

20

Dismissal by Trial Court on Prescription and
Finding Defendant an Innocent Purchaser for Value

The trial court ruled that prescription has set in, since respondents alleged in the complaint fraud and misrepresentation in procuring the
transfer of subject lots, and such transfer was made on April 21, 1970, while the instant complaint was filed only on August 10, 1994, or a little over
24 years. Relying on Buenaventura v. Court of Appeals,
[25]
where the Court held that an action for reconveyance of title due to fraud is susceptible
to prescription either within four or 10 years, the trial court held that the instant action is definitely barred. It also ruled that even if a constructive
trust was created as averred by respondents, still, the instant action has prescribed for a constructive trust prescribes in 10 years, relying on Tenio-
Obsequio v. Court of Appeals.
[26]


Moreover, the trial court, also relying on Tenio-Obsequio, agreed with Aqualabs assertion that it was an innocent purchaser for value,
which merely relied on the correctness of the TCTs covering subject lots, i.e., TCT 17918 and TCT 18177 in the name of Anthony Gaw Kache, and, as
such, Aqualab, as vendee, need not look beyond the certificate of title and investigate the title of the vendor appearing on the face of said titles.

Finally, the trial court concluded that respondents cannot invoke legal redemption under Article 1620 in relation to Art. 1623 of the Civil
Code and under Commonwealth Act No. (CA) 141, as amended,
[27]
for Lot 6727 had already been divided into subdivision lots, the subject of
numerous transactions. Besides, it reasoned that legal redemption under CA 141 is only applicable to cases of proper conveyance of a land
covered by a homestead patent, but not, as in the instant case, when the conveyances were assailed to be improper.

Aqualab Hypothetically Admitted the Fraudulent Conveyances
and Respondents Possession of Subject Lots

Respondents aver that they are the absolute and lawful owners of subject properties, i.e., Lots 6727-Q and 6727-Y, over which they have
had actual possession since 1936 or earlier until sometime in 1991, when Aqualab disturbed such possession.
[28]
While the records show that
respondents did not have in their names the certificate of titles over subject lots, the factual assertion of open, peaceful, public, and adverse
possession is hypothetically admitted by Aqualab.

Moreover, respondents allege that the conveyances of subject lots were fraudulently made in violation of the restrictions on alienation of
homesteads under CA 141, and that said conveyances were made without their knowledge and, thus, asserting their right to redeem the subject
properties in line with the policy of CA 141 that the homestead should remain with the grantee and his family.
[29]
The alleged fraudulent
conveyances were likewise hypothetically admitted by Aqualab.

On the other hand, Aqualabs co-defendants, the heirs of Bernabe Pagobo, to respondents complaint, filed their Answer asserting
possession and ownership over subjectLot 6727-Y by submitting TD 00520 to prove payment of the real estate tax thereon. However, on the
allegation of disturbance of possession and fraudulent conveyances without knowledge of respondents, the heirs of Bernabe Pagobo merely
maintained that they had no knowledge and information sufficient to form a belief as to the truth thereof.

It is, thus, clear that by filing its motion to dismiss, Aqualab hypothetically admitted the veracity of respondents continuous possession
of subject lots until 1991 when Aqualab disturbed such possession. Aqualab likewise hypothetically admitted the fraudulent and illegal
conveyances of subject lots.

In its Motion to Dismiss, Aqualab moved for the dismissal of respondents complaint on the ground of prescription, that it is an innocent
purchaser for value whose rights are protected by law, and that the complaint failed to state a cause of action for partition and legal redemption.

Prescription Is Not Apparent
on the Face of the Complaint

From the foregoing premises, the trial court erred in finding prescription. Prescription, as a ground for a motion to dismiss, is adequate
when the complaint, on its face, shows that the action has already prescribed.
[30]
Such is not the case in this instance. Respondents have duly
averred continuous possession until 1991 when such was allegedly disturbed by Aqualab. Being in possession of the subject lotshypothetically
admitted by Aqualabrespondents right to reconveyance or annulment of title has not prescribed or is not time-barred.

Verily, an action for annulment of title or reconveyance based on fraud is imprescriptible where the plaintiff is in possession of the
property subject of the acts.
[31]
And 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, if the plaintiff is not in possession.
[32]
Thus, one who is in actual possession of a piece of land
on a claim of ownership thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right.
[33]


In the instant case, as hypothetically admitted, respondents were in possession until 1991, and until such possession is disturbed, the
prescriptive period does not run. Since respondents filed their complaint in 1994, or three years after their possession was allegedly disturbed, it is
clear that prescription has not set in, either due to fraud or constructive trust.

Besides, if the plaintiff, as the real owner of the property, remains in possession of the property, the prescriptive period to recover title
and possession of the property does not run against him. In such a case, an action for reconveyance, if nonetheless filed, would be in the nature of
a suit for quieting of title, an action that is imprescriptible.
[34]


Thus, the trial courts reliance on Buenaventura
[35]
and Tenio-Obsequio
[36]
for prescription on the right of reconveyance due to fraud and
constructive trust, respectively, is misplaced, for in both cases, the plaintiffs before the trial court were not in possession of the lots subject of their
action.

Aqualab Not an Innocent Purchaser for Value Due to the Hypothetically Admitted Respondents Possession of Subject Lots

In the instant case, again based on the hypothetically admitted allegations in the complaint, it would appear that Anthony Gaw Kache,
Aqualabs predecessor-in-interest, was not in possession of subject lots. Such a fact should have put Aqualab on guard relative to the possessors
(respondents) interest over subject lots. A buyer of real property that is in the possession of a person other than the seller must be wary, and a
buyer who does not investigate the rights of the one in possession can hardly be regarded as a buyer in good faith.
[37]


21

Having hypothetically admitted respondents possession of subject lots, Aqualab cannot be considered, in the context of its moti on to
dismiss, to be an innocent purchaser for value or a purchaser in good faith. Moreover, the defense of indefeasibility of a Torrens title does not
extend to a transferee who takes it with notice of a flaw in the title of his transferor.
[38]


The Complaint Sufficiently
States a Cause of Action


Upon the foregoing disquisitions, it is abundantly clear to the Court that respondents complaint sufficiently stated, under the premises, a
cause of action. Not lost on us is the fact that the RTC dismissed the complaint of respondents on the grounds of prescription and in the finding
that Aqualab is an innocent purchaser for value of the subject lots. Quoting Philippine Bank of Communications v. Trazo,
[39]
the Court said in Bayot
v. Court of Appeals
[40]
that:

A cause of action is an act or omission of one party in violation of the legal right of the other. A motion to dismiss
based on lack of cause of action hypothetically admits the truth of the allegations in the complaint. The allegations in a
complaint are sufficient to constitute a cause of action against the defendants if, hypothetically admitting the facts alleged, the
court can render a valid judgment upon the same in accordance with the prayer therein. A cause of action exists if the
following elements are present, namely: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises
or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or
omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an action for recovery of damages.
[41]


Indeed, to sustain a motion to dismiss for lack of cause of action, the complaint must show that the claim for relief does not exist rather
than that a claim has been defectively stated or is ambiguous, indefinite, or uncertain.
[42]
However, a perusal of respondents Complaint before the
RTC, in light of Aqualabs motion to dismiss which hypothetically admitted the truth of the allegations in the complaint, shows that respondents
action before the RTC has sufficiently stated a cause of action. Hypothetically admitting fraud in the transfers of subject lots, which indisputably
were first transferred in apparent violation of pertinent provisions in CA 141 prohibiting alienation of homesteads within five years from the grant
of the homestead patent, and the continuing possession of respondents until 1991 of the subject lots, the action for reconveyance and nullification
filed in 1994 not only sufficiently stated a cause of action but also has not yet prescribed.

Given the findings above, the trial court gravely committed an error of judgment in granting Aqualabs motion to dismiss.

The appellate court was, thus, correct insofar as it reversed and set aside the September 30, 1997 Order of dismissal of the trial
court. Unfortunately, however, it went further, for it did not merely remand the case for further proceedings, i.e., for trial on the merits, but it also
resolved and decided the case in favor of respondents without going into a full-blown trial on the merits. This violated Aqualabs right to due
process.

The CA Committed Reversible Error
in Deciding the Case on the Merits

The CA reversibly erred when it decided the case on the merits when what was appealed thereto was a dismissal of the case through a
motion to dismiss. There was no trial on the merits. Thus, its resolution of the case on the merits had no factual basis. The lynchpins in the
resolution of the motion to dismiss are in the issues of prescription and whether Aqualab is an innocent purchaser for value. On these two issues
we ruled, as discussed above, that based on the motion to dismiss, the allegations in the complaint, and the pieces of documentary evidence on
record, prescription has not yet set in and that Aqualab is apparently not a purchaser in good faith for, as hypothetically admitted, respondents had
possession over subject lots until 1991.

Such hypothetical admission, however, is not equivalent to or constitutive of a judicial admission, for, after all, Aqualab has not yet filed
its Answer. It was, therefore, erroneous for the CA to decide the case on the merits. And much less can the CA rule that Aqualab did not
controvert respondents allegation of disturbance in their possession. It was a hypothetically admitted fact but not the factual finding of the trial
court.

The Parties Assertions and Allegations
Still Have to Be Proved by Trial on the Merits

First, the assertion of respondents that they had possession until 1991, a factual issue, still had to be established on trial. Indeed, he who
asserts a fact has the burden of proving it. So, too, the contention of being an innocent purchaser for value by Aqualab still has yet to be
determined through a trial on the merits. The hypothetical admission applied against a defendant is relied upon by the court only to resolve his
motion to dismiss. Verily, the burden of proving the purchasers good faith lies in the one who asserts the sameit is not enough to invoke the
ordinary presumption of good faith.
[43]


And if Aqualab is found to be truly an innocent purchaser for value, its rights as such is protected by law; more so in situations where
there have been a series of transfers of the subject lots, in which case, respondents rights, if any, will be for damages from those who perpetrated
the fraudulent conveyances.

No Factual and Legal Bases for the
Cancellation of Certificates of Title

Second, and corollary to the first, given that there is no judicial factual finding that Aqualab is not an innocent purchaser for value, it is
legally and factually without bases for the appellate court to order the cancellation of the certificates of title covering subject lots in the name of
Aqualab.

Third, the issues of reconveyance or redemptive rights of respondents and their action for partition have to be resolved by the trial court
in light of its eventual findings from a trial on the merits of the instant case.

22

We, thus, hold that the instant case should proceed to trial for the parties to adduce their respective evidence to support their contrary
positions in the defense of their asserted rights.

WHEREFORE, this petition is hereby PARTIALLY GRANTED. The CAs Decision dated March 15, 2007 and Resolution dated April 22, 2008
in CA-G.R. CV No. 58540 are hereby REVERSED and SET ASIDE. The RTCs Order dated September 30, 1997 dismissing Civil Case No. 4086-L is
likewise REVERSED and SET ASIDE. The instant case is hereby REINSTATED, and petitioner Aqualab is REQUIRED within the period available
pursuant to Section 4 of Rule 16, 1997 Revised Rules of Civil Procedure TO FILE its answer before the trial court. The trial court is ordered to
proceed with dispatch to the trial on the merits.
No costs.
SO ORDERED.








































23


ELVIRA T. ARANGOTE,
Petitioner,



- versus -



SPS. MARTIN MAGLUNOB and LOURDES S.
MAGLUNOB, and ROMEO SALIDO,
Respondents.
G.R. No. 178906

Present:

QUISUMBING, J.,
*

AUSTRIA-MARTINEZ,
Acting Chairperson,
CHICO-NAZARIO,
NACHURA, and
PERALTA, JJ.

Promulgated:

February 18, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


D E C I S I O N


CHICO-NAZARIO, J.:


Before this Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to reverse and set
aside the Decision
[1]
dated27 October 2006 and Resolution
[2]
dated 29 June 2007 of the Court of Appeals in CA-G.R. SP No. 64970. In its assailed
Decision, the appellate court affirmed the Decision
[3]
dated 12 September 2000 of the Regional Trial Court (RTC), 6
th
Judicial Region, Branch 1,
Kalibo, Aklan, in Civil Case No. 5511, which reversed the Decision
[4]
dated 6 April 1998 of the 7
th
Municipal Circuit Trial Court (MCTC) of Ibajay-
Nabas, Ibajay, Aklan, in Civil Case No. 156; and declared
[5]
the herein respondent-Spouses Martin and Lourdes Maglunob (Spouses Maglunob) and
respondent Romeo Salido (Romeo) as the lawful owners and possessors of Lot 12897 with an area of 982 square meters, more or less, located in
Maloco, Ibajay, Aklan (subject property). In its assailed Resolution, the appellate court denied herein petitioner Elvira T. Arangotes Motion for
Reconsideration.

Elvira T. Arangote, herein petitioner married to Ray Mars E. Arangote, is the registered owner of the subject property, as evidenced by
Original Certificate of Title (OCT) No. CLOA-1748.
[6]
Respondents Martin (Martin II) and Romeo are first cousins and the grandnephews of
Esperanza Maglunob-Dailisan (Esperanza), from whom petitioner acquired the subject property.

The Petition stems from a Complaint
[7]
filed by petitioner and her husband against the respondents for Quieting of Title, Declaration of
Ownership and Possession, Damages with Preliminary Injunction, and Issuance of Temporary Restraining Order before the MCTC, docketed as Civil
Case No. 156.

The Complaint alleged that Esperanza inherited the subject property from her uncle Victorino Sorrosa by virtue of a notarized Partition
Agreement
[8]
dated 29 April 1985, executed by the latters heirs. Thereafter, Esperanza declared the subject property in her name for real property
tax purposes, as evidenced by Tax Declaration No. 16218 (1985).
[9]


The Complaint further stated that on 24 June 1985, Esperanza executed a Last Will and Testament
[10]
bequeathing the subject property to
petitioner and her husband, but it was never probated. On 9 June 1986, Esperanza executed another document, an Affidavit,
[11]
in which she
renounced, relinquished, waived and quitclaimed all her rights, share, interest and participation whatsoever in the subject property in favor of
petitioner and her husband. On the basis thereof, Tax Declaration No. 16218 in the name of Esperanza was cancelled and Tax Declaration No.
16666
[12]
(1987) was issued in the name of the petitioner and her husband.

In 1989, petitioner and her husband constructed a house on the subject property. On 26 March 1993, OCT No. CLOA-1748 was issued by the
Secretary of the Department of Agrarian Reform (DAR) in the name of petitioner, married to Ray Mars E. Arangote. However, respondents,
together with some hired persons, entered the subject property on3 June 1994 and built a hollow block wall behind and in front of petitioners
house, which effectively blocked the entrance to its main door.

As a consequence thereof, petitioner and her husband were compelled to institute Civil Case No. 156.

In their Answer with Counterclaim in Civil Case No. 156, respondents averred that they co-owned the subject property with
Esperanza. Esperanza and her siblings, Tomas and Inocencia, inherited the subject property, in equal shares, from their father Martin Maglunob
(Martin I). When Tomas and Inocencia passed away, their shares passed on by inheritance to respondents Martin II and Romeo,
respectively. Hence, the subject property was co-owned by Esperanza, respondent Martin II (together with his wife Lourdes), and respondent
Romeo, each holding a one-third pro-indiviso share therein. Thus, Esperanza could not validly waive her rights and interest over the entire subject
property in favor of the petitioner.

Respondents also asserted in their Counterclaim that petitioner and her husband, by means of fraud, undue influence and deceit were
able to make Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit dated 9 June 1986, wherein she renounced all her
rights and interest over the subject property in favor of petitioner and her husband. Respondents thus prayed that the OCT issued in petitioners
name be declared null and void insofar as their two-thirds shares are concerned.

After trial, the MCTC rendered its Decision dated 6 April 1998 in Civil Case No. 156, declaring petitioner and her husband as the true and
lawful owners of the subject property. The decretal portion of the MCTC Decision reads:

WHEREFORE, judgment is hereby rendered:

24

A. Declaring the [herein petitioner and her husband] the true, lawful and exclusive owners and entitled to the
possession of the [subject property] described and referred to under paragraph 2 of the [C]omplaint and covered by Tax Declaration
No. 16666 in the names of the [petitioner and her husband];

B. Ordering the [herein respondents] and anyone hired by, acting or working for them, to cease and desist from
asserting or claiming any right or interest in, or exercising any act of ownership or possession over the [subject property];

C. Ordering the [respondents] to pay the [petitioner and her husband] the amount of P10,000.00 as attorneys fee. With
cost against the [respondents].
[13]



The respondents appealed the aforesaid MCTC Decision to the RTC. Their appeal was docketed as Civil Case No. 5511.

Respondents argued in their appeal that the MCTC erred in not dismissing the Complaint filed by the petitioner and her husband for
failure to identify the subject property therein. Respondents further faulted the MCTC for not declaring Esperanzas Affidavit dated 9 June 1986 --
relinquishing all her rights and interest over the subject property in favor of petitioner and her husband -- as null and void insofar as respondents
two-thirds share in the subject property is concerned.

On 12 September 2000, the RTC rendered its Decision reversing the MCTC Decision dated 6 April 1998. The RTC adjudged respondents, as
well as the other heirs of Martin Maglunob, as the lawful owners and possessors of the entire subject property. The RTC decreed:

WHEREFORE, judgment is hereby rendered as follows:

1) The appealed [D]ecision is REVERSED;

2) [Herein respondents] and the other heirs of Martin Maglunob are declared the lawful owners and possessors of the
whole [subject property] as described in Paragraph 2 of the [C]omplaint, as against the [herein petitioner and her husband].

3) [Petitioner and her husband] are ordered to immediately turn over possession of the [subject property] to the
[respondents] and the other heirs of Martin Maglunob; and

4) [Petitioner and her husband] are ordered to pay [respondents+ attorneys fees of P5,000.00, other litigation expenses
of P5,000.00, moral damages of P10,000.00 and exemplary damages of P5,000.00.
[14]


Petitioner and her husband filed before the RTC, on 26 September 2000, a Motion for New Trial or Reconsideration
[15]
on the ground of newly
discovered evidence consisting of a Deed of Acceptance
[16]
dated 23 September 2000, and notice
[17]
of the same, which were both made by the
petitioner, for herself and in behalf of her husband,
[18]
during the lifetime of Esperanza. In the RTC Order
[19]
dated 2 May 2001, however, the RTC
denied the aforesaid Motion for New Trial or Reconsideration.

The petitioner and her husband then filed a Petition for Review, under Rule 42 of the 1997 Revised Rules of Civil Procedure, before the Court
of Appeals, where the Petition was docketed as CA-G.R. SP No. 64970.

In their Petition before the appellate court, petitioner and her husband raised the following errors committed by the RTC in its 12
September 2000 Decision:

I. It erred in reversing the [D]ecision of the [MCTC];

II. It erred in declaring the [herein respondents] and the other heirs of Martin Maglunob as the lawful owners and
possessors of the whole [subject property];

III. It erred in declaring [OCT] No. CLOA-1748 in the name of [herein petitioner] Elvie T. Arangote as null and void;

IV. It erred in denying *petitioner and her husbands+ *M+otion for *N+ew *T+rial or *R+econsideration dated *26
September 2000; and

V. It erred in not declaring the [petitioner and her husband] as possessors in good faith.
[20]



On 27 October 2006, the Court of Appeals rendered a Decision denying the Petition for Review of petitioner and her husband and affirming
the RTC Decision dated 12 September 2000. Petitioner and her husbands subsequent Motion for Reconsideration was similarly denied by the
Court of Appeals in its Resolution dated 29 June 2007.

Hence, petitioner
[21]
now comes before this Court raising in her Petition the following issues:

I. Whether the [RTC] acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it
declared the *petitioner and her husbands title to the subject property+ null and void;

II. Whether the [RTC] acted with grave abuse of discretion amounting to lack of jurisdiction when it declared the
Affidavit of Quitclaim null and void; and

III. Whether the [RTC] and the Honorable Court of Appeals acted with grave abuse of discretion amounting to lack or
excess of jurisdiction when it rejected petitioners claim as possessors (sic) in good faith, hence, entitled to the rights
provided in [Article] 448 and [Article] 546 of the Civil Code.
[22]



25

Petitioner contends that the aforesaid OCT No. CLOA-1748 was issued in her name on 26 March 1993 and was registered in the Registry
of Deeds of Aklan on 20 April 1993. From 20 April 1993 until the institution of Civil Case No. 156 on 10 June 1994 before the MCTC, more than one
year had already elapsed. Considering that a Torrens title can only be attacked within one year after the date of the issuance of the decree of
registration on the ground of fraud and that such attack must be through a direct proceeding, it was an error on the part of the RTC and the Court
of Appeals to declare OCT No. CLOA-1748 null and void.

Petitioner additionally posits that both the RTC and the Court of Appeals committed a mistake in declaring null and void the Affidavit dated 9
June 1986 executed by Esperanza, waiving all her rights and interest over the subject property in favor of petitioner and her husband. Esperanzas
Affidavit is a valid and binding proof of the transfer of ownership of the subject property in petitioners name, as it was also coupled with actual
delivery of possession of the subject property to petitioner and her husband. The Affidavit is also proof of good faith on the part of petitioner and
her husband.

Finally, petitioner argues that, assuming for the sake of argument, that Esperanzas Affidavit is null and void, petitioner and her husband had
no knowledge of any flaw in Esperanzas title when the latter relinquished her rights to and interest in the subject property in their favor. Hence,
petitioner and her husband can be considered as possessors in good faith and entitled to the rights provided under Articles 448 and 546 of the Civil
Code.

This present Petition is devoid of merit.

It is a hornbook doctrine that the findings of fact of the trial court are entitled to great weight on appeal and should not be disturbed except
for strong and valid reasons, because the trial court is in a better position to examine the demeanor of the witnesses while testifying. It is not a
function of this Court to analyze and weigh evidence by the parties all over again. This Courts jurisdiction is, in principle, limited to reviewing
errors of law that might have been committed by the Court of Appeals.
[23]
This rule, however, is subject to several exceptions,
[24]
one of which is
present in this case, i.e., when the factual findings of the Court of Appeals and the trial court are contradictory.

In this case, the findings of fact of the MCTC as regards the origin of the subject property are in conflict with the findings of fact of both the
RTC and the Court of Appeals. Hence, this Court will have to examine the records to determine first the true origin of the subject property and to
settle whether the respondents have the right over the same for being co-heirs and co-owners, together with their grand aunt, Esperanza, before
this Court can resolve the issues raised by the petitioner in her Petition.

After a careful scrutiny of the records, this Court affirms the findings of both the RTC and the Court of Appeals as regards the origin of the
subject property and the fact that respondents, with their grand aunt Esperanza, were co-heirs and co-owners of the subject property.

The records disclosed that the subject property was part of a parcel of land
[25]
situated in Maloco, Ibajay, Aklan, consisting of 7,176
square meters and commonly owned in equal shares by the siblings Pantaleon Maglunob (Pantaleon) and Placida Maglunob-Sorrosa
(Placida). Upon the death of Pantaleon and Placida, their surviving and legal heirs executed a Deed of Extrajudicial Settlement and Partition of
Estate in July 1981,
[26]
however, the Deed was not notarized. Considering that Pantaleon died without issue, his one-half share in the parcel of land
he co-owned with Placida passed on to his four siblings (or their respective heirs, if already deceased), namely: Placida, Luis, Martin I, and Victoria,
in equal shares.

According to the aforementioned Deed of Extrajudicial Settlement and Partition of Estate, the surviving and legal heirs of Pantaleon and
Placida agreed to have the parcel of land commonly owned by the siblings declared for real property tax purposes in the name of Victorino Sorrosa
(Victorino), Placidas husband. Thus, Tax Declarations No. 5988 (1942),
[27]
No. 6200 (1945)
[28]
and No. 7233 (1953)
[29]
were all issued in the name of
Victorino.

Since Martin I already passed away when the Deed of Extrajudicial Settlement and Partition of Estate was executed, his heirs
[30]
were
represented therein by Esperanza. By virtue of the said Deed, Martin I received as inheritance a portion of the parcel of land measuring 897 square
meters.

After the death of Victorino, his heirs
[31]
executed another Partition Agreement on 29 April 1985, which was notarized on the same
date. The Partition Agreement mentioned four parcels of land. The subject property, consisting of a portion of the consolidated parcels 1, 2,
and 3, and measuring around 982 square meters, was allocated to Esperanza. In comparison, the property given to Esperanza under the
Partition Agreement is bigger than the one originally allocated to her earlier under the Deed of Extrajudicial Settlement and Partition of Estate
dated July 1981, which had an area of only 897 square meters. It may be reasonably assumed, however, that the subject property, measuring
982 square meters, allocated to Esperanza under the Partition Agreement dated 29 April 1985, is already inclusive of the smaller parcel of 897
square meters assigned to her under the Deed of Extrajudicial Settlement and Partition of Estate dated July 1981. As explained by the RTC in
its 12 September 2000 Decision:

The [subject property] which is claimed by the [herein petitioner and her husband] and that which is claimed by the
[herein respondents] are one and the same, the difference in area and technical description being due to the repartition and re-
allocation of the parcel of land originally co-owned by Pantaleon Maglunob and his sister Placida Maglunob and subsequently
declared in the name of [Victorino] under Tax Declaration No. 5988 of 1949.
[32]



It is clear from the records that the subject property was not Esperanzas exclusive share, but also that of the other heirs of her father,
Martin I. Esperanza expressly affixed her thumbmark to the Deed of Extrajudicial Settlement of July 1981 not only for herself, but also on behalf of
the other heirs of Martin I. Though in the Partition Agreement dated29 April 1985 Esperanza affixed her thumbmark without stating that she was
doing so not only for herself, but also on behalf of the other heirs of Martin I, this does not mean that Esperanza was already the exclusive owner
thereof. The evidence shows that the subject property is the share of the heirs of Martin I. This is clear from the sketch
[33]
attached to the Partition
Agreement dated 29 April 1985, which reveals the proportionate areas given to the heirs of the two siblings, Pantaleon and Placida, who were the
original owners of the whole parcel of land
[34]
from which the subject property was taken.

Further, it bears emphasis that the Partition Agreement was executed by and among the son, grandsons, granddaughters and cousins of
Victorino. Esperanza was neither the granddaughter nor the cousin of Victorino, as she was only Victorinos grandniece. The cousin of Victorino is
Martin I, Esperanzas father. In effect, therefore, the subject property allotted to Esperanza in the Partition Agreement was not her exclusive share,
as she holds the same for and on behalf of the other heirs of Martin I, who was already deceased at the time the Partition Agreement was made.
26


To further bolster the truth that the subject property was not exclusively owned by Esperanza, the Affidavit she executed in favor of
petitioner and her husband on 6 June 1985 was worded as follows:

That I hereby renounce, relinquish, waive and quitclaim all my rights, share, interest and participation whatsoever in the
[subject property] unto the said Sps. Ray Mars Arangote and Elvira T. Arangote, their heirs, successors, and assigns including the
improvement found thereon;
[35]



Logically, if Esperanza fully owned the subject property, she would have simply waived her rights to and interest in the subject property,
without mentioning her share and participation in the same. By including such words in her Affidavit, Esperanza was aware of and was limiting
her waiver, renunciation, and quitclaim to her one-third share and participation in the subject property.

Going to the issues raised by the petitioner in this Petition, this Court will resolve the same concurrently as they are interrelated.

In this case, the petitioner derived her title to the subject property from the notarized Affidavit executed by Esperanza, wherein the latter
relinquished her rights, share, interest and participation over the same in favor of the petitioner and her husband.

A careful perusal of the said Affidavit reveals that it is not what it purports to be. Esperanzas Affidavit is, in fact, a Donation. Esperanzas
real intent in executing the said Affidavit was to donate her share in the subject property to petitioner and her husband.

As no onerous undertaking is required of petitioner and her husband under the said Affidavit, the donation is regarded as a pure
donation of an interest in a real property covered by Article 749 of the Civil Code.
[36]
Article 749 of the Civil Code provides:

Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying
therein the property donated and the value of the charges which the donee must satisfy.

The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take
effect unless it is done during the lifetime of the donor.

If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this
step shall be noted in both instruments.


From the aforesaid provision, there are three requisites for the validity of a simple donation of a real property, to wit: (1) it must be made
in a public instrument; (2) it must be accepted, which acceptance may be made either in the same Deed of Donation or in a separate public
instrument; and (3) if the acceptance is made in a separate instrument, the donor must be notified in an authentic form, and the same must be
noted in both instruments.

This Court agrees with the RTC and the Court of Appeals that the Affidavit executed by Esperanza relinquishing her rights, share, interest and
participation over the subject property in favor of the petitioner and her husband suffered from legal infirmities, as it failed to comply with the
aforesaid requisites of the law.

In Sumipat v. Banga,
[37]
this Court declared that title to immovable property does not pass from the donor to the donee by virtue of a
Deed of Donation until and unless it has been accepted in a public instrument and the donor duly notified thereof. The acceptance may be made
in the very same instrument of donation. If the acceptance does not appear in the same document, it must be made in another. Where the Deed
of Donation fails to show the acceptance, or where the formal notice of the acceptance, made in a separate instrument, is either not given to the
donor or else not noted in the Deed of Donation and in the separate acceptance, the donation is null and void.
[38]


In the present case, the said Affidavit, which is tantamount to a Deed of Donation, met the first requisite, as it was notarized; thus, it became
a public instrument. Nevertheless, it failed to meet the aforesaid second and third requisites. The acceptance of the said donation was not made
by the petitioner and her husband either in the same Affidavit or in a separate public instrument. As there was no acceptance made of the said
donation, there was also no notice of the said acceptance given to the donor, Esperanza. Therefore, the Affidavit executed by Esperanza in favor
of petitioner and her husband is null and void.

The subsequent notarized Deed of Acceptance
[39]
dated 23 September 2000, as well as the notice
[40]
of such acceptance, executed by the
petitioner did not cure the defect. Moreover, it was only made by the petitioner several years after the Complaint was filed in court, or when the
RTC had already rendered its Decision dated 12 September 2000, although it was still during Esperanzas lifetime. Evidently, its execution was a
mere afterthought, a belated attempt to cure what was a defective donation.

It is true that the acceptance of a donation may be made at any time during the lifetime of the donor. And granting arguendo that such
acceptance may still be admitted in evidence on appeal, there is still need for proof that a formal notice of such acceptance was received by the
donor and noted in both the Deed of Donation and the separate instrument embodying the acceptance.
[41]
At the very least, this last legal
requisite of annotation in both instruments of donation and acceptance was not fulfilled by the petitioner. Neither the Affidavit nor the Deed of
Acceptance bears the fact that Esperanza received notice of the acceptance of the donation by petitioner. For this reason, even Esperanzas one-
third share in the subject property cannot be adjudicated to the petitioner.

With the foregoing, this Court holds that the RTC and the Court of Appeals did not err in declaring null and void Esperanzas Affidavit.

The next issue to be resolved then is whether the RTC, as well as the Court of Appeals, erred in declaring OCT No. CLOA-1748 in the name
of petitioner and her husband null and void.

Again, this Court answers the said issue in the negative.

Section 48 of Presidential decree No. 1529 states:

27

SEC. 48. Certificate not subject to collateral attack. - A certificate of title shall not be subject to collateral attack. It
cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.


Such proscription has long been enshrined in Philippine jurisprudence. The judicial action required to challenge the validity of title is a direct
attack, not a collateral attack.
[42]


The attack is considered direct when the object of an action is to annul or set aside such proceeding, or enjoin its
enforcement. Conversely, an attack is indirect or collateral when, in an action to obtain a different relief, an attack on the proceeding is
nevertheless made as an incident thereof. Such action to attack a certificate of title may be an original action or a counterclaim, in which a
certificate of title is assailed as void.
[43]


A counterclaim is considered a new suit in which the defendant is the plaintiff and the plaintiff in the complaint becomes the
defendant. It stands on the same footing as, and is to be tested by the same rules as if it were, an independent action.
[44]


In their Answer to the Complaint for Quieting of Title filed by the petitioner and her husband before the MCTC, respondents
included therein a Counterclaim wherein they repleaded all the material allegations in their affirmative defenses, the most essential of which
was their claim that petitioner and her husband -- by means of fraud, undue influence and deceit -- were able to make their grand aunt,
Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit, wherein she renounced, waived, and quitclaimed all her
rights and interest over the subject property in favor of petitioner and her husband. In addition, respondents maintained in their Answer that
as petitioner and her husband were not tenants either of Esperanza or of the respondents, the DAR could not have validly issued in favor of
petitioner and her husband OCT No. CLOA-1748. Thus, the respondents prayed, in their counterclaim in Civil Case No. 156 before the MCTC,
that OCT No. CLOA-1748 issued in the name of petitioner, married to Ray Mars E. Arangote, be declared null and void, insofar as their two-
thirds shares in the subject property are concerned.

It is clear, thus, that respondents Answer with Counterclaim was a direct attack on petitioners certificate of title. Furthermore, since all
the essential facts of the case for the determination of the validity of the title are now before this Court, to require respondents to institute a
separate cancellation proceeding would be pointlessly circuitous and against the best interest of justice.

Esperanzas Affidavit, which was the sole basis of petitioners claim to the subject property, has been declared null and void. Moreover,
petitioner and her husband were not tenants of the subject property. In fact, petitioner herself admitted in her Complaint filed before the MCTC
that her husband is out of the country, rendering it impossible for him to work on the subject property as a tenant. Instead of cultivating the
subject property, petitioner and her husband possessed the same by constructing a house thereon. Thus, it is highly suspicious how the petitioner
was able to secure from the DAR a Certificate of Land Ownership Award (CLOA) over the subject property. The DAR awards such certificates to the
grantees only if they fulfill the requirements of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Program
(CARP).
[45]
Hence, the RTC and the Court of Appeals did not err in declaring null and void OCT No. CLOA-1748 in the name of the petitioner, married
to Ray Mars E. Arangote.

Considering that Esperanza died without any compulsory heirs and that the supposed donation of her one-third share in the subject
property per her Affidavit dated 9 June 1985 was already declared null and void, Esperanzas one-third share in the subject property passed on to
her legal heirs, the respondents.

As petitioners last-ditch effort, she claims that she is a possessor in good faith and, thus, entitled to the rights provided for under Articles 448
and 546 of the Civil Code.

This claim is untenable.

The Civil Code describes a possessor in good faith as follows:

Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition
any flaw which invalidates it.

He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.

Mistake upon a doubtful or difficult question of law may be the basis of good faith.

Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from whom he received
the thing was the owner thereof, and could transmit his ownership.


Possession in good faith ceases from the moment defects in the title are made known to the possessor by extraneous evidence or by a suit for
recovery of the property by the true owner. Every possessor in good faith becomes a possessor in bad faith from the moment he becomes aware
that what he believed to be true is not so.
[46]


In the present case, when respondents came to know that an OCT over the subject property was issued and registered in petitioners name
on 26 March 1993, respondents brought a Complaint on 7 August 1993 before the Lupon of Barangay Maloco, Ibajay, Aklan, challenging the title of
petitioner to the subject property on the basis that said property constitutes the inheritance of respondent, together with their grandaunt
Esperanza, so Esperanza had no authority to relinquish the entire subject property to petitioner. From that moment, the good faith of the
petitioner had ceased.

Petitioner cannot be entitled to the rights under Articles 448 and 546 of the Civil Code, because the rights mentioned therein are
applicable only to builders in good faith and not to possessors in good faith.

Moreover, the petitioner cannot be considered a builder in good faith of the house on the subject property. In the context that such
term is used in particular reference to Article 448 of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on
that land, believing himself to be its owner and unaware of any defect in his title or mode of acquisition.
[47]

28


The various provisions of the Civil Code, pertinent to the subject, read:

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 a 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 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown
without right to indemnity.

Article 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the
demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the
expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and
the sower the proper rent.


Under the foregoing provisions, the builder in good faith can compel the landowner to make a choice between 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, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the
landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to
instead remove it from the land. In order, however, that the builder can invoke that accruing benefit and enjoy his corresponding right to demand
that a choice be made by the landowner, he should be able to prove good faith on his part.
[48]


Good faith, here understood, 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. An
individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It
implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. 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. 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.
[49]


In this case, the subject property waived and quitclaimed by Esperanza to the petitioner and her husband in the Affidavit was only
covered by a tax declaration in the name of Esperanza. Petitioner did not even bother to look into the origin of the subject property and to probe
into the right of Esperanza to relinquish the same. Thus, when petitioner and her husband built a house thereon in 1989 they cannot be
considered to have acted in good faith as they were fully aware that when Esperanza executed an Affidavit relinquishing in their favor the subject
property the only proof of Esperanzas ownership over the same was a mere tax declaration. This fact or circumstance alone was enough to put
the petitioner and her husband under inquiry. Settled is the rule that a tax declaration does not prove ownership. It is merely an indicium of a
claim of ownership. Payment of taxes is not proof of ownership; it is, at best, an indicium of possession in the concept of ownership. Neither tax
receipts nor a declaration of ownership for taxation purposes is evidence of ownership or of a right to possess realty when not supported by other
effective proofs.
[50]


With the foregoing, the petitioner is not entitled to the rights under Article 448 and 546 as the petitioner is not a builder and possessor in
good faith.

WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP
No. 64970, dated 27 October 2006 and 29 June 2007, respectively, affirming the RTC Decision dated 12 September 2000 in Civil Case No. 5511 and
declaring the respondents the lawful owners and possessors of the subject property are hereby AFFIRMED. No costs.

SO ORDERED.























29

HEIRS OF THE DECEASED SPOUSES G.R. No. 162886
VICENTE S. ARCILLA and JOSEFA
ASUNCION ARCILLA, namely:
Aida Arcilla Alandan, Rene A. Arcilla, Present:
Oscar A. Arcilla, Sarah A. Arcilla, and
Nora A. Arcilla, now deceased and YNARES-SANTIAGO, J.,
substituted by her son Sharmy Arcilla, Chairperson,
represented by their attorney-in-fact, AUSTRIA-MARTINEZ,
SARAH A. ARCILLA, CHICO-NAZARIO,
Petitioners, NACHURA, and
REYES, JJ.
- versus -

MA. LOURDES A. TEODORO, Promulgated:
Respondent. August 11, 2008
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the September 12, 2003 Decision
[1]
of the Court of Appeals (CA)
and its Resolution
[2]
dated March 24, 2004 in CA-G.R. SP No. 72032.

The facts of the case are as follows:

On December 19, 1995, Ma. Lourdes A. Teodoro (respondent) initially filed with the Regional Trial Court (RTC) of Virac, Catanduanes an application for land
registration of two parcels of land located at Barangay San Pedro, Virac, Catanduanes. The lots, with an aggregate area of 284 square meters, are denominated as Lot Nos.
525-A and 525-B, Csd.-05-010483-D of the ViracCadastre. Respondent alleged that, with the exception of the commercial building constructed thereon, she purchased
the subject lots from her father, Pacifico Arcilla (Pacifico), as shown by a Deed of Sale
[3]
dated December 9, 1966, and that, prior thereto, Pacifico acquired the said lots by
virtue of the partition of the estate of his father, Jose Arcilla evidenced by a document entitled Extrajudicial Settlement of Estate.
[4]
Respondent also presented as evidence
an Affidavit of Quit-Claim
[5]
in favor of Pacifico, executed by herein petitioners as Heirs of Vicente Arcilla (Vicente), brother of Pacifico.

On February 7, 1996, the case was transferred to the Municipal Trial Court (MTC) of Virac, Catanduanes in view of the expanded jurisdiction of said court as provided
under Republic Act No. 7691.
[6]


In their Opposition dated August 19, 1996, petitioners contended that they are the owners pro-indiviso of the subject lots including the building and other
improvements constructed thereon by virtue of inheritance from their deceased parents, spouses Vicente and Josefa Arcilla; contrary to the claim of respondent, the lots
in question were owned by their father, Vicente, having purchased the same from a certain Manuel Sarmiento sometime in 1917; Vicente's ownership is evidenced by
several tax declarations attached to the record; petitioners and their predecessors-in-interest had been in possession of the subject lots since 1906. Petitioners moved to
dismiss the application of respondent and sought their declaration as the true and absolute owners pro-indivisoof the subject lots and the registration and issuance of the
corresponding certificate of title in their names.

Subsequently, trial of the case ensued.

On March 20, 1998, herein respondent filed a Motion for Admission
[7]
contending that through oversight and inadvertence she failed to include in her application,
the verification and certificate against forum shopping required by Supreme Court (SC) Revised Circular No. 28-91 in relation to SC Administrative Circular No. 04-94.

Petitioners filed a Motion to Dismiss Application
[8]
on the ground that respondent should have filed the certificate against forum shopping simultaneously with the
petition for land registration which is a mandatory requirement of SC Administrative Circular No. 04-94 and that any violation of the said Circular shall be a cause for the
dismissal of the application upon motion and after hearing.

Opposing the motion to dismiss, respondents asserted that the petitioners' Motion to Dismiss Application was filed out of time; respondent's failure to comply with
SC Administrative Circular No. 04-94 was not willful, deliberate or intentional; and the Motion to Dismiss was deemed waived for failure of petitioners to file the same
during the earlier stages of the proceedings.

On July 19, 1999, the MTC issued an Order
[9]
denying petitioners' Motion to Dismiss Application.

On June 25, 2001, the MTC rendered a Decision
[10]
the dispositive portion of which reads as follows:

NOW THEREFORE, and considering all the above premises, the Court finds and so holds that Applicant MA. LOURDES A. TEODORO,
having sufficient title over this land applied for hereby renders judgment, which should be, as it is hereby CONFIRMED and REGISTERED in her
name.

IT IS SO ORDERED.
[11]


Herein petitioners then filed an appeal with the Regional Trial Court of Virac, Catanduanes. In its Decision
[12]
dated February 22, 2002, the RTC, Branch 43,
of Virac, Catanduanesdismissed the appeal for lack of merit and affirmed in toto the Decision of the MTC. Petitioners filed a Motion for Reconsideration but it was denied
by the RTC in its Order
[13]
of July 22, 2002.

Aggrieved by the RTC Decision, petitioners filed a Petition for Review
[14]
with the CA. On September 12, 2003, the CA promulgated its presently assailed Decision
dismissing the Petition. Petitioners filed a Motion for Reconsideration but the same was denied by the CA in its Resolution
[15]
dated March 24, 2004.

Hence, the herein petition based on the following grounds:

30

A. The Honorable Court of Appeals did not rule in accordance with the prevailing rules and jurisprudence when it held that the belated filing,
after more than two (2) years and three (3) months from the initial application for land registration, of a sworn certification against
forum shopping in Respondent's application for land registration, constituted substantial compliance with SC Admin. Circular No. 04-94.

B. The Honorable Court of Appeals did not rule in accordance with prevailing laws and jurisprudence when it held that the certification of non-
forum shopping subsequently submitted by respondent does not require a certification from an officer of the foreign service of
the Philippines as provided under Section 24, Rule 132 of the Rules of Court.

C. The Honorable Court of Appeals did not rule in accordance with prevailing laws and jurisprudence when it upheld the decisions of the
Regional Trial Court (RTC) and Municipal Trial Court (MTC) that the lots in question were not really owned by Petitioners' father Vicente
S. Arcilla, contrary to the evidence presented by both parties.

D. The Honorable Court of Appeals did not rule in accordance with prevailing laws and jurisprudence when it sustained the decision of the RTC
which affirmed in toto the decision of the MTC and in not reversing the same and rendering judgment in favor of Petitioners.
[16]

In their Memorandum, petitioners further raise the following issue:

Whether or not the Supreme Court may inquire into conclusions of facts made by the Honorable Court of Appeals in the instant Petition.
[17]


The Courts Ruling

The petition is bereft of merit.

The CA ruled correctly when it held that the belated filing of a sworn certification of non-forum shopping was substantial compliance with SC Administrative Circular
No. 04-94.

Under the attendant circumstances in the present case, the Court cannot uphold petitioners contention that respondent's delay of more than two years and three
months in filing the required certificate of non-forum shopping may not be considered substantial compliance with the requirements of SC Administrative Circular No. 04-
94 and Section 5, Rule 7 of the Rules of Court; that respondent's reasons of oversight and inadvertence do not constitute a justifiable circumstance that could excuse her
non-compliance with the mandatory requirements of the above-mentioned Circular and Rule; that subsequent compliance with the requirement does not serve as an
excuse for a party's failure to comply in the first instance.

Section 5, Rule 7, of the Rules of Court provides:

Sec. 5. Certification against forum shopping. The plaintiff or principal party shall certify under oath in the complaint or other initiatory
pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore
commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge,
no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status
thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five
(5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory
pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The
submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without
prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate
forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt as well as a cause for
administrative sanctions.

This Rule was preceded by Circular No. 28-91, which originally required the certification of non-forum shopping for petitions filed with this Court and the CA; and SC
Administrative Circular No. 04-94, which extended the certification requirement for civil complaints and other initiatory pleadings filed in all courts and other agencies.

In Gabionza v. Court of Appeals,
[18]
this Court has held that Circular No. 28-91 was designed to serve as an instrument to promote and facilitate the orderly
administration of justice and should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective or the goal of all rules of
procedure which is to achieve substantial justice as expeditiously as possible.
[19]
The same guideline still applies in interpreting what is now Section 5, Rule 7 of the 1997
Rules of Civil Procedure.
[20]


The Court is fully aware that procedural rules are not to be belittled or simply disregarded, for these prescribed procedures insure an orderly and speedy
administration of justice.
[21]
However, it is equally settled that litigation is not merely a game of technicalities.
[22]
Rules of procedure should be viewed as mere tools
designed to facilitate the attainment of justice.
[23]
Their strict and rigid application, which would result in technicalities that tend to frustrate rather than promote
substantial justice, must always be eschewed.
[24]
Even the Rules of Court reflect this principle.
[25]



Moreover, the emerging trend in our jurisprudence is to afford every party-litigant the amplest opportunity for the proper and just determination of his cause free
from the constraints of technicalities.
[26]



It must be kept in mind that while the requirement of the certificate of non-forum shopping is mandatory, nonetheless the requirement must not be interpreted
too literally and thus defeat the objective of preventing the undesirable practice of forum shopping.
[27]
In Uy v. Land Bank of the Philippines,
[28]
the Court ruled, thus:

The admission of the petition after the belated filing of the certification, therefore, is not unprecedented. In those cases where the Court
excused non-compliance with the requirements, there were special circumstances or compelling reasons making the strict application of the rule
clearly unjustified. In the case at bar, the apparent merits of the substantive aspects of the case should be deemed as a special circumstance or
compelling reason for the reinstatement of the petition. x x x
[29]


Citing De Guia v. De Guia
[30]
the Court, in Estribillo v. Department of Agrarian Reform,
[31]
held that even if there was complete non-compliance with the rule on
certification against forum-shopping, the Court may still proceed to decide the case on the merits pursuant to its inherent power to suspend its own rules on grounds of
substantial justice and apparent merit of the case.

In the instant case, the Court finds that the lower courts did not commit any error in proceeding to decide the case on the merits, as herein respondent was able to
submit a certification of non-forum shopping. More importantly, the apparent merit of the substantive aspect of the petition for land registration filed by respondent with
31

the MTC coupled with the showing that she had no intention to violate the Rules with impunity, as she was the one who invited the attention of the court to the
inadvertence committed by her counsel, should be deemed as special circumstances or compelling reasons to decide the case on the merits.

In addition, considering that a dismissal contemplated under Rule 7, Section 5 of the Rules of Court is, as a rule, a dismissal without prejudice, and since there is no
showing that respondent is guilty of forum shopping, to dismiss respondent's petition for registration would entail a tedious process of re-filing the petition, requiring the
parties to re-submit the pleadings which they have already filed with the trial court, and conducting anew hearings which have already been done, not to mention the
expenses that will be incurred by the parties in re-filing of pleadings and in the re-conduct of hearings. These would not be in keeping with the judicial policy of just, speedy
and inexpensive disposition of every action and proceeding.
[32]


The certification of non-forum shopping executed in a foreign country is not covered by Section 24, Rule 132 of the Rules of Court.

There is no merit to petitioners contentions that the verification and certification subsequently submitted by respondent did not state the country or city where the
notary public exercised hernotarial functions; and that the MTC simply concluded, without any basis, that said notary public was from Maryland, USA; that even granting
that the verification and certification of non-forum shopping were notarized in the USA, the same may not be deemed admissible for any purpose in the Philippines for
failure to comply with the requirement of Section 24, Rule 132 of the Rules of Court that the notarized document must be accompanied by a certificate issued by an
officer in the foreign service of the Philippines who is stationed in the country in which a record of the subject document is kept, proving or authenticating that the person
who notarized the document is indeed authorized to do so and has custody of the same.
The Court agrees with the disquisition of the CA, to wit:

From the foregoing provision [referring to Section 24, Rule 132, Rules of Court], it can be gathered that it does not include documents
acknowledged before [a] notary public abroad. For foreign public documents to be admissible for any purpose here in our courts, the same must be
certified by any officer of the Philippine legation stationed in the country where the documents could be found or had been executed. However,
after judicious studies of the rule, Sec. 24, Rule 132 of the 1997 Rules of Court basically pertains to written official acts, or records of the official of the
sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country. This is so, as Sec. 24, Rule
132 explicitly refers only to paragraph (a) of Sec. 19. If the rule comprehends to cover notarial documents, the rule could have included the same.
Thus, petitioners-oppositors' contention that the certificate of forum shopping that was submitted was defective, as it did not bear the certification
provided under Sec. 24, Rule 132 of the Rules of Court, is devoid of any merit. What is important is the fact that the respondent-applicant certified
before a commissioned officer clothed with powers to administer oath that [s]he has not and will not commit forum shopping.
[33]



The ruling of the Court in Lopez v. Court of Appeals,
[34]
cited by petitioners, is inapplicable to the present case because the Rules of Evidence which were in
effect at that time were the old Rules prior to their amendment in 1989. The rule applied in Lopez, which was decided prior to the effectivity of the amended Rules of
Evidence,
[35]
was Section 25, Rule 132, to wit:

Sec. 25. Proof of public or official record An official record or an entry therein, when admissible for any purpose, may be evidenced by an
official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the
record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign
country, the certificate may be made by a secretary of embassy or legation, consul general, consul, vice consul, or consular agent or by any
officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his
office. (Emphasis supplied)

When the Rules of Evidence were amended in 1989, Section 25, Rule 132 became Section 24, Rule 132; and the amendment consisted in the deletion of the introductory
phrase An official record or an entry therein, which was substituted by the phrase The record of public documents referred to in paragraph (a) of Section 19.
Thus, Section 24, Rule 132 of the Rules of Court now reads as follows:

Sec. 24. Proof of official record. - The record of public documents referred to in paragraph (a) of Section 19, when admissible for any
purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having legal custody of the record, or by his deputy,
and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is
kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice consul or consular
agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the
seal of his office. (Emphasis supplied)

Section 19(a) of the same Rule provides:

Sec. 19. Classes of documents. - For the purpose of their presentation in evidence, documents are either public or private.

Public documents are:

(a) The written official acts or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers,
whether of the Philippines or of a foreign country;

(b) Documents acknowledged before a notary public except last wills and testaments; and

(c) Public records, kept in the Philippines, of private documents required by law to be entered therein.

All other writings are private.

It cannot be overemphasized that the required certification of an officer in the foreign service under Section 24 refers only to the documents enumerated in Section
19(a), to wit: written official acts or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers of the Philippines or of a foreign
country. The Court agrees with the CA that had the Court intended to include notarial documents as one of the public documents contemplated by the provisions of
Section 24, it should not have specified only the documents referred to under paragraph (a) of Section 19.

In Lopez, the requirements of then Section 25, Rule 132 were made applicable to all public or official records without any distinction because the old rule did
not distinguish. However, in the present rule, it is clear under Section 24, Rule 132 that its provisions shall be made applicable only to the documents referred to under
paragraph (a), Section 19, Rule 132.

The CA did not err in sustaining the findings of fact and conclusion of law of the MTC and the RTC.
32


Settled is the rule that the trial courts findings of fact, especially when affirmed by the CA, are generally binding and conclusive upon this Court.
[36]
There are
recognized exceptions to this rule, among which are: (1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly mistaken,
absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no
citation of specific evidence on which the factual findings are based; (7) the finding of absence of facts is contradicted by the presence of evidence on record; (8) the
findings of the CA are contrary to the findings of the trial court; (9) the CA manifestly overlooked certain relevant and undisputed facts that, if properly considered, would
justify a different conclusion; (10) the findings of the CA are beyond the issues of the case; and (11) such findings are contrary to the admissions of both
parties.
[37]
However, petitioners failed to show that any of the exceptions is present in the instant case to warrant a review of the findings of fact of the lower courts.

Petitioners insist that the documents which were presented in evidence by respondent to prove her ownership of the subject lot are rife with defects and
inconsistencies. Petitioners contend that the subject lot should not have been included in the Extrajudicial Settlement of the Estate of Jose Arcilla, because he was no
longer the owner of the said property at the time of said settlement; the Deed of Sale should be declared null and void because the seller, Pacifico Arcilla, was not the
owner of the subject lands at the time the said Deed was executed; the Affidavit of Quitclaim is not valid and has no force and effect considering that the document
indicates that the signatures of petitioners were affixed in different places, none of which is in Virac, Catanduanes where they supposedly acknowledged said document.

The only evidence of petitioners to prove their claim that the disputed property was sold by Jose Arcilla to Manuel Sarmiento in 1908 is a single Tax Declaration in the
name of the latter, with a notation that the property was acquired by purchase.

The Court agrees with the CA in its finding that petitioners failed to present any substantial evidence, such as a deed of sale, to prove their claim that their
predecessor, Vicente Arcilla, bought the disputed property from Sarmiento. Petitioners were only able to present tax declarations in Vicente's name to prove their
allegation that Vicente became the owner of the subject property. The tax declarations presented in evidence by petitioners are not supported by any other substantial
proofs.

The Court has ruled time and again that tax declarations do not prove ownership but are at best an indicium of claims of ownership.
[38]
Payment of taxes is not proof
of ownership, any more than indicating possession in the concept of an owner.
[39]
Neither a tax receipt nor a declaration of ownership for taxation purposes is evidence of
ownership or of the right to possess realty when not supported by other effective proofs.
[40]


In addition, the Court agrees with the CA when it held that if Vicente, in fact, owned the disputed properties, his widow, Josefa, would not have agreed to include said lots
among those partitioned in the Extrajudicial Settlement of the Estate of Jose.
On the other hand, respondent's claim of ownership is not only backed up by tax declarations but also by other pieces of evidence such as the subject Extrajudicial
Settlement, Affidavit of Quitclaim, and Deed of Sale.

Petitioners question the validity of the above-mentioned documents. However, as the CA, RTC and MTC found, these documents are all notarized. It is settled that a
notarized document is executed to lend truth to the statements contained therein and to the authenticity of the signatures.
[41]
Notarized documents enjoy the
presumption of regularity which can be overturned only by clear and convincing evidence.
[42]


Petitioners' bare denials of the contents of the subject documents will not suffice to overcome the presumption of their regularity considering that they are all
notarized. To overthrow such presumption of regularity, the countervailing evidence must be clear, convincing and more than merely preponderant, which petitioners
failed to present.
[43]


An examination of the subject Extrajudicial Settlement of Estate clearly shows that the disputed lot forms part of the properties adjudicated in favor
of Pacifico Arcilla, respondents predecessor-in-interest.

Moreover, petitioners themselves admit that the Extrajudicial Settlement being referred to in the Affidavit of Quitclaim executed by petitioner and her co-heirs is the
Extrajudicial Settlement ofthe Estate of Jose Arcilla and not of Vicente Arcilla. An examination of the Affidavit of Quitclaim shows that the reference made therein with
respect to the date of execution of the said Extrajudicial Settlement as well as the notary public who acknowledged the same and the Document Number, Page Number,
Book Number and Series Number all coincide with those appearing in the document evidencing the Extrajudicial Settlement of the Estate of Jose Arcilla. Hence, what has
been waived by petitioners is their right, if any, to the properties mentioned in the said Affidavit of Quitclaim, which includes the presently disputed lot.

Petitioners posit that they are not bound by the subject Extrajudicial Settlement because they did not participate in nor did they sign the document evidencing such
settlement and that their mother who signed on their behalf was not, in fact, authorized to do so. However, the Court agrees with the ruling of the RTC that the
Extrajudicial Settlement is a public document, the same having been notarized; that such document is entitled to full faith and credit in the absence of competent
evidence showing that its execution was tainted with defects and irregularities which would warrant a declaration of nullity; that in the absence of evidence showing that
the person who signed in behalf of herein petitioners was, in fact, not authorized to do so, the presumption that she had the authority, as stated in the Extrajudicial
Settlement, remains undisturbed.

Moreover, petitioners' execution of the subject Affidavit of Quitclaim is proof that they have ratified the contents of the disputed Extrajudicial Settlement.

Petitioners' claim that the Affidavit of Quitclaim is null and void on the ground that the signatories thereto are not residents of Virac, Catanduanes and that they
affixed their signature in places other than Virac, Catanduanes where they supposedly acknowledged the said document, is not persuasive. The Court finds no error in the
finding of the MTC, as affirmed by the CA, that the execution of the subject Affidavit of Quitclaim or the signatures of the affiants appearing therein were never contested
nor raised as an issue and that petitioner Sarah Arcilla herself acknowledged her own signature in the said Affidavit.

In any event, the law does not require that parties to a document notarized by a notary public should be residents of the place where the said document is
acknowledged or that they affix their signature in the presence of the notary public. What is necessary is that the persons who signed a notarized document are the very
same persons who executed and personally appeared before the notary public in order to attest to the contents and truth of what are stated therein.
[44]



In the instant case, it is established that, with the exception of petitioner Rene Arcilla, all of herein petitioners, including their now deceased mother Josefa and sister
Nora, executed and personally acknowledged before the notary public the subject Affidavit of Quitclaim. Hence, aside from Rene, the said Affidavit of Quitclaim is valid
and binding on all the petitioners.

With respect to Rene, petitioner Oscar Arcilla, acting as his attorney-in-fact, signed the document on the formers behalf. However, settled is the rule that:

A member of the bar who performs an act as a notary public should not notarize a document unless the persons who signed the same are
the very same persons who executed and personally appeared before him. The acts of the affiants cannot be delegated to anyone for what are
stated therein are facts of which they have personal knowledge. They should swear to the document personally and not through any
33

representative. Otherwise, their representatives name should appear in the said documents as the one who executed the same. That is the only
time the representative can affix his signature and personally appear before the notary public for notarization of the said document. Simply put, the
party or parties who executed the instrument must be the ones to personally appear before the notary public to acknowledge the document.
[45]


Thus, the herein subject Affidavit of Quitclaim may not be binding on Rene. Nonetheless, with or without Renes participation in the quitclaim, respondents ownership of
the subject lots has been established by preponderance of evidence, as unanimously found by the MTC, the RTC and the CA.

Finally, petitioners' physical occupation of the commercial building which they erected on the disputed property does not necessarily prove their ownership of the
subject lots.

This Court has held that:

ownership and possession are two entirely different legal concepts. Just as possession is not a definite proof of ownership, neither is non-possession
inconsistent with ownership. The first paragraph of Article 1498 of the Civil Code states that when the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear
or cannot clearly be inferred. Possession, along with ownership, is transferred to the vendee by virtue of the notarized deed of conveyance. Thus,
in light of the circumstances of the present case, it is of no legal consequence that petitioner did not take actual possession or occupation of the
disputed lot after the execution of the deed of sale in her favor because she was already able to perfect and complete her ownership of and title
over the subject property.
[46]
(Emphasis supplied)

The Extrajudicial Settlement of Estate in favor of Pacifico, respondents predecessor-in-interest, the Affidavit of Quitclaim and the Deed of Sale in favor of respondent
establish respondents ownership over the disputed property.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated September 12, 2003 and its Resolution of March 24, 2004 in CA-G.R. SP No. 72032
areAFFIRMED.

Costs against petitioners.

SO ORDERED.















































34

FELIPA DELFIN, GINA G.R. No. 146550
MAALAT, SHIRLEY TAMAYO,
RECIO DAOS, and ROBERTO
DELFIN,
Petitioners, Present:


- versus
QUISUMBING, J.,
PRESENTACION D. BILLONES, Chairman,
ROSARIO D. DEMONARCA CARPIO,
(accompanied by husband Pedro CARPIO MORALES,
and Demonarca), WENEFREDO TINGA, JJ.
DEGALA (representing Pedro Degala),
RAMON DELA CRUZ (representing
his deceased wife Maria Daradar dela Cruz),
TERESITA DALIVA DEVIENTE
(daughter of Esperanza Daradar Daliva),
and JOLLY DATAR (representing his Promulgated:
deceased mother Trinidad D. Datar) and
the COURT OF APPEALS,
Respondents. March 17, 2006


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


D E C I S I O N

TINGA, J.:


This treats of the petition for review on certiorari assailing the Decision
[1]
and Resolution of the Court of Appeals in CA-G.R. CV No. 54035
entitled Presentacion D. Billones, et al. v. Felipa Delfin, et al., promulgated on 13 October 2000 and 26 December 2000, respectively, which
reversed the 27 May 1996 Decision of the Regional Trial Court, Branch 15 of Roxas City.

The antecedents are as follows:


On 29 July 1960, a Deed of Absolute Sale
[2]
over Lot No. 213, covered by RO-5563 (14516) of the Cadastral Survey of Panitan, Capiz, was
executed by Teresa Daos, Esperanza Daradar, Estrella Daradar and Maria Daradar, with the marital consent of Cipriano Degala, husband of Teresa
Daos, in favor of the spouses Rodolfo Delfin and Felipa Belo (spouses Delfin). The document, so it appears, bore the signatures of Esperanza and
Estrella, as well as the thumb marks of Teresa, Maria, and Cipriano, and was acknowledged before a notary public. On 18 November 1980, the
spouses Delfin registered the Deed of Absolute Sale with the Register of Deeds of the Province of Capiz. Thereupon, a new title, Transfer Certificate
of Title (TCT) No. T-17071, was issued in the name of the spouses Delfin.
[3]


Meanwhile, on 26 March 1965, an Extra-Judicial Partition and Absolute Deed of Sale
[4]
involving Lot No. 3414 then covered by TCT No. T-
16804 was made between Teresa Daos, Trinidad Degala, Leopoldo Degala, Presentacion Degala, Rosario Degala and Pedro
Degala, on one part, and the spouses Delfin, on the other. The deed, bearing either the thumb marks or the signatures of the sellers, was likewise
notarized. Said document was registered by the spouses Delfin on 24 June 1980. Thus, TCT No. T-16804 covering Lot No. 3414 was cancelled and a
new one, TCT No. T-16805, was issued in the names of the spouses Delfin on 24 June 1980.
[5]


The spouses Delfin then consolidated Lots No. 213 and No. 3414 and subdivided the resulting lot into six (6) smaller lots.
[6]
Lot No. 1, covered
by TCT No. T-19618, was sold to Roberto Delfin on 21 October 1989; Lot No. 2 covered by TCT No. T-19619 to Recio Daos on 25 April 1985; Lot No.
3 covered by TCT No. T-19620 to Gina Maalat on 14 June 1989, and; Lot No. 4 covered by TCT No. T-19621 to Shirley Tamayo on 11 August 1989.
Lot No. 5 remained with the spouses Delfin, while Lot No. 6 was used as an access road.
[7]


On 12 April 1994, herein respondents, claiming to be the heirs of the former owners of Lots No. 213 and No. 3414, filed an action for
annulment, reconveyance, recovery of ownership and possession and damages.
[8]
According to them, it was only in 1989
[9]
when they
discovered that Teresa Daos, sick and in dire need of money, was constrained to mortgage the one-half (1/2) portion of Lot No. 3414 to the
spouses Delfin for P300.00 sometime in 1965.
[10]
Taking advantage of her condition, the spouses Delfin made her sign a document purporting to be
a mortgage, but which turned out to be an extrajudicial partition with deed of absolute sale. As to Lot No. 213, respondents averred that the Deed
of Sale covering the property was fictitious and the signatures and thumb marks contained therein were all forged because three (3) of the
signatories therein died before the alleged sale in 1960, namely: Estrella Daradar, who died in 1934, and Esperanza Daradar and Cipriano Degala,
who both died in 1946.
[11]
As proof thereof, respondents presented certifications
[12]
on the deaths of Esperanza Daradar and Cipriano Degala by
the Local Civil Registrar of Panitan, Capiz.

To counter respondents arguments, petitioners alleged that respondents action was already barred by prescription and laches. Further,
they argued that the spouses Delfin, as well as the subsequent owners of the subject properties, are innocent purchasers for value and in good
faith, whose titles to the lots at the time of the purchase were all clean and free from liens and encumbrances.
[13]
The documents evidencing
the conveyance of the properties were personally and unilaterally executed by the vendors-signatories therein without any intervention from the
spouses Delfin, and duly acknowledged before a notary public, petitioners averred.
[14]


Giving credence to the claims of petitioners, the trial court ruled that respondents claim of ownership over the subject properties was not
established by a preponderance of evidence. Compared to respondents verbal claims of ownership, the spouses Delfin were able to prove that
they bought the properties from the original owners, the trial court added. The trial court held that the deeds of sale being duly executed notarial
35

and public documents, they enjoy the presumption of regularity which can only be contradicted by clear and convincing evidence. In addition,
respondents claims based on fraud were barred by prescription, having been filed more than four (4) years from the time the instruments were
registered with the Register of Deeds, and they are estopped from annulling the documents by reason of laches, the action having been filed 15
years after the deeds were registered. The trial court also denied respondents claims for damages.
[15]


Respondents elevated the case to the Court of Appeals, which reversed the ruling of the trial court. In its Decision,
[16]
the Court of Appeals
ruled that while an action for reconveyance based on implied or constructive trust prescribes in ten (10) years from the date of the issuance of the
certificate of title over the property, such prescriptive period does not apply if the person claiming to be the owner of the property is in possession
thereof, such as respondents in this case.
[17]
Moreover, considering that a similar action for reconveyance was filed by respondents as early as
1989 which was eventually dismissed without prejudice, respondents action to annul the two (2) deeds on the ground of fraud has not yet
prescribed, according to the Court of Appeals.
[18]


The appellate court annulled the Extra-Judicial Partition and Deed of Sale covering Lot No. 3414. The appellate court noted that: (i) Teresa
Daos was a very old and sickly woman; (ii) she and her children lacked formal education to fully comprehend the document to which they affixed
their signatures and/or thumb marks; (iii) P300.00 was inadequate consideration for a lot consisting of 1,565 square meters even in 1965; (iv)
respondents were allowed to remain in the subject properties; and (v) the questioned document was registered in the name of the spouses Delfin
15 years after the alleged date of its execution, when most of the alleged vendors have already died. These circumstances surrounding the
execution of the said document show that the real intention was merely to secure the loan of P300.00. Thus, what took place were in fact, an
equitable mortgage and not a sale.
[19]



As for Lot No. 213, the Court of Appeals held that the Deed of Absolute Sale could not have been executed on 9 July 1960. Relying on the
certifications of death presented by respondents, the Court of Appeals ruled that the defense of due execution cannot prevail over the fact that
two (2) of the signatories therein have already died prior to said date.
[20]
Roberto Delfin, Recio Daos, Gina Maalat, and Shirley Tamayo, buyers of
the subdivided lot, could not be considered as purchasers in good faith nor entitled to be protected in their rights because they were informed by
respondents prior to the purchase that they, and not the spouses Delfin, are the real owners of the lots, the appellate court added.
[21]


The Court of Appeals thus ruled:

WHEREFORE, premises considered, the present appeal is hereby GRANTED. The Decision dated May 27, 1996 of
the Regional Trial Court of Roxas City, Capiz, Branch 15 presided over by Judge Roger B. Patricio is hereby REVERSED and SET
SIDE and a new one entered:

(1) Annulling the Extra-Judicial Partition and Deed of Absolute Sale dated March 26, 1965 and Deed of
Absolute Sale dated July 9, 1960;
(2) Reinstating OCT No. RO-5563 (14516) referring to Lot 213 registered in the names of Teresa Daos (1/2
portion), and the children of Lucia Daos, namely: Esperanza Daradar, Estrella Daradar and Maria Daradar (1/2 pro-indiviso)
and OCT No. (4650) RO-5529 referring to Lot 3414 registered in the names of the late spouses Cipriano Degala and Teresa
Daos, and canceling the TCTs issued thereafter;


(3) Ordering plaintiffs-appellants, jointly and severally, to pay defendant Felipa Belo Delfin the amount
of P300.00 within thirty (30) days from the date of finality of this decision;
(4) Ordering defendants-appellees to free Lots 3414 and 213 from any and all obligations and encumbrances
that may have been attached to both lots and thereafter to deliver possession of the same to plaintiffs-appellants; and
(5) Ordering defendants-appellees, jointly and severally, to pay plaintiffs-appellants P10,000.00 as exemplary
damages, and *sic+ for attorneys fees and P10,000.00 as litigation expenses.

Costs against defendants-appellees.

SO ORDERED.
[22]



In the present petition for review under Rule 45, petitioners claim that the Court of Appeals erred in finding that respondents
retained possession of the subject properties. Moreover, petitioners posit that respondents allegations of fraud and forgery confine their
action to a four (4)-year prescriptive period which has long expired. Additionally, they argue that respondents failed to: (i) prove the
inadequacy of the selling price of Lot No. 3414; (ii) prove the frail condition of Teresa Daos; (iii) show that fraud attended the sale of Lot
No. 213; (iv) show that Roberto Delfin, Recio Daos, Gina Maalat and Shirley Tamayo are not purchasers in good faith; and (v) overcome
the presumption of regularity enjoyed by the notarized deeds of sale. Petitioners also question the award of exemplary damages and
attorneys fees in favor of respondents.
[23]
On the other hand, respondents for the most part merely reiterated the ruling of the Court of
Appeals.
[24]


The complete resolution of the issues presented before the Court requires a determination of facts, which this Court, not bei ng a trier of
facts, does not normally exercise in an appeal by certiorari.
[25]
This rule, however, is subject to exceptions, such as where the factual findings of
the Court of Appeals and the trial court are conflicting or contradictory,
[26]
as in the instant case.

When ones property is registered in anothers name without the formers consent, an implied trust is created by law in favor of the true
owner.
[27]
Implied trusts are those which, without being expressed, are deducible from the nature of the transaction by operation of law as
matters of equity, independently of the particular intention of the parties. Meanwhile, constructive trusts are created in order to satisfy the
demands of justice and prevent unjust enrichment. They arise against one who, by fraud, duress or abuse of confidence, obtains or holds the legal
right to property which he ought not, in equity and good conscience, to hold.
[28]
An action for reconveyance based upon an implied or constructive
trust prescribes in ten (10) years from the registration of the deed or from the issuance of the title, registration being constructive notice to all
persons.
[29]
However, an action for reconveyance based on fraud is imprescriptible where the plaintiff is in possession of the property subject of
the acts.
[30]


In essence, petitioners insist that respondents failed to prove that fraud attended the sale of Lots No. 213 and No. 3414. The Court agrees.
36


A contract or conduct apparently honest and lawful must be treated as such until it is shown to be otherwise by either positive or
circumstantial evidence.
[31]
A duly executed contract carries with it the presumption of validity. The party who impugns its regularity has the
burden of proving its simulation.
[32]
A notarized document is executed to lend truth to the statements contained therein and to the authenticity of
the signatures. Notarized documents enjoy the presumption of regularity which can be overturned only by clear and convincing evidence.
[33]


As plaintiffs in the action before the trial court, respondents have the burden to establish their case by a preponderance of evidence, or
evidence which is of greater weight or more convincing than that which is offered in opposition to it. Hence, parties who have the burden of proof
must produce such quantum of evidence, with plaintiffs having to rely on the strength of their own evidence, not on the weakness of the
defendants.
[34]


As regards Lot No. 3414, respondents specifically alleged that the spouses Delfin tricked the plaintiffs and their late mother into signing
a fictitious and simulated document, and that TCT No. T-16805 was the product of a fictitious and simulated transaction [that] was obtained
through fraud, the same should be declared null and void.
[35]
They claimed that the original owners of Lot No. 3414 did not intend to execute a
deed of extra-judicial partition and absolute sale but only a mortgage instrument. However, all that respondents came out with were
bare allegations that the said owners were either old and sickly or illiterate; that the purported selling price of P300.00 was unconscionable; and
that petitioners failed to eject respondents from the subject land, as respondents were unable to present any evidence to substantiate their claims,
much less the charge of fraud.

Respondents did not present any witness to testify on the execution of the deed, nor on the condition of the signatories thereto. At best,
their witnesses merely testified as to the identity of the previous owners of the property. Worse, petitioners Presentacion Degala Billones and
Rosario Degala Demonarca, both signatories to the subject deed, were not presented to testify on the real circumstances surrounding the assailed
transaction. As for the selling price of P300.00, suffice it to say that respondents did not even present a witness to testify as to its alleged
unconscionability vis-a-vis the prevailing market value of the property at the time of the sale. Meanwhile, the belated registration of the
document with the Register of Deeds can be explained by the fact that the original of OCT No. 4650 covering Lot No. 3414 was either lost or
destroyed and was reconstituted only in 1971, while the original copy of the deed of sale was lost by Felipa Delfin.
[36]


Even respondents claim of possession of the subject properties has not been sufficiently proved. This Court has uniformly held that the
one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is attacked
before taking steps to vindicate his right. His undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain
and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in
possession.
[37]
Actual possession of land consists in the manifestation of acts of dominion over it of such a nature as those a party would naturally
exercise over his own property.
[38]


Contrary to the appellate courts illation, respondents have not established possession of the subject properties. Save for the lone
testimony of Orlando Buday, a neighbor, that Rosario Degala Daradar was the only one still residing in the properties in dispute, no other evidence
was presented to show that respondents are in actual occupation and possession thereof. Not even Rosario herself testified. Doubts also arise as
to the veracity of respondents claim of possession since respondents themselves averred in their complaint that the spouses Delfin had
immediately taken possession of the subject properties in the same year that the sale was made, and appropriated the produce found in the
subject lots from then on.
[39]
Admissions made in the complaint are judicial admissions which are binding on the party who made them and cannot
be contradicted
[40]
absent any showing that it was made through palpable mistake. No amount of rationalization can offset such admission.
[41]
By
their very own admissions, it can be inferred that respondents or their predecessors-in-interest did not exercise actual occupancy, as they had
ceased to perform acts of dominion over the property upon the sale thereof.

Fraud may be, and often is, proved by or inferred from circumstances, and the circumstances proved may in some cases raise a
presumption of its existence. However, while fraud may be proved by circumstances or presumed from them, it cannot be demonstrated by mere
construction, but must be proven in all cases.
[42]
Respondents indeed failed to prove that fraud attended the execution of the Extra-Judicial
Partition and Deed of Absolute Sale. Their bare and unsupported allegations are not enough to overthrow the presumption of the validity of said
agreement or to raise the presumption of fraud.

Considering that respondents failed to establish the existence of fraud in the spouses Delfins acquisition of Lot No. 3414, it cannot be
said that implied or constructive trust was created between respondents and the spouses Delfin. The action for reconveyance of Lot No. 3414 must
fail. Further, in view of respondents failure to show their valid title to Lot No. 3414 or even their occupation thereof, the case cannot prosper
even when it is viewed as one for quieting of title.

On the other hand, the Court of Appeals annulled the Deed of Absolute Sale dated 9 July 1960 covering Lot No. 213 because one of the
vendors therein was already dead,
[43]
relying on the certifications issued by the Local Civil Registrar. In assailing this declaration, petitioners once
more point out that the Deed of Sale, being a duly notarized document, should be given full faith and credit. Also, they argue that the appellate
courts conclusion is based on the disputable presumption that identity of names means identity of persons.

Documents consisting of entries in public records made in the performance of a duty by a public officer are prima facie evidence of the
facts therein stated.
[44]
Public documents are (i) the written official acts, or records of the official acts of the sovereign authority, official bodies and
tribunals, and public officers, whether of the Philippines, or of a foreign country; (ii) documents acknowledged before a notary public except last
wills and testaments; and (iii) public records, kept in the Philippines, of private documents required by law to be entered therein.
[45]
Public
documents may be proved by the original copy, an official publication thereof, or a certified true copy thereof;
[46]
and when a copy of a document
or record is attested for the purpose of evidence, the attestation by the officer having legal custody of the record must state that the copy is a
correct copy of the original, or a specific part thereof, as the case may be.
[47]
A duly-registered death certificate is considered a public document
and the entries found therein are presumed correct, unless the party who contests its accuracy can produce positive evidence establishing
otherwise.
[48]
Nevertheless, this presumption is disputable and is satisfactory only if uncontradicted, and may be overcome by other evidence to
the contrary.

The documents presented by respondents were mere certifications and not the certified copies or duly authenticated reproductions of
the purported death certificates of Esperanza Daradar and Cipriano Degala. They are not the public documents referred to by the Rules of Court,
nor even records of public documents; thus, they do not enjoy the presumption granted by the Rules. Respondents did not even present the local
civil registrar who supposedly issued the certifications to authenticate and identify the same. Likewise, respondent Jolly Datar who adverted to the
certifications did not testify on how the certifications were obtained, much less his role therein.
[49]
As a consequence, the trial court did not admit
37

the certifications as independent pieces of evidence but merely as part of the testimony of respondent Jolly Datar.
[50]
A document or writing which
is admitted not as independent evidence but merely as part of the testimony of a witness does not constitute proof of the facts related
therein.
[51]
Clearly then, the certifications cannot be given probative value, and their contents cannot be deemed to constitute proof of the facts
therein stated.

More importantly, the very exhibits of respondents dispel the presumption of regularity of the issuance of the certifications of death
relied upon by the Court of Appeals. The certifications state that both Esperanza Daradar and Cipriano Degala died in 1946 at ages 24 and 63,
respectively. However, a careful study of the records of the case shows that in OCT No. RO 5563 (14516),
[52]
Esperanza Daradar was already 20
years old in 1929, making her date of birth to be sometime in 1909. This is totally incongruous with her supposed age of 24 years in 1946, which
places the year of her birth in 1922. Likewise, the Court takes note of the Decision of the Court of Appeals in CA-G.R. CV No. 31739,
[53]
wherein the
appellate court in its statement of facts found that Esperanza Daradar died on 10 August 1940, while Estrella Daradar died on 15 June 1943,
contrary to the claim of respondents in this case.
[54]
The Esperanza Daradar named in the OCT and the one referred to in the aforesaid Decision
could not have been the same Esperanza Daradar in the Local Civil Registrars certification.

As for the Ciprianos thumb mark on the deed, suffice it to say that his consent was not in fact needed to perfect the sale. Teresa Daos
Degalas share in Lot 213 was paraphernal property and, under the provisions of the Civil Code applicable at the time of the sale, she could alienate
or dispose of the said property without the permission or consent of her husband.
[55]
Thus, with or without such thumb mark, whether it was
forged or not, the Deed of Absolute Sale remains valid and effectual.

Under the circumstances, therefore, respondents were unable to overthrow the presumption of validity of the Deed of Absolute Sale. Said
deed, as well as the titles derived as a result thereof must be accorded respect and must remain undisturbed.



Anent the charge of bad faith on the part of petitioners, the Court takes note of respondents statement in their Plaintiff-Appellants
Brief,
[56]
to wit:

From the facts and circumstances of this case, Lot 213 and 3414 both of Panitan Cadastre which were consolidated, into
one single lot, per consolidated plan as appearing at the back of TCT No. T-17071, and after the two lots were consolidated, and
the same was subdivided, into six smaller lots, Lots 1, 4 and 5 thereof still remained in the names of appellees spouses Rodolfo
Delfin and Felipa Belo, while Lots 2 and 3 thereof were transferred by the said spouses appellees to Recio Daos and Gina
Maalat, respectively. These two transferees are innocent purchasers for value which appellants admit, and this appeal is only
an appeal by appellants against defendant-appellees spouses Rodolfo Delfin and Felipa Belo, and not against Recio Daos and
Gina Maalat.
[57]
(Emphasis supplied.)


In effect, contrary to the testimony of respondents witness Myrna Degala-Distura that her mother warned petitioners against buying the
subject lots,
[58]
respondents admitted that the only persons they consider to be not innocent purchasers are the spouses Delfin. However, in view
of respondents failure to prove the fraud attributed to the spouses Delfin, the Court has no choice but to declare all petitioners to be purchasers
for value and in good faith.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 13 October 2000 is REVERSED and SET ASIDE. The
Decision of the Regional Trial Court dated 27 May 1996 is REINSTATED.

No pronouncement as to costs.































38

G.R. No. L-30817 September 29, 1972
DOMINADOR DIZON, doing business under the firm name "Pawnshop of Dominador Dizon", petitioner,
vs.
LOURDES G. SUNTAY, respondent.
Andres T. Velarde for petitioner.
Rafael G. Suntay for respondent.

FERNANDO, J.:p
In essence there is nothing novel in this petition for review of a decision of the Court of Appeals affirming a lower court judgment sustaining the
right of an owner of a diamond ring, respondent Lourdes G. Suntay, as against the claim of petitioner Dominador Dizon, who owns and operates a
pawnshop. The diamond ring was turned over to a certain Clarita R. Sison, for sale on commission, along with other pieces of jewelry of respondent
Suntay. It was then pledged to petitioner. Since what was done was violative of the terms of the agency, there was an attempt on her part to
recover possession thereof from petitioner, who refused. She had to file an action then for its recovery. She was successful, as noted above, both in
the lower court and thereafter in the Court of Appeals. She prevailed as she had in her favor the protection accorded by Article 559 of the
Civil Code.
1

The matter was then elevated to us by petitioner. Ordinarily, our discretion would have been exercised against giving due course to such petition
for review. The vigorous plea however, grounded on estoppel, by his counsel, Atty. Andres T. Velarde, persuaded us to act otherwise. After a
careful perusal of the respective contentions of the parties, we fail to perceive any sufficient justification for a departure from the literal language
of the applicable codal provision as uniformly interpreted by this Court in a number of decisions. The invocation of estoppel is therefore unavailing.
We affirm.
The statement of the case as well as the controlling facts may be found in the Court of Appeals decision penned by Justice Perez. Thus: "Plaintiff is
the owner of a three-carat diamond ring valued at P5,500.00. On June 13, 1962, the plaintiff and Clarita R. Sison entered into a transaction wherein
the plaintiff's ring was delivered to Clarita R. Sison for sale on commission. Upon receiving the ring, Clarita R. Sison executed and delivered to the
plaintiff the receipt ... . The plaintiff had already previously known Clarita R. Sison as the latter is a close friend of the plaintiff's cousin and they had
frequently met each other at the place of the plaintiff's said cousin. In fact, about one year before their transaction of June 13, 1962 took place,
Clarita R. Sison received a piece of jewelry from the plaintiff to be sold for P500.00, and when it was sold, Clarita R. Sison gave the price to the
plaintiff. After the lapse of a considerable time without Clarita R. Sison having returned to the plaintiff the latter's ring, the plaintiff made demands
on Clarita R. Sison for the return of her ring but the latter could not comply with the demands because, without the knowledge of the plaintiff, on
June 15, 1962 or three days after the ring above-mentioned was received by Clarita R. Sison from the plaintiff, said ring was pledged by Melia Sison,
niece of the husband of Clarita R. Sison, evidently in connivance with the latter, with the defendant's pawnshop for P2,600.00 ... ."
2
Then came this
portion of the decision under review: "Since the plaintiff insistently demanded from Clarita R. Sison the return of her ring, the latter finally
delivered to the former the pawnshop ticket ... which is the receipt of the pledge with the defendant's pawnshop of the plaintiff's ring. When the
plaintiff found out that Clarita R. Sison pledged, she took steps to file a case of estafa against the latter with the fiscal's office. Subsequently
thereafter, the plaintiff, through her lawyer, wrote a letter ... dated September 22, 1962, to the defendant asking for the delivery to the plaintiff of
her ring pledged with defendant's pawnshop under pawnshop receipt serial-B No. 65606, dated June 15, 1962 ... . Since the defendant refused to
return the ring, the plaintiff filed the present action with the Court of First Instance of Manila for the recovery of said ring, with P500.00 as
attorney's fees and costs. The plaintiff asked for the provisional remedy of replevin by the delivery of the ring to her, upon her filing the requisite
bond, pending the final determination of the action. The lower court issued the writ of replevin prayed for by plaintiff and the latter was able to
take possession of the ring during the pendency of the action upon her filing the requisite bond."
3
It was then noted that the lower court rendered
judgment declaring that plaintiff, now respondent Suntay, had the right to the possession of the ring in question. Petitioner Dizon, as defendant,
sought to have the judgment reversed by the Court of Appeals. It did him no good. The decision of May 19, 1969, now on review, affirmed the
decision of the lower court.
In the light of the facts as thus found by the Court of Appeals, well-nigh conclusive on use, with the applicable law being what it is, this petition for
review cannot prosper. To repeat, the decision of the Court of Appeals stands.
1. There is a fairly recent restatement of the force and effect of the governing codal norm in De Gracia v. Court of Appeals.
4
Thus: "The controlling
provision is Article 559 of the Civil Code. It reads thus: 'The possession of movable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If
the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot
obtain its return without reimbursing the price paid therefor.' Respondent Angelina D. Guevara, having been unlawfully deprived of the diamond
ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The only exception the
law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without
reimbursing the price. As authoritatively interpreted in Cruz v. Pahati, the right of the owner cannot be defeated even by proof that there was good
faith in the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco. Thus: 'Suffice it to say in this regard that the
right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his consent. The
common law principle that were one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss upon the
party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an express
provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must prevail in this
jurisdiction." "
5

2. It must have been a recognition of the compulsion exerted by the above authoritative precedents that must have caused petitioner to invoke the
principle of estoppel. There is clearly a misapprehension. Such a contention is devoid of any persuasive force.
Estoppel as known to the Rules of Court
6
and prior to that to the Court of Civil Procedure,
7
has its roots in equity. Good faith is its basis.
8
It is a
response to the demands of moral right and natural justice.
9
For estoppel to exist though, it is indispensable that there be a declaration, act or
omission by the party who is sought to be bound. Nor is this all. It is equally a requisite that he, who would claim the benefits of such a principle,
must have altered his position, having been so intentionally and deliberately led to comport himself thus, by what was declared or what was done
39

or failed to be done. If thereafter a litigation arises, the former would not be allowed to disown such act, declaration or omission. The principle
comes into full play. It may successfully be relied upon. A court is to see to it then that there is no turning back on one's word or a repudiation of
one's act. So it has been from our earliest decisions. As Justice Mapa pointed out in the first case, a 1905 decision, Rodriguez v. Martinez,
10
a party
should not be permitted "to go against his own acts to the prejudice of [another]. Such a holding would be contrary to the most rudimentary
principles of justice and law."
11
He is not, in the language of Justice Torres, in Irlanda v. Pitargue,
12
promulgated in 1912, "allowed to gainsay [his]
own acts or deny rights which [he had] previously recognized."
13
Some of the later cases are to the effect that an unqualified and unconditional
acceptance of an agreement forecloses a claim for interest not therein provided.
14
Equally so the circumstance that about a month after the date
of the conveyance, one of the parties informed the other of his being a minor, according to Chief Justice Paras, "is of no moment, because [the
former's] previous misrepresentation had already estopped him from disavowing the contract.
15
It is easily understandable why, under the
circumstances disclosed, estoppel is a frail reed to hang on to. There was clearly the absence of an act or omission, as a result of which a position
had been assumed by petitioner, who if such elements were not lacking, could not thereafter in law be prejudiced by his belief in what had been
misrepresented to him.
16
As was put by Justice Labrador, "a person claimed to be estopped must have knowledge of the fact that his voluntary acts
would deprive him of some rights because said voluntary acts are inconsistent with said rights."
17
To recapitulate, there is this pronouncement not
so long ago, from the pen of Justice Makalintal, who reaffirmed that estoppel "has its origin in equity and, being based on moral right and natural
justice, finds applicability wherever and whenever the special circumstances of a case so demand."
18

How then can petitioner in all seriousness assert that his appeal finds support in the doctrine of estoppel? Neither the promptings of equity nor the
mandates of moral right and natural justice come to his rescue. He is engaged in a business where presumably ordinary prudence would manifest
itself to ascertain whether or not an individual who is offering a jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps
because of the difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such
jewelry should be recognized. The law for this sound reason accords the latter protection. So it has always been since Varela v.
Finnick,
19
a 1907 decision. According to Justice Torres: "In the present case not only has the ownership and the origin of the jewels
misappropriated been unquestionably proven but also that the accused, acting fraudulently and in bad faith, disposed of them and pledged them
contrary to agreement, with no right of ownership, and to the prejudice of the injured party, who was thereby illegally deprived of said jewels;
therefore, in accordance with the provisions of article 464, the owner has an absolute right to recover the jewels from the possession of whosoever
holds them, ... ."
20
There have been many other decisions to the same effect since then. At least nine may be cited.
21
Nor could any other outcome
be expected, considering the civil code provisions both in the former Spanish legislation
22
and in the present Code.
23
Petitioner ought to have
been on his guard before accepting the pledge in question. Evidently there was no such precaution availed of. He therefore, has only himself to
blame for the fix he is now in. It would be to stretch the concept of estoppel to the breaking point if his contention were to prevail. Moreover,
there should have been a realization on his part that courts are not likely to be impressed with a cry of distress emanating from one who is in a
business authorized to impose a higher rate of interest precisely due to the greater risk assumed by him. A predicament of this nature then does
not suffice to call for less than undeviating adherence to the literal terms of a codal provision. Moreover, while the activity he is engaged in is no
doubt legal, it is not to be lost sight of that it thrives on taking advantage of the necessities precisely of that element of our population whose lives
are blighted by extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly invoked.
WHEREFORE, the decision of the Court of Appeals of May 19, 1969 is affirmed, with costs against petitioner.





















40

G.R. No. L-20264 January 30, 1971
CONSUELO S. DE GARCIA and ANASTACIO GARCIA, petitioners,
vs.
HON. COURT OF APPEALS, ANGELINA D. GUEVARA and JUAN B. GUEVARA, respondents.
Deogracias T. Reyes and Jose M. Luison for petitioners.
Tolentino and Garcia and D.R. Cruz for private respondents.

FERNANDO, J.:
This petition for certiorari to review a decision of respondent Court of Appeals was given due course because it was therein vigorously asserted
that legal questions of gravity and of moment, there being allegations of an unwarranted departure from and a patent misreading of applicable and
controlling decisions, called for determination by this Tribunal. The brief for petitioners-spouses, however, failed to substantiate such imputed
failings of respondent Court. The performance did not live up to the promise. On the basis of the facts as duly found by respondent Court, which
we are not at liberty to disregard, and the governing legal provisions, there is no basis for reversal. We affirm.
The nature of the case presented before the lower court by private respondent Angelina D. Guevara, assisted by her spouse, Juan B. Guevara, as
plaintiffs, was noted in the decision of respondent Court of Appeals thus: "Plaintiff seeks recovery of `one (1) lady's diamond ring 18 cts. white gold
mounting, with one (1) 2.05 cts. diamond-solitaire, and four (4) brills 0.10 cts. total weight' which she bought on October 27, 1947 from R.
Rebullida, Inc."
1
Then came a summary of now respondent Guevara of her evidence: "Plaintiff's evidence tends to show that around October 11,
1953 plaintiff while talking to Consuelo S. de Garcia, owner of La Bulakea restaurant recognized her ring in the finger of Mrs. Garcia and inquired
where she bought it, which the defendant answered from her comadre. Plaintiff explained that that ring was stolen from her house in February,
1952. Defendant handed the ring to plaintiff and it fitted her finger. Two or three days later, at the request of plaintiff, plaintiff, her husband Lt. Col.
Juan Guevara, Lt. Cementina of Pasay PD, defendant and her attorney proceeded to the store of Mr. Rebullida to whom they showed the ring in
question. Mr. Rebullida a examined the ring with the aid of high power lens and after consulting the stock card thereon, concluded that it was the
very ring that plaintiff bought from him in 1947. The ring was returned to defendant who despite a written request therefor failed to deliver the
ring to plaintiff. Hence, this case. Later on when the sheriff tried to serve the writ of seizure (replevin), defendant refused to deliver the ring which
had been examined by Mr. Rebullida, claiming it was lost."
2

How the defendant, Consuelo S. de Garcia, the present petitioner before us, along with her husband Anastacio Garcia, sought to meet plaintiff's
claim was narrated thus: "On the other hand, defendant denied having made any admission before plaintiff or Mr. Rebullida or the sheriff. Her
evidence tends to show that the ring (Exhibit 1) was purchased by her from Mrs. Miranda who got it from Miss Angelita Hinahon who in turn got it
from the owner, Aling Petring, who was boarding in her house; that the ring she bought could be similar to, but not the same ring plaintiff
purchased from Mr. Rebullida which was stolen; that according to a pawn-shop owner the big diamond on Exhibit 1 was before the trial never
dismantled. When dismantled, defendant's diamond was found to weigh 2.57 cts."
3

Plaintiff lost in the lower court. She elevated the matter to respondent Court of Appeals with the judgment of the lower court being reversed. It is
this decision now under review.
These are the facts as found by respondent Court of Appeals: "That the ring brought by the parties for examination by Rafael Rebullida on
December 14, 1953 was the same ring purchased by plaintiff from R. Rebullida, Inc. on October 27, 1947 and stolen in February, 1952 has been
abundantly established by plaintiff's evidence. Before plaintiff lost the ring, she had been wearing it for six years and became familiar with it. Thus,
when she saw the missing ring in the finger of defendant, she readily and definitely identified it. Her identification was confirmed by Mr. Rafael
Rebullida, whose candid testimony is entitled to great weight, with his 30 years experience behind him in the jewelry business and being a
disinterested witness since both parties are his customers. Indeed, defendant made no comment when in her presence Rebullida after examining
the ring and stock card told plaintiff that that was her ring, nor did she answer plaintiff's letter of demand, ... asserting ownership. Further
confirmation may be found in the extra-judicial admissions, contained in defendant's original and first amended answers ..."
4

These further facts likewise appeal therein: "The foregoing proof is not counter-balanced by the denial on the part of defendant or the
presentation of the ring, Exhibit I, which has a diamond-solitaire 2.57 cts., or much heavier than the lost diamond weighing 2.05 cts. only. It is
noteworthy that defendant gave a rather dubious source of her ring. Aling Petring from whom the ring supposedly came turned out to be a
mysterious and ephemeral figure. Miss Hinahon did not even know her true and full name, nor her forwarding address. She appeared from
nowhere, boarded three months in the house of Miss Hinahon long enough to sell her diamond ring, disappearing from the scene a week
thereafter. Indeed, the case was terminated without any hearing on the third-party and fourth-party complaints, which would have shown up the
falsity of defendant's theory. Moreover, Mrs. Baldomera Miranda, third-party defendant, who tried to corroborate defendant on the latter's
alleged attempt to exchange the ring defendant bought through her, is [belied] by her judicial admission in her Answer that appellee `suggested
that she would make alterations to the mounting and structural design of the ring to hide the true identity and appearance of the original one'
(Cunanan vs. Amparo, 45 O.G. 3796). Finally, defendant is refuted by her own extra-judicial admissions ... although made by defendant's counsel.
For an attorney who acts as counsel of record and is permitted to act such, has the authority to manage the cause, and this includes the authority
to make admission for the purpose of the litigation... Her proffered explanation that her counsel misunderstood her is puerile because the liability
to error as to the identity of the vendor and the exchange of the ring with another ring of the same value, was rather remote."
5

It is in the light of the above facts as well as the finding that the discrepancy as to the weight between the diamond-solitaire in Exhibit I and the lost
diamond was due to defendant having "substituted a diamond-solitaire of plaintiff with a heavier stone" that the decision was rendered,
respondent Court reversing the lower court and ordering defendant, now petitioner Consuelo S. de Garcia, to return plaintiff's ring or fact value of
P1,000.00 and costs, as well as to pay plaintiff P1,000.00 as attorney's fee and P1,000.00 as exemplary damages. Hence this appeal.
To repeat, there is no occasion to reverse respondent Court. It correctly applied the law to the facts as found.
41

1. The controlling provision is Article 559 of the Civil Code. It reads thus: "The possession of movable property acquired in good faith is equivalent
to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the
same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner
cannot obtain its return without reimbursing the price paid therefor." Respondent Angelina D. Guevara, having been unlawfully deprived of the
diamond ring in question, was entitled to recover it from petitioner Consuelo S. de Garcia who was found in possession of the same. The only
exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return
without reimbursing the price. As authoritative interpreted in Cruz v. Pahati,
6
the right of the owner cannot be defeated even by proof that there
was good faith by the acquisition by the possessor. There is a reiteration of this principle in Aznar v. Yapdiangco.
7
Thus: "Suffice it to say in this
regard that the right of the owner to recover personal property acquired in good faith by another, is based on his being dispossessed without his
consent. The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by the another, the law imposes
the loss upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by
an express provision of the new Civil Code, specifically Article 559. Between a common law principle and statutory provision, the latter must prevail
in this jurisdiction."
8

2. It is thus immediately apparent that there is no merit to the contention raised in the first assigned error that her possession in good faith,
equivalent to title, sufficed to defeat respondent Guevara's claim. As the above cases demonstrate, even on that assumption the owner can
recover the same once she can show illegal deprivation. Respondent Court of Appeals was so convinced from the evidence submitted that the
owner of the ring in litigation is such respondent. That is a factual determination to which we must pay heed. Instead of proving any alleged
departure from legal norms by respondent Court, petitioner would stress Article 541 of the Civil Code, which provides: 'A possessor in the concept
of owner has in his favor the legal presumption that he possesses with a just title and he cannot be obliged to show or prove it." She would accord
to it a greater legal significance than that to which under the controlling doctrines it is entitled.lwph1.t The brief for respondents did clearly
point out why petitioner's assertion is lacking in support not only from the cases but even from commentators. Thus: "Actually, even under the first
clause, possession in good faith does not really amount to title, for the reason that Art. 1132 of the Code provides for a period of acquisitive
prescription for movables through `uninterrupted possession for four years in good faith' (Art. 1955 of the old Spanish Code, which provided a
period of three years), so that many Spanish writers, including Manresa, Sanchez Roman, Scaevola, De Buen, and Ramos, assert that under Art. 464
of the Spanish Code (Art. 559 of the New Civil Code), the title of the possessor is not that of ownership, but is merely a presumptive title sufficient to
serve as a basis of acquisitive prescription (II Tolentino, Civil Code of the Phil. p. 258: IV Manresa, Derecho Civil Espaol, 6th Ed., p. 380). And it is for
the very reason that the title established by the first clause of Art. 559 is only a presumptive title sufficient to serve as a basis for acquisitive
prescription, that the clause immediately following provides that `one who has lost any movable or has been unlawfully deprived thereof, may
recover it from the person in possession of the same.' As stated by the Honorable Justice Jose B. L. Reyes of this Court in Sotto vs. Enage (C.A.), 43
Off. Gaz. 5075, Dec. 1947: `Article 559 in fact assumes that possessor is as yet not the owner; for it is obvious that where the possessor has come to
acquire indefeasible title by, let us say, adverse possession for the necessary period, no proof of loss or illegal deprivation could avail the former
owner of the chattel. He would no longer be entitled to recover it under any condition.' "
9

The second assigned error is centered on the alleged failure to prove the identity of the diamond ring. Clearly the question raised is one of the fact.
What the Court of Appeals found is conclusive. Again, petitioner could not demonstrate that in reaching such a conclusion the Court of Appeals
acted in an arbitrary manner. As made mention of in the brief for respondents two disinterested witnesses, Mr. Rafael Rebullida as well as Lt. Col.
Reynaldo Cementina of the Pasay City Police Department, both of whom could not be accused of being biased in favor of respondent Angelina D.
Guevara, did testify as to the identity of the ring.
The third assigned error of petitioners would find fault with respondent Court relying "on the weakness of the title or evidence" of petitioner
Consuelo S. de Garcia. It is true, in the decision under review, mention was made of petitioner Consuelo S. de Garcia making no comment when in
her presence Rebullida, after examining the ring the stock card, told respondent Angelina L. Guevara that that was her ring, nor did petitioner
answer a letter of the latter asserting ownership. It was likewise stated in such decision that there were extra-judicial admissions in the original and
first amended answers of petitioner. In the appraisal of her testimony, respondent Court likewise spoke of her giving a rather dubious source of her
ring, the person from whom she allegedly bought it turning out "to be a mysterious and ephemeral figure." As a matter of fact, as set forth a few
pages back, respondent Court did enumerate the flaws in the version given by petitioner. From the weakness of the testimony offered which, as
thus made clear, petitioner, did not even seek to refute, she would raise the legal question that respondent Court relied on the "weakness of [her]
title or evidence" rather than on the proof justifying respondent Angelina D. Guevara's claim of ownership. Petitioner here would ignore the finding
of fact of respondent Court that such ownership on her part "has been abundantly established" by her evidence. Again here, in essence, the
question raised is one of fact, and there is no justification for us to reverse respondent Court.
The legal question raised in the fourth assignment of error is that the matter of the substitution of the diamond on the ring was a question raised
for the first time on appeal as it was never put in issue by the pleadings nor the subject of reception of evidence by both parties and not touched
upon in the decision of the lower court. Why no such question could be raised in the pleadings of respondent Angelina D. Guevara was clarified by
the fact that the substitution came after it was brought for examination to Mr. Rebullida. After the knowledge of such substitution was gained,
however, the issue was raised at the trial according to the said respondent resulting in that portion of the decision where the lower court reached a
negative conclusion. As a result, in the motion for reconsideration, one of the points raised as to such decision being contrary to the evidence is the
finding that there was no substitution. It is not necessary to state that respondent Court, exercising its appellate power reversed the lower court.
What was held by it is controlling. What is clear is that there is no factual basis for the legal arguments on which the fourth assigned error is
predicated.
What is said takes care of the fifth assigned error that respondent Court was mistaken in its finding that there was such a substitution. Again
petitioner would have us pass on a question of credibility which is left to respondent Court of Appeals. The sixth assigned error would complain
against the reversal of the lower court judgment as well as petitioner Consuelo S. de Garcia being made to pay respondent Angelina D. Guevara
exemplary damages, attorney's fees and costs. The reversal is called for in the light of the appraisal of the evidence of record as meticulously
weighed by respondent Court. As to the attorney's fees and exemplary damages, this is what respondent Court said in the decision under review:
"Likewise, plaintiff is entitled to recover reasonable attorney's fees in the sum of P1,000, it being just and equitable under the circumstances, and
another P1,000 as exemplary damages for the public good to discourage litigants from resorting to fraudulent devices to frustrate the ends of
justice, as defendant herein tried to substitute the ring, Exhibit 1, for plaintiff's ring."
10
Considering the circumstances, the cursory discussion of the
sixth assigned error on the matter by petitioner fails to demonstrate that respondent Court's actuation is blemished by legal defects.
WHEREFORE, the decision of respondent Court of Appeals of August 6, 1962 is hereby affirmed. With costs.