Condominium Law R.A.

4726
Republic aACT NO. 4726 June 18, 1966
AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND
GOVERN ITS INCIDENTS.
Sec. 1. The short title of this Act shall be "The Condominium Act".
Sec. 2. A condominium is an interest in real property consisting of separate interest in a unit in a residential,
industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on
which it is located and in other common areas of the building. A condominium may include, in addition, a
separate interest in other portions of such real property. Title to the common areas, including the land, or the
appurtenant interests in such areas, may be held by a corporation specially formed for the purpose
(hereinafter known as the "condominium corporation") in which the holders of separate interest shall
automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant
interest of their respective units in the common areas.
The real right in condominium may be ownership or any other interest in real property recognized by law, on
property in the Civil Code and other pertinent laws.
Sec. 3. As used in this Act, unless the context otherwise requires:
(a) "Condominium" means a condominium as defined in the next preceding section.
(b) "Unit" means a part of the condominium project intended for any type of independent use or ownership,
including one or more rooms or spaces located in one or more floors (or part or parts of floors) in a building
or buildings and such accessories as may be appended thereto.
(c) "Project" means the entire parcel of real property divided or to be divided in condominiums, including all
structures thereon,
(d) "Common areas" means the entire project excepting all units separately granted or held or reserved.
(e) "To divide" real property means to divide the ownership thereof or other interest therein by conveying
one or more condominiums therein but less than the whole thereof.
Sec. 4. The provisions of this Act shall apply to property divided or to be divided into condominiums only if
there shall be recorded in the Register of Deeds of the province or city in which the property lies and duly
annotated in the corresponding certificate of title of the land, if the latter had been patented or registered
under either the Land Registration or Cadastral Acts, an enabling or master deed which shall contain, among
others, the following:
(a) Description of the land on which the building or buildings and improvements are or are to be located;
(b) Description of the building or buildings, stating the number of stories and basements, the number of units
and their accessories, if any;
(c) Description of the common areas and facilities;
(d) A statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate
units and in the common areas of the condominium project. Where title to or the appurtenant interests in the
common areas is or is to be held by a condominium corporation, a statement to this effect shall be included;
(e) Statement of the purposes for which the building or buildings and each of the units are intended or
restricted as to use;
(f) A certificate of the registered owner of the property, if he is other than those executing the master deed,
as well as of all registered holders of any lien or encumbrance on the property, that they consent to the
registration of the deed;
(g) The following plans shall be appended to the deed as integral parts thereof:
(1) A survey plan of the land included in the project, unless a survey plan of the same property had previously
bee filed in said office;

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

Sec. 7. Except as provided in the following section, the common areas shall remain undivided, and there shall
be no judicial partition thereof.
Sec. 8. Where several persons own condominiums in a condominium project, an action may be brought by
one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the
condominiums in such project were co-owners of the entire project in the same proportion as their interests
in the common areas:Provided, however, That a partition shall be made only upon a showing:
(a) That three years after damage or destruction to the project which renders material part thereof unit for
its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage
or destruction, or
(b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable
and that condominium owners holding in aggregate more than thirty percent interest in the common areas
are opposed to repair or restoration of the project; or
(c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and
that condominium owners holding in aggregate more than fifty percent interest in the common areas are
opposed to repair or restoration or remodeling or modernizing of the project; or
(d) That the project or a material part thereof has been condemned or expropriated and that the project is
no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest
in the common areas are opposed to continuation of the condominium regime after expropriation or
condemnation of a material portion thereof; or
(e) That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in
accordance with the terms of this Act, have been met.
Sec. 9. The owner of a project shall, prior to the conveyance of any condominium therein, register a
declaration of restrictions relating to such project, which restrictions shall constitute a lien upon each
condominium in the project, and shall insure to and bind all condominium owners in the project. Such liens,
unless otherwise provided, may be enforced by any condominium owner in the project or by the management
body of such project. The Register of Deeds shall enter and annotate the declaration of restrictions upon the
certificate of title covering the land included within the project, if the land is patented or registered under the
Land Registration or Cadastral Acts.
The declaration of restrictions shall provide for the management of the project by anyone of the following
management bodies: a condominium corporation, an association of the condominium owners, a board of
governors elected by condominium owners, or a management agent elected by the owners or by the board
named in the declaration. It shall also provide for voting majorities quorums, notices, meeting date, and other
rules governing such body or bodies.
Such declaration of restrictions, among other things, may also provide:
(a) As to any such management body;
(1) For the powers thereof, including power to enforce the provisions of the declarations of restrictions;
(2) For maintenance of insurance policies, insuring condominium owners against loss by fire, casualty, liability,
workmen's compensation and other insurable risks, and for bonding of the members of any management
body;
(3) Provisions for maintenance, utility, gardening and other services benefiting the common areas, for the
employment of personnel necessary for the operation of the building, and legal, accounting and other
professional and technical services;
(4) For purchase of materials, supplies and the like needed by the common areas;
(5) For payment of taxes and special assessments which would be a lien upon the entire project or common
areas, and for discharge of any lien or encumbrance levied against the entire project or the common areas;
(6) For reconstruction of any portion or portions of any damage to or destruction of the project;

(7) The manner for delegation of its powers;

(8) For entry by its officers and agents into any unit when necessary in connection with the maintenance or
construction for which such body is responsible;
(9) For a power of attorney to the management body to sell the entire project for the benefit of all of the
owners thereof when partition of the project may be authorized under Section 8 of this Act, which said power
shall be binding upon all of the condominium owners regardless of whether they assume the obligations of
the restrictions or not.
(b) The manner and procedure for amending such restrictions: Provided, That the vote of not less than a
majority in interest of the owners is obtained.
(c) For independent audit of the accounts of the management body;
(d) For reasonable assessments to meet authorized expenditures, each condominium unit to be assessed
separately for its share of such expenses in proportion (unless otherwise provided) to its owners fractional
interest in any common areas;
(e) For the subordination of the liens securing such assessments to other liens either generally or specifically
described;
(f) For conditions, other than those provided for in Sections eight and thirteen of this Act, upon which partition
of the project and dissolution of the condominium corporation may be made. Such right to partition or
dissolution may be conditioned upon failure of the condominium owners to rebuild within a certain period or
upon specified inadequacy of insurance proceeds, or upon specified percentage of damage to the building, or
upon a decision of an arbitrator, or upon any other reasonable condition.
Sec. 10. Whenever the common areas in a condominium project are held by a condominium corporation, such
corporation shall constitute the management body of the project. The corporate purposes of such a
corporation shall be limited to the holding of the common areas, either in ownership or any other interest in
real property recognized by law, to the management of the project, and to such other purposes as may be
necessary, incidental or convenient to the accomplishment of said purposes. The articles of incorporation or
by-laws of the corporation shall not contain any provision contrary to or inconsistent with the provisions of
this Act, the enabling or master deed, or the declaration of restrictions of the project. Membership in a
condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be
transferable separately from the condominium unit of which it is an appurtenance. When a member or
stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the
common areas, he shall automatically cease to be a member or stockholder of the condominium corporation.
Sec. 11. The term of a condominium corporation shall be co-terminus with the duration of the condominium
project, the provisions of the Corporation Law to the contrary notwithstanding.
Sec. 12. In case of involuntary dissolution of a condominium corporation for any of the causes provided by
law, the common areas owned or held by the corporation shall, by way of liquidation, be transferred proindiviso and in proportion to their interest in the corporation to the members or stockholders thereof, subject
to the superior rights of the corporation creditors. Such transfer or conveyance shall be deemed to be a full
liquidation of the interest of such members or stockholders in the corporation. After such transfer or
conveyance, the provisions of this Act governing undivided co-ownership of, or undivided interest in, the
common areas in condominium projects shall fully apply.
Sec. 13. Until the enabling or the master deed of the project in which the condominium corporation owns or
holds the common area is revoked, the corporation shall not be voluntarily dissolved through an action for
dissolution under Rule 104 of the Rules of Court except upon a showing:
(a) That three years after damage or destruction to the project in which the corporation owns or holds the
common areas, which damage or destruction renders a material part thereof unfit for its use prior thereto,
the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction; or

(b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable
and that more than thirty percent of the members of the corporation, if non-stock, or the shareholders
representing more than thirty percent of the capital stock entitled to vote, if a stock corporation, are opposed
to the repair or reconstruction of the project, or
(c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomical, and
that more than fifty percent of the members of the corporation, if non-stock, or the stockholders representing
more than fifty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair
or restoration or remodeling or modernizing of the project; or
(d) That the project or a material part thereof has been condemned or expropriated and that the project is
no longer viable, or that the members holding in aggregate more than seventy percent interest in the
corporation, if non-stock, or the stockholders representing more than seventy percent of the capital stock
entitled to vote, if a stock corporation, are opposed to the continuation of the condominium regime after
expropriation or condemnation of a material portion thereof; or
(e) That the conditions for such a dissolution set forth in the declaration of restrictions of the project in which
the corporation owns of holds the common areas, have been met.
Sec. 14. The condominium corporation may also be dissolved by the affirmative vote of all the stockholders
or members thereof at a general or special meeting duly called for the purpose: Provided, That all the
requirements of Section sixty-two of the Corporation Law are complied with.
Sec. 15. Unless otherwise provided for in the declaration of restrictions upon voluntary dissolution of a
condominium corporation in accordance with the provisions of Sections thirteen and fourteen of this Act, the
corporation shall be deemed to hold a power of attorney from all the members or stockholders to sell and
dispose of their separate interests in the project and liquidation of the corporation shall be effected by a sale
of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporate and
of individual condominium creditors.
Sec. 16. A condominium corporation shall not, during its existence, sell, exchange, lease or otherwise dispose
of the common areas owned or held by it in the condominium project unless authorized by the affirmative
vote of all the stockholders or members.
Sec. 17. Any provision of the Corporation Law to the contrary notwithstanding, the by-laws of a condominium
corporation shall provide that a stockholder or member shall not be entitled to demand payment of his shares
or interest in those cases where such right is granted under the Corporation Law unless he consents to sell
his separate interest in the project to the corporation or to any purchaser of the corporation's choice who
shall also buy from the corporation the dissenting member or stockholder's interest. In case of disagreement
as to price, the procedure set forth in the appropriate provision of the Corporation Law for valuation of shares
shall be followed. The corporation shall have two years within which to pay for the shares or furnish a
purchaser of its choice from the time of award. All expenses incurred in the liquidation of the interest of the
dissenting member or stockholder shall be borne by him.
Sec. 18. Upon registration of an instrument conveying a condominium, the Register of Deeds shall, upon
payment of the proper fees, enter and annotate the conveyance on the certificate of title covering the land
included within the project and the transferee shall be entitled to the issuance of a "condominium owner's"
copy of the pertinent portion of such certificate of title. Said "condominium owner's" copy need not reproduce
the ownership status or series of transactions in force or annotated with respect to other condominiums in
the project. A copy of the description of the land, a brief description of the condominium conveyed, name and
personal circumstances of the condominium owner would be sufficient for purposes of the "condominium
owner's" copy of the certificate of title. No conveyance of condominiums or part thereof, subsequent to the
original conveyance thereof from the owner of the project, shall be registered unless accompanied by a

certificate of the management body of the project that such conveyance is in accordance with the provisions
of the declaration of restrictions of such project.
In cases of condominium projects registered under the provisions of the Spanish Mortgage Law or Act 3344,
as amended, the registration of the deed of conveyance of a condominium shall be sufficient if the Register
of Deeds shall keep the original or signed copy thereof, together with the certificate of the management body
of the project, and return a copy of the deed of conveyance to the condominium owner duly acknowledge
and stamped by the Register of Deeds in the same manner as in the case of registration of conveyances of
real property under said laws.
Sec. 19. Where the enabling or master deed provides that the land included within a condominium project
are to be owned in common by the condominium owners therein, the Register of Deeds may, at the request
of all the condominium owners and upon surrender of all their "condominium owner's" copies, cancel the
certificates of title of the property and issue a new one in the name of said condominium owners as proindiviso co-owners thereof.
Sec. 20. An assessment upon any condominium made in accordance with a duly registered declaration of
restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of
any such assessment plus any other charges thereon, such as interest, costs (including attorney's fees) and
penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the
condominium assessed when the management body causes a notice of assessment to be registered with the
Register of Deeds of the city or province where such condominium project is located. The notice shall state
the amount of such assessment and such other charges thereon a may be authorized by the declaration of
restrictions, a description of the condominium, unit against which same has been assessed, and the name of
the registered owner thereof. Such notice shall be signed by an authorized representative of the management
body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges
or other satisfaction thereof, the management body shall cause to be registered a release of the lien.
Such lien shall be superior to all other liens registered subsequent to the registration of said notice of
assessment except real property tax liens and except that the declaration of restrictions may provide for the
subordination thereof to any other liens and encumbrances.
Such liens may be enforced in the same manner provided for by law for the judicial or extra-judicial foreclosure
of mortgages of real property. Unless otherwise provided for in the declaration of restrictions, the
management body shall have power to bid at foreclosure sale. The condominium owner shall have the same
right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages.
Sec. 21. No labor performed or services or materials furnished with the consent of or at the request of a
condominium owner or his agent or his contractor or subcontractor, shall be the basis of a lien against the
condominium of any other condominium owner, unless such other owners have expressly consented to or
requested the performance of such labor or furnishing of such materials or services. Such express consent
shall be deemed to have been given by the owner of any condominium in the case of emergency repairs of
his condominium unit. Labor performed or services or materials furnished for the common areas, if duly
authorized by the management body provided for in a declaration of restrictions governing the property, shall
be deemed to be performed or furnished with the express consent of each condominium owner. The owner
of any condominium may remove his condominium from a lien against two or more condominiums or any part
thereof by payment to the holder of the lien of the fraction of the total sum secured by such lien which is
attributable to his condominium unit.
Sec. 22. Unless otherwise provided for by the declaration of restrictions, the management body, provided for
herein, may acquire and hold, for the benefit of the condominium owners, tangible and intangible personal
property and may dispose of the same by sale or otherwise; and the beneficial interest in such personal
property shall be owned by the condominium owners in the same proportion as their respective interests in

the common areas. A transfer of a condominium shall transfer to the transferee ownership of the transferor's
beneficial interest in such personal property.
Sec. 23. Where, in an action for partition of a condominium project or for the dissolution of condominium
corporation on the ground that the project or a material part thereof has been condemned or expropriated,
the Court finds that the conditions provided for in this Act or in the declaration of restrictions have not been
met, the Court may decree a reorganization of the project, declaring which portion or portions of the project
shall continue as a condominium project, the owners thereof, and the respective rights of said remaining
owners and the just compensation, if any, that a condominium owner may be entitled to due to deprivation
of his property. Upon receipt of a copy of the decree, the Register of Deeds shall enter and annotate the same
on the pertinent certificate of title.
Sec. 24. Any deed, declaration or plan for a condominium project shall be liberally construed to facilitate the
operation of the project, and its provisions shall be presumed to be independent and severable.
Sec. 25. Whenever real property has been divided into condominiums, each condominium separately owned
shall be separately assessed, for purposes of real property taxation and other tax purposes to the owners
thereof and the tax on each such condominium shall constitute a lien solely thereon.
Sec. 26. All Acts or parts of Acts in conflict or inconsistent with this Act are hereby amended insofar as
condominium and its incidents are concerned.
Sec. 27. This Act shall take effect upon its approval.
Approved: June 18, 1966
Del Banco vs IAC G.R. 72694 December 1 1987
G.R. No. 72694 December 1, 1987
AURORA DEL BANCO, EVELYN DEL BANCO, FEDERICO TAINO, SOLEDAD TAINO, JOVENCIO
TAINO, SAMSON TAINO, NOE TAINO, SOCORRO TAINO and CLEOFAS TAINO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT (Second Civil Cases Division), ALEJANDRA PANSACOLA,
LEONILA ENCALLADO, VEDASTO ENCALLADO, JOSE YEPES, et al., respondents.
PARAS, J.:
This is a petition for review on certiorari by way of appeal from: (a) the decision of respondent Court of
Appeals (Intermediate Appellate Court) * promulgated on May 17, 1985 in AC-G.R. CV No. 70460, entitled
"Alejandra Pansacola, et al. vs. Domen Villabona del Banco, et al." which reversed and set aside the
judgment ** of the trial court; and (b) its resolution ** of October 15, 1985 in the same case, denying
petitioners' motion for reconsideration of the aforementioned decision and their supplement to motion for
reconsideration.
The dispositive portion of the questioned decision (Rollo, p. 97) reads, as follows:
ACCORDINGLY, the decision appealed from is hereby SET ASIDE insofar as it dismisses the complaint, and
another one entered
(1) Declaring plaintiffs-appellants and defendants-appellees, in their respective capacities as described in par.
V of the complaint, as co-owners of the property in dispute, but subject to the four-part pro-indiviso division
already made by said property;
(2) Ordering the cancellation of all certificates of title that may have been issued to any of the parties hereto;
and
(3) Ordering the complete and final partition of the subject property in conformity with law.

For this purpose, this case is hereby remanded to the Court of origin so that a final partition shall be made in
accordance with Sections 2, 3, et. seq., Rule 69 of the Rules of Court.
Let a copy of this decision be furnished to the Register of Deeds for the Province of Quezon.
The facts of the case are taken from the decision of the Appellate Court (Rollo, p. 39) as follows:
In a document executed in the Municipality of San Rafael, Bulacan, on February 11, 1859, three brothers,
Benedicto Pansacola, Jose Pansacola and Manuel Pansacola (known as Fr. Manuel Pena) entered into an
agreement which provided, among others:
(1) That they will purchase from the Spanish Government the lands comprising the Island of Cagbalite which
is located within the boundaries of the Municipality of Mauban, Province of Tayabas (now Quezon) and has
an approximate area of 1,600 hectares;
(2) That the lands shall be considered after the purchase as their common property;
(3) That the co-ownership includes Domingo Arce and Baldomera Angulo, minors at that time represented by
their father, Manuel Pansacola (Fr. Manuel Pena) who will contribute for them in the proposed purchase of
the Cagbalite Island;
(4) That whatever benefits may be derived from the Island shall be shared equally by the co-owners in the
following proportion: Benedicto Pansacola-1/4 share; Jose Pansacola-1/4 share; and, Domingo Arce and
Baldomera Angulo-2/4 shares which shall be placed under the care of their father, Manuel Pansacola (Fr.
Manuel Pena).
On August 14, 1866, co-owners entered into the actual possession and enjoyment of the Island purchased by
them from the Spanish Government. On April 11, 1868 they agreed to modify the terms and conditions of the
agreement entered into by them on February 11, 1859. The new agreement provided for a new sharing and
distribution of the lands, comprising the Island of Cagbalite and whatever benefits may be derived therefrom,
as follows:
(a) The first one-fourth (1/4) portion shall belong to Don Benedicto Pansacola;
(b) The second one-fourth (1/4) portion shall belong to Don Jose Pansacola;
(c) The third one-fourth(1/4) portion shall henceforth belong to the children of their deceased brother, Don
Eustaquio Pansacola, namely: Don Mariano Pansacola,- Maria Pansacola and Don Hipolito Pansacola;
(d) The fourth and last one-fourth (1/4) portion shall belong to their nephews and nieces (1) Domingo Arce,
(2) Baldomera Angulo, (3) Marcelina Flores, (4) Francisca Flores, (5) Candelaria dela Cruz, and (6) Gervasio

Pansacola who, being all minors, are still under the care of their brother, Manuel Pansacola (Fr. Manuel Pena).
The latter is the real father of said minors.
About one hundred years later, on November 18, 1968, private respondents brought a special action for
partition in the Court of First Instance of Quezon, under the provisions of Rule 69 of the Rules of Court,
including as parties the heirs and successors-in-interest of the co-owners of the Cagbalite Island in the second
contract of co-ownership dated April 11, 1968. In their answer some of the defendants, petitioners herein,
interposed such defenses as prescription, res judicata, exclusive ownership, estoppel and laches.
After trial on the merits, the trial court rendered a decision *** dated November 6, 1981 dismissing the
complaint, the dispositive portion of which reads as follows:
WHEREFORE, and in the fight of all the foregoing this Court finds and so holds that the Cagbalite Island has
already been partitioned into four (4) parts among the original co-owners or their successors-in-interest.
Judgment is therefore rendered for the defendants against the plaintiffs dismissing the complaint in the above
entitled case.
Considering that the cross claims filed in the above entitled civil case are not compulsory cross claims and in
order that they may be litigated individually the same are hereby dismissed without prejudice.
IT IS SO ORDERED.

The motion for reconsideration filed by the plaintiffs, private respondents herein, was denied by the trial court
in an order dated February 25, 1982 (Record on Appeal, p. 241).
On appeal, respondent Court reversed and set aside the decision of the lower court (Rollo, p. 117). It also
denied the motion for reconsideration and the supplement to motion for reconsideration filed by private
respondents, in its resolution dated October 15, 1983 (Rollo, p. 86).
Instant petition was filed with the Court on December 5, 1985 (Rollo, p. 12). Petitioners Josefina Pansacola,
et al. having filed a separate petition (G.R. No. 72620) on the same subject matter and issues raised in the
instant 'petition, the counsel for private respondents filed a consolidated comment on the separate petitions
for review on February 24, 1986 with the First Division of the Court (Rollo, p. 119). It appears that counsel
for petitioners also filed a consolidated reply to the consolidated comment of private respondents as required
by the Second Division of the Court (Rollo, p. 151). However, petitioners filed a separate reply in the instant
case on February 18,1987 (Rollo, p. 168)as required by the Court in a Resolution of the Second Division dated
November 24, 1986 (Rollo, p. 160).
On May 19, 1987, private respondents in the instant petition filed a manifestation praying for the denial of
the instant petition in the same manner that G.R. No. 72620 was denied by the Court in its Resolution dated
July 23, 1986 (Rollo, p. 151). Their rejoinder to the reply of petitioners was filed on May 25,1987 (Rollo, p.
179).
On June 8, 1987, the Court resolved to give due course to the petition (Rollo, p. 192). The memorandum of
private respondents was mailed on July 18, 1987 and received in the Court on July 29, 1987 (Rollo, p. 112);
the memorandum for petitioners was mailed on August 18, 1987 and received in the Court on September 7,
1987 (Rollo, p. 177).
The sole issue to be resolved by the Court is the question of whether or not Cagbalite Island is still undivided
property owned in common by the heirs and successors-in-interest of the brothers, Benedicto, Jose and
Manuel Pansacola.
The Pansacola brothers purchased the Island in 1859 as common property and agreed on how they would
share in the benefits to be derived from the Island. On April 11, 1868, they modified the terms and conditions
of the agreement so as to include in the co-ownership of the island the children of their deceased brothers
Eustaquio and the other children of Manuel Pansacola (Fr. Manuel Pena) who were committed in the
agreement of February 11, 1859. The new agreement provided for a new sharing proportion and distribution
of the Island among the co-owners.
On January 20, 1907, the representative of the heirs of all the original owners of Cagbalite Island entered into
an agreement to partition the Island, supplemented by another agreement dated April 18, 1908. The contract
dated January 20, 1907 provides as follows:
Sa Mauban, Tayabas, ika 20 ng Enero ng 1907 caming mga quinatawan ng mga ibang co-herederos na hindi
caharap, sa pulong na ito, sa nasa naming lahat na magcaroon na ng catahimikan ang aming-aming cabahagui
sa Pulong Kagbalete sumacatuid upang mapagtoos ang hangahan ng apat na sapul na pagcacabahagui nitong
manang ito, pagcacausap na naming lahat at maihanay at mapagtalonan ang saysay ng isa't isa, ay cusa
naming pinagcasunduan at pinasiya ang nangasosonod:
Una: Ang malaquing calupaan, alis ang lahat na pacatan ay babahaguin alinsunod sa pagcabaki na guinawa
sa croquis na niyari ng practico agrimensor Don Jose Garcia.
Icalawa: Ang Lomingoy, doon ang tuid na guhit sa ilong ng Pait ay pagaapatin ding sinlaqui ayon sa dating
pagkakabaki.
Icatlo: Cung magawa na ang tunay na piano at icapit na sa lupa, paglalagay ng nadarapat na mojon, ang
masacupan ng guhit, sumacatuid ang caingin at pananim ng isa na nasacupan ng pucto na noocol sa iba, ay
mapapasulit sa dapat mag-ari, na pagbabayaran nito ang nagtanim sa halagang:- bawat caponong niog na

nabunga, P 1.00 'un peso); cung ang bias ay abot sa isang vara, P 0.50; cung bagong tanim o locloc P 0. 50
ang capono.
Icapat: Ang lahat na pacatan ay bacod na pagaapatin at bawat bahagui ay noocol sa isat-isa sa apat na sanga
ng paganacang nagmana.
Icalima: Upang ang naipatanim ng bawat isa ay matama sa canya ng mailagan ang hirap ng loob ng nagatikha;
ay pagtotolong-tolongan ng lahat naiba na mahusay ang dalawang partes na magcalapit na mapa ayong
tumama, hangang may pagluluaran, sa nagsikap at maoyanam, maidaco sa lugar na walang cailangang
pagusapan.
Icanim: Ang casulatang ito, cung mapermahan na na magcacaharap sampong ng mga ibang co-herederos na
notipicahan nitong lahat na pinagcasundoan ay mahahabilin sa camay ng agrimensor, Amadeo Pansacola,
upang canyang mapanusugan ang maipaganap ang dito'y naootos.
Na sa catunayan at catibayan ng lahat na nalalagda dito, sa pag galang at pag ganap dito sa paingacaisahan
ay pumirma sampo ng mga sacsing caharap at catanto ngayong fecha ayon sa itaas.
The contract dated April 18, 1908 provides as follows:
Sa Mauban, ika 18 ng Abril ng 1908, sa pagcacatipon ng lahat na firmantes nito ay pinagcaisahan itong
nangasosonod:
Una Pinagtitibay ang mga pinagcasundoan sa itaas noong 20 ng Enero ng 1907, liban na lamang sa mga
pangcat na una at icapat at tongcol doon pinasiya naming bahaguinin ng halohalo at paparejo ang calupaan
at pacatan.
Ycalawa Sa pagsucat ng agrimensor na si Amadeo at paggawa ng piano at descripcion ay pagbabayaran
siya ng sa bawat isa naoocol sa halagang isang piso sa bawat hectares.
Icatlo Ang counting pucto sa 'Mayanibulong' na may caingin ni G. Isidro Altamarino, asawa ni Restitute ay
tutumbasan naman cay G. Norberto Pansacola sa lugar ng Dapo calapit ng Pinangalo ng gasing sucat.
Icapat Sa inilahad na piano ay pinasiya nang itoloy at upang maca pagparehistro ang isa't isa ay
pinagcaisahang magcacagastos na parepareho para sa tablang pangmohon at ibat iba pang cagastusan.
Sa catunayan at catibayan ay cami, pumirma. (Record on Appeal, p. 224)
There is nothing in all four agreements that suggests that actual or physical partition of the Island had really
been made by either the original owners or their heirs or successors-in-interest. The agreement entered into
in 1859 simply provides for the sharing of whatever benefits can be derived from the island. The agreement,
in fact, states that the Island to be purchased shall be considered as their common property. In the second
agreement entered in 1868 the co-owners agreed not only on the sharing proportion of the benefits derived
from the Island but also on the distribution of the Island each of the brothers was allocated a 1/4 portion of
the Island with the children of the deceased brother, Eustaquio Pansacola allocated a 1/4 portion and the
children of Manuel Pansacola (Fr. Manuel Pena) also allocated a 1/4 portion of the Island. With the distribution
agreed upon each of the co-owner is a co-owner of the whole, and in this sense, over the whole he exercises
the right of dominion, but he is at the same time the sole owner of a portion, in the instant case, a 1/4 portion
(for each group of co-owners) of the Island which is truly abstract, because until physical division is effected
such portion is merely an Ideal share, not concretely determined (3 Manresa, Codigo Civil, 3rd Ed., page 486,
cited in Lopez vs. Cuaycong, 74 Phil. 601; De la Cruz vs. Cruz, 32 SCRA 307 [1970]; Felices vs. Colegado, 35
SCRA 173 [1970],; Dultra vs. CFl 70 SCRA 465 [1976]; Gatchalian vs. Arlegui, 75 SCRA 234 [1977].)
In the agreement of January 20, 1907, the heirs that were represented agreed on how the Island was to be
partitioned. The agreement of April 18, 1908 which supplements that of January 20, 1907 reveals that as of
the signing of the 1908 agreement no actual partition of the Island had as yet been done. The second and
fourth paragraphs of the agreement speaks of a survey yet to be conducted by a certain Amadeo and a plan
and description yet to be made. Virgilio Pansacola, a son of the surveyor named Amadeo who is referred to
in the contract dated April 18, 1908 as the surveyor to whom the task of surveying Cagbalite Island pursuant

to said agreement was entrusted, however, testified that said contracts were never implemented because
nobody defrayed the expenses for surveying the same (Record on Appeal, p. 225).
Petitioners invoke res judicata to bar this action for partition in view of the decision of the Court in G.R. No.
21033,"Domingo Arce vs. Maria Villabona, et al.," 21034, "Domingo Arce vs. Francisco Pansacola, et al.," and
21035,"Domingo Arce vs. Emiliano Pansacola, et al." promulgated on February 20, 1958 (Rollo, p. 141) and
Brief for Defendants-Appellees, p. 87 Appendix 1), wherein the Court said:
Considering the facts that he waited for a period of nearly 23 years after the return from his deportation
before taking any positive action to recover his pretended right in the property in question, gives great credit,
in our opinion, to the declaration of the witnesses for the defense (a) that the original parcel of land was
partitioned as they claim, and (b) that the plaintiff had disposed of all the right and interest which he had in
the portion which had been given to him.
The issue in the aforementioned case which were tried together is not whether there has already been a
partition of the Cagbalite Island. The actions were brought by the plaintiff to recover possession of three
distinct parcels of land, together with damages. In fact the word partition was used in the metaphysical or
Ideal sense (not in its physical sense).
Commenting on the above ruling of the Court in connection with the instant case, the respondent Court said:
Concededly, the Supreme Court decision in G.R. Nos. 21033-35 (Exh. X) did use or employ the word
"partition." A careful reading of the said decision will, however, reveal, and we so hold, that the employment
or use of the word "partition" therein was made not in its technical and legal meaning or sense adverted to
above, but, rather in its Ideal, abstract and spiritual sense, this is (at) once evident from the bare statement
in said decision to the effect that the property was divided into four parts, without any reference to the specific
parts of the property that may have been adjudicated to each owner. There being no such reference in the
decision and in the judgment affirmed therein to the adjudication of specific and definite portions of the
property to each co-owner, there is a clear and logical inference that there was indeed no adjudication of
specific and definite portions of the property made to each co-owner.
It must be admitted that the word "partition" is not infrequently used both in popular and technical parlance
(Fule vs. Fule, 52 Phil. 750 [1929]). For purposes of the aforementioned case, evidently the Court used the
word "partition" to refer to the distribution of the Cagbalite Island agreed upon by the original owners and in
the later agreements, by the heirs and their subsequent successors-in-interest. There need not be a physical
partition; a distribution of the Island even in a state of indiviso or was sufficient in order that a co-owner may
validly sell his portion of the co-owned property. The sale of part of a particular lot thus co-owned by one coowner was within his right pro-indivisois valid in its entirety (Pamplona vs. Moreto, 96 SCRA 775 [1980]) but
he may not convey a physical portion with boundaries of the land owned in common (Mercado vs. Liwanag,
5 SCRA 472 [1962]). Definitely, there was no physical partition of the Island in 1859. Neither could there have
been one in 1894 because the manner of subdividing the Island was only provided for in the later agreements
entered into by the heirs in 1907 and 1908. There was a distribution of the Island in 1868 as agreed upon by
the original co-owners in their agreement of April 11, 1868. Any agreement entered into by the parties in
1894 could be no more than another agreement as to the distribution of the Island among the heirs of the
original co-owners and the preparation of a tentative plan by a practical surveyor, a Mr. Jose Garcia, mentioned
in the first paragraph of the 1907 agreement, preparatory to the preparation of the real plan to be prepared
by the surveyor Amadeo, mentioned in the agreement of April 18, 1908.
What is important in the Court's ruling in the three aforementioned cases is that, the fact that there was a
distribution of the Island among the co-owners made the sale of Domingo Arce of the portion allocated to
him though pro-indiviso, valid. He thus disposed of all his rights and interests in the portion given to him.
It is not disputed that some of the private respondents and some of the petitioners at the time the action for
partition was filed in the trial court have been in actual possession and enjoyment of several portions of the

property in question (Rollo, p. 148). This does not provide any proof that the Island in question has already
been actually partitioned and co-ownership terminated. A co-owner cannot, without the conformity of the
other co-owners or a judicial decree of partition issued pursuant to the provision of Rule 69 of the Rules of
Court (Rule 71 of the Old Rules), adjudicate to himself in fee simple a determinate portion of the lot owned
in common, as his share therein, to the exclusion of other co-owners (Santos, Jr. vs. Buenconsejo, 14 SCRA
407 [1965]; Carvajal vs. Court of Appeals, 112 SCRA 237 [1982]). It is a basic principle in the law of coownership both under the present Civil Code as in the Code of 1889 that no individual co- owner can claim
any definite portion thereof (Diversified Credit Corporation vs. Rosada 26 SCRA 470 [1968]). lt is therefore of
no moment that some of the co-owners have succeeded in securing cadastral titles in their names to some
portions of the Island occupied by them (Rollo, p. 10).
It is not enough that the co-owners agree to subdivide the property. They must have a subdivision plan drawn
in accordance with which they take actual and exclusive possession of their respective portions in the plan
and titles issued to each of them accordingly (Caro vs. Court of Appeals, 113 SCRA 10 [1982]). The mechanics
of actual partition should follow the procedure laid down in Rule 69 of the Rules of Court. Maganon vs.
Montejo, 146 SCRA 282 [1986]).
Neither can such actual possession and enjoyment of some portions of the Island by some of the petitioners
herein be considered a repudiation of the co-ownership. It is undisputed that the Cagbalite Island was
purchased by the original co-owners as a common property and it has not been proven that the Island had
been partitioned among them or among their heirs. While there is co-ownership, a co-owner's possession of
his share is co-possession which is linked to the possession of the other co-owners (Gatchalian vs. Arlegui, 75
SCRA 234 [1977]).
Furthermore, no prescription shall run in favor of a co-owner against his co-owners or co-heirs so long as he
expressly or impliedly recognizes the co-ownership (Valdez vs. Olonga, 51 SCRA 71 [1973], Tero vs. Tero,
131 SCRA 100 [1984]). Co-owners cannot acquire by prescription the share of the other co-owners, absent a
clear repudiation of the co-ownership clearly communicated to the other co-owners (Mariano vs. De Vega,
148 SCRA 342 [1987]).
An action for partition does not prescribe. Article 403 of the Old Civil Code, now Article 497, provides that the
assignees of the co-owners may take part in the partition of the common property, and Article 400 of the Old
Code, now Article 494 provides that each co-owner may demand at any time the partition of the common
property, a provision which implies that the action to demand partition is imprescriptible or cannot be barred
by laches (Budlong vs. Pondoc, 79 SCRA 24 [1977]). An action for partition does not lie except when the coownership is properly repudiated by the co- owner (Jardin vs. Hollasco, 117 SCRA 532 [1982]).
On July 23, 1986, the Court through its Second Division denied the petition for the review of G.R. No. 72620,
the petition for review on certiorari separately filed by Josefina Pansacola (Rollo, p. 151).
PREMISES CONSIDERED, the instant petition is likewise DENIED for lack of merit.
SO ORDERED.

Pendel vs Bartolome 23 Phil 450

Facts: Petitioner Vicenta Ortiz y Felin de Pardell and respondent Matilde Ortiz y Felin Bartolome were the
existing heirs of the late Miguel Ortiz and Calixta Felin. On 1888, Matilde and co-defendant Gaspar de
Bartolome y Escribano took it upon themselves without an judicial authorization or even extra judicial
agreement the administration of the properties of the late Calixta and Miguel. These properties included a
house in Escolta Street, Vigan, Ilocos Sur; a house in Washington Street, Vigan, Ilocos Sur; a lot in Magallanes

Street, Vigan, Ilocos Sur; parcels of rice land in San Julian and Sta. Lucia; and parcels of land in Candon,
Ilocos Sur.
Vicenta filed an action in court asking that the judgement be rendered in restoring and returning to them one
half of the total value of the fruits and rents, plus losses and damages from the aforementioned properties.
However, respondent Matilde asserted that she never refused to give the plaintiff her share of the said
properties. Vicenta also argued that Matilde and her husband, Gaspar are obliged to pay rent to the former
for their occupation of the upper story of the house in Escolta Street.
Issue: Whether or not Matilde and Gaspar are obliged to pay rent for their occupation of the said property
Held: No. The Court ruled that the spouses are not liable to pay rent. Their occupation of the said property
was a mere exercise of their right to use the same as a co-owner. One of the limitations on a co-owners right
of use is that he must use it in such a way so as not to injure the interest of the other co-owners. In the case
at bar, the other party failed to provide proof that by the occupation of the spouses Bartolome, they prevented
Vicenta from utilizing the same

Casilao vs CA GR L-78178 April 15 1988

G.R. No. 78178 April 15, 1988
DELIA BAILON-CASILAO, LUZ PAULINO-ANG, EMMA PAULINO-YBANEZ, NILDA PAULINOTOLENTINO,

and

SABINA

BAILON,

petitioners,

vs.
THE HONORABLE COURT OF APPEALS and CELESTINO AFABLE, respondents.

Veronico E. Rubio for petitioners.

Mario G. Fortes for private-respondent.
CORTES, J.:
The fate of petitioners' claim over a parcel of land rests ultimately on a determination of whether or not said
petitioners are chargeable with such laches as may effectively bar their present action.
The petitioners herein filed a case for recovery of property and damages with notice of lis pendens on March
13, 1981 against the defendant and herein private respondent, Celestino Afable. The parcel of land involved
in this case, with an area of 48,849 square meters, is covered by Original Certificate of Title No. 1771 issued
on June 12, 1931, in the names of Rosalia, Gaudencio, Sabina Bernabe, Nenita and Delia, all surnamed Bailon,
as co-owners, each with a 1/6 share. Gaudencio and Nenita are now dead, the latter being represented in
this case by her children. Luz, Emma and Nilda. Bernabe went to China in 1931 and had not been heard from
since then [Decision of the Court of Appeals, Rollo, p. 39].
It appears that on August 23, 1948, Rosalia Bailon and Gaudencio Bailon sold a portion of the said land
consisting of 16,283 square meters to Donato Delgado. On May 13, 1949, Rosalia Bailon alone sold the
remainder of the land consisting of 32,566 square meters to Ponciana V. Aresgado de Lanuza. On the same
date, Lanuza acquired from Delgado the 16,283 square meters of land which the latter had earlier acquired
from Rosalia and Gaudencio. On December 3, 1975, John Lanuza, acting under a special power of attorney
given by his wife, Ponciana V. Aresgado de Lanuza, sold the two parcels of land to Celestino Afable, Sr.
In all these transfers, it was stated in the deeds of sale that the land was not registered under the provisions
of Act No. 496 when the fact is that it is. It appears that said land had been successively declared for taxation

first, in the name of Ciriaca Dellamas, mother of the registered co-owners, then in the name of Rosalia Bailon
in 1924, then in that of Donato Delgado in 1936, then in Ponciana de Lanuza's name in 1962 and finally in
the name of Celestino Afable, Sr. in 1983.
In his answer to the complaint filed by the herein petitioners, Afable claimed that he had acquired the land in
question through prescription and contended that the petitioners were guilty of laches.He later filed a thirdparty complaint against Rosalia Bailon for damages allegedly suffered as a result of the sale to him of the
land.
After trial, the lower court rendered a decision:
1. Finding and declaring Celestino Afable, a co-owner of the land described in paragraph III of the complaint
having validly bought the two-sixth (2/6) respective undivided shares of Rosalia Bailon and Gaudencio Bailon;
2. Finding and declaring the following as pro-indiviso co-owners, having 1/6 share each, of the property
described in paragraph III of the complaint, to wit:
a. Sabina Bailon
b. Bernabe Bailon
c. Heirs of Nenita Bailon-Paulino
d. Delia Bailon-Casilao;
3. Ordering the segregation of the undivided interests in the property in order to terminate co-ownership to
be conducted by any Geodetic Engineer selected by the parties to delineate the specific part of each of the
co-owners.
4. Ordering the defendant to restore the possession of the plaintiffs respective shares as well as all attributes
of absolute dominion;
5. Ordering the defendant to pay the following:
a. P5,000.00 as damages;
b. P2,000.00 as attorney's fees and;
c. to pay the costs.
[Decision of the Trial Court, Rollo, p. 37-38].
On appeal, the respondent Court of Appeals affirmed the decision of the lower court insofar as it held that
prescription does not he against plaintiffs-appellees because they are co-owners of the original vendors.
However, the appellate court declared that, although registered property cannot be lost by prescription,
nevertheless, an action to recover it may be barred by laches, citing the ruling in Mejia de Lucaz v.

Gamponia [100 Phil. 277 (1956)]. Accordingly, it held the petitioners guilty of laches and dismissed their
complaint. Hence, this petition for review on certiorari of the decision of the Court of Appeals.
The principal issue to be resolved in this case concerns the applicability of the equitable doctrine of laches.
Initially though, a determination of the effect of a sale by one or more co-owners of the entire property held
in common without the consent of all the co-owners and of the appropriate remedy of the aggrieved coowners is required.
The rights of a co-owner of a certain property are clearly specified in Article 493 of the Civil Code.Thus:
Art. 493. Each co-owner shall have the full ownership of his part and of the acts and benefits pertaining
thereto, and he may therefore alienate assign or mortgage it and even substitute another person in its
enjoyment, except when personal rights are involved. But the effect of the alienation or mortgage, with

respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership. [Emphasis supplied.]
As early as 1923, this Court has ruled that even if a co-owner sells the whole property as his, the sale will
affect only his own share but not those of the other co-owners who did not consent to the sale [Punsalan v.
Boon Liat 44 Phil. 320 (1923)]. This is because under the aforementioned codal provision, the sale or other
disposition affects only his undivided share and the transferee gets only what would correspond to his grantor

in the partition of the thing owned in common.[Ramirez v. Bautista, 14 Phil. 528 (1909)]. Consequently, by
virtue of the sales made by Rosalia and Gaudencio Bailon which are valid with respect to their proportionate
shares, and the subsequent transfers which culminated in the sale to private respondent Celestino Afable, the
said Afable thereby became a co-owner of the disputed parcel of land as correctly held by the lower court
since the sales produced the effect of substituting the buyers in the enjoyment thereof [Mainit v. Bandoy, 14
Phil. 730 (1910)].
From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of
the entire property by one co-owner without the consent of the other co-owners is not null and void. However,
only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property.

The proper action in cases like this is not for the nullification of the sale or for the recovery of possession of
the thing owned in common from the third person who substituted the co-owner or co-owners who alienated
their shares, but the DIVISION of the common property as if it continued to remain in the possession of the
co-owners who possessed and administered it [Mainit v. Bandoy, supra.]
Thus, it is now settled that the appropriate recourse of co-owners in cases where their consent were not
secured in a sale of the entire property as well as in a sale merely of the undivided shares of some of the coowners is an action. for PARTITION under Rule 69 of the Revised Rules of Court. Neither recovery of
possession nor restitution can be granted since the defendant buyers are legitimate proprietors and possessors
in joint ownership of the common property claimed [Ramirez v. Bautista, supra].
As to the action for petition, neither prescription nor laches can be invoked.
In the light of the attendant circumstances, defendant-appellee's defense of prescription is a vain proposition.
Pursuant to Article 494 of the Civil Code, '(n)o co-owner shall be obliged to remain in the co-ownership. Such
co-owner may demand at anytime the partition of the thing owned in common, insofar as his share is
concerned.' [Emphasis supplied.] In Budiong v. Bondoc [G.R. No. L-27702, September 9, 1977, 79 SCRA 241,
this Court has interpreted said provision of law to mean that the action for partition is imprescriptible or cannot
be barred by prescription. For Article 494 of the Civil Code explicitly declares: "No prescription shall lie in favor
of a co-owner or co- heir so long as he expressly or impliedly recognizes the co-ownership."
Furthermore, the disputed parcel of land being registered under the Torrens System, the express provision of
Act No. 496 that '(n)o title to registered land in derogation to that of the registered owner shall be acquired
by prescription or adverse possession' is squarely applicable. Consequently, prescription will not lie in favor of
Afable as against the petitioners who remain the registered owners of the disputed parcel of land.
It is argued however, that as to the petitioners Emma, Luz and Nelda who are not the registered co-owners
but merely represented their deceased mother, the late Nenita Bailon, prescription lies.Respondents bolster
their argument by citing a decision of this Court in Pasion v. Pasion [G.R.No. L-15757, May 31, 1961, 2 SCRA
486, 489] holding that "the imprescriptibility of a Torrens title can only be invoked by the person in whose

name the title is registered" and that 'one who is not the registered owner of a parcel of land cannot invoke
imprescriptibility of action to claim the same.'
Reliance on the aforesaid Pasion case is futile. The ruling therein applies only against transferees other than
direct issues or heirs or to complete strangers. The rational is clear:
If prescription is unavailing against the registered owner, it must be equally unavailing against the latter's
hereditary successors, because they merely step into the shoes of the decedent by operation of law (New
Civil Code, Article 777; Old Civil Code, Article 657), the title or right undergoing no change by its
transmission mortis causa [Atus, et al., v. Nunez, et al., 97 Phil. 762, 764].
The latest pronouncement of this Court in Umbay v. Alecha [G. R. No. 67284, March 18, 1985, 135 SCRA 427,
429], which was promulgated subsequent to the Pasion case reiterated the Atus doctrine. Thus:

Prescription is unavailing not only against the registered owner but also against his hereditary successors,
because they merely step into the shoes of the decedent by operation of law and are merely the continuation
of the personality of their predecessor-in-interest. [Barcelona v. Barcelona, 100 Phil. 251, 257].
Laches is likewise unavailing as a shield against the action of herein petitioners.
Well-stated in this jurisdiction are the four basic elements of laches, namely: (1) conduct on the part of the
defendant or of one under whom he claims, giving rise to the situation of which complaint is made and for
which the complainant seeks a remedy; (2) delay in asserting the corporations complainant's rights, the
complainant having had knowledge or notice of the defendant's conduct and having been afforded an
opportunity to institute suit; (3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and, (4) injury or prejudice to the defendant in the event
relief is accorded to the complainant, or the suit is not held to be barred [Go China Gun, et al. v. Co Cho et
al., 96 Phil. 622 (1955)].
While the first and last elements are present in this case, the second and third elements are missing.
The second element speaks of delay in asserting the complainant's rights. However, the mere fact of delay is
insufficient to constitute, laches. It is required that (1) complainant must have had knowledge of the conduct

of defendant or of one under whom he claims and (2) he must have been afforded an opportunity to institute
suit. This court has pointed out that laches is not concerned with the mere lapse of time. Thus:
Laches has been defined as the failure or neglect, for an unreasonable length of time to do that which by
exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right
within a reasonable time warranting a presumption that the party entitled to assert it either has abandoned
it or declined to assert it. Tijam, et al., v. Sibonghanoy, G.R. No. L-21450, April 25, 1968, 23 SCRA 29,35;
Tendo v. Zamacoma, G.R. No. L-63048, August 7, 1985, 138 SCRA 78, 90].
The doctrine of "laches" or of "stale demands" is based upon grounds of public policy which requires for the
peace of society, the discouragement of stale claims and unlike the statute of limitations, is not a mere

question of time but is principally a question of inequity or unfairness of permitting a right or claim to be
enforced or asserted," [Tijam v. Sibonghanoy, supra, p. 35]. [Emphasis supplied.]
It must be noted that while there was delay in asserting petitioners' rights, such delay was not attended with
any knowledge of the sale nor with any opportunity to bring suit. In the first place, petitioners had no notice
of the sale made by their eldest sister. It is undisputed that the petitioner co-owners had entrusted the care
and management of the parcel of land to Rosalia Bailon who was the oldest among them [TSN, July 27, 1983,
p. 14]. In fact, Nicanor Lee, a son of Rosalia, who was presented as a witness by the plaintiffs-petitioners,
testified on cross-examination that his mother was only the administrator of the land as she is the eldest and
her brothers and sisters were away [TSN, October 5, 1983, p. 15]. Indeed, when Delia Bailon-Casilao left
Sorsogon in 1942 after she got married, it was only in 1983 that she returned. Sabina on the other hand, is
said to be living in Zamboanga while Bernabe who left for China in 1931 has not been heard from since then.
Consequently, when Rosalia, from whom the private respondent derived his title, made the disputed sales
covering the entire property, the herein petitioners were unaware thereof.
In the second place, they were not afforded an opportunity to bring suit inasmuch as until 1981, they were
kept in the dark about the transactions entered into by their sister. It was only when Delia Bailon-Casilao
returned to Sorsogon in 1981 that she found out about the sales and immediately, she and her co-petitioners
filed the present action for recovery of property. The appellate court thus erred in holding that 'the petitioners
did nothing to show interest in the land." For the administration of the parcel of land was entrusted to the
oldest co-owner who was then in possession thereof precisely because the other co-owners cannot attend to
such a task as they reside outside of Sorsogon where the land is situated. Her co-owners also allowed her to
appropriate the entire produce for herself because it was not even enough for her daily consumption [TSN,
October 5, 1983, pp. 17-18]. And since petitioner was the one receiving the produce, it is but natural that she

was the one to take charge of paying the real estate taxes. Now, if knowledge of the sale by Rosalia was
conveyed to the petitioners only later, they cannot be faulted for the acts of their co-owner who failed to live
up to the trust and confidence expected of her. In view of the lack of knowledge by the petitioners of the
conduct of Rosalia in selling the land without their consent in 1975 and the absence of any opportunity to
institute the proper action until 1981, laches may not be asserted against the petitioners.
The third element of laches is likewise absent. There was no lack of knowledge or notice on the part of the
defendant that the complainants would assert the right on which they base the suit. On the contrary, private
respondent is guilty of bad faith in purchasing the property as he knew that the property was co-owned by
six persons and yet, there were only two signatories to the deeds of sale and no special authorization to self
was granted to the two sellers by the other co-owners.
Even as the land here was misrepresented in the deeds of sale as "unregistered," the truth was that Afable
already had notice that the land was titled in the name of six persons by virtue of the Certificate of Title which
was already in his possession even before the sale. Such fact is apparent from his testimony before the court a

quo:
COURT:
Q: From whom did you get the certificate of Title?
A: When it was mortgaged by Ponciana Aresgado.
Q: It was mortgaged to you before you bought it?
A: Yes, Your Honor. (TSN, March 5, 1984, p. 12) When cross-examined, he stated:
Q: Mr. Witness, the original Certificate of Title was given to you in the year 1974, was it not?
A: 1975.
Q: In 1975, you already discovered that the title was in the name of several persons, is it not?
A: Yes, sir.
Q: When you discovered that it is in the name of several persons, you filed a case in court for authority to
cancel the title to be transferred in your name, is it not?
A: Yes, sir.
Q: And that was denied by the Court of First Instance of Sorsogon because there was ordinary one signatory
to the deed of sale instead of six, was it not?
A: Not one but two signatories.
[Decision of the Regional Trial Court of Sorsogon, Rollo, p. 35]
Such actual knowledge of the existence of other co-owners in whose names the lot subject of the sale was
registered should have prompted a searching inquiry by Afable considering the well- known rule in this
jurisdiction that:
... a person dealing with a registered land has a right to rely upon the face of the Torrens certificate of title
and to dispense with the need of inquiring further, except when the party concerned has actual knowledge of
facts and circumstances that would impel a reasonably cautions man to make such inquiry. [Gonzales v. IAC
and Rural Bank of Pavia, Inc., G.R. No. 69622, January 29, 1988).
Moreover, the undisputed fact is that petitioners are relatives of his wife. As a genuine gesture of good faith,
he should have contacted the petitioners who were still listed as co-owners in the certificate of title which was
already in his possession even before the sale. In failing to exercise even a minimum degree of ordinary
prudence required by the situation, he is deemed to have bought the lot at his own risk. Hence any prejudice
or injury that may be occasioned to him by such sale must be borne by him.
Indeed, aware of the flaws impairing his title, Afable went to the herein petitioner Delia Bailon-Casilao, asking
the latter to sign a document obviously to cure the flaw [TSN, July 27, 1983, p.6]. Later, he even filed a
petition in the Court of First Instance to register the title in his name which was denied as aforesaid.

It may be gleaned from the foregoing examination of the facts that Celestino Afable is not a buyer in good
faith. Laches being an equitable defense, he who invokes it must come to the court with clean hands.
WHEREFORE, the petition for certiorari is hereby GRANTED, the challenged decision of the Court of Appeals
is SET ASIDE, and the decision of the trial court is REINSTATED.
SO ORDERED.

Roque vs IAC GR 75886 August 30 1988

G.R. No. 75886 August 30, 1988
CONCEPCION

ROQUE,

petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT, ERNESTO ROQUE, FILOMENA OSMUNDO, CECILIA
ROQUE, MARCELA ROQUE, JOSE ROQUE and RUBEN ROQUE, respondents.

Lorenzo J. Liwag for petitioner.

Dominador Ad Castillo for private respondents.
FELICIANO, J.:
The subject of the present Petition for Review is the 31 July 1986 Decision of the former Intermediate
Appellate Court in AC-G.R. CV No. 02248 (entitled, "Concepcion Roque, plaintiff-appellee, vs. Ernesto Roque,
Filomena Osmunda Cecilia Roque, Marcela Roque, Jose Roque and Ruben Roque, defendants-appellants")
which reversed and set aside on appeal the decision of the Regional Trial Court of Malolos, Branch 9.
The controversy here involves a 312 square meter parcel of land situated in San Juan, Malolos, Bulacan and
designated as Lot No. 1549 of the Cadastral Survey of Malolos. The property was registered originally in the
name of Januario Avendao, a bachelor who died intestate and without issue on 22 October 1945.
On 21 September 1959, the intestate heirs of Januario Avendafio executed a document entitled "Paghahati at
Pagtagabuyan ng Mana sa Labas ng Hukuman."

Through this instrument, extrajudicial partition of Lot No.

1549 was effected among the intestate heirs as follows:

a. One-fourth (1/4) undivided portion to Illuminada Avendao.
b. One-fourth (1/4) undivided portion to Gregorio Avendafio and Miguel Avendao.
c. One-fourth (1/4) undivided portion to Bernardino, Bienvenido, Numeriano and Rufina, all surnamed
Avendao.
d. One-fourth (1/4) undivided portion to respondent Emesto Roque and Victor Roque.

On 28 September 1959, co-owners Illuminada, Gregorio, Miguel, Bernardino, Bienvenido, Numeriano and
Rufina, all surnamed Avendao, in consideration of the aggregate amount of P500.00, transferred their
collective and undivided threefourths (3/4) share in Lot No. 1549 to respondent Ernesto Roque and Victor
Roque, thereby vesting in the latter full and complete ownership of the property. The transactions were
embodied in two (2) separate deeds of sale both entitled "Kasulatan ng Bilihang Patuluyan"
notarized. Subsequently, in an unnotarized "Bilihan Lubos at Patuluyan"

and both duly

dated 27 November 1961, Emesto

and Victor Roque purportedly sold a three-fourths (3/4) undivided portion of Lot No. 1549 to their half-sister,
petitioner Concepcion Roque, for the same amount. The property, however, remained registered in the name
of the decedent, Januario Avendao.
Upon the instance of petitioner Concepcion Roque and allegedly of respondent Ernesto Roque, Lot No. 1549
was surveyed on 20 September 1975. Consequent thereto, a Subdivision Plan 5 was drawn up by the Geodetic
Engineer Identifying and delineating a one-fourth (1/4) portion (78 square meters) of the property as
belonging to respondent Ernesto Roque and Victor Roque (who had died on 14 April 1962), upon the one

hand, and a three-fourths (3/4) portion (234 square meters) of the same property as belonging to petitioner
Concepion Roque, upon the other hand. Petitioner claimed that preparation of the Subdivision Plan, which
was approved on 3 November 1975 by the Land Registration Commission was a preliminary step leading
eventually to partition of Lot No. 1549, partition allegedly having been previously agreed upon inter se by the
co-owners. Respondents Ernesto Roque and the legal heirs of Victor Roque, however, refused to acknowledge
petitioner's claim of ownership of any portion of Lot No. 1549 and rejected the plan to divide the land.
Attempts at amicable settlement having fallen through, petitioner Concepcion Roque, on 6 December 1977,
filed a Complaint for "Partition with Specific Performance"

(docketed as Civil Case No. 5236-M) with Branch

2 of the then Court of First Instance of Malolos against respondents Emesto Roque and the heirs of Victor
Roque. In her complaint, petitioner (plaintiff below) claimed legal ownership of an undivided threefourths
(3/4) portion of Lot No. 1549, by virtue of the 27 November 1961 "Bilihan Lubos at Patuluyan" executed in
her favor by Emesto Roque and Victor Roque. In support of this claim, petitioner also presented an undated
and unnotarized "Kasulatang Pagkilala sa Bilihan Patuluyan ng Bahagui at Pagmamana sa Labas ng Hukuman
at Paghahati-hati at Abuyan ng Bahagui"

said to have been signed by the respondents in acknowledgment

of the existence and validity of the Bilihan in favor of petitioner. Finally, petitioner alleged that, as a coowner
of Lot No. 1549, she had a right to seek partition of the property, that she could not be compelled to remain
in the coownership of the same.
In an Answer with Compulsory Counterclaim

filed on 28 December 1977, respondents (defendants below)

impugned the genuineness and due execution of the "Bilihan Lubos at Patuluyan" dated 27 November 1961
on the ground "that the signatures appearing thereon are not the authentic signatures of the supposed
signatories ...." It was also alleged that petitioner Concepcion Roque, far from being a co-owner of Lot No.
1549, "occupied a portion of the lot in question by mere tolerance of the [defendants]." Respondents also
refused to honor the unnotarized Kasulatan and, additionally, denied having had any participation in the
preparation of the Subchvision Plan.
On 27 June 1983, the trial court (now Branch 9, Regional Trial Court of Malolos) rendered a Decision,

the

dispositive portion of which read:

WHEREFORE, judgment is hereby rendered, in favor of the plaintiff and against the defendants;
1. Ordering the heirs of the late Victor Roque namely Filomena Osmunda his spouse, his children, Cecilia
Roque, Marcela Roque, Jose Roque and Ruben Roque and their uncle and co-defendant Emesto Roque, to
execute a deed of confirmation of the sale made by Emesto and Victor Roque in favor of plaintiff Concepcion
Roque, entitled "Bilihan Lubos at Patuluyan," executed on November 27, 1961, Exh. E, over the 3/4 portion
of the subject property;
2. Ordering the partition of the parcel of land described in par. 3 of tie complaint covered by Original Certificate
of Title No. 1442 Bulacan issued in the name of Januario Avendafio, in the proportion of 3/4 to pertain to
Concepcion Roque, and 1/4 to pertain to Emesto Roque and his co- defendants, his sister-in-law, nephews
and nieces, in accordance with the approved subdivision plan (LRC Psd-230726).
3. Ordering defendants,jointly and severally, to pay to plaintiff the sum of P2,000.00 as and for attomey's
fees and the costs of suit.
SO ORDERED.
The respondents appealed from this decision alleging the following errors:
I
The lower court erred when it decided and ordered defendantsappellants to execute a confirmation of the
"Bilihan Lubos at Patuluyan," Exh. "E."
II
The lower court erred when it decided and ordered the defendantsappellant,s to deliver unto the plaintiff [a]
3/4 share of the land in question.

III
The lower court erred in deciding this case in favor of the plaintiff-appellee, based on an unnotarized and
forged signature of defendantappellant Ernesto Roque.
IV
The lower court erred in giving credence to the testimony of the plaintiff-appellee Concepcion Roque despite
[its] gross inconsistencies.

10

Acting on the appeal (docketed as A.C.-G.R. CV No. 02248), the Intermediate Appellate Court, in a
Decision

11

dated 31 July 1986, reversed the judgment of the trial court and dismissed both the petitioner's

complaint and the respondents' appeal. A Motion for Reconsideration of petitioner Concepcion Roque was
denied.
The present Petition for Review was filed with this Court on 18 September 1986. In a resolution dated 27 July
1987, we gave due course to the Petition and required the parties to submit their respective Memoranda.
1. On the matter of dismissal of petitioner's complaint, the Intermediate Appellate Court stated in its decision:
While the action filed by the plaintiff is for partition, the defendantz, after denying plaintiff's assertion of coownership, asserted that they are the exclusive and sole owners of the 314 portion of the parcel of land
claimed by the plaintiff.

Upon the issue thusjoined by the pleadings, it is obvious that the case has become one ofownership of the
disputed portion of the subject lot.
It is well settled that an action for partition will not prosper as such from the moment an alleged co-owner
asserts an adverse title. The action that may be brought by an aggrieved co-owner is accion reivindicatoria
or action for recovery of title and possession (Jardin vs. Hallasgo, 11 7 SCRA 532, 536, 537; Paner vs. Gaspar,
3 CA Rep. 155, 158). (Emphasis supplied)
Viewed in the light of the facts of the present case, the Intermediate Appellate Court's decision appears to
imply that from the moment respondents (defendants below) alleged absolute and exclusive ownership of the
whole of Lot No. 1549 in their Answer, the trial court should have immediately ordered the dismissal of the
action for partition and petitioner (plaintiff below), if she so desired, should have refiled the case but this time
as an accion reinvindicatoria. Taking this analysis a step further should the reivindicatory action prosper
i.e., a co-ownership relation is found to have existed between the parties a second action for partition
would still have to be instituted in order to effect division of the property among the co-owners.
We do not agree with the above view. An action for partition-which is typically brought by a person claiming
to be co-owner of a specified property against a defendant or defendants whom the plaintiff recognizes to be
co-owners may be seen to present simultaneously two principal issues. First, there is the issue of whether
the plaintiff is indeed a co-owner of the property sought to be partitioned. Second, assuming that the plaintiff
successfully hurdles the first issue, there is the secondary issue of how the property is to be divided between
plaintiff and defendant(s) i.e., what portion should go to which co-owner.
Should the trial court find that the defendants do not dispute the status of the plaintiff as co-owner, the court
can forthwith proceed to the actual partitioning of the property involved. In case the defendants assert in
their Answer exclusive title in themselves adversely to the plaintiff, the court should not dismiss the plaintiffs
action for partition but, on the contrary and in the exercise of its general jurisdiction, resolve the question of
whether the plaintiff is co-owner or not. Should the trial court find that the plaintiff was unable to sustain his
claimed status as co-owner, or that the defendants are or have become the sole and exclusive owners of the
property involved, the court will necessarily have to dismiss the action for partition. This result would be
reached, not because the wrong action was commenced by the plaintiff, but rather because the plaintiff having
been unable to show co-ownership rights in himself, no basis exists for requiring the defendants to submit to
partition the property at stake. If, upon the other hand, the court after trial should find the eidstence of coownership among the parties litigant, the court may and should order the partition of the property in the same

action. Judgment for one or the other party being on the merits, the losing party (respondents in this case)
may then appeal the same. In either case, however, it is quite unnecessary to require the plaintiff to file
another action, separate and independent from that for partition originally instituted. Functionally, an action
for partition may be seen to be at once an action for declaration of coownership and for segregation and
conveyance of a determinate portion of the property involved. This is the import of our jurisprudence on the
matter.

12

and is sustained by the public policy which abhors multiplicity of actions.

The question of prescription also needs to be addressed in this connection. It is sometimes said that "the
action for partition of the thing owned in common (actio communi dividendo or actio familiae

erciscundae) does not prescribe."13 This statement bears some refinement. In the words of Article 494 of the
Civil Code, "each co-owner may demand at any time the partition of the thing owned in common, insofar as
his share is concemed." No matter how long the co-ownership has lasted, a co-owner can always opt out of
the co-ownership, and provided the defendant co-owners or co-heirs have theretofore expressly or impliedly
recognized the co-ownership, they cannot set up as a defense the prescription of the action for partition. But
if the defendants show that they had previously asserted title in themselves adversely to the plaintiff and for
the requisite period of time, the plaintiffs right to require recognition of his status as a co-owner will have
been lost by prescription and the court cannot issue an order requiring partition. This is precisely what
happened in Jardin v. Hallasgo, 117 SCRA 532 (1982), which the respondent appellate court cited to support
its position quoted above.
The case of Jardin involved, among others, two (2) parcels of land which were inherited in 1920 by the
brothers Catalino jardin and Galo Jardin together with their half-brother, Sixto Hallasgo. The three (3) held
these lands in co-ownership until Sixto later (the date was not specified) repudiated the coownership and
occupied and possessed both parcels of land, claiming the same exclusively as his own. Sometime in 1973,
the heirs of Catalino and Galo instituted an action for partition of the two (2) properties against Sixto's heirs,
who had refused to surrender any portion of the same to the former. The trial court, assuming that prescription
had started to run in that case even before the Civil Code took effect, held that the action for partition filed
by the heirs of Catalino and Galo had already prescribed. On appeal, this Court affirmed the trial court on this
point in the following terms:
Article 494 of the Civil Code provides that "no co-owner shall be obliged to remain in the co- ownership" and
that "each co-owner may demand at any time the partition of the thing owned in common, insofar as his
share is concerned." It also provides that 'no prescription shall run in favor of a co-owner or co-heir against
his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership.
While the action for the partition of the thing owned in common (actio communi dividendo or actio familiae

erciscundae) does not prescribe, the co-ownership does not last forever since it may be repudiated by a coowner [i.e., Sixto]. In such a case, the action for partition does not lie. What may be brought by the aggrieved

co-owner [i.e., the heirs of Catalino and Galo] is an accion reivindicatoria or action for recovery of title and
possession. That action may be barred by prescription.
If the co-heir or co-owner having possession of the hereditary or community property, holds the same in his
own name, that is, under claim of exclusive ownership, he may acquire the property by prescription if his
possession meets all the other requirements of the law, and after the expiration of the prescriptive period, his
co-heir or co-owner may lose their right to demand partition, and their action may then be held to have
prescribed (De los Santos vs. Santa Teresa, 44 Phil. 811).
xxx xxx xxx
(Emphasis supplied)
In the light of the foregoing discussion, it will be seen that the underscored portion of the Court's opinion
in Jardin is actually obiter. For there, the Court simply held the action for partition by the heirs of Catalino and
Galo had prescribed and did not require such heirs to start a new action (which would have been quite

pointless); on the other hand, the Court remanded the case to the lower court for further proceedings in
respect of the recovery of a 350 square meter lot which the evidence showed was owned by the plaintiffs but
wrongfully included by Sixto in the cadastral survey of his share of the adjoining lot.
In Jardin, the claim of co-ownership asserted by the heirs of Catalino and Galo was effectively refuted by the
heirs of Sixto, who not only claimed for themselves absolute and exclusive ownership of the disputed
properties but were also in actual and adverse possesion thereof for a substantial length of time. The Court
found, further, that the action for partition initially available to the heirs of Catalino and Galo had, as a result
of the preceding circumstance, already prescribed.
An entirely different situation, however, obtains in the case at bar. First of all, petitioner Concepcion Roquethe co-owner seeking partition has been and is presently in open and continuous possession of a threefourths (3/4) portion of the property owned in common. The Court notes in this respect the finding of the trial
court that petitioner, following execution of the "Bilihan Lubos at Pattlluyan" on 27 November 1961, had been
in "continuous occupancyof the 3/4 portion of the lot ... up to the present, and whereon plaintifrs house and
that of her son are erected. "

14

Respondents do not dispute this finding of fact, although they would claim

that petitioner's possession is merely tolerated by them. Second, prior to filing in 1977 of the Complaint in
Civil Case No. 5236-M, neither of the parties involved had asserted or manifested a claim of absolute and

exclusive ownership over the whole of Lot No. 1549 adverse to that of any of the other co-owners: in other
words, co-ownership of the property had continued to be recognized by all the owners. Consequently, the
action for partition could not have and, as a matter of fact, had not yet prescribed at the time of institution
by Concepcion of the action below.
2. Coming now to the matter regarding dismissal of the respondents'appeal, the Intermediate Appellate Court
held that inasmuch as the attack on the validity of the "Bilihan Lubos at Patuluyan" was predicated on fraud
and no action for annulment of the document had been brought by respondents within the four (4) year
prescriptive period provided under Article 1391 of the Civil Code, such action had already prescribed.
We find it unnecessary to deal here with the issue of prescription discussed by the respondent court in its
assailed decision. The facts on record clearly show that petitioner Concepcion Roque had been in actual, open
and continuous possession of a three-fourths (3/4) portion of Lot No. 1549 ever since execution of the "Bilihan
Lubos at Patuluyan" in November of 1961. The Court notes that it was only in their Answer with Compulsory
Counterclaim filed with the trial court in December of 1977 more than sixteen (16) years later that
respondents first questioned the genuineness and authenticity of the "Bilihan Lubos at Patuluyan." Not once
during those sixteen (16) years did respondents contest petitioner's occupation of a three-fourths (3/4) portion
of Lot No. 1549. Furthermore, if indeed it is true that respondents, as they claim, are the absolute owners of
the whole of Lot No. 1549, it is most unusual that respondents would have allowed or tolerated such prolonged
occupation by petitioner of a major portion (3/4) of the land while they, upon the other hand, contented
themselves with occupation of only a fourth thereof. This latter circumstance, coupled with the passage of a
very substantial length of time during which petitioner all the while remained undisturbed and uninterrupted
in her occupation and possession, places respondents here in laches: respondents may no longer dispute the
existence of the co-ownership between petitioner and themselves nor the validity of petitioner's claim of a
threefourths (3/4) interest in Lot No. 1549, as they are deemed, by their unreasonably long inaction, to have
acquiesced in the coow,aership.

15

In this respect, we affirm the decision of the respondent appellate court

presently under review.

WHEREFORE, the Decision of the Intermediate Appellate Court dated 31 July 1986 in A.C.-G.R. CV No. 02248
is SET ASIDE with respect to that portion which orders the dismissal of the Complaint in Civil Case No. 5236M, but is AFFIRMED with respect to that portion which orders the dismissal of the respondents'appeal in A.C.G.R. CV No. 02248. The Decision of Branch 9 of the Regional Trial Court of Malolos dated 27 June 1983 in
Civil Case No. 5236-M is hereby REINSTATED. No pronouncement as to costs.

SO ORDERED.

De Lima vs CA GR 46296 September 24 1991

G.R. No. L-46296 September 24, 1991
EPITACIO DELIMA, PACLANO DELIMA, FIDEL DELIMA, VIRGILIO DELIMA, GALILEO DELIMA, JR.,
BIBIANO

BACUS,

OLIMPIO

BACUS

and

PURIFICACION

BACUS,

petitioners,

vs.
HON. COURT OF APPEALS, GALILEO DELIMA (deceased), substituted by his legal heirs, namely:
FLAVIANA VDA. DE DELIMA, LILY D. ARIAS, HELEN NIADAS, ANTONIO DELIMA, DIONISIO
DELIMA, IRENEA DELIMA, ESTER DELIMA AND FELY DELIMA, respondents.

Gabriel J. Canete for petitioners.

Emilio Lumontad, Jr. for private respondents.
MEDIALDEA, J.:p
This is a petition for review on certiorari of the decision of the Court of Appeals reversing the trial court's
judgment which declared as null and void the certificate of title in the name of respondents' predecessor and
which ordered the partition of the disputed lot among the parties as co-owners.
The antecedent facts of the case as found both by the respondent appellate court and by the trial court are
as follows:
During his lifetime, Lino Delima acquired Lot No. 7758 of the Talisay-Minglanilla Friar Lands Estate in Cebu by
sale on installments from the government. Lino Delima later died in 1921 leaving as his only heirs three
brothers and a sister namely: Eulalio Delima, Juanita Delima, Galileo Delima and Vicente Delima. After his
death, TCT No. 2744 of the property in question was issued on August 3, 1953 in the name of the Legal Heirs
of Lino Delima, deceased, represented by Galileo Delima.
On September 22, 1953, Galileo Delima, now substituted by respondents, executed an affidavit of "Extrajudicial Declaration of Heirs." Based on this affidavit, TCT No. 2744 was cancelled and TCT No. 3009 was
issued on February 4,1954 in the name of Galileo Delima alone to the exclusion of the other heirs.
Galileo Delima declared the lot in his name for taxation purposes and paid the taxes thereon from 1954 to
1965.
On February 29, 1968, petitioners, who are the surviving heirs of Eulalio and Juanita Delima, filed with the
Court of First Instance of Cebu (now Regional Trial Court) an action for reconveyance and/or partition of
property and for the annulment of TCT No. 3009 with damages against their uncles Galileo Delima and Vicente
Delima,. Vicente Delima was joined as party defendant by the petitioners for his refusal to join the latter in
their action.
On January 16, 1970, the trial court rendered a decision in favor of petitioners, the dispositive portion of which
states:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the following are the declared owners of Lot No. 7758 of
the Talisay-Minglanilla Friar Lands Estate presently covered by transfer Certificate of Title No. 3009, each
sharing a pro-indiviso share of one-fourth;
1) Vicente Delima (one-fourth)
2) Heirs of Juanita Delima, namely: Bibiano Bacus, Olimpio Bacus and Purificacion Bacus (on-fourth);
3) Heirs of Eulalio Delima, namely Epitacio, Pagano, Fidel, Virgilio and Galileo Jr., all surnamed Delima (onefourth); and

4) The Heirs of Galileo Delima, namely Flaviana Vda. de Delima, Lily D. Arias, Helen Niadas and Dionisio,
Antonio, Eotu Irenea, and Fely, all surnamed Delima (one-fourth).
Transfer Certificate of Title No. 3009 is declared null and void and the Register of Deeds of Cebu is ordered
to cancel the same and issue in lieu thereof another title with the above heirs as pro-indiviso owners.
After the payment of taxes paid by Galileo Delima since 1958, the heirs of Galileo Delima are ordered to turn
a over to the other heirs their respective shares of the fruits of the lot in question computed at P170.00 per
year up to the present time with legal (interest).
Within sixty (60) days from receipt of this decision the parties are ordered to petition the lot in question and
the defendants are directed to immediately turn over possession of the shares here awarded to the respective
heirs.
Defendants are condemned to pay the costs of the suit.
The counterclaim is dismissed.
SO ORDERED. (pp. 54-55, Rollo)
Not satisfied with the decision, respondents appealed to the Court of Appeals. On May 19, 1977, respondent
appellate court reversed the trial court's decision and upheld the claim of Galileo Delima that all the other
brothers and sister of Lino Delima, namely Eulalio, Juanita and Vicente, had already relinquished and waived
their rights to the property in his favor, considering that he (Galileo Delima) alone paid the remaining balance
of the purchase price of the lot and the realty taxes thereon (p. 26, Rollo).
Hence, this petition was filed with the petitioners alleging that the Court of Appeals erred:
1) In not holding that the right of a co-heir to demand partition of inheritance is imprescriptible. If it does,
the defenses of prescription and laches have already been waived.
2) In disregarding the evidence of the petitioners.(p.13, Rollo)
The issue to be resolved in the instant case is whether or not petitioners' action for partition is already barred
by the statutory period provided by law which shall enable Galileo Delima to perfect his claim of ownership
by acquisitive prescription to the exclusion of petitioners from their shares in the disputed property. Article
494 of the Civil Code expressly provides:
Art. 494. No co-owner shall be obliged to remain in the co-ownership. Each co-owner may demand at any
time the partition of the thing owned in common, insofar as his share is concerned.
Nevertheless, an agreement to keep the thing undivided for a certain period of time, not exceeding ten years,
shall be valid. This term may be extended by a new agreement.
A donor or testator may prohibit partition for a period which shall not exceed twenty years.
Neither shall there be any partition when it is prohibited by law.
No prescription shall run in favor of a co-owner or co-heir against his co-owners or co-heirs so long as he
expressly or impliedly recognizes the co-ownership.
As a rule, possession by a co-owner will not be presumed to be adverse to the others, but will be held to
benefit all. It is understood that the co-owner or co-heir who is in possession of an inheritance pro-indiviso
for himself and in representation of his co-owners or co-heirs, if, as such owner, he administers or takes care
of the rest thereof with the obligation of delivering it to his co-owners or co-heirs, is under the same situation
as a depository, a lessee or a trustee (Bargayo v. Camumot, 40 Phil, 857; Segura v. Segura, No. L-29320,
September 19, 1988, 165 SCRA 368). Thus, an action to compel partition may be filed at any time by any of
the co-owners against the actual possessor. In other words, no prescription shall run in favor of a co-owner
against his co-owners or co-heirs so long as he expressly or impliedly recognizes the co-ownership (Del Blanco
v. Intermediate Appellate Court, No. 72694, December 1, 1987, 156 SCRA 55).
However, from the moment one of the co-owners claims that he is the absolute and exclusive owner of the
properties and denies the others any share therein, the question involved is no longer one of partition but of
ownership (De Castro v. Echarri, 20 Phil. 23; Bargayo v. Camumot, supra; De los Santos v. Santa Teresa, 44

Phil. 811). In such case, the imprescriptibility of the action for partition can no longer be invoked or applied
when one of the co-owners has adversely possessed the property as exclusive owner for a period sufficient
to vest ownership by prescription.
It is settled that possession by a co-owner or co-heir is that of a trustee. In order that such possession is
considered adverse to the cestui que trust amounting to a repudiation of the co-ownership, the following
elements must concur: 1) that the trustee has performed unequivocal acts amounting to an ouster of
the cestui que trust; 2) that such positive acts of repudiation had been made known to the cestui que trust;
and 3) that the evidence thereon should be clear and conclusive (Valdez v. Olorga, No. L-22571, May 25,
1973, 51 SCRA 71; Pangan v. Court of Appeals, No. L-39299, October 18, 1988, 166 SCRA 375).
We have held that when a co-owner of the property in question executed a deed of partition and on the
strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance of a
new one wherein he appears as the new owner of the property, thereby in effect denying or repudiating the
ownership of the other co-owners over their shares, the statute of limitations started to run for the purposes
of the action instituted by the latter seeking a declaration of the existence of the co-ownership and of their
rights thereunder (Castillo v. Court of Appeals, No. L-18046, March 31, 1964, 10 SCRA 549). Since an action
for reconveyance of land based on implied or constructive trust prescribes after ten (10) years, it is from the
date of the issuance of such title that the effective assertion of adverse title for purposes of the statute of
limitations is counted (Jaramil v. Court of Appeals, No. L-31858, August 31, 1977, 78 SCRA 420).
Evidence shows that TCT No. 2744 in the name of the legal heirs of Lino Delima, represented by Galileo
Delima, was cancelled by virtue of an affidavit executed by Galileo Delima and that on February 4, 1954,
Galileo Delima obtained the issuance of a new title in Ms name numbered TCT No. 3009 to the exclusion of
his co-heirs. The issuance of this new title constituted an open and clear repudiation of the trust or coownership, and the lapse of ten (10) years of adverse possession by Galileo Delima from February 4, 1954
was sufficient to vest title in him by prescription. As the certificate of title was notice to the whole world of
his exclusive title to the land, such rejection was binding on the other heirs and started as against them the
period of prescription. Hence, when petitioners filed their action for reconveyance and/or to compel partition
on February 29, 1968, such action was already barred by prescription. Whatever claims the other co-heirs
could have validly asserted before can no longer be invoked by them at this time.
ACCORDINGLY, the petition is hereby DENIED and the assailed decision of the Court of Appeals dated May
19, 1977 is AFFIRMED.
SO ORDERED.
Possession

of

Property

Cases:

Sumodyo vs CA GR 82680 August 13 1994

G.R. No. 82680 August 15, 1994
NICANOR

SOMODIO,

petitioner,

vs.
COURT OF APPEALS, EBENECER PURISIMA, and FELOMINO AYCO, respondents.

Jose V. Panes for petitioner.

Vencer, Purisima & Associates for private respondents.
QUIASON, J.:
This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court to reverse and set aside
the Decision dated September 29, 1987 and the Resolution dated February 2, 1988 of the Court of Appeals
in CA-G.R. SP No. 11602.

I
On October 21, 1974, Jose Ortigas executed an instrument designated as a Transfer of Rights, conveying to
Wilfredo Mabugat the possession of a residential lot situated at Rajah Muda, Bula, General Santos City and
described in the said instrument as:
Lot No. (Unnumbered), bounded on the North by Temporary Road, on the South by Customs Zone (Sarangani
Bay), on the East by Public Land, and on the West by Public Land.
Nicanor Somodio, herein petitioner, contributed one-half of the purchase price. On October 22, 1974, Mabugat
executed an Affidavit of Trust expressly recognizing the right of petitioner over one-half undivided portion of
the lot. Later, petitioner discovered in the District Land Office that the lot was numbered "6328-X, Csd 2281D." Thereafter, petitioner and Mabugat partitioned the property into two portions, with petitioner taking the
western part. Immediately after the partition, petitioner took possession of his portion and planted thereon
ipil-ipil trees, coconut trees and other fruit-bearing trees.
In 1976, petitioner began construction of a structure with a dimension of 22-by-18 feet on his lot. His
employment, however, took him to Kidapawan, North Cotabato, and he left the unfinished structure to the
case of his uncle. He would visit the property every three months or on weekened when he had time.
Sometime in October 1977, petitioner allowed respondent Felomino Ayco, to transfer his hut to petitioner's
lot. About six years later, petitioner demanded that Ayco vacate the premises but such demand proved futile.
Hence, on August 23, 1983, petitioner filed an action for unlawful detainer with damages against respondent
Ayco before the Municipal Trial Court, Branch I, General Santos, docketed as Civil Case No. 2032-II.
Meanwhile, on June 26, 1983, respondent Ebenecer Purisima entered the land and constructed a house
thereon. Four days later, petitioner filed against respondent Purisima a complaint for forcible entry before the
same court docketed as Civil Case No. 2013-I. Said case was later consolidated with Civil Case No. 2032-II.
In his answer, respondent Purisima averred that the lot was a portion of the land subject of his application
for miscellaneous sales patent with the Bureau of Lands. Purisima described the lot in question as:
Lot No. 6328-Y, CSD-2281-D, Bula, General Santos, Cotabato. Bounded on the North by 6328-X; on the South
by Sarangani Bay; on the East by a Municipal Road; and on the West by Lot No. 6328-W, containing an area
of 1,095 square meters and covered by Tax Declaration No. 9647 (Rollo, p. 36; Emphasis supplied).
Respondent Purisima contended that his father, a geodetic engineer, had surveyed the parcel of land
comprising of Lots Nos. 6427 and 6328 for the Small Farmers Fishpond Association, Inc. in February 1958,
and that his father's survey plan was approved by the Director of Lands in 1960. Respondent Ayco, on the
other hand, did not present any evidence but merely anchored his right to possess the property on the
evidence of Purisima.
On April 30, 1986, the trial court rendered a decision finding that respondent Purisima built his house "almost
on the spot where Somodio's unfinished house" stood "thru stealth and strategy," not knowing that the house
was built on Lot No. 6328-X and not on Lot No. 6328-Y, the lot said respondent was claiming (Rollo, p. 43).
The court went on to state that:
. . . . He (private respondent Purisima) was a frequent visitor in Rajah Muda and had sometimes stayed with
Mrs. Maturan in Judge Purisima's house on the adjoining lots, and could not have remained unaware of the
possession of Somodio. He must have depended on the thought that it was his father who made the
subdivision survey and had fenced an area which he had claimed. He did not exactly verify that the area
fenced by his father had an area of only 1,095 square meters, which did not include the are Lot No. 6328-X
could eventually be standing on his property, for Lot No. 6328-X is not claimed by him and has not been
applied for even by his father. His father has been abroad and has not taken steps to apply for Lot No. 6328X. This lot is not declared for taxation purposes in the name of any claimant-applicant. Unless and until there
would be an administrative proceedings and the title ultimately issued in favor of an applicant, the possession

of the actual claimant and occupant has to be respected and maintained in the interest of public order . . .
(Rollo, pp. 43-44).
The Municipal Trial Court further held that petitioner was the actual possessor of Lot No. 6328-X. The court
did not believe respondent Ayco's claim that the administratrix of the estate of respondent Purisima's father
authorized him to build a hut on Lot No. 6328-X in 1976. At any rate, the court said that respondent Ayco
was willing to vacate the premises provided he be given financial assistance to do so (Rollo, pp. 43-44).
Nothing that the ocular inspection of the area showed that the houses of respondents Purisima and Ayco were
"inside Lot No. 6328-X" and not on Lot No. 6328-Y, the Municipal Trial Court held that the case became one
which entailed mere removal of the houses from the lot in question. Accordingly, the court ordered private
respondents to remove their respective houses, to deliver the land to petitioner, and to pay attorney's fees
and litigation expenses.
On appeal, the Regional Trial Court, Branch 22, General Santos City, affirmed in toto the decision of the
Municipal Trial Court. Respondent then elevated the cases on a petition for review to the Court of Appeals,
which, in its decision dated September 27, 1987, set aside the decisions of the two trial courts and ordered
the dismissal of the two complaints filed by petitioner.
The Court of Appeals held that herein petitioner had not "clearly and conclusively established physical, prior
possession over Lot No. 6328-X."
Petitioner's motion for the reconsideration of the decision of the Court of Appeals having been denied, he filed
the instant petition for review on certiorari.
We grant the petition.
II
The procedural issue raised by private respondents should first be resolved. The issue is whether the instant
petition is proper considering that petitioner "merely touch(es) upon questions of fact which had been carefully
considered" by the Court of Appeals (Rollo, p. 92). As a general rule, the findings of fact of the Court of
Appeals are binding on this Court. This rule, however, is not without exceptions, one of which is when the
factual findings of the Court of Appeals and the trial court are contrary to each other. In such a case, this
Court may scrutinize the evidence on record in order to arrive at the correct findings based on the record
(Valenzuela v. Court of Appeals, 191 SCRA 1 [1990]; Roman Catholic Bishop of Malolos, Inc. v. Intermediate
Appellate Court, 191 SCRA 411 [1990]).
Upon a review of the records, we are convinced that petitioner indeed enjoyed priority of possession over Lot
No. 6328-X, notwithstanding respondent Purisima's claim to the contrary.
In ejectment cases, the only issue for resolution is who is entitled to the physical or material possession of
the property involved, independent of any claim of ownership set forth by any of the party-litigants. Anyone
of them who can prove prior possession de facto may recover such possession even from the owner himself.
This rule holds true regardless of the character of a party's possession, provided, that he has in his favor
priority of time which entitles him to stay on the property until he is lawfully ejected by a person having a
better right by either accion publiciana oraccion reivindicatoria (De Luna v. Court of Appeals, 212 SCRA 276
[1992]).
Petitioner took possession of the property sometime in 1974 when he planted the property to coconut trees,
ipil- ipil trees and fruit trees. In 1976, he started the construction of a building on the property. It is immaterial
that the building was unfinished and that he left for Kidapawan for employment reasons and visited the
property only intermittently. Possession in the eyes of the law does not mean that a man has to have his feet
on every square meter of ground before it can be said that he is in possession (Ramos v. Director of Lands,
39 Phil. 175 [1918]). It is sufficient that petitioner was able to subject the property to the action of his will.
Article 531 of the Civil Code of the Philippines provides:

Possession is acquired by the material occupation of a thing or the exercise of a right, or by the fact that it is
subject to the action of our will, or by the proper acts and legal formalities established for acquiring such
right.
Even if the Court of Appeals is correct in its finding that petitioner started introducing improvements on the
land only in 1981, he still enjoyed priority of possession because respondent Purisima entered the premises
only in 1983.
It should be emphasized that the Court of Appeals noted that none of the parties had produced tax
declarations or applications as public land claimants. As such, what should have been scrutinized is who
between the claimants had priority of possession.
Moreover, neither is the fact that respondent Purisima's father surveyed the property of help to his cause. As
the Court of Appeals found, respondent Purisima's father surveyed the land for the Small Farmers Fishpond
Association, Inc., not for himself. Although respondent Purisima now claims that Lot No. 6328-X was in
payment of his fee for the services of his father and that he caused the construction of a perimeter wall in
the area, these facts do not mean that respondent Purisima himself had prior possession. He did not present
any proof that his father had authorized him to enter the land as his successor-in-interest. Neither did he
present proof that between 1958, when his father allegedly took possession of the land, and 1983, when said
respondent himself entered the land, his father ever exercised whatever right of possession he should have
over the property. Under these circumstances, priority in time should be the pivotal cog in resolving the issue
of possession.
The Court of Appeals opined that petitioner had not properly identified the lot he had occupied. The matter
of identification of the land, however, had been resolved by respondent Purisima's admission in his pleadings,
as well as by two ocular inspections.
In his answer to the complaint, respondent Purisima claimed possession over Lot No. 6328-Y, while petitioner
identified

the

lot

adjacent

to

it,

Lot

NO. 6328-X, as the area where private respondents built their houses. That these two lots are distinct from
one another was resolved by the ocular inspection conducted by a Senior Geodetic Engineer of the Office of
the City Engineer, who found that "south of lot 6328-H across a 10 meter wide road is lot 6328-Y and from
thence to the south is lot 6328-X." On June 13, 1985, the Municipal Trial Court judge himself went to the
premises in question and discovered that aside from the houses of respondents Purisima and Ayco, five other
houses had been built on Lot No. 6328-X.
Petitioner's prior possession over the property, however, is not synonymous with his right of ownership over
the same. As earlier stated, resolution of the issue of possession is far from the resolution of the issue of
ownership. Forcible entry is merely a quieting process and never determines the actual title to an estate
(German Management & Services, Inc. v. Court of Appeals, 177 SCRA 495 [1989]; Manuel v. Court of Appeals,
199 SCRA 603 [1991].
WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE and that of the trial courts
REINSTATED. Costs against private respondents.
SO ORDERED.

Kasilag vs Rodriguez GR 46623 December 7 1939

G.R. No. 46623 December 7, 1939
MARCIAL
vs.

KASILAG,

petitioner,

RAFAELA

RODRIGUEZ,

URBANO

ROQUE,

SEVERO

MAPILISAN

and

IGNACIO

DEL

ROSARIO, respondents.

Luis

M.

Kasilag

for

petitioner.

Fortunato de Leon for respondents.

IMPERIAL, J.:
This is an appeal taken by the defendant-petitioner from the decision of the Court of Appeals which modified
that rendered by the court of First Instance of Bataan in civil case No. 1504 of said court and held: that the
contract Exhibit "1" is entirely null and void and without effect; that the plaintiffs-respondents, then appellants,
are the owners of the disputed land, with its improvements, in common ownership with their brother Gavino
Rodriguez, hence, they are entitled to the possession thereof; that the defendant-petitioner should yield
possession of the land in their favor, with all the improvements thereon and free from any lien; that the
plaintiffs-respondents jointly and severally pay to the defendant-petitioner the sum of P1,000 with interest at
6 percent per annum from the date of the decision; and absolved the plaintiffs-respondents from the crosscomplaint relative to the value of the improvements claimed by the defendant-petitioner. The appealed
decision also ordered the registrar of deeds of Bataan to cancel certificate of title No. 325, in the name of the
deceased Emiliana Ambrosio and to issue in lieu thereof another certificate of title in favor of the plaintiffsrespondents and their brother Gavino Rodriguez, as undivided owners in equal parts, free of all liens and
incumbrances except those expressly provided by law, without special pronouncement as to the costs.
The respondents, children and heirs of the deceased Emiliana Ambrosio, commenced the aforesaid civil case
to the end that they recover from the petitioner the possession of the land and its improvements granted by
way of homestead to Emiliana Ambrosio under patent No. 16074 issued on January 11, 1931, with certificate
of title No. 325 issued by the registrar of deeds of Bataan on June 27, 1931 in her favor, under section 122
of Act No. 496, which land was surveyed and identified in the cadastre of the municipality of Limay, Province
of Bataan, as lot No. 285; that the petitioner pay to them the sum of P650 being the approximate value of
the fruits which he received from the land; that the petitioner sign all the necessary documents to transfer
the land and its possession to the respondents; that he petitioner be restrained, during the pendency of the
case, from conveying or encumbering the land and its improvements; that the registrar of deeds of Bataan
cancel certificate of title No. 325 and issue in lieu thereof another in favor of the respondents, and that the
petitioner pay the costs of suit.
The petitioner denied in his answer all the material allegations of the complaint and by way of special defense
alleged that he was in possession of the land and that he was receiving the fruits thereof by virtue of a
mortgage contract, entered into between him and the deceased Emiliana Ambrosio on May 16, 1932, which
was duly ratified by a notary public; and in counterclaim asked that the respondents pay him the sum of
P1,000 with 12 per cent interest per annum which the deceased owed him and that, should the respondents
be declared to have a better right to the possession of the land, that they be sentenced to pay him the sum
of P5,000 as value of all the improvements which he introduced upon the land.lawphil.net
On May 16, 1932 Emiliana Ambrosio, in life, and the petitioner executed the following public deed:
"This agreement, made and entered into this 16th day of May, 1932, by and between Emiliana Ambrosio,
Filipino, of legal age, widow and resident of Limay, Bataan, P.L., hereinafter called the party of the first part,
and Marcial Kasilag, Filipino, of legal age, married to Asuncion Roces, and resident at 312 Perdigon Street,
Manila, P.L., hereinafter called party of the second part.
WITNESSETH: That the parties hereto hereby covenant and agree to and with each other as follows:
ARTICLE I. That the party of the first part is the absolute registered owner of a parcel of land in the barrio of
Alngan, municipality of Limay, Province of Bataan, her title thereto being evidenced by homestead certificate

of title No. 325 issued by the Bureau of Lands on June 11, 1931, said land being lot No. 285 of the Limay
Cadastre, General Land Registration Office Cadastral Record No. 1054, bounded and described as follows:
Beginning at point marked 1 on plan E-57394, N. 84 32' W. 614.82 m. from B.B.M. No. 3, thence N. 66 35'
E. 307.15 m. to point "2"; S. 5 07' W. to point "5"; S.6 10' E. 104.26 m. to point "4"; S. 82 17' W. to point
"5"; S. 28 53' W. 72.26 m. to point "6"; N. 71 09' W. to point "7"; N. 1 42' E. 173.72 m. to point 1, point
of beginning, "Containing an area of 6.7540 hectares. "Points 1,2,6 and 7, B.L.; points 3,4 and 5, stakes;
points 4, 5 and 6 on bank of Alangan River. "Bounded on the North, by property claimed by Maria Ambrosio;
on the East, by Road; on the South, by Alangan River and property claimed by Maxima de la Cruz; and on the
West, by property claimed by Jose del Rosario. "Bearing true. Declination 0 51' E. "Surveyed under authority
of sections 12-22, Act No. 2874 and in accordance with existing regulations of the Bureau of Lands, by
Mamerto Jacinto, public land surveyor, on July 8, 1927 and approved on February 25, 1931.
ARTICLE II. That the improvements on the above described land consist of the following:
Four (4) mango trees, fruit bearing: one hundred ten (110) hills of bamboo trees; one (1) tamarind and six
(6) boga trees.
ARTICLE III. That the assessed value of the land is P940 and the assessed value of the improvements is P860,
as evidenced by tax declaration No. 3531 of the municipality of Limay, Bataan.
ARTICLE IV. That for and in consideration of the sum of one thousand pesos (P1,000) Philippine currency,
paid by the party of second part to the party of the first part, receipt whereof is hereby acknowledged, the
party of the first part hereby encumbers and hypothecates, by way of mortgage, only the improvements
described in Articles II and III hereof, of which improvements the party of the first part is the absolute owner.
ARTICLE V. That the condition of said mortgage is such that if the party of the first part shall well and truly
pay, or cause to paid to the party of the second part, his heirs, assigns, or executors, on or before the 16th
day of November, 1936, or four and one-half (4) years after date of the execution of this instrument, the
aforesaid sum of one thousand pesos (P1,000) with interest at 12 per cent per annum, then said mortgage
shall be and become null and void; otherwise the same shall be and shall remain in full force and effect, and
subject to foreclosure in the manner and form provided by law for the amount due thereunder, with costs
and also attorney's fees in the event of such foreclosure.lawphil.net
ARTICLE VI. That the party of the first part shall pay all taxes and assessments which are or may become due
on the above described land and improvements during the term of this agreement.
ARTICLE VII. That within thirty (30) days after date of execution of this agreement, the party of the first part
shall file a motion before the Court of First Instance at Balanga, Bataan, P. I., requesting cancellation of
Homestead Certificate of Title No. 325 referred to in Article I hereof and the issuance, in lieu thereof, of a
certificate of title under the provisions of Land Registration Act No. 496, as amended by Act 3901.
ARTICLE III. It if further agreed that if upon the expiration of the period of time (4) years stipulated in this
mortgage, the mortgagor should fail to redeem this mortgage, she would execute a deed of absolute sale of
the property herein described for the same amount as this mortgage, including all unpaid interests at the rate
of 12 per cent per annum, in favor of the mortgagee.
ARTICLE IX. That in the event the contemplated motion under Article VII hereof is not approved by the Court,
the foregoing contract of sale shall automatically become null and void, and the mortgage stipulated under
Article IV and V shall remain in full force and effect.
In testimony whereof, the parties hereto have hereunto set their hands the day and year first herein before
written.
(Sgd.) MARCIAL KASILAG
(Sgd.) EMILIANA AMBROSIO
Signed in the presence of:
(Sgd.) ILLEGIBLE

(Sgd.) GAVINO RODRIGUEZ.

PHILIPPINE

ISLANDS

ss.

BALANGA, BATAAN } ss.

Before me this day personally appeared Emiliana Ambrosio without cedula by reason of her sex, to me known
and known to me to be the person who signed the foregoing instrument, and acknowledged to me that she
executed the same as her free and voluntary act and deed.
I hereby certify that this instrument consists of three (3) pages including this page of the acknowledgment
and that each page thereof is signed by the parties to the instrument and the witnesses in their presence and
in the presence of each other, and that the land treated in this instrument consists of only one parcel.
In witness whereof I have hereunto set my hand and affixed my notarial seal, this 16th day of May, 1932.
(Sgd.)

NICOLAS

NAVARRO

Notary Public
My commission expires December 31, 1933.

Doc.
Page

No.
36

of

178
my

register

Book No. IV
One year after the execution of the aforequoted deed, that is, in 1933, it came to pass that Emiliana Ambrosio
was unable to pay the stipulated interests as well as the tax on the land and its improvements. For this reason,
she and the petitioner entered into another verbal contract whereby she conveyed to the latter the possession
of the land on condition that the latter would not collect the interest on the loan, would attend to the payment
of the land tax, would benefit by the fruits of the land, and would introduce improvements thereon. By virtue
of this verbal contract, the petitioner entered upon the possession of the land, gathered the products thereof,
did not collect the interest on the loan, introduced improvements upon the land valued at P5,000, according
to him and on May 22, 1934 the tax declaration was transferred in his name and on March 6, 1936 the
assessed value of the land was increased from P1,020 to P2,180.
After an analysis of the conditions of Exhibit "1" the Court of Appeals came to the conclusion and so held that
the contract entered into by and between the parties, set out in the said public deed, was one of absolute
purchase and sale of the land and its improvements. And upon this ruling it held null and void and without
legal effect the entire Exhibit 1 as well as the subsequent verbal contract entered into between the parties,
ordering, however, the respondents to pay to the petitioner, jointly and severally, the loan of P1,000 with
legal interest at 6 per cent per annum from the date of the decision. In this first assignment of error the
petitioner contends that the Court of Appeals violated the law in holding that Exhibit 1 is an absolute deed of
sale of the land and its improvements and that it is void and without any legal effect.
The cardinal rule in the interpretation of contracts is to the effect that the intention of the contracting parties
should always prevail because their will has the force of law between them. Article 1281 of the Civil Code
consecrates this rule and provides, that if the terms of a contract are clear and leave no doubt as to the
intention of the contracting parties, the literal sense of its stipulations shall be followed; and if the words
appear to be contrary to the evident intention of the contracting parties, the intention shall prevail. The
contract set out in Exhibit 1 should be interpreted in accordance with these rules. As the terms thereof are
clear and leave no room for doubt, it should be interpreted according to the literal meaning of its clauses. The
words used by the contracting parties in Exhibit 1 clearly show that they intended to enter into the principal
contract of loan in the amount of P1,000, with interest at 12 per cent per annum, and into the accessory
contract of mortgage of the improvements on the land acquired as homestead, the parties having moreover,

agreed upon the pacts and conditions stated in the deed. In other words, the parties entered into a contract
of mortgage of the improvements on the land acquired as homestead, to secure the payment of the
indebtedness for P1,000 and the stipulated interest thereon. In clause V the parties stipulated that Emiliana
Ambrosio was to pay, within four and a half years, or until November 16, 1936, the debt with interest thereon,
in which event the mortgage would not have any effect; in clause VI the parties agreed that the tax on the
land and its improvements, during the existence of the mortgage, should be paid by the owner of the land;
in clause VII it was covenanted that within thirty days from the date of the contract, the owner of the land
would file a motion in the Court of First Instance of Bataan asking that certificate of title No. 325 be cancelled
and that in lieu thereof another be issued under the provisions of the Land Registration Act No. 496, as
amended by Act No. 3901; in clause VIII the parties agreed that should Emiliana Ambrosio fail to redeem the
mortgage within the stipulated period of four years and a half, she would execute an absolute deed of sale of
the land in favor of the mortgagee, the petitioner, for the same amount of the loan of P1,000 including unpaid
interest; and in clause IX it was stipulated that in case the motion to be presented under clause VII should
be disapproved by the Court of First Instance of Bataan, the contract of sale would automatically become void
and the mortgage would subsist in all its force.
Another fundamental rule in the interpretation of contracts, not less important than those indicated, is to the
effect that the terms, clauses and conditions contrary to law, morals and public order should be separated
from the valid and legal contract and when such separation can be made because they are independent of
the valid contract which expresses the will of the contracting parties. Manresa, commenting on article 1255
of the Civil Code and stating the rule of separation just mentioned, gives his views as follows:
On the supposition that the various pacts, clauses or conditions are valid, no difficulty is presented; but should
they be void, the question is as to what extent they may produce the nullity of the principal obligation. Under
the view that such features of the obligation are added to it and do not go to its essence, a criterion based
upon the stability of juridical relations should tend to consider the nullity as confined to the clause or pact
suffering therefrom, except in case where the latter, by an established connection or by manifest intention of
the parties, is inseparable from the principal obligation, and is a condition, juridically speaking, of that the
nullity of which it would also occasion. (Manresa, Commentaries on the Civil Code, Volume 8, p. 575.)
The same view prevails in the Anglo-American law, as condensed in the following words:
Where an agreement founded on a legal consideration contains several promises, or a promise to do several
things, and a part only of the things to be done are illegal, the promises which can be separated, or the
promise, so far as it can be separated, from the illegality, may be valid. The rule is that a lawful promise made
for a lawful consideration is not invalid merely because an unlawful promise was made at the same time and
for the same consideration, and this rule applies, although the invalidity is due to violation of a statutory
provision, unless the statute expressly or by necessary implication declares the entire contract void. . . . (13
C. J., par. 470, p. 512; New York Cent. etc. R. Co. v. Gray, 239 U.S., 583; 60 Law ed., 451; U.S. v. Mora, 97
U.S., 413, 24 Law. ed., 1017; U.S. v. Hodson, 10 Wall, 395; 19 Law ed. 937; Gelpcke v. Dubuque, 1 Wall.
175, 17 Law ed., 520; U.S. v. Bradly, 10 Pet. 343, 9 Law. ed., 448; Borland v. Prindle, 144 Fed 713; Western
Union Tel. Co. v. Kansas Pac. R. Co., 4 Fed., 284; Northern Pac. R. Co. v. U.S., 15 Ct. Cl., 428.)
Addressing ourselves now to the contract entered into by the parties, set out in Exhibit 1, we stated that the
principal contract is that of loan and the accessory that of mortgage of the improvements upon the land
acquired as a homestead. There is no question that the first of these contract is valid as it is not against the
law. The second, or the mortgage of the improvements, is expressly authorized by section 116 of Act No.
2874, as amended by section 23 of Act No. 3517, reading:
SEC. 116. Except in favor of the Government or any of its branches, units or institutions, or legally constituted
banking corporations, lands acquired under the free patent or homestead provisions shall not be subject to
encumbrance or alienation from the date of the approval of the application and for a term of five years from

and after the date of issuance of the patent or grant, nor shall they become liable to the satisfaction of any
debt contracted prior to the expiration of said period; but the improvements or crops on the land may be
mortgaged or pledged to qualified persons, associations, or corporations.
It will be recalled that by clause VIII of Exhibit 1 the parties agreed that should Emiliana Ambrosio fail to
redeem the mortgage within the stipulated period of four and a half years, by paying the loan together with
interest, she would execute in favor of the petitioner an absolute deed of sale of the land for P1,000, including
the interest stipulated and owing. The stipulation was verbally modified by the same parties after the
expiration of one year, in the sense that the petitioner would take possession of the land and would benefit
by the fruits thereof on condition that he would condone the payment of interest upon the loan and he would
attend to the payment of the land tax. These pacts made by the parties independently were calculated to
alter the mortgage a contract clearly entered into, converting the latter into a contract of antichresis. (Article
1881 of the Civil Code.) The contract of antichresis, being a real encumbrance burdening the land, is illegal
and void because it is legal and valid.
The foregoing considerations bring us to the conclusion that the first assignment of error is well-founded and
that error was committed in holding that the contract entered into between the parties was one of absolute
sale of the land and its improvements and that Exhibit 1 is null and void. In the second assignment of error
the petitioner contends that the Court of Appeals erred in holding that he is guilty of violating the Public Land
Act because he entered into the contract, Exhibit 1. The assigned error is vague and not specific. If it attempts
to show that the said document is valid in its entirety, it is not well-founded because we have already said
that certain pacts thereof are illegal because they are prohibited by section 116 of Act No. 2874, as amended.
In the third assignment of error the petitioner insists that his testimony, as to the verbal agreement entered
into between him and Emiliana Ambrosio, should have been accepted by the Court of Appeals; and in the
fourth and last assignment of error the same petitioner contends that the Court of Appeals erred in holding
that he acted in bad faith in taking possession of the land and in taking advantage of the fruits thereof,
resulting in the denial of his right to be reimbursed for the value of the improvements introduced by him.
We have seen that subsequent to the execution of the contract, Exhibit 1, the parties entered into another
verbal contract whereby the petitioner was authorized to take possession of the land, to receive the fruits
thereof and to introduce improvements thereon, provided that he would renounce the payment of stipulated
interest and he would assume payment of the land tax. The possession by the petitioner and his receipt of
the fruits of the land, considered as integral elements of the contract of antichresis, are illegal and void
agreements because, as already stated, the contract of antichresis is a lien and such is expressly prohibited
by section 116 of Act No. 2874, as amended. The Court of Appeals held that the petitioner acted in bad faith
in taking possession of the land because he knew that the contract he made with Emiliana Ambrosio was an
absolute deed of sale and, further, that the latter could not sell the land because it is prohibited by section
116. The Civil Code does not expressly define what is meant by bad faith, but section 433 provides that "Every
person who is unaware of any flaw in his title, or in the manner of its acquisition, by which it is invalidated,
shall be deemed a possessor in good faith"; and provides further, that "Possessors aware of such flaw are
deemed possessors in bad faith". Article 1950 of the same Code, covered by Chapter II relative to prescription
of ownership and other real rights, provides, in turn, that "Good faith on the part of the possessor consists in
his belief that the person from whom he received the thing was the owner of the same, and could transmit
the title thereto." We do not have before us a case of prescription of ownership, hence, the last article is not
squarely in point. In resume, it may be stated that a person is deemed a possessor in bad faith when he
knows that there is a flaw in his title or in the manner of its acquisition, by which it is invalidated.
Borrowing the language of Article 433, the question to be answered is whether the petitioner should be
deemed a possessor in good faith because he was unaware of any flaw in his title or in the manner of its
acquisition by which it is invalidated. It will be noted that ignorance of the flaw is the keynote of the rule.

From the facts found established by the Court of Appeals we can neither deduce nor presume that the
petitioner was aware of a flaw in his title or in the manner of its acquisition, aside from the prohibition
contained in section 116. This being the case, the question is whether good faith may be premised upon
ignorance of the laws. Manresa, commenting on article 434 in connection with the preceding article, sustains
the affirmative. He says:
"We do not believe that in real life there are not many cases of good faith founded upon an error of law.
When the acquisition appears in a public document, the capacity of the parties has already been passed upon
by competent authority, and even established by appeals taken from final judgments and administrative
remedies against the qualification of registrars, and the possibility of error is remote under such
circumstances; but, unfortunately, private documents and even verbal agreements far exceed public
documents in number, and while no one should be ignorant of the law, the truth is that even we who are
called upon to know and apply it fall into error not infrequently. However, a clear, manifest, and truly
unexcusable ignorance is one thing, to which undoubtedly refers article 2, and another and different thing is
possible and excusable error arising from complex legal principles and from the interpretation of conflicting
doctrines.
But even ignorance of the law may be based upon an error of fact, or better still, ignorance of a fact is possible
as to the capacity to transmit and as to the intervention of certain persons, compliance with certain formalities
and appreciation of certain acts, and an error of law is possible in the interpretation of doubtful doctrines.
(Manresa, Commentaries on the Spanish Civil Code. Volume IV, pp. 100, 101 and 102.)
According to this author, gross and inexcusable ignorance of law may not be the basis of good faith, but
possible, excusable ignorance may be such basis. It is a fact that the petitioner is not conversant with the
laws because he is not a lawyer. In accepting the mortgage of the improvements he proceeded on the wellgrounded belief that he was not violating the prohibition regarding the alienation of the land. In taking
possession thereof and in consenting to receive its fruits, he did not know, as clearly as a jurist does, that the
possession and enjoyment of the fruits are attributes of the contract of antichresis and that the latter, as a
lien, was prohibited by section 116. These considerations again bring us to the conclusion that, as to the
petitioner, his ignorance of the provisions of section 116 is excusable and may, therefore, be the basis of his
good faith. We do not give much importance to the change of the tax declaration, which consisted in making
the petitioner appear as the owner of the land, because such an act may only be considered as a sequel to
the change of possession and enjoyment of the fruits by the petitioner, to about which we have stated that
the petitioner's ignorance of the law is possible and excusable. We, therefore, hold that the petitioner acted
in good faith in taking possession of the land and enjoying its fruits.
The petitioner being a possessor in good faith within the meaning of article 433 of the Civil Code and having
introduced the improvements upon the land as such, the provisions of article 361 of the same Code are
applicable; wherefore, the respondents are entitled to have the improvements and plants upon indemnifying
the petitioner the value thereof which we fix at P3,000, as appraised by the trial court; or the respondents
may elect to compel the petitioner to have the land by paying its market value to be fixed by the court of
origin.
The respondents also prayed in their complaint that the petitioner be compelled to pay them the sum of P650,
being the approximate value of the fruits obtained by the petitioner from the land. The Court of Appeals
affirmed the judgment of the trial court denying the claim or indemnity for damages, being of the same
opinion as the trial court that the respondents may elect to compel the petitioner to have the land. The Court
of Appeals affirmed the judgment of the trial court that the respondents have not established such damages.
Under the verbal contract between the petitioner and the deceased Emiliana Ambrosio, during the latter's
lifetime, the former would take possession of the land and would receive the fruits of the mortgaged
improvements on condition that he would no longer collect the stipulated interest and that he would attend

to the payment of the land tax. This agreement, at bottom, is tantamount to the stipulation that the petitioner
should apply the value of the fruits of the land to the payment of stipulated interest on the loan of P1,000
which is, in turn, another of the elements characterizing the contract of antichresis under article 1881 of the
Civil Code. It was not possible for the parties to stipulate further that the value of the fruits be also applied
to the payment of the capital, because the truth was that nothing remained after paying the interest at 12%
per annum. This interest, at the rate fixed, amounted to P120 per annum, whereas the market value of the
fruits obtainable from the land hardly reached said amount in view of the fact that the assessed value of said
improvements was, according to the decision, P860. To this should be added the fact that, under the verbal
agreement, from the value of the fruits had to be taken a certain amount to pay the annual land tax. We
mention these data here to show that the petitioner is also not bound to render an accounting of the value of
the fruits of the mortgaged improvements for the reason stated that said value hardly covers the interest
earned by the secured indebtednes.
For all the foregoing considerations, the appealed decision is reversed, and we hereby adjudge: (1) that the
contract of mortgage of the improvements, set out in Exhibit 1, is valid and binding; (2) that the contract of
antichresis agreed upon verbally by the parties is a real incumbrance which burdens the land and, as such, is
a null and without effect; (3) that the petitioner is a possessor in good faith; (4) that the respondents may
elect to have the improvements introduced by the petitioner by paying the latter the value thereof, P3,000,
or to compel the petitioner to buy and have the land where the improvements or plants are found, by paying
them its market value to be filed by the court of origin, upon hearing the parties; (5) that the respondents
have a right to the possession of the land and to enjoy the mortgaged improvements; and (6) that the
respondents may redeem the mortgage of the improvements by paying to the petitioner within three months
the amount of P1,000, without interest, as that stipulated is set off by the value of the fruits of the mortgaged
improvements which petitioner received, and in default thereof the petitioner may ask for the public sale of
said improvements for the purpose of applying the proceeds thereof to the payment of his said credit. Without
special pronouncement as to the costs in all instances. So ordered.

Diaz, J., concur.

Dizon vs Rodriguez GR L-20300-01; L-20355-56
G.R. Nos. L-20300-01

April 30, 1965

ANTONINO DIZON, ADELAIDA D. REYES, CONSOLACION DEGOLLACION, ET AL., petitioners,

vs.
HON. JUAN DE G. RODRIGUEZ, as Secretary of Agriculture &
HERACLITO

MONTALBAN,

as

Acting

Natural Resources,

Director

of

Fisheries,

MIGUEL TOLENTINO, REPUBLIC OF THE PHILIPPINES, ET AL., respondents.

----------------------------G.R. Nos. L-20355-56

April 30, 1965

REPUBLIC OF THE PHILIPPINES, THE SECRETARY OF AGRICULTURE & NATURAL RESOURCES,

DIRECTOR OF FISHERIES, MIGUEL TOLENTINO, and CLEMENCIA TOLENTINO, petitioners,
vs.
HON. COURT OF APPEALS, ANTONINO DIZON, ADELAIDA D. REYES, CONSOLACION DE
DEGOLLACION, ARTEMIO DIZON, AMORANDO DIZON, REMEDIOS MANAPAT SY-JUCO, and
LEONILA SIOCHI GOCO,respondents.

Jalandoni
Office

and
of

the

Jamir
Solicitor

for

petitioners

General

Miguel Tolentino for and in his own behalf.

for

Antonino
respondents

Dizon,
Republic,

et
et

al.
al.

BARRERA, J.:
These are separate appeals instituted by Antonino Dizon, et al. (G.R. Nos. L-20300-01) and the Republic of
the Philippines, et al. (G.R. Nos. L-20355-56), from a single decision of the Court of Appeals, as modified by
its resolution of August 20, 1962, holding that Lots Nos. 49 and 1 of subdivision plan Psd.-27941 are parts of
the navigable boundary of the Hacienda Calatagan, covered by Transfer Certificate of Title No. T-722, and
declaring the occupants Dizon, et al. possessors in good faith, entitled to remain therein until reimbursed, by
the intervenor Republic of the Philippines, of the necessary expenses made on the lots in the sum of
P40,000.00 and P25,000.00, respectively.
The facts of these cases, briefly stated, are as follows:
Hacienda Calatagan owned by Alfonso and Jacobo Zobel was originally covered by TCT No. T-722. In 1938,
the Hacienda constructed a pier, called "Santiago Landing," about 600 meters long from the shore into the
navigable waters of the Pagaspas Bay, to be used by vessels loading sugar produced by the Hacienda sugar
mill. When the sugar mill ceased its operation in 1948, the owners of the Hacienda converted the pier into a
fishpond dike and built additional strong dikes enclosing an area of about 30 hectares (of the Bay) and
converted the same into a fishpond. The Hacienda owners also enclosed a similar area of about 37 hectares
of the Bay on the other side of the pier which was also converted into a fishpond.
In 1949, the Zobels ordered the subdivision of the Hacienda by ordering the preparation of the subdivision
plan Psd-27941 wherein fishpond No. 1 (with 30 hectares) was referred to as Lot No. 1 and fishpond No. 2
(with 37 hectares) was referred to as Lot No. 49. The plan was approved by the Director of Lands, and the
Register of Deeds issued, from TCT No. T-722, TCT No. 2739 for lots 49 and 1 in the name of Jacobo Zobel.
In 1950, Jacobo Zobel sold to Antonino Dizon, et al. Lot 49 for which said purchasers obtained at first TCT
No. T-2740 and later T-4718, Lot 1, on the other hand, was purchased by Carlos Goco, et al., who, in turn,
sold one-half thereof to Manuel Sy-Juco, et al. Transfer Certificate of Title No. 4159 was issued in the names
of the Gocos and Sy-Jucos.
On May 24, 1952, Miguel Tolentino filed with the Bureau of Fisheries an application for ordinary fishpond
permit or lease for Lot 49, and an application for a similar permit, for Lot 1, was filed by his daughter Clemencia
Tolentino.
The Dizons, Sy-Jucos, and Gocos filed a protest with the Bureau of Fisheries, claiming the properties to be
private land covered by a certificate of title. This protest was dismissed by the Director of Fisheries, on the
ground that the areas applied for are outside the boundaries of TCT No. T-722 of Hacienda Calatagan. This
ruling was based upon the findings of the committee created by the Secretary of Agriculture and Natural
Resources to look into the matter, that Lots 1 and 49 are not originally included within the boundaries of the
hacienda.
On October 1, 1954, the protestants Dizons, Sy-Jucos, and Gocos filed an action in the Court of First Instance
of Manila (Civ. Case No. 24237) to restrain the Director of Fisheries from issuing the fishpond permits applied
for by the Tolentinos. The court dismissed this petition for non-exhaustion of administrative remedy, it
appearing that petitioners had not appealed from the decision of the Director of Fisheries to the Secretary of
Agriculture and Natural Resources. On appeal to this Court, the decision of the lower court was sustained
(G.R. No. L-8654, promulgated April 28, 1956). The protestants then filed an appeal with the Secretary of
Agriculture and Natural Resources. This time, the same was dismissed for being filed out of time.1wph1.t
On August 16, 1956, the Dizons filed Civil Case 135 and the Sy-Jucos and Gocos, Civil Case 136, in the Court
of First Instance of Batangas, to quiet their titles over Lots 49 and 1. Named defendants were the Secretary
of Agriculture and Natural Resources and applicants Tolentinos. The Republic of the Philippines was allowed
to intervene in view of the finding by the investigating committee created by the respondent Secretary, that
the lots were part of the foreshore area before their conversion into fishponds by the hacienda-owners.

On January 30, 1958, after due hearing, the Court of First Instance of Batangas promulgated a joint decision
making the finding, among others, that the subdivision plan Psd-27941 was prepared in disregard of the
technical description stated in TCT No. T-722, because the surveyor merely followed the existing shoreline
and placed his monuments on the southwest lateral of Lot 49, which was the pier abutting into the sea; and
made the conclusion that Lots 1 and 49 of Psd-27941 were part of the foreshore lands. As the certificate of
title obtained by petitioners covered lands not subject to registration, the same were declared null and void,
and Lots 1 and 49 were declared properties of the public domain. Petitioners appealed to the Court of Appeals.
In its decision of October 31, 1961, as well as the resolution of August 20, 1962, the appellate court adopted
the findings of the lower court, that the lots in question are part of the foreshore area and affirmed the ruling
cancelling the titles to plaintiffs. Although in the decision of October 31, 1961, the Court of Appeals awarded
to applicants Tolentinos damages in the amount of P200.00 per hectare from October 1, 1954, when plaintiffs
were notified of the denial of their protest by the Director of Fisheries, such award was eliminated in the
resolution of August 20, 1962, for the reason that plaintiffs, who relied on the efficacy of their certificates of
title, cannot be considered possessors in bad faith until after the legality of their said titles has been finally
determined. Appellants were thus declared entitled to retention of the properties until they are reimbursed by
the landowner, the Republic of the Philippines, of the necessary expenses made on the lands, in the sums of
P40,000.00 (for Lot 49) and P25,000.00 (for Lot 1). It is from this portion of the decision as thus modified
that defendants Tolentinos and the intervenor Republic of the Philippines appealed (in G.R. Nos. L-20355-56),
claiming that plaintiffs' possession became in bad faith when their protest against the application for lease
was denied by the Director of Fisheries. In addition, the intervenor contends that being such possessors in
bad faith, plaintiffs are not entitled to reimbursement of the expenses made on the properties.
In G.R. Nos. L-20300-01, plaintiffs Dizon, et al., claim that the finding that the Lots in question are part of the
seashore or foreshore area was erroneous, because from defendants' own evidence, the same appear to be
marshland before their conversion into fishponds.
It is noteworthy in connection with the appeal of plaintiffs, that they do not contest the existence of the pier
that was used by the hacienda owners in the loading of their manufactured sugar to vessels. The fact that
said pier jutted out 600 meters to the sea indicates that the area over which such cemented structure spanned
was part of the sea or at least foreshore land. And, plaintiffs were not able to disprove the testimonial evidence
that the fishponds in question were constructed by enclosing the areas with dikes, using the pier as one of
the ends of the fishponds. It is clear that the areas thus enclosed and converted into fishponds were really
part of the foreshore. This, and the fact that the subdivision plan Psd-27941 was found to have been prepared
not in accordance with the technical descriptions in TCT No. T-722 but in disregard of it, support the conclusion
reached by both the lower court and the Court of Appeals that Lots 49 and 1 are actually part of the territorial
waters and belong to the State. And, it is an elementary principle that the incontestable and indefeasible
character of a Torrens certificate of title does not operate when the land thus covered is not capable of
registration.
On the matter of possession of plaintiffs-appellants, the ruling of the Court of Appeals must be upheld. There
is no showing that plaintiffs are not purchasers in good faith and for value. As such title-holders, they have
reason to rely on the indefeasible character of their certificates.
On the issue of good faith of the plaintiffs, the Court of Appeals reasoned out:
The concept of possessors in good faith given in Art. 526 of the Civil Code and when said possession loses
this character under Art. 528, needs to be reconciled with the doctrine of indefeasibility of a Torrens Title.
Such reconciliation can only be achieved by holding that the possessor with a Torrens Title is not aware of
any flaw in his Title which invalidates it until his Torrens Title is declared null and void by final judgment of
the Courts.

Even if the doctrine of indefeasibility of a Torrens Title were not thus reconciled, the result would be the same,
considering the third paragraph of Art. 526 which provides that:
ART. 526. ...
Mistake upon a doubtful or difficult question of law may be the basis of good faith.
The legal question whether plaintiffs-appellants' possession in good faith, under their Torrens Titles acquired
in good faith, does not lose this character except in the case and from the moment their Titles are declared
null and void by the Courts, a difficult one. Even the members of this Court were for a long time divided, two
to one, on the answer. It was only after several sessions, where the results of exhaustive researches on both
sides were thoroughly discussed, that an undivided Court finally found the answer given in the next preceding
paragraph. Hence, even if it be assumed for the sake of argument that the Supreme Court would find that
the law is not as we have stated it in the next preceding paragraph and that the plaintiffs-appellants made a
mistake in relying thereon, such mistake on a difficult question of law may be the basis of good faith. Hence,
their possession in good faith does not lose this character except in the case and from the moment their
Torrens Titles are declared null and void by the Courts.
Under the circumstances of the case, especially where the subdivision plan was originally approved by the
Director of Lands, we are not ready to conclude that the above reasoning of the Court of Appeals on this point
is a reversible error. Needless to state, as such occupants in good faith, plaintiffs have the right to the retention
of the property until they are reimbursed the necessary expenses made on the lands.
With respect to the contention of the Republic of the Philippines that the order for the reimbursement by it of
such necessary expenses constitutes a judgment against the government in a suit not consented to by it,
suffice it to say that the Republic, on its own initiative, asked and was permitted to intervene in the case and
thereby submitted itself voluntarily to the jurisdiction of the court.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the decision appealed from is hereby affirmed in all
respects, without costs. So ordered.

Development Bank of the Philippines vs CA GR 111737 October 13 1999

G.R. No. 111737 October 13, 1999

DEVELOPMENT

BANK

OF

THE

PHILIPPINES,

petitioner,

vs.
THE

HONORABLE

COURT

OF

APPEALS

AND

SPOUSES

TIMOTEO

and

SELFIDA

S.

PIEDA, respondents.
GONZAGA-REYES, J.:
Before us is a Petition for Review on Certiorari of the decision of the Court of Appeals

in CA-G.R. CV No.

28549 entitled "SPOUSES TIMOTEO PIEDA, ET. AL. vs. DEVELOPMENT BANK OF THE PHILIPPINES" which
affirmed the decision of the Regional Trial Court (RTC), Branch 16 2, Roxas City in Civil Case No. V-4590, for
cancellation of certificate of title and/or specific performance, accounting and damages with a prayer for the
issuance of a writ of preliminary injunction.1wphi1.nt
The records show that respondent spouses Pieda (PIEDAS) are the registered owners of a parcel of land
(Lot 11-14-1-14) situated at barangay Astorga Dumarao, Capiz containing an area of 238,406 square meters,
more or less, and covered by Homestead Patent No. 0844 and Original Certificate of Title No. P-1930. On
March 7, 1972, the PIEDAS mortgaged the above described parcel of land to petitioner, Development Bank
of the Philippines (DBP) to secure their agricultural loan in the amount of P20,000.00. The PIEDAS failed to
comply with the terms and conditions of the mortgage compelling DBP to extrajudicially foreclose on February

2, 1977. In the foreclosure sale, DBP was the highest bidder and a Sheriff Certificate of Sale was executed in
its favor. In the corresponding Certificate of Sale, the sheriff indicated that "This property is sold subject to
the redemption within five (5) years from the date of registration of this instrument and in the manner
provided for by law applicable to this case". The certificate of sale was registered in the Register of Deeds of
Capiz on April 25, 1977. On March 10, 1978, after the expiration of the one-year redemption period provided
for under Section 6, ACT 3135, DBP consolidated its title over the foreclosed property by executing an Affidavit
of Consolidation of Ownership. Subsequently, a Final Deed of Sale was executed in DBP's favor, which was
registered together with the Affidavit of Consolidation of Ownership with the Register of Deeds of Capiz on
May 30, 1978. Consequently, Original Certificate of Title No. P-1930 was cancelled and TCT No. T-15559 was
issued in the name of DBP. Thereafter, DBP took possession of the foreclosed property and appropriated the
produce thereof.
On July 5, 1978, the Ministry of Justice issued Opinion No. 92, Series of 1978

which declared that lands

covered by P.D. No. 27 4, like the herein subject property, may not be the object of foreclosure proceedings
after the promulgation of said decree on Oct. 21, 1972.
On August 24, 1981, the PIEDAS offered to redeem the foreclosed property by offering P10,000.00 as partial
redemption payment. This amount was accepted by DBP who issued O.R. No. 1665719 and through a letter,
conditionally approved the offer of redemption considering the P10,000.00 as down payment.

However, on

November 11, 1981, DBP sent the PIEDAS another letter informing them that pursuant to P.D. 27, their offer
to redeem and/or repurchase the subject property could not be favorably considered for the reason that said
property was tenanted. 6 On November 16, 1981, in deference to the above-mentioned opinion, DBP through
Ramon Buenaflor sent a letter to the Acting Register of Deeds of Capiz requesting the latter to cancel TCT
No. T-15559 and to restore Original Certificate of Title No. P-1930 in the name of the PIEDAS. The Acting
Register of Deeds, in reply to such request, suggested that DBP file a petition in court pursuant to Section
108 of Presidential Decree 1529 7. In compliance with said suggestion, DBP petitioned for the cancellation of
TCT No. T-15559 with then Court of First Instance of Capiz, Branch II, docketed as Special Case No. 2653.
The petition was favorably acted upon on February 22, 1982. Thus, the foreclosure proceeding conducted on
February 2, 1977 was declared null and void and the Register of Deeds of Capiz was ordered to cancel TCT
No. 15559; OCT No. 1930 was ordered revived.
Meanwhile, on December 21, 1981, the PIEDAS filed the instant complaint against DBP for cancellation of
certificate of title and/or specific performance, accounting and damages with a prayer for the issuance of a
writ of preliminary injunction averring that DBP, in evident bad faith, caused the consolidation of its title to
the parcel of land in question in spite of the fact that the 5-year redemption period expressly stated in the
Sheriff's Certificate of Sale had not yet lapsed and that their offer to redeem the foreclosed property was
made well within said period of redemption.

After trial, the RTC ruled in favor of the PIEDAS stating that DBP violated the stipulation in the Sheriff's
Certificate of Sale which provided that the redemption period is five (5) years from the registration thereof in
consonance with Section 119

of CA No. 141

10

. DBP should therefore assume liability for the fruits that said

property produced from said land considering that it prematurely took possession thereof. The dispositive
portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against the defendant Development Bank
of the Philippines as follows:
1. Condemning the defendant DBP to pay the plaintiffs P201,138.28 less whatever amount the plaintiffs still
have to pay the said defendant DBP as balance of their loan account reckoned up to the date of this decision;
P20,000.00 as attorney's fees; P5,000.00 as litigation expenses and costs.
SO ORDERED.

11

DBP appealed to the Court of Appeals, which affirmed the decision of the RTC. The Court of Appeals stated
that since DBP was in evident bad faith when it unlawfully took possession of the property subject of the
dispute and defied what was written on the Sheriff's Certificate of Sale, the PIEDAS were entitled to recover
the fruits produced by the property or its equivalent valued at P72,000.00 per annum or a total of P216,000.00
for the three-year period. Respondent court stated that said amount was not rebutted by DBP and was fair
considering the size of the land in question. The court added that any discussion with respect to the
redemption period was of little significance since the foreclosure proceeding was declared null and void in
Special Civil Case No. 2653

12

on February 22, 1982. Thus, the right of the PIEDAS to redeem the property

has become moot and academic. Finally, the award of attorney's fees amounting to P10,000.00 13 was justified
considering that the PIEDAS were compelled to protect their interests.
DBP's Motion for Reconsideration

15

14

was denied; hence this petition where it assigns the following errors:

Ground No. 1 The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quo's Decision
Awarding Actual Damages In The Amount Of P216,000.00 In Favor Of The Private Respondents
Notwithstanding The Absence Of Evidence Substantiating Said Award. Thus, The Honorable Court Of Appeals
Had Decided This Instant Case In A Way Not In Accord With Applicable Law And Jurisprudence.
2. Ground No. 2 The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quo's Finding
That DBP Was In Bad Faith When It Took Possession Of The Property In Question Notwithstanding the
Contrary Evidence Adduced By Petitioner DBP. Thus, The Honorable Court Of Appeals Departed From The
Accepted And Usual Course f Judicial Proceedings.
3. Ground No. 3 The Honorable Court Of Appeals Gravely Erred In Affirming The Court A Quo's Decision
Awarding Attorney's Fees And Litigation Costs In Favor Of The Private Respondents Notwithstanding Absence
Of Evidence Proving The Same. Clearly, The Lower Court Be Committed Misapprehension Of Facts That Can
Be Considered A Question Of Law. 16
DBP maintains that the valuation of the income derived from the property in dispute allegedly amounting to
P216,000.00 was not proven by the PIEDAS. DBP argues that they granted the PIEDAS a loan of P20,000.00
in March 7, 1972 and up to the time of the foreclosure of the property, the PIEDAS have paid only P2,000.00
on their principal. The failure of the PIEDAS to pay this loan is attributable to the fact that said property did
not produce income amounting to P72,000.00 per annum. According to DBP, in the absence of receipts or
other evidence to support such a claim, the Court of Appeals should not have granted said amount considering
that the PIEDAS had the burden of proving actual damages. Furthermore, Selfida Pieda herself admitted
that the property never produced income amounting to P72,000.00 per annum. At any rate, the actual amount
earned by the property in terms of rentals turned over by the tenant-farmers or caretakers of the land were
duly receipted and were duly accounted for by the DBP.
DBP also alleges that the mere fact that DBP took possession and administration of the property does not
warrant a finding that DBP was in bad faith. First, records show that the PIEDAS consented to and approved
the takeover of DBP. Second, Sec. 7

17

of Act No. 3135

18

allows the mortgagee-buyer to take possession of

the mortgaged property even during the redemption period. Third, DBP's act of consolidating the title of the
property in its name does not constitute bad faith as there is no law which prohibits the purchaser at public
auction from consolidating title in its name after the expiration of the one (1) year redemption period reckoned
from the time the Certificate of Sale was registered; and neither is there any law or jurisprudence which
prohibits the PIEDAS from exercising their right of redemption over said property within five (5) years even
if title is consolidated in the name of the purchaser. When DBP consolidated title over the property in its name,
the new TCT issued in its favor was subject to the lien i.e. the right of redemption of the PIEDAS; if there
was a failure to register this in the TCT, DBP should not be faulted. Besides, even if the five (5) year period
of redemption was not indicated therein, Sec. 44

19

and 46

20

of Presidential Decree No. 1529

21

attaches

such lien by operation of law even in the absence of an annotation in the title. Moreover, Sec. 119 of CA No.

141 also makes said right of redemption a statutory lien, which subsists and binds the whole world despite
the absence of registration.
DBP also could not have been in bad faith when it denied the PIEDAS' offer to redeem the property since
the denial was premised on Opinion No. 92 of the Minister of Justice series of 1978 which stated that said
land was covered under P.D. 27 and could not be the subject of foreclosure proceedings. For this reason, DBP
immediately filed a petition to nullify the foreclosure proceedings which was favorably acted upon prior to the
service of summons and the complaint in the present case on DBP on June 30, 1982. If DBP was really in bad
faith, it would not have filed said petition for said petition was against its own interests.
Further, DBP asserts that PIEDAS appointed DBP as their attorney-in-fact or agent in case of foreclosure of
the property under Section 4 of the mortgage contract, which provides:
4. . . . In case of foreclosure, the Mortgagor hereby consents to the appointment of the mortgagee or any of
its employees as receiver, without any bond, to take charge of the mortgage property at once, and to hold
possession of the case and the rents and profits derived from the mortgaged property before the sale. . . . 22
DBP was therefore entitled to take possession of the property pursuant to the mortgage contract.
Finally, considering that DBP lawfully had material possession of the property after it consolidated its title,
DBP was entitled to the fruits and income thereof pursuant to Section 34, Rule 39 of the Rules of Court:
Sec. 34. Rents and Profits Pending Redemption. Statement thereof and credit therefor on redemption. The
purchaser, from the time of the sale until a redemption, and a redemptioner, from the time of his redemption
until another redemption, is entitled to receive the rents of the property sold or the value of the use or
occupation thereof when such property is in the possession of a tenant. . . .
Taking all this into consideration, DBP cannot be faulted for taking over possession of the property in question.
The core issue in this case is whether DBP was in bad faith when it took possession of the disputed lot.
We rule in the negative and find DBP's contentions meritorious.
A possessor in good faith is one who is not aware that there exists in his title or mode of acquisition any flaw,
which invalidates it.

23

Good faith is always presumed, and upon him who alleges bad faith on the part of a

possessor rests the burden of proof.

24

It was therefore incumbent on the PIEDAS to prove that DBP was

aware of the flaw in its title i.e. the nullity of the foreclosure. This, they failed to do.
Respondent PIEDAS argue that DBP's bad faith stems from the fact that DBP consolidated title over the
disputed property despite the statement in the Sheriff's Certificate of Sale to the effect that said land was
subject to a five year redemption period. The period of redemption of extrajudicially foreclosed land is provided
under Section 6 of ACT No. 3135 to wit:
Sec. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to,
the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person
having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold,
may redeem the same at any time within the term of one year from and after the date of sale; and such
redemption shall be governed by the provisions of section four hundred and sixty-four to four hundred and
sixty-six, inclusive, of the Code of Civil Procedure, 25 in so far as these are not inconsistent with the provisions
of this Act.
If no redemption is made within one year, the purchaser is entitled as a matter of right to consolidate
to possess

27

the property.

28

26

and

Accordingly, DBP's act of consolidating its title and taking possession of the

subject property after the expiration of the period of redemption was in accordance with law. Moreover, it
was in consonance with Section 4 of the mortgage contract between DBP and the PIEDAS where they agreed
to the appointment of DBP as receiver to take charge and to hold possession of the mortgage property in
case of foreclosure. DBP's acts cannot therefore be tainted with bad faith.
The right of DBP to consolidate its title and take possession of the subject property is not affected by the
PIEDAS' right to repurchase said property within five years from the date of conveyance granted by Section

119 of CA No. 141. In fact, without the act of DBP consolidating title in its name, the PIEDAS would not be
able to assert their right to repurchase granted under the aforementioned section. Respondent PIEDAS are
of the erroneous belief that said section prohibits a purchaser of homestead land in a foreclosure sale from
consolidating his title over said property after the one-year period to redeem said property has expired. Section
119 does not contain any prohibition to convey homestead land but grants the homesteader, his widow or
legal heirs a right to repurchase said land within a period of five years in the event that he conveys said land.
This is in consonance with the policy of homestead laws to distribute disposable agricultural lands of the State
to land-destitute citizens for their home and cultivation. 29 The right to repurchase under Section 119 aims to
preserve and keep in the family of the homesteader that portion of public land which the State had gratuitously
given him. 30 Such right is based on the assumption that the person under obligation to reconvey the property
has the full title to the property because it was voluntarily conveyed to him or that he consolidated his title
thereto by reason of a redemptioner's failure to exercise his right of redemption.

31

It is also settled that "the

five-year period of redemption fixed in Section 119 of the Public Land Law of homestead sold at extrajudicial
foreclosure begins to run from the day after the expiration of the one-year period of repurchase allowed in
an extrajudicial foreclosure".

32

Thus DBP's consolidation of title did not derogate from or impair the right of

the PIEDAS to redeem the same under C.A. No. 141.

It may be argued that P.D. 27 was already in effect when DBP foreclosed the property. However, the legal
propriety of the foreclosure of the land was put into question only after Opinion No. 92 series of 1978 of the
Ministry of Justice declared that said land was covered by P.D. 27 and could not be subject to foreclosure
proceedings. The Opinion of the Ministry of Justice was issued on July 5, 1978 or almost two months after
DBP consolidated its title to the property on March 10, 1978. By law and jurisprudence, a mistake upon a
doubtful or difficult question of law may properly be the basis of good faith.
In the case of Maneclang vs. Baun,

34

33

we held that when a contract of sale is void, the possessor is entitled

to keep the fruits during the period for which it held the property in good faith. Good faith of the possessor
ceases when an action to recover possession of the property is filed against him and he is served summons
therefore.

35

In the present case, DBP was served summons on June 30, 1982.

36

By that time, it was no

longer in possession of the disputed land as possession thereof was given back to the PIEDAS after the
foreclosure of DBP was declared null and void on February 22, 1982. Therefore, any income collected by DBP
after it consolidated its title and took possession of the property on May 30, 1978 up to February 22, 1982
belongs to DBP as a possessor in good faith since its possession was never legally interrupted.
Finally, we delete the award for attorney's fees. Although attorney's fees may be awarded if the claimant is
compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified
act or omission of the party from whom it is sought

37

, we hold that DBP's acts were clearly not unjustified.

WHEREFORE, the instant petition is hereby GRANTED, and the appealed decision of the Court of Appeals is
REVERSED. The Development Bank of the Philippines is absolved from any liability to Timoteo and Selfida
Pieda in so far as it orders the DBP to pay the PIEDAS P216,000.00 as annual produce value of the land;
P20,000.00 in attorney's fees, P5,000.00 in litigation expenses and the costs of the suit. This decision is
without prejudice to whatever liability the PIEDAS may still have to the DBP with respect to their loan.
SO ORDERED.