[G.R. No. 225176. January 19, 2018.

]
ESMERALDO GATCHALIAN, duly represented by SAMUEL GATCHALIAN, petitioner, vs. CESAR FLORES, JOSE LUIS
ARANETA, CORAZON QUING, and CYNTHIA FLORES, respondents.
TIJAM, J p:

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court filed by Esmeraldo
Gatchalian, represented herein by Samuel C. Gatchalian (petitioner) assailing the Amended Decision 1 dated October
23, 2015 and Resolution 2 dated June 15, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 126530, which affirmed
the Decision 3 dated June 8, 2012 of the Regional Trial Court (RTC), Branch 196 of Parañaque City in Civil Case No. 12-
0050, dismissing the complaint for ejectment filed by petitioners against Cesar Flores, Jose Paolo 4 Araneta, Corazon
Quing and Cynthia Flores (collectively as respondents), which was originally filed in the Metropolitan Trial Court (MeTC),
Branch 77 of Parañaque City, in Civil Case No. 2011-49. HTcADC
The pertinent facts as found by the CA are as follows:
Petitioner is one of the co-owners of a parcel of land (Road Lot 23) covered by Transfer
Certificate of Title No. 79180 located at Brgy. Vitalez, Parañaque City. Road Lot 23 is registered under
the name of petitioner's parents, spouses Sixto Gatchalian and Liceria Gatchalian. On June 2, 2011,
petitioner filed a Complaint for Ejectment with Damages against respondents Cesar Flores, Jose Paolo
Araneta (sic), Corazon Quing and Cynthia Flores (respondents) with the Metropolitan Trial Court
(MeTC) of Parañaque City, Branch 77 and docketed as Civil Case No. 2011-49.
The survey conducted on the property established that the lot of Segundo Mendoza
encroached a portion of Road Lot 23 which the Gatchalian's had tolerated. But after several years, the
lot of Segundo Mendoza was sold and subdivided among the new owners including herein
respondents. When the latter demonstrated acts of gross ingratitude to the Gatchalian family,
petitioner and his family were constrained to withdraw their tolerated possession, use and occupation
of the portion of Road Lot 23. Verbal and written demands to vacate were then served upon them but
remained unheeded. Their dispute reached the Lupong Tagapamayapa but all in vain. Hence, the filing
of the ejectment case against the respondents.
For their part, respondents denied that they usurped the property of petitioner. In fact, it was
the Gatchalians who have encroached on Road Lot 23 when they put up a fence in their (respondents)
property. They insisted that Road Lot 23 is a public road and is now known as "Don Juan Street Gat-
Mendoza." In the subdivision plan of the GAT Mendoza Housing area, Road Lot 23 is constituted as a
right of way. Respondents believed that petitioner has no cause of action against them and has no
authority to file the instant case because it is the City Government of Parañaque which has the right to
do so. 5
On December 9, 2011, the MeTC rendered a Decision 6 ordering respondents to vacate Road Lot 23, thus:
WHEREFORE, premises considered, judgment is hereby rendered as follows ordering the
defendants CESAR FLORES, JOSE PAOLO ARANETA, CORAZON QUING AND CYNTHIA FLORES and all
persons claiming rights under them, to wit:
1) to vacate the 140.50 square meter portion of the Road (Lot 23) encroached by them which
is covered by TCT No. 79180 and located at Don Juan St., Barangay Vitalez, Parañaque City;
2) to pay reasonable amount of rental in the amount of P20,000.00 a month plus legal rate of
interest reckoned from June 2, 2011 until the defendants shall have fully vacated the encroached
portion of the Road (Lot 23);
3) P20,000.00 as and (sic) for Attorney's fees;
4) Cost of suit.
SO ORDERED. 7
Respondents appealed the same to the RTC, which reversed the ruling of the MeTC in its Decision 8 dated June
8, 2012, to wit:
WHEREFORE, premises considered, the appealed Decision dated December 9, 2011 by Branch
78 of the Metropolitan Trial Court of Parañaque docketed under Civil Case No. 2011-49 is REVERSED
and the Complaint dated June 2, 2011 is herewith DISMISSED for lack of merit.
SO ORDERED. 9
 Aggrieved, petitioner appealed to the CA. The latter in its Decision 10 dated March 13, 2015, reversed the RTC
and reinstated the ruling of the MeTC. However, upon reconsideration, the CA reversed itself and affirmed the RTC,
thus:
WHEREFORE, respondent's Motion for Reconsideration is hereby GRANTED. Accordingly, we
REVERSE and SET ASIDE our findings in our Decision dated March 13, 2015. The instant petition fore
review is hereby DISMISSED and the Decision dated June 8, 2012 of the Regional Trial Court of
Parañaque City, Branch 196 in Civil Case No. 12-0050 is UPHELD.
SO ORDERED. 11
Hence, this petition.
Petitioner claimed that the CA committed grave error in ruling that the private character of Road Lot 23 has
been stripped by Municipal Ordinance No. 88-04, series of 1988 constituting the said road lot as a public right-of-way.
Petitioner also claimed that the CA erred in stating that by virtue of laches, the road lot has been converted to public
property of the municipality. aScITE
Petitioner further alleged that the road lot is still private property it being covered by TCT No. 79180 under the
name of Spouses Sixto Gatchalian and Liceria Gatchalian. The mere usage by the public of the road lot does not make it
public property. To convert the same to public property, it must be expropriated by the government or the registered
owner must donate or sell the same to the government.
The petition is granted.
At the outset, petitioner filed before the MeTC an action for ejectment against the respondents. It is settled
that in ejectment proceedings, the only issue for the Court's resolution is, who between the parties is entitled to the
physical or material possession of the subject property. Issues as to ownership are not involved, except only for the
purpose of determining the issue of possession. 12
In the instant case, petitioner asserts that he is entitled to the possession of the road lot being one of the co-
owners of the same since it is registered under the name of petitioner's parents. While respondents do not claim
ownership of the subject lot, they argued that the road lot is now public property because of Ordinance No. 88-04,
series of 1988 constituting it as "Don Juan St. Gat-Mendoza." As such, petitioner cannot evict respondents.
It is undisputed that the road lot is registered under the name of petitioner's parents. Even the respondents
did not dispute this fact. It is also undisputed that the municipal government has not undertaken any expropriation
proceedings to acquire the subject property neither did the petitioner donate or sell the same to the municipal
government. Therefore, absent any expropriation proceedings and without any evidence that the petitioner donated
or sold the subject property to the municipal government, the same is still private property.
In the case of Woodridge School, Inc. v. ARB Construction Co., Inc., 13 this Court held that:
In the case of Abellana, Sr. v. Court of Appeals, the Court held that "the road lots in a private
subdivision are private property, hence, the local government should first acquire them by donation,
purchase or expropriation, if they are to be utilized as a public road." Otherwise, they remain to be
private properties of the owner-developer.
Contrary to the position of petitioners, the use of the subdivision roads by the general public
does not strip it of its private character. The road is not converted into public property by mere
tolerance of the subdivision owner of the public's passage through it. To repeat, "the local government
should first acquire them by donation, purchase or expropriation, if they are to be utilized as a public
road." 14
As reiterated in the recent case of Republic of the Philippines, represented by the Department of Public Works
and Highways (DPWH) v. Sps. Llamas, 15 this Court held that:
As there is no such thing as an automatic cessation to [the] government of subdivision road lots, an
actual transfer must first be effected by the subdivision owner: "subdivision streets belonged to the
owner until donated to the government or until expropriated upon payment of just compensation." 16
Since the local government of Parañaque has not purchased nor undertaken any expropriation proceedings,
neither did the petitioner and his siblings donate the subject property, the latter is still a private property and Ordinance
No. 88-04 did not convert the same to public property.
As to the CA's finding that by virtue of laches the subject property has been converted into public property, We
do not agree.
 It is well-settled that an "owner of [a] registered land does not lose his rights over a property on the ground of
laches as long as the opposing claimant's possession was merely tolerated by the owner." 17
A torrens title is irrevocable and its validity can only be challenged in a direct proceeding. 18 A torrens title is
an indefeasible and impresciptible title to a property in favor of the person in whose name the title appears. The owner
is entitled to all the attributes of ownership of the property, including possession. The person who has a torrens title
over a land is entitled to possession thereof. As such, petitioner can file an ejectment case against herein respondents
who encroached upon a portion of petitioner's property.
WHEREFORE, premises considered, the petition is GRANTED. The Amended Decision dated October 23, 2015
and Resolution dated June 15, 2016 of the Court of Appeals in CA-G.R. SP No. 126530 are hereby REVERSED and SET
ASIDE. The Decision dated December 9, 2011 of the Metropolitan Trial Court in Civil Case No. 2011-49
is REINSTATED. HEITAD
SO ORDERED.

[G.R. No. 202448. December 13, 2017.]

JOSEPH O. REGALADO, petitioner, vs. EMMA DE LA RAMA VDA. DE LA PENA, 1 JESUSA 2 DE LA PENA, JOHNNY DE LA
PENA, JOHANNA DE LA PENA, JOSE DE LA PENA, JESSICA DE LA PENA, and JAIME ANTONIO DE LA PENA, respondents.
DEL CASTILLO, J p:

This Petition for Review on Certiorari seeks to reverse and set aside the May 28, 2012 Decision 3 of the Court
of Appeals (CA) in CA-G.R. CV No. 02994, which affirmed the January 20, 2009 Decision 4 of the Regional Trial Court
(RTC) of Bacolod City, Branch 42 in Civil Case No. 98-10187 for "Recovery of Possession and Damages with
Injunction." ETHIDa
Factual Antecedents

Emma, Jesusa, Johnny, Johanna, Jose, Jessica, and Jaime Antonio (Jaime); all surnamed de la Pena
(respondents), are the registered owners of two parcels of land with a total area of 44 hectares located in Murcia,
Negros Occidental. These properties are referred to as Lot Nos. 138-D and 138-S, and are respectively covered by
Transfer Certificates of Title No. T-103187 and T-103189 5 (subject properties).
Purportedly, in 1994, without the knowledge and consent of respondents, Joseph Regalado (petitioner)
entered, took possession of, and planted sugar cane on the subject properties without paying rent to respondents. In
the crop year 1995-1996, respondents discovered such illegal entry, which prompted them to verbally demand from
petitioner to vacate the properties but to no avail. 6
Later, the parties appeared before the Barangay Office of Cansilayan, Murcia, Negros Occidental but failed to
arrive at any amicable settlement. On September 29, 1997, the Lupon Tagapamayapa of said Barangay issued a
Certificate to File Action; 7 and, on March 9, 1998, respondents filed a Complaint 8 for recovery of possession and
damages with injunction against petitioner.
In his Answer, 9 petitioner countered that in 1994, Emma, Jesusa, Johnny, Johanna, and Jessica executed their
separate Waivers of Undivided Share of Lands renouncing their rights and interests over the subject properties in favor
of Jaime. In turn, Jaime subsequently waived his rights and interests on the same properties to petitioner. 10 Petitioner
claimed that respondents did not attempt to enter the properties as they already intentionally relinquished their
interests thereon.
Thereafter, petitioner filed a Motion to Dismiss 11 on the ground, among others, that the RTC has no jurisdiction
over the subject matter of the case. Petitioner posited that based on the allegations in the Complaint, the action
involved recovery of physical possession of the properties in dispute; said Complaint was also filed within one year from
the date the parties had a confrontation before the Barangay; and thus, the case was one for Ejectment and must be
filed with the proper Municipal Trial Court (MTC).
In their Reply, 12 respondents alleged that the waiver of rights in favor of Jaime was conditioned on the
payment of their P6.7 million loan with the Republic Planters Bank (RPB) and Philippine National Bank (PNB); and, in
case the subject properties would be sold, its proceeds shall be equally distributed to respondents. They further stated
that such waiver bestowed rights over the properties solely upon Jaime. They added that the subsequent waiver
executed by Jaime to petitioner should have been with conformity of the banks where the properties were mortgaged;
and conditioned on the payment of the P6.7 million loan. They pointed out that neither Jaime nor petitioner paid any
amount to RPB or PNB; and as a result, the waivers of rights in favor of Jaime, and later to petitioner, were void.
 Subsequently, in their Opposition to Motion to Dismiss, 13 respondents contended that the RTC had jurisdiction
over the case because their demand for petitioner to vacate the properties was made during the crop year 1995-1996,
which was earlier than the referral of the matter to Barangay Cansilayan.
On July 31, 2000, the RTC denied the Motion to Dismiss. It held that it had jurisdiction over the case because
the area of the subject properties was 44 hectares, more or less, and "it is safe to presume that the value of the same
is more than P20,000.00." 14
Ruling of the Regional Trial Court

On January 20, 2009, the RTC rendered a Decision ordering petitioner to turn over the subject properties to
respondents and to pay them P50,000.00 as attorney's fees.
The RTC ratiocinated that the waiver of rights executed by Jaime to petitioner was coupled with a consideration.
However, petitioner failed to prove that he paid a consideration for such a waiver; as such, petitioner was not entitled
to possess the subject properties.
Both parties appealed to the CA.
On one hand, petitioner reiterated that the RTC had no jurisdiction over the case. He also maintained that
respondents already waived their shares and rights over the properties to Jaime, who, in turn, renounced his rights to
petitioner.
On the other hand, respondents assailed the RTC Decision in so far as it failed to award them damages as a
result of petitioner's purported illegal entry and possession of the subject properties.
Ruling of the Court of Appeals

On May 28, 2012, the CA affirmed the RTC Decision.

The CA dismissed respondents' appeal because they did not establish entitlement to damages. It likewise
dismissed the appeal interposed by petitioner for failing to establish that he gave any consideration in relation to Jaime's
waiver of rights in his (petitioner) favor.
In addition, the CA ruled that the RTC had jurisdiction over this case considering that the parties stipulated on
the jurisdiction of the RTC but also because the assessed value of the subject properties is presumed to have exceeded
P20,000.00.

Issues

Hence, petitioner filed this Petition raising the issues as follows:

I. DID THE REGIONAL TRIAL COURT HAVE JURISDICTION OVER THE SUBJECT MATTER OF THE CASE?
II. DID THE COURT OF APPEALS ERR IN RULING THAT PETITIONER SHOULD RETURN POSSESSION OF THE
PROPERTIES SUBJECT OF THIS CASE TO THE RESPONDENTS?
III. SHOULD THE PETITIONER BE AWARDED DAMAGES? 15
Petitioner's Arguments

Petitioner insists that respondents filed their Complaint for recovery of physical possession of the subject
properties on March 9, 1998 or within one year from the date the parties had their confrontation before the Barangay of
Cansilayan (September 29, 1997). As such, he maintains that the RTC did not have jurisdiction over the case. cSEDTC
Petitioner also posits that even granting that this action is considered a plenary action to recover right of
possession, the RTC still had no jurisdiction because the tax declarations of the properties were not submitted, and
consequently, it cannot be determined whether it is the MTC or RTC which has jurisdiction over the case.
Moreover, petitioner argues that Jaime's waiver in his (petitioner's) favor was coupled with the following
considerations: 1) P400,000.00 cash; 2) a car worth P350,000.00; and 3) a convenience store worth P1,500,000.00. He
adds that the delivery of the properties to him confirms that he (petitioner) gave said considerations to Jaime.
Later, in his Manifestation and Motion, 16 petitioner points out that although the body of the assailed CA
Decision made reference to the January 20, 2009 RTC Decision, its dispositive portion pertained to a different case, to
wit:
 WHEREFORE, premises considered, the August 29, 2008 Decision of the Regional Trial Court,
Branch 10 in Civil Case No. CEB-30866 is AFFIRMED.
Costs against both appellants.
SO ORDERED. 17 (Underlining ours)
Consequently, petitioner prays that the dispositive portion of the CA Decision be rectified to refer to the actual
case subject of the appeal.
Respondents' Arguments

On the other hand, respondents contend that the CA did not commit any reversible error in rendering the
assailed Decision. They insist that petitioner's contentions are unsubstantial to merit consideration.

Our Ruling

The Court grants the Petition.

In our jurisdiction, there are three kinds of action for recovery of possession of real property: 1) ejectment
(either for unlawful detainer or forcible entry) in case the dispossession has lasted for not more than a year; 2) accion
publiciana or a plenary action for recovery of real right of possession when dispossession has lasted for more than one
year; and, 3) accion reinvindicatoria or an action for recovery of ownership. 18
Pursuant to Republic Act No. 7691 (RA 7691), 19 the proper Metropolitan Trial Court (MeTC), MTC, or Municipal
Circuit Trial Court (MCTC) has exclusive original jurisdiction over ejectment cases. Moreover, jurisdiction of the MeTC,
MTC, and MCTC shall include civil actions involving title to or possession of real property, or any interest therein where
the assessed value of the property does not exceed P20,000.00 (or P50,000.00 in Metro Manila). 20 On the other hand,
the RTC has exclusive original jurisdiction over civil actions involving title to or possession of real property, or any
interest therein in case the assessed value of the property exceeds P20,000.00 (or P50,000.00 in Metro Manila). 21
Jurisdiction is thus determined not only by the type of action filed but also by the assessed value of the property.
It follows that in accion publiciana and reinvindicatoria, the assessed value of the real property is a jurisdictional element
to determine the court that can take cognizance of the action. 22
In this case, petitioner consistently insists that a) the Complaint is one for ejectment; or b) if the same is deemed
an accion publiciana, the RTC still lacks jurisdiction as the assessed value of the subject properties was not alleged in
the Complaint.
As such, to ascertain the proper court that has jurisdiction, reference must be made to the averments in the
complaint, and the law in force at the commencement of the action. This is because only the facts alleged in the
complaint can be the basis for determining the nature of the action, and the court that can take cognizance of the
case. 23
Here, the pertinent portions of the Complaint read:
2. That plaintiffs [herein respondents] are the owners of two (2) parcels of land known as Lot
No. 138-D with Transfer Certificate of Title No. T-103187 and Lot No. 138-S with Transfer Certificate of
Title No. T-103189, with a total land area of 44 hectares, all of Murcia Cadastre x x x;
3. That sometime in 1994, without the knowledge and consent of herein plaintiffs, the
defendant [herein petitioner] entered into and took possession of the aforementioned parcels of land
and planted sugar cane without paying any rental to herein plaintiffs; SDAaTC
4. That plaintiffs discovered the illegal entry and occupation by the defendant of the
aforementioned property and demand to vacate the property was made orally to the defendant
sometime in 1995-96 crop year but defendant refused and still refuses to vacate the premises;
5. A confrontation before the Brgy. Kapitan of Brgy[.] Cansilayan, Murcia, Negros Occidental,
and before the Pangkat Tagapag[ka]sundo between herein parties where plaintiffs again demanded
orally for the defendant to vacate the premises but defendant refused to vacate the premises and no
amicable settlement was reached during the confrontation of the parties, thus a certificate to file
action has been issued x x x;
 6. That plaintiffs were barred by the defendant from entering the property of the plaintiffs for
the latter to take possession of the same and plant sugar cane thereby causing damages to the
plaintiffs;
7. That because of the refusal of the defendant to allow the plaintiffs to take possession and
control of their own property, plaintiffs were constrained to seek the aid of counsel and consequently
thereto this complaint. 24
Under Section 1, 25 Rule 70 of the Rules of Court, there are special jurisdictional facts that must be set forth in
the complaint to make a case for ejectment, which, as mentioned, may either be for forcible entry or unlawful detainer.
In particular, a complaint for forcible entry must allege the plaintiff's prior physical possession of the property;
the fact that plaintiff was deprived of its possession by force, intimidation, threat, strategy, or stealth; and the action
must be filed within one year from the time the owner or the legal possessor learned of their dispossession. 26 On the
other hand, a complaint for unlawful detainer must state that the defendant is unlawfully withholding possession of
the real property after the expiration or termination of his or her right to possess it; and the complaint is filed within a
year from the time such possession became unlawful. 27
In the instant case, respondents only averred in the Complaint that they are registered owners of the subject
properties, and petitioner unlawfully deprived them of its possession. They did not assert therein that they were
dispossessed of the subject properties under the circumstances necessary to make a case of either forcible entry or
unlawful detainer. Hence, in the absence of the required jurisdictional facts, the instant action is not one for
ejectment. 28
Nonetheless, the Court agrees with petitioner that while this case is an accion publiciana, there was no clear
showing that the RTC has jurisdiction over it.
Well-settled is the rule that jurisdiction is conferred only by law. It cannot be presumed or implied, and must
distinctly appear from the law. It cannot also be vested upon a court by the agreement of the parties; or by the court's
erroneous belief that it had jurisdiction over a case. 29
To emphasize, when respondents filed the Complaint in 1998, RA 7691 was already in force as it was approved
on March 25, 1994 and took effect on April 15, 1994. 30 As such, it is necessary that the assessed value of the subject
properties, or its adjacent lots (if the properties are not declared for taxation purposes) 31 be alleged to ascertain which
court has jurisdiction over the case. 32
As argued by petitioner, the Complaint failed to specify the assessed value of the subject properties. Thus, it is
unclear if the RTC properly acquired jurisdiction, or the MTC has jurisdiction, over respondents' action.
Also worth noting is the fact that the RTC took cognizance of the Complaint only on the presumption that the
assessed value of the properties exceeds P20,000.00. Aside from affirming such presumption, the CA, in turn, declared
that the RTC had jurisdiction because the parties stipulated on it. However, as discussed, jurisdiction cannot be
presumed. It cannot be conferred by the agreement of the parties, or on the erroneous belief of the court that it had
jurisdiction over a case.
Indeed, in the absence of any allegation in the Complaint of the assessed value of the subject properties, it
cannot be determined which court has exclusive original jurisdiction over respondents' Complaint. Courts cannot simply
take judicial notice of the assessed value, or even market value of the land. 33 Resultantly, for lack of jurisdiction, all
proceedings before the RTC, including its decision, are void, 34 which makes it unnecessary to discuss the other issues
raised by petitioner.
As a final note, while the modification of the clerical error in the dispositive portion of the CA Decision is
rendered irrelevant by the dismissal of the Complaint for lack of jurisdiction, the Court, nonetheless, reminds the CA
and all other courts to be more circumspect in rendering their decision, including ensuring the correctness of the
information in their issuances. After all, courts are duty-bound to render accurate decisions, or that which clearly and
distinctly express the facts and the law on which the same is based. 35 acEHCD
WHEREFORE, the Petition is GRANTED. The May 28, 2012 Decision of the Court of Appeals in CA-G.R. CV No.
02994 is REVERSED and SET ASIDE. Accordingly, the Complaint in Civil Case No. 98-10187 is DISMISSED.
SO ORDERED.

G.R. No. 229645. June 6, 2018.]

NORMA M. BALEARES, DESIDERIO M. BALEARES, GERTRUDES B. CARIASA, RICHARD BALEARES, JOSEPH BALEARES,
SUSAN B. DELA CRUZ, MA. JULIA B. RECTRA, and EDWIN BALEARES, petitioners, vs. FELIPE B. ESPANTO, rep. by
MARCELA B. BALEARES, Attorney-in-Fact, respondent.
VELASCO, JR., J p:
 For review in the instant Petition 1 is the Decision 2 promulgated on January 31, 2017 by the Court of Appeals
(CA) in CA-G.R. SP No. 144007, which affirmed the Decision 3 and the Order 4 dated July 24, 2015 and December 29,
2015, respectively, of the Regional Trial Court (RTC) of Makati City, Branch 137 in Civil Case No. 15-113 (For
Ejectment). CAIHTE
The controversy arose from the following antecedents:
The herein respondent is the current registered owner of a parcel of land with improvements situated at No.
3288 A. Mabini St., Poblacion, Makati City (subject property), and covered by Transfer Certificate of Title (TCT) No.
225428. The herein petitioners, on the other hand, were the heirs of Santos Baleares (Santos), one of the original co-
owners of the subject property 5 (previously covered by TCT No. 9482), 6 together with his siblings Tomasa, Julia,
Matilde, Marcela, Gloria (now deceased), all surnamed Baleares, and his nephew, Ernest B. Nonisa, Jr. (now deceased).
Way back on February 18, 1988, the Baleares siblings mortgaged the subject property to Arnold Maranan
(Arnold). 7 The mortgage was registered and annotated at the back of TCT No. 9482 as Entry No. 47847. 8 Unknown to
the petitioners, the subject property was apparently foreclosed and sold at public auction on August 13, 1996, where
Arnold appeared to be the highest bidder. 9
Contrariwise, sometime in 1998, believing that Arnold failed to enforce his mortgaged right over the subject
property within the 10-year prescriptive period, the petitioners, as heirs of Santos and the possessors and occupants
thereof, 10 lodged a Complaint for the Cancellation of the Mortgage Inscription on TCT No. 9482 grounded on
prescription before Branch 134 of RTC-Makati City, docketed as Civil Case No. 98-1360. 11 During its pendency,
however, a Certificate of Sale 12 dated March 2, 1999 was allegedly issued to Arnold. TCT No. 9482 was consequently
cancelled and a new one, TCT No. 225363, was issued in his favor. 13
Sometime thereafter in April 2000, respondent and his mother likewise filed a complaint against Arnold but
for Nullification of Mortgage and/or Foreclosure with TRO/Injunction based also on prescription of the latter's
mortgaged right. This was lodged before Branch 135 of RTC-Makati City and docketed as Civil Case No. 00-
523. 14 Purportedly, respondent and his mother were among the co-owners of the subject property; the latter
(respondent's mother) being one of the Baleares siblings.
On July 18, 2003, the RTC rendered a Decision 15 in Civil Case No. 98-1360 (cancellation of mortgage
inscription) in favor of the petitioners. The RTC held that there was no valid extrajudicial foreclosure of mortgage and
auction sale for non-compliance with the notice and posting of publication requirements set forth under Act No. 3135,
as amended. And, since the alleged mortgage loan had been due for more than 10 years, without Arnold having
exercised his mortgaged right, thus, the inscription on TCT No. 9482 can now be cancelled on the ground of prescription.
The RTC, thus, ordered the Register of Deeds of Makati City to cancel Entry No. 47847 dated February 18, 1988 at the
back of TCT No. 9482. 16 The CA affirmed this decision, which became final and executory on February 1, 2008. 17
In the same year, all this notwithstanding, Arnold was able to sell 18 the subject property to none other than
the respondent himself. Later, TCT No. 225428 was issued in respondent's name. The latter, however, did not
immediately take possession of the subject property. Instead, he allowed the petitioners, who were its actual occupants,
to remain therein as they are his blood relatives. 19
After some time, the respondent sent a demand letter to the petitioners for them to vacate the subject
property as he wanted to construct an apartment thereon but they refused. In so refusing, the petitioners maintained
that they have a better right of possession over the subject property being the heirs of its original owners. 20 On June
17, 2009, a final demand was made for the petitioners to vacate the subject property and to pay the reasonable rentals
thereon, 21 but this remained unheeded. Even the subsequent barangay settlement proved futile. Thus, the respondent
instituted a Complaint for Unlawful Detainer before the MeTC-Makati City against the petitioners, docketed as Civil
Case No. 98995 (the origin of this Petition).
In their Verified Answer with Motion to Dismiss and Counterclaim, the petitioners averred that the MeTC has
no jurisdiction over the instant action, as it is one for recovery of possession and not for unlawful detainer. They also
raise the existence of litis pendentia, as there are allegedly two pending cases involving similar issues of ownership and
possession that are still pending before the RTC-Makati City. They maintained that they are co-owners of the subject
property, thus, their right to stay thereon was not because of the respondent's tolerance. 22
In a Decision dated August 11, 2014, the MeTC ruled for the respondent and granted the Complaint. It found
the complaint to be sufficient for an unlawful detainer case and upheld that the case should not be dismissed on the
ground of litis pendentia, as the issues in the alleged two pending cases before the RTC-Makati City do not abate
ejectment suit. The MeTC, thus, ordered the petitioners and all persons claiming rights under them to vacate the subject
property and to peaceably surrender its possession to the respondent. The petitioners were also ordered to pay the
respondent these amounts (1) P5,000.00 per month as reasonable compensation for use and occupation of the subject
property reckoned from December 22, 2008 and every month thereafter until they fully vacated the same; (2)
P15,000.00 as attorney's fees; and (3) the costs of suit. 23 The subsequent Motion for Reconsideration was denied in
an Order 24 dated October 24, 2014 for being a prohibited pleading. DETACa
On appeal, the RTC, in a Decision dated July 24, 2015, affirmed in its entirety the MeTC ruling. The petitioners
moved to reconsider the same but it was similarly denied for lack of merit in an Order dated December 29, 2015.
In the interim, the respondent moved for the execution of the RTC Decision, which was granted in an
Order 25 dated December 26, 2016 pursuant to Section 21, 26 Rule 70 of the Rules of Court in relation to Section 21 27 of
the Revised Rule on Summary Procedure.
On further appeal, the CA, in the now assailed Decision dated January 31, 2017, affirmed both the Decision and
the Order of the RTC. The CA also ordered the petitioners to pay six percent (6%) interest rate of the outstanding
obligation from finality of judgment until fully satisfied. The CA rejected the petitioners' argument that the RTC Decision
in Civil Case No. 98-1360 binds the respondent for being a mere transferee of Arnold under the doctrine of res judicata.
Hence, this Petition raising these arguments: (1) the CA erred in not finding that respondent is a
transferee pendete lite with respect to the subject property; and (2) the CA erred in ruling that the respondent's
ejectment complaint is not barred by the final and executory Decision in Civil Case No. 98-1360 against Arnold, his
transferor, with respect to the subject property. 28
In essence, the pivotal issue that must be resolved here is who between the petitioners and the respondent
has a better right of possession over the subject property? The petitioners who are in possession of the same
continuously for a long period of time or the respondent whose right of possession is anchored on a Torrens title
obtained through purchase from someone whose right over the subject property has long ceased and he has knowledge
of such fact?
This Court rules for the petitioners.
Generally, the factual findings of the trial courts, especially when affirmed on appeal by the CA, are binding and
conclusive upon this Court. This rule, however, admits of several exceptions and one of which is when the CA manifestly
overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different
conclusion. In which case, this Court can go over the records and re-examine the evidence presented by the parties in
order to arrive at a much better and just resolution of the case.
This case involved an action for unlawful detainer filed by the respondent against the petitioners. An action for
unlawful detainer is summary in nature and the only issue that needs to be resolved is who is entitled to physical
possession of the premises, possession referring to possession de facto, and not possession de jure. Nonetheless, where
the parties to an ejectment case raise the issue of ownership and such is inseparably linked to that of possession, the
courts may pass upon that issue to determine who between the parties has the better right to possess the property.
The adjudication of the ownership issue, however, is not final and binding. The same is only for the purpose of resolving
the issue of possession. Otherwise stated, the adjudication of the issue of ownership is only provisional, and not a bar
to an action between the same parties involving title to the property. 29
Here, the petitioners claim that they have a better right of possession over the subject property as they are the
heirs of one of its original co-owners and they have been in lawful possession and occupation thereof ever since, thus,
they cannot be dispossessed of the subject property. The respondent, on the other hand, based his claim of ownership
and right of possession over the subject property on a certificate of title issued in his name. However, the respondent,
being a mere transferee of the subject property who has knowledge that his transferor's mortgaged right over the same
has been cancelled with finality by the court, merely stepped into his transferor's shoes, thus, he has no right over the
subject property.
It is true that a title issued under the Torrens system is entitled to all the attributes of property ownership,
which necessarily includes possession. 30 As such, ordinarily, the Torrens title holder over the subject properties is
considered the rightful owner who is entitled to possession thereof. But, in this case, it has not been disputed that the
petitioners have been in continuous possession of the subject property in the concept of ownership and not by mere
tolerance of the respondent. Moreover, the latter has knowledge that his transferor has no more right to enforce the
mortgage over the subject property on the ground of prescription as stated in the RTC Decision in Civil Case No. 98-
1360. The trial court also declared therein that Arnold's extrajudicial foreclosure and auction sale of the subject property
was non-existent and void, which ruling already attained finality. As such, it would appear that the respondent's right
over the subject property is highly questionable. Under these circumstances, the respondent cannot simply oust the
petitioners from possession through the summary procedure of an ejectment proceeding. aDSIHc
It bears stressing that the herein ruling is limited only to the determination as to who between the parties has
the better right of possession. It will not in any way bar any of the parties from filing an action with the proper court to
resolve conclusively the issue of ownership.
 WHEREFORE, premises considered, the present petition is GRANTED. The CA Decision dated January 31, 2017
in CA-G.R. SP No. 144007 is REVERSED and SET ASIDE. A new judgment is rendered DISMISSING the Complaint in Civil
Case No. 98995 for lack of merit.
SO ORDERED.

G.R. No. 196074. October 4, 2017.]

FLORENCIA ARJONILLO, petitioner, vs. DEMETRIA PAGULAYAN, as substituted by her heirs namely: HERMANA VDA. DE
CAMBRI, PORFIRIO T. PAGULAYAN, and VICENTE, MAGNO, PEDRO, FLORENCIO, MELECIO, LERMA, all surnamed
MATALANG, and AUREA MATALANG-DELOS SANTOS, respondent.
MARTIRES, J p:

This is a Petition for Review on Certiorari assailing the Decision 1 promulgated on 7 January 2011 and
Resolution 2 dated 16 March 2011 of the Court of Appeals (CA) in CA-G.R. CV No. 89206, which reversed and set aside
the Decision 3 dated 31 August 2006 of the Regional Trial Court, Branch 2 of Tuguegarao City (RTC), in Civil Case No.
4778.

THE FACTS

Avelardo Cue (Cue) died intestate on 8 December 1987 in Tuguegarao, Cagayan. Cue died single with no
surviving descendants or ascendants but was survived by the following: 1) his brother, Felix Cue; 2) Alfonsa Sim and
Rodolfo Sia, his niece and nephew by his deceased sister Marta Cue; 3) the herein petitioner Florencia
Arjonillo (Arjonillo), his niece by his deceased sister Angelita Cue; and 4) Antonio, Isidra, Jacinto, Juanio, Nenita and
Teodora, all surnamed Cue, his nieces and nephews by his deceased brother Francisco Cue. On 21 June 1989, they
executed an extrajudicial settlement of the estate of Cue.
According to the heirs of Cue, the decedent acquired the following properties during his lifetime:
a) Lot 999-B-3-B, Psd-57204, being a portion of Lot 999-B-3, Psd-52698, located at Poblacion,
Tuguegarao, Cagayan, with an area of two hundred ten (210) square meters, more or less;
bounded on the N. along line 1-2 by Calle Commercio; on the N and E, along lines 2-3-4 by Lot
999-B-3-A, of the subdivision plan, and on the S, along line 4-1 by Lot 999-A, Psd-46471 (Pedro
Abraham and Josefina Abraham); reasonably assessed at P105,000.00;
b) A 2-storey commercial building erected on lot 999-B-3-B, Psd-57204, made of strong materials;
assessed at P73,320.00. 4
Lot 999-B-3-B, however, is registered in the name of Demetria Pagulayan (Pagulayan) per Transfer Certificate
of Title (TCT) No. T-35506, issued by the Register of Deeds for the Province of Cagayan.
Some of the heirs of Cue, including Arjonillo, instituted Civil Case No. 4778 with the RTC for "Reivindicacion,
with Partition and Application for Temporary Restraining Order and Preliminary Mandatory Injunction." 5 They alleged
that although the property was registered in the name of Pagulayan, it was Cue who purchased it using his own funds;
that being his paramour, Pagulayan exercised undue influence on him in order to register the property exclusively in
her own name; and that the registration of the property in the name of Pagulayan is void as it is against public policy.
On the other hand, Pagulayan alleged that she acquired the property from Spouses Chua Bun Gui 6 and
Esmeralda Valdepanas Chua (Spouses Chua) for and in consideration of P20,000.00 which was acknowledged to have
been received in full by the vendors as evidenced by the deed of absolute sale executed on 25 August 1976. 7 She
prayed in her answer that the complaint be dismissed since the plaintiffs have no legal personality or cause of action
against her.
The Ruling of the RTC

On 31 August 2006, the RTC rendered a decision declaring that Pagulayan is not the rightful owner of the subject
property and, consequently, ordered the partition of the subject lot and building among the heirs of Cue. According to
the RTC, "[Demetria] failed to substantiate her financial capability to acquire the properties subject of the suit, more so
to erect and put up a building thereon jointly with Avelardo Cue." 8 Its findings were based, among others, on the
testimony of Dr. Benito Valdepanas (Dr. Valdepanas), who is a nephew of Spouses Chua:
After making a thorough evaluation on the merits of the case, as it has been well substantiated
by the testimonies of witnesses presented during the court proceedings, Demetria Pagulayan failed to
prove her claim that she bought the lot in question and put up a building thereon. Noted as well in the
records of the case is the Deposition of a witness who testified among others that he knows the lot
 described in TCT No. T-35506; that said witness has personal knowledge of the sale of the lot in
question by his uncle to the late Avelardo Cue; and that Defendant Demetria Pagulayan is a mere
salesgirl of the late Avelardo Cue.
The allegations of the Plaintiffs as above-discussed have been, in the mind of the Court,
preponderantly proven as evidenced by the testimonies and documents presented during the trial of
the case." 9
The Ruling of the CA

Upon review, the CA, in its Decision dated 7 January 2011, reversed and set aside the RTC decision and
dismissed the case. A motion for reconsideration was filed which was denied in the CA Resolution dated 16 March 2011.
In dismissing the case, the CA found that petitioners failed to discharge the burden of proving their allegation
that the properties in dispute form part of the estate of Cue. It was also found that the testimonies of their witnesses
could be considered as mere hearsay because they did not have personal knowledge of the circumstances attending
the execution of the deed of sale in favor of Pagulayan and the consequent issuance of TCT No. T-35506 in her name. 10

ISSUES

Arjonillo is now before the Court assailing the decision of the CA on the following grounds:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED OR SET ASIDE THE TRIAL
COURT'S 31 AUGUST 2006 DECISION AND DISMISSING THE COMPLAINT IN CIVIL CASE NO. 4778
ABANDONING THE FACTUAL FINDINGS OF THE COURT A QUO.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED ON THE INDEFEASIBILITY OF
RESPONDENT DEMETRIA PAGULAYAN'S TITLE AND CATEGORICALLY DECLARED THAT THE
OWNERSHIP OF THE DISPUTED PROPERTIES BELONG TO HER.
III. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT CONSIDERED WITNESS
DR. BENITO VALDEPANAS' TESTIMONY AS HEARSAY. 11

THE COURT'S RULING

The petition is without merit.

When a case is appealed to the CA, it is thrown wide open for review by that court which thereby has the
authority to affirm, reverse, or modify the assailed decision of the lower court. The appellate court can render an
entirely new decision in the exercise of its power of review in order to correct patent errors committed by the lower
courts. 12
Arjonillo and her co-heirs claim that the subject properties were owned by their predecessor, Cue. They sought
to recover its full possession from Pagulayan by filing an accion reivindicatoria before the RTC. It is then incumbent upon
them to convince the court by competent evidence that the subject properties form part of Cue's estate because in
order to successfully maintain actions for recovery of ownership of a real property, the complainants must prove the
identity of the land and their title thereto as provided under Article 434 of the Civil Code.13 They have the burden of
proof to establish the averments in the complaint by preponderance of evidence, 14 relying on the strength of their
own evidence and not upon the weakness of their opponent's evidence. 15
Rather than dispensing with their burden of proof as required under the law, Arjonillo and her co-heirs
concentrated on attacking Pagulayan's claim of ownership over the subject properties on the ground of the latter's
alleged lack of financial capability to purchase the land and erect a building thereon. It was consistently emphasized
that Pagulayan was a mere salesgirl who only had an annual salary of P1,950.00 in 1976. 16 On this basis, Arjonillo and
her co-heirs maintained that Pagulayan could not have acquired the property on 25 August 1976 as reflected in the
Deed of Absolute Sale executed by Spouses Chua. 17
They also tried to prove that contrary to what appears in the deed of sale, the actual transaction transpired
between Chua Bun Gui and Cue. But Chua Bun Gui did not testify during the trial. Neither his wife nor any witness to
the sale was presented. Instead, Arjonillo and her co-heirs presented the testimony of Dr. Valdepanas who, as earlier
noted, is the nephew of Spouses Chua and has a clinic adjacent to the property under scrutiny. The subject of his
testimony, however, is not of matters he himself knows; thus, it should be disregarded for being hearsay.
 Dr. Valdepanas testified as follows:
Q: Now, you said a while ago that Chua Bun [Gui] was the former owner of the lot in question, what did
Chua Bun [Gui] do with the lot in question?
A: Two or three days after the fire that was August 22, 1977 my uncle Chua Bun [Gui] went home to had
a cup of coffee he told me that he sold the lot in question to Avelardo Cue when in fact I was
also interested to buy it.
Q: Are we made to understand that the transaction regarding the sale of the lot in question to Avelardo
Cue was made in your house?
A: No, sir. Avelardo Cue told me that the lot in question was sold in installment basis when infact I offered
to purchase the lot in question in cash basis, sir.
xxx xxx xxx
Q: Were you present whenever the late Avelardo Cue made payments to your uncle Chua Bun Gin?
A: [A]side from knowing it personally, the late Avelardo Cue told me that he paid fifty percent of the
purchased price and the remaining balance on installment basis, sir. 18
Despite claiming knowledge of the terms and conditions of the sale, perusal of the deed of absolute sale
revealed that Dr. Valdepanas was neither a party nor a witness to the transaction. It is noticeable that Dr. Valdepanas
merely repeated statements he heard from Cue and Chua Bun Gui. When asked if he was present whenever Cue paid
Chua Bun Gui, he did not give a categorical answer but simply claimed that he knew about it personally. More
importantly, proponent offered the testimony to prove "that the lot in question was purchased by the late Avelardo
Cue and not by the defendant, Demetria Pagulayan, although the Deed of Sale was in the name of the said defendant
Demetria Pagulayan." 19 It was offered as evidence of the truth of the fact being asserted. Clearly, the above-quoted
testimony is hearsay and thus inadmissible in evidence. A witness can only testify on facts within his personal
knowledge. 20 This is a substantive prerequisite for accepting testimonial evidence that establishes the truth of a
disputed fact. 21 Unless the testimony falls under any of the recognized exceptions, hearsay evidence whether objected
to or not cannot be given credence for it has no probative value. 22
On the other hand, to shed light on how she could afford to purchase the land, Pagulayan testified that she
worked with free board and lodging from 1954 to 1976 and deposited her earnings in an account with the Philippine
National Bank. 23 She further testified that she withdrew some of the money and used it in re-selling palay and pigs. 24
The following documents were offered and admitted in evidence 25 to support Pagulayan's claim that it is
indeed she who owns the land in question: 1) a notarized deed of absolute sale 26 executed by Spouses Chua on 25
August 1976 conveying the property to Pagulayan; 2) TCT No. T-35506 27 registered in the name of Pagulayan; and 3)
Real Property Tax Receipts for 1993 28 and 1994 29 which were offered to prove that the land's tax declaration was in
the name of Pagulayan.
We agree with the finding of the CA that "[t]he documentary and testimonial evidence on record clearly support
[Pagulayan's] ownership of the disputed property as reflected in TCT No. T-35506, which was issued in her name
pursuant to the aforesaid Deed of Sale." 30 It is fundamental that a certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. The
titleholder is entitled to all the attributes of ownership, including possession of the property. 31
Though it has been held that placing a parcel of land under the mantle of the Torrens system does not mean
that ownership thereof can no longer be disputed, 32 this Court cannot ignore the fact that Arjonillo, together with her
co-heirs, failed to discharge the burden of proving their claim by a preponderance of evidence as required under the
law. Based on the foregoing, we find no persuasive argument in the instant petition that will convince us to overturn
the assailed judgment of the appellate court.
WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision and Resolution of the Court of
Appeals dated 7 January 2011 and 16 March 2011, respectively, in CA-G.R. CV No. 89206 are AFFIRMED.
SO ORDERED.

G.R. No. 211170. July 3, 2017.]

SPOUSES MAXIMO ESPINOZA and WINIFREDA DE VERA, petitioners, vs. SPOUSES ANTONIO MAYANDOC and ERLINDA
CAYABYAB MAYANDOC, respondents.
PERALTA, ** J p:
 Before this Court is the Petition for Review on Certiorari under Rule 45, dated March 21, 2014, of petitioners-
spouses Maximo Espinoza and Winifreda De Vera, that seeks to reverse and set aside the Decision 1 dated September
17, 2013 and Resolution dated January 28, 2014, both of the Court of Appeals (CA) which, in turn, affirmed with
modifications the Decision 2 dated February 18, 2011 of the Regional Trial Court (RTC), Branch 42, Dagupan City, in a
complaint for useful expenses under Articles 448 3 and 546 4 of the New Civil Code of the Philippines.
The facts follow.
A parcel of land located in Dagupan City was originally owned by Eusebio Espinoza. After the death of Eusebio,
the said parcel of land was divided among his heirs, namely: Pastora Espinoza, Domingo Espinoza and Pablo Espinoza.
Petitioner Maximo is the son of Domingo Espinoza, who died on November 3, 1965, and Agapita Cayabyab, who died
on August 11, 1963. SDAaTC
Thereafter, on May 25, 1972, Pastora Espinoza executed a Deed of Sale conveying her share of the same
property to respondents and Leopoldo Espinoza. However, on that same date, a fictitious deed of sale was executed by
petitioner Maximo's father, Domingo Espinoza, conveying the three-fourth (3/4) share in the estate in favor of
respondent Erlinda Cayabyab Mayandoc's parents; thus, TCT No. 28397 was issued in the names of the latter.
On July 9, 1977, a fictitious deed of sale was executed by Nemesio Cayabyab, Candida Cruz, petitioners-spouses
Maximo Espinoza and Winifreda De Vera and Leopoldo Espinoza over the land in favor of respondents-spouses Antonio
and Erlinda Mayandoc; thus, TCT No. 37403 was issued under the names of the latter.
As a result of the foregoing, petitioners filed an action for annulment of document with prayer for the
nullification of TCT No. 37403 and, on August 16, 1999, the RTC, Branch 40, Dagupan City rendered a Decision in favor
of petitioners and ordering respondents to reconvey the land in dispute and to pay attorney's fees and the cost of the
suit.
Respondents appealed, but the CA, in its Decision dated February 6, 2004, affirmed the RTC with modifications
that the award of attorney's fees and litigation expenses be deleted for lack of factual basis. The said CA Decision
became final and executory on March 8, 2004.
Thus, respondents filed a complaint for reimbursement for useful expenses, pursuant to Articles 448 and 546
of the New Civil Code, alleging that the house in question was built on the disputed land in good faith sometime in 1995
and was finished in 1996. According to respondents, they then believed themselves to be the owners of the land with
a claim of title thereto and were never prevented by the petitioners in constructing the house. They added that the new
house was built after the old house belonging to respondent Erlinda Mayandoc's father was torn down due to termite
infestation and would not have reconstructed the said house had they been aware of the defect in their title. As such,
they claimed that they are entitled to reimbursement of the construction cost of the house in the amount of
P800,000.00. They further asserted that at the time that their house was constructed, they were possessors in good
faith, having lived over the land in question for many years and that petitioners questioned their ownership and
possession only in 1997 when a complaint for nullity of documents was filed by the latter. AaCTcI
Petitioners, in their Answer, argued that respondents can never be considered as builders in good faith because
the latter were aware that the deeds of sale over the land in question were fictitious and, therefore, null and void; thus,
as builders in bad faith, they lose whatever has been built over the land without right to indemnity.
Respondents, on January 5, 2011, manifested their option to buy the land where the house stood, but
petitioners expressed that they were not interested to sell the land or to buy the house in question.
The RTC, on February 18, 2011, rendered its Decision with the following dispositive portion:
WHEREFORE, judgment is hereby rendered requiring the defendants to sell the land, where
the plaintiffs' house stands, to the latter at a reasonable price based on the zonal value determined by
the Bureau of Internal Revenue (BIR).
SO ORDERED. 5
Petitioners appealed to the CA, but the latter, in its Decision dated September 17, 2013, affirmed the decision
of the RTC with modifications. The dispositive portion of the Decision reads:
WHEREFORE, the Decision dated February 18, 2011 by the Regional Trial Court, Branch 42 of
Dagupan City, in Civil Case No. 2005-0271-D is hereby AFFIRMED with MODIFICATIONS.
Let the case be REMANDED to the aforementioned trial court for further proceedings
consistent with the proper application of Articles 448, 546 and 548 of the New Civil Code and to render
a complete judgment of the case. acEHCD
SO ORDERED. 6
 The motion for reconsideration of petitioners were subsequently denied by the CA in its Resolution dated
January 28, 2014.
Hence, the present petition.
Petitioners raise the following issues:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE PETITIONERS WERE NOT
ABLE TO PROVE BAD FAITH ON THE PART OF THE RESPONDENTS.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT RES JUDICATA DOES
NOT APPLY IN THE INSTANT CASE.
According to petitioners, whether or not respondents were in bad faith in introducing improvements on the
subject land is already moot, since the judgment rendered by the RTC of Dagupan City, Branch 40 and affirmed by the
CA, that declared the two Deeds of Definite/Absolute Sale dated May 25, 1972 and July 9, 1977 as null and void, had
long become final and executory on March 8, 2004. They also argue that respondents had not successfully shown any
right to introduce improvements on the said land as their claim of laches and acquisitive prescription have been rejected
by the CA on appeal; thus, it follows that the respondents were builders in bad faith because knowing that the land did
not belong to them and that they had no right to build thereon, they still caused the house to be erected. They further
insist that respondents are deemed builders in bad faith because their house has been built and reconstructed into a
bigger one after respondent Erlinda's parents forged a fictitious sale. Finally, they claim that the principle of res
judicata in the mode of "conclusiveness of judgment" applies in this case.
The petition lacks merit.
The findings of facts of the Court of Appeals are conclusive and binding on this Court 7 and they carry even
more weight when the said court affirms the factual findings of the trial court. 8 Stated differently, the findings of the
Court of Appeals, by itself, which are supported by substantial evidence, are almost beyond the power of review by this
Court. 9 Although this rule is subject to certain exceptions, this Court finds none that is applicable in this case.
Nevertheless, the petition still fails granting that an exception obtains.
To be deemed a builder in good faith, it is essential that a person asserts title to the land on which he builds, i.e.,
that he be a possessor in the concept of owner, and that he be unaware that there exists in his title or mode of
acquisition any flaw which invalidates it. 10 The RTC, as affirmed by the CA, found respondents to be builders in good
faith, thus:
The plaintiffs are builders in good faith. As asserted by plaintiffs and not rebutted by
defendants, the house of plaintiffs was built on the lot owned by defendants in 1995. The complaint
for nullity of documents and reconveyance was filed in 1997, about two years after the subject conjugal
house was constructed. Defendants-spouses believed that at the time when they constructed their
house on the lot of defendants, they have a claim of title. Art. 526, New Civil Code, states that a
possessor in good faith is one who has no knowledge of any flaw or defect in his title or mode of
acquisition. This determines whether the builder acted in good faith or not. Surely, plaintiffs would not
have constructed the subject house which plaintiffs claim to have cost them P800,000.00 to build if
they knew that there is a flaw in their claim of title. Nonetheless, Art. 527, New Civil Code, states clearly
that good faith is always presumed, and upon him who alleges bad faith on the part of the possessor
lies the burden of proof. The records do not show that the burden of proof was successfully discharged
by the defendants. EcTCAD
xxx xxx xxx
Plaintiffs are in good faith in building their conjugal house in 1995 on the lot they believed to
be their own by purchase. They also have in their favor the legal presumption of good faith. It is the
defendants who had the burden to prove otherwise. They failed to discharge such burden until the
Regional Trial Court, Br. 40, Dagupan City, promulgated an adverse ruling in Civil Case No. 97-0187-D.
Thus, Art. 448 comes in to protect the plaintiffs-owners of their improvement without causing injustice
to the lot owner. Art. 448 comes in to protect the plaintiff-owners of their improvement without
causing injustice to the lot owner. Art. 448 provided a just resolution of the resulting "forced-
ownership" by giving the defendants lot owners the option to acquire the conjugal house after
payment of the proper indemnity or to oblige the builder plaintiffs to pay for the lot. It is the
 defendants-lot owners who are authorized to exercise the option as their right is older, and under the
principle of accession where the accessory (house) follows the principal. x x x. 11
The settled rule is bad faith should be established by clear and convincing evidence since the law always
presumes good faith. 12 In this particular case, petitioners were not able to prove that respondents were in bad faith
in constructing the house on the subject land. Bad faith does not simply connote bad judgment or negligence. 13 It
imports a dishonest purpose or some moral obliquity and conscious doing of a wrong. 14 It means breach of a known
duty through some motive, interest or ill will that partakes of the nature of fraud. 15 For anyone who claims that
someone is in bad faith, the former has the duty to prove such. Hence, petitioners err in their argument that
respondents failed to prove that they are builders in good faith in spite of the findings of the RTC and the CA that they
are.
As such, Article 448 16 of the Civil Code must be applied. It applies when the builder believes that he is the
owner of the land or that by some title he has the right to build thereon, 17 or that, at least, he has a claim of title
thereto. 18 In Tuatis v. Spouses Escol, et al., 19 this Court ruled that the seller (the owner of the land) has two options
under Article 448: (1) he may appropriate the improvements for himself after reimbursing the buyer (the builder in
good faith) the necessary and useful expenses under Articles 546 20 and 548 21 of the Civil Code; or (2) he may sell the
land to the buyer, unless its value is considerably more than that of the improvements, in which case, the buyer shall
pay reasonable rent, thus: SDHTEC
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land
is in accord with the principle of accession, i.e., that the accessory follows the principal and not the
other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive. The landowner cannot refuse to exercise either option and compel instead the owner of
the building to remove it from the land.
The raison d'etre for this provision has been enunciated thus: Where the builder, planter or
sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary
to protect the owner of the improvements without causing injustice to the owner of the land. In view
of the impracticability of creating a state of forced co-ownership, the law has provided a just solution
by giving the owner of the land the option to acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He
cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the
option, because his right is older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing. 22
The CA, therefore, did not err in its ruling that instead of requiring the petitioners to sell the land, the RTC must
determine the option which the petitioners would choose. As aptly ruled by the CA:
The rule that the right of choice belongs to the owner of the land is in accordance with the
principle of accession. However, even if this right of choice is exclusive to the land owner, he cannot
refuse to exercise either option and demand, instead for the removal of the building.
Instead of requiring defendants-appellants to sell the land, the court a quo must determine
the option which they would choose. The first option to appropriate the building upon payment of
indemnity or the second option, to sell the land to the plaintiffs-appellees. Moreover, the court a
quo should also ascertain: (a) under the first option, the amount of indemnification for the building; or
(b) under the second option, the value of the subject property vis-à-vis that of the building, and
depending thereon, the price of, or the reasonable rent for, the subject property.
Hence, following the ruling in the recent case of Briones v. Macabagdal, this case must be
remanded to the court a quo for the conduct of further proceedings to assess the current fair market
of the land and to determine other matters necessary for the proper application of Article 448, in
relation to Articles 546 and 548 of the New Civil Code. 23
Therefore, this Court agrees with the CA that there is a need to remand the case to the RTC for further
proceedings, specifically, in assessing the current fair market value of the subject land and other matters that are
appropriate in the application of Article 448, in relation to Articles 546 and 548 of the New Civil Code.
As to the issue of res judicata, the CA is correct in its ruling that there is no identity of subject matter and cause
of action between the prior case of annulment of document and the present case, thus: HSAcaE
In the instant case, res judicata will not apply since there is no identity of subject matter and
cause of action. The first case is for annulment of document, while the instant case is for
 reimbursement of useful expenses as builders in good faith under article 448 in relation to Articles 546
and 548 of the New Civil Code.
Moreover, We are not changing or reversing any findings of the RTC and by this Court in Our
6 February 2004 decision. The Court is still bound by this judgment insofar as it found the Deeds of
Absolute Sale null and void, and that defendants-appellants are the rightful owners of the lot in
question.
However, if the court a quo did not take cognizance of the instant case, plaintiffs-appellees
shall lose ownership of the building worth Php316,400.00 without any compensation. While, the
defendant-appellants not only will recover the land but will also acquire a house without payment of
indemnity. The fairness of the rules enunciated in Article 448 is explained by the Supreme Court in the
case of Depra v. Dumlao, viz.:
Where the builder, planter or sower has acted in good faith, a conflict of
rights arises between the owners, and it becomes necessary to protect the owner of
the improvements without causing injustice to the owner of the land. In view of the
impracticability of creating a state of forced ownership, the law has provided a just
solution by giving the owner of the land the option to acquire the improvements after
payment of the proper indemnity, or to oblige the builder or planter to pay for the
land and the sower to pay the proper rent. It is the owner of the land who is
authorized to exercise the option, because his right is older, and because, by the
principle of accession, he is entitled to the ownership of the accessory thing.
Finally, "the decision of the court a quo should not be viewed as a denigration of the doctrine
of immutability of final judgments, but a recognition of the equally sacrosanct doctrine that a person
should not be allowed to profit or enrich himself inequitably at another's expense." 24
The well-settled rule is that the principle or rule of res judicata is primarily one of public policy. It is based on
the policy against multiplicity of suits, 26 whose primary objective is to avoid unduly burdening the dockets of the
courts. 27 In this case, however, such principle is inapplicable. AScHCD
WHEREFORE, the Petition for Review on Certiorari under Rule 45, dated March 21, 2014, of petitioners-spouses
Maximo Espinoza and Winifreda De Vera, is DENIED. Consequently, the Decision dated September 17, 2013 and
Resolution dated January 28, 2014, both of the Court of Appeals are AFFIRMED.
SO ORDERED.

G.R. No. 199353. April 4, 2018.]

LEVISTE MANAGEMENT SYSTEM, INC., petitioner, vs. LEGASPI TOWERS 200, INC., and VIVIAN Y. LOCSIN and PITONG
MARCORDE, respondents.
ENGR. NELSON Q. IRASGA, in his capacity as Municipal Building Official of Makati, Metro Manila and HON. JOSE P. DE
JESUS, in his capacity as Secretary of the Dept. of Public Works and Highways, third party respondents.
[G.R. No. 199389. April 4, 2018.]
LEGASPI TOWERS 200, INC., petitioner, vs. LEVISTE MANAGEMENT SYSTEM, INC., ENGR. NELSON Q. IRASGA, in his
capacity as Municipal Bldg. Official of Makati, Metro Manila, and HON. JOSE P. DE JESUS, in his capacity as Secretary of
the Department of Public Works and Highways, respondents.
LEONARDO-DE CASTRO, ** J p:

The Civil Code provisions on builders in good faith presuppose that the owner of the land and the builder are
two distinct persons who are not bound either by specific legislation on the subject property or by contract. Properties
recorded in accordance with Section 4 1 of Republic Act No. 4726 2 (otherwise known as the Condominium Act) are
governed by said Act; while the Master Deed and the By Laws of the condominium corporation establish the contractual
relations between said condominium corporation and the unit owners. HTcADC
These are consolidated petitions under Rule 45 filed by Leviste Management System, Inc. (LEMANS) and Legaspi
Towers 200, Inc. (Legaspi Towers), both assailing the Decision 3 dated May 26, 2011 of the Court of Appeals in CA-G.R.
CV No. 88082. The assailed Decision 4 affirmed the October 25, 2005 Decision of the Regional Trial Court (RTC), Branch
135 of Makati City in Civil Case No. 91-634.
The facts, as culled by the Court of Appeals from the records, follow:
Legaspi Towers is a condominium building located at Paseo de Roxas, Makati City. It consists
of seven (7) floors, with a unit on the roof deck and two levels above said unit called Concession 2
and Concession 3. The use and occupancy of the condominium building is governed by the Master
 Deed with Declaration of Restrictions of Legaspi Towers (hereafter "Master Deed") annotated on the
transfer certificate of title of the developer, Legaspi Towers Development Corporation.
Concession 3 was originally owned by Leon Antonio Mercado. On 9 March 1989, Lemans,
through Mr. Conrad Leviste, bought Concession 3 from Mercado.
Sometime in 1989, Lemans decided to build another unit (hereafter "Concession 4") on the
roof deck of Concession 3. Lemans was able to secure the building permit for the construction of
Concession 4 and commenced the construction thereof on October 1990.
Despite Legaspi Corporation's notice that the construction of Concession 4 was illegal, Lemans
refused to stop its construction. Due to this, Legaspi Corporation forbade the entry of Lemans'
construction materials to be used in Concession 4 in the condominium. Legaspi Corporation similarly
wrote letters to the Building Official Nelson Irasga ("hereafter Irasga"), asking that the [building] permit
of Lemans for Concession 4 be cancelled. Irasga, however, denied the requested cancellation, stating
that the applicant complied with the requirements for a building permit and that the application was
signed by the then president of Legaspi Corporation.
Lemans filed the Complaint dated February 20, 1991 with the RTC, praying among others that
a writ of mandatory injunction be issued to allow the completion of the construction of Concession 4.
On 3 April 1991, the RTC issued the writ prayed for by Lemans.
Later, Legaspi Corporation filed the Third Party Complaint dated October 7, 1991. This was
against Irasga, as the Municipal Building Official of Makati, and Jose de Jesus (hereafter "De Jesus"), as
the Secretary of Public Works and Highways (collectively referred to as the "third-party defendants-
appellees") so as to nullify the building permit issued in favor of Lemans for the construction of
Concession 4.
After the parties had presented and formally offered their respective pieces of evidence, but
before the rendition of a judgment on the main case, the RTC, in its Order dated May 24, 2002, found
the application of Article 448 of the Civil Code and the ruling in the Depra vs. Dumlao [case]
(hereafter "Depra Case") to be proper.
Lemans moved for the reconsideration o[f] the aforementioned order. The RTC denied this
and further ruled:
The main issue in this case is whether or not [LEMANS] owns the air space
above its condominium unit. As owner of the said air space, [LEMANS] contends that
its construction of another floor was in the exercise of its rights.
It is the [finding] of the Court that [LEMANS] is not the owner of the air space
above its unit. [LEMANS'] claim of ownership is without basis in fact and in law. The
air space which [LEMANS] claims is not on top of its unit but also on top of the
condominium itself, owned and operated by defendant Legaspi Towers.
Since it appears that both plaintiff and defendant Legaspi Towers were in
good faith, the Court finds the applicability of the ruling in Depra vs. Dumlao, 136
SCRA 475.
From the foregoing, Lemans filed the Petition for Certiorari dated November 13, 2002 with
the [Court of Appeals], docketed as CA G.R. SP. No. 73621, which was denied in the Decision
promulgated on March 4, 2004. The Court did not find grave abuse of discretion, amounting to lack or
excess of jurisdiction, on the RTC's part in issuing the above orders. Lemans sought reconsideration of
this decision but failed. aScITE
Meanwhile, Lemans adduced evidence before the RTC to establish that the actual cost for the
construction of Concession 4 was Eight Hundred Thousand Eight Hundred Ninety-Seven and 96/100
Pesos (PhP800,897.96) and that the fair market value of Concession 4 was Six Million Pesos
(PhP6,000,000.00). Afterwards, the RTC rendered the Assailed Decision. 5
Reiterating its previous ruling regarding the applicability of Article 448 of the Civil Code to the case, the RTC in
its October 25, 2005 Decision disposed of the dispute in this wise:
WHEREFORE, judgment is hereby rendered ordering defendant Legaspi Towers 200, Inc. to
exercise its option to appropriate the additional structure constructed on top of the penthouse owned
by plaintiff Leviste Management Systems, Inc. within sixty [60] days from the time the Decision
becomes final and executory. Should defendant Legaspi Towers 200, Inc. choose not to appropriate
 the additional structure after proper indemnity, the parties shall agree upon the terms of the lease and
in case of disagreement, the Court shall fix the terms thereof.
For lack of merit, the third party complaint and the counterclaims are hereby dismissed.
Costs against the plaintiff. 6
When the parties' respective motions for reconsideration were denied by the trial court, both elevated the
matter to the Court of Appeals.
On May 26, 2011, the Court of Appeals, acting on the consolidated appeals of LEMANS and Legaspi Towers,
rendered its Decision affirming the decision of the RTC of Makati City.
The Court of Appeals held that the appeal of LEMANS should be dismissed for failure to comply with Section
13, Rule 44 in relation to Section 1 (f), Rule 50 of the Rules of Court, as the subject index of LEMANS' brief did not contain
a digest of its arguments and a list of textbooks and statutes it cited. 7 For this reason, the appellate court no longer
passed upon the sole issue raised by LEMANS, i.e., whether its construction of Concession 4 should be valued at its
actual cost or its market value.
As regards the appeal of Legaspi Towers, the Court of Appeals held that while Concession 4 is indeed a nuisance,
LEMANS has been declared a builder in good faith, and noted that Legaspi Towers failed to contest this declaration.
Since Concession 4 was built in good faith, it cannot be demolished. The Court of Appeals likewise affirmed the validity
of the building permit for Concession 4, holding that if the application and the plans appear to be in conformity with
the requirements of governmental regulation, the issuance of the permit may be considered a ministerial duty of the
building official. 8
The Motion for Partial Reconsideration of Legaspi Towers and the Motion for Reconsideration of LEMANS were
denied for lack of merit in the appellate court's Resolution 9 dated November 17, 2011.
Consequently, LEMANS and Legaspi Towers filed separate Petitions for Review on Certiorari with this Court
based on the following grounds:
[LEMANS PETITION:]
I
THE COURT OF APPEALS ERRED WHEN IT FAILED TO APPLY THE DEPRA VS. DUMLAO DOCTRINE WHEN
IT REFUSED TO RULE ON THE PROPER VALUATION OF THE SUBJECT PROPERTY FOR THE PURPOSE OF
DETERMINING THE PURCHASE PRICE IN THE EVENT THAT RESPONDENT LEGASPI TOWERS EXERCISES
ITS OPTION TO PURCHASE THE PROPERTY.
II
THE COURT OF APPEALS ERRED WHEN, REFUSING TO RULE ON THE VALUATION OF THE SUBJECT
PROPERTY, IT DISREGARDED THE EVIDENCE ALREADY SUBMITTED AND PART OF THE RECORDS. 10
[LEGASPI TOWERS PETITION:]
I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT [LEGASPI TOWERS] HAS THE RIGHT TO
DEMOLISH CONCESSION 4 FOR BEING AN ILLEGAL CONSTRUCTION.
II. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE BUILDING PERMIT OF CONCESSION 4 IS
NOT VALIDLY ISSUED. 11
At the crux of the present controversy is the legal issue whether Article 448 of the Civil Code and our ruling
in Depra v. Dumlao 12 are applicable to the parties' situation.
Prior to answering this key question, we dispose of a procedural matter. LEMANS has taken the position that
in light of the finality of the trial court's Order dated May 24, 2002 holding that Article 448 of the Civil Code and
the Depra case should be applied in this case, Legaspi Towers is now bound by same and may no longer question the
former's status as a builder in good faith. The Court of Appeals in its assailed Decision appears to subscribe to the same
view when it ruled that, despite the fact that Concession 4 was a nuisance, the previous declaration that LEMANS is a
builder in good faith limits Legaspi Towers' options to those provided in Article 448.
The Court does not agree with LEMANS and the Court of Appeals.
At the outset, it must be pointed out that the May 24, 2002 RTC Order is an interlocutory order that did not
finally dispose of the case and, on the contrary, set the case for hearing for reception of evidence on the amount of
expenses spent by LEMANS in the construction of Concession 4. For this reason, it is apropos to discuss here the
remedies available to a party aggrieved by interlocutory orders of the trial court.
 Section 1, Rule 41 of the Rules of Court pertinently states:
RULE 41
Appeal from the Regional Trial Courts
SECTION 1. Subject of appeal. — An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to be
appealable. HEITAD
No appeal may be taken from:
(a) An order denying a motion for new trial or reconsideration;
(b) An order denying a petition for relief or any similar motion seeking relief from judgment;
(c) An interlocutory order;
(d) An order disallowing or dismissing an appeal;
(e) An order denying a motion to set aside a judgment by consent, confession or compromise on
the ground of fraud, mistake or duress, or any other ground vitiating consent;
(f) An order of execution;
(g) A judgment or final order for or against one or more of several parties or in separate claims,
counterclaims, cross-claims and third-party complaints, while the main case is pending,
unless the court allows an appeal therefrom; and
(h An order dismissing an action without prejudice.
In all the above instances where the judgment or final order is not appealable, the aggrieved
party may file an appropriate special civil action under Rule 65. (Emphases supplied.)
Hence, we explained in Crispino v. Tansay 13 that:
The remedy against an interlocutory order is not appeal but a special civil action
for certiorari under Rule 65 of the Rules of Court. The reason for the prohibition is to prevent multiple
appeals in a single action that would unnecessarily cause delay during trial. In Rudecon v. Singson:
The rule is founded on considerations of orderly procedure, to forestall useless
appeals and avoid undue inconvenience to the appealing party by having to assail
orders as they are promulgated by the court, when all such orders may be contested
in a single appeal.
Faced with an interlocutory order, parties may instantly avail of the special civil action
of certiorari. This would entail compliance with the strict requirements under Rule 65 of the Rules
of Court. Aggrieved parties would have to prove that the order was issued without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction and that there
is neither appeal nor any plain, speedy, and adequate remedy in the ordinary course of law.
This notwithstanding, a special civil action for certiorari is not the only remedy that
aggrieved parties may take against an interlocutory order, since an interlocutory order may be
appealed in an appeal of the judgment itself. In Investments, Inc. v. Court of Appeals it was held:
Unlike a "final" judgment or order, which is appealable, as above pointed out, an
"interlocutory" order may not be questioned on appeal except only as part of an
appeal that may eventually be taken from the final judgment rendered in the case.
(Emphases supplied; citations omitted.)
From the foregoing disquisition in Crispino, a party who wishes to assail an interlocutory order may (a)
immediately file a petition for certiorari if appropriate and compliant with the stringent requirements of Rule 65 or (b)
await judgment and question the interlocutory order in the appeal of the main decision. Notably, in the case at bar,
LEMANS filed a petition for certiorari against the RTC's May 24, 2002 14 and August 19, 2002 15 Orders while Legaspi
Towers chose to simply appeal the main decision.
This Court is not bound by the interlocutory orders of the trial court nor by the Court of Appeals' Decision dated
March 4, 2004 in CA-G.R. SP No. 73621, i.e., LEMANS' petition for certiorari of said interlocutory orders.
To begin with, the Court of Appeals' decision in CA-G.R. SP No. 73621 was never elevated to this Court.
Secondly, in resolving LEMANS' petition for certiorari, the Court of Appeals itself ruled, among others, that:
 It is noteworthy to state that the petitioner imputes grave abuse of discretion on the part of
the respondent judge in ruling that Article 448 and the case of Depra v. Dumlao (136 SCRA 475) are
applicable in the case at bar. At most, these are considered mere errors of judgment, which are not
proper for resolution in a petition for certiorari under Rule 65.
The error is not jurisdictional, and certiorari is not available to correct errors in judgment or
conclusions of law and fact not amounting to excess or lack of jurisdiction. In the extraordinary writ
of certiorari, neither questions of fact nor even of law are entertained, but only questions of lack or
excess of jurisdiction or grave abuse of discretion. 16 (Emphases supplied.)
We are not so constrained in these consolidated petitions under Rule 45 for as we observed in E.I. Dupont De
Nemours and Co. v. Francisco: 17
The special civil action of certiorari under Rule 65 is intended to correct errors of jurisdiction.
Courts lose competence in relation to an order if it acts in grave abuse of discretion amounting to lack
or excess of jurisdiction. A petition for review under Rule 45, on the other hand, is a mode of appeal
intended to correct errors of judgment. Errors of judgment are errors committed by a court within its
jurisdiction. This includes a review of the conclusions of law of the lower court and, in appropriate
cases, evaluation of the admissibility, weight, and inference from the evidence presented. (Emphases
supplied; citations omitted.)
In all, there is no procedural bar for this Court to pass upon the previous interlocutory orders of the court a
quo and examine the legal conclusions therein in the present consolidated appeals of the trial court's decision. We are
compelled to undertake such a review in light of the novelty of the main issue presented in these petitions. The Court,
after all, is the final arbiter of all legal questions properly brought before it. 18
We proceed to the merits of these consolidated cases.
First, we find no cogent reason to disturb the finding of the lower courts that it is Legaspi Towers which owns
the air space above Concession 3 as the same is in keeping with the facts and the applicable law. We quote with approval
the following discussion from the Court of Appeals Decision dated March 4, 2004 in CA-G.R. SP No. 73621:
As correctly pointed out by the private respondent Legaspi, the air space wherein Concession
4 was built is not only above Concession 3, but above the entire condominium building. The petitioner's
[LEMANS'] ownership of Concession 3 does not necessarily extend to the area above the same, which
is actually the "air space" of the entire condominium building. The ownership of the air space above
Concession 3 is not a necessary incident of the ownership of Concession 3. ATICcS
It may be well to state here the following provisions of Republic Act No. 4726, otherwise
known as The Condominium Act:
Section 2. A condominium is an interest in real property consisting of a
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 separated interest on 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 interests 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. (RA 4726,
The Condominium Act)
Section 3 (d). "Common areas" means the entire project excepting all units
separately granted or held or reserved.
Section 6. Unless otherwise expressly provided in the enabling or master
deed or the declaration of restrictions, the incidents of the condominium grant are as
follows:
(a) The boundary of the unit granted are the interior surfaces of the perimeter walls,
ceilings, windows and doors thereof. The following are not part of the unit —
bearing walls, columns, walls, roofs, foundations and other common structural
elements of the building x x x.
 Evidently, what a unit includes is only the four walls, ceilings, windows and doors thereof. It
certainly does not include the roof or the areas above it.
In a condominium, common areas and facilities are "portions of the condominium property
not included in the units," whereas, a unit is "a part of the condominium property which is to be subject
to private ownership." Inversely, that which is not considered a unit should fall under common areas
and facilities.
Inasmuch as the air space or the area above Concession 3 is not considered as part of the unit,
it logically forms part of the common areas.
The petitioner's efforts to establish that Concession 3 and the open area in the roof deck are
reserved and separately granted from the condominium project are futile, inasmuch as even if the
same is established, it would not prove that the area above it is not part of the common area.
Admittedly, there is nothing in the Master Deed which prohibits the construction of an additional unit
on top of Concession 3, however, there is also nothing which allows the same. The more logical
inference is that the unit is limited to that stated in the Condominium Act, considering that the Master
Deed with Declaration of Restrictions does not expressly declare otherwise.
To allow the petitioner's claim over the air space would not prevent the petitioner from further
constructing another unit on top of Concession 4 and so on. This would clearly open the door to further
"impairment of the structural integrity of the condominium building" which is explicitly proscribed in
the Master Deed. 19
Significantly, the parties are no longer questioning before us the past rulings regarding Legaspi Towers'
ownership of the air space above Concession 3 which is the air space above the condominium building itself. The
principal bones of contention here are the legal consequences of such ownership and the applicability of Article 448 of
the Civil Code and our ruling in Depra v. Dumlao 20 on the factual antecedents of these cases.
The ruling of this Court in Depra v. Dumlao extensively cited by both parties pertains to the application of
Articles 448 and 546 of the Civil Code, which respectively provide:
Art. 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of
the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot
be obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building
or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in
good faith may retain the thing until he has been reimbursed therefor.
Useful expenses shall be refunded only to the possessor in good faith with the same right of
retention, the person who has defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which the thing may have acquired by reason
thereof.
To recap, the defendant in Depra constructed his house on his lot but, in good faith, encroached on an area of
34 square meters of the property of plaintiff on which defendant's kitchen was built. The Court ruled that pursuant to
Article 448 of the Civil Code, plaintiff, as the owner of the land, has the option either to pay for the encroaching part of
the kitchen, or to sell the encroached 34 square meters of his lot to the defendant, the builder in good faith. The owner
of the land cannot refuse to pay for the encroaching part of the building and to sell the encroached part of the land.
Pursuant to Articles 448 and 546 of the Civil Code, the Court remanded the case to the RTC to determine the following:
(1) the present fair price of the 34-square meter encroached area of the land;
(2) the amount of expenses spent in building the kitchen;
(3) the increase in value the area may have acquired by reason of the building; and TIADCc
(4) whether the value of the 34-square meter area is considerably more than that of the kitchen built thereon.
After the RTC has determined the four items above, the RTC shall grant the owner a period of 15 days to exercise
his option whether (a) to appropriate the kitchen by paying the amount of expenses spent for building the same or the
increase of such area's value by reason of the building or (b) to oblige the builder in good faith to pay the price of said
area. The Court thereafter provided for further contingencies based on the RTC finding in the fourth item.
 In the case at bar, LEMANS prays that, pursuant to Depra, the Court should determine the value of Concession
4, and find such value to be Six Million Eight Hundred Thousand Eight Hundred Ninety-Seven and 96/100 Pesos
(P6,800,897.96) plus legal interest. Legaspi Towers, on the other hand, prays for the extrajudicial abatement of
Concession 4, on the ground that the applicable provision of the Civil Code is Article 699, which provides:
Article 699. The remedies against a public nuisance are:
(1) A prosecution under the Penal code or any local ordinance; or
(2) A civil action; or
(3) Abatement, without judicial proceedings.
Legaspi Towers also argues that Concession 4 is an illegal construction, for being in violation of
the Condominium Act and the By Laws of Legaspi Towers. Legaspi Towers stresses that LEMANS failed to comply with
the Condominium Act, which requires the consent of the registered owners of the condominium project for the
amendment of the Master Deed.
Indeed, the last paragraph of Section 4 of the Condominium Act provides:
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.
The Master Deed of Legaspi Towers 21 states the number of stories and basements, and the number of units
and accessories, and contains as an attachment a diagrammatic floor plan of the building as required by Section 4
(b) 22 of the Condominium Act. Section 2 of the Master Deed states:
Section 2. The Building and the Units. — The building included in the condominium project is
a commercial building constructed of reinforced concrete and consisting of seven (7) storeys with a
basement, a ground floor, a deck roof, and two levels above the deck roof. x x x. 23
The construction by LEMANS of Concession 4 contravenes the Master Deed by adding a third level above the
roof deck. As pointed out by Legaspi Towers and shown in the records, the Master Deed was never amended to reflect
the building of Concession 4. Furthermore, LEMANS failed to procure the consent of the registered owners of the
condominium project as required in the last paragraph of Section 4 of the Condominium Act.
The By-Laws of Legaspi Towers 24 specifically provides that extraordinary improvements or additions must be
approved by the members in a regular or special meeting called for the purpose prior to the construction:
ARTICLE V
IMPROVEMENTS AND ADDITIONS
xxx xxx xxx
Section 2. Extraordinary Improvements. — Improvements or additions to the common areas
which shall cost more than P100,000.00 or which involve structural construction or modification must
be approved by the members in a regular or special meeting called for the purpose before such
improvements or additions are made. x x x. 25
Said By-Laws also provides for the process by which violations of the Master Deed are redressed, and the same
coincides with the prayer of Legaspi Towers:
ARTICLE VII
ABATEMENT OF VIOLATIONS
Section 1. Power to Abate Violations. — In the event that any member or his tenant or lessee
fails or refuses to comply with any limitation, restriction, covenant or condition of the Master Deed
with Declaration of Restrictions, or with the rules and regulations on the use, enjoyment and
occupancy of office/units or other property in the project, within the time fixed in the notice given him
by the Board of Directors, the latter or its duly authorized representative shall have the right to enjoin,
abate or remedy the continuance of such breach or violation by appropriate legal proceedings.
The Board shall assess all expenses incurred in abatement of the violation, including interest,
costs and attorney's fees, against the defaulting member. 26
 Instead of procuring the required consent by the registered owners of the condominium project pursuant to
the Condominium Act, or having Concession 4 approved by the members in a regular or special meeting called for the
purpose pursuant to the By-Laws, LEMANS merely had an internal arrangement with the then president of Legaspi
Towers. The same, however, cannot bind corporations, which includes condominium corporations such as Legaspi
Towers, as they can act only through their Board of Directors. 27
Unperturbed, LEMANS argues that the internal arrangement shows its good faith in the construction of
Concession 4, and claims the application of the aforementioned Articles 448 and 546 of the Civil Code.For reference,
Article 448 provides:
Art. 448. The owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of
the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot
be obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building
or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof. AIDSTE
Firstly, it is recognized in jurisprudence that, as a general rule, Article 448 on builders in good faith does not
apply where there is a contractual relation between the parties. 28
Morever, in several cases, this Court has explained that the raison d'etre for Article 448 of the Civil Code is to
prevent the impracticability of creating a state of forced co-ownership:
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land
is in accord with the principle of accession, i.e., that the accessory follows the principal and not the
other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive. The landowner cannot refuse to exercise either option and compel instead the owner of
the building to remove it from the land.
The raison d'etre for this provision has been enunciated thus: Where the builder, planter or
sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary
to protect the owner of the improvements without causing injustice to the owner of the land. In view
of the impracticability of creating a state of forced co-ownership, the law has provided a just solution
by giving the owner of the land the option to acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He
cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the
option, because his right is older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing. 29
In the case at bar, however, the land belongs to a condominium corporation, wherein the builder, as a unit
owner, is considered a stockholder or member in accordance with Section 10 of the Condominium Act, which provides:
SECTION 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.
The builder is therefore already in a co-ownership with other unit owners as members or stockholders of the
condominium corporation, whose legal relationship is governed by a special law, the Condominium Act. It is a basic
tenet in statutory construction that between a general law and a special law, the special law prevails. Generalia
specialibus non derogant. 30 The provisions of the Civil Code, a general law, should therefore give way to
the Condominium Act, a special law, with regard to properties recorded in accordance with Section 4 31 of said Act.
Special laws cover distinct situations, such as the necessary co-ownership between unit owners in condominiums and
 the need to preserve the structural integrity of condominium buildings; and these special situations deserve, for
practicality, a separate set of rules.
Articles 448 and 546 of the Civil Code on builders in good faith are therefore inapplicable in cases covered by
the Condominium Act where the owner of the land and the builder are already bound by specific legislation on the
subject property (the Condominium Act), and by contract (the Master Deed and the By-Laws of the condominium
corporation). This Court has ruled that upon acquisition of a condominium unit, the purchaser not only affixes his
conformity to the sale; he also binds himself to a contract with other unit owners. 32
In accordance therefore with the Master Deed, the By-Laws of Legaspi Towers, and the Condominium Act, the
relevant provisions of which were already set forth above, Legaspi Towers is correct that it has the right to demolish
Concession 4 at the expense of LEMANS. Indeed, the application of Article 448 to the present situation is highly
iniquitous, in that an owner, also found to be in good faith, will be forced to either appropriate the illegal structure (and
impliedly be burdened with the cost of its demolition) or to allow the continuance of such an illegal structure that
violates the law and the Master Deed, and threatens the structural integrity of the condominium building upon the
payment of rent. The Court cannot countenance such an unjust result from an erroneous application of the law and
jurisprudence.
We will no longer pass upon the issue of the validity of building permit for Concession 4 as the same has no
bearing on the right of Legaspi Towers to an abatement of Concession 4.
Finally, we are constrained to deny the Petition of LEMANS in view of our ruling that the doctrine in Depra and
Articles 448 and 546 of the Civil Code were improperly applied in these cases.
WHEREFORE, the Petition in G.R. No. 199353 is hereby DENIED for lack of merit. The Petition in G.R. No. 199389
is GRANTED. The Decision dated May 26, 2011 and Resolution dated November 17, 2011 of the Court of Appeals in CA-
G.R. CV No. 88082 are REVERSED and SET ASIDE. Leviste Management System, Inc. is ORDERED to remove Concession
4 at its own expense.
No pronouncement as to costs.
SO ORDERED.

[G.R. No. 211947. July 3, 2017.]

HEIRS OF CAYETANO CASCAYAN, represented by LA PAZ MARTINEZ, petitioners, vs. SPOUSES OLIVER and EVELYN
GUMALLAOI, and the MUNICIPAL ENGINEER OF BANGUI, ILOCOS NORTE, respondents.
LEONEN, J p:

This resolves a Petition for Review on Certiorari 1 filed under Rule 45 of the Rules of Court praying that the
Court of Appeals Decision 2 dated July 31, 2013 and Resolution 3 dated February 25, 2014 in CA-G.R. CV No. 96900 be
reversed and set aside.
On September 10, 2007, La Paz Cascayan-Martinez, Elpidio Cascayan, Evangeline Cascayan-Siapco, Flor
Cascayan, Nene Cascayan-Alupay, and Virginia Cascayan-Avida (the Cascayan Heirs), 4 all heirs of Cayetano Cascayan
(Cayetano), filed a complaint for Recovery of Possession, Demolition, and Damages against the spouses Oliver and
Evelyn Gumallaoi (Spouses Gumallaoi) before Branch 19, Regional Trial Court, Bangui, Ilocos Norte. 5 The Cascayan Heirs
alleged that by virtue of a free patent application, they were co-owners of a parcel of land covered by Original Certificate
of Title (OCT) No. P-78399, 6 denominated as Lot No. 20028, described as follows:
A parcel of cornland (Lot No. 20028, Cad. 734-D, Bangui Cadastre), bounded on the Northeast by Lot
No. 20026; on the Southeast by an Alley; and on the Southwest by Lots Nos. 20029 and 20027 of Cad.
734-D, containing an aggregate area of 1,083 sq. mts., more or less, covered under Katibayan ng
Orihinal na Titulo Blg. No. P-78399 with Tax Declaration No. 03-006-00652 with Market Value of
Php3,510.00. 7
The Cascayan Heirs affirmed that the Spouses Gumallaoi bought Lot No. 20029, an adjacent lot, described as
follows:
A parcel of land (Lot No. 20029, Cad. 734-D, Bangui Cadastre), bounded on the Northeast by Lot No.
20028; on the Southeast by an Alley; and on the Southwest by Lot No. 20030; and on the Northwest
by Lot No. 20027 of Cad. 734-D, containing an aggregate area of 999 sq. mts., more or less, covered
under Tax Declaration No. 03-006-00673. 8
The Spouses Gumallaoi built a residential house on Lot No. 20029 which the Cascayan Heirs alleged encroached
on Lot No. 20028 after renovations and improvements. 9 The Spouses Gumallaoi ignored the notifications that they had
encroached into Lot No. 20028. 10 On May 31, 2001, the Spouses Gumallaoi applied for a Building Permit. Due to
renovations on their residential house, they further encroached on Lot No. 20028. 11 Thus, the Cascayan Heirs prayed
that the Spouses Gumallaoi be directed to vacate Lot No. 20028 and to restore it to their possession. They likewise
prayed that the municipal engineer of Bangui issue the necessary demolition permit as well as cause the demolition of
the portion of the house that encroached on Lot No. 20028. Finally, they prayed to be paid damages. 12
In response, and by way of counterclaim, the Spouses Gumallaoi maintained that they were the true owners of
both Lot Nos. 20029 and 20028. 13 They claimed that the Cascayan Heirs secured a free patent to Lot No. 20028 through
manipulation. They asserted that the supporting affidavits for the Cascayan Heirs' free patent application were obtained
through fraud and deception. They attached in their Amended Answer the affidavits by the same affiants disowning the
latter's previous affidavits. 14 Thus, the Spouses Gumallaoi prayed that they be declared the legal owners of Lot No.
20028, that OCT No. P-78399 be annulled, and that they be paid damages. 15
By agreement of the parties, Engr. Gregorio Malacas was appointed to determine whether Lot No. 20028 was
included in the lot claimed by the Spouses Gumallaoi. In his report, he said:
From the datas (sic) of the verification survey that was executed over the premises of the
subject, it appears that a two (2)[-]storey residential [b]uilding owned by the defendants was erected
partly on Lot 20028 and partly on Lot 20029. 16
The parties decided to submit the case for resolution with the position papers and the evidence on record as
bases. 17
On January 21, 2010, the Regional Trial Court 18 rendered a Decision declaring the Spouses Gumallaoi the legal
owners of Lot No. 20028. It ruled that petitioners did not prove that they or their predecessor-in-interest had been in
possession of it. Conversely, noting that the bigger portion of the Spouses Gumallaoi's residence had been constructed
on this land, the Regional Trial Court found that it was more likely that the residence was intended to be constructed
on Lot No. 20028. 19 The Regional Trial Court found inconsistencies between the claims of the Cascayan Heirs and the
evidence they presented in support of their free patent application. It concluded that OCT No. P-78399 had been
secured through fraud, without legal and proper basis, and hence, disregarded it:
It can be gleaned from the documentary evidence of the plaintiffs that their predecessor
Cayetano Cascayan was the declared owner of a parcel of sugarland with an area of 1,600 square
meters under Tax Declaration No. 28278-A, series of 1926 which cancelled Tax Declaration No. 28278.
Tax Declaration No. 28278-A was later cancelled by Tax Declaration No. 28278-B which was issued in
1932, also covering the same area. Later, it was revised in 1949 under Tax Declaration No. 005179, this
time covering a bigger area of 1,950 square meters. As per the plaintiffs, the same parcel of land was
issued Tax Declaration No. 601683, series of 1985 although the land area is indicated only to be 1,940
square meters.
Sometime in the year 1984, a parcel of land designated as Lot No. 20028 consisting of 1,083
square meters was surveyed for Marcelino Alupay as shown in the technical description issued by the
Community Environment and Natural Resources Office (CENRO), Bangui, Ilocos Norte which conducted
the survey from November 2 to 25, 2002 and approved the said technical description on October 12,
1984. Almost 20 years after the said survey or on February 25, 2004, plaintiffs through La Paz Cascayan
filed an Application for Free Patent over Lot No. 20028. In support of the application, said plaintiff
submitted as one of the requirements an Affidavit executed by Marcelino Alupay dated March 24, 2004
stating that there was a mistake in placing his name as survey claimant over the said lot. The applicant
also submitted, among others, the Affidavit of Estrelita Balbag and Jalibert Malapit who then attested
that plaintiffs as heirs of Cayetano Cascayan have continuously occupied and cultivated Lot No. 20028;
the Affidavit of Isauro Pinget, Elvira Pinget and Sixto Rigates stating that the lot was declared in the
name of Cayetano Cascayan under Tax Declaration No. 03-006-00652, series of 2003; and a
Certification from Christopher Malapit, Barangay Chairman of Brgy. Dadaor, Bangui that the notice of
application for free patent was posted from February 24 to March 24, 2004. As per an Order issued on
July 1, 2004, the CENRO approved the application and Katibayang ng Orihinal na Titulo Blg. P-78399
was issued on the same date.
From these evidences of the plaintiffs, there is clear and serious disconnect in their claim that
the parcel of land declared earlier in the name of their predecessor is the same as Lot No. 20028. The
Court notes that indeed the tax declarations issued in the name of Cayetano Cascayan in 1926, 1932,
1949 and 1985 bear the same boundaries — Florencio Molina on the north, Bernardo Acido on the
East and Pedro Corpuz on the south and west. It also notes that as shown at the back of the tax
declaration issued in 1985, it cancelled Tax Declaration No. 501883 and not the tax declaration issued
in 1949. At any rate, granting that said tax declaration issued in 1985 refers to the same lot mentioned
in the tax declarations issued in 1926, 1932 and 1949 because of the similar boundaries indicated,
 there is simply no basis to show that it is the same as Lot No. 20028. The Court even wonders why the
1985 tax declaration still refer[red] to a lot with an area of 1,940 square meters if it was already
surveyed earlier in 1982 and was found to have an area of only 1,083 square meters. Not only that, if
the plaintiffs were the owners of Lot No. 20028, it also wonders why the survey thereof was conducted
for Marcelino Alupay and not for Cayetano Cascayan who, as per another technical description also
issued by the CENRO, was the claimant in the survey also conducted in 1982 of Lot No. 20033 which is
just adjacent to the lot in question. It further wonders in the absence of any explanation how it came
about that Lot No. 20028 consisted of only 1,083 square meters which is substantially different to its
area th[a]n as originally declared in the name of Cayetano Cascayan.
At this juncture, it is noteworthy that Tax Declaration No. 03-006-00652, series of 2003 in the
name of the Heirs of Cayetano Cascayan who obviously secured the same for purposes [of] their
application for free patent, was not also earlier declared in the name of either Marcelino Alupay or
Cayetano Cascayan. A perusal of the evidences of the defendants spouses . . . show that the owner
was unknown. In fact, as shown in Tax Declaration No. 97-006-00654, it preceded Tax Declaration No.
03-006-00652 which is the same tax declaration issued to the plaintiffs in 2003 before they applied for
the free patent. It is thus clear that, the lot being declared then to an unknown person, plaintiffs took
it upon themselves and claimed it, secured a tax declaration in their name in 2003 and applied
thereafter for a free patent therefor the following year.
In other words, plaintiffs obviously applied for a free patent without any basis. It is clear from
their evidence that they were never in possession of the property in suit before they applied for the
free patent. While plaintiffs submitted affidavits to show that they have occupied and cultivated Lot
No. 20028 and that it was declared in the name of the heirs of Cayetano Cascayan in support of their
application for free patent, it appears that such evidences have been manipulated. It appears that
while they were not in fact cultivating the property and that it was declared in the name of the heirs
of Cayetano Cascayan only in 2003, they were able to present false information about their true status
as claimants. In fact, Estrelita Balbag and Jalibert Malapit, who then in the year 2004 attested in
support of plaintiffs' application for free patent that plaintiffs and their predecessor have been in
continuous possession of Lot No. 20028 since 1944 or 1945, have retracted their said Affidavits. Thus,
in the subsequent Affidavits they have executed on September 19, 2007 which defendants spouses
submitted in support of their claim, Estrelita Balbag on her part alleged that she has no knowledge
about the contents of her earlier affidavit which was not explained to her and that she is not aware of
the matters concerning Lot No. 20028 while Jalibert Malapit stated that his signature on the Affidavit
is not his real signature.
Likewise, Barangay Chairman Christopher Malapit also retracted the Certification he issued on
March 24, 2004 in support [of] the application of the plaintiffs for free patent by stating in his
subsequent Affidavit dated September 19, 2007 also submitted by the defendants spouses that there
was no posting made of the notice of application for free patent and that when he was asked to sign
by Elsa Martinez, daughter of La Paz Martine[z], he was not aware of the contents of the Certification
and that he was made to believe that it will be used for another purpose than an application for free
patent . . .
Also, Marcelino Alupay retracted the Affidavit which he executed on March 24, 2004 in favor
of the plaintiffs in connection with their application for free patent, stating that there was a mistake in
placing his name as survey claimant and that the lot applied for is in the actual possession and
cultivation of the heirs of Cayetano Cascayan. Thus in another Affidavit he executed on September 19,
2007, he alleged that he had no knowledge of the contents of what he signed and that it was not
explained to him.
In any case, contrary to the claim of plaintiffs that they were in possession of Lot No. 20028,
it appears that even by the year 2004 when plaintiffs applied for a free patent, defendants spouses
have already been in possession of Lot No. 20028 together with the adjacent Lot No. 20029. This is
clear from the fact that the bigger portion of their house was constructed over the lot in dispute. By
constructing their house both on the two lots, it is unthinkable that they would have done so under
notice or threat that they will eventually be evicted and a substantial part of their house demolished.
Under the circumstances, the Court cannot believe the claim of the plaintiffs that they have repeatedly
warned the defendants spouses about the encroachment. If this were true, it is surprising that when
the defendants spouses supposedly extended their house, they did not file a case to immediately stop
the construction.
xxx xxx xxx
 In fact, all these observations lead the Court to believe that the issuance of the free patent
was not made in accordance with the procedure laid down by Commonwealth Act No. 141, otherwise
known as the Public Land Act. As provided in Section 91 thereof, an investigation should be conducted
for the purpose of ascertaining whether the material facts set out in the application are true. In this
case, it appears more likely that there was never any investigation or any verification made by the
CENRO as to the actual status of the land in suit at the time the application of plaintiffs for a free patent
was processed and before the free patent was approved and issued. Otherwise, they would have
known that defendants spouses have constructed the bigger part of their house on Lot No. 20028.
More significantly, when Marcelino Alupay, the original survey claimant of Lot No. 20028 in 1982,
executed his Affidavit supporting the application for free patent on March 24, 2004, he was
immediately dropped on the same day as survey claimant as shown in [the] Order issued by the CENRO.
If it is any indication, it was only on the basis of the Affidavit of Marcelino Alupay stating that his name
was erroneously declared as survey claimant to the property that the dropping of his name as such
was made and not by virtue of any verification or investigation. 20 (Citations omitted)
The dispositive portion of the Regional Trial Court Decision read:
WHEREFORE, the instant complaint is DISMISSED and the defendants spouses Oliver and
Evelyn Gumallaoi are declared owners of Lot No. 20028 of the Bangui Cadastre. Consequently, it having
been issued fraudulently and without legal and proper basis, Katibayang [sic] ng Orighinal [sic] na Titulo
Blg. P-78399 issued in the name of Heirs of Cayetano Cascayan, represented by La Paz Martinez, is
hereby ordered cancelled. For want of basis, no damages are awarded.
SO ORDERED. 21
The Cascayan Heirs filed a Motion for New Trial 22 dated February 19, 2010, citing mistake as a ground. They
claimed that despite the agreement for the trial court to consider only the Commissioner's Report to resolve the
case, 23 it also examined fraudulent affidavits. 24 Thus, the Cascayan Heirs prayed that the Regional Trial Court Decision
be set aside and a new trial be conducted.
In an Order 25 dated March 21, 2011, the Regional Trial Court denied the Motion for New Trial:
Mistake as a ground for new trial under Section 1, Rule 37 of the Rules of Court must be a
mistake of fact, not of law, which relates to the case. Here, plaintiffs claim to have committed mistake
in perceiving that the case was submitted merely on the basis of the Commissioner's Report is
unavailing. The Commissioner's Report containing the findings on the relocation survey was never
meant to be crucial in determining the issue in this case. As per Order of the Court issued on July 10,
2008, the relocation survey was commissioned upon agreement of the parties to determine in the first
place if the plaintiffs and the defendants refer to one and the same identifiable property or if the lot
being claimed by the plaintiff is one and the same as or is included in the lot being claimed by the
defendants. It is therefore erroneous on the part of the plaintiffs to now claim that they thought that
the case was submitted for resolution only [on] the basis of the results of the relocation survey,
particularly the finding in the Commissioner's Report which is quoted as follows:
"From the datas [sic] of the verification survey that was executed over the
premises of the subject, it appears that a two (2)[-]storey residential building owned
by the defendants was erected partly on Lot 20028 and partly on Lot 20029".
More significantly, it is clear on record contrary to the supposed mistaken perception of the
plaintiffs that in the Order dated November 5, 2009, that parties, meaning with the concurrence of
both plaintiffs and defendants, agreed to submit the case for resolution "on the basis of their position
papers and the evidence already on record" . . . This plaintiffs cannot deny. Lest they have forgotten,
their cause of action is reconveyance based on their claim that they owned the property upon which
defendants had partly built their house. They are also too aware that if their action is for reconveyance
based on their claim of ownership, it is in the same vein that defendants lay claim to the property. They
are thus likewise aware that a resolution of the case cannot be made merely on the basis of the
Commissioner's Report but must be on the basis of the whole evidence on record.
A party who moves for a new trial on the ground of "honest mistake" must show that ordinary
prudence could not have guarded against it. A new trial is not a refuge for the obstinate. In this case,
plaintiffs' assertion that they thought that the case was submitted for resolution only on the basis of
the Commissioner's Report is but a pretentious and unfounded mistake. Having been assisted by
counsel, such mistake could not have happened had ordinary prudence been exercised. 26 (Citations
omitted)
 The Cascayan Heirs appealed the Regional Trial Court Decision to the Court of Appeals. They argued that the
Regional Trial Court could not order the cancellation of the patent because they had already been issued a certificate
of title pursuant to a public land patent. 27 Furthermore, under the Public Land Act, it is only the Solicitor General who
could institute an action for reversion of Lot No. 20028. 28 Petitioners also insisted that their Motion for New Trial
should have been granted because of their mistake in believing that the position paper would be the basis of the
Regional Trial Court's decision and because respondents committed fraud in submitting irrelevant documents. 29
The Court of Appeals denied the petition and affirmed the Regional Trial Court Decision. It held that the action
was in the nature of an accion reivindicatoria, wherein the plaintiffs claim ownership over a land and seek recovery of
full possession over it. 30 Thus, the main issue for resolution was who had a better claim over Lot No. 20028, based on
the parties' evidence. 31 Consequently, pursuant to Article 434 of the Civil Code, the plaintiffs had to prove the identity
of the land claimed and their title to it. 32 The Court of Appeals found that OCT No. P-78399 was not conclusive proof
of their title to Lot No. 20028 as titles secured by fraud and misrepresentation are not indefeasible. Quoting the Regional
Trial Court, the Court of Appeals found that the evidence proved that the Cascayan Heirs obtained their title through
fraud and misrepresentation. Additionally, it ruled that the Spouses Gumallaoi proved their title as well as the identity
of the land pursuant to Article 434 of the Civil Code.The dispositive portion of the decision read:
WHEREFORE, the instant appeal is DENIED. The January 21, 2010 Decision of Regional Trial
Court, Branch 19, Bangui, Ilocos Norte in Civil Case No. 944-19 is hereby AFFIRMED. 33
In a Resolution 34 dated February 25, 2014, the Court of Appeals also denied the Cascayan Heirs' motion for
reconsideration for lack of merit.
On April 10, 2014, the Cascayan Heirs filed a petition before this Court assailing the Court of Appeals Decision
and Resolution. Petitioners argue that regardless of any application for free patent that may have been filed, Lot No.
20028 had long been owned by Cayetano since 1925. 35 This is shown by evidence submitted to the Regional Trial
Court, namely, a Tax Declaration for the year 1925 and the presence of the debris of his residence, still intact on Lot No.
20028. 36 Moreover, petitioners insist that it has been proven that they have possessed Lot No. 20028 since time
immemorial. 37 They also claim that none of the evidence shows that respondents own Lot No. 20028. They point out
that affidavits retracting the affidavits of waiver have been submitted to the Court of Appeals, 38 explaining that the
signatories of the affidavits of waiver did not understand what they signed. 39
On September 22, 2015, respondents manifested that in lieu of filing a comment on the Petition, they are
adopting the rulings of the Court of Appeals and of the Regional Trial Court. 40
The sole issue for resolution is whether the Court of Appeals properly appreciated the evidence presented by
the parties.
The petition is denied.
Petitions for review on certiorari under Rule 45 shall pertain only to questions of law. 41 In Pascal v. Burgos: 42
Review of appeals filed before this court is "not a matter of right, but of sound judicial
discretion[.]" This court's action is discretionary. Petitions filed "will be granted only when there are
special and important reasons[.]" This is especially applicable in this case, where the issues have been
fully ventilated before the lower courts in a number of related cases.
The Rules of Court require that only questions of law should be raised in petitions filed under
Rule 45. This court is not a trier of facts. It will not entertain questions of fact as the factual findings of
the appellate courts are "final, binding[,] or conclusive on the parties and upon this [c]ourt" when
supported by substantial evidence. Factual findings of the appellate courts will not be reviewed nor
disturbed on appeal to this court. 43 (Citations omitted)
Thus, as a general rule, the factual findings of the Court of Appeals bind this Court.
Quoting the Regional Trial Court, the Court of Appeals determined, based on the evidence presented, that
petitioners obtained their title to Lot No. 20028 through fraud and misrepresentation:
In this case, Spouses Gumallaoi presented sufficient evidence to show that the Heirs of
Cascayan obtained their title through fraud and misrepresentation. We quote with approval the
following observations of the RTC, viz.:
At this juncture, it is noteworthy that Tax Declaration No. 03-006-00652,
series of 2003 in the name of the Heirs of Cayetano Cascayan who obviously secured
the same for purposes (of) their application for free patent, was not also earlier
declared in the name of either Marcelino Alupay or Cayetano Cascayan. A perusal of
the evidences [sic] of the defendants spouses . . . show that the owner was unknown.
 In fact, as shown in Tax Declaration No. 97-006-00654, it preceded Tax Declaration
No. 03-006-00652 which is the same tax declaration issued to the plaintiffs in 2003
before they applied for the free patent. It is thus clear that, the lot being declared
then to an unknown person, plaintiffs took it upon themselves and claimed it, secured
a tax declaration in their name in 2003 and applied thereafter for a free patent
therefor the following year.
In other words, plaintiffs obviously applied for a free patent without any
basis. It is clear from their evidence that they were never in possession of the property
in suit before they applied for the free patent. While plaintiffs submitted affidavits to
show that they have occupied and cultivated Lot No. 20028 and that it was declared
in the name of the heirs of Cayetano Cascayan in support of their application for free
patent, it appears that such evidences (sic) have been manipulated. It appears that
while they were not in fact cultivating the property and that it was declared in the
name of the heirs of Cayetano Cascayan only in 2003, they were able to present false
information about their true status as claimants. In fact, Estrelita Balbag and Jalibert
Malapit, who then in the year 2004 attested in support of plaintiffs' application for
free patent that plaintiffs and their predecessor have been in continuous possession
of Lot No. 20028 since 1944 or 1945, have retracted their said Affidavits. Thus, in the
subsequent Affidavits they have executed on September 19, 2007 which defendants
spouses submitted in support of their claim, Estrelita Balbag on her part alleged that
she has no knowledge about the contents of her earlier affidavit which was not
explained to her and that she is not aware of the matters concerning Lot No. 20028
while Jalibert Malapit stated that his signature on the Affidavit is not his real
signature.
Likewise, Barangay Chairman Christopher Malapit also retracted the
Certification he issued on March 24, 2004 in support [of] the application of the
plaintiffs for free patent by stating in his subsequent Affidavit dated September 19,
2007 also submitted by defendants spouses that there was no posting made of the
notice of application for free patent and that when he was asked to sign by Elsa
Martinez, daughter of La Paz Martine[z], he was not aware of the contents of the
Certification and that he was made to believe that it will be used for another purpose
than an application for free patent . . .
Also, Marcelino Alupay retracted the Affidavit which he executed on March
24, 2004 in favor of the plaintiffs in connection with their application for free patent
stating that there was mistake in placing his name as survey claimant and that the lot
applied for is in the actual possession and cultivation of the heirs of Cayetano
Cascayan. Thus, in another Affidavit he executed on September 19, 2007, he alleged
that he had no knowledge of the contents of what he signed and that it was not
explained to him. 44
However, petitioners ask that this Court reverse the Court of Appeals' determination, insisting that regardless
of any impropriety in the filing of an application for a free patent, they have proven that they owned Lot No. 20028.
They assert that they have established that Lot No. 20028 had long been owned by Cayetano since 1925 45 and that
they have possessed it since time immemorial, 46 whereas none of the evidence shows that respondents ever owned
it. Petitioners also insist that the affidavits of waiver should not have been given weight by the Court of Appeals,
considering that affidavits retracting the affidavits of waiver have been submitted to it. 47
These issues require this Court to review the Court of Appeals' appreciation of evidence. The Court of Appeals
found that the evidence did not sufficiently prove petitioners' claims of possession or ownership over Lot No. 20028:
The records are also bereft of evidence showing that the Heirs of Cascayan or their
predecessor-in-interest had been in possession of Lot No. 20028. There was not even an allegation on
how Cayetano took possession of the land and in what way he derived his title thereto. Interestingly,
the Heirs of Cascayan merely based their claim of possession on a series of tax declarations purportedly
showing that Cayetano, their predecessor-in-interest, had been religiously paying the taxes thereof
and even built a residential house thereon. However, and as aptly noted by the RTC, these tax
declarations are full of inconsistent entries that were never explained and only cast doubt as to the
identity of the land being claimed by the Heirs of Cascayan. 48
The Court of Appeals noted that the only basis for the petitioners' claim of possession was tax declarations,
which the Court of Appeals scrutinized:
 A careful perusal of the tax declarations bearing the name of Cayetano and having similar
boundaries reveal that TD No. 601683 (series of 1985) covered 1,940 sq. m. It cancelled TD No. 501883,
not TD No. 005179. On the other hand, TD No. 005179 (series of 1949), stating an area of 1,950 sq. m.,
cancelled TD No. 28278-B (series of 1932) that has an area of 1,600 sq. m. TD No. 28278-B cancelled
TD No. 28278-A (series of 1926) which bore the same dimension and had cancelled TD No. 28278. We
emphasize that TD No. 03-006-00652 (series of 2003) in the name of the Heirs of Cascayan covers an
area of 1,083 sq. m. and was not earlier declared in the name of either Cayetano or even Marcelino
who allegedly applied, though erroneously, a patent for Lot No. 20028. Obviously, its area is
substantially different from that originally declared in the name of Cayetano . . .
xxx xxx xxx
However, TD No. 97-006-00654 was declared to an unknown owner in 1997 and it cancelled
TD No. 94-006-00651 which was likewise declared to an unknown owner in 1994, and both covered an
area of 1,803 sq. m. The Heirs of Cascayan never bothered to explain why Lot No. 20028 was declared
to an unknown owner despite their claim that they had been in possession of the same since 1942. It
is also intriguing that despite the resurvey of the land in 1982, which was used by the Heirs of Cascayan
in their free patent application, showing an area of 1,083 sq. m., the land was allegedly declared in the
name of Cayetano in 1985 but still bearing an area of 1,940 sq. m. The 1985 tax declaration in the name
of Cayetano was likewise silent as to the lot number of the land being declared for tax purposes and it
appears therefrom that said lot was bounded on the south and west by the land owned by Pedro and
on the east by the land owned by Bernardo Acido. In contrast thereto, the survey conducted in 1982
showed that Lot No. 20028 is bounded on the east by an alley and not by any private land. It is quite
plain from the foregoing observations, and as correctly pointed out by the court a quo, that "there is
clear and serious disconnect in their claim that the parcel of land declared earlier in the name of
Cayetano, is the same as Lot No. 20028". 49
The Court of Appeals thoroughly examined the evidence submitted by petitioners and found it lacking in
probative value to prove petitioners' ownership over Lot No. 20028. Rather than prove their ownership, it cast doubt
on the title over Lot No. 20028.
Petitioners attempt to address the foregoing inconsistencies:
As to the discrepancy of the area, and which also bothered the Honorable Court of Appeals, it
must be noted that indeed the survey was conducted in the year 1982 (November 2-25, 1982), but it
was only approved in October 12, 1984. There was as yet no ROAD then, as it could be seen in the
boundaries of the earlier issued Tax Declarations, but it is still within the allowable area of relevance
and proximity. The present area could be properly explained with the existence of a road therein as
shown in the Survey Plan submitted by the Commissioner of the case, but the debris of the
improvements — "House and Kitchen" having been put up by Cayetano Cascayan in his lifetime, could
not be denied, which serves as a monument of ownership in fee simple. 50
The assertions that a road may explain the inconsistencies are mere factual allegations, not well-substantiated
or adequately discussed fact. They are insufficient to compel this Court to review the Court of Appeals' appreciation of
the evidence as to the identity of the property covered by the tax declarations in relation to Lot No. 20028.
The Court of Appeals also considered the waivers submitted in evidence by the parties:
The Court cannot also close its eyes to the Waiver of Rights executed by some of the Heirs of
Cascayan, particularly Virginia Abida, Irineo Tolentino, Nena Valiente Alupay, Orlino Valinete and Eden
Jacinto, recognizing Jose and Spouses Gumallaoi's ownership over Lot No. 20028 and admitting that it
was erroneous on their part to apply for a free patent over the said lot. Also worthy of note is the
statement by the Heirs of Cascayan in their application alleging that the land was public and that no
person was claiming or occupying the same notwithstanding that Spouses Gumallaoi's house was
already visibly erected therein even before the application was filed in 2003. With these striking
misrepresentations, We uphold the court a quo's findings that the application for free patent by the
Heirs of Cascayan was not supported by any valid basis warranting the cancellation of their title over
the subject property. 51
Petitioners insist that the Court of Appeals should have considered the new affidavits submitted by petitioners,
retracting the affidavits of waiver it previously appreciated. 52 Again, this is a matter of appreciation of evidence, not a
question of law, and not a proper subject of review.
The Court of Appeals found that respondents, on the other hand, sufficiently identified Lot No. 20028 and
proved their title thereto:
 In contrast, the right to possession of Spouses Gumallaoi of the subject property is hinged on
the "Recibo Ti Pinaglako Ti Daga" (Receipt for the Sale of Land) dated January 3, 2002. The boundaries
stated in the said receipt are more in accord with TD Nos. 97-006-00654 and 94-006-00651 as well as
with the resurvey of the lot as it appears in the description stated in OCT No. P-78399. Also bolstering
Spouses Gumallaoi's claim of ownership over the subject property pursuant to the said sale are the
waiver of rights and the acknowledgment of Spouses Gumallaoi's ownership by the grandchildren of
Cayetano earlier mentioned, and the Affidavit of Barangay Chairman Christopher stating that Spouses
Gumallaoi's predecessor-in-interest, Raymundo, was the actual possessor and occupant of Lot No.
20028 since 1940 up to the time that Jose questioned the legality of his possession. The Heirs of
Cascayan did not bother to rebut these allegations and during the March 8, 2008 hearing, their lawyer
brought to the attention of the RTC Raymundo's possession of the subject lot, thus:
The Court:
That's why the Court is asking the plaintiffs to submit the complete records of the application for
registration and for the defendants to show documents of ownership of their predecessors-in-
interest, meaning Jose Corpuz and Pedro Corpuz.
Atty. Guillermo (Counsel for the Heirs of Cascayan):
Yes[,] your honor. And this controversy arisen (sic) when Mr. Raymundo Garcia left for Hawaii and the
son-in-law came in and possessed the property in 1997 and a residential . . .
The Court:
Raymundo Garcia?
Atty. Guillermo:
Yes[,] your Honor, Raymundo Garcia.
The Court:
The father of Evelyn Garcia?
Atty. Guillermo:
Yes[,] your Honor, and it was only in 2002 that they got married with said Gumallaoi and that was the
starting point of this controversy . . .
Atty. Garvida:
We would like to manifest[,] your Honor[,] that Raymundo Garcia is the tenant of Jose Corpuz[.]
The Court:
Tenant?
Atty. Garvida:
Yes[,] your Honor. And he is already tilling a portion of said lot, the subject of this case since Jose
Corpuz . . . It's been a long time[,] your [H]onor[,] that he has been tilling the said parcel of land.
So he knows very well that it belongs to Jose Corpuz.
xxx xxx xxx
Hence, considering the foregoing, it behooves Us to concur with the declaration of the
court a quo that Spouses Gumallaoi are the lawful owners of the subject property. 53 (Citations
omitted)
The Court of Appeals' appreciation of the evidence on the possession of Lot No. 20028 and the weight to be
given to the parties' Tax Declarations and affidavits, which is consistent with the Regional Trial Court findings, is binding
on this Court and there is no cogent reason to review it.
Although not raised as an issue before this Court, it nonetheless bears emphasizing that when a complaint for
recovery of possession is filed against a person in possession of a parcel of land under claim of ownership, he or she
may validly raise nullity of title as a defense and, by way of counterclaim, seek its cancellation. In Heirs of Santiago v.
Heirs of Santiago: 54
A certificate of title issued under an administrative proceeding pursuant to a homestead
patent covering a disposable public land within the contemplation of the Public Land
Law or Commonwealth Act No. 141 is as indefeasible as a certificate of title issued under a judicial
 registration proceeding. Under the Land Registration Act, title to the property covered by a Torrens
certificate becomes indefeasible after the expiration of one year from the entry of the decree of
registration. Such decree of registration is incontrovertible and becomes binding on all persons
whether or not they were notified of, or participated in, the in rem registration process. There is no
specific provision in the Public Land Law or the Land Registration Act (Act 496), now Presidential Decree
1529, fixing a similar one-year period within which a public land patent can be considered open to
review on the ground of actual fraud (such as that provided for in Section 38 of the Land Registration
Act, and now Section 32 of Presidential Decree 1529), and clothing a public land patent certificate of
title with indefeasibility. Nevertheless, this Court has repeatedly applied Section 32 of Presidential
Decree 1529 to a patent issued by the Director of Lands, approved by the Secretary of Natural
Resources, under the signature of the President of the Philippines. The date of the issuance of the
patent corresponds to the date of the issuance of the decree in ordinary cases. Just as the decree finally
awards the land applied for registration to the party entitled to it, the patent issued by the Director of
Lands equally and finally grants and conveys the land applied for to the applicant.
The one-year prescriptive period, however, does not apply when the person seeking
annulment of title or reconveyance is in possession of the lot. This is because the action partakes of a
suit to quiet title which is imprescriptible. In David v. Malay, we held that a person in actual possession
of a piece of land under claim of ownership may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, and his undisturbed possession gives him the
continuing right to seek the aid of a court of equity to ascertain and determine the nature of the
adverse claim of a third party and its effect on his title.
xxx xxx xxx
In the case at bar, inasmuch as respondents are in possession of the disputed portions of Lot
2344, their action to annul Original Certificate of Title No. P-10878, being in the nature of an action to
quiet title, is therefore not barred by prescription.
Section 48 of P.D. 1529, the Property Registration Decree, provides that a certificate of title
shall not be subject to collateral attack and [cannot] be altered, modified, or canceled except in a direct
proceeding. An action is an attack on a title when the object of the action is to nullify the title, and thus
challenge the judgment or proceeding pursuant to which the title was decreed. The attack is direct
when the object of an action is to annul or set aside such judgment, or enjoin its enforcement. On the
other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack
on the judgment or proceeding is nevertheless made as an incident thereof.
In this case, while the original complaint filed by the petitioners was for recovery of
possession, or accion publiciana, and the nullity of the title was raised merely as respondents' defense,
we can rule on the validity of the free patent and OCT No. P-10878 because of the counterclaim filed
by respondents. A counterclaim can be considered a direct attack on the title. In Development Bank of
the Philippines v. Court of Appeals, we ruled on the validity of a certificate of title despite the fact that
the nullity thereof was raised only as a counterclaim. It was held that a counterclaim is considered a
complaint, only this time, it is the original defendant who becomes the plaintiff. It stands on the same
footing and is to be tested by the same rules as if it were an independent action. Moreover, since all
the facts necessary in the determination of the title's validity are now before the Court, it would be in
the best interest of justice to settle this issue which has already dragged on for 19 years. 55 (Emphasis
in the original, citations omitted)
In Firaza, Sr. v. Spouses Ugay, 56 this Court explained:
In Arangote v. Maglunob, the Court, after distinguishing between direct and collateral attack,
classified a counterclaim under former, viz.:
The attack is considered direct when the object of an action is to annul or set
aside such proceeding, or enjoin its enforcement. Conversely, an attack is indirect or
collateral when, in an action to obtain a different relief, an attack on the proceeding
is nevertheless made as an incident thereof. Such action to attack a certificate of title
may be an original action or a counterclaim, in which a certificate of title is assailed
as void.
In the recent case of Sampaco v. Lantud, the Court applied the foregoing distinction
and held that a counterclaim, specifically one for annulment of title and reconveyance based on fraud,
 is a direct attack on the Torrens title upon which the complaint for quieting of title is premised. Earlier
in, Development Bank of the Philippines v. CA, the Court ruled similarly and explained thus:
Nor is there any obstacle to the determination of the validity of TCT No.
10101. It is true that the indefeasibility of torrens title cannot be collaterally attacked.
In the instant case, the original complaint is for recovery of possession filed by
petitioner against private respondent, not an original action filed by the latter to
question the validity of TCT No. 10101 on which petitioner bases its right. To rule on
the issue of validity in a case for recovery of possession is tantamount to a collateral
attack. However, it should not [b]e overlooked that private respondent filed a
counterclaim against petitioner, claiming ownership over the land and seeking
damages. Hence, we could rule on the question of the validity of TCT No. 10101 for
the counterclaim can be considered a direct attack on the same[.]
The above pronouncements were based on the well-settled principle that a counterclaim is
essentially a complaint filed by the defendant against the plaintiff and stands on the same footing as
an independent action. 57 (Emphasis in the original and supplied, citations omitted)
Thus, this Court reiterated Heirs of Santiago 58 in the case of Sampaco v. Hadji Serad Mingca Lantud: 59
Further, petitioner contends that the Court of Appeals erred in ruling that petitioner's
counterclaim is time-barred, since the one-year prescriptive period does not apply when the person
seeking annulment of title or reconveyance is in possession of the lot, citing Heirs of Simplicio Santiago
v. Heirs of Mariano E. Santiago. Petitioner also contends that the Court of Appeals erred in ruling that
the counterclaim in this case is a collateral attack on respondent's title, citing Cimafranca v.
Intermediate Appellate Court. Petitioner cites the case of Heirs of Simplicio Santiago v. Heirs of
Mariano E. Santiago, which held that a counterclaim can be considered a direct attack on the title.
The Court notes that the case of Cimafranca v. Intermediate Appellate Court, cited by the
Court of Appeals to support its ruling that the prayer for the cancellation of respondent's title through
a counterclaim included in petitioner's Answer is a collateral attack on the said title, is inapplicable to
this case. In Cimafranca, petitioners therein filed a complaint for Partition and Damages, and
respondents therein indirectly attacked the validity of the title involved in their counterclaim. Hence,
the Court ruled that a Torrens title cannot be attacked collaterally, and the issue on its validity can be
raised only in an action expressly instituted for that purpose.
Here, the case cited by petitioner, Heirs of Simplicio Santiago v. Heirs of Mariano E.
Santiago, declared that the one-year prescriptive period does not apply when the party seeking
annulment of title or reconveyance is in possession of the lot, as well as distinguished a collateral attack
under Section 48 of PD No. 1529 from a direct attack, and held that a counterclaim may be considered
as a complaint or an independent action and can be considered a direct attack on the title, thus:
The one-year prescriptive period, however, does not apply when the
person seeking annulment of title or reconveyance is in possession of the lot. This
is because the action partakes of a suit to quiet title which is imprescriptible. In David
v. Malay, we held that a person in actual possession of a piece of land under claim of
ownership may wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right, and his undisturbed possession gives him the
continuing right to seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his title.
xxx xxx xxx
Section 48 of P.D. 1529, the Property Registration Decree, provides that a
certificate of title shall not be subject to collateral attack and cannot be altered,
modified, or canceled except in a direct proceeding. An action is an attack on a title
when the object of the action is to nullify the title, and thus challenge the judgment
or proceeding pursuant to which the title was decreed. The attack is direct when
the object of an action is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or collateral when, in an action
to obtain a different relief, an attack on the judgment or proceeding is nevertheless
made as an incident thereof.
A counterclaim can be considered a direct attack on the title. In Development Bank
of the Philippines v. Court of Appeals, we ruled on the validity of a certificate of title
 despite the fact that the nullity thereof was raised only as a counterclaim. It was held
that a counterclaim is considered a complaint, only this time, it is the original
defendant who becomes the plaintiff. It stands on the same footing and is to be
tested by the same rules as if it were an independent action[.]
The above ruling of the court on the definition of collateral attack under Section 48 of P.D. No.
1529 was reiterated in Leyson v. Bontuyan, Heirs of Enrigrre Diaz v. Virata, Arangote v.
Maglunob, and Catores v. Afidchao. 60 (Emphasis in the original, citations omitted)
Thus, the Court of Appeals did not commit an error of law in sustaining the cancellation of OCT No. P-78399,
pursuant to respondents' counterclaim, and in its determination that petitioners obtained it fraudulently.
The presence of fraud is a factual question. It must be established through clear and convincing evidence,
though the circumstances showing fraud may be varied: 61
We begin our resolution of this issue with the well-settled rule that the party alleging fraud or
mistake in a transaction bears the burden of proof. The circumstances evidencing fraud are as varied
as the people who perpetrate it in each case. It may assume different shapes and forms; it may be
committed in as many different ways. Thus, the law requires that it be established by clear and
convincing evidence. 62
In Republic v. Heirs of Alejaga, Sr., 63 this Court considered several circumstances as evidence that a free patent
had been obtained through fraud. It noted the discrepancy between the date the application was filed and the date the
investigation and verification were done. Also, the verification and investigation report supposedly conducted by the
Land Inspector was not signed. Finally, a special investigator testified that the Land Inspector admitted to not actually
conducting an investigation or an ocular inspection of the land, and this testimony remained unrebutted. 64
Here, the Court of Appeals' and the Regional Trial Court's conclusion that petitioners obtained the free patent
fraudulently was based on several findings. They determined that petitioners were never in possession of Lot No. 20028.
Even the documents submitted to support their application were flawed: the tax declarations were inconsistent and
the affidavits and Certifications were subsequently retracted. Considering that the Regional Trial Court and the Court
of Appeals uniformly determined that fraud existed in the free patent application based on the evidence presented,
there is no reason for this Court to delve into this issue.
Thus, the Court of Appeals did not commit any error of law in affirming the Regional Trial Court Decision, which
declared respondents as the legal owners of Lot No. 20028, and in cancelling petitioners' title to it.
WHEREFORE, the petition for review on certiorari dated April 10, 2014 is DENIED and the Court of Appeals
Decision dated July 31, 2013 and Resolution dated February 25, 2014 in CA-G.R. No. 96900 are AFFIRMED.
SO ORDERED.

G.R. No. 204131. June 4, 2018.]

SPOUSES JAIME AND CATHERINE BASA, SPOUSES JUAN AND ERLINDA OGALE represented by WINSTON OGALE,
SPOUSES ROGELIO AND LUCENA LAGASCA represented by LUCENA LAGASCA, and SPOUSES CRESENCIO AND ELEADORA
APOSTOL, petitioners, vs. ANGELINE LOY VDA. DE SENLY LOY, HEIRS OF ROBERT CARANTES, THE REGISTER OF DEEDS
FOR BAGUIO CITY, and THE CITY ASSESSOR'S OFFICE OF BAGUIO CITY, respondents.
DEL CASTILLO, J p:

This Petition for Review on Certiorari 1 assails the May 31, 2012 Decision 2 of the Court of Appeals (CA) in CA-
G.R. CV No. 95490 affirming the January 22, 2010 Decision of the Regional Trial Court (RTC) of Baguio City, Branch 7 in
Civil Case No. 6280-R, and the CA's subsequent October 11, 2012 Resolution 3 denying herein petitioners' Motion for
Reconsideration. 4 HTcADC
Factual Antecedents

This case revolves around a 496-square meter residential lot situated in New Lucban, Baguio City covered by
Transfer Certificate of Title No. T-30086 (subject property) in the name of the late Busa Carantes, who is the
predecessor-in-interest of Manuel Carantes and herein respondent Robert Carantes.
The subject property was mortgaged to respondent Angeline Loy and her husband in 1994. Thereafter, they
foreclosed on the mortgage, and at the auction sale, they emerged the highest bidder. On March 31, 2006, after
consolidating ownership over the subject property, Branch 6 of the Baguio RTC — in LRC ADM Case No. 1546-R — issued
in their favor a writ of possession.
 On May 30, 2006, herein petitioners — spouses Jaime and Catherine Basa, spouses Juan and Erlinda Ogale,
spouses Rogelio and Lucena Lagasca, and spouses Cresencio and Eleadora Apostol — filed before Branch 7 of the Baguio
RTC a petition for quieting of title with prayer for injunctive relief and damages, docketed as Civil Case No. 6280-R,
against respondents Angeline Loy, Robert Carantes, the Registry of Deeds for Baguio City, and the Baguio City Sheriff
and Assessor's Office. They essentially claimed that in 1992 and 1993, portions of the subject property — totaling 351
square meters — have already been sold to them by respondent Robert Carantes, by virtue of deeds of sale executed
in their favor, respectively; that they took possession of the portions sold to them; and that the titles issued in favor of
Angeline Loy created a cloud upon their title and are prejudicial to their claim of ownership. They thus prayed that the
documents, instruments, and proceedings relative to the sale of the subject property to respondent Angeline Loy be
cancelled and annulled, and that they be awarded damages and declared owners of the respective portions sold to
them.
In her answer with counterclaim, Angeline Loy alleged that she was entitled to the subject property as a result
of the foreclosure and consequent award to her as the highest bidder during the foreclosure sale; that the subject
property was later divided by judicial partition, and new certificates of title were issued in the name of Manuel and
Robert Carantes, which titles were later cancelled and new titles were issued in her name as co-owner of the subject
property together with Manuel Carantes; that she had no knowledge of the supposed sales to petitioners by Robert
Carantes as these transactions were not annotated on the title of Busa Carantes; and that the sales to the petitioners
were either unnotarized or unconsummated for failure to pay the price in full.
In his answer, Robert Carantes alleged that the sales to petitioners did not materialize; that petitioners failed
to fully pay the purchase price; that his transactions with Angeline Loy and her husband were null and void; and that he
was the real owner of the subject property in issue.
Respondents Angeline Loy and Robert Carantes failed to appear during the scheduled mediation. Petitioners
were then allowed to present their evidence ex parte.
Petitioners thereafter filed a Formal Offer of Evidence praying for admission of the following documentary
evidence:
1. Exhibit "A" — unnotarized 'Deed of Absolute Sale of a Portion of a Registered Parcel of a Residential
Land' between respondent Robert Carantes and petitioners, spouses Jaime and Catherine Basa
covering 107 square meters;
2. Exhibit "B" — unnotarized 'Deed of Absolute Sale of a Portion of a Parcel of Land' between Robert
Carantes and petitioners, spouses Juan and Erlinda Ogale, covering 84 square meters;
3. Exhibit "C" — 'Deed of Sale of Undivided Rights and Interests' in favor of petitioners Rogelio and Lucena
Lagasca, covering 80 square meters;
4. Exhibit "D" — 'Deed of Sale of Undivided Rights and Interests' in favor of petitioners Cresencio and
Eleadora Apostol, covering 80 square meters; and
5. Exhibit "E" — Affidavit of Robert Carantes. 5
On July 24, 2009, the trial court issued an Order denying admission of Exhibits "A" to "D" on the ground that
Exhibits "A" to "C" were mere photocopies and were only previously provisionally marked, while there was no such
document marked Exhibit "D".
Ruling of the Regional Trial Court

On January 22, 2010, the trial court rendered its Decision in Civil Case No. 6280-R, declaring thus: aScITE
At the outset, the Court would like to put emphasis on the ruling of the Supreme Court in the
case of Acabal vs. Acabal, 454 SCRA 555 that, 'It is a basic rule in evidence that the burden of proof lies
on the party who makes the allegations — el encumbit probatio, qui dicit, non qui negat; cum per rerum
natruam factum negatis probatio nulla sit (the proof lies upon him who affirms, not upon him who
denies; since by nature of things, he who denies a fact cannot produce any proof). If he claims a right
granted by law, he must prove it by competent evidence, relying on the strength of his own evidence
and not upon the weakness of that of his opponent.'
In the present case, the petitioners Cresencio Apostol, Jaime Basa, Lucena Lagasca and Erlinda
Ogale was [sic] presented to substantiate the allegations in their petition. All four gave similar
testimonies that respondent Robert Carantes sold to them certain portions of a parcel of land for
different sums of money on different occasions. However, although they identified photocopies of the
deeds covering the transactions which were provisionally marked, they failed to submit the original
copies thereof for which reason, the Court denied admission of the said documents when they were
 formally offered. The only other piece of documentary evidence the petitioners presented to back up
their claims was an Affidavit purportedly executed by respondent Robert Carantes. However, the said
respondent was never presented to testify on his affidavit, thus, the contents thereof could not be
appreciated in favor of the petitioners following the ruling in the case of People vs. Brioso, 37 SCRA
336, that, 'Affidavits are generally rejected in judicial proceeding as hearsay, unless the affiants
themselves are placed on the witness stand to testify thereon.'
Considering that the petitioners failed to discharge their burden of proving the truth of their
claims even by preponderance of evidence, the court is left with no recourse but to deny the reliefs
prayed for in their petition. 6
WHEREFORE, all the foregoing premises considered, the petition is hereby DENIED and the
above-entitled case is hereby DISMISSED without pronouncement as to costs.
SO ORDERED. 7
Petitioners moved to reconsider, but the trial court — in a June 18, 2010 Order — would not reverse. It held —
The court finds no cogent reason to reconsider the decision.
In the case of Llemos vs. Llemos, 513 SCRA 128, the Supreme Court had the occasion to rule
that, 'Under Section 3, Rule 130, Rules of Court, the original document must be produced and no
evidence shall be admissible other than the original document itself, except in the following cases: x x
x a) When the original has been lost or destroyed or cannot be produced in court, without bad faith on
the part of the offeror; b) When the original is in the custody or under the control of the party against
whom the evidence is offered, and the latter fails to produce it after reasonable notice; c) When the
original consists of numerous accounts or other documents which cannot be examined in court without
great loss of time and the fact sought to be established from them is only the general result of the
whole; and d) When the original is a public record in the custody of a public officer or is recorded in a
public office.'
In the present case, there is no showing that the plaintiffs' failure to produce the original
documents was based on the exceptions aforementioned. Moreover, the plaintiffs never questioned
the Court's resolution of their formal offer of evidence contained in an Order dated July 24, 2009
admitting only Exhibit "E". Thus, their assertion that they did not have to present the originals there
being no objection from the defendants who incidentally have lost their standing in this case as early
as January 22, 2008, all the more appears to be untenable. 8
Ruling of the Court of Appeals

Petitioners interposed their appeal before the CA which, on May 31, 2012, rendered the assailed Decision
containing the following pronouncement:
Petitioners x x x argue that ownership over the portions they occupied should be transferred
to them because (i) they were able to establish that the same were sold to them by respondent x x x
Robert Carantes and they had fully paid the purchase price thereof; (ii) respondent x x x Angeline Loy
was in bad faith 'in not making an investigation before entering into mortgage with Robert Carantes';
and (iii) the trial court should have reconsidered its Decision dated January 22, 2010 since petitioners
x x x filed a 'motion for reconsideration explaining the reason and simultaneously submitting the
original pieces of evidence.' HEITAD
It is a basic rule that in civil cases, the burden of proof is on the plaintiff to establish his case
by preponderance of evidence. x x x
xxx xxx xxx
Thus, although the trial court allowed petitioners x x x to present their evidence ex-parte for
failure of respondents x x x to appear in the mediation proceedings, petitioners x x x still had to prove
their allegations in their petition by preponderance of evidence.
In Saguid vs. Court of Appeals, wherein respondent therein was allowed to present her
evidence ex-parte, the Supreme Court stressed:
'As in other civil cases, the burden of proof rests upon the party who, as
determined by the pleadings or the nature of the case, asserts an affirmative issue.
Contentions must be proved by competent evidence and reliance must be had on the
strength of the party's own evidence and not upon the weakness of the opponent's
 defense. This applies with more vigor where, as in the instant case, the plaintiff was
allowed to present evidence ex parte. The plaintiff is not automatically entitled to the
relief prayed for. The law gives the defendant some measure of protection as the
plaintiff must still prove the allegations in the complaint. Favorable relief can be
granted only after the court is convinced that the facts proven by the plaintiff warrant
such relief. Indeed, the party alleging a fact has the burden of proving it and a mere
allegation is not evidence.'
In support of their allegation that portions of Lot No. T-30086 were sold to them by respondent
x x x Robert Carantes, petitioners x x x presented during the ex-parte hearing two (2) sets of documents,
to wit: (i) four (4) photocopied deeds of sale, and (ii) an original affidavit executed by respondent x x x
Robert Carantes. In its Decision dated January 22, 2010, the trial court did not consider these pieces of
evidence because (i) petitioners x x x did not submit the original deeds of sale, and (ii) respondent x x
x Robert Carantes was not presented in Court to identify his affidavit.
The trial court cannot be faulted in so ruling. Neither can it be faulted for not reconsidering its
Decision dated January 22, 2010 despite the purported 'original' deeds of sale appended to petitions'
x x x motion for reconsideration. It must be considered that:
Firstly, petitioners' x x x failure to append the original deeds of sale cannot be excused on their
alleged mistaken belief that submission of the same was no longer necessary when respondents x x x
did not object to the presentation of photocopies during the ex-parte hearing, as the trial court itself
required the submission of the original deeds of sale. Record bears that the Branch Clerk of Court
provisionally marked the photocopied deeds of sale as Exhibits 'A' to 'D' subject to the submission of
the original thereof. In fact, petitioners x x x counsel manifested that they reserved the right to present
the original deeds of sale.
Secondly, while during the ex-parte hearing, two (2) documents, both denominated as 'Deed
of Sale of Undevided [sic] Rights and Interests,' were presented to prove the sale of portions of subject
lot to petitioners x x x spouses Rogelio and Lucena Lagasca and spouses Cresencio and Eleadora
Apostol, what was appended to petitioners' x x x motion for reconsideration was a different document,
a carbon copy of a document denominated as 'Deed of Sale of Undivided Portions of Registered Land,'
between respondent x x x Robert Carantes and petitioners x x x Rogelio Lagasca and Cresencio Apostol.
Thirdly, the 'Deed of Absolute Sale of a Portion of a Registered Parcel of a Residential Land'
between respondent x x x Robert Carantes and petitioners x x x spouses Jaime and Catherine Basa was
a mere carbon copy.
The Court thus finds that the evidence adduced during the ex-parte hearing was unsatisfactory
and inconclusive. Moreover, instead of substantiating respondent x x x Robert Carantes' 'Affidavit,' the
testimonies of petitioners' x x x witnesses contradicted said 'Affidavit' as regards the areas allegedly
sold and the price per square meter. In the Affidavit, respondent x x x Robert Carantes stated that he
sold to petitioners x x x spouses Cresencio and Eleadora Apostol and spouses Rogelio and Lucena
Lagasca portions of the subject property measuring 80 square meters each for P320,000.00 per
portion. But during the ex-parte hearing, petitioner x x x Cresencio Apostol testified that what was
actually sold by respondent x x x Robert Carantes for P320,000.00 was 95 square meters. In petitioners'
x x x motion for reconsideration, it appeared that respondent x x x Robert Carantes sold to petitioners
x x x spouses Cresencio and Eleadora Apostol for P100,000.00 a total of 95 square meters. On the other
hand, the testimony of petitioner x x x Lucena Lagasca did not indicate the number of square meters
sold for the purchase price of P320,000.00, while the motion for reconsideration indicated that a total
of 99 square meters was sold by respondent x x x Robert Carantes to petitioners x x x spouses Rogelio
and Lucena Lagasca for P100,000.00. ATICcS
In sum, the pieces of evidence presented by petitioners x x x do not preponderate in their
favor. The Court finds no cogent reason to reverse the findings of the trial court. x x x
WHEREFORE, the appealed Decision dated January 22, 2010 and Order dated June 18, 2010
are AFFIRMED.
SO ORDERED. 9 (Citations omitted; emphasis and italics in the original)
Petitioners filed their motion for reconsideration, which was denied by the CA via its October 11, 2012
Resolution. Hence, the instant Petition.
Issue

Petitioners submit the lone issue of whether they have proved, by preponderant evidence, their case for
quieting of title.
Petitioners' Arguments

Praying that the assailed CA dispositions be set aside and that they be declared owners of the respective
portions of the subject property which they claim were bought from respondent Robert Carantes, petitioners argue
that they have adequately proved their ownership of the disputed property; that the lower courts disregarded the fact
that they were in possession of the respective portions claimed, which otherwise constituted proof of delivery and,
thus, consummation of the sales in their favor; that while the trial court dismissed their case for failure to present the
originals of the deeds of sale in their favor during trial, the same were nonetheless attached to their motion for
reconsideration — but the trial court just the same refused to consider them, which is erroneous on account of the
principle that substantive law and considerations of justice should outweigh technicalities and rules of procedure; that
respondent Angeline Loy was a buyer in bad faith, knowing as she did that they were in possession of the disputed
property when she and her husband acquired the same; and that between a prior unrecorded sale and a subsequent
mortgage by the seller, the former prevails on account of the better right accorded to the buyer as against the
subsequent mortgagee.
Private Respondents' Arguments

In her Comment, 10 respondent Angeline Loy maintains that the CA committed no error in affirming the trial
court; that petitioners' case was frivolous and dilatory in that it was aimed at delaying or thwarting the execution of the
writ of possession issued in her favor in LRC ADM Case No. 1546-R; and that the petition raised issues of fact which
were ably passed upon by the courts below and were beyond review by this Court.
On the other hand, the surviving heirs of Robert Carantes — who passed away during these proceedings —
failed to comment on the instant petition.

Our Ruling

The Petition lacks merit.

In order that an action for quieting of title may prosper, it is essential that the plaintiff must
have legal or equitable title to, or interest in, the property which is the subject-matter of the action.
Legal title denotes registered ownership, while equitable title means beneficial ownership. In the
absence of such legal or equitable title, or interest, there is no cloud to be prevented or removed.
xxx xxx xxx
An action for quieting of title is essentially a common law remedy grounded on equity. The
competent court is tasked to determine the respective rights of the complainant and other claimants,
not only to place things in their proper place, to make the one who has no rights to said immovable
respect and not disturb the other, but also for the benefit of both, so that he who has the right would
see every cloud of doubt over the property dissipated, and he could afterwards without fear introduce
the improvements he may desire, to use, and even to abuse the property as he deems best. But 'for
an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff
or complainant has a legal or an equitable title to or interest in the real property subject of the action;
and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.' 11
Petitioners' case for quieting of title was dismissed by the trial court for the reason that they failed to present
the originals of the purported deeds of sale executed by respondent Robert Carantes in their favor. In other words,
short of saying that petitioners failed to prove the first element in a suit for quieting of title — the existence of a legal
or equitable title — the trial court simply held that they failed to discharge the burden of proof required in such case.
Petitioners then attempted to obtain a reversal by attaching the supposed originals of the deeds of sale to their motion
for reconsideration, but the trial court did not reconsider as they failed to show that the reason for their failure to
present the original copies of the deeds fell within the exceptions under the best evidence rule, or Section 3, Rule 130
of the Rules of Court. 12 TIADCc
 The trial court cannot be faulted for ruling the way it did. By petitioners' failure to present the original copies
of the purported deeds of sale in their favor, the case for quieting of title did not have a leg to stand on. Petitioners
were unable to show their claimed right or title to the disputed property, which is an essential element in a suit for
quieting of title. Their belated presentation of the supposed originals of the deeds of sale by attaching the same to their
motion for reconsideration does not deserve consideration as well; the documents hardly qualify as evidence.
The CA correctly found that petitioners' failure to append the original copies of the deeds of sale was
inexcusable; that the document that was appended to their motion for reconsideration was different from what was
presented and marked during the ex-parte hearing; and that the testimonies of petitioners contradicted the affidavit of
Roberto Carantes, their supposed seller, with regard to the price and lot area of the subject properties. 13
Moreover, the unnotarized "Deed of Absolute Sale of a Portion of a Registered Parcel of a Residential Land"
between respondent Robert Carantes and petitioner-spouses Jaime and Catherine Basa cannot stand without the
corroboration or affirmation of Robert Carantes. On its own, the unnotarized deed is self-serving. Since Robert
Carantes's affidavit — Exhibit "E" — was rendered inadmissible by his failure to appear and testify thereon, then the
supposed unnotarized deed of sale executed by him in favor of the Basa spouses cannot sufficiently be proved.
To repeat, "for an action to quiet title to prosper, two (2) indispensable requisites must concur, namely: (1) the
plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of the action; and (2)
the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity or legal efficacy." 14 "Legal title denotes registered
ownership, while equitable title means beneficial ownership." 15
Even if petitioners are in possession of the disputed property, this does not necessarily prove their supposed
title. It may be that their possession of the disputed property is by lease or any other agreement or arrangement with
the owner — or simply by mere tolerance. Without adequately proving their title or right to the disputed portions of
the property, their case for quieting of title simply cannot prosper.
WHEREFORE, for the foregoing reasons, the Petition is DENIED. The assailed dispositions of the Court of
Appeals are AFFIRMED.
SO ORDERED.

G.R. No. 227894. July 5, 2017.]

JOSE S. OCAMPO, petitioner, vs. RICARDO 1 S. OCAMPO, SR., respondent.
VELASCO, JR., J p:

The Case
Pending before the Court is a Petition for Review on Certiorari filed under Rule 45 of the Rules of Court, seeking
to reverse and set aside the Decision 2 dated June 28, 2016 and the Resolution 3 dated October 20, 2016 of the Court
of Appeals (CA) in CA-G.R. CV No. 99908. The CA affirmed the Decision 4 dated September 30, 2011 of the Regional Trial
Court (RTC) of Manila, Branch 55, in Civil Case No. 92-61716, which ordered the partition of the subject property and
the annulment and cancellation of petitioner's title over the same. HTcADC
The Facts
Petitioner Jose S. Ocampo and respondent Ricardo S. Ocampo are full-blooded brothers being sons of the late
Basilio Ocampo and Juliana Sunglao. 5
The present case arose from a complaint filed by respondent against petitioner for partition and annulment of
Transfer Certificate of Title (TCT) No. 102822 ("Subject Property"). 6
In the complaint, respondent alleged that he and petitioner are co-owners of the Subject Property, which was
a conjugal property left by their parents, consisting of a 150-square meter lot and the improvements thereon located
at 2227 Romblon Street, G. Tuazon, Sampaloc, Manila. The Subject Property was originally registered in their parents'
names under TCT No. 36869. 7
Respondent claimed that petitioner and his wife, Andrea Mejia Ocampo, conspired in falsifying his signature
on a notarized Extra-Judicial Settlement with Waiver ("ESW") dated September 1970, and effecting the transfer of the
property in the name of petitioner under TCT No. 102822, which was issued on November 24, 1970. Based on a finding
by the National Bureau of Investigation (NBI) that respondent's signature was forged, an Information was filed against
petitioner, the notary public, and two others. Respondent requested for partition of the property, but petitioner refused
to do so and secretly mortgaged the property for P200,000.00. 8
Petitioner and his wife moved for the dismissal of the complaint, but it was denied by the trial court. Thereafter,
they filed their Answer with Motion for Preliminary Hearing on the Affirmative Defense of prescription. 9
 Based on their Answer, petitioner and his wife claimed that their parents executed a Deed of Donation Propter
Nuptias of the Subject Property in their favor as they were getting married, with a promise on their part to demolish
the old house and replace it with a new two-storey house, which they did. To build the new house, they obtained a
P10,000.00 loan from the Development Bank of the Philippines (DBP), with petitioner and his parents as borrowers. 10
Petitioner further alleged that his parents gave respondent several properties outside Metro Manila, which
respondent eventually lost. Petitioner and his wife then allowed respondent to stay at the second floor of the house.
Petitioner was able to pay the DBP loan through a loan secured from the Social Security System (SSS) with the consent
of his father. He claimed that on September 30, 1970, their father executed the ESW and secured respondent's
signature. By virtue of the ESW, petitioner was able to have TCT No. 36869 cancelled and have TCT No. 102822 issued
in favor of himself and his wife. 11
Finally, petitioner argued that TCT No. 102822 became indefeasible one year after its issuance on November
24, 1971, and that the action to annul TCT No. 102822 had prescribed since it was filed only on June 29, 1992, or 21
years and 7 months from the issuance of the title. He further claimed that the action to annul the ESW is a collateral
attack on the title, and the rule on non-prescription against a co-owner does not apply since he and his wife had become
exclusive owners of the Subject Property. 12
In an Order dated January 21, 1994, the trial court dismissed the complaint on the ground of prescription.
Respondent filed a Motion for Reconsideration and other supplemental pleadings, but they were denied by the trial
court. Respondent thus elevated the matter to the CA, which declared the RTC's January 21, 1994 Order null and void.
Petitioner filed a motion for extension of time to file a petition for review on certiorari before this Court, but the same
was denied in a minute resolution. 13
Thereafter, respondent filed a motion for writ of execution before the RTC. However, the motion was denied
on the ground that there is nothing to execute since the setting aside of the RTC Order dated January 21, 1994 calls for
the case to be tried on the merits. Thus, the RTC set the case for pre-trial. 14
Meanwhile, petitioner filed a Motion for Leave to File Amended Answer which was granted by the RTC. In the
Amended Answer, petitioner alleged that after their mother passed away in 1965, the P3,000.00 balance of the DBP
loan was paid through an SSS loan. Petitioner alleged that in consideration of the loan, respondent and their father
waived their rights to the property under the ESW. Petitioner further claimed that on November 19, 1970, their father
executed a Deed of Absolute Sale, where he sold his interest in the Subject Property for P9,000.00 in favor of
petitioner. 15
Pre-trial ensued and the case was twice referred to mediation, but the parties refused to mediate. Thus, trial
proceeded. 16
Respondent presented three witnesses, as follows: 1) himself, 2) his wife, Francisca Elera Ocampo, and 3) Rhoda
B. Flores, the Officer-in-Charge of the Questioned Documents Division of the NBI. 17 On the other hand, petitioner
presented himself as the only witness for the defense. 18 aScITE
Ruling of the Regional Trial Court
In a Decision dated September 30, 2011, the RTC ruled in favor of respondent, to wit:
WHEREFORE, premises considered, judgment is hereby rendered IN FAVOR OF THE PLAINTIFF,
RICARDO S. OCAMPO and AGAINST the defendant JOSE S. OCAMPO, as follows:
1. ORDERING the property located at 2227 Romblon St. G. Tuazon, Sampaloc, Manila, including
the improvements found therein to be partitioned between the plaintiff and the
defendant, each having a share of one-half in the property;
2. ORDERING that TCT No. 102822 of the Registry of Deeds of the City of Manila be ANNULLED;
3. ORDERING the Registry of Deeds of the City of Manila to CANCEL Transfer Certificate of Title
No. 102822, issued in the name of defendant, the same being null and void;
4. ORDERING the defendant to pay the costs of the suit.
SO ORDERED. 19
Petitioner's motion for reconsideration was denied in an Order dated May 21, 2012. Thus, he filed a Notice of
Appeal, which was granted in the Order dated July 10, 2012. 20
Ruling of the Court of Appeals
In the assailed Decision dated June 20, 2016, the CA affirmed the findings of the RTC, the dispositive portion of
which reads:
 WHEREFORE, the appeal is DENIED. The September 30, 2011 Decision of the Regional Trial
Court, Branch 55, Manila in Civil Case No. 92-61716 is AFFIRMED.
SO ORDERED. 21
In dismissing the petition, the CA found that respondent was able to prove that his signature on the ESW is not
genuine, based on his and his wife's testimony, as well as the NBI report. According to the CA, this finding of forgery
was also supported by petitioner's own admission on cross-examination that he was not present when the ESW was
executed. Based on the evidence presented, the preponderance of evidence weighed in favor of respondent and against
petitioner.
As to petitioner's argument that the action is a collateral and not a direct attack on the title, the CA found it
unmeritorious and ruled that the action precisely assails the validity of petitioner's title on the ground that it is based
on a forged document, and it is also an action for reconveyance. Thus, the CA ruled that the action to annul the ESW is
imprescriptible since it is a void or inexistent contract. With this, the CA affirmed the RTC Decision.
Petitioner filed a Motion for Reconsideration before the CA, but the same was denied in the assailed
Resolution 22 dated October 20, 2016.
Hence, this petition.
The Petition
Petitioner argues that the CA committed a reversible error in dismissing the appeal and in affirming the RTC
Decision. Petitioner claims that the ESW, being a notarized document, enjoys a prima facie presumption of authenticity
and due execution. He claims that there was no clear and convincing evidence to overcome this presumption.
Even assuming that the ESW is void or inexistent, petitioner argues that the action filed by respondent is barred
by the doctrine of estoppel by laches. The ESW was executed and notarized on September 30, 1970. However, it was
only on July 1, 1992 that respondent filed the present case for partition and annulment of title, claiming that the ESW
was forged. Thus, petitioner argues that there was an unreasonable delay on respondent's part to assert his rights and
pursue his claims against petitioner.
In compliance with the Court's Resolution dated February 1, 2017, respondent filed his Comment dated April
20, 2017. Respondent prayed for the dismissal of the petition, arguing that the issues raised therein have already been
exhaustively and judiciously passed upon by the CA and the trial court. He argues that the CA was correct in declaring
that the action was not barred by laches since the ESW is a void or inexistent contract which makes an action declaring
it imprescriptible.
The Issue
Petitioner raises the following grounds in support of his petition: HEITAD
1. The CA erred in finding that the preponderance of evidence lies in favour of the view that the signature
of the respondent is not genuine.
2. The CA erred in sustaining that the ESW is a void or inexistent contract.
3. The CA erred in ruling that the action to declare the nullity of the ESW is not barred by laches.
Essentially, the principal issue in this case is whether or not the CA committed reversible error in upholding the
RTC's findings.
The Court's Ruling
The petition is without merit.
The petition raises questions of fact

It is well settled that questions of fact are not reviewable in petitions for review on certiorari under Rule 45 of
the Rules of Court. Only questions of law distinctly set forth shall be raised in a petition and resolved. Moreover, the
factual findings of the lower courts, if supported by substantial evidence, are accorded great respect and even finality
by the courts. Except for a few recognized exceptions, this Court will not disturb the factual findings of the trial
court. 23 This Court sees no reason to overturn the factual findings of the trial court, as affirmed by the CA, as the
records show that preponderant evidence established the falsity of the ESW and the fraudulent registration of the
subject property in petitioner's name.
Prescription has not set in
 We find it proper to delve into the more important issue to be resolved, that is, whether the action for
annulment of title and partition has already prescribed. It must be pointed out that the issue of prescription had already
been raised by petitioner in his Motion to Dismiss 24 dated August 5, 1992. This motion was granted by the trial court
in its Order 25 dated January 21, 1994. However, respondent appealed this Order with the Court of Appeals in CA-G.R.
CV No. 45121. The CA then rendered a Decision 26 dated March 30, 2001, nullifying the order of dismissal of the trial
court. The CA essentially ruled that the case for partition and annulment of title did not prescribe. The CA Decision was
eventually affirmed by the Second Division of this Court in G.R. No. 149287 by virtue of a minute Resolution 27 dated
September 5, 2001, which became final and executory and was entered into the Book of Entries of Judgments on
October 16, 2001.
Accordingly, the resolution in G.R. No. 149287 should have written finis to the issue of prescription.
Nonetheless, to finally put to rest this bothersome issue, it behooves this Court to further elucidate why the
respondent's action and right of partition is not barred by prescription. The CA explained that prescription is
inapplicable. While the appellate court's observation is proper, it is inadequate as it fails to sufficiently explain why the
rule on the imprescriptibility and indefeasibility of Torrens titles do not apply.
In the recent case of Pontigon v. Sanchez, We explained thus:
Under the Torrens System as enshrined in P.D. No. 1529, the decree of registration and the
certificate of title issued become incontrovertible upon the expiration of one (1) year from the date of
entry of the decree of registration, without prejudice to an action for damages against the applicant
or any person responsible for the fraud. However, actions for reconveyance based on implied trusts
may be allowed beyond the one-year period. As elucidated in Walstrom v. Mapa, Jr.:
[N]otwithstanding the irrevocability of the Torrens title already issued in the
name of another person, he can still be compelled under the law to reconvey the
subject property to the rightful owner. The property registered is deemed to be held
in trust for the real owner by the person in whose name it is registered. After all, the
Torrens system was not designed to shield and protect one who had committed fraud
or misrepresentation and thus holds title in bad faith. In an action for reconveyance,
the decree of registration is respected as incontrovertible. What is sought instead is
the transfer of the property, in this case the title thereof, which has been wrongfully
or erroneously registered in another person's name, to its rightful and legal owner, or
to one with a better right. This is what reconveyance is all about. Yet, the right to seek
reconveyance based on an implied or constructive trust is not absolute nor is it
imprescriptible. An action for reconveyance based on an implied or constructive trust
must perforce prescribe in ten years from the issuance of the Torrens title over the
property. (Emphasis supplied) ATICcS
Thus, an action for reconveyance of a parcel of land based on implied or constructive trust
prescribes in ten (10) years, the point of reference being the date of registration of the deed or the
date of the issuance of the certificate of title over the property.
By way of additional exception, the Court, in a catena of cases, has permitted the filing of an
action for reconveyance despite the lapse of more than ten (10) years from the issuance of title. The
common denominator of these cases is that the plaintiffs therein were in actual possession of the
disputed land, converting the action from reconveyance of property into one for quieting of
title. Imprescriptibility is accorded to cases for quieting of title since the plaintiff has the right to wait
until his possession is disturbed or his title is questioned before initiating an action to vindicate his
right. 28 (Emphasis supplied; citations omitted)
Given the falsity of the ESW, it becomes apparent that petitioner obtained the registration through fraud. This
wrongful registration gives occasion to the creation of an implied or constructive trust under Article 1456 of the New
Civil Code. 29 An action for reconveyance based on an implied trust generally prescribes in ten years. However, if the
plaintiff remains in possession of the property, the prescriptive period to recover title of possession does not run against
him. In such case, his action is deemed in the nature of a quieting of title, an action that is imprescriptible. 30
In the case before us, the certificate of title over the subject property was issued on November 24, 1970. Yet,
the complaint for partition and annulment of the title was only filed on July 1, 1992, more than twenty (20) years since
the assailed title was issued. Respondent's complaint before the RTC would have been barred by prescription. However,
based on respondent's submission before the trial court, both petitioner and respondent were residing at the subject
property at the time the complaint was filed. The complaint 31 states:
 1) That Plaintiff is of legal age, married, Filipino and presently residing at 2227 Romblon St., G. Tuazon,
Sampaloc, Manila; while defendant is likewise of legal age, married, Filipino and residing at 2227
Romblon St., G. Tuazon, Sampaloc, Manila, where he may be served with summons and other
processes of this Honorable Court; 32
This was unqualifiedly admitted by petitioner in his Amended Answer and no denial was interposed
therefrom. 33 Petitioner's failure to refute respondent's possession of the subject property may be deemed as a judicial
admission. A party may make judicial admissions in (a) the pleadings, (b) during the trial, either by verbal or written
manifestations or stipulations, or (c) in other stages of the judicial proceeding. 34 A judicial admission conclusively binds
the party making it and he cannot thereafter take a position contradictory to or inconsistent with his pleadings. Acts or
facts admitted do not require proof and cannot be contradicted, unless it is shown that the admission was made through
palpable mistake or that no such admission was made. 35
Considering that respondent was in actual possession of the disputed land at the time of the filing of the
complaint, the present case may be treated as an action for quieting of title.
Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to
real property. 36 In Heirs of Delfin and Maria Tappa v. Heirs of Jose Bacud, 37 this Court reiterated the requisites for an
action for quieting of title:
The action filed by Spouses Tappa was one for quieting of title and recovery of possession.
In Baricuatro, Jr. v. Court of Appeals, an action for quieting of title is essentially a common law remedy
grounded on equity, to wit:
x x x Originating in equity jurisprudence, its purpose is to secure ". . . an
adjudication that a claim of title to or an interest in property, adverse to that of the
complainant, is invalid, so that the complainant and those claiming under him may be
forever afterward free from any danger of hostile claim." In an action for quieting of
title, the competent court is tasked to determine the respective rights of the
complainant and other claimants, ". . . not only to place things in their proper place,
to make the one who has no rights to said immovable respect and not disturb the
other, but also for the benefit of both, so that he who has the right would see
every cloud of doubt over the property dissipated, and he could afterwards without
fear introduce the improvements he may desire, to use, and even to abuse the
property as he deems best. x x x." (Emphasis in the original.) TIADCc
In our jurisdiction, the remedy is governed by Articles 476 and 477 of the Civil Code, which
state:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason
of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but
is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said
title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property
or any interest therein.
Art. 477. The plaintiff must have legal or equitable title to, or interest in the real property
which is the subject-matter of the action. He need not be in possession of said property.
From the foregoing provisions, we reiterate the rule that for an action to quiet title to prosper,
two indispensable requisites must concur, namely: (1) the plaintiff or complainant has a legal or an
equitable title to or interest in the real property subject of the action; and (2) the deed, claim,
encumbrance or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity or legal efficacy.
xxx xxx xxx
A cloud on a title exists when (1) there is an instrument (deed, or contract) or record or claim
or encumbrance or proceeding; (2) which is apparently valid or effective; (3) but is, in truth and in fact,
invalid, ineffective, voidable, or unenforceable or extinguished (or terminated) or barred by extinctive
prescription; and (4) and may be prejudicial to the title.
Since it was already established that respondent's signature on the ESW, which was the basis of petitioner's
title over the property, was forged, then it is only necessary for the cloud on respondent's title to be removed. Thus,
the trial court's order to cancel TCT No. 102822 and uphold the parties' co-ownership was proper.
 The present action is not barred by
laches

We also find no merit in petitioner's argument that the case is barred by laches.
Jurisprudence has defined laches as the failure or neglect, for an unreasonable and unexplained length of time,
to do that which — by the exercise of due diligence — could or should have been done earlier. It is the negligence or
omission to assert a right within a reasonable period, warranting the presumption that the party entitled to assert it
has either abandoned or declined to assert it. 38
Based on the facts presented before us, it appears that respondent did not sleep on his rights, as claimed by
petitioner. It is undeniable that respondent had filed several cases to assert his rights over the property. Aside from the
present complaint, respondent also filed, on separate occasions, three criminal complaints for: 1) falsification of public
document, 2) estafa through falsification of public documents, and 3) forgery, all against herein petitioner. To Our mind,
the filing of these cases at different times negates the claim of laches. Time and again, this Court has ruled that courts,
under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches
when to do so, manifest wrong or injustice would result. 39
IN VIEW OF THE FOREGOING, the petition is DENIED. The Decision dated September 30, 2011 of the Regional
Trial Court, Branch 55, Manila in Civil Case No. 92-61716, as affirmed by the Court of Appeals in its Decision dated June
28, 2016 in CA-G.R. CV No. 99908, is hereby AFFIRMED.
The Regional Trial Court shall proceed with the partition of the subject lot with dispatch.
SO ORDERED.

G.R. No. 234533. June 27, 2018.]

SPOUSES JULIETA B. CARLOS and FERNANDO P. CARLOS, petitioners, vs. JUAN CRUZ TOLENTINO, respondent.
VELASCO, JR., J p:

Nature of the Case

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the April 5,
2017 Decision 1 and the September 27, 2017 Resolution 2 of the Court of Appeals (CA) in CA-G.R. CV No. 106430. The
challenged rulings reversed and set aside the October 16, 2015 Decision 3 and the December 9, 2015 Order 4 of the
Regional Trial Court (RTC) of Quezon City, Branch 87 which dismissed respondent's complaint for annulment of title
against the petitioners.

The Facts

The instant case arose from a complaint for annulment of title with damages filed by respondent Juan Cruz
Tolentino (Juan) against his wife, Mercedes Tolentino (Mercedes), his grandson, Kristoff M. Tolentino (Kristoff), herein
petitioners Spouses Julieta B. Carlos (Julieta) and Fernando P. Carlos (Spouses Carlos), and the Register of Deeds of
Quezon City.
The subject matter of the action is a parcel of land with an area of 1,000 square meters and all the
improvements thereon located in Novaliches, 5 Quezon City, covered by Transfer Certificate of Title (TCT) No. RT-90746
(116229) issued on March 17, 1967 and registered in the name of Juan C. Tolentino, married to Mercedes Tolentino
(the subject property). 6
Without Juan's knowledge and consent, Mercedes and Kristoff, who were then residing in the subject property,
allegedly forged a Deed of Donation 7 dated February 15, 2011, thereby making it appear that Juan and Mercedes
donated the subject property to Kristoff. Thus, by virtue of the alleged forged Deed of Donation, Kristoff caused the
cancellation of TCT No. RT-90764 (116229), and in lieu thereof, TCT No. 004-2011003320 8 was issued in his name on
March 9, 2011. 9
In April 2011, Kristoff offered the sale of the subject property to Julieta's brother, Felix Bacal (Felix), who is also
the administrator of the lot owned by Julieta which is adjacent to the subject property. When Felix informed Julieta of
the availability of the subject property, Spouses Carlos then asked him to negotiate for its purchase with Kristoff. Kristoff
and Felix then arranged for the ocular inspection of the subject property. Thereafter, Kristoff surrendered to Felix copies
of the title and tax declaration covering the said property. 10
 After a series of negotiations, Kristoff and Julieta executed a Memorandum of Agreement 11 (MOA) dated April
12, 2011 stating that Kristoff is selling the subject property to Julieta in the amount of Two Million Three Hundred
Thousand Pesos (P2,300,000.00), payable in two (2) installments. On May 28, 2011, Julieta made the first payment in
the amount of Two Million Pesos (P2,000,000.00) 12 while the second payment in the amount of Three Hundred
Thousand Pesos (P300,000.00) was made on June 30, 2011. 13 On the same day, a Deed of Absolute Sale 14 was
executed between Kristoff and Julieta.
Upon learning of the foregoing events, Juan executed an Affidavit of Adverse Claim which was annotated on
TCT No. 004-2011003320 on July 15, 2011, to wit:
NOTICE OF ADVERSE CLAIM: EXECUTED UNDER OATH BY JUAN C. TOLENTINO, CLAIMING FOR THE
RIGHTS, INTEREST AND PARTICIPATION OVER THE PROPERTY, STATING AMONG OTHERS THAT HE
DISCOVERED ON JULY 14, 2011 THAT SAID PARCEL OF LAND HAS BEEN DONATED TO KRISTOFF M.
TOLENTINO BY VIRTUE OF A DEED OF DONATION PU[R]PORTEDLY EXECUTED BY JUAN C. TOLENTINO
& MERCEDES SERRANO ON FEB. 15, 2011. THAT AS A RESULT OF THE FORGED DEED OF DONATION,
HIS TITLE WAS CANCELLED. THAT HE DECLARE THAT HE HAVE NOT SIGNED ANY DEED OF DONATION
IN FAVOR OF SAID KRISTOFF M. TOLENTINO. NEITHER DID HE SELL, TRANSFER NOR WAIVE HIS RIGHTS
OF OWNERSHIP OVER THE SAID PROPERTY. OTHER CONDITIONS SET FORTH IN DOC. NO. 253, PAGE
NO. 52, BOOK NO. V, SERIES OF 2011 OF NOTARY PUBLIC OF QC, MANNY GRAGASIN DATE
INSTRUMENT — JUNE 15, 2011 15
Juan also filed a criminal complaint for Falsification of Public Document before the Office of the City Prosecutor
of Quezon City against Kristoff. 16 A Resolution for the filing of Information for Falsification of Public Document against
Kristoff was then issued on January 10, 2012. Accordingly, an Information dated February 15, 2012 was filed against
him. 17
Meanwhile, Kristoff and Julieta executed another Deed of Absolute Sale 18 dated September 12, 2011 over the
subject property and, by virtue thereof, the Register of Deeds of Quezon City cancelled TCT No. 004-2011-003320 and
issued TCT No. 004-2011013502 19 on December 5, 2011 in favor of Spouses Carlos. The affidavit of adverse claim
executed by Juan was duly carried over to the title of Spouses Carlos.
On February 23, 2012, Juan filed a complaint for annulment of title with damages against Mercedes, Kristoff,
Spouses Carlos, and the Register of Deeds of Quezon City before the RTC of Quezon City. The case was raffled to Branch
87 and docketed as Civil Case No. Q-12-70832.

RTC Ruling

In its October 16, 2015 Decision, the RTC found that Juan's signature in the Deed of Donation dated February
15, 2011 was a forgery. 20 Despite such finding, however, it dismissed Juan's complaint.
The RTC found that at the time Spouses Carlos fully paid the agreed price in the MOA on June 30, 2011, which
culminated in the execution of the Deed of Absolute Sale on even date, Kristoff was the registered owner of the subject
property covered by TCT No. 004-2011003320. Further, when the MOA and the Deed of Absolute Sale dated June 30,
2011 were executed, nothing was annotated on the said title to indicate the adverse claim of Juan or any other person.
It was only on July 15, 2011 when Juan's adverse claim was annotated on Kristoff's title. 21
The fact that a second Deed of Absolute Sale dated September 12, 2011 was executed is immaterial since the
actual sale of the subject property took place on June 30, 2011 when Spouses Carlos fully paid the purchase price. Thus,
relying on the face of Kristoff's title without any knowledge of irregularity in the issuance thereof and having paid a fair
and full price of the subject property before they could be charged with knowledge of Juan's adverse claim, the RTC
upheld Spouses Carlos' right over the subject property. The dispositive portion of the October 16, 2015 Decision states:
WHEREFORE, viewed in the light of the foregoing, the instant complaint for Annulment of Title
and Damages against the defendant spouses Fernando and Julieta Carlos is hereby DISMISSED for
failure of the plaintiff to prove his cause of action. This is without prejudice, however to any
appropriate remedy the plaintiff may take against Kristoff Tolentino and Mercedes Tolentino.
The defendant spouses' counterclaim is DISMISSED for lack of merit.
SO ORDERED. 22
Juan moved for reconsideration of the said decision but was denied by the RTC in its December 9, 2015 Order.
Thus, he interposed an appeal before the CA.
CA Ruling

On appeal, the CA found that Spouses Carlos were negligent in not taking the necessary steps to determine the
status of the subject property prior to their purchase thereof. It stressed that Julieta failed to examine Kristoff's title
and other documents before the sale as she merely relied on her brother, Felix. 23 Accordingly, the CA ruled that Juan
has a better right over the subject property. The fallo of the April 5, 2017 Decision reads:
WHEREFORE, the appeal is GRANTED. The appealed Decision of the RTC of Quezon City dated
October 16, 2015 is hereby REVERSED and SET ASIDE. Accordingly, plaintiff-appellant Juan Cruz
Tolentino is recognized to have a better right over the subject property. The Register of Deeds of
Quezon City is ORDERED to reinstate TCT No. RT-90746 (116229) in the name of Juan Cruz Tolentino
and to cancel TCT No. 004-2011013502 in the names of Spouses Julieta and Fernando Carlos, and the
latter to surrender possession of the subject property to Juan Cruz Tolentino.
SO ORDERED. 24
Spouses Carlos then filed a motion for reconsideration but the same was denied by the CA in its September 27,
2017 Resolution.
Hence, the instant petition.

The Issue

Spouses Carlos anchor their plea for the reversal of the assailed Decision on the following grounds: 25
The Court of Appeals acted injudiciously, and with grievous abuse of discretion in the
appreciation of facts and in disregard of jurisprudence, when it granted respondent's appeal, and
thereby arbitrarily and despotically ratiocinated that —
I. Petitioners are not buyers in good faith of the litigated real property, but who are otherwise
devoid of notice let alone knowledge of any flaw or infirmity in the title of the person selling the
property at the time of purchase.
II. Petitioners are not purchasers in good faith, on the basis of the Memorandum of Agreement
dated April 12, 2011 and the Deed of Absolute Sale dated June 30, 2011.
III. Respondent Juan Cruz Tolentino was the previous registered owner of the land in dispute,
thereby acting on oblivion to the fact that the real property is essentially conjugal in nature.
IV. In failing to rule and rationalize that at least one-half of the subject real property should
belong to petitioners.
V. The litigated property must be awarded and returned in favour of respondent Juan Cruz
Tolentino in its entirety.
At bottom, the crux of the controversy is who, between Juan and Spouses Carlos, has the better to right to
claim ownership over the subject property.

The Court's Ruling

The present controversy necessitates an inquiry into the facts. While, as a general rule, factual issues are not
within the province of this Court, nonetheless, in light of the conflicting factual findings of the two courts below, an
examination of the facts obtaining in this case is in order. 26
Juan and Mercedes appear to have been married before the effectivity of the Family Code on August 3, 1988.
There being no indication that they have adopted a different property regime, the presumption is that their property
relations is governed by the regime of conjugal partnership of gains. 27 Article 119 of the Civil Code thus provides:
Article 119. The future spouses may in the marriage settlements agree upon absolute or
relative community of property, or upon complete separation of property, or upon any other regime.
In the absence of marriage settlements, or when the same are void, the system of relative community
or conjugal partnership of gains as established in this Code, shall govern the property relations
between husband and wife.
 Likewise, the Family Code contains terms governing conjugal partnership of gains that supersede the terms of
the conjugal partnership of gains under the Civil Code. Article 105 of the Family Code states:
Article 105. In case the future spouses agree in the marriage settlements that the regime of
conjugal partnership of gains shall govern their property relations during marriage, the provisions in
this Chapter shall be of supplementary application.
The provisions of this Chapter shall also apply to conjugal partnerships of gains already
established between spouses before the effectivity of this Code, without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws, as provided in Article 256.
Since the subject property was acquired on March 17, 1967 28 during the marriage of Juan and Mercedes, it
formed part of their conjugal partnership. 29 It follows then that Juan and Mercedes are the absolute owners of their
undivided one-half interest, respectively, over the subject property.
Meanwhile, as in any other property relations between husband and wife, the conjugal partnership is
terminated upon the death of either of the spouses. 30 In respondent Juan's Comment filed before the Court, the
Verification which he executed on February 9, 2018 states that he is already a widower. Hence, the Court takes due
notice of the fact of Mercedes' death which inevitably results in the dissolution of the conjugal partnership.
In retrospect, as absolute owners of the subject property then covered by TCT No. RT-90746 (116229), Juan
and Mercedes may validly exercise rights of ownership by executing deeds which transfer title thereto such as, in this
case, the Deed of Donation dated February 15, 2011 in favor of their grandson, Kristoff.
With regard to Juan's consent to the afore-stated donation, the RTC, however, found that such was lacking
since his signature therein was forged. Notably, the CA did not overturn such finding, and in fact, no longer touched
upon the issue of forgery. On the other hand, it must be pointed out that the signature of Mercedes in the Deed of
Donation was never contested and is, therefore, deemed admitted.
In Arrogante v. Deliarte, 31 We ruled that a deed of sale of the subject lot therein executed by the Deliarte
siblings in favor of their brother, respondent Beethoven Deliarte (Beethoven), was void for being a conveyance of future
inheritance. Nonetheless, the provisions in the written agreement and the Deliarte siblings' signature thereon are
equivalent to an express waiver of all their rights and interests. Thus, the Court upheld the quieting of title in favor of
respondent Beethoven after finding that the deed of sale, albeit void, evidenced the consent and acquiescence of each
Deliarte sibling to said transaction.
In the present case, while it has been settled that the congruence of the wills of the spouses is essential for the
valid disposition of conjugal property, 32 it cannot be ignored that Mercedes' consent to the disposition of her one-half
interest in the subject property remained undisputed. It is apparent that Mercedes, during her lifetime, relinquished all
her rights thereon in favor of her grandson, Kristoff.
Furthermore, Mercedes' knowledge of and acquiescence to the subsequent sale of the subject property to
Spouses Carlos is evidenced by her signature appearing in the MOA 33 dated April 12, 2011 and the Deed of Absolute
Sale 34 dated September 12, 2011. We are also mindful of the fact that Spouses Carlos had already paid a valuable
consideration in the amount of Two Million Three Hundred Thousand Pesos (P2,300,000.00) for the subject property
before Juan's adverse claim was annotated on Kristoff's title. The said purchase and acquisition for valuable
consideration deserves a certain degree of legal protection.
Given the foregoing, the Court is disinclined to rule that the Deed of Donation is wholly void ab initio and that
the Spouses Carlos should be totally stripped of their right over the subject property. In consonance with justice and
equity, We deem it proper to uphold the validity of the Deed of Donation dated February 15, 2011 but only to the extent
of Mercedes' one-half share in the subject property. And rightly so, because why invalidate Mercedes' disposition of
her one-half portion of the conjugal property that will eventually be her share after the termination of the conjugal
partnership? It will practically be absurd, especially in the instant case, since the conjugal partnership had already been
terminated upon Mercedes' death.
Accordingly, the right of Kristoff, as donee, is limited only to the one-half undivided portion that Mercedes
owned. The Deed of Donation insofar as it covered the remaining one-half undivided portion of the subject property is
null and void, Juan not having consented to the donation of his undivided half.
Upon the foregoing perspective, Spouses Carlos' right, as vendees in the subsequent sale of the subject
property, is confined only to the one-half undivided portion thereof. The other undivided half still belongs to Juan. As
owners pro indiviso of a portion of the lot in question, either Spouses Carlos or Juan may ask for the partition of the lot
and their property rights shall be limited to the portion which may be allotted to them in the division upon the
termination of the co-ownership. 35 This disposition is in line with the well-established principle that the binding force
 of a contract must be recognized as far as it is legally possible to do so — quando res non valet ut ago, valeat quantum
valere potest. 36
Lastly, as a matter of fairness and in line with the principle that no person should unjustly enrich himself at the
expense of another, 37 Kristoff should be liable to reimburse Spouses Carlos of the amount corresponding to one-half
of the purchase price of the subject property.
WHEREFORE, in view of the foregoing, the petition is PARTIALLY GRANTED. The donation and subsequent sale
of the subject property is declared NULL and VOID with respect to the undivided 1/2 portion owned by Juan Cruz
Tolentino, but VALID with respect to the other undivided 1/2 portion belonging to Mercedes Tolentino. Accordingly,
petitioners Spouses Carlos and respondent Juan Cruz Tolentino are hereby declared as co-owners of the subject
property. The Register of Deeds of Quezon City is ordered to cancel TCT No. 004-2011013502 and to issue a new transfer
certificate of title in the names of Julieta B. Carlos, married to Fernando P. Carlos, and Juan Cruz Tolentino on a 50-50
undivided interest in the lot.
We order Kristoff M. Tolentino to pay Spouses Carlos the amount of One Million One Hundred Fifty Thousand
Pesos (P1,150,000.00) corresponding to one-half of the amount paid by Spouses Carlos for the subject property, with
legal interest at the rate of 6% computed from the finality of this Decision.
SO ORDERED.

G.R. No. 224549. August 7, 2017.]

SPOUSES JANET URI FAHRENBACH and DIRK FAHRENBACH, petitioners, vs. JOSEFINA R.
PANGILINAN, respondent.

PERLAS-BERNABE, J p:

Assailed in this petition for review on certiorari 1 are the Decision 2 dated September 21, 2015 and the
Resolution 3 dated April 14, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 133552, which affirmed with
modification the Decision 4 dated August 30, 2013 of the Regional Trial Court of Palawan, Branch 95 (RTC) in Civil Case
No. 4924, ordering petitioners Spouses Janet Uri Fahrenbach and Dirk Fahrenbach (petitioners) to vacate the parcel of
land claimed by respondent Josefina R. Pangilinan (respondent), but remanding the case to the RTC for the
determination of the proper amount of monthly rentals petitioners should pay respondent. HTcADC
The Facts
On September 6, 1995, respondent acquired a parcel of unregistered land (subject lot) from her aunt, Felomina
Abid (Abid), through a Waiver of Rights. 5 The said lot measured 5.78 hectares and was covered by Tax Declaration No.
0056. 6 However, unknown to respondent, Abid also executed a Deed of Sale 7 on July 15, 1995 in favor of Columbino
Alvarez (Alvarez) covering the same piece of land. 8 The Deed of Sale to Alvarez contained the following description:
An area of 5.7800 hectares, unirrigated riceland, more or less, under Tax Declaration No. 0056;
Property Index No. 066-02-020-07-002; Bounded on the North: Mindoro Strait; East: Ass. Lot No. 005,
Sec. 06; South AL No. 003; West: AL No. 011; with an assessed value of "P8,290.00." 9
On August 2, 2005, after purportedly learning that the description of the property he bought under the Deed
of Sale was erroneous, Alvarez executed a handwritten letter stating that the subject lot, with an area of 5.78 hectares
and covered by Tax Declaration No. 0056, belonged to respondent. 10 Alvarez also executed a Sinumpaang Salaysay on
July 14, 2006, stating that the said land is not the property he had intended to buy from Abid but the one with an area
of eight (8) hectares under Tax Declaration No. 019-0233-A. 11
In September 2005, respondent learned that petitioners were occupying the 5.78-hectare subject lot she
acquired from Abid and built structures thereon without respondent's consent. 12 Despite demands, petitioners refused
to vacate the premises. 13 Thus, after the barangay conciliation proceedings failed, respondent filed a complaint 14 for
forcible entry against petitioners before the Municipal Circuit Trial Court of Coron-Busuanga, Palawan (MCTC), which
was docketed as Civil Case No. 601. 15 Among others, respondent prayed that petitioners be ordered to vacate the
premises, pay a monthly rent of P10,000.00 from September 2005 up to the termination of the case, and pay
P125,000.00 as attorney's fees and litigation expenses. 16
In their Answer, 17 petitioners maintained that the land they were occupying is different from respondent's
land which is covered by Tax Declaration No. 0056. According to petitioners, the area they were occupying is the eight
(8)-hectare property covered by Tax Declaration No. 0052, which they allegedly acquired from Alvarez in 2005 by virtue
of a Deed of Sale. Petitioners further averred that Alvarez had been in possession of the same parcel of land since 1974
after Abid allowed him to cultivate it. On the other hand, respondent neither physically possessed the said property nor
introduced improvements thereon. 18
The MCTC Ruling
In a Decision 19 dated November 6, 2012, the MCTC dismissed respondent's complaint and upheld petitioners'
possession. The MCTC observed that while the parties claim to have bought different properties, i.e., the 5.78-hectare
property for the respondent and the eight (8)-hectare property for the petitioners, it was found and agreed that they
were in fact claiming one and the same lot. 20 In resolving the issue of prior possession, the MCTC took judicial notice
of the written report 21 issued by the City Environment and Natural Resources Office (CENRO) of Coron, Palawan, as
well as the report 22 of the Office of the Municipal Assessor which conducted the ocular inspection and public hearing
relative to respondent's and Alvarez's conflicting claims back in 2005 and 2006. 23 The MCTC noted that their findings
clearly state that petitioners' predecessor-in-interest, Alvarez, was the actual occupant of the area being claimed by
respondent. 24
Anent the casual visits to the property respondent allegedly made, the MCTC ruled that the same was not
sufficient to constitute actual possession contemplated by law in ejectment cases. The MCTC observed that since
respondent's alleged acquisition of the property in 1995, she has not hired a caretaker nor fenced the same as an overt
manifestation of her claim of ownership. Thus, respondent's action for forcible entry cannot prevail over petitioners
whose possession can be traced to their predecessor-in-interest. 25
Aggrieved, respondent appealed to the RTC. 26
The RTC Ruling
In a Decision 27 dated August 30, 2013, the RTC reversed the ruling of the MCTC and ordered petitioners to
vacate the subject lot. 28 The RTC pointed out that before one can be adjudged to have a better right of possession
over another, it is necessary to first ascertain the actual premises of the property subject of actual and prior
possession. 29 In this case, the RTC observed that the identity of the property petitioners were actually occupying was
not clear. 30
In this regard, the RTC observed that based on the Deed of Sale, it would appear that petitioners purchased an
eight (8)-hectare lot bounded by the seashore on the east; however, the relevant tax declaration, i.e., Tax Declaration
No. 0052, did not include "seashore" as a boundary. 31 This, according to the RTC, was the cause of the confusion anent
the identity of the property in dispute, considering that Alvarez held another eight (8)-hectare property bounded by the
seashore and covered by Tax Declaration No. 019-0233-A: 32 aScITE
Tax Declaration No. 0052 Tax Declaration No. 019-0233-A
North: ASS LOT #005 North: Seashore
South: ASS LOT #007 South: AL# 017
East: ASS LOT #007 East: AL# 003, 016

West: ASS LOT #011, Sec. 07 West: AL# 001 33

Thus, since the word "seashore" was somehow inserted in the Deed of Sale, it would appear that what the
property petitioners bought and were occupying was the lot that was previously occupied by Alvarez and covered by
Tax Declaration No. 019-0233-A. However, in truth, the RTC found out that petitioners were actually occupying
respondent's property covered by Tax Declaration No. 0056. 34 Notably, the lot covered by Tax Declaration No.
0056 35 was also bounded by the seashore as the Mindoro Strait lies on its northern side: 36
Tax Declaration No. 0056

North: Mindoro Strait

South: Ass. Lot No. 003

East: AL# 005, Sec. 6

West: Ass. Lot No. 011 37

In view of the foregoing, the RTC concluded that petitioners acted in bad faith and, accordingly, ordered them
to vacate the property and pay respondent: (a) rent in the amount of P5,000.00 per month from September 2005, plus
legal interest of six percent (6%) per annum until respondent is restored to its possession; and (b) attorney's fees and
litigation expenses amounting to P125,010.00. 38
 Dissatisfied, petitioners moved for reconsideration, 39 which was, however, denied in an Order 40 dated
November 18, 2013, prompting them to elevate the case to the CA through a petition for certiorari. 41
The CA Ruling
In a Decision 42 dated September 21, 2015, the CA affirmed the RTC's findings insofar as it held that respondent
was the prior possessor of the subject lot, but remanded the case to the RTC for the determination of the proper amount
of monthly rentals payable to respondent. 43
The CA noted that the parties in this case are claiming one and the same property, i.e., the lot covered by Tax
Declaration No. 0056, 44 and that respondent's prior possession de facto thereof has been proven as she occasionally
visited the same, paid realty taxes, and even requested for a survey authority thereon. 45 Thus, since a person need not
have his/her feet on every square meter of the ground before it can be said that he/she is in possession of the land, the
CA ruled that respondent did not lose her possession of the subject lot, although she resided somewhere else and only
occasionally visited the same. 46
Meanwhile, the CA rejected petitioners' argument that their possession of the subject lot from the time they
purchased the same in August 2005 should be tacked to Alvarez's possession. According to the CA, the concept of
tacking refers to legal possession and does not apply to physical possession, which is the issue in suits for forcible entry
such as this case. 47 The CA also echoed the RTC's observation that petitioners' documentary evidence are replete with
inconsistencies, such as the boundary description of the property they acquired from Alvarez, as stated in the Deed of
Sale vis-à-vis Tax Declaration Nos. 0052 and 019-0233-A. 48
Anent the award of monthly rent to the respondent, the CA noted that the RTC did not cite any document
showing realty assessment of the land, justify the award of P5,000.00 monthly rental in favor of respondent. 49 In this
regard, the CA remanded the case to the RTC for the determination of the monthly rentals due respondent. 50
Dissatisfied, petitioners moved for reconsideration, 51 which was, however, denied by the CA in a
Resolution 52 dated April 14, 2016; hence, the present petition.
The Issue Before the Court
The sole issue for the Court's resolution is whether or not the CA erred in holding that respondent was in prior
possession of the subject lot.
The Court's Ruling
The petition is denied.
At the outset, it must be emphasized that as a rule, the Court is not a trier of facts 53 and does not normally
embark in the evaluation of evidence adduced during trial. 54 This rule, however, allows exceptions, such as instances
when the findings of fact of the trial court are conflicting or contradictory with those of the CA, 55 as in this case where
the conflicting findings of facts of the MCTC on one hand, and the RTC and the CA on the other, warrant a second look
for the proper dispensation of justice.
After a thorough study of this case, the Court agrees with the findings of the CA and the RTC that respondent
was the prior possessor of the subject lot.
The present controversy involves two (2) properties which are separate and distinct from each other. The first
property is the 5.78-hectare lot covered by Tax Declaration No. 0056, while the second is the eight (8)-hectare parcel of
land under Tax Declaration No. 0052 (now under Tax Declaration No. 019-0233-A). Petitioners contend that they are in
possession of the second lot, as the same was purportedly acquired by them from Alvarez through a Deed of Sale.
However, it was uncovered that due to the anent the identity of the property sold, petitioners were actually occupying
the first subject lot and, hence, were erroneously claiming the same. 56 In truth, the subject lot was not the property
sold to petitioners by Alvarez, but was the one which respondent acquired from Abid in September 1995 by virtue of a
Waiver of Rights. 57 In fact, this first lot was the subject of Alvarez's handwritten letter 58 dated August 2, 2005
and Sinumpaang Salaysay 59 dated July 14, 2006, acknowledging respondent's ownership over it. With the true identity
of the subject lot having been established, it must nonetheless be determined whether or not respondent had prior de
facto possession over the same, considering that this case stemmed from a forcible entry complaint. HEITAD
It is well-settled that the only question that the courts must resolve in forcible entry or unlawful detainer cases
is who between the parties is entitled to the physical or material possession of the property in dispute. 60 The main
issue is possession de facto, independently of any claim of ownership or possession de jure that either party may set
forth in his pleading. The principal issue must be possession de facto, or actual possession, and ownership is merely
ancillary to such issue. 61 In forcible entry, the plaintiff must prove that it was in prior physical possession of the
premises until it was deprived thereof by the defendant.
 In this case, respondent had sufficiently proven her prior possession de facto of the subject lot. Records disclose
that respondent occasionally visited the subject lot since she acquired the same from Abid in September 1995. She even
paid the lot's realty taxes, as well as requested for a survey authority thereon. 62 In fact, she submitted old
photographs 63 showing herself on the subject lot, the identity of which petitioners did not contend. Notably,
jurisprudence states that the law does not require a person to have his feet on every square meter of the ground before
it can be said that he is in possession thereof. 64 In Bunyi v. Factor, 65 the Court held that "visiting the property on
weekends and holidays is evidence of actual or physical possession. The fact of her residence somewhere else, by itself,
does not result in loss of possession of the subject property." 66 In contrast, petitioners themselves claim that they
began occupying the subject lot only in August 2005, after Alvarez executed the corresponding Deed of Sale in their
favor. 67 Hence, in light of the foregoing, there is no doubt that respondent had prior de facto possession.
At this juncture, the Court finds it proper to dispel petitioners' mistaken notion that their possession should be
tacked onto that of Alvarez who allegedly occupied the property since 1974. In Nenita Quality Foods Corporation v.
Galabo, 68 the Court clarified that tacking of possession only applies to possession de jure, or that possession which has
for its purpose the claim of ownership, viz.:
True, the law allows a present possessor to tack his possession to that of his predecessor-in-interest to
be deemed in possession of the property for the period required by law. Possession in this regard,
however, pertains to possession de jure and the tacking is made for the purpose of completing the
time required for acquiring or losing ownership through prescription. We reiterate — possession in
forcible entry suits refers to nothing more than physical possession, not legal
possession. 69 (Emphases supplied)
As earlier stated, possession de jure is irrelevant because the only question in forcible entry — as it is here —
is prior physical possession or possession de facto.
Finally, the Court clarifies that the written report issued by the CENRO of Coron, Palawan, 70 as well as the
report of the Office of the Municipal Assessor 71 which conducted the ocular inspection and public hearing relative to
respondent's and Alvarez's conflicting claims back in 2005 and 2006, 72 are of no consequence to this case. As the
records show, the MCTC took judicial notice of the foregoing documents in rendering a ruling favorable to petitioners.
Nevertheless, the MCTC itself stated that the said reports deal with the conflict between Alvarez and
respondent — not between petitioners and respondent. In fact, the report of the Office of the Municipal Assessor states:
DATE: August 30, 2006
FOR: Hon. Mario T. Reyes, Jr., Municipal Mayor
THRU: Hon. Eliseo B. Buenaflor, Municipal Vice[-]Mayor
FROM: Mr. Reynario R. Labrador, Municipal Assessor
SUBJECT: BACK TO OFFICE REPORT RE: TRAVEL TO BARANGAY SAN JOSE THIS MUNICIPALITY TO
ATTEND PUBLIC HEARING REGARDING CONFLICT OF OWNERSHIP OF A PARCEL OF LAND BETWEEN
JOSEFINA REYES PANGILINAN AND COLUMBINO ALVAREZ. 73 (Emphasis supplied)
Meanwhile, the report of the CENRO of Coron, Palawan 74 states:
With sufficient documents to prove the claim of [Alvarez] and our findings that the area is
actually occupied and cultivated by his family, [Janet Uri Fahrenbach][,] with her desire to purchase
the land, had it surveyed to be sure of the total area of the land[,] considering that it is covered by Tax
Declaration, [and if it is] smaller or bigger than the declared area. Hence, a Survey Authority was issued
on July 25, 2005.
xxx xxx xxx
The inspection was done with positive results that [respondent] and [Alvarez], right then
and there[,] agreed that her claim is 5.78 [hectares] covered by Tax Declaration No. 0056. A copy of
the handwritten document dated August 2, 2005 is herewith attached.
Based on the certification of the Municipal Assessor[,] the Tax Declaration for [the] 5.78 [-
hectare lot] was transferred to [respondent] by virtue of a Waiver of Rights dated September 6,
1995[;] [the same lot] was also conveyed by [Abid] to [Alvarez] by virtue of a Deed of Sale dated July
15, 1995, almost two months ahead of the Waiver of Rights.
xxx xxx xxx 75 (Emphases supplied)
Thus, these reports clearly relate to the conflict between Alvarez and respondent regarding the ownership of
the lot covered by Tax Declaration No. 0056, and not with respect to the possession between petitioners and
 respondent. In this light, the Court cannot therefore subscribe to the MCTC's conclusion that these reports established
petitioners' prior possession of the subject lot. In fact, this conclusion cannot be inferred from the subject reports, which
only state that Alvarez was the actual occupant of the area being claimed by respondent. 76 As already explained,
Alvarez's possession is irrelevant, considering that petitioners' alleged possession over the subject lot cannot be tacked
onto that of Alvarez in suits for forcible entry, as in this case.
With regard to the rent due respondent, the CA correctly held that since petitioners disturbed respondent's
possession of the subject lot, rent is due respondent from the time petitioners intruded upon her possession. Under
Section 17, Rule 70 of the Rules of Court,the judgment in cases for forcible entry shall include the sum justly due as
arrears of rent or as reasonable compensation for the use and occupation of the premises. However, in Badillo v.
Tayag, 77 the Court clarified that reasonable amount of rent in suits for forcible entry must be determined not by mere
judicial notice, but by supporting evidence. 78 Here, since the RTC indeed failed to cite any document showing the
assessment of the subject lot, any increase in the realty taxes, and the prevailing rental rate in the area, the CA correctly
remanded this aspect to the RTC for proper determination. ATICcS
Anent the award of attorney's fees, the Court finds the same in order, considering that petitioners' intrusion
on respondent's property has compelled the latter to incur expenses to protect her interests. 79
WHEREFORE, the petition is DENIED. The Decision dated September 21, 2015 and the Resolution dated April
14, 2016 of the Court of Appeals in CA-G.R. SP No. 133552 are hereby AFFIRMED.
SO ORDERED.

G.R. No. 204663. September 27, 2017.]

MUNICIPAL RURAL BANK OF LIBMANAN, CAMARINES SUR, petitioner, vs. VIRGINIA

ORDOÑEZ, respondent.

PERALTA, ** J p:

Assailed in the instant petition for review on certiorari are the Decision 1 and Resolution 2 of the Court of
Appeals (CA), dated March 30, 2012 and October 17, 2012, respectively, in CA-G.R. CV No. 94947.
The pertinent factual and procedural antecedents of the case are as follows:
On June 20, 2000, herein respondent filed with the Regional Trial Court (RTC) of Libmanan, Camarines Sur a
Complaint 3 for Quieting of Title against herein petitioner bank. Subsequently, on September 2, 2002, the Complaint
was amended 4 where respondent alleged that: she is the owner of a 2,174 square meter parcel of land in Fundado,
Libmanan, Camarines Sur; she acquired the property through inheritance; she and her predecessors-in-interest had
been in open, peaceful, adverse, uninterrupted possession of the subject land in the concept of an owner since time
immemorial; and petitioner's claim of ownership is unfounded, unmeritorious invalid and based upon an instrument
which is null and void or, otherwise, unenforceable. Respondent prayed that she be declared the absolute owner and,
thus, entitled to the lawful possession of the subject property. She also asked the trial court to order petitioner to pay
attorney's fees and monthly rentals.
In its Answer with Counterclaim, 5 herein petitioner denied the material allegations of respondent's Amended
Complaint contending that it is, in fact, the true and absolute owner of the subject land; and the property was previously
owned by one Roberto Hermita (Roberto) who mortgaged the said land to petitioner but subsequently failed to satisfy
his obligation causing petitioner to foreclose the mortgage and subsequently acquire the property and transfer title
over it in its name. In its Counterclaim, petitioner prayed for the payment of moral damages and attorney's fees.
After the issues were joined, trial on the merits ensued.
On January 19, 2010, the RTC rendered its Decision 6 dismissing respondent's Amended Complaint as well as
petitioner's Counterclaim.
The RTC ruled that, before entering into the contract of mortgage with Roberto Hermita, petitioner, through
its manager, did its best to ascertain Roberto's claim of ownership and possession by conducting the requisite
investigation. The RTC concluded that the weight of evidence preponderates in favor of herein petitioner.
Aggrieved, respondent filed an appeal with the CA.
On March 30, 2012, the CA promulgated its assailed Decision by ruling in respondent's favor and disposing as
follows:
 WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET ASIDE.
The real estate mortgage contract dated March 23, 1995, covering the disputed property is hereby
declared NULL and VOID and the plaintiff-appellant is declared owner thereof.
SO ORDERED. 7
The CA held that: (1) respondent was able to prove that her predecessors-in-interest had possession of the
subject land prior to that of petitioner's predecessor-in-interest; (2) they declared the property for tax purposes as early
as 1949, as compared to petitioner's predecessor-in-interest who paid taxes thereon beginning only in 1970; and (3)
contrary to the findings of the RTC, the evidence preponderates in favor of herein respondent. Thus, the CA declared
respondent as owner of the subject lot and nullified the real estate mortgage executed between petitioner and Roberto.
Petitioner filed a Motion for Reconsideration, but the CA denied it in its Resolution dated October 17, 2012.
Hence, the present petition for review on certiorari with the following Assignment of Errors:
a) The Honorable Court of Appeals gravely erred when it held that respondent has prior possession
over the property through her caretaker Roman Zamudio.
b) The Honorable Court of Appeals gravely erred when it ruled that acquisitive prescription cannot be
made to apply to the possession of Roberto Hermita.
c) The Honorable Court of Appeals seriously erred when it pronounced that petitioner Municipal Rural
Bank of Libmanan, Camarines Sur was utterly remiss in its duty to establish who the true owners and
possessors of the subject property were. 8
The petition is unmeritorious.
Before delving into the merits of the instant petition, the Court finds it apropos to restate the nature of an
action for quieting of title. Citing the case of Baricuatro, Jr v. Court of Appeals, 9 this Court, in Herminio M. De Guzman,
for himself and as Attorney-in-fact of: Nilo M. De Guzman, et al. v. Tabangao Realty, Inc., 10 held, thus: aScITE
Regarding the nature of the action filed before the trial court, quieting of title is a common
law remedy for the removal of any cloud upon or doubt or uncertainty with respect to title to real
property. Originating in equity jurisprudence, its purpose is to secure "x x x an adjudication that a claim
of title to or an interest in property, adverse to that of the complainant, is invalid, so that the
complainant and those claiming under him may be forever afterward free from any danger of hostile
claim." In an action for quieting of title, the competent court is tasked to determine the respective
rights of the complainant and other claimants, "x x x not only to place things in their proper place, to
make the one who has no rights to said immovable respect and not disturb the other, but also for
the benefit of both, so that he who has the right would see every cloud of doubt over the property
dissipated, and he could afterwards without fear introduce the improvements he may desire, to use,
and even to abuse the property as he deems best x x x." (Citation omitted.)" 11
The Court, then, went on to discuss that:
Under the Civil Code, the remedy may be availed of under the following circumstances:
Art. 476. Whenever there is a cloud on title to real property or any interest
therein, by reason of any instrument, record, claim, encumbrance or proceeding
which is apparently valid or effective but is in truth and in fact invalid, ineffective,
voidable, or unenforceable, and may be prejudicial to said title, an action may be
brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title
to real property or any interest therein.
Art. 478. There may also be an action to quiet title or remove a cloud
therefrom when the contract, instrument or other obligation has been extinguished
or has terminated, or has been barred by extinctive prescription.
Article 477 of the Civil Code further provides that the plaintiff in an action to quiet title must
have legal or equitable title to or interest in the real property, which is the subject matter of the action,
but need not be in possession of said property.
For an action to quiet title to prosper, two indispensable requisites must concur: (1) the
plaintiff or complainant has a legal or equitable title or interest in the real property subject of the
action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on his title
must be shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy. 12
 In Spouses Ragasa v. Spouses Roa, 13 this Court has, likewise, ruled that:
[I]t is an established rule of American jurisprudence (made applicable in this jurisdiction by
Art. 480 of the New Civil Code) that actions to quiet title to property in the possession of the plaintiff
are imprescriptible.
The prevailing rule is that the right of a plaintiff to have his title to land quieted, as against one
who is asserting some adverse claim or lien thereon, is not barred while the plaintiff or his grantors
remain in actual possession of the land, claiming to be owners thereof, the reason for this rule being
that while the owner in fee continues liable to an action, proceeding, or suit upon the adverse claim,
he has a continuing right to the aid of a court of equity to ascertain and determine the nature of such
claim and its effect on his title, or to assert any superior equity in his favor. He may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his right. But the rule
that the statute of limitations is not available as a defense to an action to remove a cloud from title
can only be invoked by a complain[ant] when he is in possession. One who claims property which is in
the possession of another must, it seems, invoke his remedy within the statutory period. 14
In the instant case, for reasons to be discussed hereunder, the Court agrees with the CA that herein respondent
was able to prove by preponderance of evidence that she has a legal or equitable title or interest in the real property
subject of the action and that the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on her title is,
in fact, invalid or inoperative, despite its prima facie appearance of validity or legal efficacy.
In its first assigned error, petitioner argues that the CA erred in holding that: (1) respondent's predecessors-in-
interest designated a certain Roman Zamudio (Zamudio) as caretaker of the subject lot; and (2) respondent has prior
possession over the said property through Zamudio.
The Court does not agree.
First, the Court finds no cogent reason to depart from the conclusion of the CA that the testimony of
respondent's witness Perpetuo Parafina (Parafina), who is the owner of the land adjacent to the disputed property, is
clear that Zamudio was indeed the person assigned by respondent's mother as caretaker of the questioned land. 15 In
fact, the RTC, in its Decision dated January 19, 2010, likewise made a positive finding that Zamudio was, in fact,
respondent's caretaker. Moreover, Parafina testified that, since 1960, he knows the property as owned by respondent's
mother. 16
The question that follows is whether Zamudio's occupation of the subject property as caretaker may be
considered as proof of respondent's and her predecessors-in-interest's prior possession of the said land.
The Court rules in the affirmative.
For one to be considered in possession, one need not have actual or physical occupation of every square inch
of the property at all times. 17 Possession can be acquired not only by material occupation, but also by the fact that a
thing is subject to the action of one's will or by the proper acts and legal formalities established for acquiring such
right. 18 Possession can be acquired by juridical acts. 19 These are acts to which the law gives the force of acts of
possession. 20 In one case, 21 this Court has considered a claimant's act of assigning a caretaker over the disputed land,
who cultivated the same and built a hut thereon, as evidence of the claimant's possession of the said land.
In the present case, it has been established that respondent and her predecessors-in-interest authorized
Zamudio as caretaker of the subject land. Thus, Zamudio's occupation of the disputed land, as respondent's caretaker,
as early as 1975, is considered as evidence of the latter's occupation of the said property. Petitioner's argument that
respondent's possession must not be a mere fiction but must, in fact, be actual is unavailing as this requirement is
applicable only in proceedings for land registration under Presidential Decree 1529, otherwise known as the Land
Registration Decree, which is not the case here. On the other hand, it was only in 1986 that petitioner's predecessor-in-
interest started occupying the same property.
Moreover, respondent and her predecessors-in-interest declared the disputed property for tax purposes and
paid the realty taxes thereon, as early as 1949. Settled is the rule that although tax declarations or realty tax payment
of property are not conclusive evidence of ownership, nevertheless, they are good indicia of possession in the concept
of owner for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive
possession. 22 On the other hand, it was only in 1970 that Roberto's father declared the subject property for taxation
purposes.
As to petitioner's contention, in its second assignment of error, that Roberto acquired ownership of the subject
property through prescription, the Court finds no cogent reason to depart from the ruling of the CA on this matter and,
thus, quotes the same with approval, to wit:
 x x x Besides, Article 1134 of the Civil Code x x x states that "x x x (o)rdinary acquisitive prescription of
things requires possession in good faith and with just title for the time fixed by law." In this case,
however, it cannot be said that the possession of Roberto Hermita was in good faith. This is clear from
the testimony of Roberto Hermita that, prior to mortgaging the subject property to the defendant-
appellee bank, the mother of the plaintiff-appellant approached him and claimed ownership over the
subject land as well. x x x HEITAD
xxx xxx xxx
Neither can the Court agree with the trial court that extraordinary acquisitive prescription
under Article 1137 of the Civil Code can be appreciated in favor of Sofronio Hermita, predecessor-in-
interest of Roberto Hermita. As previously discussed, no evidence, testimonial or documentary, was
ever presented by the defendant-appellee that Sofronio Hermita was ever in possession of the subject
land. The trial court's conclusion that the uninterrupted possession of Sofronio Hermita since 1970
already ripened into a title by prescription, is therefore without any evidentiary basis. Hence, since it
has not been shown that Sofronio Hermita acquired ownership over the subject property, it follows
that he did not have the power to transfer the ownership of the subject property to his son Roberto
Hermita when the latter allegedly bought the same.
In fine, it cannot be said that Roberto Hermita had already acquired ownership over the
subject land when he mortgaged the same to the defendant-appellee bank. 23
Indeed, aside from tax declarations, petitioner failed to present evidence to prove that, prior to selling the
subject lot to Roberto, his father exercised acts of ownership over the said property.
As to the third assigned error, it is settled that a banking institution is expected to exercise due diligence before
entering into a mortgage contract. 24 The ascertainment of the status or condition of a property offered to it as security
for a loan must be a standard and indispensable part of its operations. 25
This Court has never failed to stress the remarkable significance of a banking institution to commercial
transactions, in particular, and to the country's economy in general. 26 The banking system is an indispensable
institution in the modern world and plays a vital role in the economic life of every civilized nation. 27 Whether as mere
passive entities for the safekeeping and saving of money or as active instruments of business and commerce, banks
have become an ubiquitous presence among the people, who have come to regard them with respect and even
gratitude and, most of all, confidence. 28 Consequently, the highest degree of diligence is expected, and high standards
of integrity and performance are even required of it. 29
In the instant case, contrary to the findings of the RTC that petitioner's manager did his best to ascertain
Roberto's claim of ownership over the disputed land, the Court agrees with the findings of the CA that petitioner was,
in fact, remiss in exercising the required degree of diligence, prudence, and care before it entered into a mortgage
contract with Roberto. With more reason should petitioner have practiced caution and mindfulness, considering that
the questioned lot is not titled. Thus, the Court agrees with the CA that a simple check with the proper authorities would
have shown that the same property has been previously declared as owned by respondent's predecessors-in-interest
and that realty taxes had been paid thereon as early as 1949. Petitioner alleges in its present petition that its bank
manager consulted the local assessor's office as to the existence of any other tax declaration covering the subject lot
but a careful reading of the testimony of petitioner's manager shows that nothing therein would prove such allegation.
Moreover, if petitioner's manager had indeed made an ocular inspection of the said property to determine its actual
condition and verify the identity of the true owner and possessor thereof, he should have easily discovered that
respondent's caretaker was also in possession of the said property and is actually occupying a portion of the same.
As to whether or not petitioner was in good faith, the issue of good faith or bad faith of a buyer is relevant only
where the subject of the sale is a registered land but not where the property is an unregistered land. 30 One who
purchases an unregistered land does so at his peril. 31 His claim of having bought the land in good faith, i.e., without
notice that some other person has a right to, or interest in, the property, would not protect him if it turns out that the
seller does not actually own the property. 32 In the instant case, there is no dispute that at the time that petitioner
entered into a contract of mortgage with Roberto and in subsequently buying the subject lot during the auction sale,
the same was still an unregistered land. Thus, petitioner may not claim good faith and due diligence in dealing with
Roberto. As a consequence, the CA did not commit error in nullifying the real estate mortgage contract between
petitioner and Roberto and in declaring respondent as the owner of the disputed lot.
WHEREFORE, the Court AFFIRMS the Decision of the Court of Appeals, promulgated on March 30, 2012, and
its Resolution dated October 17, 2012, in CA-G.R. CV No. 94947.
SO ORDERED.
G.R. No. 211845. August 9, 2017.]

PEN DEVELOPMENT CORPORATION and LAS BRISAS RESORT CORPORATION, petitioners, vs. MARTINEZ
LEYBA, INC., respondent.

DEL CASTILLO, J p:

Assailed in this Petition for Review on Certiorari 1 are the July 17, 2013 Decision 2 of the Court of Appeals (CA)
in CA-G.R. CV No. 97478 which affirmed with modification the January 20, 2009 Decision 3 of the Regional Trial Court
of Antipolo City, Branch 71 (RTC) in Civil Case No. 97-4386, and the CA's March 28, 2014 Resolution 4 denying herein
petitioners' Motion for Reconsideration. 5
Factual Antecedents

As found by the CA, the facts are as follows:

Plaintiff-Appellee Martinez Leyba, Inc. (hereafter Martinez) is a corporation organized and
existing under Philippine laws and the registered owner of three (3) contiguous parcels of land situated
in Antipolo, Rizal, surveyed and identified as Lot Nos. 29, 30 and 31, Block 3, (LRC) Pcs-7305 and
registered under Transfer Certificate of Title Nos. 250242, 250244 and 250243, respectively, with the
Register of Deeds of Rizal.
Defendants-Appellants Pen Development Corporation and Las Brisas Resorts Corporation are
also domestic corporations duly organized and existing under Philippine laws. Appellants, thereafter,
merged into one corporate entity under the name Las Brisas Resorts Corporation (hereafter Las Brisas).
Las Brisas is the registered owner of a parcel of land under TCT No. 153101 which is situated adjacent
to the lands owned by Martinez. Las Brisas occupied the said land in 1967 and fenced the same.
In 1968, Martinez noticed that the construction of Las Brisas' fence seemed to encroach on its
land. Upon verification by surveyors, Martinez was informed that the fence of Las Brisas overlaps its
property. On 11 March 1968, Martinez sent a Letter informing Las Brisas that the fence it constructed
encroaches [sic] on Martinez's land and requested Las Brisas to refrain from further intruding on the
same. Las Brisas did not respond to Martinez's letter and continued developing its land.
Martinez sent two (2) more Letters dated 31 March 1970 and 3 November 1970 to Las Brisas
informing the latter of the encroachment of its structures and improvements over Martinez's titled
land.
On 31 July 1971, Las Brisas, through a certain Paul Naidas, sent a letter to Martinez, claiming
that it 'can not [sic] trace the origin of these titles' (pertaining to Martinez's land).
Martinez sent two (2) Letters to Las Brisas reiterating its ownership over the land that Las
Brisas' improvements have encroached upon. Despite the notices, Las Brisas continued developing its
property.
Martinez sought the services of a licensed geodetic engineer to survey the boundaries of its
land. The verification survey plan Vs-04-00034, which was approved by the Regional Technical Director
for Lands of the Department of Environment and Natural Resources (DENR), revealed that the building
and improvements constructed by Las Brisas occupied portions of Martinez's lands: 567 square meters
of Lot No. 29, Block 3, (LRC) Pcs. 7305; a portion of 1,389 square meters of Lot No. 30, Block 3, (LRC)
Pcs. 7305 covered under TCT Nos. 250242, 250244 and 250243, respectively.
On 24 November 1994, Martinez sent a letter to Las Brisas demanding the latter to cease and
desist from unlawfully holding portions of Martinez's land occupied by Las Brisas structures and
improvements. Despite the said demand, no action was taken by Las Brisas.
On 24 March 1997, Martinez filed a Complaint for Quieting of Title, Cancellation of Title and
Recovery of Ownership with Damages against Las Brisas before the Regional Trial Court of Antipolo
City, docketed as Civil Case No. 97-4386. The case was raffled to, and heard by, Branch 71 thereof x x
x.
In its Answer, Las Brisas denied that it encroached on Martinez's land and that it constructed
the Las Brisas Resort Complex within the land covered by TCT No. 153101. 6
 In its Complaint, 7 Martinez added that Transfer Certificate of Title (TCT) Nos. 250242, 250244 and 250243 (or
the Martinez titles — totaling 9,796 square meters) 8 emanated from Decree No. 1921 issued by the General Land
Registration Office pursuant to Land Registration Case No. 3296, which was transcribed as Original Certificate of Title
(OCT) No. 756 by the Register of Deeds of Rizal on August 14, 1915; that Las Brisas "constructed a riprapping on the
northern portion of Lot No. 29, a building straddling Lots 30 and 31, and are now constructing a new building on Lot No.
31," 9 which acts constitute an encroachment on lands covered by the Martinez titles; that Las Brisas's title, TCT
153101 10 (TCT 153101), was originally registered on September 14, 1973, under OCT 9311 pursuant to Decree No. N-
147380, LRC Case No. N-7993, Rec. No. N-43097; that the encroachment is confirmed per verification survey conducted
by a geodetic engineer and approved by the Regional Technical Director for Lands of the Department of Environment
and Natural Resources (DENR); and that TCT 153101 thus casts a cloud on the Martinez titles, which must be removed
in order to quiet title to the latter.
Las Brisas countered in its Answer 11 that it bought the land covered by TCT 153101 (consisting of 3,606 square
meters) on May 18, 1967 from Republic Bank; that it took possession thereof in good faith that very same year; and
that it is actually Martinez that was encroaching upon its land.
Ruling of the Regional Trial Court

After trial, the RTC issued its Decision dated January 20, 2009, containing the following pronouncement:
To clarify matters, the plaintiff 12 engaged the services of Ricardo S. Cruz, a licensed Geodetic
Engineer, to plot and verify the plans and technical descriptions to determine the relative geographic
positions of the land covered by the titles of plaintiff and defendant. 13 This verification survey was
approved by the Regional Technical Director of Lands on May 23, 1996, under plan VS-04-000394. (Exh.
T-1, T-2, T-3, T-4, T-5). This plan revealed that Psu-234002, in relation to T.C.T. No. 153101 of the
defendant overlapped thus:
a. A portion of 567 square meters of Lot No. 29, Block 3, (LRC) Pcs-7305, covered by plaintiffs
T.C.T. No. 250242. This is the portion where the defendant built a riprapping.
b. A portion of 1,389 square meters of Lot No. 30, Block 3, (LRC) Pcs-7305, covered by plaintiff's
T.C.T. No. 250243. This is the portion where the defendant had constructed an old
building.
c. A portion of 1,498 square meters of Lot No. 31, Block 3, (LRC) Pcs-7305, covered by plaintiff's
T.C.T. No. 250244. This is the portion where the defendant constructed a new multi-
story edifice.
xxx xxx xxx
The issues sought to be resolved x x x can be read in the respective
memorandum [sic] submitted by the parties.
For the plaintiff, the statement of issues are as follows:
1. Whether x x x the Certificate of Title of the defendant overlapped and thus created a cloud on
plaintiff T.C.T. Nos. 250242, 250243, 250244, covering lots nos. 29, 30, and 31, block 3
(LRC) PCS-7305, which should be removed under Article 476 of the Civil Code of the
Philippines;
2. Whether x x x defendant's T.C.T. No. 153101 should be cancelled insofar as it overlapped Lots
29, 30 and 31, Block 3, (LRC) PCS-7305;
3. Whether x x x the defendant is a builder in bad faith and is liable for the consequence of his
acts;
4. Whether x x x the plaintiff is entitled to collect actual or compensatory and moral damages in
the amount of P5,000,000.00, exemplary damage in the amount of P1,000,000.00,
nominal damage in the amount of P1,000,000.00, and attorney's fees in the amount of
P300,000.00, exclusive of appearance fee of P3,000.00 per hearing or
unferome [sic] attended.
For defendants, the issues presented are:
1. Whether x x x defendant's title over the property is valid and effective;
2. Whether x x x defendant is an innocent purchaser for value;
 3. Whether x x x defendant is entitled to reimbursement for expenses in developing the
property.
For its evidence in chief, plaintiff presented Nestor Quesada (direct, June 7, 2001; cross July
26, 2001) rested its case on October 4, 2001. Its Formal Offer of Evidence as filed with the Court on
November 15, 2001 wherein Court Order dated January 15, 2002, Exhibits A to U, inclusive of their
submarkings were admitted over the objections of defendant.
The defendant presented Eufracia Naidas (direct/cross on July 11, 2004), then rested its case
on May 11, 2005, the Formal Offer of Evidence was filed in Court on June 10, 2005 wherein the Court
Order dated June 27, 2005, Exhibits 1 to 7 inclusive of submarkings were all admitted over plaintiff's
objections.
xxx xxx xxx
Considering that the defendant has raised the defense of the validity of T.C.T. No. N-21871 of
the Registry of Deeds, Marikina (Exhibit 1), and subsequently cancelled by T.C.T. No. 153101 as
transferred to the Pen Development Corp. (Exh. 2) and introduced substantial improvements thereon
which from the facts established and evidence presented during the hearings of the case it cannot be
denied that said title over the property in question is genuine and valid. Moreover, the defendant
obtained the property as innocent purchasers for value, having no knowledge of any irregularity,
defect, or duplication in the title.
Defendant further argued that there is no proof to plaintiff's claim that it had sent notices and
claims to defendant. Assuming that notices were sent to defendant as early as 1968, it took plaintiff
almost thirty (30) years to file the action to quiet its title. Therefore, by the principle of laches it should
suffer the consequence of its failure to do so within a reasonable period of time. x x x
Defendant, having introduced substantial improvements on the property, if on the ground or
assumption that the case will be decided in favor of the plaintiff, that defendant should be, by law,
entitled to be reimbursed for the expenses incurred in purchasing and developing the property, the
construction cost of the building alone estimated to be Fifty-Five Million Pesos (P55,000,000.00) x x x.
Defendant also cited Articles 544, 546, 548 of the New Civil Code of the Philippines in further
support of its defense.
It is incumbent upon the plaintiff to adduce evidence in support of his complaint x x x. Likewise,
the trial shall be limited to the issues stated in the pre-trial order.
As earlier stated, the Court shall rule on whether x x x plaintiff has discharged its obligation to
do so in compliance with the Rules of Court. Having closely examined, evaluated and passed upon the
evidence presented by both the plaintiff and defendant the Court is convinced that the plaintiff has
successfully discharged said obligation and is inclined to grant the reliefs prayed for.
Clearly this is a valid complaint for quieting of title specifically defined under Article 476 of
the Civil Code and as cited in the cases of Vda. De Angeles v. CA, G.R. No. 95748, November 21, 1996;
Tan vs. Valdehuesa, 66 SCRA 61 (1975).
As claimed by the plaintiff, defendant's T.C.T. No. 153101 is an instrument, record or claim
which constitutes or casts a cloud upon its T.C.T. Nos. 250242, 250243, and 250244. Sufficient and
competent evidence has been introduced by the plaintiff that upon plotting verification of the
technical description of both parcels of land conducted by Geodetic Engineer Ricardo Cruz, duly
approved by the Regional Technical Director of Lands of the DENR that Psu-234002, covered by
defendant's T.C.T. No. 153101 overlapped a portion of 567 square meters of Lot No. 29 x x x, a portion
of 1,389 square meters of Lot No. 30 x x x covered by plaintiff's T.C.T. Nos. 250242, 250243 and 250244,
respectively. Surprisingly, defendant has not disputed nor has it adduced evidence to disprove these
findings.
It was likewise established that plaintiff's T.C.T. No[s]. 250242, 250243 and 250244 emanated
from O.C.T. No. 756, which was originally registered on August 14, 1915, whereas, from defendant's
own evidence, its T.C.T. No. 153101 was derived from O.C.T. No. 9311, which was originally registered
on September 14, 1973, pursuant to Decree No. D-147380, in LRC Case No. N-7993, Rec. No. 43097.
Plaintiff's mother title was registered 58 years ahead of defendant's mother title. Thus, while
defendant's T.C.T. No. 153101 and its mother title are apparently valid and effective in the sense that
 they were issued in consequence of a land registration proceeding, they are in truth and in fact invalid,
ineffective, voidable, and unforceable [sic] insofar as it overlaps plaintiff's prior and subsisting titles.
xxx xxx xxx
In the cases of Chan vs. CA, 298 SCRA 713, de Villa vs. Trinidad, 20 SCRA 1167, Gotian vs.
Gaffud, 27 SCRA 706, again the Supreme Court held:
'When two certificates of title are issued to different persons covering the
same land, in whole or in part, the earlier in date must prevail and in cases of
successive registrations where more than one certificate of title is issued over the
same land, the person holding a prior certificate is entitled to the land as against a
person who relies on a subsequent certificate.'
xxx xxx xxx
Article 526 of the Civil Code defines a possession in good faith as 'one who is not aware that
there exists in his title or mode of acquisition any flaw which invalidates it, and a possession in bad
faith as one who possesses in any case contrary to the foregoing.'
xxx xxx xxx
In the case of Ortiz vs. Fuentebella, 27 Phil. 537, the Supreme Court held:
'Thus, where defendant received a letter from the daughter of the plaintiff,
advising defendant to desist from planting coconut on a land in possession of
defendant, and which letter the defendant answered by saying she did not intend to
plant coconuts on the land belonging to plaintiff, it was held that the possession [in]
bad faith began from the receipt of such letter.'
A close similarity exists in Fuentebella above cited with the facts obtaining in this case. The
pieces evidence [sic] show that while defendant was in good faith when it bought the land from the
Republic Bank as a foreclosed property, the plaintiff in a letter dated as early as March 11, 1968 x x x
had advised the defendant that the land it was trying to fence is within plaintiff's property and that the
defendant should refrain from occupying and building improvements thereon and from doing any act
in derogation of plaintiff's property rights. Six other letters followed suit x x x. The records show that
defendant received these letters but chose to ignore them and the only communication in writing from
the defendant thru Paul Naidas was a letter dated July 31, 1971, stating that he (Naidas) was all the
more confused about plaintiff's claim to the land. The defendant cannot dispute the letters sent
because it sent a response dated July 31, 1970. It is very clear that while defendant may have been [in]
good faith when it purchased the land from Republic Bank on December 6, 1977, such good faith
ceased upon being informed in writing about plaintiff's title or claim over the same land, and, worse,
it acted with evident bad faith when it proceed [sic] to build the structures on the land despite such
notice.
Consequently, the rule on the matter can be found in Articles 449, 450 of the Civil Code of the
Philippines which provide:
'Article 449. — He who builds, plants, or sows in bad faith on the land of
another, loses what is built, planted or sown without right to indemnity.'
'Article 450. — The owner of the land on which anything has been built,
planted or sown in bad faith may demand the demolition of the work, or that the
planting or sowing be removed, in order to replace things in their former condition at
the expense of the person who built, planted or sowed, or he may compel the builder
or planter to pay the price of the land, and the sower the proper rent.'
In the case of Tan Queto vs. CA, 122 SCRA 206, the Supreme Court held:
'A builder in bad faith loses the building he builds on another's property without right of
refund, ' x x x
xxx xxx xxx
As to defendant's claim that they had obtained title to the property as innocent purchasers
for value, lack of knowledge of any irregularity, effect or duplication of title, they could have discovered
the overlapping had they only bothered to engage a licensed geodetic engineer to check the accuracy
of their plan Psu-234002. To that extent, defendant has failed to exercise the diligence to be entitled
 to the status as an innocent purchaser for value. It was clearly established that defendant's certificate
of title emanated from a mother title that partially overlapped the plaintiff's prior and subsisting title.
Hence, defendant's certificate of title is void abinittio [sic] insofar as the overlapped areas are
concerned.
Defendant's claim of lack of notice on the claim of the plaintiff on the overlapped properties
is belied by the evidence presented by plaintiff which consisted by [sic] a letter dated as early as March
11, 1968 (Exh. N, N-1, N-2) advising defendant that the land it was trying to fence of [sic] is within
plaintiff's property, and at the same time asking the defendant to refrain from occupying and building
improvements thereon and from doing any act in derogation of plaintiff's property rights. Five (5)
succeeding letters addressed to defendant followed suit and the evidence clearly show that the same
were received by defendant and no less than Paul Naidas wrote a reply letter to plaintiff's counsel,
Alfonso Roldan on July 31, 1971 which conclusively affirm the fact that defendant is well aware of
plaintiff's claim to the portion of the land encroached. Thus, the defendant's claim that it is a builder
in good faith finds no factual nor legal basis. On the contrary, the defendant's continued construction
and introduction of improvements on the questioned portion of plaintiff's property clearly negates
good faith.
The claim for damages prayed for by plaintiff as a result of defendant's obstinate refusal to
recognize [the] plaintiff's title to the land insofar as the encroachments were made and to turn over
the possession thereof entitles the plaintiff to the award of moral, exemplary damages and attorney's
fees. However, since no sufficient evidence was presented that the plaintiff suffered actual damages,
the Court cannot award any pursuant to [Article] 2199 of the New Civil Code of the Philippines.
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant
as follows:
1. Quieting its T.C.T. Nos. 250242, 240243 and 250[2]44, and removing the clouds thereon
created by the issuance of T.C.T. No. 153101 insofar as the said titles are overlapped by
the T.C.T. No. 153101;
2. Ordering the cancellation or annulment of portions of T.C.T. No. 153101 insofar as it overlaps
plaintiff's T.C.T. No. 250242, to Lot 29, Block 3, (LRC) Pcs-7305; plaintiff's T.C.T. No.
250243 to Lot 30, Block 3 (LRC) Pcs-7305; and plaintiff's [TCT] No. 250244 to Lot 31,
Block 3, (LRC) Pcs-7305;
3. Ordering the defendant to vacate and turn over the possession of said portions in favor of the
plaintiff, and to remove the building or structures it has constructed thereon at its own
expense without right to indemnity [therefor]; to allow the plaintiff to appropriate what
the defendant has built or to compel the defendant to pay for the value of the land
encroached upon;
4. Ordering the defendant to pay moral damages to the plaintiff in the amount of P1,000,000.00;
exemplary damages in the amount of P1,000,000.00 and attorney's fees in the amount
of P100,000.00.
5. Ordering the defendant to pay for the cost of suit.
SO ORDERED. 14
Petitioners filed a joint Motion for Reconsideration. 15 However, in an August 7, 2009 Order, 16 the RTC held
its ground.
Ruling of the Court of Appeals

Petitioners interposed an appeal before the CA, docketed as CA-G.R. CV No. 97478. They argued that the trial
court erred in giving probative value to respondent's documentary evidence despite its hearsay character; that the trial
court erred in declaring them builders in bad faith; that the respondent is guilty of laches; and that the lower court erred
in awarding damages to respondent.
On July 17, 2013, the CA rendered the assailed Decision declaring as follows:
The appeal fails.
Good faith is an intangible and abstract quality with no technical meaning or statutory
definition, and it encompasses, among other things, an honest belief, the absence of malice and the
absence of design to defraud or to seek an unconscionable advantage. An individual's personal good
 faith is a concept of his own mind and, therefore, may not conclusively be determined by his
protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances
which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the
validity of one's right, ignorance of a superior claim, and absence of intention to overreach another.
Article 528 of the New Civil Code provides that possession acquired in good faith does not lose
this character, except in a case and from the moment facts exist which show that the possessor is not
unaware that he possesses the thing improperly or wrongfully. Possession in good faith ceases from
the moment defects in the title are made known to the possessors, by extraneous evidence or by suit
for recovery of the property by the true owner. Whatever may be the cause or the fact from which it
can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it
must be considered sufficient to show bad faith.
In the instant case, as early as 1968, Martinez sent several letters to Las Brisas informing the
latter of Martinez's ownership over the land covered by TCT Nos. 250242, 250243 and 250244 and that
the buildings and improvements Las Brisas made have encroached on the said property. In
the Letter dated 11 March 1968, Martinez informed Las Brisas that the latter's fence had overlapped
into the former's land and requested that Las Brisas refrain from entering Martinez's property.
However, Las Brisas did not heed Martinez's demand and continued developing its property. Martinez
sent six (6) more letters to Las Brisas reiterating that the latter's structures and improvements
encroached on Martinez's land. Records show that Las Brisas received these notices and in fact, made
a reply to one of Martinez's letters. Clearly, Las Brisas was informed on several occasions about
Martinez's titles x x x over its land and, despite such notices, Las Brisas chose to ignore Martinez's
demand and continued constructing other buildings and improvements that intruded into Martinez's
property. Hence, Las Brisas cannot claim that it had no knowledge of the defects of its title and,
consequently, cannot be considered in good faith.
Neither did Las Brisas bother to have its property surveyed in order to discover, for its own
benefit, the actual boundaries of its land (TCT No. 153101). It is doctrinal in land registration law that
possession of titled property adverse to the registered owner is necessarily tainted with bad faith.
Thus, proceeding with the construction works on the overlapped portions of TCT Nos. 250242, 250243
and 250244 despite knowledge of Martinez's ownership thereof puts Las Brisas in bad faith.
Las Brisas further argues that Martinez is guilty of laches as it failed to assert its right over the
encroached portions of TCT Nos. 250242, 250243 and 250244 within reasonable time.
We disagree.
xxx xxx xxx
Furthermore, Martinez is the registered owner of TCT Nos. 250242, 250243 and 250244 and,
as such, its right to demand to recover the portions thereof encroached by Las Brisas is never barred
by laches. In the case of Arroyo vs. Bocaga Inland Dev't Corp., the Supreme Court held:
'As registered owners of the lots in question, the private respondents have a
right to eject any person illegally occupying their property. This right is
imprescriptible. Even if it be supposed that they were aware of the petitioners'
occupation of the property, and regardless of the length of that possession, the lawful
owners have a right to demand the return of their property at any time as long as the
possession was unauthorized or merely tolerated, if at all. This right is never barred
by laches.'
Las Brisas argues that the court a quo erred in admitting Martinez's Relocation Survey of Lot
Nos. 28, 29 and 30 and the Verification Plan Vs-04-00394 as they constitute hearsay evidence and as
such are inadmissible.
We are not persuaded.
It bears noting that this issue of hearsay evidence was raised for the first time on appeal. It is
a fundamental rule that no question will be entertained on appeal unless it has been raised below.
Stated differently, issues of fact and arguments not adequately brought to the attention of the lower
courts will not be considered by the reviewing courts as they cannot be raised for the first time on
appeal. An issue, which was neither averred in the complaint nor raised during the trial in the lower
courts, cannot be raised for the first time on appeal because it would be offensive to the basic rule of
fair play and justice, and would be violative of the constitutional right to due process of the other party.
 In fact, the determination of issues at the pre-trial bars consideration of other issues or questions on
appeal.
In this case, Las Brisas failed to raise this argument during pre-trial and in the trial proper. Las
Brisas even failed to [raise] its objection during Martinez's formal offer of evidence. Clearly, Las Brisas
waived its right to object on [sic] the admissibility of Martinez's evidence. Thus, We cannot bend
backwards to examine this issue raised by Las Brisas at this late stage of the proceedings as it would
violate Martinez's right to due process and should thus be disregarded.
Anent the award of moral damages of Php1,000,000.00 and exemplary damages of
Php1,000,000.00, We find the same without factual or legal basis.
A juridical person is generally not entitled to moral damages because, unlike a natural person,
it cannot experience physical suffering, or such sentiments as wounded feelings, serious anxiety,
mental anguish or moral shock. While the courts may allow the grant of moral damages to corporations
in exceptional situations, it is not automatically granted because there must still be proof of the
existence of the factual basis of the damage and its causal relation to the defendant's acts. Moral
damages, though incapable of pecuniary estimation, are in the category of an award designed to
compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. In
this case, We find no evidence that Martinez suffered besmirched reputation on account of the Las
Brisas encroachment on Martinez's land. Hence, the award of moral damages should be deleted.
Neither is Martinez entitled to exemplary damages. Exemplary damages may only be awarded
if it has been shown that the wrongful act was accompanied by bad faith or done in a wanton,
fraudulent and reckless or malevolent manner. Exemplary damages are allowed only in addition to
moral damages such that no exemplary damage can be awarded unless the claimant first establishes
his clear right to moral damages. As the moral damages are improper in the instant case, so is the
award of exemplary damages.
Nevertheless, an award of nominal damages of Php100,000.00 is warranted since Las Brisas
violated the property rights of Martinez. The New Civil Code provides:
Art. 2221. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him.
Art. 2222. The court may award nominal damages in every obligation arising
from any source enumerated in Article 1157, or in every case where any property
right has been invaded.
The award of damages is also in accordance with Article 451 of the New Civil Code which states
that the landowner is entitled to damages from the builder in bad faith.
WHEREFORE, the Decision dated 20 January 2009 of the Regional Trial Court of Antipolo City,
Branch 71, in Civil Case No. 97-4386 is AFFIRMED with MODIFICATION, as follows:
1.) deleting the award of moral damages and exemplary damages to Martinez Leyba, Inc.; and
2.) ordering Las Brisas Resort Corporation to pay Martinez Leyba, Inc., Php100,000.00, as
nominal damages.
SO ORDERED. 17 (Citations omitted)
Petitioners sought to reconsider, but were rebuffed. Hence, the present Petition.
Issues
In a June 15, 2015 Resolution, 18 this Court resolved to give due course to the Petition, which contains the
following assignment of errors:
A. THE HONORALBE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT PETITIONER IS A
POSSESSOR/BUILDER IN BAD FAITH.
B. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO RULE THAT THE RESPONDENT
INCURRED LACHES IN ENFORCING ITS PUTATIVE RIGHTS.
C. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN RULING THAT THE ISSUE ON HEARSAY
CANNOT BE RAISED FOR THE FIRST TIME ON APPEAL. 19
Petitioners' Arguments

In praying that the assailed CA and trial court dispositions be set aside and that Civil Case No. 97-4386 be
dismissed instead, petitioners argue in their Petition and Reply 20 that they are not builders in bad faith; that in
constructing the improvements subject of the instant case, they merely relied on the validity and indefeasibility of their
title, TCT 153101; that until their title is nullified and invalidated, the same subsists; that as builders in good faith, they
are entitled either to a) a refund and reimbursement of the necessary expenses, and full retention of the land until they
are paid by respondent, or b) removal of the improvements without damage to respondent's property; that contrary to
the CA's pronouncement, respondent may be held accountable for laches in filing a case only after the lapse of thirty
years; and that the Survey Plan of Lots 29, 30 and 31 and the Verification Survey Plan Vs-04-000394 are inadmissible in
evidence for being hearsay, as they were not authenticated in court.
Respondent's Arguments

Respondent, on the other hand, counters in its Comment 21 that the CA is correct in declaring that petitioners
are possessors and builders in bad faith; that while petitioners may have been innocent purchasers for value, they were
not possessors and builders in good faith because despite having been regularly informed in writing that they
encroached on respondent's land and are building illegal structures thereon, they continued with their illegal occupation
and construction; that under the Civil Code, petitioners are not entitled to retention or reimbursement for being
builders in bad faith; that the principle of laches does not apply against owners of land registered under the Torrens
system of land registration; and that petitioners cannot be allowed to argue for the first time on appeal that the pieces
of documentary evidence it presented before the trial court are hearsay.
Our Ruling
The Court denies the Petition.
Under the Manual on Land Survey Procedures of the Philippines, on Verification Surveys, particularly, it is
provided, thus:
Section 146. The Regional Technical Director for Lands may issue order to conduct a
verification survey whenever any approved survey is reported to be erroneous, or when titled lands
are reported to overlap or where occupancy is reported to encroach another property. x x x
xxx xxx xxx
Section 149. All survey work undertaken for verification purposes shall be subject of
verification and approval in the DENR-LMS Regional Office concerned and shall be designated as
Verification Surveys (Vs). x x x
Pursuant to these provisions, respondent caused its property to be surveyed, and on May 23, 1996, the Regional
Technical Director of Lands approved the verification survey under Verification Survey Plan Vs-04-000394. 22 This
Verification Survey Plan revealed that petitioners encroached on respondent's land to the following extent:
a. A portion of 567 square meters of Lot No. 29, Block 3, (LRC) Pcs-7305, covered by respondent's TCT
250242. This is the portion where the petitioners built a riprapping.
b. A portion of 1,389 square meters of Lot No. 30, Block 3, (LRC) Pcs-7305, covered by respondent's TCT
250243. This is the portion where the petitioners had constructed an old building.
c. A portion of 1,498 square meters of Lot No. 31, Block 3, (LRC) Pcs-7305, covered by respondent's TCT
250244. This is the portion where the petitioners constructed a new multi-story edifice.
On this basis, respondent filed Civil Case No. 97-4386. Respondent's main evidence is the said Verification Survey Plan
Vs-04-000394, which is a public document. As a public document, it is admissible in evidence even without further proof
of its due execution and genuineness, 23 and had in its favor the presumption of regularity. To contradict the same,
there must be evidence that is clear, convincing and more than merely preponderant, otherwise the document should
be upheld. 24 The certification and approval by the Regional Technical Director of Lands signifies the "technical
correctness of the survey plotted in the said plan." 25

On the other hand, petitioners' evidence consists mainly of the claim that their TCT 153101 is a valid title and
that they purchased the land covered by it in good faith and for value. They did not present evidence to contradict
respondent's Verification Survey Plan VS-04-000394; in other words, no evidence was presented to disprove
respondent's claim of overlapping. Their evidence only goes so far as proving that they acquired the land covered by
TCT 153101 in good faith. However, while it may be true that they acquired TCT 153101 in good faith and for value, this
does not prove that they did not encroach upon respondent's lands.
 In effect, respondent's Verification Survey Plan Vs-04-000394 remains unrefuted. Petitioners' sole objection to
this piece of evidence that it was not authenticated during trial is of no significance considering that the said
documentary evidence is a public document.
Although "[i]n overlapping of titles disputes, it has always been the practice for the [trial] court to appoint a
surveyor from the government land agencies [such as] the Land Registration Authority or the DENR to act as
commissioner," 26 this is not mandatory procedure; the trial court may rely on the parties' respective evidence to
resolve the case. 27 In this case, respondent presented the results of a verification survey conducted on its lands. On
the other hand, petitioners did not present proof like the results of a survey conducted upon their initiative to contradict
respondent's evidence; nor did they move for the appointment by the trial court of government or private surveyors to
act as commissioners. Their sole defense is that they acquired their land in good faith and for value; but this does not
squarely address respondent's claim of overlapping.
For the RTC and CA, respondent's undisputed evidence proved its claim of overlapping. This Court agrees. As a
public document containing the certification and approval by the Regional Technical Director of Lands, Verification
Survey Plan Vs-04-000394 can be relied upon as proof of the encroachment over respondent's lands. More so when
petitioners could not present contradictory proof.
On the issue of being a builder in bad faith, there is no question that petitioners should be held liable to
respondent for their obstinate refusal to abide by the latter's repeated demands to cease and desist from continuing
their construction upon the encroached area. Petitioners' sole defense is that they purchased their property in good
faith and for value; but this does not squarely address the issue of encroachment or overlapping. To repeat, while
petitioners may have been innocent purchasers for value with respect to their land, this does not prove that they are
equally innocent of the claim of encroachment upon respondent's lands. The evidence suggests otherwise: despite
being apprised of the encroachment, petitioners turned a blind eye and deaf ear and continued to construct on the
disputed area. They did not bother to conduct their own survey to put the issue to rest, and to avoid the possibility of
being adjudged as builders in bad faith upon land that did not belong to them.
Under the Civil Code,
Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built,
planted or sown without right to indemnity.
Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith
may demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent.
Art. 451. In the cases of the two preceding articles, the landowner is entitled to damages from
the builder, planter or sower.
Moreover, it has been declared that
The right of the owner of the land to recover damages from a builder in bad faith is clearly
provided for in Article 451 of the Civil Code.Although said Article 451 does not elaborate on the basis
for damages, the Court perceives that it should reasonably correspond with the value of the properties
lost or destroyed as a result of the occupation in bad faith, as well as the fruits (natural, industrial or
civil) from those properties that the owner of the land reasonably expected to obtain. x x x 28
For their part, petitioners are not entitled to reimbursement for necessary expenses. Indeed, under Article 452
of the Civil Code, 29 the builder, planter or sower in bad faith is entitled to reimbursement for the necessary expenses
of preservation of the land. However, in this case, respondent's lands were not preserved: petitioners' construction and
use thereof in fact caused damage, which must be undone or simply endured by respondent by force of law and
circumstance. Respondent did not in any way benefit from petitioners' occupation of its lands.
Finally, on the question of laches, the CA correctly held that as owners of the subject property, respondent has
the imprescriptible right to recover possession thereof from any person illegally occupying its lands. Even if petitioners
have been occupying these lands for a significant period of time, respondent as the registered and lawful owner has the
right to demand the return thereof at any time.
Jurisprudence consistently holds that 'prescription and laches cannot apply to registered land
covered by the Torrens system' because 'under the Property Registration Decree, no title to registered
land in derogation to that of the registered owner shall be acquired by prescription or adverse
possession.' 30
 Under Section 47 of the Property Registration Decree, or Presidential Decree No. 1529, "(n)o title to registered
land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession."
WHEREFORE, the Petition is DENIED. The July 17, 2013 Decision and March 28, 2014 Resolution of the Court of
Appeals in CA-G.R. CV No. 97478 are AFFIRMED in toto.
SO ORDERED.

G.R. No. 230399. June 20, 2018.]

DEPARTMENT OF EDUCATION, CULTURE AND SPORTS, (now DEPARTMENT of EDUCATION),

represented by its REGIONAL DIRECTOR, TERESITA DOMALANTA, petitioner, vs. HEIRS OF REGINO
BANGUILAN, namely: BENIGNA GUMABAY, FILOMENA BANGUILAN, ESTER KUMMER, AIDA
BANGUILAN, and ELISA MALLILLIN, respondents.

REYES JR., J p:
Nature of the Petition
Before the Court is a Petition for Review on Certiorari 1 filed by the Department of Education, Culture and
Sports, now Department of Education (DepEd) through its Regional Director Teresita Domalanta, assailing the
Decision 2 dated February 24, 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 100288. The assailed Decision granted
the appeal of the heirs of Regino Banguilan (Regino), namely, Benigna Gumabay, Filomena Banguilan, Ester Kummer,
Aida Banguilan, and Elisa Mallillin and declared them as the lawful possessors of the contested property.
The Antecedent Facts
On October 24, 2001, the heirs of Regino Banguilan (respondents) instituted a Complaint 3 for recovery of
possession against the Department of Education (petitioner) with the Regional Trial Court (RTC) of Tuguegarao City,
Cagayan. Respondents claim that as the heirs of Regino, the original registered owner, and by virtue of the Extra-Judicial
Settlement and Partition executed by and among themselves upon the latter's death, they are the absolute owners of
the subject parcel of land situated in Caritan Norte, Tuguegarao City covered by Original Certificate of Title (OCT) No.
10728. 4 They alleged that sometime before the Second World War, the petitioner, through the officials of Caritan Norte
Elementary School (CNES), sought permission from Regino to build temporary structures in the contested land to be
used as classrooms for students. Since Regino did not have any immediate need of the land, he consented to the
construction of said temporary structures and allowed the conduct of classes in the premises. 5
Over time, the temporary structures were gradually improved to concrete ones until the permanent building
of CNES was established. After Regino's death in 1961, respondents alleged that their predecessors-in-interest
demanded from the school officials that they be paid reasonable rent for the use of their property and for the petitioner
to purchase the same if it so desired. Respondents claim that the officials of CNES assured them that they would pay
reasonable rent for occupying the subject lot and that they would eventually purchase it. However, no purchase or
payments were ever made. Respondents now claim that the petitioner's non-adherence to the agreement prejudiced
them because they were deprived of the use and enjoyment of the subject property since 1950. 6
Accordingly, the respondents prayed for the following: (1) to declare the school's possession of the property
illegal or unlawful; (2) to order DepEd, its assigns and those acting in its behalf, to vacate the property presently occupied
by CNES and to surrender peaceful possession thereof to the respondents; (3) to demand from DepEd for payment of
reasonable rent for the use of the property at a rate of P500.00 per month since 1950, litigation expense of P30,000.00
and P50,000.00 as attorney's fees. 7
In its Answer, 8 the petitioner admitted that sometime before the war, it had established CNES on land located
in Caritan Norte, Tuguegarao City and constructed school buildings on the said school site. However, it denied
respondents' claim of ownership and demands for payment of reasonable rent since the school's occupation and
possession over the property was in the concept of an owner for more than fifty (50) years until 2001. 9
Furthermore, the petitioner contended that respondents' complaint did not state a cause of action since there
was no proof that the lot being claimed by the latter formed part of the school site of CNES. Even assuming but without
admitting that there was a cause of action, the petitioner argues that the same had already been barred by prescription
and/or laches because they had been occupying and using the subject lot adversely, peacefully, continuously, and in
the concept of an owner for more than fifty (50) years without question. 10 aDSIHc
In a Decision 11 dated September 11, 2012, the trial court declared Regino as the undisputed owner of the
contested property where CNES was built as evidenced by OCT No. 10728. However, despite recognition of ownership,
the trial court was convinced that laches and prescription had already set in, barring respondents from assailing the
petitioner's right over subject property. The fallo of the decision reads:
WHEREFORE, premises considered, the Court ORDERS the dismissal of the complaint for lack
of merit without prejudice to their filing of an action for payment of just compensation against the
Republic of the Philippines.
SO ORDERED. 12
On appeal to the CA, respondents argued that the court a quo erred when it found that they were barred by
laches from recovering possession of the subject property. They further contended that the petitioner's possession of
the property was by mere tolerance; hence laches could not prevent them from asserting their right of possession over
the subject property. 13
In its Decision 14 dated February 24, 2017, the CA reversed and set aside the decision of the court a quo ruling
that prescription and laches could not work in favor of petitioner since the subject lot was registered under the Torren's
System and because their possession was merely by tolerance. In resolving the issue, the CA applied the principles laid
down in the case of Department of Education vs. Tuliao, 15 that mere material possession of land cannot be considered
as adverse unless such possession is accompanied with intent to possess as an owner.
In keeping with the ruling in Tuliao, 16 the CA further ruled that respondents may either appropriate the
structures or oblige the defendant to pay for the price of the land or enter into a forced lease. Additionally, the CA
awarded attorney's fees and ordered payment of an amount of P500.00 per month as reasonable compensation for the
occupancy of the property from the time of the filing of the complaint until full delivery of the property with
reimbursement of the incurred expenses as enumerated in Article 448 of the New Civil Code or upon payment of the
purchase price in case of compulsory sale. 17 In view of the foregoing, it was held that:
WHEREFORE, the appeal is GRANTED. The decision issued by the Regional Trial Court of
Tuguegarao City, Cagayan Br. 2 dated September 11, 2012 in Civil Case No. 5897 is REVERSED and SET
ASIDE. A new decision is entered declaring as follows:
1. Plaintiffs-Appellants Benigna Gumabay, Filomena Banguilan, Ester Kummer, Aida Banguilan
and Elisa Mallillin are the lawful possessors of the property registered under the Original Certificate
Title No. R.O. 62 (10728);
2. Plaintiffs-Appellants are directed to exercise their option under Article 448 of the New Civil
Code of the Philippines whether to appropriate the structures built on the subject property as their
own by paying to the defendant-appellee Department of Education, Culture and Sports (now the
Department of Education) the amount of the expenses spent for the structures or to oblige the
defendant-appellee to pay the price of the land, and said option must be exercised and relayed to this
court formally within thirty (30) days from receipt of this decision and a copy of such notice must be
furnished to the defendant.
a. If in case the plaintiffs-appellants exercise the option to appropriate the
structures built on the lot in suit, the defendant-appellee is hereby directed to submit
to this court the amount of the expenses spent for the structures within 15 days from
receipt of the notice of the plaintiff of his desired option.
b. If the plaintiffs-appellants decide to oblige the defendant-appellee to pay
the price of the land, the current market value of the land including its improvements
as determined by the City Assessor's Office shall be the basis for the price thereof.
c. In case the plaintiffs-appellants exercise the option to oblige the
defendant-appellee to pay the price of the land but the latter rejects such purchase
because the value of the land is considerably more than that of the structures, the
parties shall agree upon the terms of a forced lease, and give the court a formal
written notice of such agreement and its provisos.
d. If no formal agreement shall be entered into within a reasonable period,
the court shall fix the terms of the forced lease.
3. Defendant-appellee is directed to pay the plaintiffs-appellants the amount of five hundred
pesos (P500.00) per month as reasonable compensation for the occupancy of the subject property
from the time the complaint was filed until such time the possession of the property is delivered to the
plaintiffs-appellants subject to the reimbursement of the aforesaid expenses in favor of the defendant-
 appellee or until such time the payment of the purchase price of the lot be made by the defendant
appellee in favor of the plaintiffs-appellants in case the latter opts for the compulsory sale of the same;
4. Defendant-appellee is directed to pay the plaintiffs-appellants the amount of P20,000.00
as attorney's fees and to pay the costs of the suit.
SO ORDERED. 18
Aggrieved, DepEd filed the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court arguing
that respondent's right over the subject property, if any, is barred by laches due to their inaction for more than fifty
(50) years.
The Issue
The issue before this Court is whether or not the CA erred in ruling that respondent's cause of action against
petitioner was not yet barred by laches. 19
Ruling of the Court
The petition is bereft of merit. ETHIDa
The principle of laches or "stale demands" is the failure or neglect, for an unreasonable and unexplained length
of time, to do that which by exercising due diligence could or should have been done earlier. 20 It is based on the
grounds of public policy in order to maintain peace in the society and equity in order to avoid recognizing a right when
to do so would result in a clearly unfair situation. 21
Nevertheless, the Court has held that there is no fast and hard rule as to what constitutes laches or staleness
of demand; the determination of which is addressed to the sound discretion of the court. To conclude a sound judgment,
courts are guided that laches, being an equitable doctrine, is controlled by equitable considerations in accordance with
the particular circumstances of each case. It cannot be used to defeat justice or perpetrate fraud. Ultimately, pursuant
to the principle of equity, courts are not bound strictly by the statute of limitations or the doctrine of laches when to
be so, a manifest wrong or injustice would result. 22
As prescribed in the ruling of Phil-Air Conditioning Center vs. RCJ Lines, 23 the following elements must all be
present in order to constitute laches:
(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 for which the complaint seeks a remedy;
(2) Delay in asserting the complainant's rights, the complainant having had knowledge or notice, of
the defendant's conduct and having been afforded an opportunity to institute a 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. 24
In the instant case, a close scrutiny of the records reveals that petitioner failed to establish the concurrence of
the above-mentioned elements for the reason that CNES' possession over the subject property was merely being
tolerated by respondents and their predecessor-in-interest.
Petitioner contends that the government, through CNES, was in possession of the subject property in the
concept of an owner since the 1940's. 25 However, as found by the court a quo and the CA, the subject property was
registered in the name of Regino Banguilan under OCT. No. 10728 as early as 1929. 26 The court a quo explicitly stated,
"In the case at bar, it was undisputed that the property registered under OCT. No. 10728 was owned by Regino
Banguilan, which later redounded to his heirs." 27 Therefore, CNES knew from the very beginning that the property was
titled in someone else's name and that their possession was not in the concept of an owner.
In the case of Heirs of Jose Maligaso vs. Spouses Encinas, 28 the Court explained that possession over the
property by anyone other than the registered owner gives rise to the presumption that said possession is only by mere
tolerance. Likewise, when faced with unsubstantiated self-serving claims as opposed to a duly registered Torrens title,
the latter must prevail. The Court elucidated on this point, to wit:
The respondents' title over such area is evidence of their ownership thereof. That a certificate
of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the
person whose name appears therein and that a person who has a Torrens title over a land is entitled
to the possession thereof are fundamental principles observed in this jurisdiction. Alternatively put,
the respondents' title and that of their predecessors-in-interest give rise to the reasonable
 presumption that the petitioners have no right over the subject area and that their stay therein was
merely tolerated. 29 (Citations omitted and emphasis supplied)
Notably, petitioner failed to adduce any evidence to substantiate its claim that it acquired the subject property
and possessed it in the concept of an owner. Moreover, petitioner was unable to support its claim that the subject land
was sold to the municipality of Tuguegarao by Elena Banguilan, Regino's sister. 30 Clearly, petitioner was unable to
overturn the presumption that its occupation over the lot was by mere tolerance of the respondents.
On the other hand, the respondents have proffered the following to prove their claim of ownership over the
subject lot: (1) OCT No. 10728 registered under the name of Regino Banguilan; 31 (2) tax declarations covering the
subject land in the name of Regino; 32 and (3) a sketch plan of Lot 3950 surveyed in the name of Aida Banguilan, one of
the herein respondents. 33 Thus, as between the petitioner's unsubstantiated self-serving claims and respondent's
evidence, the latter must prevail. As such, the Court finds no reason to disturb the CA's factual finding that CNES'
possession of the subject property was, and continues to be, by mere tolerance of the respondents.
Considering that CNES' possession was merely being tolerated, respondents cannot be said to have delayed in
asserting their rights over the subject property. As explained in the recent case of Department of Education vs. Casibang,
et al., 34 a registered owner who is merely tolerating another's possession of his land is not required to perform any
act in order to recover it. This is because the occupation of the latter is only through the continuing permission of the
former. Consequently, once said permission ceases, the party whose possession is merely being tolerated is bound to
vacate the subject property. Hence, until the registered owner communicates the cessation of said permission, there is
no need to do anything to recover the subject property. Similarly, as aptly pointed out by the court a quo, Regino and
his successor-in-interests repeatedly asserted their rights over the subject property by demanding from CNES the
payment of rentals or for the latter to purchase the same. 35 However, once it became clear that petitioner was not
going to pay rent, purchase the lot, or vacate the premises, respondents instituted an action for recovery of
possession. 36 There was no prolonged inaction on the part of the respondents which could bar them from prosecuting
their claims. cSEDTC
Likewise, since CNES' occupation of Lot No. 3950 was merely being tolerated by Regino and his successors-in-
interest, petitioner cannot now claim that they lacked any knowledge or notice that the former would assert their rights
over said property. Even assuming arguendo that there was no agreement between CNES and Regino, the school is
necessarily bound by an implied promise to vacate the subject property upon the registered owner's demand. 37
Notwithstanding the petitioner's failure to prove the concurrence of all the elements of laches, jurisprudence
is also replete with cases which hold that the doctrine of prescription or laches is inapplicable to registered lands
covered by the Torrens System. 38 The Court has consistently held that laches cannot apply to registered land covered
by a Torrens Title because under the Property Registration Decree, no title to registered land in derogation to that of
the registered owner shall be acquired by prescription or adverse possession. 39
In Casibang, 40 the Court ruled in favor of a registered owner and upheld the indefeasibility and
incontrovertibility of a registered title as against the school's possession by mere tolerance. In said case, the registered
owner therein allowed the construction and operation of a school on a portion of his property because he had no use
of it at the time. However, when his successors-in-interest sought to recover possession of the lot, the DepEd refused
alleging that its possession was in the concept of an owner because it had purchased it from the original registered
owner. The Court ruled against the DepEd because it failed to produce any competent proof of transfer of ownership.
Hence, their possession of the subject property was only by mere tolerance and not in the concept of an owner. The
Court held:
It is undisputed that the subject property is covered by OCT No. O-627, registered in the name
of the Juan Cepeda. A fundamental principle in land registration under the Torrens system is that a
certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in
favor of the person whose name appears therein. Thus, the certificate of title becomes the best proof
of ownership of a parcel of land.
As registered owners of the lots in question, the respondents have a right to eject any person
illegally occupying their property. This right is imprescriptible. Even if it be supposed that they were
aware of the petitioner's occupation of the property, and regardless of the length of that possession,
the lawful owners have a right to demand the return of their property at any time as long as the
possession was unauthorized or merely tolerated, if at all. This right is never barred by laches.
Case law teaches that those who occupy the land of another at the latter's tolerance or
permission, without any contract between them, are necessarily bound by an implied promise that
the occupants will vacate the property upon demand. 41 (Citations omitted and emphasis supplied)
 On the same note, the Court concurs with the CA in its application of the case of Tuliao 42 to the herein
controversy with regard to the issue of laches. In said case, the Court unequivocally stated that laches can only apply to
one whose possession of the property was open, continuous, exclusive, adverse, notorious, and in the concept of an
owner for a prolonged period of time. Additionally, physical possession must be coupled with intent to possess as an
owner in order for it to be considered as adverse. The Court explained this, to wit:
As regards the DepEd's defense of laches, it has no merit either. It avers that its possession of
the subject land was open, continuous, exclusive, adverse, notorious and in the concept of an
owner for at least thirty-two (32) years already at the time Tuliao filed the complaint. It must be noted,
however, that Tuliao's claim that the DepEd's possession of a portion of his land to be used as a
passageway for the students was mere tolerance was not refuted. Thus, the same is deemed admitted.
This means that the DepEd's possession was not truly adverse.
The Court once ruled that mere material possession of the land was not adverse as against
the owner and was insufficient to vest title, unless such possession was accompanied by the intent
to possess as an owner. 43 (Citation omitted and emphasis supplied)
As earlier discussed, petitioner, through CNES, was only occupying the subject lot through the permission and
here tolerance of Regino and eventually his successors-in-interest, herein respondents. Therefore, the petitioner's claim
that their possession of the subject lot was adverse and in the concept of an owner, must fail.
Being the owners of the subject property, respondents have the right to recover possession from the petitioner
because such right is imprescriptible. Even if the Department of Education has been occupying the subject property for
a considerable length of time, respondents, as lawful owners, have the right to demand the return of their property at
any time as long as the possession was only through mere tolerance. 44 The same precept holds true even if the
tolerance resulted from a promise that the possessor will pay for the reasonable value of the land. 45
As correctly ruled by the Court of Appeals, respondents may exercise their rights under Article 448, 46 in
relation to Article 546 47 of the New Civil Code. Said provision provides them with the option of either: (1) appropriating
the improvements, after payment of indemnity representing the value of the improvements introduced and the
necessary and useful expenses defrayed on the subject lots; or (2) obliging the petitioner to pay the price of the land.
However, petitioner cannot be obliged to buy the land if its value is considerably more than that of the improvements
and buildings it built. In such a scenario, the petitioner may instead enter into a lease agreement with respondent heirs
and pay them reasonable rent. In case of disagreement, the Court shall fix the terms thereof.
Nonetheless, considering that the subject lot is now being used as school premises by the Caritan Norte
Elementary School and permanent structures have already been erected thereon, respondent's exercise of their rights
under Article 448 and payment of indemnity pursuant to Article 546 would undoubtedly hinder the Department of
Education's prerogative of providing basic education to said locality. In consonance with previous rulings by the
Court, 48 the petitioner's remedy to address such inconvenience is to file an action for expropriation over said land.
WHEREFORE, given the foregoing disquisition, the Petition for Review on Certiorari, dated April 26, 2017 of the
Department of Education, represented by its Regional Director, is hereby DENIED. Accordingly, the Decision dated
February 24, 2017 of the Court of Appeals in CA-G.R. CV No. 100288, reversing and setting aside the Decision dated
September 11, 2012 of the Regional Trial Court of Tuguegarao City, Cagayan, Branch 2 is hereby AFFIRMED in
toto. SDAaTC
SO ORDERED.

[G.R. No. 202342. July 19, 2017.]

AMA LAND, INC., petitioner, vs. WACK WACK RESIDENTS' ASSOCIATION, INC., respondent.

CAGUIOA, J p:

Before the Court is a petition 1 for review on certiorari under Rule 45 of the Rules of Court assailing the
Decision 2 dated June 14, 2012 (Decision) of the Court of Appeals 3 (CA) in CA-G.R. SP No. 118994, granting the petition
filed by respondent Wack Wack Residents' Association, Inc. (WWRAI), reversing and setting aside the October 28, 2010
and February 23, 2011 Orders 4 of the Regional Trial Court of Pasig City assigned in San Juan (Metropolitan Manila),
Branch 264 (RTC) in Civil Case No. 65668, ordering the RTC to issue the injunctive relief prayed for by WWRAI pending
the determination of the petition for the declaration of permanent easement of right of way, and directing WWRAI to
amend the title and the averments in the petition before the CA by disclosing the names of its principals and bringing
the action in a representative capacity.
The Facts and Antecedent Proceedings
The CA Decision summarized the facts as follows:
A commercial and residential building project located at Epifanio Delos Santos Avenue corner
Fordham Street in Wack Wack Village, Mandaluyong City, was proposed by x x x AMA Land, Inc. (AMALI
x x x) in [the] mid-1990s. As the latter proceeded to secure the needed licenses and permits for the
construction of the project, the following were issued: Building Location Permit; Certificate of
Locational Viability; Locational Clearance; Excavation and Ground Preparation Permit; Building Permit;
Environmental Compliance Certificate; HLURB Certificate of Registration; and HLURB License to Sell.
On March 18, 1996, AMALI notified [WWRAI] — a registered homeowners' association of
Wack Wack Village — of its intention to use Fordham Street as an access road and staging area of the
project. As AMALI received no response from [WWRAI], the former temporarily enclosed the job site
and set up a field office along Fordham Street. [WWRAI] claimed, however, that AMALI already
converted part of the said street as barrack site and staging area even before March 18, 1996. All
subsequent attempts of [WWRAI] to remove the said field office proved futile.
[On May 8, 1996,] AMALI then filed a petition before the [RTC], [wherein it seeks the
temporary use of Fordham Street belonging to WWRAI as an access road to AMALI's construction site
of its AMA Tower project pursuant to Article 656 5 of the Civil Code, and to establish a permanent
easement of right of way in its favor over a portion of Fordham Street pursuant to Article 649 6 of
the Civil Code.Aside from its prayer for the declaration of temporary and permanent easement of right
of way in its favor over a portion of Fordham Street, AMALI is also] praying for: (a) a temporary
restraining order (TRO) to immediately enjoin [WWRAI] from demolishing and removing the temporary
field office, constructing a fence isolating Fordham Street, and preventing AMALI from gaining access
to the construction site; (b) a writ of preliminary mandatory injunction directing [WWRAI] to allow
AMALI to use Fordham Street as an access road and staging area; (c) an order making the TRO and the
aforesaid writ permanent; and (d) an order declaring a permanent right of way in favor of AMALI.
In its answer, [WWRAI] contends that the project of AMALI violates the applicable zoning
ordinances; that the licenses and permits issued in favor of AMALI were irregular and unlawful; that
the project is a nuisance, and; that Epifanio Delos Santos Avenue can be utilized as the staging area of
the project.
On July 24, 1997, the [RTC] granted the writ of preliminary mandatory injunction "directing
[WWRAI] to allow [AMALI] to use Fordham Street through a temporary easement of right of way."
In 1998, due to financial crisis, the construction of the project was put on hold and AMALI was
constrained to finish merely the basement. Although AMALI asserted that "it continued to pay
[WWRAI] for the use of Fordham Street," [WWRAI] claimed otherwise.
In 2002, before the Regional Trial Court of Muntinlupa, Branch 256, AMALI filed a petition for
corporate rehabilitation which was later on approved. Also, the said rehabilitation court in Muntinlupa
directed the Office of the Building Official and/or Office of the City Engineer of Mandaluyong City to
issue an Amended Building Permit in favor of AMALI. As a consequence, Building Permit No. 08-2011-
0048 was issued.
As AMALI resume[d] the project, [WWRAI] filed in January 2010, an "Urgent Motion to Set for
Hearing" its application for temporary restraining order and/or writ of preliminary injunction. The
[RTC] heard the application and received the evidence presented by [WWRAI]. AMALI, on the other
hand, failed to attend the proceedings. On October 28, 2010, the [RTC] ruled against the motion. Thus,
it ordered the following:
WHEREFORE, [WWRAI]'s application for the issuance of temporary
restraining order and/or writ of preliminary injunction is DENIED for lack of merit.
[AMALI] is directed to make representations with the Building Officials of
Mandaluyong City on its application for permit to construct the building.
Attention of the Building Officials of Mandaluying (sic) City is invited to the
pending controversy of [the] parties involved, hence, his (sic) prompt final decision is
suggested. x x x
A motion for reconsideration of the above order was filed but was denied on February 23,
2011. Hence, the x x x petition [for certiorari under Rule 65 before the CA].
 On June 10, 2011, after a [clarificatory] hearing, [the CA] granted [WWRAI]'s application for a
temporary restraining order[, and, accordingly, AMALI was commanded to cease and desist from
further committing the act complained of, which is the construction of the commercial and residential
condominium project located along EDSA corner Fordham Street in Wack Wack Village.] 7 Then, on
July 28, 2011, the application of [WWRAI] for the issuance of a writ of preliminary injunction was
granted as well pending resolution of the x x x petition for certiorari [before the CA]. 8
The CA Ruling

The CA rendered its Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the petition is GRANTED. The October 28, 2010 and
February 23, 2011 Orders of the Regional Trial Court of Pasig City assigned in San Juan (Metropolitan
Manila), Branch 264, in Civil Case No. 65668 is REVERSED and SET ASIDE. The latter court is hereby
ordered to issue the injunctive relief prayed for by the petitioner Wack Wack Residents Association,
Inc. pending determination of the petition for the declaration of PERMANENT easement of right of
way.
Also, the petitioner is DIRECTED to AMEND the following: (a) the TITLE; and (b)
the AVERMENTS, in the present petition by disclosing the names of its principals and bringing the
action in a representative capacity.
SO ORDERED. 9
Without filing a motion for reconsideration, AMALI filed the instant Rule 45 petition for review on certiorari.
Issues
AMALI raised the following issues in its Petition:
(1) whether WWRAI is guilty of forum shopping;
(2) whether WWRAI is entitled to a temporary restraining order and/or a writ of preliminary injunction;
(3) whether the CA Decision amounts to a prejudgment of the merits of Civil Case No. 65668 (original petition
for easement of right of way);
(4) whether the CA Decision disturbed the status quo prevailing before the filing of the WWRAI petition; and
(5) whether WWRAI is the real party in interest in this case. 10
The Court's Ruling
AMALI's petition is meritorious.
The five issues raised by AMALI have, as core issue, the question of whether or not WWRAI is entitled to enjoin
the construction of the AMA Tower pending determination of the original petition for the declaration of temporary and
permanent easements of right of way over a portion of Fordham Street.
The Court in Lukang v. Pagbilao Development Corporation 11 reiterated the purpose and grounds for the
issuance of a writ of preliminary injunction, viz.:
A writ of preliminary injunction is a provisional remedy which is adjunct to a main suit, as well
as a preservative remedy issued to maintain the status quo of the things subject of the action or the
relations between the parties during the pendency of the suit. The purpose of injunction is to prevent
threatened or continuous irremediable injury to the parties before their claims can be thoroughly
studied and educated. Its sole aim is to preserve the status quo until the merits of the case are fully
heard. Under Section 3, Rule 58 of the Rules of Court, an application for a writ of preliminary injunction
may be granted if the following grounds are established:
(a) That the applicant is entitled to the relief demanded, and the whole or part of such relief
consists in restraining the commission or continuance of the act or acts complained of,
or in requiring the performance of an act or acts, either for a limited period or
perpetually;
(b) That the commission, continuance or non-performance of the act or acts complained of
during the litigation would probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing, threatening, or is attempting to do, or is
procuring or suffering to be done, some act or acts probably in violation of the rights of
 the applicant respecting the subject of the action or proceeding, and tending to render
the judgment ineffectual. 12
Thus, to be entitled to the injunctive writ, the petitioner must show that: (1) there exists a clear and
unmistakable right to be protected; (2) this right is directly threatened by the act sought to be enjoined; (3) the invasion
of the right is material and substantial; and (4) there is an urgent and paramount necessity for the writ to prevent
serious and irreparable damage. 13
The grant or denial of the injunctive relief rests on the sound discretion of the court taking cognizance of the
case, since the assessment and evaluation of evidence towards that end involves findings of fact left to the conclusive
determination by such court; and the exercise of judicial discretion by such court will not be interfered with, except
upon a finding of grave abuse of discretion. 14
In the issuance of the injunctive writ, grave abuse of discretion implies a capricious and whimsical exercise of
judgment equivalent to lack of jurisdiction; or the exercise of power in an arbitrary or despotic manner by reason of
passion, prejudice or personal aversion amounting to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law. 15
Guided by the foregoing principles, the CA erred in finding that the RTC committed grave abuse of discretion in
issuing its October 28, 2010 and February 23, 2011 Orders, denying WWRAI's application for the issuance of a temporary
restraining order and writ of preliminary injunction.
The Court agrees with the RTC that:
[WWRAI]'s allegation that [its members'] 16 right to live in a peaceful, quiet and safe
environment will be violated in the event that the condominium project of [AMALI] will be erected is
untenable. The alleged noise and dust that may be caused by the construction is the natural
consequence thereof. However, this annoyance that may be brought by the construction is not
permanent in nature but is merely temporary and once the building is completed, [said members']
right to live in a peaceful, quiet and safe environment will be restored without noise and dust.
As to the allegations that [said members'] privacy may be invaded for the reason that they
may be photographed or videotaped without their knowledge, these fears are merely speculative and
cannot be taken into consideration.
As admitted by [WWRAI's] witness, the construction activity is suspended, hence, there is
nothing to restrain x x x. There is no urgent and paramount necessity for the writ to prevent serious
damage. 17
Indeed, WWRAI was unable to convincingly demonstrate a clear and unmistakable right that must be protected
by the injunctive writ. The apprehensions of its members are, as correctly ruled by the RTC, speculative and insufficient
to substantiate the element of serious and irreparable damage.
As to the issue of the legality of the construction of AMA Tower, the Resolution 18 in NBCDO NO. 12-11-93
MAND CITY dated March 29, 2012 issued by the Office of the Secretary of the Department of Public Works and Highways
(DPWH), finding "the issuance of Amended Building Permit No. 08-2011-0048 for [AMALI's] proposed thirty-four (34)
storey with seven (7) basement level AMA Tower Residences project is in accordance with the provisions of the National
Building Code of the Philippines (P.D. 1096) and its IRR x x x" 19 carries the presumption of regularity as having been
issued pursuant to official duty. 20 The authority to administer and enforce the provisions of the National Building Code,
and the power to appoint Building Officials throughout the country, including Metro Manila, pertain to the Secretary of
Public Works and Highways. 21 Until sufficiently rebutted, the determination of the Secretary of DPWH stands. Besides,
the determination of the "special and affirmative defense" that the construction of the AMA Tower is illegal, which
WWRAI raised in its Answer, 22 will be finally settled after the parties have adduced their evidence in chief. The same
holds true with respect to the assertion of WWRAI that the construction of the AMA Tower is a nuisance. This issue can
only be resolved after trial on the merits. The RTC also noted that no less than the Department of Environment and
Natural Resources issued an Environmental Compliance Certificate in favor of AMALI and "it is clear that no question
remains on the legality of [AMALI's] construction." 23
However, the denial of WWRAI's application for a writ of preliminary injunction against the construction of the
AMA Tower does not necessarily translate to AMALI's entitlement to a temporary easement of right of way over a
portion of Fordham Street belonging to WWRAI for use as an access road and staging area of its AMA Tower project
before the resolution of its petition for declaration of easement of right of way (original petition) by the RTC. Stated
differently, WWRAI cannot be compelled at this stage of the proceedings to grant AMALI a temporary legal easement
of right of way over a portion of Fordham Street.
In its original petition, AMALI alleges two distinct causes of action, namely:
3.0
FIRST CAUSE OF ACTION
(DECLARATION OF TEMPORARY EASEMENT OF RIGHT OF WAY)
xxx xxx xxx
3.2 [AMALI]'s use of Fordham Street belonging to [WWRAI] as an access road to [AMALI]'s
construction site is indispensable to the construction of AMA TOWER Project.
3.3 [AMALI]'s property is so situated that the temporary site construction office and the
temporary ingress and egress for the construction workers can only be created with
least prejudice in Fordham Street. The Dolmar property on the right side of [AMALI]'s
property is an existing commercial structure while the Sta. Cruz's at the back is a
residential property. The front portion of [AMALI]'s property is facing a main thorough
fare[, Epifanio de los Santos Avenue (EDSA),] and will be a part of the construction itself.
3.4 [AMALI] is ready, willing and able to pay the proper indemnity.
3.5 Article 656 of the New Civil Code provides that:
"Art. 656. If it be indispensable for the construction, repair, improvement,
alteration or beautification of a building, to carry materials through the estate of
another, or to raise thereon scaffolding or other objects necessary for the work, the
owner of such estate shall be obliged to permit the act, after receiving payment of
the proper indemnity for the damage caused him. (5691)"
4.0
SECOND CAUSE OF ACTION
(DECLARATION OF PERMANENT EASEMENT OF RIGHT OF WAY)
xxx xxx xxx
4.2 The property of [AMALI] where the site of AMA TOWER is situated is surrounded by estates
of others. A commercial building of Dolmar is on the right side of [AMALI]'s property
and a residential property of Sta. Cruz is at the back. The front portion of [AMALI]'s
property is facing a main thorough fare.
4.3 The property of [AMALI] has no adequate outlet to a public highway. The front portion of
the property facing EDSA is a difficult and dangerous outlet not only for [AMALI] but for
the public as well.
4.4 The use of small portion of Fordham Street near EDSA is a point least prejudicial to [WWRAI].
4.5 [AMALI] is ready, willing and able to pay the proper indemnity.
4.6 Article 649 of the New Civil Code provides that:
"Art. 649. The owner, or any person who by virtue of a real right may cultivate
or use any immovable, which is surrounded by other immovables pertaining to other
persons and without adequate outlet to a public highway, is entitled to demand a
right of way through the neighboring estates, after payment of the proper indemnity.
xxx xxx xxx" 24
First of all, the CA Decision categorically found that WWRAI is the owner of the subject Fordham Street as this
was expressly admitted by AMALI and pursuant to the RTC's pre-trial order. 25 Thus, inasmuch as AMALI prays for the
grant of both temporary and permanent easements of right of way over a portion of Fordham Street against WWRAI in
the original petition, WWRAI should be deemed to be the owner of the servient estate. Simply stated, WWRAI, and not
its members, is the real party in interest in this case. To be sure, even AMALI itself filed the original petition against
WWRAI and not against the latter's members.
Secondly, the question of whether or not AMALI, as owner of the dominant estate, may validly claim against
WWRAI a compulsory permanent right of way under Articles 649 and 650 26 of the Civil Code, will depend on a finding
that AMALI has established the existence of the following requisites, namely: (1) the dominant estate is surrounded by
other immovables; (2) it is without adequate outlet to a public highway; (3) after the proper indemnity has been paid;
(4) the isolation was not due to the proprietor of the dominant estate's own acts; and (5) the right of way claimed is at
a point least prejudicial to the servient estate. 27 A sixth requisite is that the right of way must be absolutely necessary
for the normal enjoyment of the dominant estate by its owner. 28 There must be a real, not fictitious or artificial,
necessity for the right of way, 29 and the right cannot be claimed merely for the convenience of the owner of the
enclosed estate. 30 The burden of proving the existence of the foregoing requisites lies on AMALI, being the owner of
the dominant estate. 31 This issue has been correctly recognized by the CA as still pending determination by the
Regional Trial Court of Pasig City assigned in San Juan (Metropolitan Manila) Branch 264, in Civil Case No. 65668.
In turn, as regards the question of whether AMALI is entitled to a temporary easement of right of way, Article
656 of the Civil Code provides that this can be granted only after the payment of the proper indemnity by AMALI, the
owner of the dominant estate; and only if AMALI has established that the easement is indispensable for the construction
of its AMA Tower Project.
The Court is aware that the RTC had previously granted on July 24, 1997, a writ of preliminary mandatory
injunction "directing [WWRAI] to allow [AMALI] [to] use Fordham Street x x x through a temporary easement right of
way [and set the] compensation for the use of Fordham Street x x x to Fifty Thousand Pesos (P50,000.00) per month of
use." 32
As to how the RTC arrived at the P50,000.00 monthly compensation and the conclusion that the use of Fordham
Street is indispensable in the construction of the AMA Tower, the Court is perplexed given the admission in the July 24,
1997 Order of the RTC that "the parties waived presentation of witnesses and submitted the incident [prayer for
issuance of a writ of preliminary mandatory injunction] for resolution based on their respective pleadings." 33 Unlike
the RTC Order dated October 28, 2010 which denied WWRAI's application for a temporary restraining order and writ of
preliminary injunction where the judicial affidavits executed by four members of WWRAI were summarized, the RTC
Order dated July 24, 1997 which granted a temporary easement of right of way in favor of AMALI simply concluded that:
Article 656 of the New Civil Code provides:
"If it be indispensable for the construction, repair, improvement, alteration
or beautification of a building, to carry materials through the estate of another, or to
raise thereon scaffolding or other objects necessary for the work, the owner of such
estate shall be obliged to permit the act, after receiving payment of the proper
indemnity for the damage caused him."
[WWRAI's] obligation is undoubtedly established by the above provision.
From a map of the area in question (Annex "G" of [AMALI's] Reply), it is unmistakable that
Fordham Street in Wack Wack Village, which is owned by [WWRAI], is the only road which [AMALI] is
able to use with respect to the necessary preparations relative to the construction project. 34
The RTC did not even factor in its Order the fact that the front portion of AMALI's property where the proposed AMA
Tower project is situated is facing EDSA, which AMALI describes as a main thoroughfare. The said Order also fails to
identify the specific portion of Fordham Street that would be subject to the temporary easement of right of way.

Not only is the July 24, 1997 Order granting the temporary easement of right of way short in factual basis, it is
a virtual prejudgment of AMALI's "FIRST CAUSE OF ACTION (DECLARATION OF TEMPORARY EASEMENT OF RIGHT OF
WAY)."
The Court reiterated in Searth Commodities Corp. v. Court of Appeals 35 that:
The prevailing rule is that courts should avoid issuing a writ of preliminary injunction which
would in effect dispose of the main case without trial. x x x There would in effect be a prejudgment of
the main case and a reversal of the rule on the burden of proof since it would assume the proposition
which the petitioners are inceptively bound to prove. 36
The RTC erred and/or gravely abused its discretion when it granted AMALI's application for preliminary
mandatory injunction because, in so doing, it prematurely decided disputed facts and disposed of the merits of the case
without the benefit of a full-blown trial wherein testimonial and documentary evidence could be fully and exhaustively
presented, heard and refuted by the parties. 37 As such, the RTC Order dated July 24, 1997 insofar as it granted a
temporary easement of right of way over Fordham Street in favor of AMALI is concerned is declared void and of no
force and effect. 38 The RTC lacked jurisdiction to declare a temporary easement of right of way arising from Article 656
of the Civil Code without a full-blown trial.
Article 656 requires proof of indispensability and receipt of payment of the proper indemnity for the damage
caused by the owner of the dominant estate before the owner of the servient estate can be compelled to grant a
temporary easement of right of way. It appears from the rollo that AMALI presented no witnesses to establish these
prerequisites. Being preconditions, they are akin to suspensive conditions that must be fulfilled before the obligation
on the part of WWRAI to allow the easements can arise. Until the preconditions are met, AMALI has no legal basis to
use a portion of Fordham Street as an access road and staging area of its AMA Tower project. To allow AMALI to do so
 would be in contravention of the legal provisions on the establishment and grant of the legal easement of right of way
under the Civil Code.
The issue of forum shopping becomes irrelevant in the light of the Court's ruling that the CA erred in finding
that the RTC acted with grave abuse of discretion in issuing its Orders dated October 28, 2010 and February 23, 2011.
This issue is also immaterial in the determination of AMALI's temporary use of a portion of Fordham Street as an access
road and staging area of its AMA Tower project. Even on the assumption that the Court finds WWRAI guilty of forum
shopping, the burden of AMALI to establish the preconditions discussed above so as to entitle it to a temporary legal
easement subsists.
Furthermore, the Court finds no compelling need to resolve the issue of prejudgment of the main case or the
original petition in view of the granting of the present petition and the declaration as void the granting of a writ of
preliminary mandatory injunction on the temporary easement of right of way under RTC Order dated July 24, 1997.
To stress, the temporary easement of right of way under Article 656 of the Civil Code, similar to the permanent
easement of right of way pursuant to its Articles 649 and 650, can only be granted after proof of compliance with the
prerequisites set forth in the articles duly adduced during a full-blown trial.
Lastly, the status quo prevailing before the filing of the WWRAI petition before the CA is not the status
quo ante that must be preserved. The object of a writ of preliminary injunction is to preserve the status quo, which is
the last peaceable uncontested status that preceded the pending controversy. 39 Thus, the proper understanding of
the status quo ante should refer to the situation prior to AMALI's unauthorized use of a portion of Fordham Street as
an access road and staging area of its AMA Tower project.
WHEREFORE, premises considered, the petition for review on certiorari in G.R. No. 202342 is hereby GRANTED,
and the Court of Appeals' Decision dated June 14, 2012 in CA-G.R. SP No. 118994 is hereby REVERSED and SET ASIDE.
The October 28, 2010 and February 23, 2011 Orders of the Regional Trial Court of Pasig City assigned in San Juan
(Metropolitan Manila), Branch 264 in Civil Case No. 65668 are REINSTATED, and its Order dated July 24, 1997 insofar as
it granted a temporary easement of right of way over Fordham Street in favor of petitioner AMA Land, Inc. is concerned
is declared VOID and of NO EFFECT. The said Regional Trial Court is DIRECTED to proceed with the trial of the case with
dispatch.
SO ORDERED.

G.R. No. 225929. January 24, 2018.]

JOSE V. GAMBITO, petitioner, vs. ADRIAN OSCAR Z. BACENA, respondent.

REYES, JR., J p:

This is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court, assailing the Decision 2 dated
April 8, 2016 and Resolution 3 dated July 19, 2016 of the Court of Appeals (CA) in CA-G.R. SP No. 140980.

The Antecedents

The records show that before the Municipal Trial Court (MTC) of Bayombong, Nueva Vizcaya, Jose V. Gambito
(Gambito) filed a complaint for quieting of title, declaration of nullity of title, specific performance and damages over a
parcel of land located in La Torre South, Bayombong, Nueva Vizcaya, against Adrian Oscar Z. Bacena (Bacena), one of
the defendants therein. SDAaTC
Gambito alleged before the MTC that he is the true and registered owner of a certain parcel of land located in
La Torre South, Bayombong, Nueva Vizcaya containing an area of 8,601 square meters, more or less, under Transfer
Certificate of Title (TCT) No. T-149954. The said parcel of land was acquired by him through a Deed of Donation executed
on July 9, 2008 by his mother, Luz V. Gambito (Luz), who held said property under TCT No. 92232. Her mother, Luz,
acquired the same property from Dominga Pascual (Pascual) and her co-owner, Rosalina Covita (Covita), through a Deed
of Sale dated December 16, 1994 which finds its origin from Original Certificate of Title (OCT) No. R-578 issued on March
30, 1916. 4
Gambito claimed that through his efforts, he discovered that Bacena surreptitiously secured before the
Community Environment and Natural Resources Office (CENRO), a patent title, Katibayan ng Orihinal na Titulo Bilang P-
21362 covering 4,259 sq m, more or less, which was a part and portion of the same lot registered in Gambito's name
under TCT No. T-149954. Gambito further alleged that he is aware his parents filed a protest before the CENRO,
Bayombong, Nueva Vizcaya on August 31, 2007 against Bacena but the same was later withdrawn by his parents upon
realization that said office is not the proper forum and that the order of dismissal was issued on April 8, 2009 and thus
there is a need to clear up the cloud cast by the title of Bacena over his ancient title.
Bacena, in his defense, alleged that the folder of Petronila Castriciones (Castriciones), survey claimant of Lot
No. 1331, Cad 45, La Torre, Bayombong, Nueva Vizcaya, is supported by the records of the CENRO, Bayombong, Nueva
Vizcaya. The title OCT No. P-21362 was regularly issued and was based on authentic documents. 5 On the other hand,
the title of Gambito's predecessor-in-interest is evidently null and void ab initio because it was derived from a Deed of
Sale, dated December 16, 1994 which supposedly signed by vendor Pascual although she was already dead, having died
on August 25, 1988 or after a period of seven years. Moreover, the signatory-vendor, Covita denied that she ever signed
the Deed of Sale which is supposedly that of her husband, Mariano G. Mateo, supposedly signifying his conformity to
the sale, is likewise a fake signature of her husband because he was already dead at the time of the execution of the
document having died on June 14, 1980. 6
By way of counterclaim, Bacena prayed, among others, that Gambito's Title (TCT No. T-149954) and that of his
predecessor-in-interest, Luz, TCT No. T-92232 and the Deed of Sale, basis of TCT No. T-92232 as null and void; and to
declare that title of Bacena, OCT No. P-21262, valid and effective and be cleared/quieted of any cloud thereto. 7

Ruling of the MTC

After the parties' presentation of evidence, the MTC rendered a Decision 8 dated March 11, 2014 in favor of
Gambito. The MTC considered the defense's position as a collateral attack on Gambito's title. 9 The MTC ruled that the
issue on the validity of title, whether or not fraudulently issued, can only be raised in action expressly instituted for that
purpose.
Moreover, the MTC ruled that in successive registrations, where more than one certificate is issued in respect
of a particular estate or interest in land, the person claiming under the prior certificate is entitled to the estate or
interest, and here, the origin of Gambito's title was issued in 1916 and while Bacena's title was only issued on February
25, 1999. 10

Ruling of the Regional Trial Court

Aggrieved, Bacena appealed before the Regional Trial Court (RTC) of Bayombong, Nueva Vizcaya, Branch 27,
which granted the appeal in a Decision 11 rendered on November 21, 2014.
In its ruling, the RTC laid that in an action for quieting of title, it is an indispensable requisite that the plaintiff
or complainant has a legal or an equitable title to or interest in the real property subject of the action, which is however
wanting at the time Gambito filed his verified Complaint. 12
The RTC also noted that Gambito's title was derived through a certificate of title which was based on a falsified
Deed of Sale which was made to appear to have been signed by the parties who were long dead at the time of its
execution. 13
Moreover, the RTC found that Bacena's title has become indefeasible and incontrovertible as it has been
possessed by Bacena and his predecessors-in-interest and never been occupied by Gambito and his mother.
Contrary to the MTC's ruling, the RTC held that Bacena's counterclaim partakes of a direct attack on Gambito's
title.
The RTC likewise found that the title in the name of Bacena was regularly issued as he and his predecessors
have been in undisturbed possession, occupation and utilization of Lot No. 1331 as early as October 1, 1913 when it
was cadastrally surveyed and even before it; has always been declared for taxation purposes with taxes thereof duly
paid yearly; and that as private property, it is not within the jurisdiction of the Bureau of Lands to grant it to public land
application. 14
The RTC awarded damages in favor of Bacena.

Ruling of the CA

On appeal, the CA, in its Decision 15 dated April 8, 2016, affirmed the RTC's Decision dated November 21, 2014.
The CA agreed with the findings and ruling of the RTC.
 Undaunted, Gambito filed a Motion for Reconsideration of the said decision of the CA which was however
denied in its Resolution 16 dated July 19, 2016.
Hence, this petition for review on certiorari.
In support of the petition, Gambito assails the decision of the CA claiming that it is not in consonance with law
and jurisprudence. The underlying issues presented by Gambito for resolution are as follows, viz.:
1. The decision did not properly address the important issue on laches;
2. The decision misapplied the concept of transferee in good faith; and
3. The decision misappreciated the objection on the award for damages.

Ruling of the Court

The petition is denied.

The decision of the CA is in
consonance with law and
jurisprudence
On the issue of laches, the decision of the CA properly addressed the important issue thereon and the CA
correctly held that it should be Bacena and not the Gambito who should invoke laches. acEHCD
Laches is defined as the failure or neglect for an unreasonable and unexplained length of time to do that which,
by exercising due diligence, could or should have been done earlier; it is negligence or omission to assert a right within
a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to
assert it. 17
It should be noted that the CA found that Bacena has no reason to doubt his own ownership and possession of
Lot No. 1331, as established in this case obtained through the right of Castriciones. Moreover, it was Gambito who
disturbed that open, continuous, peaceful, adverse and notorious possession of Bacena and his predecessors-in-
interest. Thus, Bacena is not expected to assert his right for having possession and title to the land in dispute and the
CA is correct when it found that Bacena has no reason to doubt his own ownership and possession of Lot No. 1331.
Hence, the Court is in accord with the CA when it held that laches cannot apply and it should be Bacena and not Gambito
who should invoke laches.
Private ownership of land — as when there is prima facie proof of ownership like a duly registered possessory
information or a clear showing of open continuous, exclusive, and notorious possession, by present or previous
occupants — is not affected by the issuance of a free patent over the same land. 18
While Gambito assails both the RTC and CA on the principle of laches on the uninterrupted existence of OCT
No. R-578 of 98 years, it should be noted that the CA found, it was certain that when the cadastral survey was conducted
in 1913 to 1914, there were already two survey claimants, one of which is Castriciones. Thus, OCT No. R-578 should not
have included Lot No. 1331, as there was already a supervening event that transpired from the time it was applied for
until the title was issued. Moreover, here it established that Castriciones is the previous occupant with open continuous,
exclusive, and notorious possession as above contemplated. Hence, OCT No. R-578 issued as a free patent, by
application, cannot affect Castriciones' previous occupation with open continuous, exclusive, and notorious possession.
On the issue of transferee in good faith, the decision of the CA did not misapply the concept of transferee in
good faith.
While Gambito argues that the CA misapplied the concept of transferee in good faith for the reason that bad
faith has died when Pascual, inherited the property from Venancio Pascual, We disagree.
Under Section 53 of Presidential Decree No. 1529, known as the Property Registration Decree, in all cases of
registration procured by fraud, the owner may pursue all his legal and equitable remedies against the parties to such
fraud without prejudice, however, to the rights of any innocent holder for value of a certificate of title. After the entry
of the decree of registration on the original petition or application, any subsequent registration procured by the
presentation of a forged duplicate certificate of title, or a forged deed or other instrument, shall be null and void.
In this case, Gambito is not an innocent holder for value for the reason that he is a donee acquiring the property
gratuitously by a Deed of Donation and not by purchase. Hence, the concept of an innocent purchaser for value cannot
apply to him.
 Moreover, in Ingusan v. Heirs of Aureliano I. Reyes, 19 the Court happened to pass upon falsified documents
involving properties, thus:
There is no doubt that the deed of donation of titled property, cancellation of affidavit of loss
and agreement of subdivision with sale, being falsified documents, were null and void. It follows that
TCT Nos. NT-241155, NT-241156, NT-239747 and NT-239748 which were issued by virtue of these
spurious documents were likewise null and void. 20
In this case, it is an established fact that the fraud referred to by the CA is the fraud on the transfer of the
property from Pascual and Covita to Luz on the basis of fake signatures considering that the vendor signatories therein
are all dead. As such, by applicability of the foregoing jurisprudence, the deed is considered a forged deed and hence
null and void. Thus, Luz's title is null and void which transferred nothing by Deed of Donation to her son Gambito, the
petitioner herein. Hence, the CA did not misapply the concept of transferee in good faith by considering the fraud in
the transfer of the property to Luz consequently ending up with Gambito.
On the issue that the CA decision misappreciated the objection on the award for damages, Gambito's argument
that he cannot be in bad faith deserves scant consideration. SDHTEC
Good faith is ordinarily used to describe that state of mind denoting "honesty of intention, and freedom from
knowledge of circumstances which ought to put the holder upon inquiry; 21 an honest intention to abstain from taking
any unconscientious advantage of another, even through technicalities of law, together with absence of all information,
notice, or benefit or belief of facts which render the transaction unconscientious." 22
The CA in its resolve as to the award of damages referred to the RTC's basis of the awards. As can be gleaned
from the CA's Resolution dated July 19, 2016, viz.:
The trial court discussed the basis of the awards, yet petitioner, aside from his self-serving
claim that there was no bad faith, failed to discuss the lack of sufficient basis for the grant of awards. 23
In this connection, the RTC in its Decision 24 dated November 21, 2014, laid down its basis in concluding the
award for damages finding absence of good faith on the part of Gambito by taking a second hard look into the facts and
circumstances obtaining on the manner by which the appellee, who was the notary public who notarized the Last Will
and Testament and who as expected fully knew the rights of the appellant over the lot in question. 25 Thus, it is evident
that Gambito's state of mind had no honesty of intention and had no freedom from knowledge of circumstances which
ought to put him upon inquiry. Hence, Gambito's claim that the CA decision misappreciated the objection on the award
for damages is incorrect.
In sum, the Court finds that the decision of the CA is in consonance with law and jurisprudence.
WHEREFORE, in light of the foregoing, the petition is hereby DENIED. The Decision dated April 8, 2016 issued
by the Court of Appeals in CA-G.R. SP No. 140980 is AFFIRMED.
SO ORDERED.

G.R. No. 197743. March 12, 2018.]

HEIRS OF JOSE MARIANO and HELEN S. MARIANO, represented by DANILO DAVID S. MARIANO, MARY
THERESE IRENE S. MARIANO, MA. CATALINA SOPHIA S. MARIANO, JOSE MARIO S. MARIANO, MA.
LENOR S. MARIANO, MACARIO S. MARIANO and HEIRS OF ERLINDA MARIANO-VILLANUEVA,
represented in this act by IRENE LOURDES M. VILLANUEVA through her ATTORNEY-IN-FACT EDITHA S.
SANTUYO and BENJAMIN B. SANTUYO, petitioners, vs. CITY OF NAGA, respondent.

TIJAM, J p:

This is a Petition for Review on Certiorari, filed under Rule 45 of the Rules of Court, assailing the July 20, 2011
Amended Decision 1 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 90547 which reconsidered its March 7,
2011 Decision, 2 annulling the June 20, 2005 Decision 3 of the Regional Trial Court (RTC), Branch 26 of Naga City in Civil
Case No. RTC 2005-0030, and reinstating the February 14, 2005 Decision 4 of the Municipal Trial Court (MTC), Branch 1
of Naga City in Civil Case No. 12334 dismissing the ejectment case instituted by petitioners.

The Facts

As culled by the CA from the records, the facts of the case are as follows:
 On July 3, 1954, Eusebio M. Lopez, Sr., Soledad L. Dolor, Jose A. Gimenez and Eusebio Lopez, Jr. (Lopez Jr.), as
the President, Secretary, Treasurer and General Manager of the City Heights Subdivision (Subdivision), respectively,
wrote to the mayor of the City of Naga (City), offering to construct the Naga City Hall within the premises of the
Subdivision. Their letter indicated that the City Hall would be built on an area of not less than two hectares within the
Subdivision, which would be designated as the open space reserved for a public purpose. The letter, which also indicated
the terms of the construction contract, provided that the City would be free to accept another party's offer to construct
the City Hall if it found the same to be more favorable. 5
The City's Municipal Board subsequently passed Resolution No. 75, dated July 12, 1954, asking the Subdivision
for a bigger area on which the City Hall would stand. Consequently, on July 30, 1954, the Subdivision amended its offer
and agreed to donate five hectares to the City. The area is a portion of the land registered in the names of Macario
Mariano (Macario) and Jose A. Gimenez (Gimenez) under Transfer Certificate of Title (TCT) No. 671 of the Registry of
Deeds for Naga City, measuring a total of 22.9301 hectares. Along with its amended offer to construct the City Hall, the
Subdivision specified the terms of its proposal to finance the construction. 6
The amended offer was signed by Macario and Gimenez to indicate their "(c)onforme," and by their respective
spouses, Irene P. Mariano (Irene) and Rose Fitzgerald De Gimenez (through one Josie A. Gimenez), to indicate their
marital consent. 7
On August 11, 1954, the Municipal Board adopted Resolution No. 89 accepting the Subdivision's offer of
donation and its proposed contract. The Resolution also authorized the City Mayor to execute the deed of donation on
the City's behalf. 8 CAIHTE
The parties submitted divergent accounts on what happened after Resolution No. 89 was passed.
According to the City, the City Mayor of Naga, Monico Imperial (Mayor Imperial), and the registered
landowners, Macario and Gimenez, executed a Deed of Donation 9 on August 16, 1954, whereby the latter donated five
hectares of land (subject property), two hectares of which to be used as the City Hall site, another two hectares for the
public plaza, and the remaining hectare for the public market. By virtue of said Deed, the City entered the property and
began construction of the government center. It also declared the five-hectare property in its name for tax
purposes. 10 Thereafter, the Land Transportation Office (LTO), the National Bureau of Investigation (NBI), the
Department of Labor and Employment (DOLE), the Philippine Postal Corporation (PPC), the Fire Department and other
government agencies and instrumentalities entered the same property and built their offices thereon. 11
In contrast, petitioners averred that the landowners' plan to donate five hectares to the City did not materialize
as the contract to build the City Hall was not awarded to the Subdivision. As early as August 23, 1954, Lopez Jr., the
Subdivision's General Manager, supposedly wrote to Macario telling him to suspend the signing of the deed of donation
as the Municipal Board could not agree on the specific site where the City Hall would be built. Petitioners alleged that
the construction contract was eventually awarded by the Bureau of Public Works (BPW) to a local contractor, Francisco
O. Sabaria (Sabaria), who won in a public bidding. Mayor Imperial opposed the award, arguing that he and not the BPW
had the authority to initiate the public bidding for the project. The BPW, however, asserted its authority to bid out and
award the contract on the ground that national funds would be used for the project. Mayor Imperial and Sabaria
litigated the issue, with the former losing before the trial court and subsequently withdrawing his appeal before the CA.
Afterwards, the Municipal Board adopted Resolution No. 11 dated January 20, 1959 authorizing the City Mayor to enter
into a contract with Sabaria for the construction of the City Hall. 12
Petitioners claimed that on February 5, 1959, Macario and officers of the Subdivision met with Mayor Imperial
to demand the return of the five-hectare lot as the condition for the donation was not complied with. Mayor Imperial
purportedly assured them that the City would buy the property from them. The purchase, however, did not materialize.
Petitioners alleged that ten years later, or on May 14, 1968, Macario wrote to Lopez Jr., instructing him to make a follow-
up on the City's payment for the subject lot. On December 2, 1971, Macario died without receiving payment from the
City. 13
In 1976, a certain Tirso Mariano filed an action for partition of Macario's estate. The action was opposed by
Macario's widow, Irene, and their adopted children, Jose (Jose) and Erlinda (Erlinda) Mariano. As an offshoot of this
action, a petition to annul Jose and Erlinda's adoption was instituted. 14
Irene died in 1988. Jose died the following year which was also when his and Erlinda's adoption was declared
valid and legal by the appellate court. In 1994, Irene's marriage to one Rolando Reluccio (Reluccio) was declared
bigamous and void ab initio. And after a protracted litigation, Jose, then represented by his heirs, and Erlinda were
declared as Irene's heirs to the exclusion of Reluccio who was also declared to be without right to represent Irene in
Macario's estate. 15
On March 11, 1997, the probate court issued letters of administration to one of the petitioners herein, Danilo
David S. Mariano (Danilo), for the administration of Irene's estate. In September 2003, Danilo demanded upon then City
Mayor of Naga, Jesse M. Robredo, to vacate and return the subject property. When the City did not comply, petitioners,
as heirs of Jose and Erlinda, filed a Complaint 16 for unlawful detainer against the City, docketed as Civil Case No.
12334. 17

The Unlawful Detainer Case

In their Complaint, filed on February 12, 2004, 18 petitioners asked the MTC to order the City and all agencies,
instrumentalities or offices claiming rights under it, including the LTO, NBI, DOLE, PPC and the Fire Department, to
vacate the subject property, shown in the Sketch Plan as Blocks 25 and 26 (LRC) Psd-9674, and to return possession
thereof to them. In addition to attorney's fees, they asked the City to pay them a monthly rental of P2.5 million from
the date it received the demand to vacate until it surrendered possession, as reasonable compensation for the use of
the property. 19
Arguing that the issue involved is one of ownership, the City moved to dismiss the complaint for lack of
jurisdiction. 20 After the MTC denied the motion on March 22, 2004, 21 the City filed its Answer. 22 The parties
subsequently submitted their respective Position Papers 23 and evidence. 24
Petitioners averred that there was no donation of the subject property to the City as the obligation to donate
on the part of Macario and Gimenez, conditioned on the Subdivision undertaking the construction of the City Hall
therein, was abrogated when the City eventually awarded the construction contract to Sabaria. Petitioners further
alleged that Macario thereafter demanded the return of the property but was assured by Mayor Imperial that the City
would buy the same. The purchase, however, never materialized despite Macario's supposed reminder to Mayor
Imperial of his assurance. Petitioners, thus, argued that the City's possession of the subject property was by mere
tolerance which ceased when they required its return. 25
The City countered that the donation actually took place, as evidenced by a Deed of Donation dated August 16,
1954, making the City the owner and lawful possessor of the subject property. This was supposedly why the subject
property had long been declared in the City's name for tax purposes. Granting there was no donation, the City stressed
that ownership of the premises automatically vested in it when they were designated as open spaces of the subdivision
project, donation thereof being a mere formality. The City also argued that since the property was already occupied by
several government offices for about 50 years, recovery thereof was no longer feasible and the landowners may simply
demand just compensation from the City. The City further contended that the complaint was dismissible on the grounds
of laches and prescription. In any case, the City averred that it could not be ejected from the premises as it possessed
the rights of a builder in good faith. 26
Petitioners in turn denied that laches had set in because Macario supposedly made a demand for the City to
return the property, and subsequently, to abide by Mayor Imperial's commitment to purchase the same. Furthermore,
as heirs of Macario and Irene, they themselves sought to recover the subject property after learning of their rights
thereto through Danilo who collated Irene's properties following his appointment as administrator of her estate. 27
Petitioners also argued that title to the property, which remained registered in the names of Macario and
Gimenez, was indefeasible and could not be lost by prescription or be defeated by tax declarations. They further
asserted that the requirement of open space in the subdivision for public use was already satisfied with the landowners'
donation of road lots, measuring 120,280 square meters, to the City as annotated on TCT No. 671. They posited
that Presidential Decree (PD) No. 957, 28 enacted in 1976, as amended by PD No. 1216, 29 which defined "open space,"
should not be applied because it was not yet in effect when the subdivision plan was approved in 1962. 30
Petitioners contended that the City was a builder in bad faith because it continued to construct the City Hall
and allowed other government agencies to build their offices on the subject property, knowing that the donation had
been aborted when the condition therefor was not fulfilled and that its avowed purchase of the property was not
forthcoming. 31

The MTC's Ruling

In its February 15, 2005 Decision, the MTC gave weight to the Deed of Donation. 32 Nonetheless, it dismissed
the complaint on the ground of lack of jurisdiction. It reasoned that the City's defense, which involved a claim of
ownership, removed the issue from the case of unlawful detainer. 33

The RTC's Ruling

 On the City's appeal, the RTC set aside the MTC's dismissal. The dispositive portion of the RTC's June 20, 2005
Decision reads as follows:
WHEREFORE, premises considered [petitioners] having proved and convinced this Court by
preponderance of evidence that the lower court committed a serious and reversible error in rendering
the herein assailed decision, accordingly, the DECISION dated February 14, 2005 of the Court a quo is
hereby REVERSED and SET ASIDE. Consequently, decision is hereby rendered in favor of [petitioners]
and against [respondent] ORDERING the latter of the following: DETACa
(1) For the [respondent] City Government of Naga, including all other government
instrumentalities, agencies and offices claiming right of possession through and under it which are but
not limited to Land Transportation Office, National Bureau of Investigation, Department of Labor and
Employment, Philippine Postal Corporation, Fire Department and all other offices and buildings which
are all claiming rights under [respondent] to immediately vacate the subject properties, Blocks 25 and
26 (LRC) Psd-9674 forming part of TCT No. 671 in the name of Macario A. Mariano and Jose A. Gimenez,
and to peacefully surrender and deliver its physical possession to the [petitioners], including all the
improvements and structures erected thereon which were built in bad faith as they are now forfeited
in favor of plaintiffs-appellants;
(2) For the [respondent] to pay [petitioners] the amount of P2,500,000.00 per month by way
of reasonable compensation for the use and occupancy of the property in question reckoned from
November 30, 2003 until such time that the [respondent] shall have actually vacated the subject
property;
(3) For the [respondent] to pay [petitioners] Attorney's fees in the amount of P587,159.60;
and
(4) For the [respondent] to pay the cost of the suit.
SO ORDERED. 34
The RTC held that the MTC could have resolved the issue of ownership if only to resolve the issue of possession.
It ruled against the existence of the Deed of Donation, purportedly acknowledged before a notary public for Manila,
finding that the award of the construction contract to Sabaria released Macario and Gimenez from the obligation to
execute said deed. Furthermore, the fact that the subject property remained registered in Macario and Gimenez's
names and no annotation of the purported donation was ever inscribed on the title proved that the City recognized that
its possession was by mere tolerance of the landowners. This, finding, said the RTC, was bolstered by the
Certification 35 issued on August 27, 2003 by the Records Management Archive Office of the National Archives that it
had no record of such Deed, and a similar Certification 36 from the Office of the Clerk of Court of the Manila RTC as
repository of notarial reports of notaries public for Manila. The RTC also noted that the purported Deed of Donation
was unsigned by the donors and indicated merely the letters "SGD" opposite their names. 37
The RTC explained that since the subject land was titled under the Torrens system in the name of Macario and
Gimenez, the tax declaration in the City's name could not prevail, and the property could not be subject of acquisitive
prescription. It also held that petitioners were not guilty of laches, noting the several cases they had to file to establish
their right to inherit from, and to recover or preserve the estate of, Macario and Irene, as well as Danilo's discovery of
the subject property as part of the latter's estate following the issuance to him of letters of administration over Irene's
estate in 1997. Finally, the RTC agreed with petitioners that the road lots donated to the City in 1963 satisfied the
requirement of open space in the subdivision at that time, and that the City was a builder in bad faith. 38
The City moved for the Presiding Judge's inhibition on the ground of bias. Subsequently, it also filed a motion
for reconsideration of the June 20, 2005 Decision with a motion for new trial based on newly discovered
evidence 39 consisting of additional documents purportedly showing that the subject property was already donated to
the City. 40 On July 15, 2005, the RTC issued an Order denying said motions. 41

The CA's March 7, 2011 Decision

Partly granting the City's appeal, the CA inter alia directed the City to pay only half of the monthly rental, which
it reduced to P500,000, because the subject property was co-owned by Macario and Gimenez. The dispositive portion
of the CA's Decision reads:
IN VIEW OF ALL THE FOREGOING, the instant petition for review is PARTIALLY GRANTED.
 The assailed Decision dated June 20, 2005 rendered by the Regional Trial Court (RTC) of Naga
City (Branch 26), in Civil Case No. RTC 2005-0030 (For: Ejectment) is hereby MODIFIED in that:
(1) The City of Naga is hereby ORDERED to pay to the respondents as heirs of Don Macario
Mariano half of the adjudged monthly rental for the use and enjoyment of the questioned property,
or in the amount of Two Hundred Fifty Thousand Pesos (Php250,000.00), for the period November 3,
2003 until the City of Naga finally vacates that portion it has been occupying, or until such time when
the City expropriates the same private property;
(2) The portion of the assailed Decision where all the other government instrumentalities and
agencies, including but not limited to the Land Transportation Office, National Bureau of Investigation,
Department of Labor and Employment, Philippine Postal Corporation, Fire Department, Municipal Trial
Court, Regional Trial Court, which office buildings are standing on the lot in question, are ordered to
immediately vacate therefrom as well as to deliver the physical possession of the improvements and
structures they have introduced thereat to the Heirs of Don Macario Mariano, is DELETED because
these other government instrumentalities and agencies are not parties to the case in the court
below; and
(3) The award of attorney's fees in favor of the Heirs of Don Macario Mariano is reduced to
Two Hundred Thousand Pesos (Php200,000.00) on equitable grounds.
All other aspects of the assailed Decision dated June 20, 2005 and Order dated July 15, 2005
are hereby affirmed.
SO ORDERED. 42
In reaching this decision, the CA ratiocinated that:
[T]here could be no donation of the subject five (5) hectares of land by the landowners, DON MACARIO
and Jose Gimenez (or GIMENEZ) to the City of Naga because the donee failed to present the original
deed of donation before the trial court, and did not give a satisfactory explanation of the loss of the
same. As against the Letter dated May 14, 1968 written by DON MACARIO instructing Eusebio Lopez,
Sr., then City Heights Subdivision President, to do a follow-up of the City's proposal to buy the five (5)
hectare-lot, We held the latter document to be a conclusive proof that the donation that DON
MACARIO and the City of Naga intended was not consummated. 43 aDSIHc

The CA's July 20, 2011 Amended Decision

Both parties moved for reconsideration of the CA's March 7, 2011 Decision. 44 After a re-examination of the
case records and the evidence adduced by the parties, the CA, on July 20, 2011, rendered an Amended Decision, the
dispositive portion of which reads:
WHEREFORE, premises considered, the Motion for Reconsideration filed by the City of Naga
is GRANTED.
Our Decision promulgated on March 7, 2011 is RECONSIDERED. Accordingly, the Decision
dated June 20, 2005 of the Regional Trial Court (RTC) of Naga City (Branch 26), in Civil Case No. RTC
2005-0030 (For: Ejectment), is ANNULLED and SET ASIDE, and the Decision dated February 14, 2005
rendered by the Municipal Trial Court (MTC) of Naga City (Branch 1), in Civil Case No. 12334, is
hereby REINSTATED without prejudice to the filing by either party of an action regarding the ownership
of the property involved.
On the other hand, the Motion for Reconsideration filed by the Heirs of Don Macario Mariano
of Our Decision dated March 7, 2011 is DENIED.
SO ORDERED. 45
In so ruling, the CA held that pursuant to the best evidence rule under Section 3, Rule 130 of the Rules of Court,
the photocopy of the letter dated May 14, 1968 was inadmissible and without probative value in the absence of a clear
showing that the original writing was lost or destroyed. As an exception to the best evidence rule, the CA excused the
City's failure to present the original Deed of Donation on the basis of the June 11, 2004 Certification issued by the Office
of the Clerk of Court of the RTC-Manila that the Deed could not be found in its records as the Notarial Reports of Atty.
Vicente M. Magpoc, before whom the instrument was acknowledged, for the period January 12, 1953 to December 31,
1954, could not be located and must have been destroyed by water spillage during the fire that razed their office on
November 18, 1981. According to the CA, secondary evidence of the Deed could be admitted because it had been
satisfactorily shown, through the Certification, that the Deed was lost due to force majeure, thus, without bad faith on
the part of the offeror.
The CA further held that "the following secondary documents on record sufficiently confirmed the existence,
execution and contents of the subject deed of donation," to wit:
(a) Letter dated July 3, 1954 of the President, Secretary, Treasurer and General Manager of
the City Heights Subdivision (in the persons of Eusebio M. Lopez, Sr., Soledad L. Dolor, Jose A. Gimenez
and Eusebio Lopez, Jr.) to the mayor of Naga expressing their offer to construct the Naga City Hall
within the premises of not less than two (2) hectares of the Subdivision (Exhibit "1");
(b) Resolution No. 75 dated July 12, 1954 issued by the Municipal Board of Naga (then a
municipality) requesting for a bigger area of land where the City Hall would stand, from the Subdivision
(Exhibit "2");
(c) Letter dated July 30, 1954 of the Subdivision to the City amending its original offer and
agreeing to donate a portion of five (5) hectares. Also, in this Letter, the Subdivision elaborated on its
offer to finance the construction of the same building and specified the terms of such financing
contract (Exhibit "3");
(d) Resolution No. 89 dated August 11, 1954 where the then Municipal Board resolved to
accept the Subdivision's offer of donation and of the financing contract to construct the government
center, and at the same time, to authorize the Mayor to enter into a final deed of donation in behalf
of the then municipality (Exhibit "4");
(e) Letter dated November 26, 1955 of the then City Mayor of Naga, Hon. Monico Imperial, to
the Naga City Planning Board indicating the fact of donation of the same parcel of land by the
Subdivision to the City (Exhibit "30");
(f) Letter dated March 6, 1968 of DON MACARIO referring to the open spaces of the
Subdivision having been donated to the City of Naga (Exhibit "18");
(g) Letter dated September 6, 1970 of Hon. Virginia F. Perez, Vice-Mayor and Presiding Officer,
indicating the existence of a Deed of Donation and the fact of Donation (Exhibit "6"). 46
The CA thus concluded that the existence and due execution of the Deed of Donation had been duly established,
warranting the dismissal of the ejectment case. The CA also found that petitioners' claim was barred by laches, noting
that the City had been in open, public and adverse possession of the subject property for 49 years at the time the
ejectment case was filed.
The appellate court, however, emphasized that the case being one for unlawful detainer, its judgment was
conclusive only as to possession, and its disquisition on the claim of ownership was merely provisional and without
prejudice to a separate and independent action respecting title to the land.
Dissatisfied with the CA's Amended Decision, petitioners filed the instant petition for review.
Petitioners pray for the reinstatement of the RTC's Decision, asserting that in admitting secondary evidence of
the Deed of Donation, the CA misapplied Section 5, Rule 130 and Section 19, Rule 132 of the Rules, Article 749 of the Civil
Code, and Sections 245, 246 and 247 of the Notarial Law. Petitioners fault the CA for allegedly disregarding their
evidence which received no objection from the City. Finally, petitioners impugn the CA's finding that they were guilty
of laches, insisting that the City's possession was by mere tolerance. 47 ETHIDa

The Court's Ruling

Petitions for review under Rule 45 should cover only questions of law 48 as this Court is not a trier of
facts. 49 However, the incongruent factual conclusions of the MTC and the CA on the one hand, and the RTC on the
other, compel us to revisit the factual circumstances of the case for the proper dispensation of justice. 50
The sole issue for resolution in an unlawful detainer case is physical or material possession of the property
involved, independent of any claim of ownership by any of the parties — possession de facto and not possession de
jure. 51 When the defendant, however, raises the defense of ownership in his pleadings and the question of possession
cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only to determine
the issue of possession, 52 or more particularly, to determine who between the parties has the better right to possess
the property. 53 Nonetheless, the adjudication is merely provisional and would not bar or prejudice an action between
the same parties involving title to the property. 54
 In this case, the City, as the defendant in the unlawful detainer case, asserted ownership over the subject
property by virtue of an alleged donation made in 1954 by the landowners in its favor. In support of this claim, the City
proffered a copy of a Deed of Donation dated August 16, 1954.
Purported donation lacked
the formalities required
for validity

Generally, contracts are obligatory in whatever form they may have been entered into, provided all the
essential requisites for their validity are present. However, when the law requires that a contract be in some form to be
valid, such requirement is absolute and indispensable; its non-observance renders the contract void and of no
effect. 55 One such law is Article 749 of the Civil Code of the Philippines which requires that:
Art. 749. In order that the donation of an immovable may be valid, it must be made in a
public document, specifying therein the property donated and the value of the charges which the
donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public document,
but it shall not take effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an
authentic form, and this step shall be noted in both instruments. (Emphasis ours)
Thus, donation of real property, which is a solemn contract, is void without the formalities specified in the
foregoing provision. 56
Article 749 of the Civil Code requires that donation of real property must be made in a public instrument to be
valid. In Department of Education, Culture and Sports (DECS) v. Del Rosario, 57 We stated:
A deed of donation acknowledged before a notary public is a public document. The notary
public shall certify that he knows the person acknowledging the instrument and that such person is
the same person who executed the instrument, acknowledging that the instrument is his free act
and deed. The acceptance may be made in the same deed of donation or in a separate instrument. An
acceptance made in a separate instrument must also be in a public document. If the acceptance is in a
separate public instrument, the donor shall be notified in writing of such fact. Both instruments must
state the fact of such notification. 58 (Emphasis ours)
The purported Deed of Donation submitted by the City cannot be considered a public document. While it
contains an Acknowledgment before a notary public, the same is manifestly defective as it was made neither by the
alleged donors (Macario and Gimenez) and their respective spouses, or by the donee (the City, through Mayor Imperial),
but only by Eusebio M. Lopez, Faustino Dolor, Soledad Lirio Dolor and Lopez, Jr., as the Subdivision's President, Vice
President, Secretary and General Manager, respectively. The Acknowledgment thus reads: TIADCc
REPUBLIC OF THE PHILIPPINES)
IN THE CITY OF MANILA ) s.s.
BEFORE ME, this 16th day of August, 1954, in the City of Manila, Philippines, personally
appeared EUSEBIO M. LOPEZ, with Res. Cert. No. A-0232064, issued at Manila, on Feb. 24,
1954; FAUSTINO DOLOR, with Res. Cert. No. A-0295133, issued at Manila on Feb. 7, 1954; SOLEDAD
LIRIO DOLOR, with Res. Cert. No. A-4782271, issued at Pasay City on July 27, 1954; and EUSEBIO LOPEZ,
JR., with Res. Cert. No. A-476353, issued at Naga City on July 8, 1954, all known to me and to me known
to be the same persons who executed the foregoing instrument and they acknowledged to me that
the same is their free act and voluntary deed.
This instrument relating to a Deed of Donation consist two pages only, including this page on
which this acknowledgement is written and have been signed by the parties on each and every page
thereof.
WITNESS MY HAND AND SEAL, the day, year, and place first above written.

Doc. No. 201; Page No. 70; (SGD) VICENTE M. MAGPOC

Book No. VI; Series of 1954 Notary Public

Until December 31, 1954 58

 (Emphasis ours)

Said Deed also shows that Mayor Imperial affixed his signature thereon on August 21, 1954, or four days after
it was notarized, thus he could not have acknowledged the same before the notary public on August 16, 1954. Verily,
the notary public could not have certified to knowing the parties to the donation, or to their execution of the instrument,
or to the voluntariness of their act. This glaring defect is fatal to the validity of the alleged donation. It is settled that a
defective notarization will strip the document of its public character and reduce it to a private instrument. 59
Not being a public document, the purported Deed of Donation is void. 60 A void or inexistent contract has no
force and effect from the very beginning, 61 as if it had never been entered into. 62 It is equivalent to nothing and is
absolutely wanting in civil effects. It cannot be validated either by ratification or prescription. 63
Void contracts may not be invoked as a valid action or defense in any court proceeding, including an ejectment
suit. 64 Thus:
In Spouses Alcantara v. Nido, which involves an action for unlawful detainer, the petitioners therein
raised a defense that the subject land was already sold to them by the agent of the owner. The Court
rejected their defense and held that the contract of sale was void because the agent did not have the
written authority of the owner to sell the subject land.
Similarly, in Roberts v. Papio, a case of unlawful detainer, the Court declared that the defense
of ownership by the respondent therein was untenable. The contract of sale invoked by the latter was
void because the agent did not have the written authority of the owner. A void contract produces no
effect either against or in favor of anyone.
In Ballesteros v. Abion, which also involves an action for unlawful detainer, the Court
disallowed the defense of ownership of the respondent therein because the seller in their contract of
sale was not the owner of the subject property. For lacking an object, the said contract of sale was
void ab initio. 65
Since void contracts cannot be the source of rights, the City has no possessory right over the subject
property. 66 In this light, to resolve whether to admit the copy of the purported Deed of Donation as secondary evidence
will be futile as the instrument in any case produces no legal effect.
Circumstances controverting
the City's right of possession
based on the alleged donation

Other cogent facts and circumstances of substance engender veritable doubts as to whether the City has a
better right of possession over the subject property than petitioners, as heirs of Mariano and Irene, based on the
purported Deed of Donation. 67
The City has, for more than 50 years since the donation supposedly took place on August 16, 1954, failed to
secure title over the subject property in its name. If the City had acquired ownership of the premises, it is incredible
that it would fail to register the donation and have the property titled in its name. That it would remain passive for such
length of time is confounding and does not serve to bolster its proprietary or possessory claim to the property. 68
At the very least, the City should have caused the annotation of the alleged Deed on TCT No. 671 immediately
after August 16, 1954 or shortly thereafter. Such inscription would have been binding on petitioners, as Macario and
Irene's successors-in-interest, as well as on third parties. 69
Petitioners, as heirs of a
registered owner of the subject
property, have the preferred
or better right of possession

Indeed, title to the subject property remains registered in the names of Macario and Gimenez. The alleged
Deed of Donation does not appear to have been registered and TCT No. 671 does not bear any inscription of said Deed.
The Court has consistently upheld the registered owners' superior right to possess the property in unlawful
detainer cases. 70 A fundamental principle in land registration is that the certificate of title serves as evidence of an
indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. It is
conclusive evidence as regards ownership of the land therein described, and the titleholder is entitled to all the
attributes of ownership of the property, including possession. 71 Thus, the Court has time and again reiterated the age-
old rule that the person who has a Torrens title over a parcel of land is entitled to possession thereof. 72
 It has likewise been constantly emphasized that when the property is registered under the Torrens system, the
registered owner's title to the property is presumed legal and cannot be collaterally attacked, especially in a mere action
for unlawful detainer. 73 It has even been held that it does not even matter if the party's title to the property is
questionable. 74
Furthermore, it has been held that a certificate of title has a superior probative value as against that of an
unregistered deed of conveyance in ejectment cases. 75 Spouses Pascual v. Spouses Coronel, 76 involving an unlawful
detainer case, is on point; it instructs:
In any case, [W]e sustain the appellate court's finding that the respondents have the better
right to possess the subject property. As opposed to the unregistered deeds of sale, the certificate of
title certainly deserves more probative value. Indeed, a Torrens Certificate is evidence of indefeasible
title of property in favor of the person in whose name appears therein — such holder is entitled to the
possession of the property until his title is nullified.
xxx xxx xxx
Even if [W]e sustain the petitioners' arguments and rule that the deeds of sale are valid
contracts, it would still not bolster the petitioners' case. In a number of cases, the Court had upheld
the registered owners' superior right to possess the property. In Co v. Militar, the Court was confronted
with a similar issue of which between the certificate of title and an unregistered deed of sale should
be given more probative weight in resolving the issue of who has the better right to possess. There,
the Court held that the court a quo correctly relied on the transfer certificate of title in the name of
petitioner, as opposed to the unregistered deeds of sale of the respondents. The Court stressed therein
that the Torrens System was adopted in this country because it was believed to be the most effective
measure to guarantee the integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized.
Likewise, in the recent case of Umpoc v. Mercado, the Court declared that the trial court did
not err in giving more probative weight to the TCT in the name of the decedent vis-à-vis the
contested unregistered Deed of Sale. Later in Arambulo v. Gungab, the Court held that the registered
owner is preferred to possess the property subject of the unlawful detainer case. The age-old rule is
that the person who has a Torrens Title over a land is entitled to possession thereof. 78 (Emphasis ours
and citations omitted.)
Accordingly, as against the City's unregistered claim, the Torrens title in the name of Macario and Gimenez
must prevail, conferring upon the registered owners the better right of possession. This superior or preferred right of
possession applies to petitioners as Macario's hereditary successors 79 who have stepped into said decedent's shoes
by operation of law. 80 AIDSTE
No automatic acquisition of
ownership of open space in
the subdivision

On the strength of the Court's ruling in White Plains Association, Inc. v. Judge Legaspi, 81 the City asserted that
because the subject property had been designated as the open space of the City Heights Subdivision, intended for public
use, ownership thereof automatically vested in the City, its donation being a mere formality. It disputed petitioners'
claim that the road lots already donated to the City satisfied the open space requirement for subdivisions prior to the
enactment of PD 957 dated July 12, 1976, as amended by PD 1216 dated October 14, 1977. It argued that the Subdivision
Regulations then in effect expressly required a public open space of at least five percent (5%) of the gross area of the
subdivision.
Several reasons impel us to reject the City's stance.
We start with the 1948 Subdivision Regulations 81 invoked by the City. As amended, 82 it required:
Sec. 14. Areas for Community Use. —
a. Public open space
Subdivisions of one hectare or more shall be provided with suitable areas for parks,
playgrounds, playlots and/or other recreational purposes to be dedicated for public use which area
or areas shall comprise at least 5 per cent of the gross area of the subdivision. Open spaces so
dedicated for public use shall be consolidated as much as possible for maximum utility and not broken
into small or odd-shaped parcels of land. 83 (Emphasis ours)
 The Subdivision Regulations required a public open space in the subdivision, suitable for parks, playgrounds,
playlots and/or other recreational purposes. The term "open space" necessarily signifies the absence of buildings or
edifices. The enumeration of parks, playgrounds and playlots as the specified usage for such space buttresses the view
that the area should be non-buildable. The phrase "other recreational purposes" should be read in conjunction with
this enumeration and should thus be construed as usage akin to parks, playgrounds and playlots which have clear and
open space as their common feature. This is consistent with the principle of ejusdem generis which provides that "where
a general word or phrase follows an enumeration of particular or specific words of the same class or where the latter
follow the former, the general word or phrase is to be construed to include, or to be restricted to persons, things or
cases akin to, resembling, or of the same kind or class as those specifically mentioned." 84 The requirement under
Section 14 (a) of the Subdivision Regulations, therefore, is an open, non-buildable space. Notably, this construction is
consistent with the restriction under Section 2 of PD 1216 which requires that areas in a subdivision reserved for "parks,
playgrounds and recreational use" shall be "non-buildable." The only exception, as provided in Section 14 (b) of the
same Regulations, is the use of the open space as a school site in the absence of barrio, central or elementary schools
in the vicinity of a proposed residential subdivision.
It appears from the records, however, that the subject property — Blocks 25 and 26 in the Subdivision Plan —
had been designated not as an open space, but as the sites for the City Hall and market, respectively. Thus, TCT No. 671
contains the following inscription:
Entry 3296 — ORDER
Existence of approved subdivision Plan LRC Psd-9671 with technical descriptions for Block 4
with 19 lots, Block 10 with 28 lots; Block 11 with 40 lots; Block 12 with 19 lots; Block 13 with 3 lots;
Block 14 with 3 lots; Block 15 with 5 lots; Block 16 with 25 lots; Block 17 with 18 lots; Block 18 with 38
lots; Block 19 with 44 lots; Block 20 with 45 lots; Block 21 with 11 lots; Block 22 with 9 lots; Block 23
with 18 lots; Block 24 with 17 lots; Block 25 City Hall Site and Block 26 Market Site; Road lots No. 10
to 30 cannot be disposed without prior approval of the court. Date of order Aug. 23, 1962. Inscribed
September 13, 1962 10:35 a.m.
(Sgd.) ROLANDO G. ALBERTO
Reg. of Deeds, Naga City 85
(Emphasis ours)
The City had represented to the CA that the Subdivision Plan had been approved by the National Planning
Commission and the then Court of First Instance. 86 No evidence has been adduced to show that as so approved, the
Subdivision Plan indicated areas within Blocks 25 and 26 for use as parks, playgrounds or other recreational purposes.
There is likewise no debate that the subject property is in fact used as the site of the City Hall and other
government offices. During the pre-trial conference, the parties stipulated that four hectares of the subject property
are occupied by the City Hall and other government agencies. 87 While one hectare of the subject property is admittedly
occupied by the Naga Civic Center, 88 it has not been established that it comprises public open space as contemplated
in the Subdivision Regulations.
In any event, the City cannot successfully invoke the Subdivision Regulations as basis to demand vested
proprietary rights over the subject property. Contrary to its position that roads as well as open space in subdivisions
instantly belong to the government without need of compensation or any overt act of donation, the Subdivision
Regulations indicate that local governments did not automatically become the owner of roads and open space in
subdivisions within their jurisdiction and a positive act of conveyance or dedication was necessary to vest ownership in
the city or municipality, thus:
Sec. 17. Improvements. —
xxx xxx xxx
h. Utilities in general. — Unless street areas are conveyed to the city or municipality, the
approval of a subdivision plan binds the subdivider and his successors to permit all public utilities to
use the streets for furnishing services to the subdivision, in accordance with existing municipal or city
regulations. 90
Sec. 19. Approval. —
xxx xxx xxx
h. Dedication of streets, highways and ways. — The approval of the Final Plan by the
Commission shall not be deemed to constitute or effect an acceptance by the government of the
dedication of any street, or other proposed public way or space shown on the Plat. The subdivider
 may, if he so desires, offer to dedicate all streets, highways, and other ways shown in the approved
Final Plat for public use, but the government may, at its discretion, or upon the recommendation of
the National Urban Planning Commission, accept only such streets, highways and other ways as it
deems necessary for public purposes. It shall be the duty of the subdivider to improve, repair and
maintain all streets, highways and other ways in the subdivision until their dedication to public use is
accepted by the government. 91 (Emphasis ours)
Parenthetically, even under PD 957, specifically Section 31, 92 it was optional on the part of the owner or
developer of the subdivision to donate the roads and open space found therein. Furthermore, under PD 1216, "(t)he
transfer of ownership from the subdivision owner-developer to the local government is not automatic but requires a
positive act from the owner-developer before the city or municipality can acquire dominion over the subdivision roads,"
such that "until and unless the roads are donated, ownership remains with the owner-developer." 93
The City's reliance on the 1991 White Plains case is misplaced. The case involved Road Lot 1 in the White Plains
Subdivision, which had been set aside for the proposed Highway 38 of Quezon City. The Court held therein that said
road was thus withdrawn from the commerce of man as the open space required by law to be devoted for public use,
and its ownership was automatically vested in the Quezon City Government and/or the Republic of the Philippines
without need of compensating the developer, the donation thereof being a mere formality. However, as explained by
this Court in Albon v. Mayor Fernando: 94
The ruling in the 1991 White Plains Association decision relied on by both the trial and
appellate courts was modified by this Court in 1998 in White Plains Association v. Court of Appeals.
Citing Young v. City of Manila, this Court held in its 1998 decision that subdivision streets belonged to
the owner until donated to the government or until expropriated upon payment of just
compensation. 95
Furthermore, in Woodridge School, Inc. v. ARB Construction Co., Inc., 96 where the 1991 White Plains case was
similarly applied by the trial court in holding that a subdivision road automatically belonged to the government, the
Court ruled:
In the case of Abellana, Sr. v. Court of Appeals, the Court held that the road lots in a private
subdivision are private property, hence, the local government should first acquire them by donation,
purchase, or expropriation, if they are to be utilized as a public road. Otherwise, they remain to be
private properties of the owner-developer.
Contrary to the position of petitioners, the use of the subdivision roads by the general public
does not strip it of its private character. The road is not converted into public property by mere
tolerance of the subdivision owner of the public's passage through it. To repeat, the local government
should first acquire them by donation, purchase, or expropriation, if they are to be utilized as a public
road. 97
Petitioners cannot simply
demand just compensation
in lieu of recovering possession
as there was no expropriation

Invoking the case of Alfonso v. Pasay City, 97 as cited in Republic v. Court of Appeals, 98 the City argued that
recovering possession of the subject property is no longer feasible because it is now occupied and used by the City Hall
and other government offices, so that petitioners' remedy is merely to demand payment of just compensation. AaCTcI
The Court's exact pronouncement in Alfonso states:
As registered owner, (Alfonso) could bring an action to recover possession at any time because
possession is one of the attributes of ownership of land. However, said restoration of possession by
the City of Pasay is neither convenient nor feasible because it is now and has been used for road
purposes. So, the only relief available is for the City of Pasay to make due compensation, which it could
and should have done years ago since 1925. 99
It will be noted, however, that in the cases thus invoked, and in other cases where the Court made a similar
ruling, 100 the government took the property in the exercise of its power of eminent domain. This case clearly involves
a different factual milieu as the subject property was not expropriated by the government. It had been offered by its
owners-developers, under certain terms, for donation to the City as the City Hall and market sites within the subdivision,
which offer the City clearly had the option to refuse. In fact, the Subdivision's General Manager, Lopez Jr., appeared to
have written to Macario essentially asking him to defer the donation because while the Municipal Board accepted their
offer, they had considered "other and better alternative sites near the National Highway." 101
 The "power of eminent domain" has been defined thus:
The right of eminent domain is "the ultimate right of the sovereign power to appropriate, not
only the public but the private property of all citizens within the territorial sovereignty, to public
purpose." 102 (Emphasis ours)
[E]minent domain, also often referred to as expropriation and, with less frequency, as condemnation,
is, like police power and taxation, an inherent power of sovereignty. It need not be clothed with any
constitutional gear to exist; instead, provisions in our Constitution on the subject are meant more to
regulate, rather than to grant, the exercise of the power. Eminent domain is generally so described as
"the highest and most exact idea of property remaining in the government" that may be acquired for
some public purpose through a method in the nature of a forced purchase by the State. 103 (Emphasis
ours)
In the instant case, there was no such appropriation or condemnation or forced purchase to speak of. The City
was not propelled by an imperative need to take the subject property for a public purpose. The City, in taking possession
of the subject property, was not exercising a sovereign function as expropriator. In this light, the Alfonso ruling cannot
be applied to petitioners.
The City is not entitled to the
rights of a builder in good faith

By law, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any
flaw which invalidates it. 104 The essence of good faith lies in an honest belief in the validity of one's right, ignorance
of a superior claim, and absence of intention to overreach another. 105
By these standards, the City cannot be deemed a builder in good faith.
The evidence shows that the contract for the construction of the City Hall by the Subdivision was an integral
component of the latter's offer of donation, constituting an essential condition for the intended conveyance. Thus, by
their July 30, 1954 letter 106 to the Naga City Mayor, the Subdivision and the registered owners of the subject property
submitted their "amended offer to construct the City Hall for Naga City within the premises of the subdivision." The
letter stated that the City Hall would be erected on not less than two hectares of the five-hectare land to be donated
by Macario and Gimenez to the City. It also proposed a financing scheme for the construction of the City Hall, the
construction cost not to exceed P150,000. It is, thus, readily apparent that the construction contract was the impetus
for the offer of donation, and that such offer was made to persuade the City to award the contract to the Subdivision.
On August 11, 1954, the Municipal Board adopted Resolution No. 89 107 accepting the Subdivision's July 30,
1954 offer as amended by Lopez Jr.'s oral representations in the Board's open session as regards the financing aspect
of the transaction. Consequently, Macario and Gimenez delivered possession of the subject property to the City
government of Naga. 108
However, on January 20, 1959, the Municipal Board issued Resolution No. 11 109 authorizing the City Mayor
to enter into a contract with Sabaria for the construction of the City Hall.
That the Subdivision would, by its July 30, 1954 proposal, undertake the construction is evident from Lopez Jr.'s
letter 110 of August 23, 1954 informing Macario that he would defer the "making of the plans of the building until the
location of the City Hall was settled. That the construction contract was the condition for the proposed donation finds
support in Macario's September 17, 1959 letter 111 to Mayor Imperial and May 14, 1968 112 letter to Lopez Jr. which
indicated that in February 1959, or the month after the construction contract was awarded to Sabaria, Mayor Imperial
proposed for the Naga City government to "buy instead" the subject property.
Macario's September 17, 1959 letter to Mayor Imperial reads:
Joe and I would like to know from you the status of your proposal you have intimated to us
during our meeting last February at my residence regarding your offer for the city government of Naga
to buy instead the parcels of land which we contemplated to donate to the city as city hall and market
site.
It has been long since then our last conversation regarding your proposal and have not heard
any positive development from you.
Please advice [sic] us soonest and hope this be given preferential action by your Office. 113
His May 14, 1968 letter to Lopez Jr. in turn reads:
Please be advised to disregard all my previous letters and instructions to you regarding the
donation of the city hall and market sites to the City of Naga. Kindly make immediate representation
 to the City Mayor and insist on the previous proposal made by Mayor Monico Imperial for the city to
buy the land we offered to them.
Considering the lapse of time and until now, no clear actions have been made by the city, I
suggest you take whatever appropriate actions on this matter the soonest possible time. 114
The foregoing circumstances ineluctably show that the City knew of a substantial flaw in its claim over the
subject property. The proposed donation was conditioned on the award of the construction contract to the Subdivision.
By its Resolution No. 89, the City accepted the proposal with all its conditions. Thus, the City could not have been
unaware that by awarding the same construction contract to Sabaria, it no longer had any cause to continue occupying
the subject property as the condition for the proposed donation had not been satisfied. Accordingly, it should have
vacated the subject property. However, it stayed on and allowed Sabaria to undertake the construction.
Furthermore, Macario's September 17, 1959 and May 14, 1968 letters showed that Mayor Imperial had
proposed that the Naga City government would just buy the subject property from him and Gimenez. Said letters also
indicated that Macario had long been waiting for the City to act on this proposal but the latter had not taken any action.
The City, in the meantime, continued to enjoy possession of the subject property and subsequently allowed other
government agencies to build their offices in the premises. The proposal, however, was never brought to fruition by the
City.
It cannot, thus, be said that the City was of an honest belief that it had a valid right to the subject property or
that its actions had not overreached the landowners. Accordingly, it cannot be considered to have acted in good faith.
Articles 449 and 450 of the Civil Code provide:
Art. 449. He who builds, plants or sows in bad faith on the land of another, loses what is built,
planted or sown without right of indemnity.
Art. 450. The owner of the land on which anything has been built, planted or sown in bad faith
may demand the demolition of the work, or that the planting or sowing be removed, in order to replace
things in their former condition at the expense of the person who built, planted or sowed; or he may
compel the builder or planter to pay the price of the land, and the sower the proper rent.
Thus, petitioners, as hereditary successors of the registered owners of the subject property, have the right to
appropriate what has been built on the property, without any obligation to pay indemnity therefor, and the City has no
right to a refund of any improvement built therein. 116
The CA ruled that Macario's May 14, 1968 letter was a mere photocopy and could not thus be received as
secondary evidence absent a clear showing that its original had been lost or destroyed. The Court notes, however, that
this letter, along with Macario's September 17, 1959 missive, were offered by petitioners and admitted by the
MTC 117 without any objection from the City either as to their admissibility or the purposes for which they were
submitted.
It is well-settled that evidence not objected to is deemed admitted and may be validly considered by the court
in arriving at its judgment. 118 This is true even if by its nature the evidence is inadmissible and would have surely been
rejected if it had been challenged at the proper time. 119 Once admitted without objection, even though not admissible
under an objection, We are not inclined now to reject it. 120 Consequently, the evidence that was not objected to
became property of the case, and all parties to the case are considered amenable to any favorable or unfavorable effects
resulting from the said evidence. 121
Neither laches nor
prescription had set in

It is settled that:
Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that
which, by exercising due diligence, could or should have been done earlier; it is negligence or omission
to assert a right within a reasonable time, warranting the presumption that the party entitled to assert
it either has abandoned or declined to assert it. There is no absolute rule as to what constitutes laches
or staleness of demand; each case is to be determined according to its particular circumstances, with
the question of laches addressed to the sound discretion of the court. Because laches is an equitable
doctrine, its application is controlled by equitable considerations and should not be used to defeat
justice or to perpetuate fraud or injustice. 122
By his September 17, 1959 and May 14, 1968 letters, Macario has been shown to have taken steps to have the
City act on Mayor Imperial's proposal to "buy instead" the subject property. His efforts were overtaken by his death
three years later in 1971. Furthermore, as the RTC found, petitioners had been engaged in litigation to establish their
right to inherit from Macario and Irene, and it was Danilo's discovery of the subject property, following the issuance to
him of letters of administration over Irene's estate in 1997, that prompted them to issue a demand for the City to vacate
the premises.
Given these circumstances, the Court is not disposed to conclude that there was an unreasonable or
unexplained delay that will render petitioners' claim stale. EcTCAD
In contrast, the City, despite its claim of having acquired the subject property by donation in 1954, has itself
failed to have the same transferred in its name for a long period of time. Indeed, the subject property remains registered
in the name of petitioners' predecessor-in-interest as co-owner.
The rule is that an action to recover possession of a registered land never prescribes in view of the provision of
Section 44 of Act No. 496 to the effect that no title to registered land in derogation of that of a registered owner shall
be acquired by prescription or adverse possession. It follows that a registered owner's action to recover a real property
registered under the Torrens System does not prescribe. 122
Thus, it has been consistently held that registered owners have the right to evict any person unlawfully
occupying their property, and this right is imprescriptible and can never be barred by laches. 123 Even if it be supposed
that they were aware of the occupant's possession of the property, and regardless of the length of that possession, the
lawful owners have a right to demand the return of their property at any time as long as the possession was
unauthorized or merely tolerated, if at all. 124
Moreover, it is well settled that the rule on imprescriptibility of registered lands not only applies to the
registered owner but extends to the heirs of the registered owner as well. As explained in Mateo v.
Diaz, 125 prescription is unavailing not only against the registered owner, but also against his hereditary successors
because the latter step into the shoes of the decedent by operation of law and are the continuation of the personality
of their predecessor-in-interest. 126 Consequently, petitioners, as heirs of registered landowner Macario, cannot be
barred by prescription from claiming possession of the property.
Restitution of premises,
reasonable rent
and attorney's fees

Section 17, Rule 70 of the Rules of Court provides:

Sec. 17. Judgment. — If after trial the court finds that the allegations of the complaint are true,
it shall render judgment in favor of the plaintiff for the restitution of the premises, the sum justly due
as arrears of rent or as reasonable compensation for the use and occupation of the premises,
attorney's fees and costs. x x x
Thus, the rightful possessor in an unlawful detainer case is entitled to the return of the property and to recover
damages, which refer to "rents" or "the reasonable compensation for the use and occupation of the premises," or the
"fair rental value of the property" and attorney's fees and costs. More specifically, recoverable damages are "those
which the plaintiff could have sustained as a mere possessor, or those caused by the loss of the use and occupation of
the property." 127
The RTC granted petitioners' prayer for a monthly rental of P2.5 million (or P50.00 per square meter) as
reasonable compensation for the City's use and occupation of the subject property from November 30, 2003 until the
premises are actually vacated. However, in its March 7, 2011 Decision, the CA reduced the monthly rental to
P500,000.00 (or P10.00 per square meter), holding that:
The very reason why the monthly rental of the premises surrounding the City Hall is as high as that
pegged by the lower appellate court (at Php50.00 per square meter or Php2,500,000.00 for the 50,000
square meters), is the presence of the local government at the site. It should not, therefore, be
burdened too much in the computation of the monthly rental when it has contributed in a major way
in making the area an upscale one. Thus, the Court submits that the monthly rental of Php500,000.00
is just equitable under the circumstances. 128
There is logic in the CA's ratiocination that the presence of the local government in the subject property
enhanced the value of real estate in its vicinity. The Court, however, cannot lose sight of the fact that the City's
occupation of the subject property has been blighted by bad faith. The benefit to the real estate values had been at the
expense of the rights of Macario and Gimenez and their successors-in-interest.
Furthermore, it has been held that the reasonable compensation contemplated in Section 17, Rule 70 "partakes
of the nature of actual damages." While the court may fix the reasonable amount of rent, it must base its action on the
evidence adduced by the parties. The Court has defined "fair rental value" as the amount at which a willing lessee would
 pay and a willing lessor would receive for the use of a certain property, neither being under compulsion and both parties
having a reasonable knowledge of all facts, such as the extent, character and utility of the property, sales and holding
prices of similar land and the highest and best use of the property. 129
Petitioners based their prayer for a P50.00 rental rate on the P110.00 monthly rent per square meter under a
2004 lease contract over another property situated near the subject premises. 130 The burden of proof to show that
the rental demanded is unconscionable or exorbitant rests upon the City. 131 The City, however, has not adduced
controverting evidence as to the fair rental value of the premises. 132 All things considered, the Court finds petitioners'
prayer for compensation at less than half the rate indicated in said lease contract to be reasonable. 133
The fair rental value is to be reckoned from the time of the demand to vacate. 134 The City received two
demand letters from petitioners; the second "extend(ed)" its stay in the subject property for another two months from
the 30th day of the month when it received the initial demand letter on September 10, 2003. 135 Thus, the reasonable
rent was due not from November 3, 2003 as the CA declared in its March 7, 2011 Decision, but from November 30,
2003, and should be paid until the subject property is vacated.
The Court agrees with the CA's holding in its March 7, 2011 Decision that the amount due to petitioners shall
only be half of the reasonable rent as the subject property was co-owned by Macario with Gimenez. Absent proof to
the contrary, the portions belonging to the co-owners in the co-ownership shall be presumed equal. 136
As regards attorney's fees, the RTC awarded the same in the amount of P587,159.60 or 10% of the property's
market value based on the tax declarations. In its March 7, 2011 Decision, the CA reduced the award to P200,000.00 on
equitable grounds, considering the extent of legal services rendered by petitioners' counsel. 137
The Court finds either award to be excessive. Indubitably, petitioners were constrained to litigate to protect
their interest. 138 However, considering the circumstances of the case, including the summary 139 nature of an
unlawful detainer proceeding, the Court holds that an award of P75,000.00 as attorney's fees is fair and reasonable.
Decision is binding on
privies or parties deriving
possession from the City

In its March 7, 2011 Decision, the CA held that the government offices occupying the subject property, other
than the City government of Naga, could not be ordered to vacate the same because they were not parties to the case.
Jurisprudence, however, instructs that:
A judgment directing a party to deliver possession of a property to another is in personam. x
x x Any judgment therein is binding only upon the parties properly impleaded and duly heard or given
an opportunity to be heard. However, this rule admits of the exception, such that even a non-party
may be bound by the judgment in an ejectment suit where he is any of the following: (a) trespasser,
squatter or agent of the defendant fraudulently occupying the property to frustrate the judgment; (b)
guest or occupant of the premises with the permission of the defendant; (c) transferee pendente lite;
(d) sublessee; (e) co-lessee; or (f) member of the family, relative or privy of the
defendant. 140 (Emphasis ours)
Exceptions (b) and (f) are clearly applicable. There is no dispute that the government offices were allowed by
the City to occupy the subject property. Deriving their possession from the City, they are unmistakably the City's privies
in the occupation of the premises. 141 Thus, they too are bound by the judgment in this case.
Determination of ownership
is not conclusive

It must be stressed that the ruling in this case is limited only to the determination of who between the parties
has a better right to possession. This adjudication is not a final determination on the issue of ownership and, thus, will
not bar or prejudice an action between the same parties involving title to the property, if and when such action is
brought seasonably before the proper forum. 143
WHEREFORE, the petition is GRANTED. The Court of Appeals' Amended Decision dated July 20, 2011 is SET
ASIDE. The Decision dated June 20, 2005 of the Regional Trial Court, Branch 26 of Naga City in Civil Case No. RTC 2005-
0030 is REINSTATED with MODIFICATION in that: (a) petitioners shall be paid only half of the adjudged monthly rental
of P2,500,000; and (b) the award of attorney's fees is reduced to P75,000. HSAcaE
SO ORDERED.

G.R. No. 173120. July 26, 2017.]

SPOUSES YU HWA PING and MARY GAW, petitioners, vs. AYALA LAND, INC., respondent.
[G.R. No. 173141. July 26, 2017.]
HEIRS OF SPOUSES ANDRES DIAZ and JOSEFA MIA, petitioners, vs. AYALA LAND, INC., respondent.
MENDOZA, J p:

These petitions for review on certiorari seek to reverse and set aside the June 19, 2006 Decision 1 of the Court
of Appeals (CA) in CA-G.R. CV Nos. 61593 and 70622, which reversed and set aside its February 8, 2005 Amended
Decision 2 and reinstated its February 28, 2003 Decision, 3 in a case for annulment of title and surveys, recovery of
possession and judicial confirmation of title.
The Antecedents
On March 17, 1921, petitioners Spouses Andres Diaz and Josefa Mia (Spouses Diaz) submitted to the General
Land Registration Office for approval of the Director of Lands a survey plan designated as Psu-25909, which covered a
parcel of land located at Sitio of Kay Monica, Barrio Pugad Lawin, Las Piñas, Rizal, with an aggregate area of 460,626
square meters covered by Lot 1. On May 26, 1921, the Director of Lands approved survey plan Psu-25909.
On October 21, 1925, another survey plan was done covering Lot 3 of the same parcel of land designated as Psu-
47035 for a certain Dominador Mayuga. The said survey, however, stated that the lot was situated at Sitio May Kokek,
Barrio Almanza, Las Piñas, Rizal. Then, on July 28, 1930, another survey was undertaken designated as Psu-80886 for a
certain Eduardo C. Guico (Guico). Again, the survey indicated a different address that the lots were situated in Barrio
Tindig na Mangga, Las Piñas, Rizal. Finally, on March 6, 1931, an additional survey plan was executed over the similar
parcel of land designated as Psu-80886/SWO-20609 for a certain Alberto Yaptinchay (Yaptinchay). Psu-80886 and Psu-
80886/SWO-20609 covered Lot 2, with 158,494 square meters, and Lot 3, with 171,309 square meters, of the same
land.
On May 9, 1950, Original Certificate of Title (OCT) No. 242 was issued in favor of Yaptinchay covering Lots 2
and 3 pursuant to Psu-80886/SWO-20609. On May 11, 1950, OCT No. 244 was also issued to Yaptinchay. On May 21,
1958, OCT No. 1609 covering Lot 3 pursuant to Psu-47035 was issued in favor of Dominador Mayuga. On May 18, 1967,
some of properties were sold to CPJ Corporation resulting in the issuance of Transfer Certificate Title (TCT) No. 190713
in its name.
On February 16, 1968, petitioner Andres Diaz filed a petition for original registration before the Court of First
Instance (CFI) of Pasay for Lot No. 1 of Psu-25909. On October 19, 1969, judgment was rendered by the CFI of Pasay for
the original registration of Psu-25909 in favor of Andres Diaz. On May 19, 1970, OCT No. 8510 was issued in the name
of Spouses Diaz. On May 21, 1970, the Spouses Diaz subdivided their 460,626 square meter property covered by OCT
No. 8510 into ten (10) lots, described as Lots No. 1-A to 1-J and conveyed to different third parties.
On May 17, 1971, CPJ Corporation, then owner of the land covered by TCT No. 190713, which originated from
OCT No. 242, filed Land Registration Case No. N-24-M before the Regional Trial Court (RTC) of Pasig City, Branch 166,
against Spouses Diaz and other named respondents (Diaz Case). It sought to review OCT No. 8510 in the names of
Spouses Diaz on the ground that the interested persons were not notified of the application.
On August 30, 1976 and December 4, 1976, Andres Diaz sold to Librado Cabautan (Cabautan) the following
parcels of land, which originated from OCT No. 8510 under Psu-25909, to wit:
1. Lot 1-I, with an area of 190,000 square meters covered by the new TCT No. 287416;
2. Lot 1-B, with an area of 135,000 square meters covered by the new TCT No. 287411;
3. Lot 1-A with an area of 125,626 square meters covered by the new TCT No. 287412; and
4. Lot 1-D, with an area of 10,000 square meters also covered by the new TCT No. 287412. 4
On March 12, 1993, petitioner Spouses Yu Hwa Ping and Mary Gaw (Spouses Yu) acquired ownership
over 67,813 square meters representing the undivided half-portion of Lot 1-A originating from OCT No. 8510 of
Spouses Diaz. The said property was co-owned by Spouses Diaz with Spouses Librado and Susana Cabautan resulting
from a civil case decided by the RTC of Makati on March 29, 1986.
On January 27, 1994, Spouses Yu acquired ownership over Lot 1-B originating from OCT No. 8510 of Spouses
Diaz with an area of 135,000 square meters. Pursuant to the transfers of land to Spouses Yu, TCT Nos. 39408 and 64549
were issued in their names.
On the other hand, on May 4, 1980, CPJ Corporation transferred their interest in the subject properties to third
persons. Later, in 1988, Ayala Corporation obtained the subject properties from Goldenrod, Inc. and PESALA. In 1992,
pursuant to the merger of respondent Ayala Land, Inc. (ALI) and Las Piñas Ventures, Inc., ALI acquired all the subject
properties, as follows:
 1. Lot 3 which originated from OCT No. 1609 under Psu-47035 and covered by a new TCT No. 41325;
2. Lot 2 which originated from OCT No. 242 under Psu-80886/SWO-20609 and covered by a new TCT No. 41263;
3. Lot 3 which originated from OCT No. 242 under Psu-80886/SWO-20609 and covered by a new TCT No. 41262;
and
4. Lot 6 which originated from OCT No. 242 under Psu-80886/SWO-20609 and covered by a new TCT No.
41261. 5
First RTC Ruling
Returning to the Diaz case, on December 13, 1995, the RTC of Pasig City rendered a Decision 6 against Spouses
Diaz. It held that OCT No. 8510 and all the transfer certificates issued thereunder must be cancelled. The RTC of Pasig
City opined that Spouses Diaz committed fraud when they filed their application for original registration of land without
informing the interested parties therein in violation of Sections 31 and 32 of Act No. 496. It also held that Spouses Diaz
knew that CPJ Corporation had an appropriate interest over the subject properties.
Aggrieved, Spouses Diaz elevated an appeal before the CA docketed as CA-G.R. CV No. 61593.
Meanwhile, sometime in August 1995, Spouses Yu visited their lots. To their surprise, they discovered that ALI
had already clandestinely fenced the area and posted guards thereat and they were prevented from entering and
occupying the same. 7 They also discovered that the transfer of certificates of titles covering parcels of land overlapping
their claim were in the name of ALI under TCT Nos. 41325, 41263, 41262, and 41261.
On December 4, 1996, Spouses Yu filed a complaint before the RTC of Las Piñas City, Branch 255, against ALI
for declaration of nullity of the TCTs issued in the name of the latter (Yu case). They also sought the recovery of
possession of the property covered by ALI's title which overlapped their land alleging that Spouses Diaz, their
predecessors had open, uninterrupted and adverse possession of the same from 1921 until it was transferred to
Cabautan in 1976. Spouses Yu averred that Cabautan possessed the said land until it was sold to them in 1994. 8 They
likewise sought the judicial confirmation of the validity of their titles.
Spouses Yu principally alleged that the titles of ALI originated from OCT Nos. 242, 244, and 1609, which were
covered by Psu-80886 and Psu-47035. The said surveys were merely copied from Psu-25909, which was prepared at an
earlier date, and the Director of Lands had no authority to approve one or more surveys by different claimants over the
same parcel of land. 9 They asserted that OCT No. 8510 and its transfer certificates, which covered the Psu-25909, must
be declared valid against the titles of ALI.
The RTC of Las Piñas ordered the conduct of a verification survey to help in the just and proper disposition of
the case. Engr. Veronica Ardina-Remolar from the Bureau of Lands, the court-appointed commissioner, supervised the
verification survey, and the parties sent their respective surveyors. After the verification survey was completed and the
parties presented all their pieces of evidence, the case was submitted for resolution.
Second RTC Ruling
In its May 7, 2001 Decision, 10 the RTC of Las Piñas ruled in favor of Spouses Yu. It held that based on the
verification survey and the testimonies of the parties' witnesses, OCT Nos. 242, 244, and 1609 overlapped OCT No.
8510. The RTC of Las Piñas also pointed out, and extensively discussed, that Psu-80886 and Psu-47035, which were the
bases of OCT Nos. 242, 244, and 1609, were marred with numerous and blatant errors. It opined that ALI did not offer
any satisfactory explanation regarding the glaring discrepancies of Psu-80886 and Psu-47035. On the other hand, it
observed that Psu-25909, the basis of OCT No. 8510, had no irregularity in its preparation. Thus, the RTC of Las Piñas
concluded that the titles of ALI were void ab initio because their original titles were secured through fraudulent surveys.
The fallo reads:
WHEREFORE, judgment is rendered in favor of the plaintiffs in that the three transfer
certificates issued in the name of Ayala Land, Inc. by the Register of Deeds in the City of Las Piñas,
namely, Transfer Certificate of Title Nos. 41325, 41263 and 41262 all covering Lots Nos. 1, 2 and 6 of
survey plans PSU-47035, PSU-80886, Psu-80886/SWO-20609, the original survey under PSU-47035 and
decree of registration no. N-63394, and Original Certificate of Title No. 1609 issue in favor of
Dominador Mayuga, including all other titles, survey and decrees pertaining thereto and from or upon
which the aforesaid titles emanate, are hereby declared spurious and void ab initio. In the same vein,
the Court upholds the validity of Transfer Certificates of Title Nos. TCT Nos. T-64549 covering Lot 1-A
in the name of Mary Gaw, spouse of Yu Hwa Ping, and T-39408 covering Lot 1-B in the name of Yu Hwa
Ping (both originating from Original Certificate of Title No. 8510) pursuant to plan PSU-25909
undertaken on March 17, 1921. The defendant is also ordered to pay the plaintiffs temperate damages
 in the amount of One Million Pesos (PHP1,000,000.00) exemplary damages in the amount of Five
Hundred Thousand Pesos (PHP500,000.00), and to pay the costs.
SO ORDERED. 11
Unconvinced, ALI appealed to the CA, where the case was docketed as CA-G.R. CV No. 70622. Eventually, said
appeal was consolidated with the earlier appeal of Spouses Diaz in CA-G.R. CV No. 61593.
The CA Rulings
In its decision, dated June 19, 2003, the CA ruled in favor of ALI. It held that in the Diaz case, the RTC of Pasig
properly cancelled OCT No. 8510 because Spouses Diaz committed fraud. It opined that Spouses Diaz knew of CPJ
Corporation's interest over the subject land but failed to inform it of their application.
With respect to the Yu case, the CA ruled that Spouses Yu could no longer assert that the titles of ALI were
invalid because the one-year period to contest the title had prescribed. Hence, ALI's titles were incontestable. The CA
underscored that the errors cited by the RTC of Las Piñas in Psu-80886 and Psu-47035, upon which the titles of ALI were
based, were innocuous or already explained. It also stressed that OCT Nos. 242, 244, and 1609, from which the titles of
ALI originated, were issued in 1950 and 1958; while the OCT No. 8510, from which the titles of Spouses Yu originated,
was only issued in 1970. As the original titles of ALI predated that of Spouses Yu, the CA concluded that the former titles
were superior.
Undaunted, Spouses Yu and Spouses Diaz filed their motions for reconsideration.
In its decision, dated February 8, 2005, the CA granted Spouses Yu and Spouses Diaz' motions for
reconsideration. It opined that the numerous errors in Psu-80886 and Psu-47035 were serious and these affected the
validity of the original titles upon which the surveys were based. In contrast, the CA noted that Psu-25909, upon which
the original titles of Spouses Yu and Spouses Diaz were based, bore all the hallmarks of verity.
The CA also emphasized that in Guico v. San Pedro, 12 the Court already recognized the defects surrounding
Psu-80886. In that case, the Court noted that the applicant-predecessor of Psu-80886 was not able to submit the
corresponding measurements of the land and he failed to prove that he had occupied and cultivated the land
continuously since the filing of their application. The CA likewise cited (1) the certification from the Department of
Environment and Natural Resources-Land Management Bureau (DENR-LMB) that Psu-80886 was included in the list of
restricted plans because of the doubtful signature of the surveyor, and (2) the memorandum, dated August 3, 2000,
from the Assistant Regional Director for Operations of the DENR directing all personnel of the Land Survey Division not
to issue copies or technical descriptions of Psu-80886 and Psu-47035.
The CA further wrote that the slavish adherence to the issue of prescription and laches by ALI should not be
countenanced. It declared that the doctrine that registration done fraudulently is no registration at all prevails over the
rules on equity. With respect to the Diaz case, the CA held that Spouses Diaz had no obligation to inform CPJ Corporation
and its successors about their registration because the original titles of the latter, from which their transferred titles
were derived, were based on fraudulent surveys.
Undeterred, ALI filed a second motion for reconsideration.
In its assailed June 19, 2006 decision, the CA granted the second motion for reconsideration in favor of ALI. It
reversed and set aside its February 8, 2005 decision and reinstated its February 28, 2003 decision. The CA held that Guico
v. San Pedro did not categorically declare that Psu-80886 was invalid and it even awarded some of the lots to the
applicant; and that the certification of DENR-LMB and the memorandum of the Assistant Director of the DENR could
not be considered by the courts because these were not properly presented in evidence.
The CA reiterated its ruling that Spouses Yu could no longer question the validity of the registrations of OCT
Nos. 242, 244, and 1609 because the one-year reglementary period from the time of registration had already expired
and these titles were entitled to the presumption of regularity. Thus, once a decree of registration was made under the
Torrens system, and the reglementary period had lapsed, the title was perfected and could not be collaterally attacked.
The CA also stressed that the noted discrepancies in Psu-80886 and Psu-47035 were immaterial to assail the validity of
OCT Nos. 242, 244 and 1609, which were registered earlier than OCT No. 8510.
Hence, these petitions, anchored on the following:
ISSUES
I
WHETHER THE COMPLAINT OF SPOUSES YU IS BARRED BY PRESCRIPTION
II
 WHETHER THE VALIDITY OF THE SURVEYS OF OCT NOS. 242, 244 AND 1609 AS AGAINST OCT NO.
8510 CAN BE ASSAILED IN THE PRESENT CASE
III
WHETHER THE CASE OF GUICO V. SAN PEDRO IS APPLICABLE IN THE PRESENT CASE
IV
WHETHER THE ALLEGED ERRORS IN PSU-80886 AND PSU-47035 ARE OF SUCH DEGREE SO AS TO
INVALIDATE OCT NOS. 242, 244 AND 1609 AND ITS TRANSFER CERTIFICATES OF TITLES
In their Memorandum, 13 the petitioners chiefly argue that the complaint filed by Spouses Yu is not barred by
the one-year prescriptive period under Act No. 496 because an action to annul the fraudulent registration of land is
imprescriptible; that there are several and conspicuous irregularities in Psu-80886 and Psu-47035 which cast doubt on
the validity of OCT Nos. 242, 244, and 1609; that Guico v. San Pedro did not categorically award Lots No. 2 and 3 covered
by Psu-80886 to the applicant therein because he was still required to submit an amended plan duly approved by the
Director of Lands; that the applicant in Guico v. San Pedro never submitted any amended plan, hence, no lot was
awarded under Psu-80886 and its irregularity was affirmed by the Supreme Court; that the registration of OCT Nos. 242,
244, and 1609 on a date earlier than OCT No. 8510 did not render them as the superior titles; that in case of two
conflicting titles, the court must look into the source of the titles; that the sources of the titles, Psu-80886 and Psu-
47035, had numerous errors that could not be satisfactorily explained by ALI; and that Psu-25909 had the hallmark of
regularity and it was approved by the Director of Lands at an earlier date.
In its Memorandum, 14 ALI essentially countered that in the June 19, 2006 decision, the CA properly
disregarded the certification of DENR-LMB and the memorandum of the Assistant Director of the DENR because these
were not presented in evidence; that Guico v. San Pedro recognized the registrability of Lots No. 2 and 3 under Psu-
80886; that the RTC of Las Piñas did not have jurisdiction to look beyond the details of the decrees of registration; that
the registration of a land under the Torrens system carries with it a presumption of regularity; that in case of conflict
between two certificates of title, the senior and superior title must be given full effect and validity; and that the alleged
errors in the Psu-80886 and Psu-47035 were sufficiently explained.
The Court's Ruling
The Court finds the petitions meritorious.
The present case essentially involves the issue: between the registered titles of the petitioners and ALI, which
is more superior? Before the said issue can be discussed thoroughly, the Court must first settle whether the actions
instituted by the petitioners were filed within the reglementary periods.
The actions were filed
within their respective
prescriptive periods
The Diaz case was a petition for review before the RTC of Pasig. It assailed OCT No. 8510 in the names of Spouses
Diaz on the ground that the said title was issued through fraud because the interested persons were not informed of
their application for registration. Under Section 38 of Act No. 496, "any person deprived of land or of any estate or
interest therein by decree of registration obtained by fraud [may] file in the competent Court of First Instance a petition
for review within one year after entry of the decree provided no innocent purchaser for value has acquired an
interest." 15
Here, OCT No. 8510 was issued in the name of Spouses Diaz on May 21, 1970. On the other hand, the petition
for review of CPJ Corporation was filed on May 17, 1971. Thus, the said petition was timely filed and the RTC of Pasig
could tackle the issues raised therein. When the RTC of Pasig ruled in favor of CPJ Corporation, Spouses Diaz appealed
to the CA. In the same manner, when they received an unfavorable judgment from the CA, Spouses Diaz filed a petition
for review on certiorari before the Court. Accordingly, the appeal of Spouses Diaz is proper and it can be adjudicated on
the merits.
On the other hand, the Yu case began when they filed a complaint before the RTC of Las Piñas against ALI for
declaration of nullity of the TCTs issued in the name of the latter because of the spurious, manipulated and void surveys
of OCT Nos. 242, 244 and 1609. They also sought the recovery of possession of the property covered by ALI's title that
overlapped their land alleging that their predecessors, Spouses Diaz, had open, uninterrupted and adverse possession
of the same from 1921 until it was transferred to Cabautan in 1976. Spouses Yu also alleged that Cabautan possessed
the said land until it was sold to them in 1994. 16 It was only in August 1995 that they discovered that ALI clandestinely
fenced their property and prevented them from occupying the same. They also sought the judicial confirmation of the
validity of their titles.
 ALI argues that the complaint of Yu is barred by prescription because it was filed beyond the one-year period
under Section 38 of Act No. 496. On the other hand, Spouses Yu assert that their action was imprescriptible because
they sought to set aside the titles that were obtained through void surveys and they assert that the principle of
indefeasibility of a Torrens title does not apply where fraud attended the issuance of the title.
The Court finds that the complaint of Spouses Yu is not barred by prescription. While Section 38 of Act No.
496 states that the petition for review to question a decree of registration must be filed within one (1) year after entry
of the decree, such provision is not the only remedy of an aggrieved party who was deprived of land by fraudulent
means. The remedy of the landowner whose property has been wrongfully or erroneously registered in another's name
is, after one year from the date of the decree, not to set aside the decree, as was done in this case, but, respecting the
decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice for
reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. 17
Uy v. Court of Appeals 18 remarkably explained the prescriptive periods of an action for reconveyance
depending on the ground relied upon, to wit:
The law creates the obligation of the trustee to reconvey the property and its title in favor of
the true owner. Correlating Section 53, paragraph 3 of PD No. 1529 and Article 1456 of the Civil
Code with Article 1144 (2) of the Civil Code, the prescriptive period for the reconveyance of
fraudulently registered real property is ten (10) years reckoned from the date of the issuance of the
certificate of title. This ten-year prescriptive period begins to run from the date the adverse party
repudiates the implied trust, which repudiation takes place when the adverse party registers the land.
An exception to this rule is when the party seeking reconveyance based on implied or constructive
trust is in actual, continuous and peaceful possession of the property involved. Prescription does not
commence to run against him because the action would be in the nature of a suit for quieting of title,
an action that is imprescriptible.
The foregoing cases on the prescriptibility of actions for reconveyance apply when the action
is based on fraud, or when the contract used as basis for the action is voidable. Under Article 1390 of
the Civil Code, a contract is voidable when the consent of one of the contracting parties is vitiated by
mistake, violence, intimidation, undue influence or fraud. When the consent is totally absent and not
merely vitiated, the contract is void. An action for reconveyance may also be based on a void contract.
When the action for reconveyance is based on a void contract, as when there was no consent on the
part of the alleged vendor, the action is imprescriptible. The property may be reconveyed to the true
owner, notwithstanding the TCTs already issued in another's name. The issuance of a certificate of title
in the latter's favor could not vest upon him or her ownership of the property; neither could it validate
the purchase thereof which is null and void. Registration does not vest title; it is merely the evidence
of such title. Our land registration laws do not give the holder any better title than what he actually
has. Being null and void, the sale produces no legal effects whatsoever.
Whether an action for reconveyance prescribes or not is therefore determined by the nature
of the action, that is, whether it is founded on a claim of the existence of an implied or constructive
trust, or one based on the existence of a void or inexistent contract. x x x 19
As discussed-above, when the action for reconveyance is based on an implied or constructive trust, the
prescriptive period is ten (10) years, or it is imprescriptible if the movant is in the actual, continuous and peaceful
possession of the property involved. On the other hand, when the action for reconveyance is based on a void deed or
contract the action is imprescriptible under Article 1410 of the New Civil Code. 20 As long as the land wrongfully
registered under the Torrens system is still in the name of the person who caused such registration, an action in
personam will lie to compel him to reconvey the property to the real owner. 21
In Hortizuela v. Tagufa, 22 the complainant therein filed an action for reconveyance and recovery of possession
with damages for a parcel of land which was wrongfully granted a patent or decree issued in a registration proceedings
in the name of a third person. The CA and the Municipal Circuit Trial Court initially dismissed the complaint because it
allegedly questioned the validity of the Torrens title in a collateral proceeding and it had prescribed. When the case
reached the Court, it ruled that the instituted complaint had not prescribed because "in a complaint for reconveyance,
the decree of registration is respected as incontrovertible and is not being questioned. What is being sought is the
transfer of the property wrongfully or erroneously registered in another's name to its rightful owner or to the one with
a better right. If the registration of the land is fraudulent, the person in whose name the land is registered holds it as a
mere trustee, and the real owner is entitled to file an action for reconveyance of the property." 23 It was eventually ruled
therein that the action for reconveyance was proper and the possession was recovered.
In this case, Spouses Yu sought to reconvey to them once and for all the titles over the subject properties. To
prove that they had a superior right, they questioned the validity of the surveys which were the bases of OCT Nos. 242,
244 and 1609, the origin of ALI's TCTs. Moreover, they also sought to recover the possession that was clandestinely
taken away from them. Thus, as the subject matter of this case is the ownership and possession of the subject
properties, Spouses Yu's complaint is an action for reconveyance, which is not prohibited by Section 38 of Act No. 496.
Moreover, a reading of Spouses Yu's complaint reveals that they are seeking to declare void ab initio the titles
of ALI and their predecessors-in-interest as these were based on spurious, manipulated and void surveys. 24 If
successful, the original titles of ALI's predecessors-in-interest shall be declared void and, hence, they had no valid object
to convey. It would result to a void contract or deed because the subject properties did not belong to the said
predecessors-in-interest. Accordingly, the Yu case involves an action for reconveyance based on a void deed or contract
which is imprescriptible under Article 1410 of the New Civil Code.
Further, the Court agrees with the observation of the CA in its February 8, 2005 Amended Decision, to wit:
9. In light of the circumstances, we feel that a slavish adherence to the doctrine being invoked
by ALI with respect to alleged prescription and laches, should not be countenanced. The said axioms
do not possess talismanic powers, the mere invocation of which will successfully defeat any and all
attempts by those who claim to be the real owners of property, to set aright what had been done
through fraud and imposition. Consistent with the doctrine that registration done fraudulently is no
registration at all, then this court must not allow itself to be swayed by appeals to a strict interpretation
of what are, after all, principles based on equity. To rule otherwise would be to reward deception and
duplicity and place a premium on procedural niceties at the expense of substantial justice. 25
Neither can ALI be considered an innocent purchaser for value of the subject properties. As discussed by the
RTC of Las Piñas, when ALI purchased the subject lots from their predecessors-in-interest in 1988, the titles bore notices
of the pending cases and adverse claims sufficient to place it on guard. In the TCTs of ALI, the notices of lis
pendens indicated therein were sufficient notice that the ownership of the properties were being disputed. The trial
court added that even the certified true copy of Psu-80886 had markings that it had been used in some other cases as
early as March 7, 1959. 26 Accordingly, ALI is covered by the present action for reconveyance. As both the Diaz and Yu
cases were properly filed and are not barred by prescription, these can be adjudicated by the Court on the merits.
The Rule — that between
two (2) conflicting titles,
the title registered earlier
prevails — is Not Absolute
The June 19, 2006 and February 28, 2003 decisions of the CA essentially ruled that ALI's titles were superior to
those of the petitioners because OCT Nos. 242, 244 and 1609 were registered earlier than OCT No. 8510. The CA
emphasized that the general rule was that in case of two certificates of title purporting to include the same land, the
earlier date prevails. This general rule was first discussed in Legarda v. Saleeby, 27 as follows:
The question, who is the owner of land registered in the name of two different persons, has
been presented to the courts in other jurisdictions. In some jurisdictions, where the "torrens" system
has been adopted, the difficulty has been settled by express statutory provision. In others it has been
settled by the courts. Hogg, in his excellent discussion of the "Australian Torrens System," at page 823,
says: "The general rule is that in the case of two certificates of title, purporting to include the same
land, the earlier in date prevails, whether the land comprised in the latter certificate be wholly, or only
in part, comprised in the earlier certificate. x x x In successive registrations, where more than one
certificate is issued in respect of a particular estate or interest in land, the person claiming under the
prior certificate is entitled to the estate or interest; and that person is deemed to hold under the prior
certificate who is the holder of, or whose claim is derived directly or indirectly from the person who
was the holder of the earliest certificate issued in respect thereof x x x. 28
The said general rule has been repeated by the Court in its subsequent decisions in Garcia v. Court of
Appeals, 29 MWSS v. Court of Appeals, 30 Spouses Carpo v. Ayala Land, Inc., 31 and recently in Jose Yulo Agricultural
Corp. v. Spouses Davis. 32 Nevertheless, the rule on superiority is not absolute. The same case of Legarda v.
Saleeby explains the exception to the rule, viz.:
Hogg adds however that, "if it can be clearly ascertained by the ordinary rules of construction
relating to written documents, that the inclusion of the land in the certificate of title of prior date is
a mistake, the mistake may be rectified by holding the latter of the two certificates of title to be
conclusive." 33 [Emphasis supplied]
Accordingly, if the inclusion of the land in the earlier registered title was a result of a mistake, then the latter
registered title will prevail. The ratio decidendi of this exception is to prevent a title that was earlier registered, which
erroneously contained a parcel of land that should not have been included, from defeating a title that was later
registered but is legitimately entitled to the said land. It reinforced the doctrine that "[r]egistering a piece of land under
the Torrens System does not create or vest title because registration is not a mode of acquiring ownership. A certificate
of title is merely an evidence of ownership or title over the particular property described therein." 34
In his book, Land Registration and Related Proceedings, 35 Atty. Amado D. Aquino further explained that the
principle of according superiority to a certificate of title earlier in date cannot, however, apply if it was procured through
fraud or was otherwise jurisdictionally flawed. Thus, if there is a compelling and genuine reason to set aside the rule on
the superiority of earlier registered title, the Court may look into the validity of the title bearing the latter date of
registration, taking into consideration the evidence presented by the parties.
In Golloy v. Court of Appeals, 36 there were two conflicting titles with overlapping boundaries. The first title
was registered on March 1, 1918, while the second title was registered on August 15, 1919. Despite having been
registered at a prior date, the Court did not allow the earlier registered title of the respondents to prevail because of
the continuing possession of the petitioners therein and the laches committed by the respondents. Hence, the holder
of an earlier registered title does not, in all instances, absolutely triumph over a holder of a latter registered title.
In this case, the petitioners assail the numerous and serious defects in the surveys of OCT Nos. 242, 244 and
1609, which cast doubt on the inclusion of the subject lands in ALI's titles. Accordingly, the Court must delve into the
merits of their contentions to determine whether the subject properties are truly and genuinely included in ALI's title.
Merely relying on the date of registration of the original titles is insufficient because it is the surveys therein that are
being assailed. It is only through a judicious scrutiny of the evidence presented may the Court determine whether to
apply the general rule or the exception in the superiority of titles with an earlier registration date.
The survey of the registered
land may be scrutinized by
the courts when compelling
reasons exist
In its June 19, 2006 decision, the CA emphasized that OCT Nos. 242, 244, and 1609 carry with it the presumption
of regularity and that the surveys therein were presumably undertaken by qualified surveyors before the issuance of
the titles. In effect, the appellate court declares that the surveys of these titles should no longer be inspected.
The Court does not agree.
Although a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in
favor of the person whose name appears therein, 37 it is not a conclusive proof of ownership. It is a well-settled rule
that ownership is different from a certificate of title. The fact that a person was able to secure a title in his name does
not operate to vest ownership upon him of the subject land. Registration of a piece of land under the Torrens System
does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence
of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the
true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at
the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real property
may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the
registered owner. 38
Hence, the Court may inquire into the validity of the ownership of a property by scrutinizing the movant's
evidence of title and the basis of such title. When there is compelling proof that there is doubt on the validity of the
sources or basis of such title, then an examination is proper. Thus, the surveys of the certificates of title are not immune
from judicial scrutiny, in light of the genuine and legitimate reasons for its analysis.
In Dizon v. Rodriguez 39 and Republic v. Ayala y Cia, 40 the Court confronted the validity of the surveys
conducted on the lands to determine whether the title was properly subdivided. It was ruled therein that subdivision
plan Psd-27941 was erroneous because it was "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." 41 Accordingly, the sole method for the
Court to determine the validity of the title was to dissect the survey upon which it was sourced. As a result, it was
discovered that the registered titles therein contained areas which belong to the sea and foreshore lands.
Here, only a direct review of the surveys of OCT Nos. 242, 244, and 1609, as well as OCT No. 8510 can resolve
the issue on the validity of these titles. The findings of the RTC of Las Piñas and the CA differ with respect to the cited
errors in the surveys. The Court is convinced that through a rigorous study of the affected surveys, the valid owners of
the subject properties are can be finally adjudicated.
 Finally, after resolving the various preliminary issues, the Court can now tackle the crux of these petitions —
the validity of Psu-25909, Psu-47035, Psu-80886, and Psu-80886/SWO-20609. The resolution of this issue will decisively
determine the true and rightful owner of the subject properties.
Psu-47035, Psu-80886 and
Psu-80886/SWO-20609 contain
numerous and serious irregularities
which cast doubt on the validity of
OCT Nos. 242, 244 and 1609
At the onset, the present case poses an issue on the validity of registered and overlapping titles based on their
surveys. The Court must commend the RTC of Las Piñas for taking the correct procedure in resolving such issue.
In Cambridge Realty and Resources Corp. v. Eridanus Development, Inc., 42 it was ruled that a case of
overlapping of boundaries or encroachment depends on a reliable, if not accurate, verification survey; barring one, no
overlapping or encroachment may be proved successfully, for obvious reasons. The first step in the resolution of such
cases is for the court to direct the proper government agency concerned to conduct a verification or relocation survey
and submit a report to the court, or constitute a panel of commissioners for the purpose. In that case, the Court
lamented that the trial court therein did not order the conduct of a verification survey and the appointment of geodetic
engineers as commissioners, to wit:
This is precisely the reason why the trial court should have officially appointed a commissioner
or panel of commissioners and not leave the initiative to secure one to the parties: so that a thorough
investigation, study and analysis of the parties' titles could be made in order to provide, in a
comprehensive report, the necessary information that will guide it in resolving the case completely,
and not merely leave the determination of the case to a consideration of the parties' more often than
not self-serving evidence. 43
Similarly, in Chua v. B.E. San Diego, Inc., 44 the Court ruled that in overlapping boundary disputes, the
verification survey must be actually conducted on the very land itself. In that case, the verification survey conducted it
was merely based on the technical description of the defective titles. The opinion of the surveyor lacked
authoritativeness because his verification survey was not made on the land itself.
In this case, the RTC of Las Piñas issued an Order, 45 dated December 5, 1997, which directed the parties to
conduct a verification survey pursuant to the prescribed rules. Engr. Veronica Ardina-Remolar (Remolar) from the
Bureau of Lands of the DENR was the court-appointed commissioner who supervised and coordinated the verification
survey. Engrs. Rolando Nathaniel Pada (Pada) and Alexander Ocampo (Ocampo) were the geodetic engineers for
Spouses Yu; while Engr. Lucal Francisco (Francisco) was the geodetic engineer for ALI. They conducted actual verification
survey on April 5, 6, 7 and 16, 1998 and June 8, 1998. Afterwards, Engr. Remolar submitted her Report, 46 dated
November 4, 1998, to the trial court which stated that there were overlapping areas in the contested surveys. Likewise,
Engrs. Pada and Francisco submitted their Verification Reports and Survey Plans, 47 which were approved by the DENR.
Then, the parties presented their respective witnesses.
The RTC of Las Piñas had a technical and accurate understanding and appreciation of the overlapping surveys
of Psu-25909, Psu-47035, Psu-80886, and Psu-80886/SWO-20609. In its decision, dated May 7, 2001, it ruled in favor of
Spouses Yu and it discussed extensively its observations and findings regarding the overlapping areas, to wit:
From the evidence on record, it appears that the following plans were made on the dates and
by the surveyor specified herein:
Survey No. PSU-25909 March 17, 1921 A.N. Feliciano
Survey No. PSU-47035 October 21, 1925 A.N. Feliciano
Survey No. PSU-80886 July 28, 1930 A.N. Feliciano
Survey No. SWO-20609 March 6, 1931 A.N. Feliciano

Plan PSU-25909 (Exhibit "F") invoked by the plaintiffs and authenticity of which is certified by
appropriate government custodians including Engineer Remolar, the court-designated commissioner,
appears to have been prepared on March 17, 1921 for one Andres Diaz and recites the following
entries:
"THE ORIGINAL FIELD NOTES, COMPUTATIONS AND PLAN OF THIS SURVEY
EXECUTED BY A.M. FELICIANO HAVE BEEN CHECKED AND VERIFIED IN THIS OFFICE IN
 ACCORDANCE WITH SECTIONS 1858 TO 1865, ACT 2711 AND ARE HEREBY APPROVED
MAY 26, 1921."
-and-
"This is to certify that this is a true and correct plan of Psu-25909 as traced
from the mounted paper of plan Psu-25909 which is on file at T.R.S. Lands
Management Sector, N.C.R.
"This true copy of the plan is requested by the Chief, Technical Records
Section as contained in a letter dated February 15, 1989.
TEODORICO C. CALISTERIO
Chief, Topographic 7 Special Maps Section

Traced by: F. SUMAGUE

Checked by: A.O. VENZON (Sgd.) 4/28/89

Thus, the Court holds that plan PSU-25909 (Exhibit "F") is a true copy of an official document
on file with the Bureau of Lands and is, therefore, entitled to great weight and appreciation, there
being no irregularity demonstrated in the preparation thereof.
On the other hand, an examination of Plan PSU-47035 (Exhibit "G") invites suspicion thereto.
As observed by Engineer Pada in his verification survey report, the photocopy of plan PSU-47035
submitted by the defendant shows that the plan appears to have done for one Estanislao Mayuga,
while in the certified true copy of the pertinent decree (Exhibit "HH"/Exhibit 20), it appears that the
same was done for a certain Dominador Mayuga. Viewing this discrepancy in the light of the fact that
the plan for PSU-47035 was undertaken on October 21, 1925 or more than four years after the survey
for plan PSU-25909 was done, the same discrepancy leads the Court to conclude that PSU-47035 is
spurious and void.
The third plan enumerated above, plan PSU-80886 (Exhibit "II"/Exhibit 29), prepared on July
28, 1930 or more than five years since plan PSU-25909 was done for Andres Diaz, also invites suspicion.
An examination of the same reveals that the lower right hand corner of the plan, which bears the serial
number PSU-80886, is manifestly different from the main document in terms of the intensity of its
contrast, and that the change in the intensity of the shading is abrupt as one examines the document
starting from the lower right hand corner to anywhere else in the same document. Also, it is worth
observing that the main document, minus the lower right hand corner mentioned, does not indicate
anything to even suggest that it pertains to plan PSU-80886. For these reasons, the contention of the
plaintiffs that this lower right hand corner of the plan appears to be a spurious attachment to the main
document to make the main document it look like it is actually plan PSU-80886, has merit.
Another discrepancy invites further suspicion under the circumstances. The main document
bears what appears to be the actual signature of the surveyor, Mr. A.N. Feliciano while the lower right
hand corner of the plan mentions only the name "Serafin P. Hidalgo — Director of Lands" with the
prefix "Sgd." But without any actual signature. An interesting query arises: Why would the document
bear an actual signature of the surveyor without bearing the signature of the Director of Lands which
in essence is the more important signature for authentication purposes?
Still another discrepancy is with respect to a monument appearing in PSU-80886 (Exhibit "II").
At the upper off-right portion thereof are entries referring to a monument more specifically described
as B.L.L.M. No. 4. According to Engineer Pada, citing a certified document taken from the Land
Management Bureau of the Department of Environment and Natural Resources, this monument was
established only on November 27, 1937 (TSN, March 24, 2000, pp. 18-20) which is more than seven
years after PSU-80886 was undertaken. How a monument which was established only in November
1937 can actually exist in a plan made on July 28, 1930 is absolutely incredible.
In view of the foregoing, the Court finds good reason to consider PSU-80886 (Exhibit "II" and
29), relied upon by the defendant, spurious and void as well.
The fourth and last plan mentioned is SWO-20609, done on March 6, 1931.
 It is admitted by the geodetic engineer of the defendant that a specific work order (SWO) co-
exists with a survey plan, and that in particular, SWO-20609 was undertaken in view of alleged errors
in plan PSU-80886 (TSN, February 16, 2001, pp. 31-32). Therefore, SWO-20609 must be evaluated in
relation to plan PSU-80886. From this perspective, the Court also notes that SWO-20609 is attended
with discrepancies thus rendering it devoid of any credence.
For the record, in PSU-80886 (Exhibit "II"/Exhibits 29 and 30), the land concerned appears to
have been surveyed for one Eduardo C. Guico while in PSU-80886/SWO-20609 (Exhibit "H"/Exhibit 35),
the same land appears to have been surveyed for one Alberto Yaptinchay. In addition, it is evident in
PSU-80886 (Exhibits 29 and 30) that vital entries regarding the total area of the property covered by
the document bear many erasures, particularly two erasures as to the total area in terms of number
and one erasure as to that total area in terms of unit of measurement.
The Court likewise notes with suspicion the fact that all four survey plans were purportedly
undertaken by one and the same surveyor, a Mr. A.N. Feliciano. It seems extremely unusual why the
same A.N. Feliciano, who surveyed the same property for Andres Diaz in 1921, would do so again in
1925 with different results, and again in 1930 once more with different results, and still one more
time in 1931 with still different results. The only reasonable and logical conclusion under these telling
circumstances is that the second, third and last surveys corresponding to PSU-47035, PSU-80886 and
PSU-80886/SWO-20609 are all spurious and void, too.
The Court went through the record of the case and no satisfactory explanation has been
offered by the defendant regarding these discrepancies. Even the documentary evidence presented by
the defendant offers no plausible reason for the Court to reject the contentions of the plaintiffs. This
all the more strengthens the view of the Court to effect that PSU-47035, PSU-80886 and PSU-
80886/SWO-20609 are spurious and void ab initio. This view is also strengthened by the credentials of
Engineer Pada whom the Court considers as a very credible witness.
All in all, the Court is convinced that the title of the plaintiffs to the properties in dispute is
superior over those invoked by the defendant. 48 [Emphases supplied]
The findings of the RTC of Las Piñas were affirmed by the CA in its February 8, 2005 decision. It agreed that
there are indeed glaring errors in the surveys relied upon by ALI. These errors could not be merely disregarded as they
affect the authenticity and validity of OCT Nos. 242, 244 and 1609.
Conclusion
After a judicious study of the case, the Court agrees with the findings of the RTC of Las Piñas and the CA in its
February 8, 2005 decision.
First, Psu-25909 was conducted by a certain A.N. Feliciano in favor of Andres Diaz and was approved on May
26, 1921. Curiously, the subsequent surveys of Psu-47035 for a certain Dominador Mayuga, Psu-80886 for a certain
Guico and Psu-80886/SWO-20609 for a certain Yaptinchay were also conducted by A.N. Feliciano. It is dubious how the
same surveyor or agrimensor conducted Psu-47035, Psu-80886 and Psu-80886/SWO-20609 even though an earlier
survey on Psu-25909, which the surveyor should obviously be aware, was already conducted on the same parcel of land.
Engr. Pada, witness of Spouses Yu, also observed this irregularity and stated that this practice is not the standard norm
in conducting surveys.
Second, even though a single entity conducted the surveys, the lands therein were described to be located in
different places. Psu-25909, the earliest dated survey, indicated its location at Sitio of Kay Monica, Barrio Pugad Lawin,
Las Piñas, Rizal, while Psu-47035 and Psu-80886 stated their locations at Sitio May Kokek, Barrio Almanza, Las Piñas,
Rizal, and Barrio Tindig na Mangga, Las Piñas, Rizal, respectively. Again, Engr. Pada observed this peculiarity and pointed
out that the subject properties should have had the same address. ALI did not provide an explanation to the
discrepancies in the stated addresses. Thus, it led the CA to believe that the same surveyor indicated different locations
to prevent the discovery of the questionable surveys over the same parcel of land.
Third, there is a discrepancy as to who requested the survey of Psu-47035. The photocopy of Psu-47035 as
submitted by ALI shows that it was done for a certain Estanislao Mayuga. On the other hand, the certified true copy of
Psu-47035 depicts that it was made for Dominador Mayuga. Once more, Engr. Pada noticed this discrepancy on the said
survey. ALI, however, did not give any justification on the diverging detail, which raises question as to the authenticity
and genuineness of Psu-47035.
Fourth, Psu-80886 does not contain the signature of then Director of Lands, Serafin P. Hidalgo; rather, the prefix
"Sgd." was simply indicated therein. As properly observed by the CA in its February 8, 2005 decision, any person can
place the said prefix and it does not show that the Director of Lands actually signed and gave his imprimatur to Psu-
80886. The absence of the approval of the Director of Lands on Psu-80886 added doubt to its legitimacy. The excuse
proffered by ALI — that Psu-80886 is regular and valid simply because land registration proceedings were undertaken
— is insufficient to cure the crucial defect in the survey.
In University of the Philippines v. Rosario, 49 it was held that "[n]o plan or survey may be admitted in land
registration proceedings until approved by the Director of Lands. The submission of the plan is a statutory requirement
of mandatory character. Unless a plan and its technical description are duly approved by the Director of Lands, the same
are of no value." Hence, the lack of approval by the Director of Lands of Psu-80886 casts doubt on its legality. It also
affects the jurisdictional facts before the land registration courts which relied on Psu-80886 for registration.
Fifth, Psu-80886 was issued on July 28, 1930 but it referred to a specific monument described as B.L.L.M No. 4.
According to the LMB-DENR, the said monument was only established on November 27, 1937, more than seven years
after Psu-80886 was issued. 50 This discrepancy was duly noted in the findings of the verification report and it was
affirmed by the testimony of Engr. Pada. Thus, both the RTC of Las Piñas and the CA in its February 8, 2005 decision
properly observed that it was highly irregular for Psu-80886 to refer to B.L.L.M No. 4 because the said monument existed
seven years later.
Sixth, ALI attempted to explain this anomaly by stating that Psu-80886 was amended by Psu-80886/SWO-
20609, a Special Work Order, in view of the discrepancies of the former. While Psu-80886/SWO-20609 is dated March
6, 1931, ALI insists that it was actually conducted in 1937 and approved in 1940. However, in its February 8, 2005
decision, the CA noted that said testimony crumbled under cross-examination as ALI's witness, Engr. Felino
Cortez (Cortez), could not reaffirm the said justification for Psu-80886's manifest error of including a latter dated
monument. Also, the Court observed that ALI's other witness, Engr. Percival Bacani, testified that he does not know why
B.L.L.M No. 4 was used in preparing Psu-80886 even though the said monument appears on all the titles. 51 Moreover,
the alleged explanation provided by ALI to justify the existence of B.L.L.M No. 4 in Psu-80886 was not indicated at all in
the verification report and survey plan they submitted before the RTC of Las Piñas. Accordingly, ALI did not resolve the
uncertainty surrounding the reference to B.L.L.M No. 4 by Psu-80886 and it seriously damages the validity of the said
survey.
Seventh, ALI explained that Psu-80886/SWO-20609 was undertaken to correct a discrepancy in Psu-80886. Its
witness, Engr. Cortez, confirmed that Psu-80886/SWO-20609 was commenced to resolve the mistake in the timeline.
He added that the timeline published in the notice of initial hearing in the Official Gazette for Psu-80886 was different
from the approved plan in Psu-80886/SWO-20609. He also noted some difference in the area of Psu-80886 compared
to Psu-80886/SWO-20609. 52 These admissions show that Psu-80886 was flawed from the very beginning. Yaptinchay
merely requested the conduct of Psu-80886/SWO-20609 in order to resurrect or salvage the erroneous Psu-80886 and
to wrongfully acquire OCT No. 242. It does not, however, erase the fact that Psu-80886, from which ALI's titles
originated, is marred with irregularities. This is a badge of fraud that further runs counter to the legitimacy of the surveys
that ALI relied upon.
Eight, the RTC of Las Piñas continuously observed the irregularities in Psu-80886. It stated that "the total area
of the property covered by the document bear many erasures, particularly two erasures as to the total area in terms of
number and one erasure as to that total area in terms of unit of measurement." 53 Manifestly, no explanation was
provided why it was necessary to make erasures of the crucial data in the survey regarding the total area.
Ninth, the RTC of Las Piñas continued its observations regarding Psu-80886's anomalies. It added that "[a]n
examination of the same reveals that the lower right hand corner of the plan, which bears the serial number PSU-80886,
is manifestly different from the main document in terms of the intensity of its contrast, and that the change in the
intensity of the shading is abrupt as one examines the document starting from the lower right hand corner to anywhere
else in the same document. Also, it is worth observing that the main document, minus the lower right hand corner
mentioned, does not indicate anything to even suggest that it pertains to plan PSU-80886. For these reasons, the
contention of the plaintiffs that this lower right hand corner of the plan appears to be a spurious attachment to the
main document to make the main document it look like it is actually plan PSU-80886, has merit." 54 These observations
were based on the first-hand examination of the surveys, verification reports, and witnesses by the RTC of Las Piñas.
Tenth, as correctly emphasized by the CA in its February 8, 2005 decision, the Supreme Court had previously
noted the defects surrounding Psu-80886 in the case of Guico v. San Pedro. The said case involved the application of
registration of Guico of a tract of land covered by Psu-80886, subdivided into eleven (11) lots, filed on November 4,
1930 before the Court of First Instance of Rizal (CFI). The said land originated from Pedro Lopez de Leon, covered by
Psu-16400. It was transferred to his son, Mariano Lopez de Leon, and then one-third portion thereof was conveyed to
Guico. Several oppositors appeared therein to assail Guico's application. On August 19, 1935, the CFI ruled that only Lot
Nos. 1, 2, 3, 6, 7 and 10 may be registered in the name of Guico.
On appeal, the CA disposed the case in this wise:
 Adjudicamos a Eduardo C. Guico los lotes 2 y 3 de su plano y las porciones que quedan de las
adjudicadas a el por el Juzgado inferior y que no estan comprendidos en los terrenos reclamados por
Valeriano Miranda, Nicasio San Pedro, Jose Dollenton, Gregorio Arciaga, Donato Navarro, Leon
Navarro, Dionisio Dollenton, Basilio Navarro, Bernardo Mellama y Lorenzo Dollenton, debiendo al
efecto presentar un plano enmendado debidamente aprobado por el Director de Terrenos, confirmado
asi la decision apelada en lo que estuvira conforme, y revocandola en lo que no estuviera. 55
When translated, the text reads:
We adjudicate to Eduardo C. Guico Lots 2 and 3 of his plant and the portions that remain
adjudicated to him by the lower court and that are not included in the lands claimed by Valeriano
Miranda, Nicasio San Pedro, Jose Dollenton, Gregorio Arciaga, Donato Navarro, Leon Navarro, Dionisio
Dollenton, Basilio Navarro, Bernardo Mellama, and Lorenzo Dollenton, under the obligation to present
an amended properly approved plan to the Director of Lands, confirming therefore the appealed
decision what is consistent with this and revoking it on what is not. 56 [Emphasis and underscoring
supplied]
Undeterred, Guico filed an appeal before the Supreme Court alleging that the CA erred in declaring that there
was no imperfect title in favor of Pedro Lopez de Leon, his predecessor-in-interest.
In its decision, dated June 20, 1941, the Court dismissed the appeal of Guico and affirmed the CA ruling. It was
held that "la solicitud de Pedro Lopez de Leon composicion con el Estado no fue aprobada porque no pudo hacerse la
medicion correspondiente." Its translation stated that the application of Pedro Lopez de Leon regarding the composition
of the estate was not approved because he was not able to submit the corresponding measurements, referring to Psu-
16400, from which Psu-80886 was derived.
In addition, the Supreme Court noted that "while abundant proof is offered concerning the filing of the
application for composition title by the original possessor, the records nowhere exhibits compliance with the operative
requirement of said section 45 (a) of Act No. 2874, that such applicants or grantees and their heirs have occupied and
cultivated said lands continuously since the filing of their applications." 57
Consequently, the Court observed two major irregularities in the application of Guico under Psu-80886, (1) his
predecessor-in-interest did not submit any valid measurement of the estate from which Psu-80886 was derived; and (2)
that the applicant or his grantees failed to occupy or cultivate the subject land continuously. These findings are
substantial and significant as these affect the validity of Psu-80886.
ALI insisted that Guico v. San Pedro should actually be construed in their favor because the Court affirmed the
ruling of the CA which awarded Lot Nos. 2 and 3 to Guico, hence, Psu-80886 was valid.
The Court is not persuaded.
A reading of the dispositive portion of the CA decision in Guico v. San Pedro does not categorically state that
Lot Nos. 2 and 3 were absolutely and completely awarded to Guico. The award of the said lots was subject to the vital
and primordial condition or obligation to present to the court an amended, properly approved, plan to the Director of
Lands. Evidently, the Court was not satisfied with Psu-80886 because it lacked the requisites for a valid survey. Thus, it
required Guico to secure an amended and correctly approved plan, signed by the Director of Lands. The purpose of this
new plan was to confirm that the appealed decision was consistent with the facts established therein. The records,
however, did not show that Guico indeed secured an amended and properly approved plan. Psu-80886/SWO-20609
obviously was not the required amended order because a special work order is different from an amended
survey. 58 Moreover, the said special work order was initiated by Yaptinchay, and not Guico. The insufficiency of Psu-
80886 is evident in this decision.
Thus, as Guico did not subject Psu-80886 to a valid amended approved plan, he was not awarded Lot Nos. 2
and 3 for registration. It can be seen from the OCT Nos. 242, 244, and 1609; that Guico never secured their registration
because the Court discovered the anomalous Psu-80886. The Court's pronouncement in Guico v. San Pedro, although
promulgated more than half a century ago, must be respected in accordance with the rule on judicial adherence.
Lastly, the Court also agrees with the finding of the CA in its February 8, 2005 decision that Psu-25909 bears all
the hallmarks of verity. It was established that Andres Diaz was the very first claimant of the subject property and was
the proponent of Psu-25909. The said survey clearly contained the signature of the surveyor and the Director of Lands,
as can be seen on its face. In stark contrast with Psu-80886, which contained alterations and erasures, Psu-25909 has
none. The original of Psu-25909 was likewise on file with the Bureau of Lands and a microfilm reproduction was readily
obtained from the file of the said office, unlike in Psu-80886 and Psu-47909.
The RTC of Las Piñas shared this examination. It ruled that Psu-25909 was a true copy of an official document
on file with the Bureau of Lands. It also gave great weight and appreciation to the said survey because no irregularity was
demonstrated in the preparation thereof. The trial court added that Engr. Remolar, as the appropriate government
custodian and court-appointed commissioner, certified the authenticity of Psu-25909.
In fine, the Court finds that there are numerous defects in Psu-47909, Psu-80886 and Psu-80886/SWO-20609,
which are all hallmarks of fraud, viz.:
1. That A.N. Feliciano conducted all the surveys even though he should have known that the earlier dated survey
Psu-25909, already covered the same parcel of land;
2. That Psu-47909, Psu-80886 and Psu-25909 covered the same parcel of land and were conducted by the same
surveyor but each survey stated a different location;
3. That the photocopy of Psu-47035, as submitted by ALI, shows that it was done for a certain Estanislao Mayuga
but the certified true copy of Psu-47035 depicted that it was made for Dominador Mayuga;
4. That Psu-80886 did not contain the signature of then Director of Lands, Serafin P. Hidalgo, and it is well-
settled rule that no plan or survey may be admitted in land registration proceedings until approved by
the Director of Lands;
5. That Psu-80886 was issued on July 28, 1930 but it referred to a specific monument described as B.L.L.M No.
4, which was only established on November 27, 1937;
6. That ALI attempted to explain this anomaly by stating that Psu-80886 was amended by Psu-80886/SWO-
20609, which was done in 1937. On cross-examination, however, the witness of ALI was unable to
reaffirm that the special work order was rightly performed in 1937 and the said explanation was not
reflected in the verification report and survey plan of ALI;
7. That Psu-80886/SWO-20609 was undertaken to correct a discrepancy in Psu-80886, which was an admission
that the latter survey, from which the titles of ALI originated, was defective;
8. That the total area of the property covered by Psu-80886 contained many erasures, which were not
satisfactorily explained;
9. That there was a difference in the intensity of the lower right portion of Psu-80886 which showed that it may
simply have been an attachment to the main document; and
10. That in Guico v. San Pedro, the Court found that irregularities surround Psu-80886 because its predecessor-
in-interest did not submit the corresponding measurement of his survey and the applicant or his
grantees failed to occupy and cultivate the subject land continuously. Further, Lot Nos. 2 and 3 of Psu-
80886 were not awarded to Guico because the records do not show that he submitted the required
amended properly approved plan by the Director of Lands.
In contrast, Psu-25909 bore all the hallmarks of verity because it contains the signatures of the surveyor and
the Director of Lands, and it did not contain any erasure or alterations thereon. Likewise, a duly authenticated copy
of Psu-25909 is readily available in the Bureau of Lands.
The foregoing anomalies surrounding Psu-47909, Psu-80886, and Psu-80886/SWO-20609 were similarly
observed by the RTC of Las Piñas. The trial court was able to establish its findings based on the verification survey it
ordered, under the supervision of the court-appointed commissioner. Hence, the trial court had the direct access to the
evidence presented by the parties as well as the verification reports and survey plans submitted by the parties. It is a
fundamental rule that the conclusion and findings of fact by the trial court are entitled to great weight on appeal and
should not be disturbed except for strong and cogent reasons, because the trial court is in a better position to examine
real evidence, as well as to observe the demeanor of the witnesses while testifying in the case. 59
Even without considering (1) the certification from the DENR-LMB that Psu-80886 is included in the list of
restricted plans because of the doubtful signature of the surveyor, and (2) the memorandum, dated August 3, 2000,
from the Assistant Regional Director of the DENR directing all personnel of the Land Survey Division not to issue copies
or technical descriptions of Psu-80886 and Psu-47035, there were numerous defects on the surveys that affected their
validity. The exclusion of these documents did not alter the finding of the Court that the surveys were spurious and
must be set aside.
Further, the Court cannot subscribe to the finding of the CA in its June 19, 2006 decision that the numerous
defects in Psu-47909, Psu-80886 and Psu-80886/SWO-20609 are "not enough to deprive the assailed decree of
registration of its conclusive effect, neither are they sufficient to arrive at the conclusion that the survey was definitely,
certainly, conclusively spurious." 60 The Court cannot close its eyes to the blatant defects on the surveys upon which
the original titles of ALI were derived simply because its titles were registered. To allow these certificates of title in the
registration books, even though these were sourced from invalid surveys, would tarnish and damage the Torrens system
of registration, rather than uphold its integrity.
 It is an enshrined principle in this jurisdiction that registration is not a mode of acquiring ownership. A certificate
of title merely confirms or records title already existing and vested. The indefeasibility of a Torrens title should not be
used as a means to perpetrate fraud against the rightful owner of real property. Good faith must concur with registration
because, otherwise, registration would be an exercise in futility. A Torrens title does not furnish a shield for fraud,
notwithstanding the long-standing rule that registration is a constructive notice of title binding upon the whole world.
The legal principle is that if the registration of the land is fraudulent, the person in whose name the land is registered
holds it as a mere trustee. 61
When a land registration decree is marred by severe irregularity that discredits the integrity of the Torrens
system, the Court will not think twice in striking down such illegal title in order to protect the public against unscrupulous
and illicit land ownership. Thus, due to the numerous, blatant and unjustifiable errors in Psu-47909, Psu-80886, and
Psu-80886/SWO-20609, these must be declared void. Likewise, OCT Nos. 242, 244, and 1609, their transfer certificates,
and instruments of conveyances that relied on the anomalous surveys, must be absolutely declared void ab initio.
With respect to the Diaz case, the Court agrees with the CA in its February 8, 2005 decision that Spouses Diaz
did not commit fraud. As Psu-47909, Psu-80886 and Psu-80886/SWO-20609 are void, then OCT Nos. 242, 244 and 1609
are also void ab initio. The transfer certificates in the hands of third parties, including CPJ Corporation and ALI, are
likewise void. Accordingly, Spouses Diaz had no obligation to inform CPJ Corporation of their application for registration
and they could not be held guilty of fraud.
WHEREFORE, the petitions are GRANTED. The June 19, 2006 Decision of the Court of Appeals in CA-G.R. CV
Nos. 61593 & 70622 is hereby REVERSED and SET ASIDE. The February 8, 2005 Amended Decision of the Court of
Appeals is hereby REINSTATED.
SO ORDERED.

G.R. No. 213716. October 10, 2017.]

JOSE S. RAMISCAL, JR., petitioner, vs. COMMISSION ON AUDIT, respondent.

JARDELEZA, J p:

This is a petition for review on certiorari 1 under Rule 64, in relation to Rule 65, of the Rules of Court, assailing
the Decision 2 dated September 13, 2012 and Resolution 3 dated May 6, 2014 of the Commission on Audit (COA) in COA
Decision No. 2012-139. The Decision denied petitioner Jose S. Ramiscal's appeal for exclusion from liability in Notice of
Disallowance (ND) No. 2010-07-084-(1996) and Notice of Charge (NC) No. 2010-07-001-(1996), while the Resolution
denied petitioner's motion for reconsideration for lack of merit. TAIaHE
During the 11th Congress (1998 to 2001), the Senate's Committees on Accountability of Public Officers and
Investigations (Blue Ribbon) and National Defense and Security held hearings to investigate the alleged anomalous
acquisitions of land by the Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) in
Calamba, Laguna and Tanauan, Batangas. Prompted by a series of resolutions by the Senate, the Deputy Ombudsman
for the Military and other Law Enforcement Offices sent to the COA a request dated April 29, 2004 for the conduct of
audit on past and present transactions of the AFP-RSBS. Thus, the COA constituted a special audit team (SAT) 4 to
conduct the special audit/investigation. 5
The SAT found, among others, that the AFP-RSBS, represented by petitioner, purchased from Concord
Resources, Inc. 6 four parcels of land with a total area of 227,562 square meters in Calamba, Laguna (collectively, the
Calamba properties). These lands were intended to serve as right-of-way to the 600-hectare property of the AFP-RSBS
called the Calamba Land Banking project. 7 The SAT discovered that two deeds of sale containing different
considerations were executed to cover the purchase. The deed of sale recorded with the Registry of Deeds of Calamba,
Laguna disclosed that the total purchase price was P91,024,800. On the other hand, the records obtained by the audit
team from the AFP-RSBS management revealed that another deed of sale was executed by Concord Resources, Inc.
alone and has a purchase price of P341,343,000. The AFP-RSBS paid Concord Resources, Inc. this consideration as was
recorded in its books of account. 8
The SAT concluded that the deed of sale filed before the Registry of Deeds was the true deed of sale, considering
that it was signed by both parties. It followed then that the true purchase price was P91,024,800 and as such, the
government lost P250,318,200 when it allegedly paid Concord Resources, Inc. P341,343,000. 9
The SAT also concluded that the execution of two deeds of sale covering the same parcels of land resulted in
the underpayment of capital gains and documentary stamp taxes in the amount of P16,270,683. Based on the amount
paid by the AFP-RSBS to Concord Resources, Inc., the total taxes that should have been paid was P22,187,295 and not
P5,916,612. 10
On October 10, 2005, the SAT issued Audit Observation Memorandum No. 2005-01 (AOM) to then AFP-RSBS
President, Cesar Jaime for comment. 11
On July 28, 2010, the SAT issued ND No. 2010-07-084-(1996) 12 and NC No. 2010-07-001-(1996). 13 The ND
directed petitioner, Elizabeth Liang, Jesus Garcia, and Rosemarie Ragasa 14 to immediately settle the amount of
P250,318,200 representing excess payment for the Calamba properties. The NC, on the other hand, directed petitioner,
Oscar Martinez, 15 and Alma Paraiso 16 to immediately settle the amount of P16,270,683 representing the deficiency
for capital gains and documentary stamp taxes.
Petitioner appealed the ND and the NC before the Commission Proper, but the same was denied for lack of
merit.
Hence, this petition which raises the following issues:
1. Whether the action of the COA in issuing the ND and NC had already prescribed;
2. Whether the COA had already lost its jurisdiction over the case and on the person of petitioner when
a criminal case, involving the same set of facts and circumstances, had already been filed with the
Sandiganbayan;
3. Whether the COA is authorized to issue an NC involving the payment of capital gains and
documentary stamp taxes which are national internal revenue taxes; and
4. Whether the COA has authority to institute an administrative complaint or proceedings against
petitioner who had already resigned.
On March 27, 2017, petitioner also filed an Urgent Motion for Issuance of Temporary Restraining Order, praying
that the COA be enjoined to suspend or recall its Order of Execution No. 2017-012 on the NC.
We partially grant the petition.
The Constitution and the Rules of Court limit the permissible scope of inquiry in petitions under Rules 64 and
65 to errors of jurisdiction or grave abuse of discretion. 17 There is grave abuse of discretion when there is an evasion
of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the
judgment rendered is not based on law and evidence but on caprice, whim and despotism. 18 Hence, unless tainted
with grave abuse of discretion, the COA's simple errors of judgment cannot be reviewed even by this Court. 19 Rather,
the general policy has been to accord weight and respect to the decisions of the COA. The limitation of the Court's
power of review over the COA's rulings merely complements its nature as an independent constitutional body that is
tasked to safeguard the proper use of government (and, ultimately, the people's) property by vesting it with the power
to: (1) determine whether government entities comply with the law and the rules in disbursing public funds; and (2)
disallow illegal disbursements of these funds. 20 The deference is also based on the doctrine of separation of powers
and the COA's presumed expertise in the laws it is entrusted to enforce. 21 cDHAES
Bearing the foregoing principles in mind, we now proceed to determine whether the COA gravely abused its
discretion in affirming the ND and NC issued against petitioner.

Petitioner argues that the ND and NC have already prescribed pursuant to Articles 1149 and 1153 of the Civil
Code. Article 1149 provides that all other actions whose periods are not fixed in the Civil Code or in other laws must be
brought within five (5) years from the time the right of action accrues. Article 1153, on the other hand, provides that
the period for prescription of actions to demand accounting runs from the day the persons who should render the same
cease in their functions. Petitioner explains that the transaction subject of the ND and NC occurred in 1997, a year
before he resigned in 1998. He concluded that in accordance with Articles 1149 and 1153, the COA has until 2003 within
which to issue an ND or NC. As it happened, however, it was only in 2004 when the audit investigation transpired.
Consequently, the ND and NC issued against him in 2010 have already prescribed.
Petitioner is mistaken. The right of the State, through the COA, to recover public funds that have been
established to be irregularly and illegally disbursed does not prescribe.
Article 1108 (4) of the Civil Code expressly provides that prescription does not run against the State and its
subdivisions. This rule has been consistently adhered to in a long line of cases involving reversion of public lands, where
it is often repeated that when the government is the real party in interest, and it is proceeding mainly to assert its own
right to recover its own property, there can, as a rule, be no defense grounded on laches or prescription. 22 We find
that this rule applies, regardless of the nature of the government property. Article 1108 (4) does not distinguish between
real or personal properties of the State. There is also no reason why the logic behind the rule's application to reversion
cases should not equally apply to the recovery of any form of government property. In fact, in an early case involving a
collection suit for unpaid loans between the Republic and a private party, the Court, citing Article 1108 (4) of the Civil
Code, held that the case was brought by the Republic in the exercise of its sovereign functions to protect the interests
of the State over a public property. 23
Moreover, the SAT was created by authority of COA Legal and Adjudication Office Order No. 2004-125. SATs
may be created by the Legal and Adjudication Office of the COA based on complaints or audit findings indicating
existence of fraud as contained in audit reports or audit observation memoranda. 24 This flows from the investigative
and inquisitorial powers of the COA under Section 40 of Presidential Decree (PD) No. 1445, otherwise known as
the Government Auditing Code of the Philippines. n 25 Thus, while ordinarily, under Section 52 of PD 1445, a settled
account may only be reopened or reviewed within three years after the original settlement on the grounds that it is
tainted with fraud, collusion, or error calculation, or when new and material evidence is discovered, a SAT is not
constrained by this time limit. It may still reopen and review accounts that have already been post-audited and/or
settled pursuant to Section 52. An Office Order directing the special audit is deemed sufficient authority to reopen the
accounts. 26 As applied here, however, there is as yet no settled account to speak of because it was only in 2003 when
the nature of the AFP-RSBS as a government or public entity was decided with finality in People v. Sandiganbayan, Jose
S. Ramiscal, Jr., et al. 27
Even if we follow petitioner's argument that Articles 1149 and 1153 of the Civil Code apply here, the action of
the COA is still not barred by the statute of limitations. Indeed, petitioner's actions occurred in 1997, after the
consummated sale of the Calamba properties and its supposed inclusion in the account of the AFP-RSBS. However, the
COA's cause of action would accrue later, for it was only in 2004 when it was informed of a possible irregularity of the
sale when the Ombudsman requested it to conduct an audit of prior transactions of the AFP-RSBS.
A cause of action arises when that which should have been done is not done, or that which should not have
been done is done. A party's right of action accrues only when the confluence of the following elements is established:
(a) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (b) an obligation
on the part of defendant to respect such right; and (c) an act or omission on the part of such defendant violative of the
right of the plaintiff. It is only when the last element occurs or takes place can it be said in law that a cause of action has
arisen. More, the aggrieved party must have either actual or presumptive knowledge of the violation by the guilty party
of his rights either by an act or omission. 28 ASEcHI
To recall, the Ombudsman requested the COA to conduct an audit in view of People v. Sandiganbayan, Jose
Ramiscal, Jr., et al., where the Court ruled that the AFP is a government entity whose funds are public in nature.
Petitioner argued in that case that the AFP-RSBS is a private entity. He, in fact, admitted in his Appeal Memorandum
before the COA that prior to People v. Sandiganbayan, Jose Ramiscal, Jr., et al., the AFP-RSBS has been operating as a
private entity since its creation in 1973. 29 Thus, the special audit in 2004 was the first audit ever conducted over its
funds.
The COA immediately created the SAT in 2004 upon the request of Ombudsman. In 2005, the SAT had issued
its AOM against the AFP-RSBS. At this point, however, an AOM is merely an initial step in the conduct of an investigative
audit to determine the propriety of the disbursements made. 30 The AOM issued to the AFP-RSBS, in particular, merely
requested it to explain: (1) why the AFP-RSBS paid Concord Resources, Inc. P341,343,000 based on a unilateral deed of
sale instead of P91,024,800 pursuant to a bilateral deed of sale executed by the parties; (2) why the AFP-RSBS
acquiesced on the execution of two (2) deeds of sale covering the same parcels of land that resulted in the
underpayment of taxes; (3) which of the two (2) deeds of sale is genuine; and (4) why the AFP-RSBS paid a consideration
which is 328% higher than the property's zonal valuation per Department of Finance Order No. 16-97 dated December
16, 1996. 31
After the issuance of an AOM, there are still several steps to be conducted before a final conclusion can be
made or before the proper action can be had against the auditee. 32 As we have elaborated in Corales v. Republic:
A perusal of COA Memorandum No. 2002-053, particularly Roman Numeral III, Letter A, paragraphs 1
to 5 and 9, reveals that any finding or observation by the Auditor stated in the AOM is not yet
conclusive, as the comment/justification of the head of office or his duly authorized representative is
still necessary before the Auditor can make any conclusion. The Auditor may give due course or find
the comment/justification to be without merit but in either case, the Auditor shall clearly state the
reason for the conclusion reached and recommendation made. Subsequent thereto, the Auditor shall
transmit the AOM, together with the comment or justification of the Auditee and the former's
recommendation to the Director, Legal and Adjudication Office (DLAO), for the sector concerned in
 Metro Manila and/or the Regional Legal and Adjudication Cluster Director (RLACD) in the case of
regions. The transmittal shall be coursed through the Cluster Director concerned and the Regional
Cluster Director, as the case may be, for their own comment and recommendation. The DLAO for the
sector concerned in the Central Office and the RLACD shall make the necessary evaluation of the
records transmitted with the AOM. When, on the basis thereof, he finds that the transaction should
be suspended or disallowed, he will then issue the corresponding Notice of Suspension (NS), Notice of
Disallowance (ND) or Notice of Charge (NC), as the case may be, furnishing a copy thereof to the Cluster
Director. Otherwise, the Director may dispatch a team to conduct further investigation work to justify
the contemplated action. If after in-depth investigation, the DLAO for each sector in Metro Manila and
the RLACD for the regions find that the issuance of the NS, ND, and NC is warranted, he shall issue the
same and transmit such NS, ND or NC, as the case may be, to the agency head and other persons found
liable therefor. 33
From the foregoing, it would be from the issuance of an AOM in 2005 that the COA's right of action against
petitioner, or its right to disallow or charge AFP-RSBS' accounts, would have only accrued. It was only then that the COA
would have had actual or presumptive knowledge of any illegal or irregular disbursement of public funds. Hence, the
COA would have had until 2010 within which to issue a notice of disallowance or charge, which is considered as an audit
decision, recommendation or disposition. 34

II

Petitioner argues that the audit proceedings may no longer proceed against him because of his prior retirement
and the pendency of a criminal case involving the same facts before the Sandiganbayan. We disagree.
The "threefold liability rule" holds that the wrongful acts or omissions of a public officer may give rise to civil,
criminal and administrative liability. 35 This simply means that a public officer may be held civilly, criminally, and
administratively liable for a wrongful doing. Thus, if such violation or wrongful act results in damages to an individual,
the public officer may be held civilly liable to reimburse the injured party. If the law violated attaches a penal sanction,
the erring officer may also be punished criminally. Finally, such violation may also lead to suspension, removal from
office, or other administrative sanctions. 36
The action that may result for each liability under the "threefold liability rule" may proceed independently of
one another, as in fact, the quantum of evidence required in each case is different. 37 Thus, in Reyna v. Commission on
Audit, 38 we held that a criminal case filed before the Office of the Ombudsman is distinct and separate from the
proceedings on the disallowance before the COA.
Furthermore, the right of the government to exercise administrative supervision over erring public officials is
lost when they cease their functions in office. Consequently, the government must commence an administrative case
while they are in office; otherwise, the disciplining body would no longer have any jurisdiction over them. The same is
not true with civil and criminal cases. We have ruled in the past that even if an administrative case may no longer be
filed against public officials who have already resigned or retired, criminal and civil cases may still be filed against
them. 39 The administrative case contemplated under the threefold liability rule is one that goes into the conduct of
the public official and is intended to be disciplinary. ITAaHc
This is not the nature of the present case against petitioner. The audit proceedings before the COA may be
characterized as administrative, but only in the sense that the COA is an administrative body. Essentially, though, the
conduct of the audit was not an exercise of the government's administrative supervision over petitioner where he may
be meted out with a penalty of suspension or dismissal from office, with an order of restitution a mere accessory
penalty. What was being determined through the COA audit proceedings was his civil liability and accountability over
the excess in the disbursement of public funds and the underpaid taxes. 40 The audit proceedings not being an
administrative case against him, petitioner's resignation in 1998 does not serve to bar the present case.

III

Petitioner maintains that the COA has no jurisdiction to issue the NC involving the payment of capital gains and
documentary stamp taxes because these are national revenue taxes, the assessment and collection of which fall within
the jurisdiction of the Bureau of Internal Revenue (BIR).
Petitioner's argument is partially correct.
 The COA has authority to ascertain whether a government agency has paid the correct taxes. Section 2, Article
IX-D of the Constitution gives the Commission the broad power, authority, and duty to examine, audit, and settle all
accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in
trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities. This constitutional
mandate is echoed in various provisions of PD No. 1445. Section 26, in part, specifically provides that the general
jurisdiction of the Commission includes the examination, audit, and settlement of all debts and claims of any sort due
from or owing to the Government or any of its subdivisions, agencies and instrumentalities. Additionally, paragraph 2,
Section 25 of PD No. 1445 provides that, as a primary objective, the Commission shall develop and implement a
comprehensive audit program that shall encompass an examination of financial transactions, accounts, and reports,
including evaluation of compliance with applicable laws and regulations.
The authority of the Commission over national revenue taxes, however, appears to be limited. Section 28 of PD
1445 gives the Commission the authority to examine books, papers, and documents filed by individuals and corporations
with, and which are in the custody of, government offices in connection with government revenue collection
operations, for the sole purpose of ascertaining that all funds determined by the appropriate agencies as collectible
and due the government have actually been collected, except as otherwise provided in the Internal Revenue Code. This
authority, in turn, is consistent with the duty of the Commission to establish that all obligations of the agency have been
accurately recorded, 41 and with its power, under such regulations as it may prescribe, to authorize and enforce the
settlement of accounts subsisting between agencies of the government. 42 This limited duty to ascertain under Section
28 expressly gives way to the Internal Revenue Code. It does not carry the concomitant duty to collect taxes. As it is,
the BIR is the government agency vested with the power and duty to both assess and collect national internal revenue
taxes.
We disagree with the argument of the COA that it was merely performing its duty to ensure that all government
revenues are collected when it issued the NC. Again, Section 28 of PD 1445 is clear that the only purpose of the
examination is to ascertain. Even under Section 35 of PD 1445, which COA cited in its assailed Decision, its authority to
assist in the collection and enforcement of all debts and claims due the government shall be done through proper
channels. 43 The COA's duty to collect or settle taxes, it appears, is done only in a facilitative manner.
It is a different matter, however, if the government agency or unit being examined and audited by the COA is
one that has the authority or function to collect taxes, such as the BIR itself or a local government unit. In such cases,
the audit would not only cover the disbursements made, but also the revenues, receipts, and other incomes of the
agency or unit. Should there be any deficiencies because of under-appraisal, under-assessment or under-collection, the
COA shall issue a notice of charge. 44
This is not the case here. The underpaid capital gains and documentary stamp taxes did not come from the
account of the AFP-RSBS and did not form part of its revenues, receipts or other incomes. The COA therefore erred in
issuing the NC against petitioner for the collection of these taxes. It is, in a sense, barking up the wrong tree. Quite
tellingly, the SAT Report did not recommend that the AFP-RSBS be held accountable for the deficient taxes. Instead, it
merely recommended the enforcement by the BIR for the collection of the deficiency on capital gains and documentary
stamp taxes. 45 CHTAIc
Moreover, the deed of sale between the AFP-RSBS and Concord Resources, Inc. specifically provided that all
taxes such as withholding tax, documentary stamp tax and other costs and expenses covering transfer tax,
documentation and notarial and registration fees, shall be for the sole and exclusive account of Concord Resources,
Inc. 46 In fact, both the SAT Report and the AOM noted that the Certificate Authorizing Registration No. 615456 dated
August 27, 1996 issued by the Revenue District Officer of Calamba, Laguna disclosed that it was Concord Resources, Inc.
which paid the capital gains and documentary stamp taxes. 47
Finally, we find it incongruent to disallow the difference of P250,318,200 but, at the same time, charge
P16,270,683 against petitioner for the alleged underpaid taxes. Considering that the amount of P91,024,800 is being
held as the correct purchase price of the sale, the correct taxes in the amount of P5,916,612 have already been settled.
To demand more on the ground that all income from whatever sources is taxable would unjustly enrich the government.
WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. COA Decision No. 2012-139 dated September
13, 2012 and Resolution dated May 6, 2014 are hereby AFFIRMED with the MODIFICATION that petitioner is NOT
LIABLE under Notice of Charge No. 2010-07-001-(1996).
SO ORDERED.