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ANGELITA VALDEZ,

Petitioner,




- versus -





REPUBLIC OF THE PHILIPPINES,
Respondent.

G.R. No. 180863

Present:

YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

Promulgated:

September 8, 2009

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


DECISION

NACHURA, J .:





Before this Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court assailing the Decision of the Regional Trial Court (RTC) of
Camiling, Tarlac dated November 12, 2007 dismissing petitioner Angelita
Valdezs petition for the declaration of presumptive death of her husband, Sofio
Polborosa (Sofio).

The facts of the case are as follows:

Petitioner married Sofio on January 11, 1971 in Pateros, Rizal. On
December 13, 1971, petitioner gave birth to the spouses only child, Nancy.
According to petitioner, she and Sofio argued constantly because the latter was
unemployed and did not bring home any money. In March 1972, Sofio left their
conjugal dwelling. Petitioner and their child waited for him to return but, finally, in
May 1972, petitioner decided to go back to her parents home in Bancay 1
st
,
Camiling, Tarlac. Three years passed without any word from Sofio. In October
1975, Sofio showed up at Bancay 1
st
. He and petitioner talked for several hours and
they agreed to separate. They executed a document to that effect.
[1]
That was the
last time petitioner saw him. After that, petitioner didnt hear any news of Sofio,
his whereabouts or even if he was alive or not.
[2]


Believing that Sofio was already dead, petitioner married Virgilio Reyes on
June 20, 1985.
[3]
Subsequently, however, Virgilios application for naturalization
filed with the United States Department of Homeland Security was denied because
petitioners marriage to Sofio was subsisting.
[4]
Hence, on March 29, 2007,
petitioner filed a Petition before the RTC of Camiling, Tarlac seeking the
declaration of presumptive death of Sofio.

The RTC rendered its Decision
[5]
on November 12, 2007, dismissing the
Petition for lack of merit. The RTC held that Angelita was not able to prove the
well-grounded belief that her husband Sofio Polborosa was already dead. It said
that under Article 41 of the Family Code, the present spouse is burdened to prove
that her spouse has been absent and that she has a well-founded belief that the
absent spouse is already dead before the present spouse may contract a subsequent
marriage. This belief, the RTC said, must be the result of proper and honest-to-
goodness inquiries and efforts to ascertain the whereabouts of the absent spouse.

The RTC found that, by petitioners own admission, she did not try to find
her husband anymore in light of their mutual agreement to live separately.
Likewise, petitioners daughter testified that her mother prevented her from
looking for her father. The RTC also said there is a strong possibility that Sofio is
still alive, considering that he would have been only 61 years old by then, and
people who have reached their 60s have not become increasingly low in health and
spirits, and, even assuming as true petitioners testimony that Sofio was a chain
smoker and a drunkard, there is no evidence that he continues to drink and smoke
until now.

Petitioner filed a motion for reconsideration.
[6]
She argued that it is the Civil
Code that applies in this case and not the Family Code since petitioners marriage
to Sofio was celebrated on January 11, 1971, long before the Family Code took
effect. Petitioner further argued that she had acquired a vested right under the
provisions of the Civil Code and the stricter provisions of the Family Code should
not be applied against her because Title XIV of the Civil Code, where Articles 384
and 390 on declaration of absence and presumption of death, respectively, can be
found, was not expressly repealed by the Family Code. To apply the stricter
provisions of the Family Code will impair the rights petitioner had acquired under
the Civil Code.

The RTC denied the Motion for Reconsideration in a Resolution dated
December 10, 2007.
[7]


Petitioner now comes before this Court seeking the reversal of the RTC
Decision and Motion for Reconsideration.

In its Manifestation and Motion,
[8]
the Office of the Solicitor General (OSG)
recommended that the Court set aside the assailed RTC Decision and grant the
Petition to declare Sofio presumptively dead. The OSG argues that the requirement
of well-founded belief under Article 41 of the Family Code is not applicable to
the instant case. It said that petitioner could not be expected to comply with this
requirement because it was not yet in existence during her marriage to Virgilio
Reyes in 1985. The OSG further argues that before the effectivity of the Family
Code, petitioner already acquired a vested right as to the validity of her marriage to
Virgilio Reyes based on the presumed death of Sofio under the Civil Code. This
vested right and the presumption of Sofios death, the OSG posits, could not be
affected by the obligations created under the Family Code.
[9]


Next, the OSG contends that Article 390 of the Civil Code was not repealed
by Article 41 of the Family Code.
[10]
Title XIV of the Civil Code, the OSG said,
was not one of those expressly repealed by the Family Code. Moreover, Article
256 of the Family Code provides that its provisions shall not be retroactively
applied if they will prejudice or impair vested or acquired rights.
[11]


The RTC Decision, insofar as it dismissed the Petition, is affirmed.
However, we must state that we are denying the Petition on grounds different from
those cited in the RTC Decision.

Initially, we discuss a procedural issue. Under the Rules of Court, a party
may directly appeal to this Court from a decision of the trial court only on pure
questions of law. A question of law lies, on one hand, when the doubt or difference
arises as to what the law is on a certain set of facts; on the other hand, a question of
fact exists when the doubt or difference arises as to the truth or falsehood of the
alleged facts. Here, the facts are not disputed; the controversy merely relates to the
correct application of the law or jurisprudence to the undisputed facts.
[12]


The RTC erred in applying the provisions of the Family Code and holding
that petitioner needed to prove a well-founded belief that Sofio was already
dead. The RTC applied Article 41 of the Family Code, to wit:

Art. 41. A marriage contracted by any person during subsistence
of a previous marriage shall be null and void, unless before the
celebration of the subsequent marriage, the prior spouse had been absent
for four consecutive years and the spouse present has a well-founded
belief that the absent spouse was already dead. In case of disappearance
where there is danger under the circumstances set forth in the provisions
of Article 391 of the Civil Code, an absence of only two years shall be
sufficient.

For the purpose of contracting a subsequent marriage under the
preceding paragraph, the spouse present must institute a summary
proceeding as provided in this Code for the declaration of presumptive
death of the absentee, without prejudice to the effect of reappearance of
the absent spouse.


It is readily apparent, however, that the marriages of petitioner to Sofio and
Virgilio on January 11, 1971 and June 20, 1985, respectively, were both celebrated
under the auspices of the Civil Code.

The pertinent provision of the Civil Code is Article 83:

Art. 83. Any marriage subsequently contracted by any person
during the lifetime of the first spouse of such person with any person
other than such first spouse shall be illegal and void from its
performance, unless:

(1) The first marriage was annulled or dissolved; or

(2) The first spouse had been absent for seven consecutive years
at the time of the second marriage without the spouse present having
news of the absentee being alive, of if the absentee, though he has been
absent for less than seven years, is generally considered as dead and
believed to be so by the spouse present at the time of contracting such
subsequent marriage, or if the absentee is presumed dead according to
Articles 390 and 391. The marriage so contracted shall be valid in any of
the three cases until declared null and void by a competent court.


Article 390 of the Civil Code states:

Art. 390. After an absence of seven years, it being unknown
whether or not the absentee still lives, he shall be presumed dead for all
purposes, except for those of succession.

The absentee shall not be presumed dead for the purpose of
opening his succession till after an absence of ten years. If he
disappeared after the age of seventy-five years, an absence of five years
shall be sufficient in order that his succession may be opened.


The Court, on several occasions, had interpreted the above-quoted provision
in this wise:

For the purposes of the civil marriage law, it is not necessary to have the
former spouse judicially declared an absentee. The declaration of
absence made in accordance with the provisions of the Civil Code has
for its sole purpose to enable the taking of the necessary precautions for
the administration of the estate of the absentee. For the celebration of
civil marriage, however, the law only requires that the former spouse has
been absent for seven consecutive years at the time of the second
marriage, that the spouse present does not know his or her former spouse
to be living, that such former spouse is generally reputed to be dead and
the spouse present so believes at the time of the celebration of the
marriage.
[13]



Further, the Court explained that presumption of death cannot be the subject of
court proceedings independent of the settlement of the absentees estate.

In re Szatraw
[14]
is instructive. In that case, petitioner contracted marriage
with a Polish national in 1937. They lived together as husband and wife for three
years. Sometime in 1940, the husband, on the pretext of visiting some friends, left
the conjugal abode with their child and never returned. After inquiring from
friends, petitioner found that her husband went to Shanghai, China. However,
friends who came from Shanghai told her that the husband was not seen there. In
1948, petitioner filed a petition for the declaration of presumptive death of her
husband arguing that since the latter had been absent for more than seven years and
she had not heard any news from him and about her child, she believes that he is
dead. In deciding the case, the Court said:

The petition is not for the settlement of the estate of Nicolai
Szatraw, because it does not appear that he possessed property brought
to the marriage and because he had acquired no property during his
married life with the petitioner. The rule invoked by the latter is merely
one of evidence which permits the court to presume that a person is dead
after the fact that such person had been unheard from in seven years had
been established. This presumption may arise and be invoked and made
in a case, either in an action or in a special proceeding, which is tried or
heard by, and submitted for decision to, a competent
court. Independently of such an action or special proceeding, the
presumption of death cannot be invoked, nor can it be made the
subject of an action or special proceeding. In this case, there is no
right to be enforced nor is there a remedy prayed for by the petitioner
against her absent husband. Neither is there a prayer for the final
determination of his right or status or for the ascertainment of a
particular fact (Hagans v. Wislizenus, 42 Phil. 880), for the petition does
not pray for a declaration that the petitioner's husband is dead, but
merely asks for a declaration that he be presumed dead because he had
been unheard from in seven years. If there is any pretense at securing a
declaration that the petitioner's husband is dead, such a pretension cannot
be granted because it is unauthorized. The petition is for a declaration
that the petitioner's husband is presumptively dead. But this declaration,
even if judicially made, would not improve the petitioner's situation,
because such a presumption is already established by law. A judicial
pronouncement to that effect, even if final and executory, would still
be a prima facie presumption only. It is still disputable. It is for that
reason that it cannot be the subject of a judicial pronouncement or
declaration, if it is the only question or matter involved in a case, or
upon which a competent court has to pass. The latter must decide
finally the controversy between the parties, or determine finally the right
or status of a party or establish finally a particular fact, out of which
certain rights and obligations arise or may arise; and once such
controversy is decided by a final judgment, or such right or status
determined, or such particular fact established, by a final decree, then the
judgment on the subject of the controversy, or the decree upon the right
or status of a party or upon the existence of a particular fact, becomes res
judicata, subject to no collateral attack, except in a few rare instances
especially provided by law. It is, therefore, clear that a judicial
declaration that a person is presumptively dead, because he had
been unheard from in seven years, being a presumption juris
tantum only, subject to contrary proof, cannot reach the stage of
finality or become final. Proof of actual death of the person presumed
dead because he had been unheard from in seven years, would have to be
made in another proceeding to have such particular fact finally
determined. If a judicial decree declaring a person presumptively dead,
because he had not been heard from in seven years, cannot become final
and executory even after the lapse of the reglementary period within
which an appeal may be taken, for such presumption is still disputable
and remains subject to contrary proof, then a petition for such a
declaration is useless, unnecessary, superfluous and of no benefit to the
petitioner.
[15]



In Lukban v. Republic,
[16]
petitioner Lourdes G. Lukban contracted marriage
with Francisco Chuidian on December 10, 1933. A few days later, on December
27, Francisco left Lourdes after a violent quarrel. She did not hear from him after
that day. Her diligent search, inquiries from his parents and friends, and search in
his last known address, proved futile. Believing her husband was already dead
since he had been absent for more than twenty years, petitioner filed a petition in
1956 for a declaration that she is a widow of her husband who is presumed to be
dead and has no legal impediment to contract a subsequent marriage. On the other
hand, the antecedents in Gue v. Republic
[17]
are similar to Szatraw. On January 5,
1946, Angelina Gues husband left Manila where they were residing and went
to Shanghai, China. From that day on, he had not been heard of, had not written to
her, nor in anyway communicated with her as to his whereabouts. Despite her
efforts and diligence, she failed to locate him. After 11 years, she asked the court
for a declaration of the presumption of death of Willian Gue, pursuant to the
provisions of Article 390 of the Civil Code of the Philippines.

In both cases, the Court reiterated its ruling in Szatraw. It held that a petition
for judicial declaration that petitioner's husband is presumed to be dead cannot be
entertained because it is not authorized by law.
[18]


From the foregoing, it can be gleaned that, under the Civil Code, the
presumption of death is established by law
[19]
and no court declaration is needed
for the presumption to arise. Since death is presumed to have taken place by the
seventh year of absence,
[20]
Sofio is to be presumed dead starting October 1982.

Consequently, at the time of petitioners marriage to Virgilio, there existed
no impediment to petitioners capacity to marry, and the marriage is valid under
paragraph 2 of Article 83 of the Civil Code.

Further, considering that it is the Civil Code that applies, proof of well-
founded belief is not required. Petitioner could not have been expected to comply
with this requirement since the Family Code was not yet in effect at the time of her
marriage to Virgilio. The enactment of the Family Code in 1988 does not change
this conclusion. The Family Code itself states:

Art. 256. This Code shall have retroactive effect insofar as it does
not prejudice or impair vested or acquired rights in accordance with the
Civil Code or other laws.


To retroactively apply the provisions of the Family Code requiring petitioner
to exhibit well-founded belief will, ultimately, result in the invalidation of her
second marriage, which was valid at the time it was celebrated. Such a situation
would be untenable and would go against the objectives that the Family Code
wishes to achieve.

In sum, we hold that the Petition must be dismissed since no decree on the
presumption of Sofios death can be granted under the Civil Code, the same
presumption having arisen by operation of law. However, we declare that
petitioner was capacitated to marry Virgilio at the time their marriage was
celebrated in 1985 and, therefore, the said marriage is legal and valid.

WHEREFORE, the foregoing premises considered, the Petition
is DENIED.



[G.R. No. 112597. April 2, 1996]
VIRGINIA A. LEONOR, petitioner, vs. COURT OF APPEALS, HON.
ROLINDO D. BELDIA, JR., as Presiding Judge of the Regional
Trial Court of SanCarlos City, Branch 57, and MAURICIO D.
LEONOR, JR., respondents.
SYLLABUS
1. REMEDIAL LAW; SPECIAL PROCEEDINGS; CANCELLATION OR
CORRECTION OF ENTRIES IN THE CIVIL REGISTRY (RULE 108);
COVERS ONLY TYPOGRAPHICAL OR CLERICAL ERRORS. - The only
errors that can be cancelled or corrected under Rule 108 of the Rules of
Court are typographical or clerical errors, not material or substantial ones
like the validity or nullity of a marriage. A clerical error is one which is
visible to the eyes or obvious to the understanding; error made by a clerk
or a transcriber; a mistake in copying or writing (Black vs. Republic, L-
10869, Nov. 28, 1958); or some harmless and innocuous change such as
a correction of name that is clearly misspelled or of a mis-statement of the
occupation of the parent. Where the effect of a correction in a civil registry
will change the civil status of petitioner and her children from legitimate to
illegitimate, the same cannot be granted except only in an adversarial
proceeding.
2. ID.; ID.; ID.; RULE, NOT APPLICABLE IN CHANGE OF STATUS. - The
summary procedure under Rule 108, and for that matter under Art. 412 of
the Civil Code, cannot be used by Mauricio to change his and Virginias
civil status from married to single and of their three children from legitimate
to illegitimate. Neither does the trial court, under said Rule, have any
jurisdiction to declare their marriage null and void and as a result thereof,
to order the local civil registrar to cancel the marriage entry in the civil
registry. Further, the respondent trial judge gravely and seriously abused
his discretion in unceremoniously expanding his very limited jurisdiction
under such rule to hear evidence on such a controversial matter as nullity
of a marriage under the Civil Code and/or Family Code, a process that is
proper only in ordinary adversarial proceedings under the Rules.
3. ID.; JUDGMENT; EFFECT OF VOID JUDGMENT. - A void judgment for
want of jurisdiction is no judgment at all. It cannot be the source of any
right nor the creator of any obligation. All acts performed pursuant to it and
all claims emanating from it have no legal effect. Hence, it can never
become final and any writ of execution based on it is void; x x x it may be
said to be a lawless thing which can be treated as an outlaw and slain at
sight, or ignored wherever and whenever it exhibits its head. Banco
Espaol-Filipino vs. Palanca, 37 Phil. 921, 949 (1918).
4. ID.; PROACTIVE ROLE OF SUPREME COURT. - The Supreme Court is
not just a toothless promoter of procedural niceties which are understood
and appreciated only by lawyers and jurists. It cannot shrink from its
quintessential role as the fountain of speedy, adequate and substantial
justice. If the Court, as the head and guardian of the judicial branch, must
continuously merit the force of public trust and confidence - which
ultimately is the real source of its sovereign power, possessing neither the
purse nor the sword - and if it must decisively discharge its sacred duty as
the last sanctuary of the oppressed and the weak, it must, in appropriate
cases like the one before us, pro-actively provide weary litigants with
immediate legal and equitable relief, free from the delays and legalistic
contortions that oftentimes result from applying purely formal and
procedural approaches to judicial dispensations. Pursuant to the foregoing
principle and considering the peculiar circumstances of the present case
which are patent on the basis of the admitted facts, as well as the
undisputed copies of the pleadings presented by the parties, and
especially the verified copy of the trial courts decision which loudly speaks
for itself, the Court therefore resolved to make an exception to the normal
procedures and to delve deeper into the substantive issue of the
validity/nullity of the trial courts proceedings and judgment. Happily, both
parties had expressed a desire to have this case resolved soonest. Upon
the other hand, remanding the case back to the trial court for the
perfection of the appeal and requiring the parties to re-litigate in the Court
of Appeals with the use of probably the same documents and arguments
ventilated in the kilometric pleadings filed here would just unnecessarily
clog the courts dockets; besides, in all likelihood the parties would
eventually come before this Court anyway.
APPEARANCES OF COUNSEL
Edgar Mendoza for petitioner.
Reynaldo C. Depasucat for private respondent.
D E C I S I O N
PANGANIBAN, J .:
Is a judgment voiding a marriage and rendered by the regional trial court
under Rule 108 of the Rules of Court valid and proper? May its validity be
challenged by the wife in a petition for certiorari against the husband who
abandoned her and who is now living abroad with a foreign woman?
These are the two main issues that were posed before this Court in this
petition for review seeking a partial reversal of the Decision
1
of the Court of
Appeals
2
promulgated September 30, 1993 in CA-G.R. SP No. 30606 and its
Resolution
3
promulgated November 11, 1993, which denied petitioners motion
for partial reconsideration of the Decision.
The Facts
Petitioner Virginia A. Leonor was married to private respondent Mauricio
D. Leonor, Jr., in San Carlos City on March 13, 1960. Out of the union, three
children, Mauricio III, Ned and Don, were born. The spouses were separated
for a substantial part of their married life for, while Mauricio resided
in Switzerland studying and working, Virginia stayed in the Philippinesworking
as a nurse in Laguna. Mauricio became unfaithful and lived with a certain
Lynda Pond abroad. This induced petitioner to institute a civil action
in Geneva, Switzerland for separation and alimony. Private respondent
counter-sued for divorce.
On February 14, 1991, the lower Cantonal Civil Court of Switzerland
pronounced the divorce of the spouses Leonor but reserved the liquidation of
the matrimonial partnership. The saidSwiss Court denied alimony to petitioner.
In a letter to the lower Cantonal Civil Court dated March 1, 1991, Mauricio, for
the first time, raised the issue of the alleged non-existence of the marriage
between him and Virginia. Meanwhile, Virginia learned that the solemnizing
officer in the Philippines, Justice of the Peace Mabini Katalbas, failed to send
a copy of their marriage contract to the Civil Registrar of San Carlos City for
registration. Hence, on July 11, 1991, Virginia applied for the late registration
of her marriage. The Civil Registrar, finding said application in order, granted
the same.
On appeal to the higher Cantonal Civil Court, Mauricio asked for the
cancellation of his marriage in the Philippines. On January 17, 1992, the
higher Cantonal Civil Court granted petitioner alimony, prompting Mauricio to
elevate the matter on appeal to the Federal Court of Switzerland, In its
decision dated July 9, 1992, the Federal Court affirmed the decision of the
higher Cantonal Civil Court.
4

On May 22, 1992, Mauricio, represented by his brother Teodoro Leonor,
filed a petition for the cancellation of the late registration of marriage in the
civil registry of San Carlos City with the Regional Trial Court, Branch 59, San
Carlos City (Special Proceeding No. RTC- 144). Given as grounds for the
cancellation were the tardiness of the registration and the nullity of his
marriage with Virginia due to the non-observance of the legal requirements
for a valid marriage. Mauricios petition was filed pursuant to Rule 108 of the
Rules of Court.
After several hearings and on December 14, 1992, the trial court rendered
judgment
5
declaring said marriage null and void for being sham and fictitious.
The dispositive portion of said decision reads:
AND IN THE LIGHT OF THE FOREGOING, this Court finds and orders that the
registration of the marriage contract between Mauricio Leonor, Jr. and Virginia Amor
dated March 13, 1960 must be canceled in (sic) the Books of the Local Civil Registry
of San Carlos City for being a null and void marriage not in accordance with a (sic)
New Civil Code under Articles 52, 53 and 55 now presently amended by the Family
Code of the Philippines, Executive Order No. 209 as amended by Executive Order
No. 227, without pronouncement as to cost.
Virginia received notice of the decision on January 4, 1993, and
on January 15, 1993, she filed her notice of appeal.
On February 24, 1993, the trial court, on motion of Mauricios counsel,
issued an order
6
dismissing Virginias appeal on the ground that she had failed
to file a record on appeal within thirty days and had thus failed to perfect her
appeal. It was the erroneous holding of the trial court that in special
proceedings, a record on appeal was an indispensable requisite under Rule
19, Section 6 of the Interim Rules and Guidelines in relation to Rule 109 of the
Rules of Court. Such failure, according to respondent Judge, caused the
decision to become executory.
On April 1, 1993, Virginia filed a petition for certiorari, prohibition and
mandamus with the Court of Appeals (CA-G.R. SP NO. 30606) and sought
the nullification of both the decision dated December 14, 1992 and the order
dated February 24, 1993 of the trial court for having been issued in excess
ofjurisdiction and/or with grave abuse of discretion.
The Court of Appeals dismissed the petition insofar as it sought the
reversal of the decision of the trial court, saying that the remedy for said
purpose was an appeal, not a special civil action.
The appellate court, however, granted the petition insofar as it sought the
nullification of the Order dated February 24, 1993 dismissing the appeal. Said
the appellate court:
Even so, this petition is an appropriate remedy against the dismissal of the
petitioners appeal, which dismissal we sense to be erroneous and issued in excess of
jurisdiction.
xxx xxx xxx
WHEREFORE, judgment is hereby rendered setting aside the questioned order of
respondent judge dated February 24, 1993, with instructions to the latter to give due
course to petitioners appeal in the subject special proceeding. Costs against private
respondents.
Dissatisfied with the above Decision, petitioner filed a motion for partial
reconsideration asking the Court of Appeals to annul the decision of the trial
court. The Court of Appeals denied the motion, stating that the central issue in
the special civil action was only the validity of the trial courts order denying
petitioners right to appeal and that said issue was resolved in petitioners
favor. Further, it said that the correctness or validity of the trial courts decision
should properly be resolved in the appeal.
Hence, the present recourse.
Issues Raised by the Parties
The petition assailed the respondent Courts Decision and Order
mentioned in the second paragraph of this Decision for alleged -
1. Procedural Errors x x x in not finding x x x (a) that the lower court gravely abused
its discretion in recognizing the action as one for declaration of nullity of marriage
instead of a special proceeding for cancellation of (an) entry in the civil registry and
(b) in not finding that the lower court had no jurisdiction (over) the issue of nullity;
and
2. Substantive errors x x x in not finding x x x (a) that the lower court gravely erred
in declaring the marriage null and void x x x and (b) x x x in disregarding the
presumptions in favor of the rights of children and to the administration of the
conjugal property x x x and the validity of marriage x x x.
In her Memorandum, petitioner elucidated and spiritedly argued the above
grounds.
In fine, the foregoing issues could be restated as follows:
1. Did the respondent Court err in holding that petitioner should have appealed
from the trial courts decision instead of filing a petition for certiorari?
2. Did the respondent Court err in refusing to decide upon the merits of the case,
that is, to declare whether or not the judgment of the trial court is null and void?
Should the Supreme Court now resolve the merits of the case, i.e., decide the issue of
nullity of the assailed decision of the trial court?
The Courts Ruling
Since these issues are intimately intertwined, we shall discuss them
together.
At the outset, it must be stressed that the Court of Appeals acted within its
authority in simply ordering the trial court to give due course to petitioners
appeal without going into the merits of the case.
In Municipality of Binan, Laguna vs. Court of Appeals,
7
we held:
Respondent Court of Appeals has no jurisdiction in a certiorari proceeding involving
an incident in a case to rule on the merits of the main case itself which was not on
appeal before it. x x x.
In other words, the Court of Appeals has already done its duty by
declaring that the lower court gravely abused its discretion or acted without
jurisdiction in refusing to give due course to petitioners appeal. Hence, it
ordered said court to allow the appeal. Once appeal is perfected, the merits of
the case, i.e. the validity/nullity of the trial courts decision, would then be
resolved by said Court.
Understandably, the Court of Appeals has limited itself to ruling upon the
procedural question lodged before it. It cannot be seriously faulted - as
petitioner vehemently did - for opting to navigate within the narrow banks of
the placid waters of certiorari. For in doing so, it was strictly following
established legal doctrines and precedents.
Upon the other hand, the Supreme Court is not just a toothless promoter
of procedural niceties which are understood and appreciated only by lawyers
and jurists. It cannot shrink from its quintessential role as the fountain of
speedy, adequate and substantial justice. If the Court, as the head and
guardian of the judicial branch, must continuously merit the force of public
trust and confidence - which ultimately is the real source of its sovereign
power, possessing neither the purse nor the sword - and if it must decisively
discharge its sacred duty as the last sanctuary of the oppressed and the
weak, it must, in appropriate cases like the one before us, pro-actively provide
weary litigants with immediate legal and equitable relief, free from the delays
and legalistic contortions that oftentimes result from applying purely formal
and procedural approaches to judicial dispensations.
Pursuant to the foregoing principle and considering the peculiar
circumstances of the present case which are patent on the basis of the
admitted facts, as well as the undisputed copies of the pleadings presented by
the parties, and especially the verified copy of the trial courts decision which
loudly speaks for itself, the Court therefore resolved to make an exception to
the normal procedures and to delve deeper into the substantive issue of the
validity/nullity of the trial courts proceedings and judgment. Happily, both
parties had expressed a desire to have this case resolved soonest. Upon the
other hand, remanding the case back to the trial court for the perfection of the
appeal and requiring the parties to re-litigate in the Court of Appeals with the
use of probably the same documents and arguments ventilated in the
kilometric pleadings filed here would just unnecessarily clog the courts
dockets; besides, in all likelihood the parties would eventually come before
this Court anyway.
Also, it must be observed that Virginia actually filed a proper Notice of
Appeal which the trial court disallowed. Hence, she had no choice but to bring
her petition for certiorari in the respondent Court. To constrain her to go back
to said Court, this time by ordinary appeal, would be tantamount to punishing
her and delaying her cause for faults not attributable to her, but rather to the
manifest error of the respondent trial judge.
So, too, as will be shown shortly, the trial courts decision is really a nullity
for utter want of jurisdiction. Hence, it could be challenged at any time.
It is not disputed that the original petition
8
in the trial court was for
cancellation of entry in the civil registry of the late registration of the
marriage between Leonor and Mauricio, in consonance with Section 3, Rule
108 of the Rules of Court. Ground alleged for the nullity and cancellation of
the marriage was non-observance of the legal requirements for a valid
marriage.
Later, on August 22, 1992, an amended petition
9
was filed adding
essentially the following allegations; (a) that there was no marriage contract,
(b) that the marriage was a sham x x x to cover-up the (alleged) shame of
Virginia Amor who was then pregnant, (c) that Virginia allegedly assured
Mauricio that they need not live together x x x and Mauricio need not give any
support, (d) that the couple always had trouble (and) quarrel, and (e) that
Mauricio had been transferring residence to avoid Virginia until he went
abroad for good. The answer
10
of the Civil Registrar and the
opposition
11
of Virginia, among others, disputed the propriety of the collateral
attack against the marriage, under said Rule.
The decision
12
of the trial court is, painfully, a sophomoric and pathetic
portrayal of Virginia as allegedly an unbecoming x x x unmarried woman
(who) wormed her to a (sic) heart of the matriarch of the Leonor Family x x x
to summon the son Mauricio to come to her rescue and as a scheming nurse
who lured a struggling young teacher x x x to this unwelcomed (sic) love
affair. These matters, needless to say, border on the incredible, as they were
brought up some thirty (30) years after the marriage was celebrated in 1960
and only after Virginiadiscovered her husbands infidelity. The said decisions
crude attempt at literary sophistication is matched only by its jarring syntax
and grammatical incongruencies.
13
Insofar as this Court can figure out from
the convoluted language of the decision, the trial court (a) declared the
marriage null and void and (b) ordered the local civil registrar of San Carlos
City to cancel its entry in the local civil registry, the sum total of which,
coincidentally (and most conveniently), would enable Mauricio to show to the
Swiss courts that he was never married and thus, to convince said courts to
reverse their order granting alimony to his abandoned wife. Such blatant
abuse and misuse of court proceedings cannot be countenanced by this
Court.
The ultimate legal question therefore is this: In disposing of a special
proceeding under Rule 108, did the trial court have jurisdiction to declare the
marriage null and void and to order the cancellation of its entry in the local civil
registry?
To contribute to the cause of clarity, Rule 108 of the Rules of Court is
reproduced hereunder.
Rule 108
CANCELLATION OR CORRECTION OF ENTRIES
IN THE CIVIL REGISTRY
SEC. 1. Who may file petition. - Any person interested in any act, event, order or
decree concerning the civil status of persons which has been recorded in the civil
register, may file a verified petition for the cancellation or correction of any entry
relating thereto, with the court of First Instance of the province where the
corresponding civil registry is located.
SEC. 2. Entries subject to cancellation or correction. - Upon good and valid grounds,
the following entries in the civil register may be cancelled or corrected; (a) births; (b)
marriages; (c) deaths; (d) legal separations; (e) judgments of annulments of marriage;
(f) judgments declaring marriages void from the beginning; (g) legitimations; (h)
adoptions; (i) acknowledgments of natural children; (j) naturalization; (k)election, loss
or recovery of citizenship; (l) civil interdiction; (m) judicial determination of filiation;
(n) voluntary emancipation of a minor; and (o) changes of name.
SEC. 3. Parties. - When cancellation or correction of an entry in the civil register is
sought, the civil registrar and all persons who have or claim any interest which would
be affected thereby shall be made parties to the proceeding.
SEC. 4. Notice and publication. - Upon the filling of the petition, the court shall, by an
order, fix the time and place for the hearing of the same, and cause reasonable notice
thereof to be given to the persons named in the petition. The court shall also cause the
order to be published once a week for three (3) consecutive weeks in a newspaper of
general circulation in the province.
SEC. 5. Opposition. - The civil registrar and any person having or claiming any
interest under the entry whose cancellation or correction is sought may, within fifteen
(15) days from notice of the petition, or from the last date of publication of such
notice, file his opposition thereto.
SEC. 6. Expediting proceedings. - The court in which the proceeding is brought may
make orders expediting the proceedings, and may also grant preliminary injunction for
the preservation of the rights of the parties pending such proceedings.
SEC. 7. Order. - After hearing, the court may either dismiss the petition or issue an
order granting the cancellation or correction prayed for. In either case, a certified copy
of the judgment shall be served upon the civil registrar concerned who shall annotate
the same in his record.
On its face, the Rule would appear to authorize the cancellation of any
entry regarding marriages in the civil registry for any reason by the mere
filing of a verified petition for the purpose. However, it is not as simple as it
looks. Doctrinally, the only errors that can be cancelled or corrected under this
Rule are typographical or clerical errors, not material or substantial ones like
the validity or nullity of a marriage.
14
A clerical error is one which is visible to
the eyes or obvious to the understanding; error made by a clerk or a
transcriber; a mistake in copying or writing (Black vs. Republic, L-10869, Nov.
28, 1958); or some harmless and innocuous change such as a correction of
name that is clearly misspelled or of a mis-statement of the occupation of the
parent (Ansalada vs. Republic, No. L-10226, Feb. 14, 1958).
15

Where the effect of a correction in a civil registry will change the civil
status of petitioner and her children from legitimate to illegitimate, the same
cannot be granted except only in an adversarial proceeding.
16
In Vda. de
Castro vs. Republic,
17
this Court held:
x x x It has been the consistent ruling of this Court since the Ty Kong
Tin vs. Republic, 94 Phil. 321, that substantial alterations, such as those affecting the
status and citizenship of a person in the Civil Registry Records, cannot be ordered by
the court unless first threshed out in an appropriate action wherein all parties who
may be affected by the entries are notified or represented (see Rule 108 of the
Revised Rules of Court), and that the summary proceedings under Article 412 of the
Civil Code only justify an order to correct innocuous or clerical errors, such as
misspellings and the like, errors that are visible to the eyes or obvious to the
understanding. (Baybayan vs. Republic of the Philippines, 16 SCRA 403)
Clearly and unequivocally, the summary procedure under Rule 108, and
for that matter under Art. 412 of the Civil Code, cannot be used by Mauricio to
change his and Virginias civil status from married to single and of their three
children from legitimate to illegitimate. Neither does the trial court, under said
Rule, have any jurisdiction to declare their marriage null and void and as a
result thereof, to order the local civil registrar to cancel the marriage entry in
the civil registry. Further, the respondent trial judge gravely and seriously
abused his discretion in unceremoniously expanding his very limited
jurisdiction under such rule to hear evidence on such a controversial matter as
nullity of a marriage under the Civil Code and/or Family Code, a process that
is proper only in ordinary adversarial proceedings under the Rules.
A void judgment for want of jurisdiction is no judgment at all. It cannot be
the source of any right nor the creator of any obligation. All acts performed
pursuant to it and all claims emanating from it have no legal effect. Hence, it
can never become final and any writ of execution based on it is void; x x x it
may be said to be a lawless thing which can be treated as an outlaw and slain
at sight, or ignored wherever and whenever it exhibits its head.
18

WHEREFORE, the petition is GRANTED. Judgment is hereby rendered
DECLARING NULL and VOID the decision of the respondent judge
dated February 14,1992 in Special Proceedings No. RTC-144 and
MODIFYING accordingly the Decision dated September 30, 1993 of the
respondent Court of Appeals in CA-G.R. No. SP-30606. Let a copy of this
Decision be spread in the records of respondent Judge in the Office of the
Court Administrator. Costs against private respondent Mauricio D. Leonor, Jr.
SO ORDERED.



G.R. No. 130277 May 9, 2002
MA. LOURDES BARRIENTOS ELEOSIDA, for and in behalf of her minor child, CHARLES
CHRISTIAN ELEOSIDA, petitioner,
vs.
LOCAL CIVIL REGISTRAR OF QUEZON CITY, and CARLOS VILLENA BORBON, respondents.
PUNO, J .:
This is a petition for review on certiorari of the Order
1
of the Regional Trial Court of Quezon City,
Branch 89, which dismissed motu proprio the petition of Ma. Lourdes Eleosida to correct some
entries in the birth certificate of her son, Charles Christian. The birth certificate shows, among
others, that the child's full name is Charles Christian Eleosida Borbon. He was born on May 24, 1992
to Ma. Lourdes Barrientos Eleosida and Carlos Villena Borbon. The birth certificate also indicates
that the child's parents were married on January 10, 1985 in Batangas City.
2

On January 30, 1997, petitioner Ma. Lourdes Eleosida filed a petition before the Regional Trial Court
of Quezon City seeking to correct the following entries in the birth certificate of her son, Charles
Christian: first, the surname "Borbon" should be changed to "Eleosida;" second, the date of the
parents' wedding should be left blank; and third, the informant's name should be "Ma. Lourdes B.
Eleosida," instead of "Ma. Lourdes E. Borbon." In support of her petition, petitioner alleged that she
gave birth to her son out of wedlock on May 24, 1992; that she and the boy's father, Carlos Borbon,
were never married; and that the child is therefore illegitimate and should follow the mother's
surname. The petition impleaded the Local Registrar of Quezon City and Carlos Villena Borbon as
respondents.
3

On April 23, 1997, the trial court issued a notice of hearing stating:
"Verified petition having been filed by petitioner Ma. Lourdes Barrientos Eleosida, praying
that the entries in the Certificate of Live Birth of her minor child, Charles Christian Eleosida
Borbon, be changed and/or corrected, such that, his last name BORBON be deleted and
instead place therein the name ELEOSIDA, which is the surname of his mother-petitioner;
the entry "January 10, 1985 Batangas City", be likewise deleted, since the petitioner and
respondent Carlos Villena Borbon, at the time of the minor's birth were not legally married;
and the surname BORBON of petitioner Ma. Lourdes E. Borbon under the column Informant,
be also deleted;
NOTICE IS HEREBY GIVEN, that this petition is set for hearing on June 26, 1997 at 8:30
o'clock in the morning, in the Session Hall of this Court sitting at the Ground Floor, Room
118, Hall of Justice, Quezon City, which is ordered published once a week for three (3)
consecutive weeks, in a newspaper of general circulation and published in Metro Manila, to
be selected by raffle, at the expense of the petitioner, at which date, time and place, the
petitioner shall appear and prove her petition, in that all other persons having or claiming any
interest thereon shall also appear and show cause why, if any, they have, the petition shall
not be granted.1wphi 1. nt
Let copies of this notice be furnished the petitioner, and together with copies of the petition,
respondent Carlos Villena Borbon; the Offices of the Local Civil Registrar of Quezon City and
the Solicitor General, who are given fifteen (15) days from notice of the petition, or from the
last date of publication of such notice, within which to file their opposition thereto, if any. In
the event that the Solicitor General may not be able to appear on the scheduled hearing, to
designate the City Prosecutor of Quezon City to appear for and in behalf of the State.
SO ORDERED."
4

On June 26, 1997, the trial court issued another order setting the date for the presentation of
evidence on July 23, 1997. It stated:
"Considering that there is no opposition filed despite notice to the Solicitor General as
contained in the notice of hearing dated April 23, 1997 requiring that office to file their
opposition, if any, to the petition for correction of entries in the birth certificate of minor child
Charles Christian Eleosida, the petitioner will be allowed to present compliance with the
jurisdictional requirements and at the same time initially present evidence on July 23, 1997,
at 8:30 o'clock in the morning."
5

On August 25, 1997, the trial court motu proprio dismissed the petition for lack of merit. It ruled:
"It is an established jurisprudence that, only CLERICAL ERRORS OF A HARMLESS AND
INNOCUOUS NATURE like: misspelled name, occupation of the parents, etc., may be the
subject of a judicial order (contemplated under Article 412 of the New Civil Code),
authorizing changes or corrections and: NOT as may affect the CIVIL STATUS,
NATIONALITY OR CITIZENSHIP OF THE PERSONS INVOLVED.
In the present case, it is very clear that the changes desired by the petitioner will ultimately
affect the CIVIL STATUS OF CHARLES CHRISTIAN, as she wants the Court to Direct the
Civil Registrar of Quezon City to substitute her maiden name, ELEOSIDA, with that of
BORBON; to delete the information supplied in ITEM 12, respecting the date and place of
marriage of parents, on the ground that she was never married to respondent CARLOS
VILLENA BORBON and amend the information in ITEM 14, respecting the name of the
informant, from MA. LOURDES E. BORBON to MA. LOURDES B. ELEOSIDA, and is
indicative of petitioner's intention and device to establish that CHARLES CHRISTIAN's civil
status as ILLEGITIMATE.
With the petition's ultimate purpose on the part of petitioner to secure judicial order, which
would authorize a change in the civil status of CHARLES CHRISTIAN, this Court, finds the
action improper. The matters desired to be cancelled and/or changed by petitioner cannot be
considered falling under the ambit of the words 'clerical errors of a harmless and innocuous
nature.'
WHEREFORE, for LACK OF MERIT, the petition is now MOTU PROPIO (sic) dismissed."
6

Petitioner fled the instant petition for review raising the issue of whether corrections of entries in the
certificate of live birth pursuant to Article 412 of the Civil Code, in relation to Rule 108 of the Rules of
Court may be allowed even if the errors to be corrected are substantial and not merely clerical errors
of a harmless and innocuous nature.
7

The Court required the respondents to comment on the petition. The Office of the Solicitor General
(OSG) filed a Manifestation in Lieu of Comment. The OSG submitted that even substantial errors in
the civil registry may be corrected provided that the parties aggrieved by the error avail themselves
of the appropriate adversary proceeding. Thus it argued that even if the petition seeks the correction
and eventual change in the civil status of Charles Christian, the same can be ordered by the court as
long as all the parties who may be affected by the entries are notified and represented.
8
Respondent
Carlos Borbon, on the other hand, failed to submit his comment on the petition despite several
notices from this Court. Hence, on January 24, 2001, the Court dispensed with the filing of
respondent Borbon's comment and gave due course to the petition.
9

We find merit in the petition. Rule 108 of the Revised Rules of Court provides the procedure for
cancellation or correction of entries in the civil registry. The proceedings under said rule may either
be summary or adversary in nature. If the correction sought to be made in the civil register is clerical,
then the procedure to be adopted is summary. If the rectification affects the civil status, citizenship or
nationality of a party, it is deemed substantial, and the procedure to be adopted is adversary.
10
This
is our ruling in Republic vs. Valencia
11
where we held that even substantial errors in a civil registry
may be corrected and the true facts established under Rule 108 provided the parties aggrieved by
the error avail themselves of the appropriate adversary proceeding. An appropriate adversary suit or
proceeding is one where the trial court has conducted proceedings where all relevant facts have
been fully and properly developed, where opposing counsel have been given opportunity to
demolish the opposite party's case, and where the evidence has been thoroughly weighed and
considered. The Court further laid down the procedural requirements to make the proceedings under
Rule 108 adversary, thus:
"The pertinent sections of Rule 108 provide:
SEC. 3. Parties.When cancellation or correction of an entry in the civil register is
sought, the civil registrar and all persons who have or claim any interest which would
be affected thereby shall be made parties to the proceeding.1wphi 1. nt
SEC. 4. Notice and publication.Upon the filing of the petition, the court shall, by
an order, fix the time and place for the hearing of the same, and cause reasonable
notice thereof to be given to the persons named in the petition. The court shall also
cause the order to be published once in a week for three 93) consecutive weeks in a
newspaper of general circulation in the province.
SEC. 5. Opposition.The civil registrar and any person having or claiming any
interest under the entry whose cancellation or correction is sought may, within fifteen
(15) days from notice, file his opposition thereto.
Thus, the persons who must be made parties to a proceeding concerning the cancellation or
correction of an entry in the civil register are(1) the civil registrar, and (2) all persons who
have or claim any interest which would be affected thereby. Upon the filing of the petition, it
becomes the duty of the court to(1) issue an order fixing the time and place for the hearing
of the petition, and (2) cause the order for hearing to be published once a week for three (3)
consecutive weeks in a newspaper of general circulation in the province. The following are
likewise entitled to oppose the petition:--(1) the civil registrar, and (2) any person having or
claiming any interest under the entry whose cancellation or correction is sought.
If all these procedural requirements have been followed, a petition for correction and/or
cancellation of entries in the record of birth even if filed and conducted under Rule 108 of the
Revised Rules of Court can no longer be described as 'summary'. xxx"
12

It is true in the case at bar that the changes sought to be made by petitioner are not merely clerical
or harmless errors but substantial ones as they would affect the status of the marriage between
petitioner and Carlos Borbon, as well as the legitimacy of their son, Charles Christian. Changes of
such nature, however, are now allowed under Rule 108 in accordance with our ruling in Republic
vs. Valencia provided that the appropriate procedural requirements are complied with. The records
show that upon receipt of the petition, the trial court issued a notice of hearing setting the hearing on
June 26, 1997 at 8:30 in the morning at Room 118, Hall of Justice, Quezon City. The trial court
likewise ordered the publication of said notice once a week for three (3) consecutive weeks in a
newspaper of general circulation and its posting in selected places in Metro Manila. The notice
stated that the petitioner shall prove her petition during said hearing and all other persons having or
claiming any interest thereon shall also appear and show if there is any reason why the petition
should not be granted. Respondents Carlos Villena Borbon, the Local Civil Registrar of Quezon City
and the Solicitor General were all furnished with a copy of the notice of hearing together with a copy
of the petition. On June 26, 1997, the trial court issued a second order giving the petitioner an
opportunity to show compliance with the jurisdictional requirements and to present evidence during
the hearing set on July 23, 1997. The foregoing satisfy all the requirements of Rule 108 to make it an
adversary proceeding. It was therefore an error for the trial court to dismiss the petition motu
propriowithout allowing the petitioner to present evidence to support her petition and all the other
persons who have an interest over the matter to oppose the same.1wphi1.nt
IN VIEW WHEREOF, the petition is GRANTED and the Order dated August 25, 1997 of the RTC of
Quezon City, Branch 89, subject of the petition at bar is set aside. The case is REMANDED to the
court a quo for further proceedings.
SO ORDERED.


G.R. No. 138496 February 23, 2004
HUBERT TAN CO and ARLENE TAN CO, petitioners,
vs.
THE CIVIL REGISTER OF MANILA and any person having or claiming an interest under the
entry whose cancellation or correction is sought, respondent.
D E C I S I O N
CALLEJO, SR., J .:
Before the Court is the petition for review on certiorari filed by Hubert Tan Co and Arlene Tan Co
seeking to reverse and set aside the Order
1
dated September 23, 1998 of the Regional Trial Court of
Manila, Branch 26, dismissing their petition for correction of entries in the Civil Register. Likewise
sought to be reversed and set aside is the Order dated April 27, 1999 of the court a quo denying the
petitioners motion for reconsideration of the said order.
The factual antecedents are as follows:
Hubert Tan Co was born on March 23, 1974. His sister, Arlene Tan Co, was born on May 19, 1975.
In their respective certificates of birth, it is stated that their parents Co Boon Peng and Lourdes
Vihong K. Tan are Chinese citizens.
Thereafter, Co Boon Peng filed an application for his naturalization as a citizen of the Philippines
with the Special Committee on Naturalization under Letter of Instruction (LOI) No. 270. His
application was granted and he was conferred Philippine citizenship under Presidential Decree
(P.D.) No. 1055. The Chairman of the Committee issued on February 15, 1977 Certificate of
Naturalization No. 020778 in his favor. Thus, on February 15, 1977, Co Boon Peng took his oath as
a Philippine citizen. In the meantime, Hubert and Arlene Co finished college and earned their
respective degrees in architecture and accountancy in Philippine schools.
On August 27, 1998, they filed with the Regional Trial Court of Manila a petition under Rule 108 of
the Rules of Court for correction of entries in their certificates of birth. The case was docketed as Sp.
Proc. Case No. 98-90470. They alleged, inter alia, in their petition that:
(3) They were born in the Philippines and the legitimate children of CO BOON PENG;
(4) Co Boon Peng, who is formerly a citizen of China, was conferred Philippine citizenship by
naturalization under Presidential Decree No. 1055 and had taken his oath of allegiance to
the Republic of the Philippines on 15th February, 1977 in the City of Manila;
(5) At the time of birth of [the] petitioners, their father CO BOON PENG was still a Chinese
citizen that is why entry in their respective birth certificates as to their fathers citizenship was
Chinese;
(6) Upon granting of Philippine citizenship by naturalization to Co Boon Peng in 1977, [the]
petitioners who were born in the Philippines and still minors at that time became Filipino
citizens through the derivative mode of naturalization. Our Naturalization Law, specifically
Section 15 of Commonwealth Act No. 473, as amended by Commonwealth Act No. 535
which provides:
"Minor children of persons naturalized under this law who have been born in the Philippines
shall be considered citizens thereof;"
(7) The naturalization of petitioners father in 1977 was an act or event affecting and
concerning their civil status that must be recorded in the Civil Register, Article 407 of the
New Civil Code of the Philippines which provides:
"Acts, events and judicial decrees concerning the civil status of persons shall be recorded in the Civil
Register."
2

The petitioners prayed that, after due proceedings, the trial court render judgment correcting and
changing the entries in their respective birth certificates as to the citizenship of their father Co Boon
Peng, from "Chinese" to "Filipino."
3

On September 23, 1998, the court a quo issued an order dismissing the petition outright on the
ground that the petition was insufficient, solely because the petitioners father Co Boon Peng applied
for naturalization under LOI No. 270 and was conferred Philippine citizenship by naturalization under
PD No. 1055 and not under Commonwealth Act (CA) No. 473.
4

The petitioners sought the reconsideration of the assailed order arguing that LOI No. 270 and CA
No. 473 were designed to grant citizenship to deserving aliens; hence, should be construed
together. They averred that the benefit of Section 15 of CA No. 473 should also be granted to the
petitioners whose father was granted naturalization under LOI No. 270. However, the RTC issued an
Order on April 27, 1999, denying their motion for reconsideration for the following reasons: (a)
although Commonwealth Act No. 473 and Letter of Instructions No. 270 are statutes relating to the
same subject matter, they do not provide the same beneficial effects with respect to the minor
children of the applicant. Section 15 of CA No. 473 expressly provides for the effect of the
naturalization on the wife and children of the applicant while LOI No. 270 does not have any proviso
to that effect; (b) LOI No. 270 clearly refers to qualified individuals only. The rules and regulations
promulgated by the Committee established pursuant to LOI No. 270 and the amendments issued by
then President Ferdinand E. Marcos (LOI Nos. 292 and 491) clearly speak of qualified individuals
only; no proviso therein referred to its effect on the wife and children of the individual; (c) Section 15
of CA No. 473 should not be deemed and incorporated in and applied to LOI No. 270; and, (d) the
application of the so-called "pari materia" rule of construction made by the petitioners is misplaced,
as what should be applied in the instant case is the rule on strict construction of legislative grants or
franchise. The court a quo stressed that legislative grants, whether they be of property, rights or
privileges, whether granted to corporations or individuals, must be strictly construed against the
grantee and in favor of the grantor.
Aggrieved, the petitioners now come to this Court assailing the court a quos Order dismissing their
petition outright and its Order denying their motion for the reconsideration of the same.
The petitioners contend that the trial court erred in holding that their petition was insufficient. They
assert that contrary to the ruling of the trial court, they are qualified to claim the benefit of Section 15
of CA No. 473, which provides that minor children of persons naturalized thereunder who were born
in the Philippines shall likewise be considered citizens thereof. They contend that although LOI No.
270, under which the petitioners father was naturalized does not contain a provision similar to
Section 15 of CA No. 473, the latter provision should be deemed incorporated therein. They point
out that both laws have the same purpose and objective, i.e., to grant Philippine citizenship to
qualified aliens permanently residing in the Philippines. The petitioners invoke the rule that statutes
in pari materia are to be read together.
5
They posit that CA No. 473 and LOI No. 270 should be
harmonized and reconciled since "all statutes relating to the same subject, or having the same
general purpose, should be read in connection with it, and should be construed together as they
constitute one law."
6

The petitioners maintain that the letter and spirit of LOI No. 270 was to grant the privilege of
Philippine citizenship not only to qualified aliens but also to their minor children who were born in the
country. They assert that this is apparent from paragraph 4-A thereof, which extends the option to
adopt Filipino names not only to qualified applicants for naturalization but also to their wives and
minor children. They submit that when then President Ferdinand E. Marcos enacted LOI No. 270, he
must be presumed to have been acquainted with the provisions of CA No. 473 and did not intend to
abrogate and discontinue the beneficial effects of Section 15 thereof; otherwise, Pres. Marcos would
have expressly repealed Section 15 of CA No. 473 in relation to LOI No. 270. Thus, according to the
petitioners, the naturalization of their father during their minority is an act or event affecting their civil
status that must be recorded in the Civil Register pursuant to Article 407 of the Civil Code.
In his Comment, the Solicitor General contends that the court a quo did not err in issuing the
assailed orders. Contrary to the petitioners theory, LOI No. 270 and CA No. 473 are separate and
distinct laws; therefore, are not in pari materia. He points out that although LOI No. 270 and CA No.
473 both govern the naturalization of aliens, CA No. 473 deals with the requirements and procedure
for naturalization by judicial decree; LOI No. 270, on the other hand, deals with the requirements and
procedure for naturalization by presidential decree.
The Solicitor General further asserts that the petitioners contention that the naturalization of their
father is an event affecting and concerning their civil status envisaged in Article 407 of the Civil Code
has no legal basis. The correction sought and allowed under Rule 108 of the Rules of Court must be
one that reflects a fact existing before or at the time of birth. In the petitioners case, the
naturalization of their father in 1977 took place long after they were born. Moreover, according to the
Solicitor General, under LOI No. 270 and its amendatory laws, the naturalization of a father did not
ipso facto render his children also naturalized. The petitioners thus cannot invoke Article 407 of the
Civil Code and Rule 108 of the Rules of Court to avoid strict compliance with the naturalization laws.
The petition is meritorious.
The rule on statutory construction provides that:
Statutes in pari materia should be read and construed together because enactments of the same
legislature on the same subject are supposed to form part of one uniform system; later statutes are
supplementary or complimentary (sic) to the earlier enactments and in the passage of its acts the
legislature is supposed to have in mind the existing legislations on the subject and to have enacted
its new act with reference thereto.
7

Statutes in pari materia should be construed together to attain the purpose of an expressed national
policy, thus:
On the presumption that whenever the legislature enacts a provision it has in mind the previous
statutes relating to the same subject matter, it is held that in the absence of any express repeal or
amendment therein, the new provision was enacted in accord with the legislative policy embodied in
those prior statutes, and they all should be construed together. Provisions in an act which are
omitted in another act relating to the same subject matter will be applied in a proceeding under the
other act, when not inconsistent with its purpose. Prior statutes relating to the same subject matter
are to be compared with the new provisions; and if possible by reasonable construction, both are to
be construed that effect is given to every provision of each. Statutes in pari materia, although in
apparent conflict, are so far as reasonably possible construed to be in harmony with each other.
8

LOI No. 270 and CA No. 473 are laws governing the naturalization of qualified aliens residing in the
Philippines. While they provide for different procedures, CA No. 473 governs naturalization by
judicial decree while LOI No. 270 governs naturalization by presidential decree; both statutes have
the same purpose and objective: to enable aliens permanently residing in the Philippines, who,
having demonstrated and developed love for and loyalty to the Philippines, as well as affinity to the
culture, tradition and ideals of the Filipino people, and contributed to the economic, social and
cultural development of our country, to be integrated into the national fabric by being granted Filipino
citizenship. Under the LOI, the procedure for the acquisition of citizenship by naturalization is more
expeditious, less cumbersome and less expensive. The sooner qualified aliens are naturalized, the
faster they are able to integrate themselves into the national fabric, and are thus able to contribute to
the cultural, social and political well- being of the country and its people.
Clearly, LOI No. 270 and CA No. 473 are, as the petitioners correctly posit, statutes in pari materia.
Absent any express repeal of Section 15 of CA No. 473 in LOI No. 270, the said provision should be
read into the latter law as an integral part thereof, not being inconsistent with its purpose. Thus,
Section 15 of CA No. 473,
9
which extends the grant of Philippine citizenship to the minor children of
those naturalized thereunder, should be similarly applied to the minor children of those naturalized
under LOI No. 270, like the petitioners in this case.
It is not enough that the petitioners adduce in evidence the certificate of naturalization of their father,
Co Boon Peng, and of his oath of allegiance to the Republic of the Philippines, to entitle them to
Philippine citizenship. They are likewise mandated to prove the following material allegations in their
petition: (a) that they are the legitimate children of Co Boon Peng; (b) that they were born in the
Philippines; and, (c) that they were still minors when Co Boon Peng was naturalized as a Filipino
citizen;
The petitioners recourse to Rule 108 of the Rules of Court, as amended, is appropriate. Under
Article 412 of the New Civil Code, no entry in a civil register shall be changed or corrected without a
judicial order. The law does not provide for a specific procedure of law to be followed. But the Court
approved Rule 108 of the Rules of Court to provide for a procedure to implement the law.
10
The
entries envisaged in Article 412 of the New Civil Code are those provided in Articles 407 and 408 of
the New Civil Code which reads:
Art. 407. Acts, events and judicial decrees concerning the civil status of persons shall be recorded in
the civil register.
Art. 408. The following shall be entered in the civil register:
(1) Births; (2) Marriages; (3) deaths; (4) legal separations; (5) annulments of marriage; (6) judgments
declaring marriages void from the beginning; (7) legitimations; (8) adoptions; (9) acknowledgments
of natural children; (10) naturalization; (11) loss, or (12) recovery of citizenship; (13) civil interdiction;
(14) judicial determination of filiation; (15) voluntary emancipation of a minor; and (16) changes of
name.
Specific matters covered by the said provision include not only status but also nationality.
11
The acts,
events or factual errors envisaged in Article 407 of the New Civil Code include even those that occur
after the birth of the petitioner. However, in such cases, the entries in the certificates of birth will not
be corrected or changed. The decision of the court granting the petition shall be annotated in the
certificates of birth and shall form part of the civil register in the Office of the Local Civil Registrar.
12

To correct simply means "to make or set aright; to remove the faults or error from." To change
means "to replace something with something else of the same kind or with something that serves as
a substitute. Article 412 of the New Civil Code does not qualify as to the kind of entry to be changed
or corrected or distinguished on the basis of the effect that the correction or change may be.
13
Such
entries include not only those clerical in nature but also substantial errors. After all, the role of the
Court under Rule 108 of the Rules of Court is to ascertain the truths about the facts recorded
therein.
14

The proceedings in Rule 108 of the Rules of Court are summary if the entries in the civil register
sought to be corrected are clerical or innocuous in nature. However, where such entries sought to be
corrected or changed are substantial: i.e., the status and nationality of the petitioners or the
citizenship of their parents,
15
the proceedings are adversarial in nature as defined by this Court
in Republic v. Valencia, thus:
One having opposing parties; contested, as distinguished from an ex parte application, one of which
the party seeking relief has given legal warning to the other party, and afforded the latter an
opportunity to contest it. Excludes an adoption proceeding.
16

In such a proceeding, the parties to be impleaded as respective defendants are (a) the local civil
registrar; and, (b) all persons who have claims any interest which would be affected thereby.
17

In this case, the petitioners alleged in their petition that they are the legitimate children of Co Boon
Peng, who was naturalized as a Filipino citizen, but that their certificates of birth still indicate that he
is a Chinese national. In view of their fathers naturalization, they pray that the entries in their
certificates of birth relating to the citizenship of their father be changed from "Chinese" to "Filipino."
The petitioners recourse to the procedure in Rule 108 of the Rules of Court, as amended, being
appropriate, it behooved the trial court to do its duty under Section 4, Rule 108 of the Rules of Court,
namely:
Sec. 4. Notice and Publication. Upon the filing of the petition, the court shall, by an order, fix the
time and place for the hearing of the same, and cause reasonable notice thereof to be given to the
person named in the petition. The court shall also cause the order to be published once a week for
three (3) consecutive weeks in a newspaper of general circulation in the province.
After hearing, the court shall issue an order either dismissing the petition or issue an order granting
the same. In either case, a certified copy of the judgment shall be served upon the civil registrar
concerned who shall annotate the same in the certificates of birth of the petitioners. The judgment of
the court shall form part of the records of the local civil register.
18

In this case, the trial court dismissed the petition outright in violation of Rule 108 of the Rules of
Court. Patently, then, the trial court erred in so doing.
IN THE LIGHT OF THE FOREGOING, the petition is GRANTED. The assailed Orders of the
Regional Trial Court of Manila, Branch 26, are SET ASIDE and REVERSED. The trial court is
DIRECTED to reinstate the petition in Special Proceedings NO. 98-90470 in the court docket, and
ORDERED to continue with the proceedings in the said case under Rule 108 of the Rules of Court,
as amended.
SO ORDERED.


G.R. No. 174689 October 22, 2007
ROMMEL JACINTO DANTES SILVERIO, petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, respondent.
D E C I S I O N
CORONA, J .:
When God created man, He made him in the likeness of God; He created them male and
female. (Genesis 5:1-2)
Amihan gazed upon the bamboo reed planted by Bathala and she heard voices coming from
inside the bamboo. "Oh North Wind! North Wind! Please let us out!," the voices said. She
pecked the reed once, then twice. All of a sudden, the bamboo cracked and slit open. Out
came two human beings; one was a male and the other was a female. Amihan named the
man "Malakas" (Strong) and the woman "Maganda" (Beautiful). (The Legend of Malakas and
Maganda)
When is a man a man and when is a woman a woman? In particular, does the law recognize the
changes made by a physician using scalpel, drugs and counseling with regard to a persons sex?
May a person successfully petition for a change of name and sex appearing in the birth certificate to
reflect the result of a sex reassignment surgery?
On November 26, 2002, petitioner Rommel Jacinto Dantes Silverio filed a petition for the change of
his first name and sex in his birth certificate in the Regional Trial Court of Manila, Branch 8. The
petition, docketed as SP Case No. 02-105207, impleaded the civil registrar of Manila as respondent.
Petitioner alleged in his petition that he was born in the City of Manila to the spouses Melecio
Petines Silverio and Anita Aquino Dantes on April 4, 1962. His name was registered as "Rommel
Jacinto Dantes Silverio" in his certificate of live birth (birth certificate). His sex was registered as
"male."
He further alleged that he is a male transsexual, that is, "anatomically male but feels, thinks and acts
as a female" and that he had always identified himself with girls since childhood.
1
Feeling trapped in
a mans body, he consulted several doctors in the United States. He underwent psychological
examination, hormone treatment and breast augmentation. His attempts to transform himself to a
"woman" culminated on January 27, 2001 when he underwent sex reassignment surgery
2
in
Bangkok, Thailand. He was thereafter examined by Dr. Marcelino Reysio-Cruz, Jr., a plastic and
reconstruction surgeon in the Philippines, who issued a medical certificate attesting that he
(petitioner) had in fact undergone the procedure.
From then on, petitioner lived as a female and was in fact engaged to be married. He then sought to
have his name in his birth certificate changed from "Rommel Jacinto" to "Mely," and his sex from
"male" to "female."
An order setting the case for initial hearing was published in the Peoples Journal Tonight, a
newspaper of general circulation in Metro Manila, for three consecutive weeks.
3
Copies of the order
were sent to the Office of the Solicitor General (OSG) and the civil registrar of Manila.
On the scheduled initial hearing, jurisdictional requirements were established. No opposition to the
petition was made.
During trial, petitioner testified for himself. He also presented Dr. Reysio-Cruz, Jr. and his American
fianc, Richard P. Edel, as witnesses.
On June 4, 2003, the trial court rendered a decision
4
in favor of petitioner. Its relevant portions read:
Petitioner filed the present petition not to evade any law or judgment or any infraction thereof
or for any unlawful motive but solely for the purpose of making his birth records compatible
with his present sex.
The sole issue here is whether or not petitioner is entitled to the relief asked for.
The [c]ourt rules in the affirmative.
Firstly, the [c]ourt is of the opinion that granting the petition would be more in consonance
with the principles of justice and equity. With his sexual [re-assignment], petitioner, who has
always felt, thought and acted like a woman, now possesses the physique of a female.
Petitioners misfortune to be trapped in a mans body is not his own doing and should not be
in any way taken against him.
Likewise, the [c]ourt believes that no harm, injury [or] prejudice will be caused to anybody or
the community in granting the petition. On the contrary, granting the petition would bring the
much-awaited happiness on the part of the petitioner and her [fianc] and the realization of
their dreams.
Finally, no evidence was presented to show any cause or ground to deny the present petition
despite due notice and publication thereof. Even the State, through the [OSG] has not seen
fit to interpose any [o]pposition.
WHEREFORE, judgment is hereby rendered GRANTING the petition and ordering the Civil
Registrar of Manila to change the entries appearing in the Certificate of Birth of [p]etitioner,
specifically for petitioners first name from "Rommel Jacinto" to MELY and petitioners gender
from "Male" to FEMALE.
5

On August 18, 2003, the Republic of the Philippines (Republic), thru the OSG, filed a petition for
certiorari in the Court of Appeals.
6
It alleged that there is no law allowing the change of entries in the
birth certificate by reason of sex alteration.
On February 23, 2006, the Court of Appeals
7
rendered a decision
8
in favor of the Republic. It ruled
that the trial courts decision lacked legal basis. There is no law allowing the change of either name
or sex in the certificate of birth on the ground of sex reassignment through surgery. Thus, the Court
of Appeals granted the Republics petition, set aside the decision of the trial court and ordered the
dismissal of SP Case No. 02-105207. Petitioner moved for reconsideration but it was
denied.
9
Hence, this petition.
Petitioner essentially claims that the change of his name and sex in his birth certificate is allowed
under Articles 407 to 413 of the Civil Code, Rules 103 and 108 of the Rules of Court and RA 9048.
10

The petition lacks merit.
A Persons First Name Cannot Be Changed On the Ground of Sex Reassignment
Petitioner invoked his sex reassignment as the ground for his petition for change of name and sex.
As found by the trial court:
Petitioner filed the present petition not to evade any law or judgment or any infraction thereof
or for any unlawful motive but solely for the purpose of making his birth records
compatible with his present sex. (emphasis supplied)
Petitioner believes that after having acquired the physical features of a female, he became entitled to
the civil registry changes sought. We disagree.
The State has an interest in the names borne by individuals and entities for purposes of
identification.
11
A change of name is a privilege, not a right.
12
Petitions for change of name are
controlled by statutes.
13
In this connection, Article 376 of the Civil Code provides:
ART. 376. No person can change his name or surname without judicial authority.
This Civil Code provision was amended by RA 9048 (Clerical Error Law). In particular, Section 1 of
RA 9048 provides:
SECTION 1. Authority to Correct Clerical or Typographical Error and Change of First Name
or Nickname. No entry in a civil register shall be changed or corrected without a judicial
order, except for clerical or typographical errors and change of first name or nickname which
can be corrected or changed by the concerned city or municipal civil registrar or consul
general in accordance with the provisions of this Act and its implementing rules and
regulations.
RA 9048 now governs the change of first name.
14
It vests the power and authority to entertain
petitions for change of first name to the city or municipal civil registrar or consul general concerned.
Under the law, therefore, jurisdiction over applications for change of first name is now primarily
lodged with the aforementioned administrative officers. The intent and effect of the law is to exclude
the change of first name from the coverage of Rules 103 (Change of Name) and 108 (Cancellation
or Correction of Entries in the Civil Registry) of the Rules of Court, until and unless an administrative
petition for change of name is first filed and subsequently denied.
15
It likewise lays down the
corresponding venue,
16
form
17
and procedure. In sum, the remedy and the proceedings regulating
change of first name are primarily administrative in nature, not judicial.
RA 9048 likewise provides the grounds for which change of first name may be allowed:
SECTION 4. Grounds for Change of First Name or Nickname. The petition for change of
first name or nickname may be allowed in any of the following cases:
(1) The petitioner finds the first name or nickname to be ridiculous, tainted with dishonor or
extremely difficult to write or pronounce;
(2) The new first name or nickname has been habitually and continuously used by the
petitioner and he has been publicly known by that first name or nickname in the community;
or
(3) The change will avoid confusion.
Petitioners basis in praying for the change of his first name was his sex reassignment. He intended
to make his first name compatible with the sex he thought he transformed himself into through
surgery. However, a change of name does not alter ones legal capacity or civil status.
18
RA 9048
does not sanction a change of first name on the ground of sex reassignment. Rather than avoiding
confusion, changing petitioners first name for his declared purpose may only create grave
complications in the civil registry and the public interest.
Before a person can legally change his given name, he must present proper or reasonable cause or
any compelling reason justifying such change.
19
In addition, he must show that he will be prejudiced
by the use of his true and official name.
20
In this case, he failed to show, or even allege, any
prejudice that he might suffer as a result of using his true and official name.
In sum, the petition in the trial court in so far as it prayed for the change of petitioners first name was
not within that courts primary jurisdiction as the petition should have been filed with the local civil
registrar concerned, assuming it could be legally done. It was an improper remedy because the
proper remedy was administrative, that is, that provided under RA 9048. It was also filed in the
wrong venue as the proper venue was in the Office of the Civil Registrar of Manila where his birth
certificate is kept. More importantly, it had no merit since the use of his true and official name does
not prejudice him at all. For all these reasons, the Court of Appeals correctly dismissed petitioners
petition in so far as the change of his first name was concerned.
No Law Allows The Change of Entry In The Birth Certificate As To Sex On the Ground of Sex
Reassignment
The determination of a persons sex appearing in his birth certificate is a legal issue and the court
must look to the statutes.
21
In this connection, Article 412 of the Civil Code provides:
ART. 412. No entry in the civil register shall be changed or corrected without a judicial order.
Together with Article 376 of the Civil Code, this provision was amended by RA 9048 in so far
as clerical or typographical errors are involved. The correction or change of such matters can now
be made through administrative proceedings and without the need for a judicial order. In effect, RA
9048 removed from the ambit of Rule 108 of the Rules of Court the correction of such errors.
22
Rule
108 now applies only to substantial changes and corrections in entries in the civil register.
23

Section 2(c) of RA 9048 defines what a "clerical or typographical error" is:
SECTION 2. Definition of Terms. As used in this Act, the following terms shall mean:
xxx xxx xxx
(3) "Clerical or typographical error" refers to a mistake committed in the performance
of clerical work in writing, copying, transcribing or typing an entry in the civil register
that is harmless and innocuous, such as misspelled name or misspelled place of
birth or the like, which is visible to the eyes or obvious to the understanding, and can
be corrected or changed only by reference to other existing record or
records: Provided, however, That no correction must involve the change
of nationality, age, status or sex of the petitioner. (emphasis supplied)
Under RA 9048, a correction in the civil registry involving the change of sex is not a mere clerical or
typographical error. It is a substantial change for which the applicable procedure is Rule 108 of the
Rules of Court.
The entries envisaged in Article 412 of the Civil Code and correctable under Rule 108 of the Rules of
Court are those provided in Articles 407 and 408 of the Civil Code:
24

ART. 407. Acts, events and judicial decrees concerning the civil status of persons shall be
recorded in the civil register.
ART. 408. The following shall be entered in the civil register:
(1) Births; (2) marriages; (3) deaths; (4) legal separations; (5) annulments of marriage; (6)
judgments declaring marriages void from the beginning; (7) legitimations; (8) adoptions; (9)
acknowledgments of natural children; (10) naturalization; (11) loss, or (12) recovery of
citizenship; (13) civil interdiction; (14) judicial determination of filiation; (15) voluntary
emancipation of a minor; and (16) changes of name.
The acts, events or factual errors contemplated under Article 407 of the Civil Code include even
those that occur after birth.
25
However, no reasonable interpretation of the provision can justify the
conclusion that it covers the correction on the ground of sex reassignment.
To correct simply means "to make or set aright; to remove the faults or error from" while to change
means "to replace something with something else of the same kind or with something that serves as
a substitute."
26
The birth certificate of petitioner contained no error. All entries therein, including those
corresponding to his first name and sex, were all correct. No correction is necessary.
Article 407 of the Civil Code authorizes the entry in the civil registry of certain acts (such as
legitimations, acknowledgments of illegitimate children and naturalization), events (such as births,
marriages, naturalization and deaths) and judicial decrees (such as legal separations, annulments of
marriage, declarations of nullity of marriages, adoptions, naturalization, loss or recovery of
citizenship, civil interdiction, judicial determination of filiation and changes of name). These acts,
events and judicial decrees produce legal consequences that touch upon the legal capacity, status
and nationality of a person. Their effects are expressly sanctioned by the laws. In contrast, sex
reassignment is not among those acts or events mentioned in Article 407. Neither is it recognized
nor even mentioned by any law, expressly or impliedly.
"Status" refers to the circumstances affecting the legal situation (that is, the sum total of capacities
and incapacities) of a person in view of his age, nationality and his family membership.
27

The status of a person in law includes all his personal qualities and relations, more or less
permanent in nature, not ordinarily terminable at his own will, such as his being
legitimate or illegitimate, or his being married or not. The comprehensive term status
include such matters as the beginning and end of legal personality, capacity to have rights in
general, family relations, and its various aspects, such as birth, legitimation, adoption,
emancipation, marriage, divorce, and sometimes even succession.
28
(emphasis supplied)
A persons sex is an essential factor in marriage and family relations. It is a part of a persons legal
capacity and civil status. In this connection, Article 413 of the Civil Code provides:
ART. 413. All other matters pertaining to the registration of civil status shall be governed by
special laws.
But there is no such special law in the Philippines governing sex reassignment and its effects. This is
fatal to petitioners cause.
Moreover, Section 5 of Act 3753 (the Civil Register Law) provides:
SEC. 5. Registration and certification of births. The declaration of the physician or midwife
in attendance at the birth or, in default thereof, the declaration of either parent of the
newborn child, shall be sufficient for the registration of a birth in the civil register. Such
declaration shall be exempt from documentary stamp tax and shall be sent to the local civil
registrar not later than thirty days after the birth, by the physician or midwife in attendance at
the birth or by either parent of the newborn child.
In such declaration, the person above mentioned shall certify to the following facts: (a) date
and hour of birth; (b) sex and nationality of infant; (c) names, citizenship and religion of
parents or, in case the father is not known, of the mother alone; (d) civil status of parents; (e)
place where the infant was born; and (f) such other data as may be required in the
regulations to be issued.
xxx xxx xxx (emphasis supplied)
Under the Civil Register Law, a birth certificate is a historical record of the facts as they existed at
the time of birth.
29
Thus, the sex of a person is determined at birth, visually done by the birth
attendant (the physician or midwife) by examining the genitals of the infant. Considering that there is
no law legally recognizing sex reassignment, the determination of a persons sex made at the time of
his or her birth, if not attended by error,
30
is immutable.
31

When words are not defined in a statute they are to be given their common and ordinary meaning in
the absence of a contrary legislative intent. The words "sex," "male" and "female" as used in the Civil
Register Law and laws concerning the civil registry (and even all other laws) should therefore be
understood in their common and ordinary usage, there being no legislative intent to the contrary. In
this connection, sex is defined as "the sum of peculiarities of structure and function that distinguish a
male from a female"
32
or "the distinction between male and female."
33
Female is "the sex that
produces ova or bears young"
34
and male is "the sex that has organs to produce spermatozoa for
fertilizing ova."
35
Thus, the words "male" and "female" in everyday understanding do not include
persons who have undergone sex reassignment. Furthermore, "words that are employed in a statute
which had at the time a well-known meaning are presumed to have been used in that sense unless
the context compels to the contrary."
36
Since the statutory language of the Civil Register Law was
enacted in the early 1900s and remains unchanged, it cannot be argued that the term "sex" as used
then is something alterable through surgery or something that allows a post-operative male-to-
female transsexual to be included in the category "female."
For these reasons, while petitioner may have succeeded in altering his body and appearance
through the intervention of modern surgery, no law authorizes the change of entry as to sex in the
civil registry for that reason. Thus, there is no legal basis for his petition for the correction or change
of the entries in his birth certificate.
Neither May Entries in the Birth Certificate As to First Name or Sex Be Changed on the
Ground of Equity
The trial court opined that its grant of the petition was in consonance with the principles of justice
and equity. It believed that allowing the petition would cause no harm, injury or prejudice to anyone.
This is wrong.
The changes sought by petitioner will have serious and wide-ranging legal and public policy
consequences. First, even the trial court itself found that the petition was but petitioners first step
towards his eventual marriage to his male fianc. However, marriage, one of the most sacred social
institutions, is a special contract of permanent union between a man and a woman.
37
One of its
essential requisites is the legal capacity of the contracting parties who must be a male and a
female.
38
To grant the changes sought by petitioner will substantially reconfigure and greatly alter the
laws on marriage and family relations. It will allow the union of a man with another man who has
undergone sex reassignment (a male-to-female post-operative transsexual). Second, there are
various laws which apply particularly to women such as the provisions of the Labor Code on
employment of women,
39
certain felonies under the Revised Penal Code
40
and the presumption of
survivorship in case of calamities under Rule 131 of the Rules of Court,
41
among others. These laws
underscore the public policy in relation to women which could be substantially affected if petitioners
petition were to be granted.
It is true that Article 9 of the Civil Code mandates that "[n]o judge or court shall decline to render
judgment by reason of the silence, obscurity or insufficiency of the law." However, it is not a license
for courts to engage in judicial legislation. The duty of the courts is to apply or interpret the law, not
to make or amend it.
In our system of government, it is for the legislature, should it choose to do so, to determine what
guidelines should govern the recognition of the effects of sex reassignment. The need for legislative
guidelines becomes particularly important in this case where the claims asserted are statute-based.
To reiterate, the statutes define who may file petitions for change of first name and for correction or
change of entries in the civil registry, where they may be filed, what grounds may be invoked, what
proof must be presented and what procedures shall be observed. If the legislature intends to confer
on a person who has undergone sex reassignment the privilege to change his name and sex to
conform with his reassigned sex, it has to enact legislation laying down the guidelines in turn
governing the conferment of that privilege.
It might be theoretically possible for this Court to write a protocol on when a person may be
recognized as having successfully changed his sex. However, this Court has no authority to fashion
a law on that matter, or on anything else. The Court cannot enact a law where no law exists. It can
only apply or interpret the written word of its co-equal branch of government, Congress.
Petitioner pleads that "[t]he unfortunates are also entitled to a life of happiness, contentment and
[the] realization of their dreams." No argument about that. The Court recognizes that there are
people whose preferences and orientation do not fit neatly into the commonly recognized
parameters of social convention and that, at least for them, life is indeed an ordeal. However, the
remedies petitioner seeks involve questions of public policy to be addressed solely by the
legislature, not by the courts.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
Puno, C.J., Chairperson, Sandoval-Gutierrez, Azcuna, Garcia, JJ., concur.


G.R. No. 186027 December 8, 2010
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
MERLYN MERCADERA through her Attorney-in-Fact, EVELYN M. OGA, Respondent.
D E C I S I O N
MENDOZA, J .:
This petition for review on certiorari assails the December 9, 2008 Decision
1
of the Court of
Appeals (CA), in CA G.R. CV No. 00568-MIN, which affirmed the September 28, 2005 Order of the
Regional Trial Court of Dipolog City, Branch 8 (RTC), in a petition for correction of entries, docketed
as Special Proceedings No. R-3427 (SP No. R-3427), filed by respondent Merlyn
Mercadera (Mercadera) under Rule 108 of the Rules of Court.
The Factual and Procedural Antecedents
On June 6, 2005, Merlyn Mercadera (Mercadera), represented by her sister and duly constituted
Attorney-in-Fact, Evelyn M. Oga (Oga), sought the correction of her given name as it appeared in
her Certificate of Live Birth - from Marilyn L. Mercadera to Merlyn L. Mercadera before the Office of
the Local Civil Registrar of Dipolog City pursuant to Republic Act No. 9048 (R.A. No. 9048).
2

Under R.A. No. 9048, the city or municipal civil registrar or consul general, as the case may be, is
now authorized to effect the change of first name or nickname and the correction of clerical or
typographical errors in civil registry entries. "Under said law, jurisdiction over applications for change
of first name is now primarily lodged with administrative officers. The law now excludes the change
of first name from the coverage of Rules 103 until and unless an administrative petition for change of
name is first filed and subsequently denied"
3
and removes "correction or changing of clerical errors
in entries of the civil register from the ambit of Rule 108." Hence, what is left for the scope of
operation of the rules are substantial changes and corrections in entries of the civil register.
4

The Office of the Local Civil Registrar of Dipolog City, however, refused to effect the correction
unless a court order was obtained "because the Civil Registrar therein is not yet equipped with a
permanent appointment before he can validly act on petitions for corrections filed before their office
as mandated by Republic Act 9048."
5

Mercadera was then constrained to file a Petition For Correction of Some Entries as Appearing in
the Certificate of Live Birth under Rule 108 before the Regional Trial Court of Dipolog
City (RTC). The petition was docketed as Special Proceedings No. R-3427 (SP No. R-
3427). Section 2 of Rule 108 reads:
SEC. 2. Entries subject to cancellation or correction. Upon good and valid grounds, the
following entries in the civil register may be cancelled or corrected: (a) births; (b) marriages; (c)
deaths; (d) legal separations; (e) judgments of annulments of marriage; (f) judgments declaring
marriages void from the beginning; (g) legitimations; (h) adoptions; (i) acknowledgments of natural
children; (j) naturalization; (k) election, loss or recovery of citizenship; (l) civil interdiction; (m) judicial
determination of filiation; (n) voluntary emancipation of a minor; and (o) changes of
name. [Underscoring supplied]
Upon receipt of the petition for correction of entry, the RTC issued an order, dated June 10, 2005,
which reads:
Finding the petition sufficient in form and substance, notice is hereby given that the hearing of said
petition is set on JULY 26, 2005 at 8:30 oclock in the morning, at the Session Hall of Branch 8, this
Court, Bulwagan ng Katarungan, Dipolog City, on which date, time and place, anyone appearing to
contest the petition shall state in writing his grounds there[for], serving a copy thereof to the
petitioner and likewise file copies with this Court on or before the said date of hearing.
Let this order be published at the expense of petitioner once a week for three (3) consecutive weeks
in a newspaper edited and published in Dipolog City and of general circulation therein, the City of
Dapitan and the province of Zamboanga del Norte, and copies hereof be furnished to the Office of
the Solicitor General of (sic) 134 Amorsolo St., Legaspi Village, Makati, Metro Manila, the City Civil
Registrar of Dipolog, and posted on the bulletin boards of the City Hall of Dipolog, the Provincial
Capitol Building, and of this Court.
IT IS SO ORDERED.
The Office of the Solicitor General (OSG) entered its appearance for the Republic of the Philippines
and deputized the Office of the City Prosecutor to assist in the case only on the very day of the
hearing. This prompted the court to reset the hearing on September 5, 2005. On said day, there
being no opposition, counsel for Mercadera moved for leave of court to present evidence ex parte.
Without any objection from the City Prosecutor, the trial court designated the branch clerk of court to
receive evidence for Mercadera.
On September 15, 2005, the testimony of Oga and several photocopies of documents were formally
offered and marked as evidence to prove that Mercadera never used the name "Marilyn" in any of
her public or private transactions. On September 26, 2005, the RTC issued an order
6
admitting
Exhibits "A" to "I"
7
and their submarkings, as relevant to the resolution of the case.
The following facts were gathered from documentary evidence and the oral testimony of Oga, as
reported by the lower court:
Petitioner Merlyn M. Mercadera was born on August 19, 1970 at Dipolog City. She is the daughter of
spouses Tirso U. Mercadera and Norma C. Lacquiao. The fact of her birth was reported to the Office
of the City Civil Registrar of Dipolog City on September 8, 1970. It was recorded on page 68, book
no. 9, in the Registry of Births of said civil registry. In the certification of birth dated May 9, 2005
issued by the same registry, her given name appears as Marilyn and not Merlyn (Exhibit "C").
On September 29, 1979, petitioner was baptized according to the rites and ceremonies of the United
Church of Christ in the Philippines. As reflected in her certificate of baptism issued by said church,
she was baptized by the name Merlyn L. Mercadera (Exhibit "D").
In her elementary diploma issued by the Paaralang Sentral ng Estaka, Dipolog City; her high school
diploma issued by the Zamboanga del Norte School of Arts and Trades, Dipolog City; and college
diploma issued by the Silliman University, Dumaguete City, where she earned the degree of
Bachelor of Secondary Education, uniformly show her name as Merlyn L. Mercadera (Exhibits "E",
"F", and "G").
Presently, she is working in U.P. Mindanao, Buhangin, Davao City. Her certificate of membership
issued by the Government Service Insurance System also bears his [sic] complete name as Merlyn
Lacquiao Mercadera (Exhibit "H").
When she secured an authenticated copy of her certificate of live birth from the National Statistics
Office, she discovered that her given name as registered is Marilyn and not Merlyn; hence, this
petition.
In its September 28, 2005 Decision,
8
the RTC granted Mercaderas petition and directed the Office of
the City Civil Registrar of Dipolog City to correct her name appearing in her certificate of live birth,
Marilyn Lacquiao Mercadera, to MERLYN Lacquiao Mercadera. Specifically, the dispositive portion
of the RTC Decision reads:
WHEREFORE, the petition is GRANTED. Accordingly, the Office of the City Civil Registrar of
Dipolog City is hereby directed to correct the given name of petitioner appearing in her certificate of
live birth, from Marilyn Lacquiao Mercadera to MERLYN Lacquiao Mercadera.
In a four-page decision, the RTC ruled that the documentary evidence presented by Mercadera
sufficiently supported the circumstances alleged in her petition. Considering that she had used
"Merlyn" as her given name since childhood until she discovered the discrepancy in her Certificate of
Live Birth, the RTC was convinced that the correction was justified.
The OSG timely interposed an appeal praying for the reversal and setting aside of the RTC decision.
It mainly anchored its appeal on the availment of Mercadera of the remedy and procedure under
Rule 108. In its Brief
9
filed with the CA, the OSG argued that the lower court erred (1) in granting the
prayer for change of name in a petition for correction of entries; and (2) in admitting the photocopies
of documentary evidence and hearsay testimony of Oga.
For the OSG, the correction in the spelling of Mercaderas given name might seem innocuous
enough to grant but "it is in truth a material correction as it would modify or increase substantive
rights."
10
What the lower court actually allowed was a change of Mercaderas given name, which
would have been proper had she filed a petition under Rule 103 and proved any of the grounds
therefor. The lower court, "may not substitute one for the other for purposes of
expediency."
11
Further, because Mercadera failed to invoke a specific ground recognized by the
Rules, the lower courts order in effect allowed the change of ones name in the civil registry without
basis.
The CA was not persuaded. In its December 9, 2008 Decision,
12
the appellate court affirmed the
questioned RTC Order in CA-G.R. CV No. 00568-MIN. The CA assessed the controversy in this
wise:
Appellants insistence that the petition should have been filed under Rule 103 and not Rule 108 of
the Rules of Court is off the mark. This Court does not entertain any doubt that the petition before
the trial court was one for the correction on an entry in petitioners Certificate of Live Birth and not
one in which she sought to change her name. In Co v. Civil Register of Manila, G.R. No. 138496,
February 23, 2004, the High Court reiterated the distinction between the phrases "to correct" and "to
change." Said the High Court:
To correct simply means "to make or set aright; to remove the faults or error from." To change
means "to replace something with something else of the same kind or with something that serves as
a substitute. Article 412 of the New Civil Code does not qualify as to the kind of entry to be changed
or corrected or distinguished on the basis of the effect that the correction or change may be. Such
entries include not only those clerical in nature but also substantial errors. After all, the role of the
Court under Rule 108 of the Rules of Court is to ascertain the truths about the facts recorded
therein.
That appellee sought to correct an entry and not to change her name is patent to the Court from the
allegations in her petition, specifically, paragraphs 7 and 8 thereof
x x x x
Anent the RTCs error in admitting the photocopies of Mercaderas documentary evidence and in
vesting probative value to Ogas testimony, the CA cited the well-established rule that "evidence not
objected to may be admitted and may be validly considered by the court in arriving at its judgment."
13

On March 6, 2009, the OSG filed the present petition. On behalf of Mercadera, the Public Attorneys
Office (PAO) filed its Comment
14
on July 3, 2009. The OSG declined to file a reply claiming that its
petition already contained an exhaustive discussion on the following assigned errors:
15

I
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN GRANTING THE
CHANGE IN RESPONDENTS NAME UNDER RULE 103.
II
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN CONSIDERING
SECONDARY EVIDENCE.
Rule 103 procedurally governs judicial petitions for change of given name or surname, or both,
pursuant to Article 376 of the Civil Code.
16
This rule provides the procedure for an independent
special proceeding in court to establish the status of a person involving his relations with others, that
is, his legal position in, or with regard to, the rest of the community.
17
In petitions for change of name,
a person avails of a remedy to alter the "designation by which he is known and called in the
community in which he lives and is best known."
18
When granted, a persons identity and interactions
are affected as he bears a new "label or appellation for the convenience of the world at large in
addressing him, or in speaking of, or dealing with him."
19
Judicial permission for a change of name
aims to prevent fraud and to ensure a record of the change by virtue of a court decree.
The proceeding under Rule 103 is also an action in rem which requires publication of the order
issued by the court to afford the State and all other interested parties to oppose the petition. When
complied with, the decision binds not only the parties impleaded but the whole world. As notice to all,
publication serves to indefinitely bar all who might make an objection. "It is the publication of such
notice that brings in the whole world as a party in the case and vests the court with jurisdiction to
hear and decide it."
20

Essentially, a change of name does not define or effect a change of ones existing family relations or
in the rights and duties flowing therefrom. It does not alter ones legal capacity or civil
status.
21
However, "there could be instances where the change applied for may be open to objection
by parties who already bear the surname desired by the applicant, not because he would thereby
acquire certain family ties with them but because the existence of such ties might be erroneously
impressed on the public mind."
22
Hence, in requests for a change of name, "what is involved is not a
mere matter of allowance or disallowance of the request, but a judicious evaluation of the sufficiency
and propriety of the justifications advanced x x x mindful of the consequent results in the event of its
grant x x x."
23

Rule 108, on the other hand, implements judicial proceedings for the correction or cancellation of
entries in the civil registry pursuant to Article 412 of the Civil Code.
24
Entries in the civil register refer
to "acts, events and judicial decrees concerning the civil status of persons,"
25
also as enumerated in
Article 408 of the same law.
26
Before, only mistakes or errors of a harmless and innocuous nature in
the entries in the civil registry may be corrected under Rule 108 and substantial errors affecting the
civil status, citizenship or nationality of a party are beyond the ambit of the rule. In the abandoned
case of Chua Wee v. Republic,
27
this Court declared that,
x x x if Rule 108 were to be extended beyond innocuous or harmless changes or corrections of
errors which are visible to the eye or obvious to the understanding, so as to comprehend substantial
and controversial alterations concerning citizenship, legitimacy of paternity or filiation, or legitimacy
of marriage, said Rule 108 would thereby become unconstitutional for it would be increasing or
modifying substantive rights, which changes are not authorized under Article 412 of the new Civil
Code."
In the latter case of Wong v. Republic,
28
however, Justice Vicente Abad Santos, in a separate
concurrence, opined that Article 412, which Rule 108 implements, contemplates all kinds of issues
and all types of procedures because "the provision does not say that it applies only to non-
controversial issues and that the procedure to be used is summary in nature." In Republic v. Judge
De la Cruz,
29
the dissenting opinion penned by Justice Pacifico De Castro echoed the same view:
It is not accurate to say that Rule 108 would be rendered unconstitutional if it would allow the
correction of more than mere harmless clerical error, as it would thereby increase or modify
substantive rights which the Constitution expressly forbids because Article 412 of the Civil Code, the
substantive law sought to be implemented by Rule 108, allows only the correction of innocuous
clerical errors not those affecting the status of persons. As was stressed in the dissent on the
aforesaid Wong Case, Article 412 does not limit in its express terms nor by mere implication, the
correction authorized by it to that of mere clerical errors. x x x it would be reasonable and justified to
rule that Article 412 contemplates of correction of erroneous entry of whatever nature, procedural
safeguards having only to be provided for, as was the manifest purpose of Rule 108.
x x x proceedings for the correction of erroneous entry should not be considered as establishing
one's status in a legal manner conclusively beyond dispute or controversion, x x x the books making
up the civil register and all documents relating thereto x x x shall be prima facie evidence of the facts
therein contained. Hence, the status as corrected would not have a superior quality for evidentiary
purpose. Moreover, the correction should not imply a change of status but a mere rectification of
error to make the matter corrected speak for the truth. x x x
Finally in Republic v. Valencia,
30
the above stated views were adopted by this Court insofar as even
substantial errors or matters in a civil registry may be corrected and the true facts established,
provided the parties aggrieved avail themselves of the appropriate adversary proceeding. "If the
purpose of the petition is merely to correct the clerical errors which are visible to the eye or obvious
to the understanding, the court may, under a summary procedure, issue an order for the correction
of a mistake. However, as repeatedly construed, changes which may affect the civil status from
legitimate to illegitimate, as well as sex, are substantial and controversial alterations which can only
be allowed after appropriate adversary proceedings depending upon the nature of the issues
involved. Changes which affect the civil status or citizenship of a party are substantial in character
and should be threshed out in a proper action depending upon the nature of the issues in
controversy, and wherein all the parties who may be affected by the entries are notified or
represented and evidence is submitted to prove the allegations of the complaint, and proof to the
contrary admitted x x x."
31
"Where such a change is ordered, the Court will not be establishing a
substantive right but only correcting or rectifying an erroneous entry in the civil registry as authorized
by law. In short, Rule 108 of the Rules of Court provides only the procedure or mechanism for the
proper enforcement of the substantive law embodied in Article 412 of the Civil Code and so does not
violate the Constitution."
32

In the case at bench, the OSG posits that the conversion from "MARILYN" to "MERLYN" is not a
correction of an innocuous error but a material correction tantamount to a change of name which
entails a modification or increase in substantive rights. For the OSG, this is a substantial error that
requires compliance with the procedure under Rule 103, and not Rule 108.
It appears from these arguments that there is, to some extent, confusion over the scope and
application of Rules 103 and Rule 108. Where a "change of name" will necessarily be reflected by
the corresponding correction in an entry, as in this case, the functions of both rules are often
muddled. While there is no clear-cut rule to categorize petitions under either rule, this Court is of the
opinion that a resort to the basic distinctions between the two rules with respect to alterations in a
persons registered name can effectively clear the seeming perplexity of the issue. Further, a careful
evaluation of circumstances alleged in the petition itself will serve as a constructive guide to
determine the propriety of the relief prayed for.
The "change of name" contemplated under Article 376 and Rule 103 must not be confused with
Article 412 and Rule 108. A change of ones name under Rule 103 can be granted, only on grounds
provided by law. In order to justify a request for change of name, there must be a proper and
compelling reason for the change and proof that the person requesting will be prejudiced by the use
of his official name. To assess the sufficiency of the grounds invoked therefor, there must be
adversarial proceedings.
33

In petitions for correction, only clerical, spelling, typographical and other innocuous errors in the civil
registry may be raised. Considering that the enumeration in Section 2, Rule 108
34
also includes
"changes of name," the correction of a patently misspelled name is covered by Rule 108. Suffice it to
say, not all alterations allowed in ones name are confined under Rule 103. Corrections for clerical
errors may be set right under Rule 108.
This rule in "names," however, does not operate to entirely limit Rule 108 to the correction of clerical
errors in civil registry entries by way of a summary proceeding. As explained above, Republic v.
Valencia is the authority for allowing substantial errors in other entries like citizenship, civil status,
and paternity, to be corrected using Rule 108 provided there is an adversary proceeding. "After all,
the role of the Court under Rule 108 is to ascertain the truths about the facts recorded therein."
35

A serious scrutiny of this petition reveals a glaring lack of support to the OSGs assumption that
Mercadera intended to change her name under Rule 103. All that the petition propounded are swift
arguments on the alleged procedural flaws of Mercaderas petition before the RTC. In the same vein,
no concrete contention was brought up to convince this Court that the dangers sought to be
prevented by the adversarial proceedings prescribed in Rule 103 are attendant in this case. Instead,
the RTC found the documents presented by Mercadera to have satisfactorily shown that she had
been known as MERLYN ever since, discounting the possibility that confusion, or a modification of
substantive rights might arise. Truth be told, not a single oppositor appeared to contest the petition
despite full compliance with the publication requirement.
Thus, the petition filed by Mercadera before the RTC correctly falls under Rule 108 as it simply
sought a correction of a misspelled given name. To correct simply means "to make or set aright; to
remove the faults or error from." To change means "to replace something with something else of the
same kind or with something that serves as a substitute."
36
From the allegations in her petition,
Mercadera clearly prayed for the lower court "to remove the faults or error" from her registered given
name "MARILYN," and "to make or set aright" the same to conform to the one she grew up to,
"MERLYN." It does not take a complex assessment of said petition to learn of its intention to simply
correct the clerical error in spelling. Mercadera even attempted to avail of the remedy allowed by
R.A. No. 9048 but she unfortunately failed to enjoy the expediency which the law provides and was
constrained to take court action to obtain relief. Thus, the petition was clear in stating:
7. That as such, there is a need to correct her given name as appearing in her Certificate of
Live Birth from MARILYN to MERLYN to conform to her true and correct given name that she
had been using and had been known within the community x x x.
8. That herein petitioner went to the Office of the Local Civil Registrar of Dipolog City and
requested them to effect such correction in her Certificate of Live Birth, however, the Local
Civil Registrar of Dipolog City will not effect such correction unless an order is obtained by
herein petitioner from this Honorable Court because the Local Civil Registrar therein is not
yet equipped with permanent appointment before he can validly act on petitions for
corrections filed before their office as mandated by Republic Act 9048, hence the filing of this
petition. [Emphases supplied]
Indeed, there are decided cases involving mistakes similar to Mercaderas case which recognize the
same a harmless error. In Yu v. Republic
37
it was held that "to change Sincio to Sencio which
merely involves the substitution of the first vowel i in the first name into the vowel e amounts
merely to the righting of a clerical error." In Labayo-Rowe v. Republic,
38
it was held that the change of
petitioners name from "Beatriz Labayo/Beatriz Labayu" to "Emperatriz Labayo" was a mere
innocuous alteration wherein a summary proceeding was appropriate. In Republic v. Court of
Appeals, Jaime B. Caranto and Zenaida P. Caranto, the correction involved the substitution of the
letters "ch" for the letter "d," so that what appears as "Midael" as given name would read "Michael."
In the latter case, this Court, with the agreement of the Solicitor General, ruled that the error was
plainly clerical, such that, "changing the name of the child from Midael C. Mazon to Michael C.
Mazon cannot possibly cause any confusion, because both names can be read and pronounced
with the same rhyme (tugma) and tone (tono, tunog, himig)."
39

In this case, the use of the letter "a" for the letter "e," and the deletion of the letter "i," so that what
appears as "Marilyn" would read as "Merlyn" is patently a rectification of a name that is clearly
misspelled. The similarity between "Marilyn" and "Merlyn" may well be the object of a mix- up that
blemished Mercaderas Certificate of Live Birth until her adulthood, thus, her interest to correct the
same.
The CA did not allow Mercadera the change of her name. What it did allow was the correction of her
misspelled given name which she had been using ever since she could remember.
It is worthy to note that the OSGs reliance on Republic vs. Hernandez
40
is flawed. In that case, this
Court said that "a change in a given name is a substantial matter" and that it "cannot be granted by
means of any other proceeding that would in effect render it a mere incident or an offshoot of
another special proceeding." While this Court stands true to the ruling in Hernandez, the said
pronouncement therein was stated in a different tenor and, thus, inapplicable to this case.
Hernandez was decided against an entirely different factual milieu. There was a petition for adoption
that must not have led to a corresponding change in the adoptees given name because "it would be
procedurally erroneous to employ a petition for adoption to effect a change of name in the absence
of a corresponding petition for the latter relief at law." In the present case, the issue is the
applicability of either Rule 103 or Rule 108 and the relief sought by Mercadera can in fact be granted
under the latter. This Court finds no attempt on the part of Mercadera to render the requirements
under Rule 103 illusory as in Hernandez.
Besides, granting that Rule 103 applies to this case and that compliance with the procedural
requirements under Rule 108 falls short of what is mandated, it still cannot be denied that Mercadera
complied with the requirement for an adversarial proceeding before the lower court. The publication
and posting of the notice of hearing in a newspaper of general circulation and the notices sent to the
OSG and the Local Civil Registry are sufficient indicia of an adverse proceeding. The fact that no
one opposed the petition, including the OSG, did not deprive the court of its jurisdiction to hear the
same and did not make the proceeding less adversarial in nature. Considering that the OSG did not
oppose the petition and the motion to present its evidence ex parte when it had the opportunity to do
so, it cannot now complain that the proceedings in the lower court were procedurally defective.
Indeed, it has become unnecessary to further discuss the reasons why the CA correctly affirmed the
findings of the lower court especially in admitting and according probative value to the evidence
presented by Mercadera.
WHEREFORE, the December 9, 2008 Decision of the Court of Appeals in CA-G.R. CV No. 00568-
MIN is AFFIRMED.
SO ORDERED.
JOSE CATRAL MENDOZA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ANTONIO EDUARDO B. NACHURA
Associate Justice
DIOSDADO M. PERALTA
Associate Justice
ROBERTO A. ABAD
Associate Justice
A T T E S T A T I O N>
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division
C E R T I F I CA T I O N
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.
RENATO C. CORONA
Chief Justice


G.R. No. L-47943 May 31, 1982
MANILA ELECTRIC COMPANY, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
BATANGAS and PROVINCIAL ASSESSOR OF BATANGAS, respondents.

AQUINO, J .:
This case is about the imposition of the realty tax on two oil storage tanks installed in 1969 by Manila
Electric Company on a lot in San Pascual, Batangas which it leased in 1968 from Caltex (Phil.), Inc.
The tanks are within the Caltex refinery compound. They have a total capacity of 566,000 barrels.
They are used for storing fuel oil for Meralco's power plants.
According to Meralco, the storage tanks are made of steel plates welded and assembled on the
spot. Their bottoms rest on a foundation consisting of compacted earth as the outermost layer, a
sand pad as the intermediate layer and a two-inch thick bituminous asphalt stratum as the top layer.
The bottom of each tank is in contact with the asphalt layer,
The steel sides of the tank are directly supported underneath by a circular wall made of concrete,
eighteen inches thick, to prevent the tank from sliding. Hence, according to Meralco, the tank is not
attached to its foundation. It is not anchored or welded to the concrete circular wall. Its bottom plate
is not attached to any part of the foundation by bolts, screws or similar devices. The tank merely sits
on its foundation. Each empty tank can be floated by flooding its dike-inclosed location with water
four feet deep. (pp. 29-30, Rollo.)
On the other hand, according to the hearing commissioners of the Central Board of Assessment
Appeals, the area where the two tanks are located is enclosed with earthen dikes with electric steel
poles on top thereof and is divided into two parts as the site of each tank. The foundation of the
tanks is elevated from the remaining area. On both sides of the earthen dikes are two separate
concrete steps leading to the foundation of each tank.
Tank No. 2 is supported by a concrete foundation with an asphalt lining about an inch thick.
Pipelines were installed on the sides of each tank and are connected to the pipelines of the Manila
Enterprises Industrial Corporation whose buildings and pumping station are near Tank No. 2.
The Board concludes that while the tanks rest or sit on their foundation, the foundation itself and the
walls, dikes and steps, which are integral parts of the tanks, are affixed to the land while the
pipelines are attached to the tanks. (pp. 60-61, Rollo.) In 1970, the municipal treasurer of Bauan,
Batangas, on the basis of an assessment made by the provincial assessor, required Meralco to pay
realty taxes on the two tanks. For the five-year period from 1970 to 1974, the tax and penalties
amounted to P431,703.96 (p. 27, Rollo). The Board required Meralco to pay the tax and penalties as
a condition for entertaining its appeal from the adverse decision of the Batangas board of
assessment appeals.
The Central Board of Assessment Appeals (composed of Acting Secretary of Finance Pedro M.
Almanzor as chairman and Secretary of Justice Vicente Abad Santos and Secretary of Local
Government and Community Development Jose Roo as members) in its decision dated November
5, 1976 ruled that the tanks together with the foundation, walls, dikes, steps, pipelines and other
appurtenances constitute taxable improvements.
Meralco received a copy of that decision on February 28, 1977. On the fifteenth day, it filed a motion
for reconsideration which the Board denied in its resolution of November 25, 1977, a copy of which
was received by Meralco on February 28, 1978.
On March 15, 1978, Meralco filed this special civil action of certiorari to annul the Board's decision
and resolution. It contends that the Board acted without jurisdiction and committed a grave error of
law in holding that its storage tanks are taxable real property.
Meralco contends that the said oil storage tanks do not fall within any of the kinds of real property
enumerated in article 415 of the Civil Code and, therefore, they cannot be categorized as realty by
nature, by incorporation, by destination nor by analogy. Stress is laid on the fact that the tanks are
not attached to the land and that they were placed on leased land, not on the land owned by
Meralco.
This is one of those highly controversial, borderline or penumbral cases on the classification of
property where strong divergent opinions are inevitable. The issue raised by Meralco has to be
resolved in the light of the provisions of the Assessment Law, Commonwealth Act No. 470, and the
Real Property Tax Code, Presidential Decree No. 464 which took effect on June 1, 1974.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land,
buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. This
provision is reproduced with some modification in the Real Property Tax Code which provides:
Sec. 38. Incidence of Real Property Tax. They shall be levied, assessed and
collected in all provinces, cities and municipalities an annual ad valorem tax on real
property, such as land, buildings, machinery and other improvements affixed or
attached to real property not hereinafter specifically exempted.
The Code contains the following definition in its section 3:
k) Improvements is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of waste, costing
labor or capital and intended to enhance its value, beauty or utility or to adapt it for
new or further purposes.
We hold that while the two storage tanks are not embedded in the land, they may, nevertheless, be
considered as improvements on the land, enhancing its utility and rendering it useful to the oil
industry. It is undeniable that the two tanks have been installed with some degree of permanence as
receptacles for the considerable quantities of oil needed by Meralco for its operations.
Oil storage tanks were held to be taxable realty in Standard Oil Co. of New Jersey vs. Atlantic City,
15 Atl. 2nd 271.
For purposes of taxation, the term "real property" may include things which should generally be
regarded as personal property(84 C.J.S. 171, Note 8). It is a familiar phenomenon to see things
classed as real property for purposes of taxation which on general principle might be considered
personal property (Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
The case of Board of Assessment Appeals vs. Manila Electric Company, 119 Phil. 328, wherein
Meralco's steel towers were held not to be subject to realty tax, is not in point because in that case
the steel towers were regarded as poles and under its franchise Meralco's poles are exempt from
taxation. Moreover, the steel towers were not attached to any land or building. They were removable
from their metal frames.
Nor is there any parallelism between this case and Mindanao Bus Co. vs. City Assessor, 116 Phil.
501, where the tools and equipment in the repair, carpentry and blacksmith shops of a transportation
company were held not subject to realty tax because they were personal property.
WHEREFORE, the petition is dismissed. The Board's questioned decision and resolution are
affirmed. No costs.
SO ORDERED.


G.R. No. L-59534 May 10, 1990
COMPAIA GENERAL DE TABACOS DE FILIPINAS, petitioner,
vs.
COURT OF APPEALS, PHILIPPINE NATIONAL BANK and DEVELOPMENT BANK OF THE
PHILIPPINES,respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Pelaez, Adriano & Gregorio for respondents San Carlos Planters' Association & Theo Davis & Co.,
Far East Ltd. et al.

NARVASA, J .:
The conflicting claims of the mortgagees of a sugar quota or production allowance, on the one hand,
and the mortgagors' subsequent vendees of the same, on the other, are the subject of the petition
for review on certiorariat bar.
It appears that an unregistered partnership known as Gomez & Torres composed of Francisco M.
Gomez and Hector Torres was the "principal and majority stockholder of the Philippine Milling
Company, a domestic corporation which owns and operates in the Mindoro Mill District a sugar mill
where all the sugar cane planters of that mill district mill their sugar cane."
1
"Gomez & Torres" was
also "registered in the Sugar Quota Administration as the owner and holder of the entire production
allowance or quota appertaining to Plantation No. 30-15 of the Mindoro Mill District."
2

As security for a loan of P2,000,000.00 obtained from the Rehabilitation Finance Corporation (RFC),
said Philippine Milling Company (thru its president, Hector A. Torres), and the above mentioned
Hector A. Torres and Francisco Gomez, executed on August 7, 1950, a deed of mortgage
hypothecating to the RFC, particularly described real and personal property, "together with all the
buildings and improvements now existing or which may hereafter be constructed on the mortgaged
property, all easements, sugar quotas, agricultural or land indemnities, aids or subsidies and all
other rights or benefits annexed to or inherent therein, now existing or which may hereafter exist."
3

The mortgagors above named also assigned to the RFC on August 16, 1950, in a public
instrument,
4
the sugar quota of the mill district aggregating no less than 148,000 piculs and sugar
warehouse receipts covering, the first 29,500 piculs of sugar milled by the sugar central annually and
such additional sugar as may be necessary to cover the annual amortization of the loan, taking into
consideration the fluctuating sugar prices, which assignments shall remain in full force and effect as long
as . . . (their) aforementioned loan has not been settled in full."
Some fifteen months later, or on November 2, 1951, the same mortgagors executed in favor of the
same mortgagee (the R.F.C) a second mortgage, this time as security for another loan of
P1,860,000.00. The mortgage covered real and/or personal properties listed in the deed, "together
with all the buildings and improvements now existing or which may hereafter be constructed on the
mortgaged property, all easements, sugar quotas, agricultural or land indemnities, aids or subsidies,
and all other rights or benefits annexed to or inherent therein, now existing or which may hereafter
exist . . . and also other assets acquired with the proceeds of such loan . . . "
5

The mortgagors also executed on November 2, 1951 an assignment in favor of the RFC, like that of
August 16, 1950, supra, respecting "its rights and interests on all the sugar quota of the Mindoro Mill
District aggregating no less than 148,000 piculs and additional sugar warehouse receipts covering
the first 27,350 piculs of sugar milled by the sugar central annually, and such additional sugar may
be necessary to cover the annual amortization on the loan, until the full amount of the additional loan
has been fully paid."
6

Both deeds of (real estate and chattel) mortgages were registered in the Register of Deeds of
Occidental Mindoro on August 20, 1950 and November 9, 1951, respectively.
7

Earlier, or on or about January 13, 1951, the real estate and personal property subject of the two (2)
mortgages just described, were again mortgaged by Philippine Milling Co., Francisco M. Gomez and
Hector A. Torres, this time in favor of the Philippine National Bank as collateral for a loan of
P235,000.00. This real estate and chattel mortgage was amended on April 6, 1951 by increasing its
consideration from P235,000.00 to P335,000.00, and still later, on January 18, 1952, by further
increasing the consideration to P1,405,0,00.00.
8
The original deed and its two (2) amendments were
all registered with the Register of Deeds of Occidental Mindoro.
In July, 1957, two (2) letters-agreements were executed between Gomez & Torres (represented by
Francisco M. Gomez) on the one hand, and Theo H. Davies & Co., Ltd. ("for itself and representing
[or as authorized representative of) San Carlos Planters' Association"]), on the other, by virtue of
which the former sold to the latter a total of 18,000 piculs of the production allowance (or sugar
quota) of Plantation No. 30-15, to wit:
1) On July 3, 1957: 8,250 piculs of "our ''A" quota and 1,750.00 piculs of our "B" quota corresponding
to Plantation No. 30-15 of the Mindoro Mill District which is duly registered in our name;"
9
and
2) on July 11, 1957: 6,600.00 piculs of "our "A" quota and 1,400.00 piculs of our "B" quota . . ."
In the later agreement, Gomez & Torres guaranteed "that said 8,000.00 piculs of quotas as well as
the 10,000.00 piculs sold to you on July 3, 1957, belong to us and are free from any lien or
incumbrance whatsoever."
10

The transferees presented the two (2) agreements for recording in the District Office of the Sugar
Quota Administration, on July 12, 1957. But the Sugar Quota Administration declined to give due
course to the transfer until "necessary corrections" were made in the registration documents (known
as DTRs: "district transfer registries"), and "the written conformity of the PNB," secured.
11

In a letter to the Philippine Mining Company dated September 10, 1957, the Administrator cited
several reasons for his refusal:
12

1. There is no signature nor initial of the Permit Agent assigned to your District.
2. There is no distribution of coefficients in Columns F, I, and J in both of your DTR's.
3. This Office received a letter from the Philippine National Bank advising this Office
that the allotments of Plantations Nos. 30-4, 30-8c, 30-9c, 30-14, 30-15 and 30-16a
are mortgaged to the PNB and to advise the PNB of any sale, transfer or conveyance
affecting the quota of the Philippine Milling Company, Hector A. Torres and
Francisco M. Gomez and to withhold the registration without the consent of the PNB.
The letter of the PNB above referred to (par. 3) was that written by its Vice President, J.V.
Buenaventura, dated September 4, 1957.
13

On October 2, 1957, San Carlos Planters' Association and Theo H. Davies Co. Ltd. submitted "two
copies of the mill district coefficients and allowances of the 1957-1958 crop of the San Carlos Mill
District." In response, the Sugar Quota Administrator sent them a letter dated October 3, 1957
advising that it was inappropriate for them to include "in said list, sugar allotments rights in the
quantity of 14,850 piculs for 'A' and 3,150 for 'B' purchased by San Carlos Milling Co., Ltd. from
Mindoro Mill District," because "this purchase has not been given due course by this office in view of
the defects . . . (which) have not yet been corrected."
14

The Governor of the RFC also wrote to the SQA, under date of October 9, 1957, informing it of the
mortgage to it of the sugar quota in question "aggregating no less than 148,000 piculs," and
requesting "that no transfer or conveyance affecting the said sugar quota rights of the Philippine
Milling Co. and Messrs. Hector A. Torres and Francisco Gomez that may have been presented or . .
. may be presented . . . be given due course without the written consent of this Corporation."
15

On October 17, 1957, the San Carlos Milling Co. Ltd. and Theo H. Davies & Co. Far East Ltd. wrote
to the SQA, in reply to the latter's communication of October 3, 1957. Adverting to a letter of the
Philippine Milling Co. "of Sept. 15th, 1957 and . . . memorandum enclosure of the same date
addressed to the Phil. Milling Co., the transferor central, by Torres and Gomez, owners and sellers
of the quota rights in question, " they demanded "that the transfer of said quotas be given effect
immediately from Mindoro Plantation Audit 30-15 of Torres and Gomez to Plantation Audit No. 38-E-
24 of the San Carlos Mill District for account of the San Carlos Planters
Association."
16

The matter of registration remained in a state of flux until about a year later, or more precisely,
August 5, 1958, when the Administrator ultimately authorized the transfer.
17

On January 6 and 7, 1959, the San Carlos Planters' Association in turn executed sales of portions of
the sugar quota of 18,000 piculs acquired by it in favor of various individual sugar planters, all of
which sales were recorded in the San Carlos District Transfer Registry.
18
Then on January 16, 1959,
San Carlos effected a change in the Plantation Number of its remaining portion of the sugar quota
purchased by it (57.06 piculs of "A" quota and 12.12, piculs of "B" quota) from No. 38-E-24 to No. 38-
343.
19

Eventually, the Development Bank of the Philippines (formerly RFC) caused the extrajudicial
foreclosure of its mortgages of August 7, 1950 and November 2, 1951 by the Provincial Sheriff of
Occidental Mindoro. The foreclosure sale was held on November 28, 1958. The DBP was the
highest bidder. A certificate of sale was accordingly drawn up in its favor by the Sheriff on January
19, 1959.
20
As might be expected, among the properties specified in the certificate of sale, as having
been sold to DBP, were.
21

All sugar quota rights of the Philippine Milling Company including those of Spouses,
Francisco M. Gomez and Francisca Villanueva and the Spouses, Hector A. Torres
and Galinica Romano, as well as those of Gomez and Torres partnership in the
Mindoro Mill District aggregating to no less than 148,000 piculs of sugar, which are
attached to any and or all parcels of land described above and mortgaged to the
Rehabilitation Finance Corporation now Development Bank, of the Philippines as
well as the said sugar central's share in the above sugar and quota rights.
On June 17, 1960 the one-year redemption period granted by law to the mortgagors, having
expired without a redemption having been attempted, and the DBP having consolidated its
ownership over the real and personal property subject of the mortgage sale the DBP executed a
deed of sale in favor of the PNB covering all the foreclosed property, for P5,147,309.07 and other
valuable consideration.
22

Now, as regards the sugar quota in question, said deed stipulated inter alia that:
1) The "sugar quota rights pertaining to the Philippine Milling
Company shall not be covered-by this agreement until after the
expiration of the 1959-1960 crop year, but in no case earlier than
June 30, 1960;"
23
and
2) ". . . while the l8,000 piculs of "A" and "B" sugar are expressly
excluded in this Deed of Sale because of certain circumstances, the
Vendee may, however, take such action as it may deem proper in
order to recover the said 18,000 piculs of "A" and "B" sugar quotaand
Vendor agrees to join such action whenever requested by the
Vendee, it being understood, however, that Vendor shall not in any
way be responsible for said 18,000 piculs nor be liable for the
outcome of such action . . .
24

After about two (2) years, in March, 1962, PNB wrote to the San Carlos Planters' Association and
the planters to whom the latter had sold portions of the 18,000 piculs of the sugar quota in
question, supra, demanding the restoration and delivery to it (the PNB) of their respective portions of
said quota. As already mentioned,
25
the 18,000 piculs consisted of 14,850 piculs of 'A' quota and 3,150
piculs of 'B' quota.
When the latter failed to do so, the PNB together with the DBP brought suit in the Court of First
Instance of Occidental Mindoro against Francisco M. Gomez and Hector A. Torres and their
spouses; the partnership of Gomez & Torres; the Philippine Planters' Association; all the sugar
planters to whom as aforementioned had been sold parts of the 18,000 piculs of the sugar quota in
question; and the Sugar Quota Administration.
26
It set out three (3) causes of action in its complaint
and prayed for judgment as follows:
ON THE FIRST CAUSE OF ACTION
a. Declare the plaintiff PNB owner of the sugar quota in question in the quantity equal
to 14,850 piculs of "A" quota and 3,150 piculs of "B" quota presently registered in the
Sugar Quota Administration in the names of the defendants PLANTERS and
defendant San Carlos Planters' Ass'n in the quantity and under the plantation
numbers indicated in par. 3 of the First Cause of Action of this Complaint;
b. Order the defendants PLANTERS of the San Carlos Mill District and the defendant
San Carlos Planters' Ass'n to return and restore to the plaintiff PNB the sugar quota
in question;
c. Order the cancellation of the District Transfer Registry . . . (regarding the transfers
to the defendants) and declare same of no force and effect.
ON THE SECOND AND ALTERNATIVE CAUSE OF ACTION
a. Declare the plaintiff PNB owner of the sugar quota in question in the quantity equal
to 14,850 piculs of "A" quota and 3,150 piculs of "B" quota presently registered in the
Sugar Quota Administration in the names of the defendants PLANTERS and
defendant San Carlos Planters' Assn. in the quantity and under the plantation
numbers indicated in par. 3 of the First Cause of Action of this Complaint;
b. Declare the sale of the sugar quota in question made by defendant TORRES &
GOMEZ on July 3, 1957 and July 11, 1957 null and void;
c. Declare the transfer of the sugar quota in question from the Mindoro Mill District to
the San Carlos Mill District null and void;
d. Declare the subsequent transfer of the sugar quota in question made by defendant
San Carlos Planters' Assn. to the defendant PLANTERS of the San Carlos Mill
District null and void;
e. Order the said defendants PLANTERS and the defendant San Carlos Planters'
Assn. to return and restore to the plaintiff PNB the sugar quota in question; and
f. Order the cancellation of the. District Transfer Registry, Annexes "F", "G", "H", "I"
and "J" and declare same of no force and effect.
ON THE THIRD CAUSE OF ACTION
a. Order the defendants TORRES & GOMEZ, Francisco Gomez, Hector A. Torres,
Conrado Manalansan, as Sugar Quota Administrator, Theo H. Davies & Co. Ltd. and
the San Carlos Planters' Assn. to pay jointly and severally the plaintiff PNB the sum
of P50,400.00 as lost and/or unrealized rental of the sugar quota in question for the
1958-1959 crop year;
b. Order the defendants TORRES & GOMEZ, Francisco Gomez, Hector A. Torres,
Conrado Manalansan, as Sugar Quota Administrator, Theo H. Davies & Co. Ltd. and
the San Carlos Planters' Assn. to pay jointly and severally the plaintiff PNB the sum
of P93,465.00 as unrealized profits on the sugar quota in question in connection with
the agreement for conversion for 1959-1960 crop year;
c. Order the defendants TORRES & GOMEZ, Francisco Gomez, Hector A. Torres,
Conrado Manalansan, as Sugar Quota Administrator, Theo H. Davies & Co. Ltd. and
the San Carlos Planters' Assn. to pay jointly and severally the plaintiff PNB the sum
of P93,465.00 as unrealized profits on the sugar quota in question in connection with
the agreement for conversion entered with the BISCOM for the 1960-1961 crop year;
d. Order the defendants TORRES & GOMEZ, Francisco Gomez, Hector A. Torres,
Conrado Manalansan, as Sugar Quota Administrator, Theo H. Davies & Co. Ltd.,
San Carlos Planters' Assn. and the defendants PLANTERS to pay jointly and
severally the Plaintiff PNB the sum of P9,000.00 annually for three crop years
beginning with the 1961-1962 as lost and/or unrealized rental of the sugar quota in
question.
Plaintiff further pray for such other relief which this Honorable Court may deem just
and proper to grant in the premises, with costs against the defendants.
Answers were in due course filed by the several defendants. At the pre-trial, the parties entered into
a partial stipulation of facts which contained, in substance:
1) an admission of all the relevant documents appended to the complaint, as well as other
documents, already above specified;
2) an acknowledgment that the consideration fixed in the two (2) letters-contracts between
Gomez & Torres and Theo H. Davies & Co., Ltd. and the San Carlos Planters' Association,
dated July 3 and 11, 1957,
27
had been paid;
3) a statement that the transfer of a part of the sugar quota to Cia. General de Tabacos de
Filipinos (TABACALERA) was for valid consideration, and was accompanied by the usual
warranty of the vendor's full right of disposition thereof and of absence of any lien or
encumbrance thereon; and
4) a request that the court "take judicial notices of all executive orders, circulars and
regulations which are pertinent to sugar quotas or which are otherwise in implementation of,
or connected with, legislation on sugar trade and industry."
28

Trial ensued after which judgment was rendered. The Trial Court's judgment, rendered on April 8,
1968,
29
went against the plaintiffs.
30
It made the following explicit findings:
1. That while the defendants, Philippine Milling Company and Gomez and Torres
assigned the rights over the Sugar Quota to the R.F.C., said assignment of rights,
not having been duly registered in accordance with the rules and regulations of the
Sugar Quota Administration, did not effect third parties who acquired said sugar
quota in good faith and for value;
2. That the San Carlos Planters Association, the Theo H. Davies, the TABACALERA
and all the transferees had acquired the sugar quota in question legally and in good
faith, hence, the plaintiff has no cause of action against them; (and)
3. That nevertheless, a valid cause of action exists as against defendants Francisco
M. Gomez and Hector Torres on the basis of the mortgage and assignment executed
by them in favor of the Development Bank of the Philippines and the Philippine
National Bank.
And on said findings, the Court:
1) dismissed the case "as against the San Carlos (Planters') Association, Theo H. Davies
Co., Ltd., TABACALERA, the Sugar Quota Administrator and all the other private defendants
who are the transferees;" but
2) ordered defendants 'Francisco M. Gomez and Hector Torres . . . to pay the value of the
18,000 piculs of 'A' and 'B' sugar quota allowance in the amount of P270,000.00 to the
Philippine National Bank, plus interest at the legal rate from 1958 up to the actual payment
thereof and to pay the costs."
PNB and Francisco Gomez appealed to the Court of Appeals.
31
The PNB ascribed to the Trial Court
the following errors to wit:
1) not finding that a valid mortgage was duly constituted also on the sugar quota allowances in
question with binding effect against third persons including the defendants-appellees;
2) not finding that the defendants-appellees had both actual and constructive notice of the mortgage
in favor of the Philippine National Bank and the Development Bank of the Philippines which covered
the sugar quota allowances;
3) not finding that the PNB is the owner of the sugar quota allowance and in not ordering the
defendants-appellees to return or reconvey the said sugar quota allowances to the PNB.
The decision of the Court of Appeals
32
was rendered on October 30, 1980.
33
It modified the Trial
Court's judgment as follows:
IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment appealed from is
hereby modified, in these aspects:
1. declaring the Philippine National Bank the owner of the sugar
quota or production allowances in question;
2. ordering the defendants-appellees (excepting the defendant-
appellee Administrator of the Sugar Quota Office) to reconvey to
plaintiff-appellant PNB, the said sugar quota or production allowance
in question registered in their names, or if the same can not now be
legally done, directing the defendants-appellees (excepting appellee
Administrator of the Sugar Quota Office) to jointly and severally pay
to PNB the value of the sugar quota or production allowance in
question.
The appealed judgment is hereby affirmed in all other respects.
From this judgment, the Compaia General de Tabacos (TABACALERA) has appealed to this Court.
Here it submits that said judgment should be reversed on the basis of the following considerations,
to wit:
1) that sugar quotas are not "ordinary property . . . which may be appropriated, transferred,
conveyed and/or encumbered by the private grantee at his whim and discretion without the
intervention of the State," it being "regulated property, the disposal or encumbrance of which is made
subject to certain restrictions and regulations provided for by law;" hence, "any form of alienation
thereof should be made subject to governmental regulations and should be processed and approved
by the implementing arm of the government, the Sugar Quota Administration;" and the mortgage
constituted over the sugar quota in this case by the parties to whom the same had originally been
awarded the partnership of Gomez and Torres or the Philippine Milling Company was void,
"(a)pproval or sanction of the Sugar Quota Administration . . . (being) sorely and fatally lacking;"
a) moreover, "the very terms of the deed of sale executed by the DBP in favor of
PNB on June 17, 1966 specifically and expressly excluded the 18,000 piculs in
question;
2) even if the mortgage be accorded validity, it was "binding only as between the mortgagors and the
mortgagees and did not have any effect in third persons who subsequently acquired the same,"
because the mortgages had not yet been "duly registered with the Sugar Quota Administration"
when TABACALERA and others purchased parts of the quota in question from the Philippine
Planters' Association; indeed, the transferees from the latter had "received the sanction and
approval of the Sugar Quota Administrator;"
3) the direction by the Court of Appeals for TABACALERA among others, to reconvey the quota to
the PNB is vague and indefinite since it does not state the point of time to be considered in
computing the value thereof; furthermore, since it "benefited only to the extent of the . . . (precise
quantity purchased by it, out of the 18,000 piculs), it would be "clearly contrary to law and grossly
iniquitous" for it to be made solidarily liable for the value of the entire sugar quota in question; and
4) if TABACALERA reconveys or pays the value of the sugar quota acquired from San Carlos
Planters' Association, the latter should, upon its implied and express warranty against eviction,
reimburse it therefor.
The argument that Theo H. Davies & Co., Ltd., San Carlos Planters' Association, and their privies
and successors in interest like TABACALERA, are purchasers in good faith of the sugar quota in
question because they could not he deemed to have prior knowledge of the encumbrances thereon,
is untenable.
For one thing, as the Court of Appeals has pointed out, the intangible property that is the sugar
quota in question should be considered as real property by destination, "an improvement attaching
to the land entitled thereto."
34
Moreover, as is axiomatic, the recording in the Registry of Deeds of a
mortgage over lands and other immovables operates to charge "the whole world" with notice
thereof.
35
The registration therefore of the mortgages executed by the Philippine Milling Company, Hector
A. Torres and Francisco Gomez in favor of the RFC and later of the PNB, thus had the effect of charging
all persons, including Theo H. Davies & Co., Ltd., San Carlos Planters' Association, and their privies and
successors in interest, with notice of the encumbrance, not only over the lands belonging to the
mortgagors but also of the sugar quotas as well as "all the buildings and improvements . . . existing or
which may hereafter be constructed on the mortgaged property, all; elements,
. . . agricultural or land indemnities, aids or subsidies and all other rights or benefits annexed to or
inherent therein, now existing or which may hereafter exist." So, none of the parties in this case can plead
lack of knowledge of the mortgage lien over the sugar quota or production allowance.
Even if the sugar quota is assumed to be personal, not raid property, and hence not embraced in the
mortgage of the immovables created by the corresponding deeds, it would nevertheless still be
covered by the chattel mortgage created in and by the same deeds. Since, like the recording of a
real estate mortgage, registration of a chattel mortgage also puts all persons on notice of its
existence, the legal situation would be exactly the same: the registration of the above described
deeds of chattel (and real estate) mortgage over the sugar quota, among other things, would also
have charged all persons with notice thereof from the time of such registration.
36

Again, being themselves engaged and possessed of no little experience in the sugar industry, said
Theo H. Davies & Co., Ltd., San Carlos Planters' Association (and their own transferees) could not
but have known, when negotiations for their respective purchases of the sugar quota in question
commenced, that the sugar quota they were dealing with had perforce to pertain to some specific
sugar plantation or farm, i.e., Plantation 30-15 of the Mindoro Mill District. Sugar quota allocations do
not have existence independently of any particular tract of land. They are essentially ancillary, not
principal, assets, necessarily annexed to a specific sugar plantation or land, improvements
"attaching to the land entitled thereto."
37
Hence, the very first inquiry in any negotiation affecting sugar
quotas necessarily would have to do with the identification of the district, plantation or land to which the
quotas appertain. No transaction can be had of sugar quotas in the abstract, without reference
whatsoever to any particular land. Indeed, any deed of conveyance of sugar quota would unavoidably
have to describe the sugar plantation and district to which it refers or relates. There can be no sale simply
of sugar quota of a certain number of piculs without specification of the land to which it relates. Such a
sale would be inconsistent with established usage, and would be void for want of a determinate subject
matter.
38
Theo H. Davies & Co., Ltd. and San Carlos Planters' Association can not therefore plead
ignorance of the fact that the quota they were buying pertained to land belonging to the sellers, Plantation
No. 30-15 of the Mindoro Mill District.
Furthermore, Theo H. Davies & Co., Ltd. and San Carlos Planters' Association were obviously of the
belief that a mortgage or sale of a sugar quota is void if "(a)pproval or sanction of the Sugar Quota
Administration . . . (is) lacking," this being in fact a proposition TABACALERA lays before this Court,
although it cites no particular authority for it and has thus failed to convince this Court of its validity.
Be this as it may, it was with this proposition in mind that Theo H. Davies & Co. Ltd. and San Carlos
Planters' Association submitted the deed of conveyance in their favor of the sugar quota in question,
to the SQA, precisely to obtain the latter's approval of that transaction. That approval, as already
stated, was not given until a year later. But long before that approval, they were clearly and
categorically informed that the sugar quota, subject of the sale to them for which they were seeking
approval by the SQA was already mortgaged to the RFC and then to the PNB. Since good faith is
obviously a state of the mind, and since prior to the approval of the conveyance to them of the
sugar quota by the SQA which approval they thought to be essential for the validity of said
conveyance-they came to know of the earlier encum brance thereof to other parties, it is not possible
for them without, contradicting themselves, to claim good faith in the transaction.
Turning now to TABACALERA and the other vendees of Theo H. Davies & Co. Ltd. and San Carlos
Planters' Association, it is self-evident that they are also quite familiar with sugar quotas, including
the nature and process of transferring the same, these being an important factor in their operations
and transactions. They therefore had to know that the sugar quotas they were purchasing had
originally to be part and parcel of some sugar plantation. Hence, apart from being charged with
knowledge, as above discussed, of the mortgage of the land to which the sugar quota in question
was an integrated adjunct and that the mortgage extended to said sugar quotas like the buildings
and improvements thereon standing it may reasonably be assumed as a fact, too, that they
inquired about and were duly informed of the origin of, and immediately preceding transactions
involving, the sugar quotas they were acquiring.
They should therefore all be regarded as buyers in bad faith the original vendees of Gomez and
Torres and the Philippine Milling Company (i.e., the Philippine Planters Association and Theo H.
Davies & Co. Ltd.) as well as the latter's own vendees (TABACALERA, et al.). The Court of Appeals
was thus quite correct in "ordering the defendants-appellees (excepting the defendant-appellee
Administrator of the Sugar Quota Office) to reconvey to plaintiff-appellant PNB, the said sugar quota
or production allowance in question registered in their names, or if the same can not now be legally
done, directing the defendants-appellees (excepting appellee Administrator of the Sugar Quota
Office) to jointly and severally pay to PNB the value of the sugar quota or production allowance in
question."
The fact that "the very terms of the deed of sale executed by the DBP in favor of PNB on June 17,
1966 specifically and expressly excluded the 18,000 piculs in question," of which TABACALERA
would make capital, is of no moment. As also held by the Court of Appeals, the exclusion is more
apparent than real. It is true that the deed of June 17, 1966 does provide that "the 18,000 piculs of
'A' and 'B' sugar are expressly excluded . . . because of certain circumstances." It is however pointed
out that "the Vendee may . . . take such action as it may deem proper in order to recover the said 18,
000 piculs of 'A' and 'B' sugar quota and Vendor agrees to join such action whenever requested by
the Vendee." The clear implication is that notwithstanding those "certain circumstances" causing the
exclusion of the 18,000 piculs, there was an express assertion that a right to recover the same
existed in favor of the vendor and/or its vendee; a declaration, in other words, that the sugar quota of
18,000 piculs rightfully belonged to the vendor and, by the sale, to the vendee. The ambivalent
stipulation, in the mind of the Court of Appeals, merely evidenced the DBP's intention not be
rendered liable to PNB on any warranty of legal title considering that the quota had in point of fact
already been sold to third persons before foreclosure; the ostensible exclusion of the 18,000 piculs
was a mere cautionary proviso. This Court agrees, after undertaking a review and analysis of the
relevant facts.
However, TABACALERA's argument that it should not be made solidarily liable for the value of the
entire sugar quota in question, because it benefited only to the extent of the precise quantity
purchased by it, out of the 18,000 piculs is well taken. It does not appear that it acted in concert with
the other vendees in the acquisition of all the 18,000 piculs comprising the sugar quota in question.
For aught that appears on the record, it dealt separately and individually with its vendor. Its liability
should indeed be limited to a return of the exact quantity and quality of the sugar quota separately
purchased by it, as indubitably appears on record, or the payment of the value thereof computed as
of the time that its obligation to return that quota was adjudged by the Court of Appeals.
One final question remains to be resolved, that posed by TABACALERA, to wit: if it reconveys the
sugar quota acquired from San Carlos Planters' Association, or pays its value, should not it be
reimbursed therefor by the latter, upon its implied and express warranty against eviction? The
answer win have to be in the negative. They, vendor and vendee, are in pari delicto. At the time of
the transaction between them they were well aware of the encumbrance on the property dealt with,
they had the common intention of negating the rights that they knew had earlier and properly been
acquired by the mortgagee of the property they were treating of; they were both consequently acting
in bad faith. The object or purpose of their contract was "contrary to law, morals, good customs,
public order or public policy."
39
The law says that in such a case, where "the unlawful or forbidden
cause consists does not constitute a criminal offense, . . . and the fault is on the part of both contracting
parties, neither may recover what he has given by virtue of the contract, or demand the performance of
the other's undertaking."
40
No relief can be granted to either party; the law will leave them where they
are.
41

WHEREFORE, the challenged judgment of the Court of Appeals is hereby AFFIRMED, with the
modification that the liability of petitioner Compaia General de Tabacos de Filipinas
(TABACALERA) is limited to the return to the Philippine National Bank of the exact quantity and
quality of the sugar quota purchased by it from the Philippine Planters Association and/or Theo H.
Davies & Co., Ltd., as indubitably appears on record, or the payment of the value thereof to said
Philippine National Bank computed as of the time that its obligation to return that quota was
adjudged by the Court of Appeals.
IT IS SO ORDERED.


G.R. No. 106041 January 29, 1993
BENGUET CORPORATION, petitioner,
vs.
CENTRAL BOARD OF ASSESSMENT APPEALS, BOARD OF ASSESSMENT APPEALS OF
ZAMBALES, PROVINCIAL ASSESSOR OF ZAMBALES, PROVINCE OF ZAMBALES, and
MUNICIPALITY OF SAN MARCELINO, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.

CRUZ, J .:
The realty tax assessment involved in this case amounts to P11,319,304.00. It has been imposed on
the petitioner's tailings dam and the land thereunder over its protest.
The controversy arose in 1985 when the Provincial Assessor of Zambales assessed the said
properties as taxable improvements. The assessment was appealed to the Board of Assessment
Appeals of the Province of Zambales. On August 24, 1988, the appeal was dismissed mainly on the
ground of the petitioner's "failure to pay the realty taxes that fell due during the pendency of the
appeal."
The petitioner seasonably elevated the matter to the Central Board of Assessment Appeals,
1
one of
the herein respondents. In its decision dated March 22, 1990, the Board reversed the dismissal of the
appeal but, on the merits, agreed that "the tailings dam and the lands submerged thereunder (were)
subject to realty tax."
For purposes of taxation the dam is considered as real property as it comes within
the object mentioned in paragraphs (a) and (b) of Article 415 of the New Civil Code.
It is a construction adhered to the soil which cannot be separated or detached
without breaking the material or causing destruction on the land upon which it is
attached. The immovable nature of the dam as an improvement determines its
character as real property, hence taxable under Section 38 of the Real Property Tax
Code. (P.D. 464).
Although the dam is partly used as an anti-pollution device, this Board cannot accede
to the request for tax exemption in the absence of a law authorizing the same.
xxx xxx xxx
We find the appraisal on the land submerged as a result of the construction of the
tailings dam, covered by Tax Declaration Nos.
002-0260 and 002-0266, to be in accordance with the Schedule of Market Values for
Zambales which was reviewed and allowed for use by the Ministry (Department) of
Finance in the 1981-1982 general revision. No serious attempt was made by
Petitioner-Appellant Benguet Corporation to impugn its reasonableness, i.e., that the
P50.00 per square meter applied by Respondent-Appellee Provincial Assessor is
indeed excessive and unconscionable. Hence, we find no cause to disturb the
market value applied by Respondent Appellee Provincial Assessor of Zambales on
the properties of Petitioner-Appellant Benguet Corporation covered by Tax
Declaration Nos. 002-0260 and 002-0266.
This petition for certiorari now seeks to reverse the above ruling.
The principal contention of the petitioner is that the tailings dam is not subject to realty tax because it
is not an "improvement" upon the land within the meaning of the Real Property Tax Code. More
particularly, it is claimed
(1) as regards the tailings dam as an "improvement":
(a) that the tailings dam has no value separate from and independent
of the mine; hence, by itself it cannot be considered an improvement
separately assessable;
(b) that it is an integral part of the mine;
(c) that at the end of the mining operation of the petitioner corporation
in the area, the tailings dam will benefit the local community by
serving as an irrigation facility;
(d) that the building of the dam has stripped the property of any
commercial value as the property is submerged under water wastes
from the mine;
(e) that the tailings dam is an environmental pollution control device
for which petitioner must be commended rather than penalized with a
realty tax assessment;
(f) that the installation and utilization of the tailings dam as a pollution
control device is a requirement imposed by law;
(2) as regards the valuation of the tailings dam and the submerged lands:
(a) that the subject properties have no market value as they cannot
be sold independently of the mine;
(b) that the valuation of the tailings dam should be based on its
incidental use by petitioner as a water reservoir and not on the
alleged cost of construction of the dam and the annual build-up
expense;
(c) that the "residual value formula" used by the Provincial Assessor
and adopted by respondent CBAA is arbitrary and erroneous; and
(3) as regards the petitioner's liability for penalties for
non-declaration of the tailings dam and the submerged lands for realty tax purposes:
(a) that where a tax is not paid in an honest belief that it is not due, no
penalty shall be collected in addition to the basic tax;
(b) that no other mining companies in the Philippines operating a
tailings dam have been made to declare the dam for realty tax
purposes.
The petitioner does not dispute that the tailings dam may be considered realty within the meaning of
Article 415. It insists, however, that the dam cannot be subjected to realty tax as a separate and
independent property because it does not constitute an "assessable improvement" on the mine
although a considerable sum may have been spent in constructing and maintaining it.
To support its theory, the petitioner cites the following cases:
1. Municipality of Cotabato v. Santos (105 Phil. 963), where this Court considered the dikes and
gates constructed by the taxpayer in connection with a fishpond operation as integral parts of the
fishpond.
2. Bislig Bay Lumber Co. v. Provincial Government of Surigao (100 Phil. 303), involving a road
constructed by the timber concessionaire in the area, where this Court did not impose a realty tax on
the road primarily for two reasons:
In the first place, it cannot be disputed that the ownership of the road that was
constructed by appellee belongs to the government by right of accession not only
because it is inherently incorporated or attached to the timber land . . . but also
because upon the expiration of the concession said road would ultimately pass to the
national government. . . . In the second place, while the road was constructed by
appellee primarily for its use and benefit, the privilege is not exclusive, for . . .
appellee cannot prevent the use of portions of the concession for homesteading
purposes. It is also duty bound to allow the free use of forest products within the
concession for the personal use of individuals residing in or within the vicinity of the
land. . . . In other words, the government has practically reserved the rights to use
the road to promote its varied activities. Since, as above shown, the road in question
cannot be considered as an improvement which belongs to appellee, although in part
is for its benefit, it is clear that the same cannot be the subject of assessment within
the meaning of Section 2 of C.A.
No. 470.
Apparently, the realty tax was not imposed not because the road was an integral part of the lumber
concession but because the government had the right to use the road to promote its varied activities.
3. Kendrick v. Twin Lakes Reservoir Co. (144 Pacific 884), an American case, where it was declared
that the reservoir dam went with and formed part of the reservoir and that the dam would be
"worthless and useless except in connection with the outlet canal, and the water rights in the
reservoir represent and include whatever utility or value there is in the dam and headgates."
4. Ontario Silver Mining Co. v. Hixon (164 Pacific 498), also from the United States. This case
involved drain tunnels constructed by plaintiff when it expanded its mining operations downward,
resulting in a constantly increasing flow of water in the said mine. It was held that:
Whatever value they have is connected with and in fact is an integral part of the mine
itself. Just as much so as any shaft which descends into the earth or an underground
incline, tunnel, or drift would be which was used in connection with the mine.
On the other hand, the Solicitor General argues that the dam is an assessable improvement
because it enhances the value and utility of the mine. The primary function of the dam is to receive,
retain and hold the water coming from the operations of the mine, and it also enables the petitioner
to impound water, which is then recycled for use in the plant.
There is also ample jurisprudence to support this view, thus:
. . . The said equipment and machinery, as appurtenances to the gas station building
or shed owned by Caltex (as to which it is subject to realty tax) and which fixtures are
necessary to the operation of the gas station, for without them the gas station would
be useless and which have been attached or affixed permanently to the gas station
site or embedded therein, are taxable improvements and machinery within the
meaning of the Assessment Law and the Real Property Tax Code. (Caltex [Phil.] Inc.
v. CBAA, 114 SCRA 296).
We hold that while the two storage tanks are not embedded in the land, they may,
nevertheless, be considered as improvements on the land, enhancing its utility and
rendering it useful to the oil industry. It is undeniable that the two tanks have been
installed with some degree of permanence as receptacles for the considerable
quantities of oil needed by MERALCO for its operations. (Manila Electric Co. v.
CBAA, 114 SCRA 273).
The pipeline system in question is indubitably a construction adhering to the soil. It is
attached to the land in such a way that it cannot be separated therefrom without
dismantling the steel pipes which were welded to form the pipeline. (MERALCO
Securities Industrial Corp. v. CBAA, 114 SCRA 261).
The tax upon the dam was properly assessed to the plaintiff as a tax upon real
estate. (Flax-Pond Water Co. v. City of Lynn, 16 N.E. 742).
The oil tanks are structures within the statute, that they are designed and used by the
owner as permanent improvement of the free hold, and that for such reasons they
were properly assessed by the respondent taxing district as improvements.
(Standard Oil Co. of New Jersey v. Atlantic City, 15 A 2d. 271)
The Real Property Tax Code does not carry a definition of "real property" and simply says that the
realty tax is imposed on "real property, such as lands, buildings, machinery and other improvements
affixed or attached to real property." In the absence of such a definition, we apply Article 415 of the
Civil Code, the pertinent portions of which state:
Art. 415. The following are immovable property.
(1) Lands, buildings and constructions of all kinds adhered to the soil;
xxx xxx xxx
(3) Everything attached to an immovable in a fixed manner, in such a way that it
cannot be separated therefrom without breaking the material or deterioration of the
object.
Section 2 of C.A. No. 470, otherwise known as the Assessment Law, provides that the realty tax is
due "on the real property, including land, buildings, machinery and other improvements" not
specifically exempted in Section 3 thereof. A reading of that section shows that the tailings dam of
the petitioner does not fall under any of the classes of exempt real properties therein enumerated.
Is the tailings dam an improvement on the mine? Section 3(k) of the Real Property Tax Code defines
improvement as follows:
(k) Improvements is a valuable addition made to property or an amelioration in its
condition, amounting to more than mere repairs or replacement of waste, costing
labor or capital and intended to enhance its value, beauty or utility or to adopt it for
new or further purposes.
The term has also been interpreted as "artificial alterations of the physical condition of the ground
that arereasonably permanent in character."
2

The Court notes that in the Ontario case the plaintiff admitted that the mine involved therein could
not be operated without the aid of the drain tunnels, which were indispensable to the successful
development and extraction of the minerals therein. This is not true in the present case.
Even without the tailings dam, the petitioner's mining operation can still be carried out because the
primary function of the dam is merely to receive and retain the wastes and water coming from the
mine. There is no allegation that the water coming from the dam is the sole source of water for the
mining operation so as to make the dam an integral part of the mine. In fact, as a result of the
construction of the dam, the petitioner can now impound and recycle water without having to spend
for the building of a water reservoir. And as the petitioner itself points out, even if the petitioner's
mine is shut down or ceases operation, the dam may still be used for irrigation of the surrounding
areas, again unlike in the Ontario case.
As correctly observed by the CBAA, the Kendrick case is also not applicable because it involved
water reservoir dams used for different purposes and for the benefit of the surrounding areas. By
contrast, the tailings dam in question is being used exclusively for the benefit of the petitioner.
Curiously, the petitioner, while vigorously arguing that the tailings dam has no separate existence,
just as vigorously contends that at the end of the mining operation the tailings dam will serve the
local community as an irrigation facility, thereby implying that it can exist independently of the mine.
From the definitions and the cases cited above, it would appear that whether a structure constitutes
an improvement so as to partake of the status of realty would depend upon the degree
of permanence intended in its construction and use. The expression "permanent" as applied to an
improvement does not imply that the improvement must be used perpetually but only until the
purpose to which the principal realty is devoted has been accomplished. It is sufficient that the
improvement is intended to remain as long as the land to which it is annexed is still used for the said
purpose.
The Court is convinced that the subject dam falls within the definition of an "improvement" because it
is permanent in character and it enhances both the value and utility of petitioner's mine. Moreover,
the immovable nature of the dam defines its character as real property under Article 415 of the Civil
Code and thus makes it taxable under Section 38 of the Real Property Tax Code.
The Court will also reject the contention that the appraisal at P50.00 per square meter made by the
Provincial Assessor is excessive and that his use of the "residual value formula" is arbitrary and
erroneous.
Respondent Provincial Assessor explained the use of the "residual value formula" as follows:
A 50% residual value is applied in the computation because, while it is true that when
slime fills the dike, it will then be covered by another dike or stage, the stage covered
is still there and still exists and since only one face of the dike is filled, 50% or the
other face is unutilized.
In sustaining this formula, the CBAA gave the following justification:
We find the appraisal on the land submerged as a result of the construction of the
tailings dam, covered by Tax Declaration Nos.
002-0260 and 002-0266, to be in accordance with the Schedule of Market Values for
San Marcelino, Zambales, which is fifty (50.00) pesos per square meter for third
class industrial land (TSN, page 17, July 5, 1989) and Schedule of Market Values for
Zambales which was reviewed and allowed for use by the Ministry (Department) of
Finance in the 1981-1982 general revision. No serious attempt was made by
Petitioner-Appellant Benguet Corporation to impugn its reasonableness, i.e, that the
P50.00 per square meter applied by Respondent-Appellee Provincial Assessor is
indeed excessive and unconscionable. Hence, we find no cause to disturb the
market value applied by Respondent-Appellee Provincial Assessor of Zambales on
the properties of Petitioner-Appellant Benguet Corporation covered by Tax
Declaration Nos. 002-0260 and 002-0266.
It has been the long-standing policy of this Court to respect the conclusions of quasi-judicial
agencies like the CBAA, which, because of the nature of its functions and its frequent exercise
thereof, has developed expertise in the resolution of assessment problems. The only exception to
this rule is where it is clearly shown that the administrative body has committed grave abuse of
discretion calling for the intervention of this Court in the exercise of its own powers of review. There
is no such showing in the case at bar.
We disagree, however, with the ruling of respondent CBAA that it cannot take cognizance of the
issue of the propriety of the penalties imposed upon it, which was raised by the petitioner for the first
time only on appeal. The CBAA held that this "is an entirely new matter that petitioner can take up
with the Provincial Assessor (and) can be the subject of another protest before the Local Board or a
negotiation with the local sanggunian . . ., and in case of an adverse decision by either the Local
Board or the local sanggunian, (it can) elevate the same to this Board for appropriate action."
There is no need for this time-wasting procedure. The Court may resolve the issue in this petition
instead of referring it back to the local authorities. We have studied the facts and circumstances of
this case as above discussed and find that the petitioner has acted in good faith in questioning the
assessment on the tailings dam and the land submerged thereunder. It is clear that it has not done
so for the purpose of evading or delaying the payment of the questioned tax. Hence, we hold that the
petitioner is not subject to penalty for its
non-declaration of the tailings dam and the submerged lands for realty tax purposes.
WHEREFORE, the petition is DISMISSED for failure to show that the questioned decision of
respondent Central Board of Assessment Appeals is tainted with grave abuse of discretion except as
to the imposition of penalties upon the petitioner which is hereby SET ASIDE. Costs against the
petitioner. It is so ordered.
Narvasa, C.J., Gutierrez, Jr., Padilla, Bidin, Grio-Aquino, Regalado, Davide, Jr., Romero, Nocon,
Bellosillo, Melo and Campos, Jr., JJ., concur.
Feliciano, J., took no part.

G.R. No. 120098 October 2, 2001
RUBY L. TSAI, petitioner,
vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS, INC. and MAMERTO R
VILLALUZ, respondents.
x---------------------------------------------------------x
[G.R. No. 120109. October 2, 2001.]
PHILIPPINE BANK OF COMMUNICATIONS, petitioner,
vs.
HON. COURT OF APPEALS, EVER TEXTILE MILLS and MAMERTO R VILLALUZ, respondents.
QUISUMBING, J .:
These consolidated cases assail the decision
1
of the Court of Appeals in CA-G.R. CV No. 32986,
affirming the decision
2
of the Regional Trial Court of Manila, Branch 7, in Civil Case No. 89-48265.
Also assailed is respondent court's resolution denying petitioners' motion for reconsideration.
On November 26, 1975, respondent Ever Textile Mills, Inc. (EVERTEX) obtained a three million
peso (P3,000,000.00) loan from petitioner Philippine Bank of Communications (PBCom). As security
for the loan, EVERTEX executed in favor of PBCom, a deed of Real and Chattel Mortgage over the
lot under TCT No. 372097, where its factory stands, and the chattels located therein as enumerated
in a schedule attached to the mortgage contract. The pertinent portions of the Real and Chattel
Mortgage are quoted below:
MORTGAGE
(REAL AND CHATTEL)
xxx xxx xxx
The MORTGAGOR(S) hereby transfer(s) and convey(s), by way of First Mortgage, to the
MORTGAGEE, . . . certain parcel(s) of land, together with all the buildings and improvements
now existing or which may hereafter exist thereon, situated in . . .
"Annex A"
(Real and Chattel Mortgage executed by Ever Textile Mills in favor of PBCommunications
continued)
LIST OF MACHINERIES & EQUIPMENT
A. Forty Eight (48) units of Vayrow Knitting Machines-Tompkins made in Hongkong:
Serial Numbers Size of Machines
xxx xxx xxx
B. Sixteen (16) sets of Vayrow Knitting Machines made in Taiwan.
xxx xxx xxx
C. Two (2) Circular Knitting Machines made in West Germany.
xxx xxx xxx
D. Four (4) Winding Machines.
xxx xxx xxx
SCHEDULE "A"
I. TCT # 372097 - RIZAL
xxx xxx xxx
II. Any and all buildings and improvements now existing or hereafter to exist on the above-
mentioned lot.
III. MACHINERIES & EQUIPMENT situated, located and/or installed on the above-
mentioned lot located at . . .
(a) Forty eight sets (48) Vayrow Knitting Machines . . .
(b) Sixteen sets (16) Vayrow Knitting Machines . . .
(c) Two (2) Circular Knitting Machines . . .
(d) Two (2) Winding Machines . . .
(e) Two (2) Winding Machines . . .
IV. Any and all replacements, substitutions, additions, increases and accretions to above
properties.
xxx xxx xxx
3

On April 23, 1979, PBCom granted a second loan of P3,356,000.00 to EVERTEX. The loan was
secured by a Chattel Mortgage over personal properties enumerated in a list attached thereto.
These listed properties were similar to those listed in Annex A of the first mortgage deed.
After April 23, 1979, the date of the execution of the second mortgage mentioned above, EVERTEX
purchased various machines and equipments.
On November 19, 1982, due to business reverses, EVERTEX filed insolvency proceedings docketed
as SP Proc. No. LP-3091-P before the defunct Court of First Instance of Pasay City, Branch XXVIII.
The CFI issued an order on November 24, 1982 declaring the corporation insolvent. All its assets
were taken into the custody of the Insolvency Court, including the collateral, real and personal,
securing the two mortgages as abovementioned.
In the meantime, upon EVERTEX's failure to meet its obligation to PBCom, the latter commenced
extrajudicial foreclosure proceedings against EVERTEX under Act 3135, otherwise known as "An
Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate
Mortgages" and Act 1506 or "The Chattel Mortgage Law". A Notice of Sheriff's Sale was issued on
December 1, 1982.
On December 15, 1982, the first public auction was held where petitioner PBCom emerged as the
highest bidder and a Certificate of Sale was issued in its favor on the same date. On December 23,
1982, another public auction was held and again, PBCom was the highest bidder. The sheriff issued
a Certificate of Sale on the same day.
On March 7, 1984, PBCom consolidated its ownership over the lot and all the properties in it. In
November 1986, it leased the entire factory premises to petitioner Ruby L. Tsai for P50,000.00 a
month. On May 3, 1988, PBCom sold the factory, lock, stock and barrel to Tsai for P9,000,000.00,
including the contested machineries.
On March 16, 1989, EVERTEX filed a complaint for annulment of sale, reconveyance, and damages
with the Regional Trial Court against PBCom, alleging inter alia that the extrajudicial foreclosure of
subject mortgage was in violation of the Insolvency Law. EVERTEX claimed that no rights having
been transmitted to PBCom over the assets of insolvent EVERTEX, therefore Tsai acquired no
rights over such assets sold to her, and should reconvey the assets.
Further, EVERTEX averred that PBCom, without any legal or factual basis, appropriated the
contested properties, which were not included in the Real and Chattel Mortgage of November 26,
1975 nor in the Chattel Mortgage of April 23, 1979, and neither were those properties included in the
Notice of Sheriff's Sale dated December 1, 1982 and Certificate of Sale . . . dated December 15,
1982.
The disputed properties, which were valued at P4,000,000.00, are: 14 Interlock Circular Knitting
Machines, 1 Jet Drying Equipment, 1 Dryer Equipment, 1 Raisin Equipment and 1 Heatset
Equipment.
The RTC found that the lease and sale of said personal properties were irregular and illegal because
they were not duly foreclosed nor sold at the December 15, 1982 auction sale since these were not
included in the schedules attached to the mortgage contracts. The trial court decreed:
WHEREFORE, judgment is hereby rendered in favor of plaintiff corporation and against the
defendants:
1. Ordering the annulment of the sale executed by defendant Philippine Bank of
Communications in favor of defendant Ruby L. Tsai on May 3, 1988 insofar as it affects the
personal properties listed in par. 9 of the complaint, and their return to the plaintiff
corporation through its assignee, plaintiff Mamerto R. Villaluz, for disposition by the
Insolvency Court, to be done within ten (10) days from finality of this decision;
2. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P5,200,000.00 as compensation for the use and possession of the properties in question
from November 1986 to February 1991 and P100,000.00 every month thereafter, with
interest thereon at the legal rate per annum until full payment;
3. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P50,000.00 as and for attorney's fees and expenses of litigation;
4. Ordering the defendants to pay jointly and severally the plaintiff corporation the sum of
P200,000.00 by way of exemplary damages;
5. Ordering the dismissal of the counterclaim of the defendants; and
6. Ordering the defendants to proportionately pay the costs of suit.
SO ORDERED.
4

Dissatisfied, both PBCom and Tsai appealed to the Court of Appeals, which issued its decision
dated August 31, 1994, the dispositive portion of which reads:
WHEREFORE, except for the deletion therefrom of the award; for exemplary damages, and
reduction of the actual damages, from P100,000.00 to P20,000.00 per month, from November 1986
until subject personal properties are restored to appellees, the judgment appealed from is hereby
AFFIRMED, in all other respects. No pronouncement as to costs.
5

Motion for reconsideration of the above decision having been denied in the resolution of April 28,
1995, PBCom and Tsai filed their separate petitions for review with this Court.
In G.R No. 120098, petitioner Tsai ascribed the following errors to the respondent court:
I
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN EFFECT
MAKING A CONTRACT FOR THE PARTIES BY TREATING THE 1981 ACQUIRED
MACHINERIES AS CHATTELS INSTEAD OF REAL PROPERTIES WITHIN THEIR
EARLIER 1975 DEED OF REAL AND CHATTEL MORTGAGE OR 1979 DEED OF
CHATTEL MORTGAGE.
II
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING
THAT THE DISPUTED 1981 MACHINERIES ARE NOT REAL PROPERTIES DEEMED
PART OF THE MORTGAGE DESPITE THE CLEAR IMPORT OF THE EVIDENCE AND
APPLICABLE RULINGS OF THE SUPREME COURT.
III
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN DEEMING
PETITIONER A PURCHASER IN BAD FAITH.
IV
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN ASSESSING
PETITIONER ACTUAL DAMAGES, ATTORNEY'S FEES AND EXPENSES OF LITIGATION
FOR WANT OF VALID FACTUAL AND LEGAL BASIS.
V
THE HONORABLE COURT OF APPEALS (SECOND DIVISION) ERRED IN HOLDING
AGAINST PETITIONER'S ARGUMENTS ON PRESCRIPTION AND LACHES.
6

In G.R. No. 120098, PBCom raised the following issues:
I.
DID THE COURT OF APPEALS VALIDLY DECREE THE MACHINERIES LISTED UNDER
PARAGRAPH 9 OF THE COMPLAINT BELOW AS PERSONAL PROPERTY OUTSIDE OF THE
1975 DEED OF REAL ESTATE MORTGAGE AND EXCLUDED THEM FROM THE REAL
PROPERTY EXTRAJUDICIALLY FORECLOSED BY PBCOM DESPITE THE PROVISION IN THE
1975 DEED THAT ALL AFTER-ACQUIRED PROPERTIES DURING THE LIFETIME OF THE
MORTGAGE SHALL FORM PART THEREOF, AND DESPITE THE UNDISPUTED FACT THAT
SAID MACHINERIES ARE BIG AND HEAVY, BOLTED OR CEMENTED ON THE REAL
PROPERTY MORTGAGED BY EVER TEXTILE MILLS TO PBCOM, AND WERE ASSESSED FOR
REAL ESTATE TAX PURPOSES?
II
CAN PBCOM, WHO TOOK POSSESSION OF THE MACHINERIES IN QUESTION IN GOOD
FAITH, EXTENDED CREDIT FACILITIES TO EVER TEXTILE MILLS WHICH AS OF 1982
TOTALLED P9,547,095.28, WHO HAD SPENT FOR MAINTENANCE AND SECURITY ON THE
DISPUTED MACHINERIES AND HAD TO PAY ALL THE BACK TAXES OF EVER TEXTILE MILLS
BE LEGALLY COMPELLED TO RETURN TO EVER THE SAID MACHINERIES OR IN LIEU
THEREOF BE ASSESSED DAMAGES. IS THAT SITUATION TANTAMOUNT TO A CASE OF
UNJUST ENRICHMENT?
7

The principal issue, in our view, is whether or not the inclusion of the questioned properties in the
foreclosed properties is proper. The secondary issue is whether or not the sale of these properties to
petitioner Ruby Tsai is valid.
For her part, Tsai avers that the Court of Appeals in effect made a contract for the parties by treating
the 1981 acquired units of machinery as chattels instead of real properties within their earlier 1975
deed of Real and Chattel Mortgage or 1979 deed of Chattel Mortgage.
8
Additionally, Tsai argues that
respondent court erred in holding that the disputed 1981 machineries are not real
properties.
9
Finally, she contends that the Court of Appeals erred in holding against petitioner's
arguments on prescription and laches
10
and in assessing petitioner actual damages, attorney's fees
and expenses of litigation, for want of valid factual and legal basis.
11

Essentially, PBCom contends that respondent court erred in affirming the lower court's judgment
decreeing that the pieces of machinery in dispute were not duly foreclosed and could not be legally
leased nor sold to Ruby Tsai. It further argued that the Court of Appeals' pronouncement that the
pieces of machinery in question were personal properties have no factual and legal basis. Finally, it
asserts that the Court of Appeals erred in assessing damages and attorney's fees against PBCom.
In opposition, private respondents argue that the controverted units of machinery are not "real
properties" but chattels, and, therefore, they were not part of the foreclosed real properties,
rendering the lease and the subsequent sale thereof to Tsai a nullity.
12

Considering the assigned errors and the arguments of the parties, we find the petitions devoid of
merit and ought to be denied.
Well settled is the rule that the jurisdiction of the Supreme Court in a petition for review on certiorari
under Rule 45 of the Revised Rules of Court is limited to reviewing only errors of law, not of fact,
unless the factual findings complained of are devoid of support by the evidence on record or the
assailed judgment is based on misapprehension of facts.
13
This rule is applied more stringently when
the findings of fact of the RTC is affirmed by the Court of Appeals.
14

The following are the facts as found by the RTC and affirmed by the Court of Appeals that are
decisive of the issues: (1) the "controverted machineries" are not covered by, or included in, either of
the two mortgages, the Real Estate and Chattel Mortgage, and the pure Chattel Mortgage; (2) the
said machineries were not included in the list of properties appended to the Notice of Sale, and
neither were they included in the Sheriff's Notice of Sale of the foreclosed properties.
15

Petitioners contend that the nature of the disputed machineries, i.e., that they were heavy, bolted or
cemented on the real property mortgaged by EVERTEX to PBCom, make them ipso
facto immovable under Article 415 (3) and (5) of the New Civil Code. This assertion, however, does
not settle the issue. Mere nuts and bolts do not foreclose the controversy. We have to look at the
parties' intent.
While it is true that the controverted properties appear to be immobile, a perusal of the contract of
Real and Chattel Mortgage executed by the parties herein gives us a contrary indication. In the case
at bar, both the trial and the appellate courts reached the same finding that the true intention of
PBCOM and the owner, EVERTEX, is to treat machinery and equipment as chattels. The pertinent
portion of respondent appellate court's ruling is quoted below:
As stressed upon by appellees, appellant bank treated the machineries as chattels; never as
real properties. Indeed, the 1975 mortgage contract, which was actually real and chattel
mortgage, militates against appellants' posture. It should be noted that the printed form used
by appellant bank was mainly for real estate mortgages. But reflective of the true intention of
appellant PBCOM and appellee EVERTEX was the typing in capital letters, immediately
following the printed caption of mortgage, of the phrase "real and chattel." So also, the
"machineries and equipment" in the printed form of the bank had to be inserted in the blank
space of the printed contract and connected with the word "building" by typewritten slash
marks. Now, then, if the machineries in question were contemplated to be included in the
real estate mortgage, there would have been no necessity to ink a chattel mortgage
specifically mentioning as part III of Schedule A a listing of the machineries covered thereby.
It would have sufficed to list them as immovables in the Deed of Real Estate Mortgage of the
land and building involved.
As regards the 1979 contract, the intention of the parties is clear and beyond question. It
refers solely tochattels. The inventory list of the mortgaged properties is an itemization of
sixty-three (63) individually described machineries while the schedule listed only machines
and 2,996,880.50 worth of finished cotton fabrics and natural cotton fabrics.
16

In the absence of any showing that this conclusion is baseless, erroneous or uncorroborated by the
evidence on record, we find no compelling reason to depart therefrom.
Too, assuming arguendo that the properties in question are immovable by nature, nothing detracts
the parties from treating it as chattels to secure an obligation under the principle of estoppel. As far
back as Navarro v. Pineda, 9 SCRA 631 (1963), an immovable may be considered a personal
property if there is a stipulation as when it is used as security in the payment of an obligation where
a chattel mortgage is executed over it, as in the case at bar.
In the instant case, the parties herein: (1) executed a contract styled as "Real Estate Mortgage and
Chattel Mortgage," instead of just "Real Estate Mortgage" if indeed their intention is to treat all
properties included therein as immovable, and (2) attached to the said contract a separate "LIST OF
MACHINERIES & EQUIPMENT". These facts, taken together, evince the conclusion that the parties'
intention is to treat these units of machinery as chattels. A fortiori, the contested after-acquired
properties, which are of the same description as the units enumerated under the title "LIST OF
MACHINERIES & EQUIPMENT," must also be treated as chattels.
Accordingly, we find no reversible error in the respondent appellate court's ruling that inasmuch as
the subject mortgages were intended by the parties to involve chattels, insofar as equipment and
machinery were concerned, the Chattel Mortgage Law applies, which provides in Section 7 thereof
that: "a chattel mortgage shall be deemed to cover only the property described therein and not like or
substituted property thereafter acquired by the mortgagor and placed in the same depository as the
property originally mortgaged, anything in the mortgage to the contrary notwithstanding."
And, since the disputed machineries were acquired in 1981 and could not have been involved in the
1975 or 1979 chattel mortgages, it was consequently an error on the part of the Sheriff to include
subject machineries with the properties enumerated in said chattel mortgages.
As the auction sale of the subject properties to PBCom is void, no valid title passed in its favor.
Consequently, the sale thereof to Tsai is also a nullity under the elementary principle of nemo dat
quod non habet, one cannot give what one does not have.
17

Petitioner Tsai also argued that assuming that PBCom's title over the contested properties is a
nullity, she is nevertheless a purchaser in good faith and for value who now has a better right than
EVERTEX.
To the contrary, however, are the factual findings and conclusions of the trial court that she is not a
purchaser in good faith. Well-settled is the rule that the person who asserts the status of a purchaser
in good faith and for value has the burden of proving such assertion.
18
Petitioner Tsai failed to
discharge this burden persuasively.
Moreover, a purchaser in good faith and for value is one who buys the property of another without
notice that some other person has a right to or interest in such property and pays a full and fair price
for the same, at the time of purchase, or before he has notice of the claims or interest of some other
person in the property.
19
Records reveal, however, that when Tsai purchased the controverted
properties, she knew of respondent's claim thereon. As borne out by the records, she received the
letter of respondent's counsel, apprising her of respondent's claim, dated February 27, 1987.
20
She
replied thereto on March 9, 1987.
21
Despite her knowledge of respondent's claim, she proceeded to
buy the contested units of machinery on May 3, 1988. Thus, the RTC did not err in finding that she
was not a purchaser in good faith.
Petitioner Tsai's defense of indefeasibility of Torrens Title of the lot where the disputed properties
are located is equally unavailing. This defense refers to sale of lands and not to sale of properties
situated therein. Likewise, the mere fact that the lot where the factory and the disputed properties
stand is in PBCom's name does not automatically make PBCom the owner of everything found
therein, especially in view of EVERTEX's letter to Tsai enunciating its claim.
Finally, petitioners' defense of prescription and laches is less than convincing. We find no cogent
reason to disturb the consistent findings of both courts below that the case for the reconveyance of
the disputed properties was filed within the reglementary period. Here, in our view, the doctrine of
laches does not apply. Note that upon petitioners' adamant refusal to heed EVERTEX's claim,
respondent company immediately filed an action to recover possession and ownership of the
disputed properties. There is no evidence showing any failure or neglect on its part, for an
unreasonable and unexplained length of time, to do that which, by exercising due diligence, could or
should have been done earlier. The doctrine of stale demands would apply only where by reason of
the lapse of time, it would be inequitable to allow a party to enforce his legal rights. Moreover, except
for very strong reasons, this Court is not disposed to apply the doctrine of laches to prejudice or
defeat the rights of an owner.
22

As to the award of damages, the contested damages are the actual compensation, representing
rentals for the contested units of machinery, the exemplary damages, and attorney's fees.
As regards said actual compensation, the RTC awarded P100,000.00 corresponding to the unpaid
rentals of the contested properties based on the testimony of John Chua, who testified that the
P100,000.00 was based on the accepted practice in banking and finance, business and investments
that the rental price must take into account the cost of money used to buy them. The Court of
Appeals did not give full credence to Chua's projection and reduced the award to P20,000.00.
Basic is the rule that to recover actual damages, the amount of loss must not only be capable of
proof but must actually be proven with reasonable degree of certainty, premised upon competent
proof or best evidence obtainable of the actual amount thereof.
23
However, the allegations of
respondent company as to the amount of unrealized rentals due them as actual damages remain
mere assertions unsupported by documents and other competent evidence. In determining actual
damages, the court cannot rely on mere assertions, speculations, conjectures or guesswork but
must depend on competent proof and on the best evidence obtainable regarding the actual amount
of loss.
24
However, we are not prepared to disregard the following dispositions of the respondent
appellate court:
. . . In the award of actual damages under scrutiny, there is nothing on record warranting the
said award of P5,200,000.00, representing monthly rental income of P100,000.00 from
November 1986 to February 1991, and the additional award of P100,000.00 per month
thereafter.
As pointed out by appellants, the testimonial evidence, consisting of the testimonies of Jonh
(sic) Chua and Mamerto Villaluz, is shy of what is necessary to substantiate the actual
damages allegedly sustained by appellees, by way of unrealized rental income of subject
machineries and equipments.
The testimony of John Cua (sic) is nothing but an opinion or projection based on what is
claimed to be a practice in business and industry. But such a testimony cannot serve as the
sole basis for assessing the actual damages complained of. What is more, there is no
showing that had appellant Tsai not taken possession of the machineries and equipments in
question, somebody was willing and ready to rent the same for P100,000.00 a month.
xxx xxx xxx
Then, too, even assuming arguendo that the said machineries and equipments could have
generated a rental income of P30,000.00 a month, as projected by witness Mamerto Villaluz,
the same would have been a gross income. Therefrom should be deducted or removed,
expenses for maintenance and repairs . . . Therefore, in the determination of the actual
damages or unrealized rental income sued upon, there is a good basis to calculate that at
least four months in a year, the machineries in dispute would have been idle due to absence
of a lessee or while being repaired. In the light of the foregoing rationalization and
computation, We believe that a net unrealized rental income of P20,000.00 a month, since
November 1986, is more realistic and fair.
25

As to exemplary damages, the RTC awarded P200,000.00 to EVERTEX which the Court of Appeals
deleted. But according to the CA, there was no clear showing that petitioners acted malevolently,
wantonly and oppressively. The evidence, however, shows otherwise.It is a requisite to award
exemplary damages that the wrongful act must be accompanied by bad faith,
26
and the guilty acted
in a wanton, fraudulent, oppressive, reckless or malevolent manner.
27
As previously stressed,
petitioner Tsai's act of purchasing the controverted properties despite her knowledge of EVERTEX's
claim was oppressive and subjected the already insolvent respondent to gross disadvantage.
Petitioner PBCom also received the same letters of Atty. Villaluz, responding thereto on March 24,
1987.
28
Thus, PBCom's act of taking all the properties found in the factory of the financially
handicapped respondent, including those properties not covered by or included in the mortgages, is
equally oppressive and tainted with bad faith. Thus, we are in agreement with the RTC that an award
of exemplary damages is proper.
The amount of P200,000.00 for exemplary damages is, however, excessive. Article 2216 of the Civil
Code provides that no proof of pecuniary loss is necessary for the adjudication of exemplary
damages, their assessment being left to the discretion of the court in accordance with the
circumstances of each case.
29
While the imposition of exemplary damages is justified in this case,
equity calls for its reduction. In Inhelder Corporation v. Court of Appeals, G.R. No. L-52358, 122
SCRA 576, 585, (May 30, 1983), we laid down the rule that judicial discretion granted to the courts in
the assessment of damages must always be exercised with balanced restraint and measured
objectivity. Thus, here the award of exemplary damages by way of example for the public good
should be reduced to P100,000.00.
By the same token, attorney's fees and other expenses of litigation may be recovered when
exemplary damages are awarded.
30
In our view, RTC's award of P50,000.00 as attorney's fees and
expenses of litigation is reasonable, given the circumstances in these cases.
WHEREFORE, the petitions are DENIED. The assailed decision and resolution of the Court of
Appeals in CA-G.R. CV No. 32986 are AFFIRMED WITH MODIFICATIONS. Petitioners Philippine
Bank of Communications and Ruby L. Tsai are hereby ordered to pay jointly and severally Ever
Textile Mills, Inc. the following: (1) P20,000.00 per month, as compensation for the use and
possession of the properties in question from November 1986
31
until subject personal properties are
restored to respondent corporation; (2) P100,000.00 by way of exemplary damages, and (3)
P50,000.00 as attorney's fees and litigation expenses. Costs against petitioners.
SO ORDERED.
Bellosillo, Mendoza, Buena and De Leon, Jr., JJ., concur.


G.R. No. 137705 August 22, 2000
SERG'S PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners,
vs.
PCI LEASING AND FINANCE, INC., respondent.
D E C I S I O N
PANGANIBAN, J .:
After agreeing to a contract stipulating that a real or immovable property be considered as personal
or movable, a party is estopped from subsequently claiming otherwise. Hence, such property is a
proper subject of a writ of replevin obtained by the other contracting party.
The Case
Before us is a Petition for Review on Certiorari assailing the January 6, 1999 Decision
1
of the Court
of Appeals (CA)
2
in CA-GR SP No. 47332 and its February 26, 1999 Resolution
3
denying
reconsideration. The decretal portion of the CA Decision reads as follows:
"WHEREFORE, premises considered, the assailed Order dated February 18, 1998 and Resolution
dated March 31, 1998 in Civil Case No. Q-98-33500 are hereby AFFIRMED. The writ of preliminary
injunction issued on June 15, 1998 is hereby LIFTED."
4

In its February 18, 1998 Order,
5
the Regional Trial Court (RTC) of Quezon City (Branch 218)
6
issued
a Writ of Seizure.
7
The March 18, 1998 Resolution
8
denied petitioners Motion for Special Protective
Order, praying that the deputy sheriff be enjoined "from seizing immobilized or other real properties
in (petitioners) factory in Cainta, Rizal and to return to their original place whatever immobilized
machineries or equipments he may have removed."
9

The Facts
The undisputed facts are summarized by the Court of Appeals as follows:
10

"On February 13, 1998, respondent PCI Leasing and Finance, Inc. ("PCI Leasing" for short) filed
with the RTC-QC a complaint for [a] sum of money (Annex E), with an application for a writ of
replevin docketed as Civil Case No. Q-98-33500.
"On March 6, 1998, upon an ex-parte application of PCI Leasing, respondent judge issued a writ of
replevin (Annex B) directing its sheriff to seize and deliver the machineries and equipment to PCI
Leasing after 5 days and upon the payment of the necessary expenses.
"On March 24, 1998, in implementation of said writ, the sheriff proceeded to petitioners factory,
seized one machinery with [the] word that he [would] return for the other machineries.
"On March 25, 1998, petitioners filed a motion for special protective order (Annex C), invoking the
power of the court to control the conduct of its officers and amend and control its processes, praying
for a directive for the sheriff to defer enforcement of the writ of replevin.
"This motion was opposed by PCI Leasing (Annex F), on the ground that the properties [were] still
personal and therefore still subject to seizure and a writ of replevin.
"In their Reply, petitioners asserted that the properties sought to be seized [were] immovable as
defined in Article 415 of the Civil Code, the parties agreement to the contrary notwithstanding. They
argued that to give effect to the agreement would be prejudicial to innocent third parties. They further
stated that PCI Leasing [was] estopped from treating these machineries as personal because the
contracts in which the alleged agreement [were] embodied [were] totally sham and farcical.
"On April 6, 1998, the sheriff again sought to enforce the writ of seizure and take possession of the
remaining properties. He was able to take two more, but was prevented by the workers from taking
the rest.
"On April 7, 1998, they went to [the CA] via an original action for certiorari."
Ruling of the Court of Appeals
Citing the Agreement of the parties, the appellate court held that the subject machines were
personal property, and that they had only been leased, not owned, by petitioners. It also ruled that
the "words of the contract are clear and leave no doubt upon the true intention of the contracting
parties." Observing that Petitioner Goquiolay was an experienced businessman who was "not
unfamiliar with the ways of the trade," it ruled that he "should have realized the import of the
document he signed." The CA further held:
"Furthermore, to accord merit to this petition would be to preempt the trial court in ruling upon the
case below, since the merits of the whole matter are laid down before us via a petition whose sole
purpose is to inquire upon the existence of a grave abuse of discretion on the part of the [RTC] in
issuing the assailed Order and Resolution. The issues raised herein are proper subjects of a full-
blown trial, necessitating presentation of evidence by both parties. The contract is being enforced by
one, and [its] validity is attacked by the other a matter x x x which respondent court is in the best
position to determine."
Hence, this Petition.
11

The Issues
In their Memorandum, petitioners submit the following issues for our consideration:
"A. Whether or not the machineries purchased and imported by SERGS became real property by
virtue of immobilization.
B. Whether or not the contract between the parties is a loan or a lease.
"12

In the main, the Court will resolve whether the said machines are personal, not immovable, property
which may be a proper subject of a writ of replevin. As a preliminary matter, the Court will also
address briefly the procedural points raised by respondent.
The Courts Ruling
The Petition is not meritorious.
Preliminary Matter:Procedural Questions
Respondent contends that the Petition failed to indicate expressly whether it was being filed under
Rule 45 or Rule 65 of the Rules of Court. It further alleges that the Petition erroneously impleaded
Judge Hilario Laqui as respondent.
There is no question that the present recourse is under Rule 45. This conclusion finds support in the
very title of the Petition, which is "Petition for Review on Certiorari."
13

While Judge Laqui should not have been impleaded as a respondent,
14
substantial justice requires
that such lapse by itself should not warrant the dismissal of the present Petition. In this light, the
Court deems it proper to remove, motu proprio, the name of Judge Laqui from the caption of the
present case.
Main Issue: Nature of the Subject Machinery
Petitioners contend that the subject machines used in their factory were not proper subjects of the
Writ issued by the RTC, because they were in fact real property. Serious policy considerations, they
argue, militate against a contrary characterization.
Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal
property only.
15
Section 3 thereof reads:
"SEC. 3. Order. -- Upon the filing of such affidavit and approval of the bond, the court shall issue an
order and the corresponding writ of replevin describing the personal property alleged to be
wrongfully detained and requiring the sheriff forthwith to take such property into his custody."
On the other hand, Article 415 of the Civil Code enumerates immovable or real property as follows:
"ART. 415. The following are immovable property:
x x x x x x x x x
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly
to meet the needs of the said industry or works;
x x x x x x x x x"
In the present case, the machines that were the subjects of the Writ of Seizure were placed by
petitioners in the factory built on their own land. Indisputably, they were essential and principal
elements of their chocolate-making industry. Hence, although each of them was movable or
personal property on its own, all of them have become "immobilized by destination because they are
essential and principal elements in the industry."
16
In that sense, petitioners are correct in arguing
that the said machines are real, not personal, property pursuant to Article 415 (5) of the Civil Code.
17

Be that as it may, we disagree with the submission of the petitioners that the said machines are not
proper subjects of the Writ of Seizure.
The Court has held that contracting parties may validly stipulate that a real property be considered
as personal.
18
After agreeing to such stipulation, they are consequently estopped from claiming
otherwise. Under the principle of estoppel, a party to a contract is ordinarily precluded from denying
the truth of any material fact found therein.
Hence, in Tumalad v. Vicencio,
19
the Court upheld the intention of the parties to treat a house as a
personal property because it had been made the subject of a chattel mortgage. The Court ruled:
"x x x. Although there is no specific statement referring to the subject house as personal property,
yet by ceding, selling or transferring a property by way of chattel mortgage defendants-appellants
could only have meant to convey the house as chattel, or at least, intended to treat the same as
such, so that they should not now be allowed to make an inconsistent stand by claiming otherwise."
Applying Tumalad, the Court in Makati Leasing and Finance Corp. v. Wearever Textile Mills
20
also
held that the machinery used in a factory and essential to the industry, as in the present case, was a
proper subject of a writ of replevin because it was treated as personal property in a contract.
Pertinent portions of the Courts ruling are reproduced hereunder:
"x x x. If a house of strong materials, like what was involved in the above Tumalad case, may be
considered as personal property for purposes of executing a chattel mortgage thereon as long as the
parties to the contract so agree and no innocent third party will be prejudiced thereby, there is
absolutely no reason why a machinery, which is movable in its nature and becomes immobilized
only by destination or purpose, may not be likewise treated as such. This is really because one who
has so agreed is estopped from denying the existence of the chattel mortgage."
In the present case, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. Specifically, Section 12.1 of the Agreement reads as follows:
21

"12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding
that the PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or
attached to or embedded in, or permanently resting upon, real property or any building thereon, or
attached in any manner to what is permanent."
Clearly then, petitioners are estopped from denying the characterization of the subject machines as
personal property. Under the circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding -- that the machines should be deemed personal
property pursuant to the Lease Agreement is good only insofar as the contracting parties are
concerned.
22
Hence, while the parties are bound by the Agreement, third persons acting in good faith
are not affected by its stipulation characterizing the subject machinery as personal.
23
In any event,
there is no showing that any specific third party would be adversely affected.
Validity of the Lease Agreement
In their Memorandum, petitioners contend that the Agreement is a loan and not a lease.
24
Submitting
documents supposedly showing that they own the subject machines, petitioners also argue in their
Petition that the Agreement suffers from "intrinsic ambiguity which places in serious doubt the
intention of the parties and the validity of the lease agreement itself."
25
In their Reply to respondents
Comment, they further allege that the Agreement is invalid.
26

These arguments are unconvincing. The validity and the nature of the contract are the lis mota of the
civil action pending before the RTC. A resolution of these questions, therefore, is effectively a
resolution of the merits of the case. Hence, they should be threshed out in the trial, not in the
proceedings involving the issuance of the Writ of Seizure.
Indeed, in La Tondea Distillers v. CA,
27
the Court explained that the policy under Rule 60 was that
questions involving title to the subject property questions which petitioners are now raising --
should be determined in the trial. In that case, the Court noted that the remedy of defendants under
Rule 60 was either to post a counter-bond or to question the sufficiency of the plaintiffs bond. They
were not allowed, however, to invoke the title to the subject property. The Court ruled:
"In other words, the law does not allow the defendant to file a motion to dissolve or discharge the writ
of seizure (or delivery) on ground of insufficiency of the complaint or of the grounds relied upon
therefor, as in proceedings on preliminary attachment or injunction, and thereby put at issue the
matter of the title or right of possession over the specific chattel being replevied, the policy
apparently being that said matter should be ventilated and determined only at the trial on the
merits."
28

Besides, these questions require a determination of facts and a presentation of evidence, both of
which have no place in a petition for certiorari in the CA under Rule 65 or in a petition for review in
this Court under Rule 45.
29

Reliance on the Lease Agreement
It should be pointed out that the Court in this case may rely on the Lease Agreement, for nothing on
record shows that it has been nullified or annulled. In fact, petitioners assailed it first only in the RTC
proceedings, which had ironically been instituted by respondent. Accordingly, it must be presumed
valid and binding as the law between the parties.
Makati Leasing and Finance Corporation
30
is also instructive on this point. In that case, the Deed of
Chattel Mortgage, which characterized the subject machinery as personal property, was also
assailed because respondent had allegedly been required "to sign a printed form of chattel mortgage
which was in a blank form at the time of signing." The Court rejected the argument and relied on the
Deed, ruling as follows:
"x x x. Moreover, even granting that the charge is true, such fact alone does not render a contract
void ab initio, but can only be a ground for rendering said contract voidable, or annullable pursuant
to Article 1390 of the new Civil Code, by a proper action in court. There is nothing on record to show
that the mortgage has been annulled. Neither is it disclosed that steps were taken to nullify the
same. x x x"
Alleged Injustice Committed on the Part of Petitioners
Petitioners contend that "if the Court allows these machineries to be seized, then its workers would
be out of work and thrown into the streets."
31
They also allege that the seizure would nullify all efforts
to rehabilitate the corporation.
Petitioners arguments do not preclude the implementation of the Writ.1wphi1 As earlier discussed, law and
jurisprudence support its propriety. Verily, the above-mentioned consequences, if they come true,
should not be blamed on this Court, but on the petitioners for failing to avail themselves of the
remedy under Section 5 of Rule 60, which allows the filing of a counter-bond. The provision states:
"SEC. 5. Return of property. -- If the adverse party objects to the sufficiency of the applicants bond,
or of the surety or sureties thereon, he cannot immediately require the return of the property, but if
he does not so object, he may, at any time before the delivery of the property to the applicant,
require the return thereof, by filing with the court where the action is pending a bond executed to the
applicant, in double the value of the property as stated in the applicants affidavit for the delivery
thereof to the applicant, if such delivery be adjudged, and for the payment of such sum to him as
may be recovered against the adverse party, and by serving a copy bond on the applicant."
WHEREFORE, the Petition is DENIED and the assailed Decision of the Court of
Appeals AFFIRMED. Costs against petitioners.
SO ORDERED.
Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.


REPUBLIC OF
THEPHILIPPINES,
Petitioner,


G.R. No. 186166

Present:




- versus -




JOSE T. CHING represented by
his Attorney-in-fact, ANTONIO
V. CHING,
Respondent.
CORONA,

CJ,
CARPIO, J., Chairperson,
LEONARDO-DE CASTRO,


PERALTA, and
MENDOZA, JJ.




Promulgated:

October 20, 2010

X -------------------------------------------------------------------------------------- X

D E C I S I O N

MENDOZA, J .:


In this Petition for Review on certiorari under Rule 45, the Republic of the
Philippines, represented by the Office of the Solicitor General (OSG), assails the
November 28, 2008 Decision
[1]
of the Court of Appeals (CA), in CA-G.R. CV No.
00318-MIN, reversing the December 3, 2002 Resolution
[2]
of the Regional Trial
Court, Butuan City, Branch 2 (RTC), disallowing the Application for Registration
of Title of respondent Jose Ching, represented by his Attorney-in-Fact, Antonio
Ching, in Land Registration Case No. N-290.

THE FACTS


On August 9, 1999, respondent Jose Ching, represented by his Attorney-in-
Fact, Antonio Ching, filed a verified Application for Registration of Title covering
a parcel of land with improvements identified as Lot 1, SGS-13-000037-D, being a
portion of Lot 2738, GSS-10-000043, before the RTC. The subject lot is a
consolidation of three (3) contiguous lots situated in Banza, Butuan City, Agusan
del Norte, with an area of 58,229 square meters. The first parcel of land is covered
by Tax Declaration No. 96GR-11-003-0556-A; the second parcel by Tax
Declaration No. 96GR-11-003-0444-I; and the third parcel by Tax
Declaration No. 96GR-11-003-0537-A. In support of his application,
respondent attached the (a) Sketch plan;
[3]
(b) Technical description;
[4]
(c) Tracing
Cloth of Plan of Portion of Lot 2738, Gss-10-000043, which is a Segregation Plan
of Portion of Lot 2738, Gss-10-0000431, as surveyed for Jose T. Ching and duly
approved by the Bureau of Land DENR Region XIII on July 08, 1998 covering the
subject land;
[5]
and (d) Special Power of Attorney executed by Jose T. Ching
authorizing Antonio V. Ching, Jr. to file an application for title over the land.
[6]


Respondent alleged that on April 10, 1979, he purchased the subject land
from the late former governor and Congressman Democrito O. Plaza as evidenced
by a Deed of Sale of Unregistered Lands.
[7]



Initially, the RTC, acting as a land registration court, ordered respondent to
show cause why his application for registration of title should not be dismissed for
his failure to state the current assessed value of the subject land and his non-
compliance with the last paragraph of Section 17 of Presidential Decree (P.D.) No.
1529.
[8]


Accordingly, on September 3, 1999, respondent filed a Verified Amended
Application
[9]
which the RTC found to be sufficient in form and substance.
The case was set for initial hearing on December 22, 1999.
[10]


On December 16, 1999, the OSG duly deputized the Provincial Prosecutor of
Agusan del Norte to appear on behalf of the State.
[11]
Thereafter, on January 20,
2000, the OSG filed an Opposition to the application for registration of
title. Specifically, the OSG alleged:

(1) That neither the applicant nor his predecessors-in-
interest have been in open, continuous, exclusive and notorious
possession and occupation of the land in question since June 12,
1945 or prior thereto [Sec. 48 (b) C.A. 141, as amended by P.D.
1073];

(2) That the muniments of title and/or any tax declarations
and tax payments receipts of applicant attached to or alleged in
the application, do not constitute competent and sufficient
evidence of a bona fide acquisition of the land applied for or of his
open, continuous, exclusive and notorious possession and
occupation of the land in the concept of owner since June 12, 1945
or prior and the tax declaration and tax payment receipts appear
not to be genuine and are of recent vintage;

(3) That the claim of ownership in fee simple on the basis of
Spanish title or grant can no longer be availed of by the applicant
who have failed to file an appropriate application for registration
within six (6) months from 16 February 1976 under P.D. No. 892
as the instant application appears to have been filed on December
17, 1998; and

(4) That the parcels of land applied for are portions of the
public domain belonging to the Republic of the Philippines not
subject to private appropriation.
[12]

On June 28, 2001, the Department of Environment and Natural Resources
likewise filed its opposition to the application.

On December 3, 2002, the RTC resolved to dismiss the respondents
application for registration.
[13]
The dispositive portion reads:

IN VIEW OF THE FOREGOING, the court resolves to
dismiss as it hereby dismisses the instant application for
registration of title for insufficiency of evidence.

SO ORDERED.


The RTC was not convinced that respondents Deed of Sale sufficiently
established that he was the owner in fee simple of the land sought to be
registered. The RTC wrote [e]vidence only shows that the applicant and his
vendor as predecessor-in-interest have been in open, peaceful, notorious and
exclusive possession starting from 1965. Among the tax declarations marked
Exhibits R to R-7 includes the oldest one marked Exhibit R-7 shown in the
back lower portion that it was effective beginning the year 1980, and among the
tax declarations marked Exhibit S to S-8 inclusive, the oldest one marked
Exhibit S-8 is effective in the year 1980 and among the Tax Declaration marked
Exhibit T to T-7 inclusive, the oldest one marked Exhibit T-7 shows that it
began to be effective in the year 1980 also. In the Certification (Exhibit U)
issued by the Office of the City Treasurer of Butuan shows that the payment of the
realty taxes paid for the 3 parcels started only in the year 1980.
[14]


Respondent filed a motion for reconsideration and a subsequent
supplemental motion for reconsideration with attached additional tax declarations.
The RTC denied both motions in its December 11, 2003 Resolution
[15]
stating that
it could not consider the additional tax declarations attached in the Supplemental
Motion for Reconsideration as these were not formally offered in evidence. The
RTC also noted that the additional documents were mere photocopies and would
not have any probative value because they were not in accord with the
requirements under Act 496
[16]
and P.D. 1529
[17]
that only original muniments of
title or copies thereof must be presented.

Respondent appealed the RTC ruling before the CA. Respondent claimed
that the RTC erred in dismissing the application for registration of title for
insufficiency of evidence and in failing to consider the additional tax declarations
attached in his Supplemental Motion for Reconsideration.
[18]


On November 28, 2008, the CA reversed the RTCs earlier resolution and
granted respondents application for registration of title.
[19]
The decretal portion of
said decision reads:

WHEREFORE, the appealed Decision of the Regional Trial
Court, Branch 2, Butuan City acting as land registration court,
dismissing the application for registration of title for insufficiency
of evidence is hereby REVERSED and SET ASIDE. The
Appellants application for land registration is GRANTED.

SO ORDERED.
[20]


The CA ruled that the RTC erred in failing to consider the additional
documents attached in respondents Supplemental Motion for
Reconsideration. The CA ratiocinated:

Clearly from the foregoing tax declarations which all went
unchallenged and formed part of the record of the instant case, it
could clearly be seen that the same parcels of land had been in
possession of the petitioner-appellants (respondent)
predecessors-in-interest since 1948 until these parcels were
purchased by him on 10 April 1979. Since the applicant and his
predecessors-in-interest had been in possession of the land for
more than thirty (30) years continuously, peacefully, adversely,
publicly and to the exclusion of everybody, the same was in the
concept of owners. This also means that petitioner-appellant is no
longer required to prove that the property in question is classified as
alienable and disposable land of the public domain.
[21]
The long and
continuous possession thereof by petitioner-appellant and his
predecessors-in-interest since 1948 or a total period of fifty-one
(51) years before the application was filed on 09 August
1999 converted the property to a private one. This is but a mere
reiteration of the established rule that alienable public land held
by a possessor, personally, or through his predecessor-in-interest,
openly, continuously and exclusively for the prescribed statutory
period of thirty (30) years under the Public Land Act, as amended,
is converted to private property by the mere lapse or completion
of said period, ipso jure.
[22]


Hence, this petition.
[23]


In its Memorandum,
[24]
the OSG submits the following

ISSUES

I

The Court of Appeals erred in reversing and setting aside the
Resolution dated December 23, 2002 of the Land Registration
Court denying the BELATED submission of tax declarations
which the herein respondent merely attached in its supplemental
motion for reconsideration and which were NOT FORMALLY
OFFERED in evidence during the trial of the case, as required
under Section 34 of Rule 132 of the 1997 Revised Rules of Civil
Procedure;

II

The Court of Appeals erred in reversing and setting aside the
Resolution dated December 23, 2002 of the Land Registration
Court denying the admission of MERE PHOTOCOPIES of tax
declarations which have not been verified or authenticated, in
flagrant violation of the requirements of both Act 496 (Land
Registration Act) and PD 1529 (Property Registration
Act) providing that only ORIGINAL muniments of titles or
original copies thereof shall be filed;
III

The Court of Appeals erred in reversing and setting aside the
subject Resolution of the Land Registration Court which denied
the application for registration on the ground that the respondent
herein failed to prove that the subject land is alienable and
disposable land of the public domain and have been in possession
for the length of time and manner and concept prescribed in
Section 48(b) of the CA 141 as amended.
[25]


The petition is meritorious.

Sec. 14(1) of P.D. 1529
[26]
in relation to Section 48(b) of Commonwealth
Act 141, as amended by Section 4 of P.D. 1073,
[27]
provides:

SEC. 14. Who may apply.The following persons may file in the
proper Court of First Instance [now Regional Trial Court] an application
for registration of title to land, whether personally or through their duly
authorized representatives:

(1) Those who by themselves or through their predecessors-in-
interest have been in open, continuous, exclusive and notorious possession
and occupation of alienable and disposable lands of the public domain
under a bona fide claim of ownership since June 12, 1945, or earlier.

X x x
Section 48. The following described citizens of the Philippines,
occupying lands of the public domain or claiming to own any such lands or
an interest therein, but whose titles have not been perfected or completed,
may apply to the Court of First Instance [now Regional Trial Court] of the
province where the land is located for confirmation of their claims and the
issuance of a certificate of title therefor, under the Land Registration Act,
to wit:

X x x

(b) Those who by themselves or through their
predecessors-in-interest have been in open, continuous,
exclusive and notorious possession and occupation of
agricultural lands of the public domain, under a bona
fide claim of acquisition of ownership, since June 12,
1945, or earlier, immediately preceding the filing of the
application for confirmation of title except when prevented
by war or force majeure. These shall be conclusively
presumed to have performed all the conditions essential to a
Government grant and shall be entitled to a certificate of title
under the provisions of this chapter.

Based on these legal parameters, applicants for registration of title under
Section 14(1) must sufficiently establish: (1) that the subject land forms part of the
disposable and alienable lands of the public domain; (2) that the applicant and his
predecessors-in-interest have been in open, continuous, exclusive and notorious
possession and occupation of the same; and (3) that it is under a bona fide claim of
ownership since June 12, 1945, or earlier.

Thus, before an applicant can adduce evidence of open, continuous,
exclusive and notorious possession and occupation of the property in question, he
must first prove that the land belongs to the alienable and disposable lands of the
public domain. It is doctrinal that, under the Regalian doctrine, all lands of the
public domain pertain to the State and the latter is the foundation of any asserted
right to ownership in land. Accordingly, the State presumably owns all lands not
otherwise appearing to be clearly within private ownership. To overcome such
presumption, irrefutable evidence must be shown by the applicant that the land
subject of registration has been declassified and now belongs to the alienable and
disposable portion of the public domain.
[28]


Notably, the Court finds no evidence in this case that would show that the
land in question has been classified as alienable and disposable land of the public
domain. The sketch plan, technical description and the tracing clothing plan that
respondent presented do not show the actual legal status of the land. Hence, the
conclusion reached by the CA that it was no longer necessary for the respondent to
prove the alienability of the land in question on the assumption that he had already
completed the thirty-year possessory requirement was misplaced. The
requirements of alienability and possession and occupation since June 12, 1945 or
earlier under Section 14(1) are indispensable prerequisites to a favorable
registration of his title to the property. Absent one, the application for registration
is materially infirmed.

Since respondent provided no competent and persuasive evidence to show
that the land has been classified as alienable and disposable, then the application
for registration should be denied.

At any rate, after reviewing the documents submitted by the respondent, it is
clear that there was no substantive evidence to show that he complied with the
requirement of possession and occupation since June 12, 1945 or earlier.

The earliest tax declaration that respondent tried to incorporate in his
Supplemental Motion for Reconsideration does not measure up to the time
requirement. In particular, the tax declaration on the first lot, as shown by Tax
Declaration No. 6932 in the name of Adulfo Calo, only began in 1948.
[29]
On the
second lot, Tax Declaration No. 3852 in the name of Marcos Azote merely
appeared in 1952.
[30]
While on the third lot, Tax Declaration No. 6891 registered
in the name of the Heirs of Felipe Calo came up in 1948.
[31]
Unmistakably, the
respondent cannot avail of registration under Section 14(1) of P.D. 1529.

In his Memorandum,
[32]
respondent proffered that should not the land be
registrable under Section 14(1) of P.D. 1529, it could still be registered under
Section 14(2) of P.D. 1529.
[33]


He cannot.

The case of Heirs of Mario Malabanan vs. Republic
[34]
summarized the
distinctions between the legal requisites in applications for registration of title
under Section 14(1) and Section 14(2) of P.D. 1529, to wit:

(1) In connection with Section 14(1) of the Property
Registration Decree, Section 48(b) of the Public Land Act
recognizes and confirms that those who by themselves or through
their predecessors in interest have been in open, continuous,
exclusive, and notorious possession and occupation of alienable
and disposable lands of the public domain, under a bona fide
claim of acquisition of ownership, since June 12, 1945 have
acquired ownership of, and registrable title to, such lands based
on the length and quality of their possession.

(a) Since Section 48(b) merely requires
possession since 12 June 1945 and does not require that
the lands should have been alienable and disposable
during the entire period of possession, the possessor is
entitled to secure judicial confirmation of his title thereto
as soon as it is declared alienable and disposable, subject
to the timeframe imposed by Section 47 of the Public Land
Act.
[35]


(b) The right to register granted under Section
48(b) of the Public Land Act is further confirmed by
Section 14(1) of the Property Registration Decree.

(2) In complying with Section 14(2) of the Property
Registration Decree, consider that under the Civil Code,
prescription is recognized as a mode of acquiring ownership of
patrimonial property. However, public domain lands become only
patrimonial property not only with a declaration that these are
alienable or disposable. There must also be an express government
manifestation that the property is already patrimonial or no longer
retained for public service or the development of national wealth,
under Article 422 of the Civil Code.
[36]
And only when the property
has become patrimonial can the prescriptive period for the
acquisition of property of the public dominion begin to run.

(a) Patrimonial property is private property of the
government. The person acquires ownership of
patrimonial property by prescription under the Civil Code
is entitled to secure registration thereof under Section
14(2) of the Property Registration Decree.

(b) There are two kinds of prescription by which
patrimonial property may be acquired, one ordinary and
other extraordinary. Under ordinary acquisitive
prescription, a person acquires ownership of a patrimonial
property through possession for at least ten (10) years, in
good faith and with just title. Under extraordinary
acquisitive prescription, a persons uninterrupted adverse
possession of patrimonial property for at least thirty (30)
years, regardless of good faith or just title, ripens into
ownership.

The import of this ruling is clear. Under Section 14(2) of P.D. 1529, before
acquisitive prescription could commence, the property sought to be registered must
not only be classified as alienable and disposable; it must also be expressly
declared by the State that it is no longer intended for public service or the
development of the national wealth or that the property has been converted into
patrimonial. Thus, absent an express declaration by the State, the land remains to
be property of public dominion.

WHEREFORE, the petition is GRANTED. The November 28, 2008
Decision of the Court of Appeals is hereby REVERSED and SET ASIDE. The
Application for Registration of Title of respondent Jose T. Ching in Land
Registration Case No. N-290 is DENIED.


G.R. No. 136438 November 11, 2004
TEOFILO C. VILLARICO, petitioner,
vs.
VIVENCIO SARMIENTO, SPOUSES BESSIE SARMIENTO-DEL MUNDO & BETH DEL MUNDO,
ANDOKS LITSON CORPORATION and MARITES CARINDERIA, respondents.


D E C I S I O N


SANDOVAL-GUTIERREZ, J .:
Before us is a petition for review on certiorari of the Decision
1
of the Court of Appeals dated
December 7, 1998 in CA-G.R. CV No. 54883, affirming in toto the Decision
2
of the Regional Trial
Court (RTC) of Paraaque City, Branch 259, dated November 14, 1996, in Civil Case No. 95-044.
The facts of this case, as gleaned from the findings of the Court of Appeals, are:
Teofilo C. Villarico, petitioner, is the owner of a lot in La Huerta, Paraaque City, Metro Manila with
an area of sixty-six (66) square meters and covered by Transfer Certificate of Title (T.C.T.) No.
95453 issued by the Registry of Deeds, same city.
Petitioners lot is separated from the Ninoy Aquino Avenue (highway) by a strip of land belonging to
the government. As this highway was elevated by four (4) meters and therefore higher than the
adjoining areas, the Department of Public Works and Highways (DPWH) constructed stairways at
several portions of this strip of public land to enable the people to have access to the highway.
Sometime in 1991, Vivencio Sarmiento, his daughter Bessie Sarmiento and her husband Beth Del
Mundo, respondents herein, had a building constructed on a portion of said government land. In
November that same year, a part thereof was occupied by Andoks Litson Corporation and Marites
Carinderia, also impleaded as respondents.
In 1993, by means of a Deed of Exchange of Real Property, petitioner acquired a 74.30 square
meter portion of the same area owned by the government. The property was registered in his name
as T.C.T. No. 74430 in the Registry of Deeds of Paraaque City.
In 1995, petitioner filed with the RTC, Branch 259, Paraaque City, a complaint for accion publiciana
against respondents, docketed as Civil Case No. 95-044. He alleged inter alia that respondents
structures on the government land closed his "right of way" to the Ninoy Aquino Avenue; and
encroached on a portion of his lot covered by T.C.T. No. 74430.
Respondents, in their answer, specifically denied petitioners allegations, claiming that they have
been issued licenses and permits by Paraaque City to construct their buildings on the area; and
that petitioner has no right over the subject property as it belongs to the government.
After trial, the RTC rendered its Decision, the dispositive portion of which reads:
"WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring the defendants to have a better right of possession over the subject land
except the portion thereof covered by Transfer Certificate of Title No. 74430 of the
Register of Deeds of Paraaque;
2. Ordering the defendants to vacate the portion of the subject premises described in
Transfer Certificate of Title No. 74430 and gives its possession to plaintiff; and
3. Dismissing the claim for damages of the plaintiff against the defendants, and
likewise dismissing the claim for attorneys fees of the latter against the former.
Without pronouncement as to costs.
SO ORDERED."
3

The trial court found that petitioner has never been in possession of any portion of the public land in
question. On the contrary, the defendants are the ones who have been in actual possession of the
area. According to the trial court, petitioner was not deprived of his "right of way" as he could use the
Kapitan Tinoy Street as passageway to the highway.
On appeal by petitioner, the Court of Appeals issued its Decision affirming the trial courts Decision
in toto, thus:
"WHEREFORE, the judgment hereby appealed from is hereby AFFIRMED in toto, with costs
against the plaintiff-appellant.
SO ORDERED."
4

In this petition, petitioner ascribes to the Court of Appeals the following assignments of error:
"I
THE FINDINGS OF FACT OF THE HON. COURT OF APPEALS CONTAINED A
CONCLUSION WITHOUT CITATION OF SPECIFIC EVIDENCE ON WHICH THE SAME
WAS BASED.
II
THE HON. COURT OF APPEALS ERRED IN CONSIDERING THAT THE ONLY ISSUE IN
THIS CASE IS WHETHER OR NOT THE PLAINTIFF-APPELLANT HAS ACQUIRED A
RIGHT OF WAY OVER THE LAND OF THE GOVERNMENT WHICH IS BETWEEN HIS
PROPERTY AND THE NINOY AQUINO AVENUE.
III
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT ACCION PUBLICIANA
IS NOT THE PROPER REMEDY IN THE CASE AT BAR.
IV
THE HON. COURT OF APPEALS ERRED IN CONCLUDING THAT THE EXISTENCE OF
THE PLAINTIFF-APPELLANTS RIGHT OF WAY DOES NOT CARRY POSSESSION OVER
THE SAME.
V
THE HON. COURT OF APPEALS ERRED IN NOT RESOLVING THE ISSUE OF WHO HAS
THE BETTER RIGHT OF POSSESSION OVER THE SUBJECT LAND BETWEEN THE
PLAINTIFF-APPELLANT AND THE DEFENDANT-APPELLEES."
5

In their comment, respondents maintain that the Court of Appeals did not err in ruling that petitioners
action for accion publiciana is not the proper remedy in asserting his "right of way" on a lot owned by
the government.
Here, petitioner claims that respondents, by constructing their buildings on the lot in question, have
deprived him of his "right of way" and his right of possession over a considerable portion of the same
lot, which portion is covered by his T.C.T. No. 74430 he acquired by means of exchange of real
property.
It is not disputed that the lot on which petitioners alleged "right of way" exists belongs to the state or
property of public dominion. Property of public dominion is defined by Article 420 of the Civil Code as
follows:
"ART. 420. The following things are property of public dominion:
(1) Those intended for public use such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and other of similar character.
(2) Those which belong to the State, without being for public use, and are intended for some
public service or for the development of the national wealth."
Public use is "use that is not confined to privileged individuals, but is open to the indefinite
public."
6
Records show that the lot on which the stairways were built is for the use of the people as
passageway to the highway. Consequently, it is a property of public dominion.
Property of public dominion is outside the commerce of man and hence it: (1) cannot be alienated or
leased or otherwise be the subject matter of contracts; (2) cannot be acquired by prescription
against the State; (3) is not subject to attachment and execution; and (4) cannot be burdened by any
voluntary easement.
7

Considering that the lot on which the stairways were constructed is a property of public dominion, it
can not be burdened by a voluntary easement of right of way in favor of herein petitioner. In fact, its
use by the public is by mere tolerance of the government through the DPWH. Petitioner cannot
appropriate it for himself. Verily, he can not claim any right of possession over it. This is clear from
Article 530 of the Civil Code which provides:
"ART. 530. Only things and rights which are susceptible of being appropriated may be the
object of possession."
Accordingly, both the trial court and the Court of Appeals erred in ruling that respondents have better
right of possession over the subject lot.
However, the trial court and the Court of Appeals found that defendants buildings were constructed
on the portion of the same lot now covered by T.C.T. No. 74430 in petitioners name. Being its
owner, he is entitled to its possession.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals dated
December 7, 1998 in CA-G.R. CV No. 54883 is AFFIRMED with MODIFICATION in the sense that
neither petitioner nor respondents have a right of possession over the disputed lot where the
stairways were built as it is a property of public dominion. Costs against petitioner.
SO ORDERED.


FRANCO ESGUERRA,
Petitioner,



- versus -



G.R. No. 158328

Present:

QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

ALFONSO MANANTAN,
DANILO MANANTAN, ARIANG


Promulgated:
ANTONIO,
AQUILINOCONCEPCION, and
FORTUNATO MIGUEL,
Respondents.

February 23, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J .:
Before us is a petition for review on certiorari assailing the
Decision
[1]
dated October 30, 2002 of the Court of Appeals in CA-G.R. CV No.
58050 and its Resolution
[2]
dated May 20, 2003 denying the motion for
reconsideration. The appellate court had affirmed the decision
[3]
dated February
13, 1997 of the Regional Trial Court (RTC) of Guimba, Nueva Ecija, Branch 31.
This case stemmed from the complaint for ejectment filed by petitioner
Franco Esguerra against respondents before the RTC. Franco claims he is the
registered owner of a parcel of land surveyed as Lot No. 661, Cad. No. 699,
covering an area of 7,786 square meters, and situated in Barangay San Cristobal,
Licab, Nueva Ecija. Franco avers that he inherited it from his father, Pio Esguerra,
who had inherited it from his father, Lorenzo Esguerra. However, Pio allowed
Gaudencio Miguel
[4]
to occupy his property and later mortgaged the land to
Gaudencio as evidenced by a document entitled Deed of Sale with Right to
Repurchase dated June 6, 1960. In 1979, Gaudencio executed an instrument
denominated as Kasunduan to cancel said deed of sale with the right to repurchase.

Before the repurchase of the property, respondents Alfonso Manantan,
Danilo Manantan, Ariang Antonio, Aquilino Concepcion and Fortunato Miguel
constructed their houses on the lot without the knowledge and consent of Pio.

On April 14, 1992, Franco filed his application for free patent of the subject
property. On May 20, 1992, Free Patent No. 034914-92-1117 was issued in his
name. Pursuant to such free patent title, the Register of Deeds of
the Province of Nueva Ecija issued Original Certificate of Title (OCT) No. P-
15176 in Francos name.

Thereafter, Franco demanded that respondents vacate the premises, but they
refused to do so. He then filed a complaint for ejectment against them before the
RTC which was docketed as Civil Case No. 723-G.

Pending the ejectment case, respondents filed a case for annulment of OCT
No. P-15176 which was docketed as Civil Case No. 779-G. This case was
subsequently consolidated with Civil Case No. 723-G.
On February 13, 1997, the RTC dismissed the complaint for ejectment and
declared null and void OCT No. P-15176. The dispositive portion of the decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the defendants Alfonso Manantan, Danilo Manantan, Ariang Antonio,
Aquilino Concepcion and Fortunato Miguel in Civil Case No. 723-G and
plaintiffs in Civil Case No. 779-G and against the plaintiff Franco Esguerra in
Civil Case No. 723-G and defendant in Civil Case No. 779-G, to wit:
1. Dismissing the complaint in Civil Case No. 723-G for lack of
merit;
2. In Civil Case No. 779-G, the Court hereby declares, as it hereby
declared as NULL and VOID AND WITHOUT FORCE AND EFFECT
Original Certificate of Title No. P-15176, issued by Register of Deeds [of]
the Province of Nueva Ecija pursuant to Free Patent No. 034914-92-1117
in the name of Franco F. Esguerra, and ordering the same Register of
Deeds to cancel said OCT No. P-15176, including the owners copy issued
to said Franco F. Esguerra.
IT IS SO ORDERED.
[5]

Franco appealed to the Court of Appeals. The appellate court denied the
appeal and affirmed the trial courts decision. Hence, this petition where petitioner
assigns the following errors:
I.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT THE
PETITIONER IS ESTOPPED FROM RAISING THE ISSUE OF LACK OF
JURISDICTION.
II.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT
RESPONDENTS HAD ACQUIRED A VESTED RIGHT OVER THE
PROPERTY AND THEREFORE HAVE THE RIGHT TO ATTACK THE
TITLE OF PETITIONERS AND SEEK RECONVEYANCE OF TITLE OVER
THE SUBJECT LAND.
III.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT
PETITIONER[S] RIGHT TO REDEEM THE PROPERTY ALREADY
EXPIRED.
IV.
THE COURT OF APPEALS ERRED WHEN IT RULED THAT
PETITIONERS CLAIM FOR MORAL AND ATTORNEYS FEES ARE
WITHOUT BASIS.
[6]

Simply stated, the issues before us in this case are: (1) Was petitioner
estopped from questioning the jurisdiction of the RTC? (2) Who has a better right
over the contested property?

On the first issue, petitioner contends that he is not estopped from
questioning the trial courts jurisdiction to decide the complaints for ejectment and
annulment of title. He claims that he immediately appealed the decision to the
Court of Appeals and thus, he cannot be guilty of laches since the appeal was the
earliest opportunity to question the validity of the decision.

On the second issue, petitioner argues that respondents occupied the subject
property by mere tolerance of Gaudencio even without the permission of Pio. He
also avers that since respondents possession has not been open, continuous,
exclusive and notorious for 30 years, they have not acquired the property through
prescription. According to him, the subject property was already redeemed
on December 24, 1978 as evidenced by the Kasunduan executed by Gaudencio in
1979.

He contends that respondents action to annul the title on the ground of fraud
has prescribed since they filed it two years after the issuance of title. He avers that
the action should have been filed within one year after the date of the issuance of
the decree of registration. He further claims that the respondents have no
personality to question his title because only the State has the right to do so.

Respondents, for their part, maintain that they had established their open and
continuous possession of the subject property for 30 years and that they had been
paying the real estate taxes of the property. They also stress that Franco neither
possessed nor improved the subject property and even admitted that respondents
possessed the property. They maintain that their action for annulment of title has
not prescribed since what they actually filed was an action for reconveyance which
prescribes after ten years from registration of title.

The Court of Appeals, in affirming the RTC decision, reasoned that
petitioner was estopped from questioning the trial courts jurisdiction to hear and
decide the case when he had voluntarily submitted himself to its jurisdiction. It
also found that the respondents had acquired title over the same for having been in
actual adverse possession of the subject property for 30 years. On the issue of
redemption, the appellate court held that under Article 1606
[7]
of the Civil Code of
the Philippines, Pios right to redeem the property had already prescribed.

We agree with the appellate court that petitioner is estopped from questioning
the jurisdiction of the RTC. Lack of jurisdiction of the court over an action cannot
be waived by the parties or be cured by their silence, acquiescence, or express
consent. A party may assail the jurisdiction of the court over the action at any stage
of the proceedings and even on appeal.
[8]
However, participation in all stages of the
proceedings before the trial court, including invocation of its authority in asking for
affirmative relief, effectively bars a party by estoppel from challenging the courts
jurisdiction.
[9]


Note that it was petitioner who filed a complaint for ejectment against
respondents before the RTC. It was actually the respondents who moved to
dismiss the complaint for lack of jurisdiction. The trial court denied it since the
allegations of the complaint showed that it was in fact one for recovery of
possession of real property.
[10]
When respondents filed a complaint for annulment
of title, petitioner moved to dismiss it, citing the pendency of the ejectment case,
and not lack of jurisdiction, as ground. But it was denied by the RTC. Thereafter,
both parties moved for joint trial of the cases. Considering that these cases
involved the same question of fact, the trial court was correct to jointly try and
decide them. Two cases involving the same parties and affecting closely related
subject matters must be ordered consolidated and jointly tried in court, where the
earlier case was filed.
[11]


Moreover, petitioner never raised the issue of lack of jurisdiction in his
pleadings before the RTC. It was only in the Court of Appeals where he asserted
for the first time that the RTC lacked jurisdiction over the ejectment case. This
Court therefore cannot countenance petitioners adopting inconsistent postures by
attacking the jurisdiction of the regular courts to which he had voluntarily
submitted. Estoppel bars him from doing so.
[12]


There is also no merit in petitioners contention that the action for annulment
of title had prescribed. The one-year prescriptive period does not apply when the
person seeking annulment of title is in possession of the lot. This is because the
action partakes of a suit to quiet title which is imprescriptible.
[13]
In this case,
inasmuch as respondents are in possession of the lot, their action to annul OCT No.
P-15176 is not barred by prescription.

We now come to the crucial issue: Who has a better right over the contested
property?

We held in Magistrado v. Esplana
[14]
that so long as there is a clear showing
of open, continuous, exclusive, and notorious possession, and hence, a registrable
possession, by present or previous occupants, by any proof that would be
competent and admissible, the property must be considered to be private.

In the present case, it was established that the subject land is private property
since time immemorial. Records reveal that the property was cultivated as riceland
and was first declared for tax purposes under the name of Graciano
Agustin. On June 6, 1960, Pio exercised acts of ownership over the land by
entering into a notarized contract of sale with the right to repurchase with
Gaudencio. He declared in the contract that he had inherited the land from his
father and had been in possession of the property for 27 years. Pio likewise
declared the property for tax assessment purposes, as required under Presidential
Decree No. 76,
[15]
on September 25, 1973. In the Kasunduan executed on April 25,
1979, Gaudencio acknowledged that Pio owned the land. Pio further disposed of
the property in his last will and testament in favor of his heirs which include
petitioner. Although the will is void for not complying with the formal requisites of
a notarial will, it may be used to show the exclusive and adverse character of
petitioners possession as a co-heir and co-owner.
[16]
It also appears that
respondents occupied the property on permission of Gaudencio. While petitioner
did not actually reside and cultivate the land, Gaudencio had agreed to
pay buwis or rentals for the houses built thereon by Fortunato Miguel and Alfonso
Manantan.
[17]
Aquilino Concepcion also agreed to pay the rent.
[18]
Clearly, the
evidence on record shows that the property belonged to Pio and upon his death,
passed on to his heirs.

Inasmuch as the subject property is private, a free patent issued over it is null
and void, and produces no legal effect whatsoever. Private ownership of land is
not affected by the issuance of a free patent over the same land, because the Public
Land Law applies only to lands of the public domain. The Director of Lands has
no authority to grant free patents to lands that have ceased to be public in character
and have passed to private ownership. Consequently, a certificate of title issued
pursuant to a homestead patent partakes of the nature of a certificate issued in a
judicial proceeding only if the land covered by it is really a part of the disposable
land of the public domain.
[19]
Hence, the free patent covering Lot No. 661, a
private land, and the certificate of title issued pursuant thereto, are null and void.

Notwithstanding, petitioners right to possess and claim of ownership over
Lot No. 661 are substantiated, contrary to the findings of the trial court and Court
of Appeals. This Court is not a trier of facts and not duty-bound to analyze and
weigh all over again the evidence already considered in the proceedings below,
unless there is a misapprehension of facts or failure to consider certain relevant
facts which, if properly taken into account, will justify a different conclusion.
[20]


In the present case, the trial court and the Court of Appeals failed to consider
that Pio, as owner of the subject property and petitioners predecessor-in-interest,
and Gaudencio, respondents predecessor-in-interest, entered into a notarized
contract of sale with the right to repurchase on June 6, 1960. Such contract is an
equitable mortgage under Article 1602, paragraph 6 of the Civil Code, to wit:
Art. 1602. The contract shall be presumed to be an equitable mortgage, in
any of the following cases:
x x x x
(6) In any other case where it may be fairly inferred that the real intention
of the parties is that the transaction shall secure the payment of a debt or the
performance of any other obligation.
x x x x
A proof that the contract was an equitable mortgage is that while the contract
was dated June 6, 1960, Pio had declared, in a sworn statement, the subject
property for tax assessment purposes on September 25, 1973.
[21]
Further,
Gaudencio still recognized Pio as the owner of the property and stated in a
notarized document that the property was mortgaged to him (naisanla sa akin)
and that he received Pios payment of the debt, the same amount under the
purported contract of sale.
[22]
Notably, both documents are considered public
documents and enjoy the presumption of validity as to its authenticity and due
execution. This legal presumption was not overcome by respondents.
[23]
Other
than the objection that the property subject of the documents is public land, no
other proof was presented. Thus, the presumption of validity of these documents
prevails. The transaction being an equitable mortgage, Pios ownership of the
property did not cease. Therefore, the period of redemption under Article 1606
does not apply.

The appellate court erred in ruling that respondents had acquired the
property through prescription. As borne by the testimonies of Alfonso
Manantan,
[24]
Fortunato Miguel,
[25]
and Danilo Manantan,
[26]
they occupied the
property, not as owners but upon permission of Gaudencio. As already
established, Gaudencio did not have open, continuous and adverse possession of
the property. Moreover, on November 13, 1979, petitioner and Gaudencio agreed
that the latter shall pay rent on the land where the houses of Fortunato and Alfonso
were built. Thereafter, Aquilino Concepcion and a certain Pedro Antonio also
agreed to pay rent. These circumstances belie respondents claim of acquisitive
prescription.

Acquisitive prescription is a mode of acquiring ownership by a possessor
through the requisite lapse of time. In order to ripen into ownership, possession
must be in theconcept of an owner, public, peaceful and uninterrupted. Thus,
mere possession with a juridical title, such as by a usufructuary, a trustee, a
lessee, an agent or a pledgee, not being in the concept of an owner, cannot ripen
into ownership by acquisitive prescription, unless the juridical relation is first
expressly repudiated and such repudiation has been communicated to the other
party. Acts of possessory character executed due to license or by mere tolerance of
the owner would likewise be inadequate. Possession, to constitute the foundation
of a prescriptive right, must be en concepto de dueo, or, to use the common law
equivalent of the term, that possession should be adverse, if not, such possessory
acts, no matter how long, do not start the running of the period of
prescription.
[27]
Clearly, respondents, when they agreed to pay rent, became mere
lessees and their possession cannot ripen into ownership. They also did not present
proof of ownership. The tax receipts offered in evidence merely showed that they
paid the taxes due only after petitioner filed a complaint against them. Such
payment without adverse possession does not prove ownership.

However, while this Court declares that Lot No. 661 is a private property
and not part of the public domain, the petitioners title as co-owner of the said lot is
imperfect and still subject to the rules on confirmation of title under Section 48
(b)
[28]
of the Public Land Act.
[29]
As an applicant for confirmation of title,
petitioner has the burden of proving that he meets the requirements of the law.
[30]


WHEREFORE, the petition is PARTIALLY GRANTED. The Decision
dated October 30, 2002 of the Court of Appeals in CA-G.R. CV No. 58050 and its
Resolution dated May 20, 2003 denying the motion for reconsideration
are MODIFIED. Petitioner Franco Esguerra is declared a co-owner and holder of
imperfect title over Lot No. 661. Free Patent No. 034914-92-1117 and Original
Certificate of Title No. P-15176, both in the name of Franco Esguerra are declared
null and void. No pronouncement as to costs.

SO ORDERED.




G.R. No. 128850 November 20, 1998
ARCHIPELAGO MANAGEMENT AND MARKETING CORPORATION, petitioner,
vs.
COURT OF APPEALS and the HEIRS OF ROSALINA SANTOS-MORALES, namely, EMETERIO
MORALES, LYDIA, TRINIDAD, ROGELIO DE LA PAZ and EMMANUEL S. DE LA
PAZ, respondents.

PANGANIBAN, J .:
The issue of whether fraud attended the execution of a contract is factual in nature. Normally, this
Court is bound by the appellate court's findings, unless they are contrary to those of the trial court, in
which case we may wade into the factual dispute to settle it with finality. However, after meticulously
poring over the records and carefully weighing the arguments of the parties, we find no reversible
error in the Amended Decision of the Court of Appeals resolving this property dispute between the
separate heirs of the first marriages of a widow and a widower who, after the death of their
respective first spouses, married each other.
The Case
This is the gist of our ruling on the Petition for Review before us, which seeks to set aside the
January 28, 1997 Amended Decision
1
and the April 23, 1997 Resolution
2
of the Court of Appeals
3
in
CA-GR CV No. 46014. The Amended Decision granted private respondents' Motion for
Reconsideration,
4
viz.:
WHEREFORE, the Decision of this Court dated July 31, 1996 dismissing the
complaint is SET ASIDE, and a new one is hereby rendered, REVERSING the
appealed Decision of the lower court and declaring the Deed of Absolute Sale dated
May 3, 1989 ANNULLED.
5

The April 23, 1997 Resolution, on the other hand, denied petitioner's own Motion for
Reconsideration.
This case originated from a Complaint for Annulment of Contract with Damages, filed
6
before the
Regional Trial Court (RTC) of Quezon City
7
by Rosalina Santos-Morales, through her daughter Lydia
Trinidad, against Petitioner Archipelago Management and Marketing Corporation. Upon the death of
Rosalina on October 7, 1992,
8
herein private respondents, in their capacity as heirs, filed an Amended
Complaint
9
stating inter alia that they were substituting the deceased as plaintiffs.
10

On April 15, 1994, the Complaint and the Counterclaim
11
were dismissed in the RTC Decision, which
was initially affirmed by the Court of Appeals (CA) in its original Decision dated July 31, 1996.
12
Acting on
private respondents' Motion for Reconsideration with Motion for New Trial, the appellate court,
13
in its
Amended Decision, reversed its previous ruling. Subsequently, as already stated, it also denied
petitioner's own plea for reconsideration.
Undaunted, petitioner has brought this appeal for a final ruling on the matter.
14

The Facts
The factual antecedents of the case were identically summarized by the appellate tribunal
in both its original and its amended Decisions, as follows:
At the center of the controversy is a parcel of land upon which are erected residential
buildings located at No. 58, South Maya Street, Philamlife Homes, Quezon City.
Before the controversy, the subject property was owned and titled in the name of
Rosalina Santos Morales, covered by TCT No. 255716. The latter had children by
first marriage, one of whom is Lydia Trinidad (plaintiff-appellant). When Rosalina was
widowed, she married Emeterio Morales, a widower, who also had children by a
former marriage, including Narciso Morales, president of Archipelago Management
and Marketing Corporation (defendant-appellee). For more than forty (40) years,
Rosalina and Emeterio lived together in the subject property, leasing out the building
as a retreat house to outside parties.
When several offices in the Quezon City Hall w[ere] razed by fire in 1988, many
records, including original certificates of title[,] were reduced to ashes. Consequently,
landowners with real properties in Quezon City had to apply for reconstitution of their
individual titles. Sometime in August of that year, it is alleged that Emeterio Morales
took the owner's duplicate certificate of title over the subject property from Rosalina's
designated caretaker, and on the pretext that he was going to apply for reconstitution
of title, he was able to convince Rosalina to affix her signature on several
documents. One of those documents turned out to be a Deed of Absolute Sale dated
May 3, 1989, wherein it was stipulated that Rosalina sold to the defendant-appellee
corporation the subject property for One Million Two Hundred Thousand
(P1,200,000.00) Pesos. By virtue thereof, a new title was issued in favor of the
defendant-appellee corporation.
Meanwhile, Rosalina Morales and her husband, Emeterio, continued to reside in the
subject property. She even entered into a 5-year lease contract over the buildings
with the siblings of Rodolfo and Nympha Alano, on May 19, 1989. She also
continued to pay the yearly realty taxes on said property.
In 1992, Rosalina's daughter, Lydia Trinidad, returned from the United States of
America. Lydia inquired about the title to the subject property, and she learned from
the Office of the Register of Deeds of Quezon City about the Deed of Absolute Sale
between Rosalina and the defendant-appellee corporation.
On July 17, 1992, Rosalina Santos-Morales, represented by Lydia Trinidad, filed an
action for annulment of the Deed of Absolute Sale with damages against the
defendant corporation. She denied having sold the subject property, allegedly
paraphernal, to anybody, much less to the defendant corporation. She further alleged
that her signature on the said document was obtained by means of fraud, deceit and
insidious machinations on the part of her husband, Emeterio, and her stepson,
Narciso Morales, for and in behalf of the defendant corporation. She also denied
having received any consideration in the amount of P1,200,000.00. In fact, when she
learned of the said transaction, she immediately filed an affidavit of adverse claim
before the Register of Deeds of Quezon City. She argued that the fact the she
entered into a contract of lease over the subject property even after the Deed of
Absolute Sale was supposedly executed is proof that she knew of no sale to the
defendant corporation. Consequently, she contended that the said Deed of Absolute
Sale was invalid for fraud and vices of consent.
Furthermore, she pointed out that there were irregularities in the execution of the
disputed Deed of Absolute Sale. First, the residence certificate cited in the Deed
dated May 3, 1989 was issued way back on January 26, 1988 in Malabon, Rizal,
when she already had a new one issued on January 26, 1989 in Quezon City.
Second, Vicente M. Joyas, who notarized the disputed Deed of Absolute. Sale was
not appointed as Notary Public of Manila in 1988 for the term ending on December
31, 1989, per verification from the Office of the Clerk of Court of Manila.
Accordingly, she prayed that the Deed of Absolute Sale be annulled; that Lydia
Trinidad be appointed her guardian ad litem; and that the defendant corporation be
made to pay P200,000.00 as and for moral damages; P100,000.00 as and for actual
and compensatory damages; P150,000.00 as and for attorney's fees and litigation
costs.
In its answer, the defendant corporation denied that the subject property was
paraphernal, claiming that it was purchased and the improvements thereon
constructed using the money of Emeterio Morales, the plaintiff's husband, during the
existence of their marriage. It was also contended that the plaintiff, who was at that
point physically disabled and senile, could not have known of nor consented to her
daughter's filing of the present action, for her (plaintiff) thumbmark could have easily
been affixed on the adverse claim and the complaint it self by Lydia Trinidad. The
defendant also questioned Lydia Trinidad's authority to file the action when she had
not yet been appointed guardianad litem.
Moreover, the defendant negated the plaintiff's allegation that Emeterio Morales took
the certificate of title from the caretaker since the said title was in Rosalina Morales'
possession, and he could not have misled her to sign the Deed of Absolute Sale on
the pretext that it was only in connection with the application for reconstitution of said
title. It was pointed out that at that time, Rosalina Morales was in full possession of
her mental faculties and was in fact, a very intelligent and astute woman. To
corroborate this allegation, the defendant corporation attached as annexes several
motions and a compromise agreement executed by Rosalina Morales in Special
Proceeding No. 5010 before the RTC of Pasig, Metro Manila, in the exercise of her
duties as administratrix of the sizable estate of her deceased aunt. Thus, there was
no truth to the allegation that Rosalina Morales' consent to the sale of the subject
property was not given freely and voluntarily, considering that she was mentally and
physically aware of everything that was going on around her.
Furthermore, the defendant argued that the alleged irregularity in the residence
certificate and the notarization of the document would not in any way affect the
validity of the sale since a public instrument [was] not essential to its validity. Insofar
as the lease was concerned, Narciso Morales alleged that he tolerated it since he
made a commitment to his father and stepmother (the Morales spouses) that they
could reside in and enjoy the fruits of the subject property for as long as they lived,
out of his love and devotion for them. Thus, the plaintiff had no cause of action and
the suit was baseless in fact and in law.
The defendant then prayed that judgment be rendered in its favor, dismissing the
complaint and ordering the plaintiff to pay P1,000,000.00 by way of compensatory
damages, P500,000.00 as corrective damages; P200,000.00 as and for attorney's
fees and costs of suit.
Even before the pre-trial conference could be held, on October 7, 1992, plaintiff
Rosalina Santos-Morales passed away. Accordingly, her heirs, namely, Lydia
Trinidad, Rogelio de la Paz, Emmanuel de la Paz and Emeterio Morales, as her
surviving spouse, were substituted as co-plaintiffs. Emeterio Morales thereafter
executed an affidavit wherein he declared that his inclusion as a party-plaintiff was
without his consent or authorization. He also deposed that as one of Rosalina
Morales' forced heirs, he [was] requesting that the civil case be withdrawn and/or
dismissed.
On April 30, 1993, the trial court issued the pre-trial Order limiting the issues to be
resolved to the following[:]
I. Whether or not the plaintiff, Rosalina Santos
Morales, was of sound mind when the questioned
Deed of Absolute Sale was executed on May 3, 1989.
II. Whether or not the consent of Rosalina Santos-
Morales, when she affixed her signature on the
questioned Deed of Absolute Sale was vitiated by
fraud.
III. Whether or not defendant corporation paid the
consideration stated in the Deed of Absolute Sale.
15

The Ruling of the Court of Appeals
In its assailed Amended Decision reversing the trial court's judgment, as well as its own earlier
pronouncement, the CA ruled that "Rosalina never sold the property in question to defendant,
contrary to what the Deed of Absolute Sale dated May 3, 1989 purports to show."
16

The appellate court held that fraud vitiated the consent of Rosalina as indicated by the following
circumstances "surrounding the signing of the Deed of Sale": (1) she "was tricked into believing that
what she was signing was an application for the reconstitution of the lost [certificate of] title but which
was actually a deed of absolute sale of the property in question"; (2) "there was no reason for [her] to
sell her house and lot," because "[t]here was no evidence that would hint that the couple was in any
economic problem"; (3) the person who notarized the document was not a commissioned notary
public; (4) her expired residence certificate appeared on the Deed, although a new one had already
been issued to her; (5) there is no substantial proof of payment; and (6) her subsequent acts showed
that "she did not know or was not aware" that she signed any deed of sale.
17

The Issue
Petitioner raises this solitary issue:
Whether or not the Court of Appeals committed a reversible error in reversing its
original decision and the decision of the Regional Trial Court by annulling the Deed
of Absolute Sale on a mere motion for reconsideration which did not raise new and
substantial issues.
18

Simply put, the main issue is whether the appellate court committed reversible error in ruling that the
signature of Rosalina was fraudulently obtained. However, in discussing and determining the
existence of a reversible error, we shall take up all the issues raised by petitioner before the Court of
Appeals, as all of them revolve around the core question of fraud. First, we shall tackle a preliminary
matter: the propriety of private respondents' Motion for Reconsideration before the CA.
This Court's Ruling
The petition is devoid of merit.
Preliminary Issue:
Motion for Reconsideration
The petitioner submits that the CA should have denied private respondents' Motion for
Reconsideration, "as it did not raise new and substantial arguments and issues that would warrant
the reversal of its original Decision."
We rule otherwise. Rule 9 of the Revised Internal Rules of the Court of Appeals simply requires that
a motion for reconsideration state (1) the material dates and (2) the grounds relied upon by the
movant.
19
The appellate tribunal is thus accorded the opportunity to correct a possible error in its
decision.
20

Herein private respondents' Motion for Reconsideration (MR) alleged that there was a newly
discovered evidence the holographic will
21
of Rosalina. It is therefore incorrect to say that the
arguments in the MR were mere rehashes of those already passed upon by the appellate court.
More important, the following discussion will show that the CA committed no reversible error in
granting the Motion for Reconsideration, because the reversal of the original CA Decision was
clearly justified.
Main Issue:
Circumstances Showing Fraud
A contract is a meeting of minds between two persons, whereby one is bound to give something or
to render some service to the other.
22
A valid contract requires the concurrence of the following
essential requisites: (1) consent of the contracting parties, (2) object certain which is the subject matter of
the contract, and (3) cause of the obligation which is established.
23
Under Article 1330 of the Civil Code,
consent may be vitiated by any of the following: (1) mistake, (2) violence, (3) intimidation, (4) undue
influence, and (5) fraud.
As earlier noted, the present case revolves around the question of fraud. There is fraud when one
party is induced by the other to enter into a contract, through and solely because of the latter's
insidious words or machinations.
24
But not all forms of fraud can vitiate consent. Under Article 1330,
fraud refers to dolo causante or causal fraud, in which, prior to or simultaneous with the execution of a
contract, one party secures the consent of the other by using deception, without which such consent
would not have been given.
25

Because the factual findings of the trial court and the Court of Appeals differed, we undertook a
scrutiny of the records, which persuaded us that the assailed Amended Decision should be affirmed
and the contested contract annulled. We believe that causal fraud is clearly demonstrated by the
following facts which were duly established during the trial.
Certificate of Title
Obtained by Misrepresentation
When Emeterio Morales, father of Narciso Morales, took the owner's duplicate certificate of title of
the subject property from Gregorio Baonguis, Rosalina's caretaker, he did not reveal that the
property was the subject of a sale. Instead, Emeterio claimed that he needed the owner's duplicate
to enable him to follow up Rosalina's application for a reconstitution of the certificate of title, which
had been burned during the fire that gutted the Quezon City Hall. This is evident from Baonguis'
testimony:
26

Q Where is the title of this property now?
A It was taken, from me by Mr. Emeterio Morales, in 1988, sir.
Q Where did you give it to him?
A In their house at 58 South Maya Street, Philamlife Homes, Quezon
City, sir.
Q Did Mr. Morales tell you his purpose why he need[ed] that owner's
copy of the title?
A According to him, he need[ed] that owner's copy to facilitate the
reconstitution of title. They [would] be the one to follow it up, sir.
Q Did you come to know the result of this reconstitution of this title[?]
A After that, sir, I heard nothing about it anymore.
Worse, when, confronted by Lydia Trinidad (Rosalina's daughter), Emeterio denied that he had ever
taken the certificate of title from Baonguis. She testified:
27

Q After learning from Mr. B[a]ong[u]is that the title of the property in
question was taken by your stepfather, what did you do?
A I confronted my stepfather and asked for it and he denied.
Q What, more or less, did you ask your stepfather about this thing?
A I asked him about the title and he said he [did] not have it.
Q After learning from your stepfather that he did not have this title,
what did you do next?
A I told him that I [was] inquiring from the Register of Deeds.
Irregularities in the
Notarization
Irregularities also impair the notarization of the alleged Deed of Sale. Very glaring is the fact that the
Deed carried the expired residence certificate of Rosalina, although a new one had been issued to
her at the time.
28
The significance of this detail was correctly appreciated by the Court of Appeals in the
following terms:
. . . Furthermore, investigation also revealed that an [a]pplication for [r]econstitution
of the original TGT No. 255716, duly signed by Rosalina Santos-Morales, was filed
with the Office of the Registry of Deeds of Quezon City on August 8, 1988, and that
her Residence Certificate No. 85119801-G issued on January 26, 1988, in Malabon,
Rizal, appearing therein [was] the same as that one appearing in the Deed of
Absolute Sale dated May 3, 1989, which is an indication of irregularity considering
that as early as January 26, 1989, she had already been issued Residence
Certificate No. 04022287 in Quezon City, which was even used in the notarization of
the Contract of Lease dated May 19, 1989. If it were true that Rosalina Morales
personally appeared before Atty. Joyas and herself presented her residence
certificate to Atty. Joyas, there is no reason why her 1988 residence certificate
should be the one that should appear in the deed of sale, the only possible
conclusion being that she never appeared before Atty. Joyas to present her
residence certificate to the latter. . . . (Emphasis supplied.)
The conclusion of the Court of Appeals is buttressed by the fact that Atty. Vicente M. Joyas, who
notarized the Deed of Absolute Sale, was not a commissioned notary.
29

We have ruled that "while [a] writing may have been accompanied by the most solemn formalities,
no instrument is so sacred when tainted with fraud as to place it beyond scrutiny of extrinsic
evidence. The evidence overcomes the known presumption fraus est odiosa et non
praesumenda."
30
Such rule is especially applicable when the instrument fails to conform to the
formalities required by law.
Acts of Ownership Exercised by
Rosalina Even After the Alleged
Execution of the Deed of Sale
Ownership of a property means, among others, the right to enjoy and dispose of it, subject to
limitations established by law.
31
The law "recognizes in the owner the right to enjoy and dispose of the
thing owned. The right to enjoy includes: the jus utendi or the right to receive from the thing what it
produces, and the jus abutendi or the right to consume the thing by its use." Further, "[t]he right to
dispose or the jus disponendi, is the power of the owner to alienate, encumber, transform, and even
destroy the thing owned."
32

In the present case, even after Rosalina allegedly sold her paraphernal
33
property to herein petitioner,
she still performed acts of ownership over the same. Sixteen days after the alleged execution of the Deed
of Sale,
34
she entered into a contract of lease
35
with siblings Rodolfo and Nympha as lessees. The lease
contract clearly stated that Rosalina was "the absolute owner" of the disputed property.
36
Indeed, she did
not even mention petitioner's alleged "interest" over the property when she signed the said contract. This
was affirmed on the witness stand by Nympha's husband, Reynaldo Ortiz, who stated that he was
unaware of the existence of either Petitioner Corporation or Narciso Morales.
37

Furthermore, Rosalina (and her heirs) continued to possess the disputed property even after the
alleged sale. She also paid the real estate taxes and collected rentals from the lessees. In fact, after
the alleged execution of the questioned Deed of Sale, she even executed a holographic will
bequeathing the property to her husband Emeterio, her caretaker Baonguis and her children by her
first husband.
In stark contrast, petitioner never exercised acts of ownership over the property. Indeed, aside from
the alleged Deed of Sale, it presented no other evidence of its ownership such as books, records or
financial statements. Moreover, it did not pay the real estate taxes even after a new TCT had been
issued in its name on May 5, 1989 as a consequence of the registration of the purported Deed.
38
It
must also be underscored that Atty. Narciso Morales, president of the petitioner corporation, knew of the
subsequent acts of Rosalina, but offered no objection thereto.
Rosalina's Immediate
Disavowal of the Deed of Sale
Upon learning of the existence of the Deed of Absolute Sale, Rosalina immediately denied that she
ever signed the said contract. Her reaction was described by her daughter Lydia, who testified
thus:
39

Q What did you do with this Deed of Absolute Sale and the title you
procured from the Office of the Register of Deeds when you talked to
your mother?
A I showed it to my mother and she said: "No I have not sold this."
Over and over again, that was her answer.
Q In this Deed of Absolute Sale, marked in evidence as Exhibit "C", it
appears that it purports that this property which is the parcel of land
covered by TCT No. 255716 from the Register of Deeds of Quezon
City, to have been sold by your mother to the defendant corporation
in the consideration of P1,200,000;00. Did you mention this to your
mother? Did you confront her with this particular portion of the Deed
of Absolute Sale?
A Yes, sir.
Q What did she tell you?
A She said, she never sold that. She told me she did not receive any
single amount out of that sale.
Thereafter, Rosalina executed an affidavit repudiating the said contract. The following averments in
the affidavit are instructive:
1. I am the registered owner of that parcel of land, together with the improvements
thereon, located in Philamlife Homes, Quezon City, covered by Transfer Certificate of
Title No. 255716 issued by the Register of Deeds of Quezon City, which property is
my paraphernal property;
2. Considering my present state of health, I requested my daughter Lydia Santos
dela Paz Trinidad, to make the necessary verification with the Office of the Register
of Deeds of Quezon regarding said property because my owner's copy of the title
was reportedly taken by my husband, Emeterio S. Morales, from my caretaker
without my previous authority and consent;
3. Said verification made by my daughter disclosed that on May 5, 1989, [a] Deed of
Absolute Sale purporting to have been executed by me in favor of Archipelago
Management and Marketing Corporation, covering said property, was presented to
the Office of the Register of Deeds of Quezon City;
4. I was very much surprised to learn this because I ha[d] not sold the said property
to anybody much less to Archipelago Management and Marketing Corporation;
5. In view of this, I have executed this Affidavit of Adverse Claim for the purpose of
requesting the Office of the Register of Deeds of Quezon City and/or the Land
Registration Authority not to deliver the reconstituted owner's duplicate of the said
TCT No. 255716 except to me or to my duly authorized representative under my
written authority.
6. I hereby further request the said Office to hold in abeyance registration of any
document affecting the said parcel of land.
40

Eventually, Rosalina filed the present Complaint to annul the contract of sale.
Consideration
for the Sale
There is no conclusive showing that Rosalina ever received any consideration for the alleged sale.
Although petitioner argues that private respondents failed to overcome the legal presumption that
there was sufficient consideration for the contract,
41
its own evidence fails to provide any factual basis
for the presumption.
Indeed, petitioner's version is so outlandish that it defies belief. It asserts that the geriatric Rosalina
travelled all the way from her home in Quezon City to Narciso Morales' Greenhills residence where
she was given the payment. Afterwards, the parties supposedly went to the Manila City Hall to have
the Deed of Sale notarized. Incredibly, petitioner alleges that the payment, which was in cash, was
made in Greenhills because Rosalina was afraid of holdups!
Simply stated, petitioner's account is highly implausible. We find more credibility in private
respondents' version denying that Rosalina ever sold her property, executed a deed of sale, or
received any amount from the petitioner.
42
The fact that Rosalina's bank passbook shows no increase
in the deposit on or after the date of the alleged sale
43
supports the cause of the private respondents.
Deceased Not
Guilty of Negligence
Citing Songco v. Sellner,
44
petitioner argues that private respondents cannot invoke fraud, because
Rosalina was negligent in signing the Deed of Sale. It contends that Rosalina did not exercise due care
when she affixed her signature to the Deed of Absolute Sale without first reading the contents thereof.
The argument is not persuasive. In the first place, Songco does not apply. In that case, a party
claimed fraud based on the vendor's exaggerated statement concerning the probable yield of sugar
from the cane sold. The Court held that such party should have exercised diligence instead of
merely relying on the representation of the vendor. Clearly, the factual setting of Songco is different
from that of the present controversy.
In this case, Rosalina was not aware that she ever signed any deed of sale. All she knew was that
she had applied for the reconstitution of her title. In fact, her subsequent conduct confirms that she
did not sell or intend to sell her property.
Petitioner maintains that she should have read the documents before signing the same. The peculiar
circumstances of this case, however, render that contention unacceptable. While it may be
presumed that Rosalina was of sound mind, it is undisputed that she was also quite old. In fact, two
years after the alleged execution of the Deed of Sale, according to the testimony of Narciso
Morales,
45
Rosalina entered into her "second childhood." Thus, while Rosalina's mind may have been
sound when she signed the said contract, it was degenerating and becoming susceptible to surreptitious
machinations. Furthermore, it was her husband who asked her to sign the documents, purportedly in
connection with her application for a reconstitution of title. She cannot be expected to have exercised the
same high degree of vigilance usually observed in ordinary "arm's length" transactions.
All the foregoing circumstances militate against petitioner's cause. Apropos to the present case is
the following pronouncement of this Court:
. . . . The statement that fraud cannot be presumed does not mean that the
presumption of fraud may not arise, and be legitimately deduced, from circumstantial
evidence, but only that it is not to be assumed of a transaction that it is fraudulent, in
the absence of proof afforded by intrinsic evidence of unfairness in the transaction
itself, or extrinsic facts and circumstances leading to that conclusion. The general
rule, therefore, must be understood only as affirming that a contract or conduct
apparently honest and lawful must be treated as such until it is shown to be
otherwise by either positive or circumstantial evidence. Fraud may be, and often is,
proved by or inferred from circumstances, and the circumstances proved may in
some cases raise a presumption of its existence. On the other hand it has been held
that while fraud may be proved by circumstances or presumed from them, it cannot
be demonstrated by construction, and hence must be prove[n] in all cases.
46

Conclusion
After an exhaustive scrutiny of the records of this case, we find no reversible error in the CA's
conclusion that fraud attended the execution of the subject Deed.
In reversing its original Decision, the reviewing court ratiocinated:
Considering the above pleadings of the parties, which necessitated a re-review of the
facts and issues of the case, it appears that there were certain facts of substance
and value which were overlooked that, if considered, would affect the outcome of the
case. Thus, the need to render this Amended Decision.
While it is true that Rosalina Morales was of sound mind when she executed the
disputed Deed of Absolute Sale, it is likewise true that it does not necessarily follow
that no fraud was committed, since, through deceit and certain manipulations, she
could be made to erroneously affix her signature to the deed of sale. Again, while it is
true that a deed of sale does not have to be notarized to be valid, it is likewise true
that consent may be vitiated as shown by the circumstances surrounding the signing
of the deed of sale, thereby rendering the sale voidable for lack of consent, . . .
47

The chain of circumstances indubitably shows that Rosalina was "tricked into believing"
48
that what
she was signing were papers pertinent to her application for the reconstitution of her burned certificate of
title. And the CA correctly observed that ". . . Rosalina Morales' series of acts subsequent to the alleged
date of execution of the deed of sale shows that she did not know, and was not aware, of having affixed
her signature on a document that turned out later to be a deed of sale . . . ."
49
Petitioner could not have
obtained the signature of Rosalina without the help of Emeterio Morales. Thus, the appellate court had
reason to rule that "Atty. Narciso Morales, . . ., as president of the defendant corporation, conspiring and
confederating with his father, Mr. Emeterio Morales, obtained by means of fraud and deceit the signature
of Rosalina Santos-Morales."
50

Taken together, the aforecited circumstances in this case overwhelmingly demonstrate the causal
fraud committed in obtaining Rosalina's signature on the Deed of Sale. Rosalina had no intention to
part with her property, and as the appellate court ruefully observed, she had no reason to. In fact,
her conduct reveals that she had no knowledge at all of the alleged Deed of Sale, and that during
her lifetime, she considered herself the absolute owner of the property. Au contraire, petitioner and
its president manifested no conduct showing ownership or challenge to her dominion over the
subject real estate, even after the alleged execution of the Deed.
In closing, an earlier observation of this Court is aptly reiterated hereunder:
51

"[T]he fertility of man's invention in devising new schemes of fraud is so great that
courts have declined to define it, reserving to themselves the liberty to deal with it
under whatever form it may present itself." In the case at bar the fraudulent scheme
is evidenced by a series of related acts committed one after another, silently, quietly
and surreptitiously. Our jurisprudence abounds with cases where fraud had been
held to exist but we have found none in which all the circumstances above indicated
are present, the circumstances being varied as the men who schemed the fraud in
each case.
WHEREFORE, the petition is hereby DENIED for lack of merit. The assailed Decision dated January
28, 1997 and the Resolution dated April 23, 1997, both promulgated by the Court of Appeals in CA-
GR No. 46014, are AFFIRMED. Costs against petitioner.
SO ORDERED.



ANGELA DELA ROSA and G.R. No. 133882
CORAZON MEDINA,
Petitioners,
Present:


- versus - PANGANIBAN, C.J., Chairperson,
YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
*

CALLEJO, SR., and
ORFELINA D. ROLDAN, CHICO-NAZARIO, JJ.
LORNA SAN DIEGO,
FLORDELIZA D.
CATACUTAN, NORMA Y.
LACUESTA, and ARSENIO Promulgated:
DULAY,
Respondents. September 5, 2006

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


D E C I S I O N


CALLEJO, SR., J .:


This is a Petition for Review on Certiorari of the Decision
[1]
of the Court of
Appeals (CA) in CA-G.R. SP No. 45560 affirming, on a petition for review, the
Decision of the Regional Trial Court (RTC) of Tarlac in Civil Case No. 8396,
which in turn reversed on appeal the decision of the Municipal Trial Court (MTC)
of Tarlac, Tarlac in Civil Case No. 6089 for unlawful detainer.
The Antecedents

The spouses Adriano Rivera and Aurora Mercado were the owners of two
(2) parcels of land located in Tarlac, Tarlac, both covered by respective titles; the
261-square-meter lot was covered by Transfer Certificate of Title (TCT) No. 7225,
while the 772 sq. m. was covered by TCT No. 7226.

Sometime in 1957, the spouses Rivera executed a deed of sale
[2]
over the
properties in favor of the spouses Arsenio Dulay and Asuncion dela Rosa. Gideon
dela Rosa, one of Asuncions brothers, was one of the instrumental witnesses in the
deed. To pay for the property, the spouses Dulay, who were members of the
Government Service Insurance System (GSIS), secured a P9,500.00 loan and
executed a real estate mortgage over the two lots as security
therefor. On September 16, 1957, the Register of Deeds issued TCT Nos. 29040
and 29041 in the names of the spouses Dulay.

The spouses Dulay forthwith took possession of the lots, except a 500-
square-meter portion which was then occupied by Gideon dela Rosa and his wife
Angela and the portion where the house of Corazon Medina stood. The spouses
Dulay declared the property for taxation purposes in their names and paid the
realty taxes therefor.

Sometime in 1982, the spouses Dulay made demands on Gideon, Angela and
Corazon to vacate the premises, as their three daughters would be constructing
their respective houses thereon. Gideon, Angela and Corazon refused to do so,
prompting the spouses to file a complaint for recovery of possession (accion
publiciana) against them with the then Court of First Instance (CFI) of Tarlac. The
spouses Dulay alleged, inter alia, that they bought the lots from the spouses Rivera
in 1957; defendants occupied a 370-square-meter portion on the western side, and
were claiming ownership over one-half of the property, as shown by their letter to
plaintiffs appended to their complaint; and they needed the property so that their
daughters, who already had their respective families, could build houses
thereon. The spouses Dulay prayed that defendants be evicted from the property
and be required to pay reasonable compensation for their use of the
premises.
[3]
The case was docketed as Civil Case No. 6261.

In their answer to the complaint, defendants alleged the following by way of
special and affirmative defenses: Gideon and his sister Asuncion contributed
equally to the purchase price of the property; plaintiffs secured a GSIS loan
of P9,500.00, out of which P6,500.00 was paid to the vendors; Gideon and
Asuncion verbally agreed that plaintiffs would be indicated as the sole vendees in
the deed of sale as they were the GSIS members; defendants had already paid their
share of the purchase price of the property as of 1978, except for the amount
of P332.00; and, insofar as the one-half portion on the western side of the property
was concerned, plaintiffs were trustees for defendants, who likewise owned the
same. Defendants interposed counterclaims for damages and prayed that the said
one-half portion be reconveyed to them.
[4]


During the trial, the spouses Dulay adduced in evidence the following: the
Deed of Absolute Sale dated January 16, 1957, with Gideon as an instrumental
witness;
[5]
the tax declarations in their names covering the property; and receipts of
realty tax payments made over the property.
[6]


Defendants spouses Dela Rosa adduced in evidence a small notebook
containing therein an alleged list of payments to the spouses Dulay of their share in
the purchase price of the property.
[7]
They presented an NBI Questioned
Documents Expert to prove the authenticity of the signature of Asuncion Dulay on
one of the receipts.
[8]
However,Asuncion denied that she bought the property with
her brother Gideon, and that she received any amount from him and his wife as
part of the purchase price of the property. She likewise denied that it was her
signature that appeared on the purported receipt.

On July 17, 1987, the trial court rendered judgment in Civil Case No. 6261
in favor of the spouses Dulay and ordered the spouses Dela Rosa and Corazon
Medina to vacate the property and turn over possession to plaintiffs.
[9]
The trial
court declared:

ANALYZING THE EVIDENCE, there is no doubt that the
registered owners of the lots in question are the plaintiffs-spouses
Arsenio Dulay and Asuncion dela Rosa (Exhibits A and B). They
bought these lots from the spouses Adriano Rivera and Aurora Mercado
(Exhibits D and D-1).

Defendants claim that they bought from the plaintiffs one-half
(1/2) portion of the lots in question is untenable. Firstly, if it is true as
claimed by them that there was such an agreement to purchase from the
plaintiffs a portion of the lots in question, why did they not reduce [the]
same in writing? In fact, its the defendants, particularly Gideon
dela Rosa, who induced and accompanied the plaintiffs to go to a Notary
Public for the execution of Exhibit D. The amounts mentioned in
Exhibit 5 does (sic) not clearly indicate whether they were payments
made for the purchase price in installment or for monthly rentals for their
occupation of Lot 3-B-2. The defendants were the only ones who made
entries; and a perusal of such entries were not recorded in sequence of
alleged monthly payment but merely entries dictated and/or written at
will.

Regarding Exhibit 6 and the alleged signature of
plaintiff Asuncion dela Rosa, the report (Exhibit 7, 7-A and 7-B)
and the testimony of the Chief NBI handwriting expert when presented
by the defendants themselves is very emphatic. Thus:

However, the question signature was signed over a
typewritten carbon or duplicate.

What we mean by that, Sir, is that there is here a
purported receipt with the body typewritten underlining
below the supposed signature Asuncion R. Dulay, it is a
little surprising because if a document is prepared in one
occasion, then the body should be in ribbon impression and
the underlining should be in ribbon. The supposed
typewritten body above the signature is an original ribbon
impression, that is, it is direct from the typewritten with the
ribbon striking the sheet of paper, the underlining,
however, on which the signature is signed is a carbon
impression, that means it is a duplicate impression. (pp. 8-
9, tsn., Oct. 30/85).
[10]


The spouses Dela Rosa and Corazon Medina appealed to the CA. The case
was docketed as CA-G.R. CV No. 15455. On June 29, 1990, the appellate court
rendered judgment granting the appeal and reversed the trial courts
ruling. According to the appellate court, the complaint was premature on account
of plaintiffs failure to allege, in their complaint, that there had been earnest efforts
to have the case amicably settled as mandated under Article 222 of the New Civil
Code.
[11]


The spouses Dulay filed a Motion for Extension of Time to File a Petition
for Review on Certiorari with this Court which was granted. The motion was
recorded as UDK-10069. However, the spouses Dulay failed to file their
petition. Thus, on November 19, 1990, the Court resolved to declare final and
executory the decision of the CA in CA-G.R. CV No. 15455 for failure of
plaintiffs-appellees to file their petition for review.
[12]
The resolution of the Court
became final and executory.
[13]


In the meantime, Gideon died. His wife Angela and Corazon Medina
continued residing in the property without paying any rentals therefor. Asuncion
Dulay passed away on June 26, 1995, survived by her husband Arsenio and their
children: Orfelina Roldan, Lorna San Diego, Flordeliza Catacutan, and Norma
Lacuesta.

In a letter dated October 2, 1995, Arsenio and his children, through counsel,
made demands on Corazon and Angela to vacate the property within 30 days from
receipt thereof, with a warning that failure to do so would impel them to file the
necessary legal action.
[14]
Nevertheless, they suggested a conference to discuss the
amicable settlement of the matter.
Corazon and Angela ignored the letter. This prompted Arsenio and his children to
file a complaint for eviction against Angela and Corazon in the Office of
the BarangayCaptain. The parties did not arrive at a settlement, and on December
1, 1995, the Pangkat Secretary issued a certification to file action.
[15]


On January 29, 1996, Arsenio and his children, as plaintiffs, filed a
complaint for unlawful detainer against Corazon and Angela, as defendants, in the
MTC of Tarlac, Tarlac. Plaintiffs alleged the following:

3. Plaintiffs are the co-owners of two adjoining parcels of
residential land located at Tarlac, Tarlac, and more particularly described
as follows:

Transfer Certificate of Title No. 29040

A parcel of land (Lot B of the subdivision plan
Psd-2284, being a portion of the land described on the
original plan II-5215, G.L.R.O. Record No. 7962), situated
in the Barrio of San Roque, Municipality of Tarlac,
Province of Tarlac. Bounded on the N.E., by Lot C of
the subdivision plan; on the S.E., by Lot No. 3-B-2 of the
subdivision plan and property of Concepcion Cider; on the
W., by property of Timotea Mercado; and on the N.W.,
by Lot A of the subdivision plan, containing an area of
TWO HUNDRED SIXTY-ONE (261) SQUARE
METERS, more or less.

Transfer Certificate of Title No. 29041

A parcel of land (Lot No. 3-B-2 of the
subdivision plan Psd-2284, being a portion of Lot No. 3-
B, plan II-2977-Amd., G.L.R.O. Record No. 1955),
situated in the Barrio of San
Roque, Municipality of Tarlac, Province of Tarlac. Bounde
d on the N.E., by Lot 87-C of the subdivision plan; on the
S.E., by Lot No. 3-B-1 of the subdivision plan; on the S.W.,
by property of Concepcion Cider; and on the N.W., by Lot
B of the subdivision plan, containing an area of SEVEN
HUNDRED SEVENTY-TWO (772) SQUARE METERS,
more or less.

Copies of the transfer certificates of title are attached as Annexes
A and B, respectively. The total assessed value of said lands does
not exceed Twenty Thousand Pesos (P20,000.00).

4. Said parcels of land were formerly owned by the
spouses Asuncion dela Rosa and Arsenio Dulay. Plaintiffs Orfelina
Roldan, Lorna San Diego, Flordeliza Catacutan, and Norma Lacuesta are
the children of the spouses Asuncion dela Rosa and plaintiff Arsenio
Dulay. Upon the death of Asuncion dela Rosa on 26 June 1995, said
parcels of land became jointly owned by herein plaintiffs. A copy
of Asuncion dela Rosas certificate of death is attached as Annex C.

5. The spouses Dulay bought said parcels of land sometime
in 1957. Defendants and their predecessors-in-interest have occupied
and are continuously occupying about five hundred (500) square meters,
more or less, of said parcels of land. Defendants and their predecessors-
in-interest have occupied said parcels of land since 1957 without paying
any rent.

6. The occupation by defendants of said parcels of land were
at the mere tolerance of the spouses Dulay and, thereafter, of the
plaintiffs. Defendants have promised to vacate the premises if and when
needed by the spouses Dulay and plaintiffs.

7. Demands were made on defendants to vacate the
premises, which demands, however, were ignored and not
heeded. Defendants refused and continues to refuse to vacate the
premises. A copy of the final demand letters sent to Angela dela Rosa
and Corazon Medina are attached as Annexes D and E, respectively.

8. In an attempt to arrive at an amicable settlement and in
recognition of their being blood relatives, plaintiffs exerted earnest
efforts towards a compromise with defendants. Defendants were invited
to discuss and settle the matter amicably. Defendants, however, refused
to meet and discuss any settlement and ignored the invitation extended
by plaintiffs.

9. In compliance with Section 412 of the Local Government
Code (R.A. No. 7160) and as a further attempt to settle the dispute
amicably, plaintiffs brought the matter to thelupong tagapamayapa of
their barangay. Defendants, however, refused to discuss an amicable
settlement. The certification to file action issued by the lupon chairman
is attached and made an integral part hereof as Annex F.

10. Defendants have been occupying and using the premises
without paying any rent therefor. The present reasonable rental value of
the premises is Fifty Pesos (P50.00) per month, which amount
defendants should be made to pay from September 1957 until possession
is restored to plaintiffs.

11. By reason of the unjustifiable refusal to vacate and the
unlawful detainer of the subject property by defendants and all persons
claiming rights under them, plaintiffs were constrained to seek redress in
court to protect their own rights and interests, thereby causing them to
incur litigation expenses in the amount of not less than Fifty Thousand
Pesos (P50,000.00), for which amount the defendant should be made
liable to plaintiffs.
[16]


Plaintiffs therein prayed that, after due proceedings, judgment be rendered in
their favor as follows:
WHEREFORE, premises considered, plaintiffs most respectfully
pray that, after trial, judgment be rendered by this Honorable Court in
favor of plaintiffs and ordering as follows:

1. Defendants and all persons claiming rights under them to
immediately vacate the premises;

2. Defendants to pay all rental arrears at the monthly rate
of P50.00 from September 1957 until possession is restored or a total
of P23,000.00;

3. Defendants to pay litigation expenses in the amount
of P50,000.00; and

4. Defendants to pay the costs of this suit.

Plaintiffs pray for such other and further reliefs just and equitable
under the premises.
[17]


The case was docketed as Civil Case No. 6089.

In their answer, defendants reiterated their allegations in their answer to the
complaint in Civil Case No. 6261 in the CFI of Tarlac.

On April 30, 1996, Angela filed a complaint against Arsenio and his children
in the MTC of Tarlac, Tarlac for recovery of ownership, reconveyance,
cancellation of title, and damages. The case was docketed as Civil Case No.
6154. Angela, as plaintiff, reiterated her allegations in her answer and
counterclaim in Civil Case No. 6261 as allegations comprising her causes of
action. She prayed that, after due proceedings, judgment be rendered in their
favor, thus:

WHEREFORE, it is most respectfully prayed of this Hon.
Court that judgment shall issue:

1. Ordering that an immediate temporary restraining order
restraining the defendants from disturbing the possession of the Plaintiff
over the property in question until the case is finally dissolved;

2. Declaring the Plaintiff as owner of the one-half (1/2)
property in question, thereby reconveying the ownership thereof and
cancelling the title;

3. Ordering the defendants, jointly and severally, to pay
Plaintiff the amount of P30,000.00 as attorneys fee, plus P1,000.00 per
hearing;

4. Ordering the defendants, jointly and severally, to pay
Plaintiff the amount of P10,000.00 as acceptance fee, plus P20,000.00 as
litigation expenses;

5. Ordering the defendants, jointly and severally, to pay
Plaintiff the amount of P20,000.00 as exemplary damages;

6. Ordering the defendants, jointly and severally, to pay
Plaintiff the amount of P10,000.00 as moral damages;

7. And granting such other reliefs and remedies just and
equitable in the premises.
[18]


On July 17, 1996, the MTC issued a pre-trial order in Civil Case No.
6089 defining the issue, thus:

Whether or not Unlawful Detainer is proper in the premises
considering the claim of ownership by defendants from the beginning of
these litigations sometime in 1982 followed by this case at
bench. Otherwise stated, is the occupation of the land in dispute by the
defendants by tolerance of plaintiffs.
[19]


On September 25, 1996, the MTC rendered judgment in Civil Case No.
6089 in favor of Corazon and Angela and ordered the dismissal of the complaint
on the ground of lack of jurisdiction.
[20]
The court held that the issue between the
parties was one of ownership and not merely possession de facto. Thus, the
possession of the property by defendants was not by mere tolerance, but by virtue
of a claim of ownership; in fact, defendants never recognized the plaintiffs claim
of ownership over the property. In ruling against Arsenio and his children, the trial
court relied on their pleadings, the decision of the CFI in Civil Case No. 6261, the
ruling of the CA in CA-G.R. CV No. 15455, and the resolution of this Court in
UDK-10069.
[21]
It declared that, although the CA reversed the decision of the CFI
in Tarlac, the facts show that the dispute between the parties constitutes
possession de jure; the action of the spouses Dulay in Civil Case No. 6261 which
was an accion publiciana cannot be converted into one for unlawful detainer in
Civil Case No. 6089.

Arsenio and his children appealed to the RTC. The case was docketed as
Civil Case No. 8396. On June 25, 1997, it reversed the decision of the MTC and
ordered the eviction of defendants, holding that the issue was the entitlement to the
physical possession de facto of the property, an issue within the exclusive
jurisdiction of the MTC;
[22]
in contrast, the issue between the parties in Civil Case
No. 6261 was possession de jure and not possession de facto. The RTC further
declared that the spouses Dulay had a torrens title over the property which was
conclusive against the whole world; as such, they were entitled to the possession of
the property as owners thereof. Citing the ruling of this Court in Peran v.
Espera,
[23]
the RTC ruled that Corazon and Angela possessed the property for a
considerable length of time only through mere tolerance of plaintiffs.

Corazon and Angela moved to reconsider the decision, which the RTC
denied in an Order
[24]
dated September 22, 1997. They filed a petition for review
in the CA, praying that the RTC decision be reversed and the decision of the MTC
be affirmed. Angela claimed that she owned one-half of the property as co-owner
of the spouses Dulay. The case was docketed as CA-G.R. SP No. 45560.

On March 16, 1998, the CA rendered judgment in CA-G.R. SP No. 45560
affirming the decision of the RTC and dismissing the petition. The CA ruled that,
contrary to the claim of Angela, there was no trust created over one-half of the
property in her favor. Since the complaint against Angela and Corazon in the
MTC was one for unlawful detainer, the MTC had exclusive jurisdiction over the
case. Moreover, they had been in
possession of the property by tolerance. In any case, their action was barred by
prescription and laches.

Angela and Corazon filed a motion for reconsideration, which the CA
denied.

Angela and Corazon, now petitioners, filed the instant petition for review
on certiorari, claiming that the CA erred as follows:

I
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED
IN CONSIDERING THAT THE CASE AT BAR IS ONE OF
UNLAWFUL DETAINER, WHEN IT IS ONE OF RECOVERY OF
OWNERSHIP AND POSSESSION.

II
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED
IN CONSIDERING THAT THERE WAS NO TRUST CREATED BY
AGREEMENT OF THE PARTIES.

III
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED
IN CONSIDERING THAT THE PETITIONERS CLAIM HAS BEEN
BARRED BY PRESCRIPTION OR LACHES.

IV
THE HON. COURT OF APPEALS, WITH DUE RESPECT, ERRED
IN AWARDING ATTORNEYS FEE FOR RESPONDENTS.
[25]


According to petitioners, during the pre-trial in the MTC, the parties
stipulated on the following issues to be resolved by the court: whether or not the
action for unlawful detainer of respondents was proper considering that petitioners
claimed ownership over the property in their answer to the complaint; and whether
petitioners possessed the property by mere tolerance of respondents. Petitioners
insist that during the pre-trial conference, respondents admitted that they had filed
a complaint for recovery of possession of property against petitioners in the CFI of
Tarlac, docketed as Civil Case No. 6261.

Petitioners maintain that the principal issue is one of ownership over the
property and not merely whether or not respondents, as plaintiffs, were entitled to
possession de facto as the registered owners thereof; hence, the MTC had no
jurisdiction over the action of respondents.

Petitioners are of the view that the trial court and the CA erred in declaring
that there was no trust created over the property. They maintain that there was a
verbal agreement between Gideon and his sister Asuncion that the property would
be purchased by them; that the purchase price thereof would be advanced by
Asuncion; that Asuncion would be indicated as the vendee in the deed of absolute
sale to enable her to secure a GSIS loan to pay for the property, with the
concomitant agreement that Gideon would pay one-half of the purchase price for
the property; and that the property will be titled in their name as trustees for the
spouses Gideon and Angela dela Rosa over one-half portion of the lots. They
insist that they are not barred from assailing the deed of absolute sale executed in
favor of the spouses Dulay by the spouses Rivera. There is likewise no factual and
legal basis for the award of attorneys fees.

In their comment on the petition, respondents aver that the stay of petitioners
in the property after 1982 was by mere tolerance. The MTC had exclusive
jurisdiction over their action because it was filed within one year from petitioners
last demand to vacate the property. The CA correctly ruled that no trust was
created over the property, with petitioners as trustors and respondents as trustees;
whether a trust agreement was created is a question of fact which cannot be raised
in this Court in a petition for review oncertiorari.

In any event, petitioners claim of a constructive trust was barred by
prescription since more than ten years had elapsed from the time the titles over the
properties in favor of respondents were issued on September 16, 1957.

Respondents further point out that the MTC of Tarlac rendered judgment in
Civil Case No. 6154 dismissing the complaint on the ground of prescription or
laches; on April 6, 2000, the RTC affirmed the decision on appeal; the CA
affirmed the decision in CA-G.R. SP No. 58857 on February 14, 2002; and on
January 22, 2003, this Court denied petitioners petition for review of the decision
of the CA in G.R. No. 155599.
[26]
Thus, the fact that no constructive trust existed
in favor of petitioners has been laid to rest by the Court.

The Ruling of the Court

The threshold issues are: (1) whether the MTC had jurisdiction over the
action of respondents (plaintiffs therein); (2) whether the CA erred in declaring
that there was no trust relationship between petitioners as trustors and respondents
as trustees; (3) whether the appellate court erred in ruling that the action of
petitioners to enforce the trust against respondents had prescribed; and (4) whether
respondents are entitled to attorneys fees.

On the first issue, we agree with the decision of the CA that the action of
respondents against petitioners was one for unlawful detainer, and that the MTC
had jurisdiction over the same. Indeed, petitioners claimed ownership over one-
half of the property in their answer to the complaint and alleged that respondents
were merely trustees thereof for their benefit as trustors; and, during the pre-trial,
respondents admitted having filed their complaint for recovery of possession of
real property (accion publiciana) against petitioners before the CFI of Tarlac,
docketed as Civil Case No. 6261. However, these did not divest the MTC of its
inceptial jurisdiction over the complaint for unlawful detainer of respondents.

It is settled jurisprudence that what determines the nature of an action as
well as which court or body has jurisdiction over it are the allegations of
the complaint and the character of the relief sought, whether or not plaintiff is
entitled to any and all of the reliefs prayed for.
[27]
The jurisdiction of the court or
tribunal over the nature of the action cannot be made to depend upon the defenses
set up in the court or upon a motion to dismiss, for otherwise, the question of
jurisdiction would depend almost entirely on defendant. Once jurisdiction is
vested, the same is retained up to the end of the litigation.
[28]


Jurisdiction cannot be conferred by the voluntary act or agreement of the
parties; it cannot be acquired through or waived, enlarged or diminished by their
act or omission. Neither is it conferred by the acquiescence of the court. It is
neither for the court nor the parties to violate or disregard the rule, this matter
being legislative in character. Thus, the jurisdiction over the nature of an action
and the subject matter thereof is not affected by the theories set up by defendant in
an answer or motion to dismiss.
[29]


Section 3 of Republic Act No. 7691, amending Section 33(2) of Batas
Pambansa Blg. 129, which was the law in effect when respondents filed their
complaint against petitioners, provides that Metropolitan Trial Courts, Municipal
Trial Courts and Municipal Circuit Trial Courts exercise exclusive original
jurisdiction over cases of forcible entry and unlawful detainer; provided that, when,
in such cases, defendant raises the questions 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 issues of
possession.

As gleaned from the averments of the complaint, respondents, as plaintiffs
below, alleged that they were the owners of parcels of land covered by TCT Nos.
29040 and 29041, hence, entitled to the possession of the property; petitioners
(defendants therein) and their predecessors-in-interest had occupied the said
parcels of land since 1957 without paying any rent; their possession over the
property continued even after the spouses Dulay purchased the property; and that
their occupation of the property was by mere tolerance of the spouses Dulay and,
after Asuncion died on June 26, 1995, by respondents; petitioners promised to
vacate the premises when respondents needed the property; demands were made by
respondents on October 2, 1995 for petitioners to vacate the property but the latter
refused, prompting an action to be filed in the Office of the Pangkat; and, on
December 1, 1995, the Pangkat Secretary issued a certification to file action. As
gleaned from the petitory portion of the complaint, respondents likewise prayed for
the eviction of petitioners from the property with a plea for judgment for
reasonable compensation for petitioners occupation of the premises. Respondents
filed their complaint onJanuary 29, 1996 in the MTC, within the period of one year
from the final demand made against petitioners to vacate the property.

It is true that during the pre-trial, the MTC issued an order defining the issue
to be litigated by the parties whether or not unlawful detainer is proper in the
premises considering defendants claim of ownership from 1982; otherwise stated,
whether petitioners occupation of the land in dispute was by mere tolerance of
respondents. As framed by the MTC, the issue before it was basically one of
physical or material possession of the property, although petitioners raised
ownership as an issue. Thus, the MTC erred when it declared that, since defendants
claimed ownership over the property, it was divested of its jurisdiction to take
cognizance of and decide the case on its merits.

It bears stressing that in unlawful detainer cases, the only issue for
resolution, independent of any claim of ownership by any party litigant, is: who is
entitled to the physical and material possession of the property involved? The
mere fact that defendant raises the defense of ownership of the property in the
pleadings does not deprive the MTC of its jurisdiction to take cognizance of and
decide the case. In cases where defendant raises the question of ownership in the
pleadings and the question of possession cannot be resolved without deciding the
issue of ownership, the court may proceed and resolve the issue of ownership but
only for the purpose of determining the issue of possession. However, the
disposition of the issue of ownership is not final, as it may be the subject of
separate proceeding specifically brought to settle the issue. Hence, the bare fact
that petitioners, in their answer to the complaint, raised the issue of whether they
owned the property as trustors of a constructive trust (with the spouses Dulay as
the trustees), did not divest the MTC of its jurisdiction to take cognizance of the
case and decide the same on its merits.
[30]


Petitioners were well aware that the issue of ownership over the property had
to be resolved in a proper action for the purpose, separate from and independent of
Civil Case No. 6089 in the MTC of Tarlac. It is for this reason that petitioner
Angela filed a complaint for recovery of ownership, reconveyance, cancellation of
title and damages against respondents, docketed as Civil Case No. 6154, wherein
she prayed that respondents, as defendants, be ordered to convey to her one-half
portion of the property. However, her claim was rejected by the trial court, which
ordered the complaint dismissed; the RTC likewise dismissed the case on
appeal. In affirming this dismissal in CA-G.R. SP No. 58857 promulgated
on February 14, 2002, the CA ratiocinated as follows:

Nevertheless, notwithstanding the foregoing, this Court finds that
petitioners complaint should be dismissed. This is so because petitioner
miserably failed to establish her claim to the property. It must be
stressed that while an implied trust may be established by parol
evidence, such evidence must be as fully convincing as if the acts giving
rise to the trust obligation are proven by an authentic document. (Heirs
of Lorenzo Yap v. Court of Appeals, 312 SCRA 603 [1999], at page
609). An implied trust cannot be made to rest on vague and inconclusive
proof. (Ibid.)

Unfortunately for petitioner, the evidence she presented in her
attempt to establish their so-called trust agreement is not sufficient or
convincing. The list of dates and amounts written by her purportedly
showing payments made to the late Asuncion dela Rosa Dulay cannot
even be given credence as appreciation of such list can be equivocal (see
Exhibit H, page 152, Original Records). The list was made in
petitioners handwriting and there was no counter-signature made by
Dulay showing acknowledgment of such listing. At best, the list can
merely be appreciated as it is, a list, but definitely, it does not prove
payments made on the purchase price of the portion of the property.

Also, the Court notes the NBIs Questioned Documents Report
No. 316-884 (dated Nov. 14, 1984) finding that the signature of
Asuncion Dulay in the receipt allegedly acknowledging partial payment
in the amount of P500.00 was signed over a typewritten carbon or
duplicate impression which is not part of the main entries in the receipt
(see Exhibit 7, page 154, Original Records). Such conclusion shows
that the entries made on the receipt were not written on a single occasion
but rather separately executed. Thus, the Court cannot give any
evidentiary value on said receipt considering that its credibility is
suspect.

Meanwhile, private respondents have in their favor TCT Nos.
29040 and 29041 in the name of the spouses Arsenio Dulay and
Asuncion dela Rosa (see Exhibits 1 and 2, pages 181-182, Original
Records); the Deed of Absolute Sale executed in 1957 by the spouses
Adriano Rivera and Aurora Mercado (petitioners paternal grandparents)
conveying the entire property to the spouses Dulay for the price
of P7,000 (see Exhibit 3, page 148, Original Records); the tax
declaration receipts showing tax payments made by private respondents
on the property (see Exhibits 3 to 3-b, pages 183-185, Original
Records); and the tax declaration of real property for the year 1974 in the
name of the spouses Dulay (see Exhibit C to C-1, pages 150-151,
Original Records).

All told, petitioner failed to discharge that onus incumbent upon
her to prove her claim over the property.
[31]


Angela assailed the decision of the CA in this Court in G.R. No. 155599, and
this Court resolved to deny the petition as follows:

G.R. No. 155599 (Angela dela Rosa v. Orfelina Roldan, et al.).
Considering the allegations, issues, and arguments adduced in the
petition for review on certiorari of the decision and resolution of the
Court of Appeals dated February 14, 2002 and October 14, 2002,
respectively, the Court Resolves to DENY the petition for failure of the
petitioner to sufficiently show that the Court of Appeals committed any
reversible error in the challenged decision and resolution as to warrant
the exercise by this Court of its discretionary appellate jurisdiction in
this case.
[32]


The resolution of the Court became final and executory on May 20,
2003.
[33]
Thus, the issue of whether or not respondents were trustees of one-
half of the property had been finally resolved by this Court in favor of respondents;
in fine, the validity of TCT Nos. 29040 and 29041 in the names of the spouses
Dulay had been affirmed by the trial court, the MTC, the CA and this Court. The
claim of co-ownership of petitioner Angela and possession over the western
portion of the property thus have no factual and legal basis.

We agree with petitioners that the complaint of the spouses Dulay filed in
1982 docketed as Civil Case No. 6261 was one for recovery of possession of the
property (accion publiciana) and that they likewise later filed a complaint with the
MTC, on January 29, 1996, for unlawful detainer in Civil Case No. 6089 instead of
an accion publiciana. However, respondents were not proscribed from filing a
complaint for unlawful detainer five (5) or six (6) years from the dismissal of their
complaint for recovery of possession of real property. The dismissal of
respondents complaint in Civil Case No. 6261 by the CA was not based on the
merits of the case, but solely because it was premature on account of the failure to
allege that earnest efforts were made for the amicable settlement of the cases as
required by Article 222 of the New Civil Code. The dismissal of the complaint
was thus without prejudice.
[34]


It bears stressing that, after the Court declared in UDK-10069 on November
19, 1990 that the decision of the CA in CA-G.R. CV No. 15455 was final and
executory, respondents did not immediately file their complaint for unlawful
detainer against petitioners for their eviction. Respondents filed their complaint
only on January 29, 1996, or after the lapse of almost six (6) years, but barely four
(4) months after respondents final demand to vacate the property on October 2,
1995 and the issuance of the certification of the Pangkat Secretary on December 1,
1995.

We agree with the contention of petitioners that for an action for unlawful
detainer based on possession by mere tolerance to prosper, the possession of the
property by defendant must be legal from the very beginning.
[35]
In this case,
petitioners possession of the property was tolerated by the former owners, the
spouses Rivera, and by the spouses Dulay after they purchased the property. After
all, Angela was the granddaughter of Consolacion Rivera, the sister of Adriano
Rivera, and Gideon was the brother ofAsuncion. However, when the spouses
Dulay needed the property for their childrens use and requested petitioners to
vacate the property, the latter refused. From then on, petitioners possession of the
property became deforciant. A person who occupies the land of another on the
latters tolerance, without any contract between them, is necessarily barred by an
implied provision that he will vacate the same upon demand.
[36]
Respondents thus
had the option to file a complaint for unlawful detainer within one year therefrom,
or an accion publiciana beyond the one-year period from the demand of
respondents as plaintiffs for petitioners to vacate the property.

The Court notes that the property was sold to respondents, and that it was
titled in their names (TCT Nos. 29040 and 29041). The said deed and titles
support the right of respondents to the material possession of the
property.
[37]
Under all the circumstances and facts in this case, petitioners claim,
that they had the right to the material possession of the property, has no factual and
legal basis. We quote with approval the decision of the CA in CA-G.R. SP No.
45560:

Private respondents are entitled to its possession from the time
title was issued in their favor as registered owners. An action for
unlawful detainer may be filed when possession by a landlord, vendor,
vendee or other person against whom the possession of any land or
building is unlawfully withheld after the expiration or termination of
their right to hold possession, by virtue of a contract, express or
implied.

Second. The age-old rule is that the person who has a torrens
title over a land is entitled to possession thereof. Except for the claim
that the title of private respondents is not conclusive proof of ownership,
petitioners have shown no right to justify their continued possession of
the subject premises.
[38]


On the issue of whether the RTC acted in excess of its appellate jurisdiction
in awarding P50,000.00 as attorneys fees in favor of respondents, petitioners aver
that under the Rules on Summary Procedure, respondents are entitled to a
maximum amount of only P20,000.00; hence, the RTC acted in excess of its
jurisdiction when it awardedP50,000.00 as attorneys fees, as it is in excess of the
maximum amount under the said Rules. Besides, petitioners aver, the amount
of P50,000.00 is unjust and inequitable. Moreover, the RTC ordered petitioners to
pay attorneys fees of P50,000.00 without even supporting the award with its
finding and citing legal provisions or case law.

For its part, the CA ruled that the award of P50,000.00 as attorneys fees
under the Rules on Summary Procedure does not apply in a case where the
decision of the MTC is appealed to the RTC. The latter court may award an
amount beyond the maximum amount of P20,000.00 under the Rules on Summary
Procedure as attorneys fees for the reason that, on appeal in the RTC, the regular
rules of civil procedure apply. According to the CA, there was factual and legal
basis for the award of P50,000.00 as respondents attorneys fees:

Second. Decisional law states

There is no question that a court may, whenever it deems
just and equitable, allow the recovery by the prevailing
party of attorneys fees. In determining the reasonableness
of such fees, this Court in a number of cases has provided
various criteria which, for convenient guidance, we might
collate, thusly: a) the quantity and character of the services
rendered; b) the labor, time and trouble involved; c) the
nature and importance of the litigation; d) the amount of
money or the value of the property affected by the
controversy; e) the novelty and difficulty of questions
involved; f) the responsibility imposed on counsel; g) the
skill and experience called for in the performance of the
service; h) the professional character and social standing of
the lawyer; i) the customary charges of the bar for similar
services; j) the character of employment, whether casual or
for established client; k) whether the fee is absolute or
contingent (it being the rule that an attorney may properly
charge a higher fee when it is contingent than when it is
absolute; and l) the results secured.

In view thereof, the award of attorneys fees is justified. That is,
in addition to the provisions of Article 2208 of the New Civil Code
which reads

In the absence of stipulation, attorneys fees and
expenses of litigation, other than judicial costs, cannot be
recovered, except:

x x x x

(2) When the defendants act or omission has
compelled the plaintiff to litigate with third persons or to
incur expenses to protect his interest;

x x x x

considering that petitioners refused to vacate the subject premises
despite demands by the private respondents.

Finally, the Supreme Court has explained

The Rule on Summary Procedure applies only in
cases filed before the Metropolitan Trial Court and
Municipal Trial Courts pursuant to Section 36 of Batas
Pambansa Blg. 129. x x x Hence, when the respondents
appealed the decision of the Municipal Trial Court to the
Regional Trial Court, the applicable rules are those of the
latter court.

Thus, the award of the amount of fifty thousand pesos
(P50,000.00) as attorneys fees is justified considering that the
jurisdictional amount of twenty thousand pesos (P20,000.00) under
Section 1, paragraph (A), subparagraph (1) of the Revised Rule on
Summary Procedure applies only to the Metropolitan Trial Courts,
Municipal Trial Courts in Cities, Municipal Trial Courts and Municipal
Circuit Trial Courts.
[39]



We agree with the ruling of the CA. The ceiling of P20,000.00 applies only
in the MTC where the Rules on Summary Procedure are applied. On appeal to the
RTC, the RTC may affirm, modify or even reverse the decision of the MTC; as
such, the RTC may increase the award for attorneys fees in excess of P20,000.00
if there is factual basis therefor.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Costs
against the petitioners.

SO ORDERED.


ASUNCION URIETA VDA. DE G.R. No. 164402
AGUILAR, represented by
ORLANDO U. AGUILAR, Present:
Petitioner,
CORONA, C. J., Chairperson,
VELASCO, JR.,
- versus - LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.
SPOUSES EDERLINA B. ALFARO
and RAUL ALFARO, Promulgated:
Respondents. July 5, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - x


D E C I S I O N


DEL CASTILLO, J .:

In an action for recovery of possession of realty, who has the better right of
possession, the registered owner armed with a Torrens title or the occupants brandishing
a notarized but unregistered deed of sale executed before the land was registered under
the Torrens system?

As we previously ruled in similar cases,
[1]
we resolve the question in favor of the
titleholder.

Factual Antecedents

On August 3, 1995, petitioner filed a Complaint for Recovery of Possession and
Damages
[2]
before the Regional Trial Court (RTC) of San Jose, Occidental Mindoro. She
alleged that on May 16, 1977, her husband Ignacio Aguilar (Ignacio) was issued Original
Certificate of Title (OCT) No. P-9354
[3]
over a 606-square meter parcel of land
designated as Lot 83 situated in Brgy. Buenavista, Sablayan, Occidental Mindoro. Prior
thereto, or in 1968, Ignacio allowed petitioners sister, Anastacia Urieta (Anastacia),
mother of respondent Ederlina B. Alfaro (Ederlina), to construct a house on the southern
portion of said land and to stay therein temporarily.

In 1994, Ignacio died and his heirs decided to partition Lot 83. Petitioner thus
asked the respondents, who took possession of the premises after the death of Anastacia,
to vacate Lot83. They did not heed her demand.

Thus, petitioner filed a case for accion publiciana praying that respondents be
ordered to vacate subject property, and to pay moral, temperate, and exemplary damages,
as well as attorneys fees and the costs of suit.

In their Answer with Counterclaims and Affirmative Defenses,
[4]
respondents did
not dispute that Ignacio was able to secure title over the entire Lot 83. However, they
asserted that on April 17, 1973, Ignacio and herein petitioner sold to their mother
Anastacia the southern portion of Lot 83 consisting of 367.5 square meters as shown by
the Kasulatan sa Bilihan
[5]
which bears the signatures of petitioner and Ignacio. Since
then, they and their mother have been in possession thereof. Respondents also presented
several Tax Declarations
[6]
in support of their allegations.

Respondents also raised the defense of prescription. They pointed out that accion
publiciana or an action to recover the real right of possession independent of ownership
prescribes in 10 years. However, it took petitioner more than 25 years before she asserted
her rights by filing accion publiciana. As alleged in the complaint, they took possession
of the disputed portion ofLot 83 as early as 1968, but petitioner filed the case only in
1995.

By way of counterclaim, respondents prayed that petitioner be directed to execute
the necessary documents so that title to the 367.5-square meter portion of Lot 83 could be
issued in their name. They likewise prayed for the dismissal of the complaint and for
award of moral and exemplary damages, as well as attorneys fees.

In her Reply and Answer to Counterclaim,
[7]
petitioner denied having signed
the Kasulatan sa Bilihan and averred that her signature appearing thereon is a
forgery. She presented an unsworn written declaration dated January 28, 1994 where her
husband declared that he did not sell the property in question to anyone. As to the issue
of prescription, she asserted that respondents occupation of subject property cannot ripen
into ownership considering that the same is by mere tolerance of the owner. Besides, the
purported Kasulatan sa Bilihan was not registered with the proper Registry of Deeds.

During the trial, petitioner presented the testimonies of Orlando Aguilar (Orlando)
and Zenaida Baldeo (Zenaida). Orlando testified that he has been staying in Lot 83 since
1960 and had built a house thereon where he is presently residing; and, that his mother,
herein petitioner, denied having sold the property or having signed any document for that
matter.

Zenaida also testified that in 1981, her father (Ignacio) and Ederlina had a
confrontation before the barangay during which her father denied having conveyed any
portion of Lot 83 to anybody. She further testified that she is familiar with the signature
of her father and that the signature appearing on the Kasulatan sa Bilihan is not her
fathers signature.
For their part, respondents offered in evidence the testimonies of Estrella Bermudo
Alfaro (Estrella), Ederlina, and Jose Tampolino (Jose). Estrella declared that she was
present when Ignacio and the petitioner affixed their signatures on the Kasulatan sa
Bilihan, which was acknowledged before Notary Public Juan Q. Dantayana on April 17,
1973. She narrated that her mother actually purchased the property in 1954, but it was
only in 1973 when the vendor executed the deed of sale. In fact, her father Francisco
Bermudo was able to secure a permit to erect a house on the disputed property from the
Office of the Mayor of Sablayan, Occidental Mindoro in 1954.
[8]
She was surprised to
learn though that their property is still registered in the name of the petitioner.

Ederlina corroborated the declarations of Estrella. She also alleged that her
parents occupied the property in 1954 when they built a hut there, then later on, a house
of strong materials.

Jose corroborated the declarations of the other witnesses for the respondents that
the disputed portion of Lot 83 is owned by Anastacia.

Ruling of the Regional Trial Court

In its Decision
[9]
dated September 21, 1998, the court a quo ordered the
respondents to vacate subject premises and denied their counterclaim for reconveyance
on the grounds of prescription and laches. It held that the prescriptive period for
reconvenyance of fraudulently registered real property is 10 years reckoned from the date
of the issuance of the certificate of title. In this case, however, it is not disputed that OCT
No. P-9354 covering the entire Lot 83 was issued to Ignacio in 1977. The trial court
likewise held that respondents are guilty of laches and that the reconveyance of the
disputed property in their favor would violate the rule on indefeasibility of Torrens title.
The dispositive portion of the trial courts Decision reads:

WHEREFORE, and in the light of all the foregoing considerations,
judgment is hereby rendered in favor of plaintiff and against the defendants, to
wit:

1. Ordering the defendants and any person claiming right under them to
vacate the premises in question and surrender the possession thereof to
plaintiff;

2. To pay the amount of Ten Thousand Pesos (P10,000.00) as and for
reasonable attorneys fees;

3. To pay the costs of this suit.

SO ORDERED.
[10]



Ruling of the Court of Appeals


On June 7, 2004, the CA promulgated its Decision
[11]
reversing the trial courts
Decision and dismissing the complaint, as well as respondents counterclaim. The CA
upheld the validity of the Kasulatan sa Bilihan since it is a notarized document and
disputably presumed to be authentic and duly executed. In addition, witness Estrella
categorically declared that she was present when petitioner and Ignacio signed
the Kasulatan sa Bilihan. The CA elaborated that in order to disprove the presumption
accorded to a notarized document, the party contesting its authenticity and due execution
must present a clear and convincing evidence to the contrary, which the petitioner failed
to do.

The CA likewise disagreed with the court a quo that respondents counterclaim
should be dismissed on the ground of indefeasibility of title. It emphasized that
the Torrens system was adopted to protect innocent third parties for value and not to
protect fraud. Nonetheless, the CA did not grant the relief sought in respondents
counterclaim considering that not all interested parties were impleaded in the case.
The dispositive portion of the CAs Decision reads:

IN VIEW OF THE FOREGOING, the decision appealed from is
REVERSED, and a new one ENTERED dismissing the complaint and
counterclaim.

SO ORDERED.
[12]



Issue

Without seeking reconsideration of the CAs Decision, petitioner interposed the
present recourse raising the sole issue of:

WHETHER X X X THE HONORABLE COURT OF APPEALS ERRED
IN UPHOLDING THE VALIDITY/GENUINENESS AND DUE
EXECUTION OF THE PURPORTED DEED OF SALE OF THE
PORTION OF THE LOT DESPITE THE VEHEMENT DENIAL OF THE
ALLEGED VENDORS.
[13]



Petitioner contends that the CA grievously erred in upholding the validity and
genuineness of the Kasulatan sa Bilihan. She alleges that she wanted to take the witness
stand to disclaim in open court her purported signature appearing on
respondents Kasulatan sa Bilihan, but could not do so because she is too old, bed-ridden
and has to bear a tortuous five-hour drive to reach the court. Nevertheless, she executed a
sworn statement declaring that she and her husband never sold any portion of Lot 83 and
that their signatures appearing on said deed were forged. She avers that the assistance of
an expert witness is not even necessary to detect the patent dissimilarities between said
forged signatures and their authentic signatures.

Petitioner likewise argues that the CA erred in taking into consideration the
appearance and condition of the paper where the Kasulatan sa Bilihan is written. She
posits that the fabrication of an ancient-looking document nowadays is no longer
difficult. She also points to several circumstances which cast doubt on the authenticity
and due execution of the Kasulatan sa Bilihan, but which the CA inexplicably ignored

Furthermore, petitioner maintains that her title is indefeasible. And while there are
exceptions to the rule on indefeasibility of title,
[14]
she emphasizes that respondents never
disputed her title. With regard to the tax declarations presented by respondents,
petitioner asserts that it has been the consistent ruling of this Court that tax declarations
are not necessarily proof of ownership.

In their comment, respondents assert that in petitions filed under Rule 45 of the
Rules of Court, only questions of law can be raised. Factual issues are prohibited. From
the arguments advanced by the petitioner, however, it is clear that she is asking this Court
to examine and weigh again the evidence on record.

Our Ruling

We grant the petition.

This case falls under the exceptions where the
Supreme Court may review factual issues.


As a rule, only questions of law may be raised in petitions for review
on certiorari.
[15]
It is settled that in the exercise of the Supreme Courts power of review,
the court is not a trier of facts and does not normally undertake the re-examination of the
evidence presented by the contending parties during the trial of the case.
[16]
This rule,
however, is subject to a number of exceptions,
[17]
one of which is when the findings of the
appellate court are contrary to those of the trial court, like in the present case.

Nature and purpose of accion publiciana.


Also known as accion plenaria de posesion,
[18]
accion publiciana is an
ordinary civil proceeding to determine the better right of possession of realty
independently of title.
[19]
It refers to an ejectment suit filed after the expiration of one
year from the accrual of the cause of action or from the unlawful withholding of
possession of the realty.
[20]


The objective of the plaintiffs in accion publiciana is to recover possession only,
not ownership.
[21]
However, where the parties raise the issue of ownership, the courts
may pass upon the issue to determine who between the parties has the right to possess the
property. This adjudication, however, is not a final and binding determination of the
issue of ownership; it is only for the purpose of resolving the issue of possession, where
the issue of ownership is inseparably linked to the issue of possession. The adjudication
of the issue of ownership, being provisional, is not a bar to an action between the same
parties involving title to the property.
[22]
The adjudication, in short, is not conclusive on
the issue of ownership.
[23]


Guided by the foregoing jurisprudential guideposts, we shall now resolve the
arguments raised by the parties in this petition.

As against petitioners Torrens title,
respondents Kasulatan sa Bilihan cannot
confer better right to possess.


It is settled that a Torrens title is evidence of indefeasible title to property in favor
of the person in whose name the title appears.
[24]
It is conclusive evidence with respect
to the ownership of the land described therein.
[25]
It is also settled that the titleholder is
entitled to all the attributes of ownership of the property, including possession.
[26]
Thus,
in Arambulo v. Gungab,
[27]
this Court declared that the age-old rule is that the person
who has a Torrens title over a land is entitled to possession thereof.

In the present case, there is no dispute that petitioner is the holder of a Torrens title
over the entire Lot 83. Respondents have only their notarized but unregistered Kasulatan
sa Bilihanto support their claim of ownership. Thus, even if respondents proof of
ownership has in its favor a juris tantum presumption of authenticity and due execution,
the same cannot prevail over petitioners Torrens title. This has been our consistent
ruling which we recently reiterated in Pascual v. Coronel,
[28]
viz:

Even if we 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 title in the name of 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--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. (Citations omitted.)


As the titleholder, therefore, petitioner is preferred to possess the
entire Lot 83. Besides, there are telltale signs which cast doubt on the genuineness of
the Kasulatan. To cite a few:

1. The date of its execution unbelievably coincides with the date the buyer,
Anastacia, died;

2. Despite its alleged execution on April 17, 1973, respondents brought up
the Kasulatan only when petitioner asked them to vacate the disputed
premises. Prior thereto, they neither asserted their rights thereunder nor
registered the same with the proper Registry of Deeds;

3. The lawyer who notarized the Kasulatan sa Bilihan, as well as the witnesses
thereto, was not presented in court; and,

4. The District Land Officer who signed OCT No. P-9354 by authority of the
President is a public officer who has in his favor the presumption of regularity
in issuing said title.

Torrens certificate of title cannot be the subject
of collateral attack.


Moreover, respondents attack on the validity of petitioners title by claiming that
their mother became the true owner of the southern portion of Lot 83 even before the
issuance of OCT No. P-9354 constitutes as a collateral attack on said title. It is an attack
incidental to their quest to defend their possession of the property in an accion
publiciana, not in a direct action whose main objective is to impugn the validity of the
judgment granting the title.
[29]
This cannot be allowed. Under Section 48 of Presidential
Decree No. 1529, otherwise known as the Property Registration Decree, a certificate of
title cannot be the subject of collateral attack. Thus:

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


A collateral attack transpires when, in another action to obtain a different relief and
as an incident to the present action, an attack is made against the judgment granting the
title.
[30]
This manner of attack is to be distinguished from a direct attack against a
judgment granting the title, through an action whose main objective is to annul, set aside,
or enjoin the enforcement of such judgment if not yet implemented, or to seek recovery if
the property titled under the judgment had been disposed of.
[31]
Thus, in Magay v.
Estiandan,
[32]
therein plaintiff-appellee filed an accion publiciana. In his defense,
defendant-appellant alleged among others that plaintiff-appellees Transfer Certificate of
Title No. 2004 was issued under anomalous circumstances. When the case reached this
Court, we rejected defendant-appellants defense on the ground that the issue on the
validity of said title can only be raised in an action expressly instituted for that
purpose. Also, in Co v. Court of Appeals
[33]
we arrived at the same conclusion and
elaborated as follows:

In their reply dated September 1990, petitioners argue that the issues of
fraud and ownership raised in their so-called compulsory counterclaim partake
of the nature of an independent complaint which they may pursue for the
purpose of assailing the validity of the transfer certificate of title of private
respondents. That theory will not prosper.

While a counterclaim may be filed with a subject matter or for a relief
different from those in the basic complaint in the case, it does not follow that
such counterclaim is in the nature of a separate and independent action in
itself. In fact, its allowance in the action is subject to explicit conditions, as
above set forth, particularly in its required relation to the subject matter of
opposing partys claim. Failing in that respect, it cannot even be filed and
pursued as an altogether different and original action.

It is evident that the objective of such claim is to nullify the title of
private respondents to the property in question, which thereby challenges the
judgment pursuant to which the title was decreed. This is apparently a
collateral attack which is not permitted under the principle of indefeasibility of
a Torrens title. It is well settled that a Torrens title cannot be collaterally
attacked. The issue on the validity of title, i.e., whether or not it was
fraudulently issued, can only be raised in an action expressly instituted for that
purpose. Hence, whether or not petitioners have the right to claim ownership
of the land in question is beyond the province of the instant proceeding. That
should be threshed out in a proper action.


The lower courts cannot pass upon or grant
respondents counterclaim for lack of
jurisdiction.


Both the trial court and the appellate court considered respondents counterclaim
as a petition for reconveyance. In which case, it should be treated merely as a permissive
counterclaim because the evidence required to prove their claim differs from the evidence
needed to establish petitioners demand for recovery of possession. Being a permissive
counterclaim, therefore, respondents should have paid the corresponding docket
fees.
[34]
However, there is no proof on record that respondents paid the required docket
fees. The official receipts were neither attached to nor annotated on respondents Answer
with Counterclaims and Affirmative Defenses
[35]
which was filed via registered
mail
[36]
on August 19, 1995. It has been our consistent ruling that it is not simply the
filing of the complaint or appropriate initiatory pleading, but the payment of the full
amount of the prescribed docket fee, that vests a trial court with jurisdiction over the
subject matter or nature of the action.
[37]
The same rule applies to permissive
counterclaims, third-party claims and similar pleadings, which shall not be considered
filed until and unless the filing fee prescribed therefor is paid.
[38]


On a final note, and as discussed above, we stress that our ruling in this case is
limited only to the issue of determining who between the parties has a better right to
possession. This adjudication is not a final and binding determination of the issue of
ownership. As such, this is not a bar for the parties to file an action for the determination
of the issue of ownership where the validity of the Kasulatan sa Bilihan and of OCT No.
P-9354 can be properly threshed out.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court
of Appeals dated June 7, 2004 is REVERSED and SET ASIDE and the September 21,
1998 Decision of Regional Trial Court, Branch 46, San Jose, Occidental Mindoro,
insofar as it orders the respondents to vacate the premises is REINSTATED and
AFFIRMED.

SO ORDERED.




G.R. No. L-6528 May 25, 1953
MUNICIPALITY OF BOCAUE, ET AL., plaintiffs-appellants,
vs.
SEVERINO MANOTOK and MARIA MANOTOK, defendants-appellees.
Angel S. Alvir, Santiago & Macapagal for appellants.
Antonio Gonzales for appellees.
BAUTISTA ANGELO, J .:
In the Court of First Instance of Bulacan, the Municipality of Bocaue and the Province of Bulacan,
represented by the Provincial Fiscal, filed an action for the expropriation of certain parcels of land.
The defendants filed their answer. Thereafter, the defendants filed an action to dismiss alleging that
the issue is now a settled matter in view of the several decisions of the Supreme Court. With this
motion, the Provincial Fiscal joined hands being convinced that plaintiffs have no cause of action. On
September 24, 1924, the court issued an order dismissing the case. The law firm of Alvir "&
Macapagal, claiming to have been authorized by the plaintiffs, took steps to appeal from said order,
and despite the objection of defendants, the court gave due course to the appeal.
Defendants now come praying for the dismissal of the appeal contending that the law firm of Alvir &
Macapagal has no right to represent the plaintiffs, nor can it be authorized to represent them, for
under the law plaintiffs can only be represented by the Provincial Fiscal in civil actions wherein they
are parties in interest. The motion to dismiss is vigorously to by said law firm of Alvir & Macapagal.
The Solicitor General, in his comment on the matter, agrees with counsel for the defendants.
Under the law, the Provincial Fiscal of Bulacan and his assistant are charged with the duty to
represent the province and any municipality thereof in all civil actions, except in cases where original
jurisdiction is vested in the Supreme Court or in cases where a municipality was a party adverse to
the provincial government (Section 1681-1683, Revised Administrative Code). The municipal council
is authorized to employ a special attorney for the municipality only if the Provincial Fiscal is
disqualified to serve (Paragraph 2, Section 1683, Revised Administrative Code). This is what we
said in the case of Eugenio Reyes, et al. vs. Judge Pablo G. Cornista, et al., 92 Phil 838.
It would seem clear that the Provincial Fiscal is the only counsel who can rightfully represent the
plaintiffs and therefore, Attys. Alvir & Macapagal have no standing in the case. The appeal herein
interposed in behalf of the plaintiffs cannot therefore be maintained.
Wherefore, the appeal is hereby dismissed, without costs.
Paras, C.J., Feria, Pablo, Bengzon, Montemayor, Reyes, Jugo an


G.R. No. 105909 June 28, 1994
MUNICIPALITY OF PILILLA, RIZAL, petitioner,
vs.
HON. COURT OF APPEALS, HON. ARTURO A. MARAVE, as Presiding Judge, Regional Trial
Court, Branch 78, Morong, Rizal, and PHILIPPINE PETROLEUM CORPORATION, respondents.
Felix E. Mendiola for petitioner.
Makalintal, Barot, Torres & Ibarra for respondent Philippine Petroleum Corporation.


REGALADO, J .:
Petitioner questions and seeks the nullification of the resolution of respondent Court of Appeals in
CA-G.R. SP. No. 27504 dated March 31, 1992, dismissing the petition for having been filed by a
private counsel, as well as its succeeding resolution dated June 9, 1992, denying petitioner's motion
for reconsideration.
1

The records show that on March 17, 1989, the Regional Trial Court of Tanay, Rizal, Branch 80,
rendered judgment in Civil Case No. 057-T in favor of plaintiff, now herein petitioner Municipality of
Pililla, Rizal, against defendant, now herein private respondent Philippine Petroleum Corporation
(PPC, for short), ordering therein defendant to pay said plaintiff (1) the amount of P5,301,385.00
representing the tax on business due from the defendant under Section 9(A) of Municipal Tax
Ordinance No. 1 of said municipality for the period from 1979 to 1983, inclusive, plus such amount of
tax as may accrue until final determination of the case; (2) storage permit fee in the amount of
P3,321,730.00 due from the defendant under Section 10, paragraph Z(13)
(b-1-c) of the same municipal tax ordinance for the period from 1975 to 1986, inclusive, plus the
amount of said fee that may accrue until final determination of the case; (3) mayor's permit fee due
from the defendant under Section 10, paragraph (P) (2) of said municipal tax ordinance from 1975 to
1984, inclusive, in the amount of P12,120.00, plus such amount of the same fee as may accrue until
final determination of the case; (4) sanitary inspection fee in the amount of P1,010.00 for the period
from 1975 to 1984, plus the amount of this fee that may accrue until final determination of the case;
and (5) the costs of suit.
2

On June 3, 1991, in G.R. No. 90776 this Court affirmed the aforesaid judgment, with the modification
that business taxes accruing prior to 1976 are not to be paid by PPC because the same have
prescribed, and that storage fees are not also to be paid by PPC since the storage tanks are owned
by PPC and not by the municipality and, therefore, cannot be the bases of a charge for service by
the municipality.
3
This judgment became final and executory on July 13, 1991 and the records were
remanded to the trial court for execution.
On October 14, 1991, in connection with the execution of said judgment, Atty. Felix E. Mendiola filed
a motion in behalf of plaintiff municipality with the Regional Trial Court, Branch 78, Morong, Rizal* for
the examination of defendant corporation's gross sales for the years 1976 to 1978 and 1984 to 1991
for the purpose of computing the tax on business imposed under the Local Tax Code, as amended.
On October 21, 1991, defendant corporation filed a manifestation to the effect that on October 18,
1991, Pililla Mayor Nicomedes Patenia received from it the sum of P11,457,907.00 as full
satisfaction of the above-mentioned judgment of the Supreme Court, as evidence by the release and
quitclaim documents executed by said mayor. Accordingly, on October 31, 1991 the court below
issued an order denying plaintiff municipality's motion for examination and execution of judgment on
the ground that the judgment in question had already been satisfied.
4

Thereafter, on November 21, 1991 Atty. Mendiola filed a motion for reconsideration of the court's
aforesaid order of October 31, 1991, claiming that the total liability of defendant corporation to
plaintiff municipality amounted to P24,176,599.00, while the amount involved in the release and
quitclaim executed by Mayor Patenia was only P12,718,692; and that the said mayor could not
waive the balance which represents the taxes due under the judgment to the municipality and over
which judgment the law firm of Atty. Mendiola had registered two liens for alleged consultancy
services of 25% and attorneys' fees of 25% which, when quantified and added, amount to more than
P12 million.
On January 28,1992, the trial court denied the aforesaid motion for reconsideration.
5

On February 18, 1992, Atty. Mendiola, again ostensibly in behalf of herein petitioner municipality,
filed a petition for certiorari with us, which petition we referred to the Court of Appeals for proper
disposition and was docketed therein as CA-G.R. SP No. 27504.
6
On March 2, 1992, respondent PPC
filed a motion questioning Atty. Mendiola's authority to represent petitioner municipality.
7
Consequently,
on March 31, 1992 respondent Court of Appeals dismissed the petition for having been filed by a private
counsel in violation of law and jurisprudence, but without prejudice to the filing of a similar petition by the
Municipality of Pililla through the proper provincial or municipal legal officer.
8
Petitioner filed a motion for
reconsideration which was denied by the Court of Appeals in its resolution of June 9, 1992.
9

Petitioner is once again before us with the following assignment of errors:
1. It is an error for the Court of Appeals to consider private respondent's new issue
raised for the first time on appeal, as it could no longer be considered on appeal,
because it was never been (sic) raised in the court below.
2. It is an error for the Court of Appeals in dismissing (sic) the instant petition with
alternative remedy of filing similar petition as it is a departure from established
jurisprudence.
3. It is an error for the Court of Appeals to rule that the filing of the instant petition by
the private counsel is in violation of law and jurisprudence.
10

We find the present petition devoid of merit.
The Court of Appeals is correct in holding that Atty. Mendiola has no authority to file a petition in
behalf of and in the name of the Municipality of Pililla. The matter of representation of a municipality
by a private attorney has been settled in Ramos vs. Court of Appeals, et al.,
11
and reiterated
in Province of Cebu vs. Intermediate Appellate Court, et al.,
12
where we ruled that private attorneys
cannot represent a province or municipality in lawsuits.
Section 1683 of the Revised Administrative Code provides:
Section 1683. Duty of fiscal to represent provinces and provincial subdivisions in
litigation. The provincial fiscal shall represent the province and any municipality or
municipal district thereof in any court, except in cases whereof original jurisdiction is
vested in the Supreme Court or in cases where the municipality or municipal district
in question is a party adverse to the provincial government or to some other
municipality or municipal district in the same province. When the interests of a
provincial government and of any political division thereof are opposed, the provincial
fiscal shall act on behalf of the province.
When the provincial fiscal is disqualified to serve any municipality or other political
subdivision of a province, a special attorney may be employed by its council.
13

Under the above provision, complemented by Section 3, Republic Act No. 2264, the Local Autonomy
Law,
14
only the provincial fiscal and the municipal attorney can represent a province or municipality in
their lawsuits. The provision is mandatory. The municipality's authority to employ a private lawyer is
expressly limited only to situations where the provincial fiscal is disqualified to represent it.
15

For the aforementioned exception to apply, the fact that the provincial fiscal was disqualified to
handle the municipality's case must appear on
record.
16
In the instant case, there is nothing in the records to show that the provincial fiscal is
disqualified to act as counsel for the Municipality of Pililla on appeal, hence the appearance of herein
private counsel is without authority of law.
The submission of Atty. Mendiola that the exception is broad enough to include situations wherein
the provincial fiscal refuses to handle the case cannot be sustained. The fiscal's refusal to represent
the municipality is not a legal justification for employing the services of private counsel. Unlike a
practicing lawyer who has the right to decline employment, a fiscal cannot refuse to perform his
functions on grounds not provided for by law without violating his oath of office. Instead of engaging
the services of a special attorney, the municipal council should request the Secretary of Justice to
appoint an acting provincial fiscal in place of the provincial fiscal who has declined to handle and
prosecute its case in court, pursuant to Section 1679 of the Revised Administrative Code.
17

It is also significant that the lack of authority of herein counsel,
Atty. Mendiola, was even raised by the municipality itself in its comment and opposition to said
counsel's motion for execution of his lien, which was filed with the court a quo by the office of the
Provincial Prosecutor of Rizal in behalf of said municipality.
18

The contention of Atty. Mendiola that private respondent cannot raise for the first time on appeal his
lack of authority to represent the municipality is untenable. The legality of his representation can be
questioned at any stage of the proceedings. In the cases hereinbefore cited,
19
the issue of lack of
authority of private counsel to represent a municipality was only raised for the first time in the proceedings
for the collection of attorney's fees for services rendered in the particular case, after the decision in that
case had become final and executory and/or had been duly executed.
Furthermore, even assuming that the representation of the municipality by Atty. Mendiola was duly
authorized, said authority is deemed to have been revoked by the municipality when the latter,
through the municipal mayor and without said counsel's participation, entered into a compromise
agreement with herein private respondent with regard to the execution of the judgment in its favor
and thereafter filed personally with the court below two pleadings
entitled and constitutive of a "Satisfaction of Judgment" and a "Release and Quitclaim".
20

A client, by appearing personally and presenting a motion by himself, is considered to have impliedly
dismissed his lawyer. Herein counsel cannot pretend to be authorized to continue representing the
municipality since the latter is entitled to dispense with his services at any time. Both at common law
and under Section 26, Rule 138 of the Rules of Court, a client may dismiss his lawyer at any time or
at any stage of the proceedings, and there is nothing
to prevent a litigant from appearing before the court to conduct his own litigation.
21

The client has also an undoubted right to compromise a suit without the intervention of his
lawyer.
22
Even the lawyers' right to fees from their clients may not be invoked by the lawyers themselves
as a ground for disapproving or holding in abeyance the approval of a compromise agreement. The
lawyers concerned can enforce their rights in the proper court in an appropriate proceeding in accordance
with the Rules of Court, but said rights may not be used to prevent the approval of the compromise
agreement.
23

The apprehension of herein counsel that it is impossible that the municipality will file a similar
petition, considering that the mayor who controls its legislative body will not take the initiative, is not
only conjectural but without factual basis. Contrary to his pretensions, there is presently a
manifestation and motion pending with the trial court filed by the aforesaid municipal mayor for the
withdrawal of the "Satisfaction of Judgment" and the "Release and Quitclaim"
24
previously filed in the
case therein as earlier mentioned.
WHEREFORE, the petition at bar is DENIED for lack of merit and the judgment of respondent Court
of Appeals is hereby AFFIRMED.
SO ORDERED.


G.R. No. 127820 July 20, 1998
MUNICIPALITY OF PARAAQUE, petitioner,
vs.
V.M. REALTY CORPORATION, respondent.

PANGANIBAN, J .:
A local government unit (LGU), like the Municipality of Paraaque, cannot authorize an expropriation
of private property through a mere resolution of its lawmaking body. The Local Government Code
expressly and clearly requires an ordinance or a local law for the purpose. A resolution that merely
expresses the sentiment or opinion of the Municipal Council will not suffice. On the other hand, the
principle of res judicata does not bar subsequent proceedings for the expropriation of the same
property when all the legal requirements for its valid exercise are complied with.
Statement of the Case
These principles are applied by this Court in resolving this petition for review on certiorari of the July
22, 1996 Decision
1
of the Court of Appeals
2
in CA GR CV No. 48048, which affirmed in toto
3
the
Regional Trial Court's August 9, 1994 Resolution.
4
The trial court dismissed the expropriation suit as
follows:
The right of the plaintiff to exercise the power of eminent domain is not disputed.
However, such right may be exercised only pursuant to an Ordinance (Sec. 19, R.A
No. 7160). In the instant case, there is no such ordinance passed by the Municipal
Council of Paraaque enabling the Municipality, thru its Chief Executive, to exercise
the power of eminent domain. The complaint, therefore, states no cause of action.
Assuming that plaintiff has a cause of action, the same is barred by a prior judgment.
On September 29, 1987, the plaintiff filed a complaint for expropriation involving the
same parcels of land which was docketed as Civil Case No. 17939 of this Court
(page 26, record). Said case was dismissed with prejudice on May 18, 1988 (page
39, record). The order of dismissal was not appealed, hence, the same became final.
The plaintiff can not be allowed to pursue the present action without violating the
principle of [r]es [j]udicata. While defendant in Civil Case No. 17939 was Limpan
Investment Corporation, the doctrine of res judicata still applies because the
judgment in said case (C.C. No. 17939) is conclusive between the parties and their
successors-in-interest (Vda. de Buncio vs. Estate of the late Anita de Leon). The
herein defendant is the successor-in-interest of Limpan Investment Corporation as
shown by the "Deed of Assignment Exchange" executed on June 13, 1990.
WHEREFORE, defendant's motion for reconsideration is hereby granted. The order
dated February 4, 1994 is vacated and set aside.
This case is hereby dismissed. No pronouncement as to costs.
SO ORDERED.
5

Factual Antecedents
Pursuant to Sangguniang Bayan Resolution No. 93-95, Series of 1993,
6
the Municipality of
Paraaque filed on September 20, 1993, a Complaint for expropriation
7
against Private Respondent V.M.
Realty Corporation over two parcels of land (Lots 2-A-2 and 2-B-1 of Subdivision Plan Psd-17917), with a
combined area of about 10,000 square meters, located at Wakas, San Dionisio, Paraaque, Metro
Manila, and covered by Torrens Certificate of Title No. 48700. Allegedly, the complaint was filed "for the
purpose of alleviating the living conditions of the underprivileged by providing homes for the homeless
through a socialized housing project."
8
Parenthetically, it was also for this stated purpose that petitioner,
pursuant to its Sangguniang Bayan Resolution No. 577, Series of 1991,
9
previously made an offer to
enter into a negotiated sale of the property with private respondent, which the latter did not accept.
10

Finding the Complaint sufficient in form and substance, the Regional Trial Court of Makati, Branch
134, issued an Order dated January 10, 1994,
11
giving it due course. Acting on petitioner's motion, said
court issued an Order dated February 4, 1994,
12
authorizing petitioner to take possession of the subject
property upon deposit with its clerk of court of an amount equivalent to 15 percent of its fair market value
based on its current tax declaration.
On February 21, 1994, private respondent filed its Answer containing affirmative defenses and a
counterclaim,
13
alleging in the main that (a) the complaint failed to state a cause of action because it was
filed pursuant to a resolution and not to an ordinance as required by RA 7160 (the Local Government
Code); and (b) the cause of action, if any, was barred by a prior judgment or res judicata. On private
respondent's motion, its Answer was treated as a motion to dismiss.
14
On March 24, 1991,
15
petitioner
filed its opposition, stressing that the trial court's Order dated February 4, 1994 was in accord with Section
19 of RA 7160, and that the principle of res judicata was not applicable.
Thereafter, the trial court issued its August 9, 1994 Resolution
16
nullifying its February 4, 1994 Order
and dismissing the case. Petitioner's motions for reconsideration and transfer of venue were denied by
the trial court in a Resolution dated December 2, 1994.
17
Petitioner then appealed to Respondent Court,
raising the following issues:
1. Whether or not the Resolution of the Paraaque Municipal Council
No. 93-95, Series of 1993 is a substantial compliance of the statutory
requirement of Section 19, R.A. 7180 [sic] in the exercise of the
power of eminent domain by the plaintiff-appellant.
2. Whether or not the complaint in this case states no cause of action.
3. Whether or not the strict adherence to the literal observance to the
rule of procedure resulted in technicality standing in the way of
substantial justice.
4. Whether or not the principle of res judicata is applicable to the
present case.
18

As previously mentioned, the Court of Appeals affirmed in toto the trial court's Decision. Respondent
Court, in its assailed Resolution promulgated on January 8, 1997,
19
denied petitioner's Motion for
Reconsideration for lack of merit.
Hence, this appeal.
20

The Issues
Before this Court, petitioner posits two issues, viz.:
1. A resolution duly approved by the municipal council has the same force and effect
of an ordinance and will not deprive an expropriation case of a valid cause of action.
2. The principle of res judicata as a ground for dismissal of case is not applicable
when public interest is primarily involved.
21

The Court's Ruling
The petition is not meritorious.
First Issue:
Resolution Different from an Ordinance
Petitioner contends that a resolution approved by the municipal council for the purpose of initiating
an expropriation case "substantially complies with the requirements of the law"
22
because the terms
"ordinance" and "resolution" are synonymous for "the purpose of bestowing authority [on] the local
government unit through its chief executive to initiate the expropriation proceedings in court in the
exercise of the power of eminent domain."
23
Petitioner seeks to bolster this contention by citing Article 36,
Rule VI of the Rules and Regulations Implementing the Local Government Code, which provides. "If the
LGU fails to acquire a private property for public use, purpose, or welfare through purchase, the LGU may
expropriate said property through a resolution of the Sanggunian authorizing its chief executive to initiate
expropriation proceedings."
24
(Emphasis supplied.)
The Court disagrees. The power of eminent domain is lodged in the legislative branch of
government, which may delegate the exercise thereof to LGUs, other public entities and public
utilities.
25
An LGU may therefore exercise the power to expropriate private property only when authorized
by Congress and subject to the latter's control and restraints, imposed "through the law conferring the
power or in other legislations."
26
In this case, Section 19 of RA 7160, which delegates to LGUs the power
of eminent domain, also lays down the parameters for its exercise. It provides as follows:
Sec. 19. Eminent Domain. A local government unit may, through its chief executive
and acting pursuant to an ordinance, exercise the power of eminent domain for
public use, or purpose, or welfare for the benefit of the poor and the landless, upon
payment of just compensation, pursuant to the provisions of the Constitution and
pertinent laws: Provided, however, That the power of eminent domain may not be
exercised unless a valid and definite offer has been previously made to the owner,
and such offer was not accepted: Provided, further, That the local government unit
may immediately take possession of the property upon the filing of the expropriation
proceedings and upon making a deposit with the proper court of at least fifteen
percent (15%) of the fair market value of the property based on the current tax
declaration of the property to be expropriated: Provided,finally, That, the amount to
be paid for the expropriated property shall be determined by the proper court, based
on the fair market value at the time of the taking of the property. (Emphasis supplied)
Thus, the following essential requisites must concur before an LGU can exercise the power of
eminent domain:
1. An ordinance is enacted by the local legislative council authorizing the local chief
executive, in behalf of the LGU, to exercise the power of eminent domain or pursue
expropriation proceedings over a particular private property.
2. The power of eminent domain is exercised for public use, purpose or welfare, or
for the benefit of the poor and the landless.
3. There is payment of just compensation, as required under Section 9, Article III of
the Constitution, and other pertinent laws.
4. A valid and definite offer has been previously made to the owner of the property
sought to be expropriated, but said offer was not accepted.
27

In the case at bar, the local chief executive sought to exercise the power of eminent domain
pursuant to a resolution of the municipal council. Thus, there was no compliance with the first
requisite that the mayor be authorized through an ordinance. Petitioner cites Camarines Sur vs.
Court of Appeals
28
to show that a resolution may suffice to support the exercise of eminent domain by
an LGU.
29
This case, however, is not in point because the applicable law at that time was BP 337,
30
the
previous Local Government Code, which had provided that a mere resolution would enable an LGU to
exercise eminent domain. In contrast, RA 7160,
31
the present Local Government Code which was
already in force when the Complaint for expropriation was filed, explicitly required an ordinance for this
purpose.
We are not convinced by petitioner's insistence that the terms "resolution" and "ordinance" are
synonymous. A municipal ordinance is different from a resolution. An ordinance is a law, but a
resolution is merely a declaration of the sentiment or opinion of a lawmaking body on a specific
matter.
32
An ordinance possesses a general and permanent character, but a resolution is temporary in
nature. Additionally, the two are enacted differently a third reading is necessary for an ordinance, but
not for a resolution, unless decided otherwise by a majority of all the Sanggunianmembers.
33

If Congress intended to allow LGUs to exercise eminent domain through a mere resolution, it would
have simply adopted the language of the previous Local Government Code. But Congress did not. In
a clear divergence from the previous Local Government Code, Section 19 of RA 7160 categorically
requires that the local chief executive act pursuant to an ordinance. Indeed, "[l]egislative intent is
determined principally from the language of a statute. Where the language of a statute is clear and
unambiguous, the law is applied according to its express terms, and interpretation would be resorted
to only where a literal interpretation would be resorted to only where a literal interpretation would be
either impossible or absurd or would lead to an injustice."
34
In the instant case, there is no reason to
depart from this rule, since the law requiring an ordinance is not at all impossible, absurd, or unjust.
Moreover, the power of eminent domain necessarily involves a derogation of a fundamental or
private right of the people.
35
Accordingly, the manifest change in the legislative language from
"resolution" under BP 337 to "ordinance" under RA 7160 demands a strict construction. "No species of
property is held by individuals with greater tenacity, and is guarded by the Constitution and laws more
sedulously, than the right to the freehold of inhabitants. When the legislature interferes with that right and,
for greater public purposes, appropriates the land of an individual without his consent, the plain meaning
of the law should not be enlarged by doubtful interpretation."
36

Petitioner relies on Article 36, Rule VI of the Implementing Rules, which requires only a resolution to
authorize an LGU to exercise eminent domain. This is clearly misplaced, because Section 19 of RA
7160, the law itself, surely prevails over said rule which merely seeks to implement it.
37
It is axiomatic
that the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued
for its implementation. Besides, what the discrepancy seems to indicate is a mere oversight in the
wording of the implementing rules, since Article 32, Rule VI thereof, also requires that, in exercising the
power of eminent domain, the chief executive of the LGU act pursuant to an ordinance.
In this ruling, the Court does not diminish the policy embodied in Section 2, Article X of the
Constitution, which provides that "territorial and political subdivisions shall enjoy local autonomy." It
merely upholds the law as worded in RA 7160. We stress that an LGU is created by law and all its
powers and rights are sourced therefrom. It has therefore no power to amend or act beyond the
authority given and the limitations imposed on it by law. Strictly speaking, the power of eminent
domain delegated to an LGU is in reality not eminent but "inferior" domain, since it must conform to
the limits imposed by the delegation, and thus partakes only of a share in eminent domain.
38
Indeed,
"the national legislature is still the principal of the local government units, which cannot defy its will or
modify or violate it."
39

Complaint Does Not
State a Cause of Action
In its Brief filed before Respondent Court, petitioner argues that its Sangguniang Bayan passed an
ordinance on October 11, 1994 which reiterated its Resolution No. 93-35, Series of 1993, and
ratified all the acts of its mayor regarding the subject expropriation.
40

This argument is bereft of merit. In the first place, petitioner merely alleged the existence of such an
ordinance, but it did not present any certified true copy thereof. In the second place, petitioner did
not raise this point before this Court. In fact, it was mentioned by private respondent, and only in
passing.
41
In any event, this allegation does not cure the inherent defect of petitioner's Complaint for
expropriation filed on September 23, 1993. It is hornbook doctrine that
. . . in a motion to dismiss based on the ground that the complaint fails to state a
cause of action, the question submitted before the court for determination is the
sufficiency of the allegations in the complaint itself. Whether those allegations are
true or not is beside the point, for their truth is hypothetically admitted by the motion.
The issue rather is: admitting them to be true, may the court render a valid judgment
in accordance with the prayer of the complaint?
42

The fact that there is no cause of action is evident from the face of the Complaint for expropriation
which was based on a mere resolution. The absence of an ordinance authorizing the same is
equivalent to lack of cause of action. Consequently, the Court of Appeals committed no reversible
error in affirming the trial court's Decision which dismissed the expropriation suit.
Second Issue:
Eminent Domain Not Barred by Res Judicata
As correctly found by the Court of Appeals
43
and the trial court,
44
all the requisites for the application
of res judicataare present in this case. There is a previous final judgment on the merits in a prior
expropriation case involving identical interests, subject matter and cause of action, which has been
rendered by a court having jurisdiction over it.
Be that as it may, the Court holds that the principle of res judicata, which finds application in
generally all cases and proceedings,
45
cannot bar the right of the State or its agent to expropriate
private property. The very nature of eminent domain, as an inherent power of the State, dictates that
the right to exercise the power be absolute and unfettered even by a prior judgment or res judicata. The
scope of eminent domain is plenary and, like police power, can "reach every form of property which the
State might need for public use."
46
"All separate interests of individuals in property are held of the
government under this tacit agreement or implied reservation. Notwithstanding the grant to individuals,
the eminent domain, the highest and most exact idea of property, remains in the government, or in the
aggregate body of the people in their sovereign capacity; and they have the right to resume the
possession of the property whenever the public interest requires it."
47
Thus, the State or its authorized
agent cannot be forever barred from exercising said right by reason alone of previous non-compliance
with any legal requirement.
While the principle of res judicata does not denigrate the right of the State to exercise eminent
domain, it does apply to specific issues decided in a previous case. For example, a final judgment
dismissing an expropriation suit on the ground that there was no prior offer precludes another suit
raising the same issue; it cannot, however, bar the State or its agent from thereafter complying with
this requirement, as prescribed by law, and subsequently exercising its power of eminent domain
over the same property.
48
By the same token, our ruling that petitioner cannot exercise its delegated
power of eminent domain through a mere resolution will not bar it from reinstituting similar proceedings,
once the said legal requirement and, for that matter, all others are properly complied with. Parenthetically
and by parity of reasoning, the same is also true of the principle of "law of the case." In Republic vs. De
Knecht,
49
the Court ruled that the power of the State or its agent to exercise eminent domain is not
diminished by the mere fact that a prior final judgment over the property to be expropriated has become
the law of the case as to the parties. The State or its authorized agent may still subsequently exercise its
right to expropriate the same property, once all legal requirements are complied with. To rule otherwise
will not only improperly diminish the power of eminent domain, but also clearly defeat social justice.
WHEREFORE, the petition is hereby DENIED without prejudice to petitioner's proper exercise of its
power of eminent domain over subject property. Costs against petitioner.
SO ORDERED.



[G.R. No. 155692. October 23, 2003]
PHIVIDEC INDUSTRIAL AUTHORITY and ATTY. CESILO
ADAZA, petitioners, vs. CAPITOL STEEL CORPORATION and
CHENG HAN SUI, respondents.
D E C I S I O N
Tinga, J .:
Before us is a Petition for Review on Certiorari filed by petitioner Phividec
International Authority (PHIVIDEC) and Atty. Cesilo Adaza (Atty. Adaza)
seeking to overturn the Amended Decision dated 28 May 2002 in CA-G.R. SP
No. 60181 of the Former Sixth Division of the Court of Appeals.
[1]
The
respondents Capitol Steel Corporation and Cheng Han Sui had originally filed
before the Court of Appeals a Petition for Certiorari, Prohibition and
Mandamus with a prayer for the issuance of a Temporary Restraining Order
and a Writ of Preliminary Injunction, assailing the orders of the Regional Trial
Court
[2]
of Misamis Oriental (RTC) denying the respondents Motion to
Dismiss.
[3]
The Court of Appeals had initially affirmed the orders of the RTC in
a Decision
[4]
dated 23 November 2001, but acting upon the
respondents Motion for Reconsideration
[5]
it reversed itself in the
challenged Amended Decision. Hence, the current petition.
PHIVIDEC, through Atty. Adaza who is a private lawyer, filed a
complaint
[6]
for expropriation against the respondents on 24 August 1999.
PHIVIDEC is a government-owned corporation which was created by
Presidential Decree No. 538. Five (5) days later, or on 29 August 1999,
PHIVIDEC, also through Atty. Adaza, filed an Amended Complaint,
[7]
which
however lacked the prescribed certification against forum shopping.
On 13 October 1999, respondents filed an Omnibus Motion,
[8]
praying for
the dismissal of the expropriation case on the grounds of absence of the
certification against forum shopping and lack of authority of Atty. Adaza to
represent PHIVIDEC. Along with its Opposition
[9]
to the Omnibus
Motion, PHIVIDEC filed a Manifestation/Motion, attaching thereto a
Certification of Non-Forum Shopping. In an Order
[10]
dated 4 November 1999,
the RTC denied the Omnibus Motion. Respondents moved for the
reconsideration of the RTCs Order, but the motion for reconsideration was
denied on 27 June 2000.
On 13 October 1999, respondents filed an Omnibus Motion praying for the
dismissal of the expropriation case on the grounds of absence of the
certification against forum shopping and the lack of authority of Atty. Adaza to
represent PHIVIDEC. PHIVIDEC opposed the Motion to Dismiss and filed as
well a Manifestation/Motion, attaching thereto the Certificate of Non-Forum
Shopping. In an Order dated 4 November 1999, the RTC denied the Omnibus
Motion. Respondents moved for the reconsideration of the RTC Order, but the
motion was denied on27 June 2000.
Respondents then elevated the RTC orders to the Court of Appeals,
through their petition in CA-G.R. No. 60181. After denying respondents
application for a temporary restraining order,
[11]
the appellate court promulgated
its Decision
[12]
dismissing respondents petition for lack of merit. However,
on Motion for Reconsideration of the respondents, the Court of Appeals came
out with the assailed Amended Decision. Pointing out that under Section 3
of Memorandum Circular No. 9,
[13]
and COA Circular No. 86-255
[14]
the
engagement of a private counsel of a government-owned or controlled
corporation (GOCC) requires the prior written concurrence of the Office of the
Government Corporate Counsel (OGCC) and the Commission on Audit
(COA), respectively, the appellate court held that Atty. Adazas representation
of PHIVIDEC in the expropriation case was not valid. The dispositive portion
of theAmended Decision reads:
WHEREFORE, finding the Motion for Reconsideration to be of merit, the assailed
Decision is hereby SET ASIDE, without prejudice to the filing of similar petition by
PHIVIDEC though (sic) a proper legal officer or counsel.
[15]

In the petition, petitioners maintain that PHIVIDEC has secured the written
concurrences of the COA and the OGCC to its engagement of Atty. Adaza as
its counsel in the expropriation case, substantially complying with the
requirements of COA Circular No. 86-255 and Memorandum Circular No. 9.
Petitioners also argue that the subsequent filing of the certification of non-
forum shopping before the RTC constituted substantial compliance with the
law.
A review of the laws involving the role of the OGCC as official counsel of
all GOCCs from the time the office was made separate and distinct from the
Office of the Solicitor General is in order. This is necessary to determine the
nature and extent of the OGCCs legal representation in behalf of GOCCs and
the public policy, if any, as regards the engagement by GOCCs of the
services of private lawyers.
In 1959, Republic Act No. 2327, which declared the position of
Government Corporate Counsel separate and distinct from that of the Solicitor
General, was enacted. Four years later, it was amended by Republic Act No.
3838. The amendatory law made the Government Corporate Counsel the
principal law officer of GOCCs. It also imposed the prohibition on GOCCs
from hiring private counsels. The full text of the amendments reads:
Section 1. x x x [The Government Corporate Counsel] shall be the principal law
office of all government-owned or controlled corporations. To enable him to
discharge, his functions as such, it shall be the duty of all said corporations to refer to
him all important legal questions for opinion, advice and determination, all proposed
contracts, and all important court cases for his services. He shall, moreover, exercise
control and supervision over all the legal divisions maintained separately by said
corporations. No government-owned or controlled corporation shall hire a private
law practitioner to handle any of its legal cases without the written consent of the
Government Corporate Counsel or of the Secretary of Justice. (Emphasis
supplied)
Thus, beginning with the year 1963, the general rule disallowing GOCCs
from hiring private lawyers was put in place, subject to the exception that the
GOCC may do so with the written consent of the Government Corporate
Counsel or the Secretary of Justice.
Republic Act No. 2327 was further amended by Republic Act No.
6000,
[16]
but it did not change the general rule and the exception thereto.
Then, in 1978, President Marcos in the exercise of his legislative
powers
[17]
promulgated Presidential Decree No. 1415 (P.D. No. 1415), which
further delineated the powers and functions of the Office of the Government
Corporate Counsel. This time, the previously established exception to the rule
prohibiting the hiring of private lawyers was deleted, and a more stringent
policy adopted. Section 1 of P.D. No. 1415 reads:
Section 1. The Office of the Government Corporate Counsel shall be the principal
law office of all government-owned or controlled corporations, without exception,
including their subsidiaries. (Emphasis supplied)
Clearly, the OGCC was ordained to serve as the exclusive law office of all
GOCCs. While P.D. No. 1415 did not contain a repealing clause, the new
policy it established was patently inconsistent with what had been provided by
Republic Act No. 2327, as amended. Thus the prior laws were effectively
repealed.
[18]

In 1987, the President Aquino issued Executive Order No. 292 (E.O. No.
292), otherwise known as the Administrative Code of 1987, in the exercise of
her transitory legislative powers under the aegis of the 1987
Constitution.
[19]
This Code remains to this day as the governing law on the role
and functions of the OGCC in relation to GOCCs. Section 10, Book IV, Title
III, Chapter 3 thereof provides:
Section 10. Office of the Government Corporate Counsel. The Office of the
Government Corporate Counsel (OGCC) shall act as the principal law office of all
government-owned or controlled corporations, their subsidiaries, other corporate
offsprings and government acquired asset corporations and shall exercise control and
supervision over all legal departments or divisions maintained separately and such
powers and functions as are now or may hereafter be provided by law. xxx
(Emphasis supplied)
Noteworthy in the law is the deletion of the phrase without exception
employed in P.D. No. 1415 which theretofore rendered exclusive and absolute
the authority of the OGCC to represent GOCCs. So, it should be asked: What
is the significance of the elimination of the phrase?
Certainly, the amendatory deletion did not alter the mandate of the OGCC
to handle the cases of the GOCCs nor did it signal the abandonment of the
policy not to engage private lawyers for the GOCCs. Not only has the
aforequoted Section 10 retained the explicit key provision that the OGCC
shall act as not principal law office of all government-owned or controlled
corporations, it has even expanded the reach of the OGCC by conferring on it
control and supervision over all legal departments or divisions of the
GOCCs, as well as their subsidiaries, other corporate offsprings and
government acquired asset corporations.
With the change it effected, however, the new Administrative Code has
made the powers of the President come into play as regards the inter-
relationship between the GOCCs and the OGCC. Under the Constitution, it
is the President who exercises both executive
[20]
and administrative
powers.
[21]
As administrative head, the Presidents duty is to see that every
government office is managed and maintained properly by the persons in
charge of it in accordance with pertinent laws and regulations.
[22]
Corollary to
these powers is the power to promulgate rules and issuances that would
ensure a more efficient management of the executive branch, for so long as
such issuances are not contrary to law.
President Aquino, however, did not promulgate any issuance on the
matter. It was President Fidel V. Ramos who did so, through Administrative
Order No. 130 which he issued in 1994. Section 1 thereof reads:
Section 1. All legal matters pertaining to government-owned or controlled
corporations, their subsidiaries, other corporate offsprings and government acquired
asset corporations (hereinafter collectively referred to as GOCCs) shall be
exclusively referred to and handled by the Office of the Government Corporate
Counsel (hereinafter referred to as OGCC), unless their respective charters
expressly name the Office of the Solicitor General (hereinafter referred to as OSG)
as their legal counsel. When authorized by the President, or by the head of the office
concerned and approved by the President, the OSG shall also represent GOCCs.
(emphasis supplied)
The above-quoted provision not only reaffirmed but strengthened the
exclusive mandate of the OGCC. Moreover, it effectively removed from the
GOCCs the opportunity to engage the services of private lawyers. Under its
terms, the President may authorize only the Office of the Solicitor General to
represent the GOCCs in place of or in addition to the OGCC.
Then came Memorandum Circular No. 9 issued by President Joseph
Estrada on 27 August 1998. Section 3 thereof states:
GOCCs are likewise enjoined to refrain from hiring private lawyers or law firms to
handle their cases and legal matters. But in exceptional cases, the written conformity
and acquiescence of the Solicitor General or the Government Corporate Counsel, as
the case may be, and the written concurrence of the Commission on Audit shall first
be secured before the hiring or employment of a private lawyer or law firm.
(Emphasis supplied)
It was only with the enactment of Memorandum Circular No. 9 in 1998 that
an exception to the general prohibition was allowed for the first time since
P.D. No. 1415 was enacted in 1978. However, indispensable conditions
precedent were imposed before any hiring of private lawyer could be effected.
First, private counsel can be hired only in exceptional cases. Second, the
GOCC must first secure the written conformity and acquiescence of the
Solicitor General or the Government Corporate Counsel, as the case may be,
before any hiring can be done. And third, the written concurrence of the COA
must also be secured prior to the hiring.
There are strong reasons behind this public policy. One is the need of the
government to curtail unnecessary public expenditures, such as the legal fees
charged by private lawyers against GOCCs. Precisely, the two whereas
clauses of Memorandum Circular No. 9 recite this particular concern, viz:
WHEREAS, there is a need to reduce government expenditures by minimizing the
expenses of government-owned or controlled corporations (GOCCs) which hire
private lawyers and law firms, considering the high cost of retainers, fees and charges
that are paid to said private lawyers and law firms;
WHEREAS, one way of realizing savings on the part of government-owned or
controlled corporations (GOCCs) is to implement and enforce pertinent laws and
regulations which prohibit GOCCs from hiring private retainers and law firms to
handle their cases and legal matters, and those which direct GOCCs to refer their
cases and legal matters to the Office of the Government Corporate Counsel (OGCC)
for proper handling.
The other factor is anchored on the perceived strong ties of the OGCC
lawyers to their client government corporations. Thus, compared to outside
lawyers the OGCC lawyers are expected to be imbued with a deeper sense of
fidelity to the governments cause and more attuned to the need to preserve
the confidentiality of sensitive information.
Evidently, OGCC is tasked by law to serve as the law office of GOCCs to
the exclusion of private lawyers. Evidently again, there is a strong policy bias
against the hiring by GOCCs of private counsel.
Thus, it behooves this Court, hearkening the dictates of law and public
policy, to examine with a skeptical eye any claim of professional
representation by a private counsel in behalf of a GOCC. Now, petitioners
make such a claim before us. Under any reasonable yardstick, however, they
utterly failed to comply with the requirements set by Memorandum Circular
No. 9.
PHIVIDEC argues that it submitted the approval of the COA and the
OGCC to the hiring of Atty. Adaza as its counsel. Yet, in clear contravention of
Memorandum Circular No. 9, Atty. Adaza, on 24 August 1999, filed the
expropriation suit in behalf of PHIVIDEC before the GOCC could secure the
required prior written concurrences of both the OGCC or the COA. The
documents which petitioners submitted in support of their claim do not indicate
that they obtained the requisite concurrences at all.
Petitioners primarily rely on a certified true copy of an
Indorsement
[23]
issued by COA Regional Office No. 10 as proof of written
concurrence on the part of the COA. All that it contains is a second-hand
claim that the COA General Counsel had allegedly concurred in the retainer
contract between PHIVIDEC and Atty. Adaza. The written concurrence itself
which may be the best evidence of the alleged concurrence was not
presented. It is also worth noting that the said Indorsement was dated 4 June
2002, or approximately two years after the filing of the expropriation case by
Atty. Adaza.
Neither is there proof that the written concurrence of the Office of the
Government Corporate Counsel was secured. The Court of Appeals in its
original decision referred to a letter
[24]
sent by the OGCC to PHIVIDEC, wherein
the former supposedly suggested changes to the retainer contract already
signed by Atty. Adaza and PHIVIDEC.
[25]
Given the clear language of
Memorandum Circular No. 9, the letter cannot serve as proof of concurrence
by the OGCC to PHIVIDECs hiring of Atty. Adaza. In fact, the letter even
indicates that the OGCC disapproved the retainer contract, as it evinced the
OGCCs disagreement with the provisions of the alleged retainer contract. On
their part, petitioners on whose shoulders rest the burden of proving the
concurrences, failed to point out the specific document which contains the
alleged OGCC conformity.
It is also apparent that petitioners failed to comply with the requirements
laid down by the COA in its Circular No. 86-255. The Circular
requires the prior written concurrences of the OGCC or the Solicitor
General and the COA before GOCCs may hire private counsels.
[26]
It must be
noted though that the COA Circular is not decisive in the disposition of this
case. It cannot by any measure grant or disallow the authority for GOCCs to
hire private counsels. The function pertains to the executive branch. Its
mandate is to audit the disbursement of public funds. As regards the payment
of funds belonging to GOCCs to lawyers retained by them, COA Circular 86-
255 is the governing regulation.
All told, it is ineluctable that Atty. Adaza had no authority to file in behalf of
the petitioner the expropriation case against the respondents. In the
analogous cases of Municipality of Bocaue v. Manotok
[27]
and Municipality of
Pililia v. Court of Appeals,
[28]
this Court ruled that the want of authority on the
part of lawyer to file a suit in behalf of a local government unit is cause
enough to dismiss the actions filed by the lawyer. The same rule applies in
this case.
The Court of Appeals, therefore, is correct in ordering the dismissal of the
case, without prejudice to the filing of a similar petition by PHIVIDEC through
a proper legal officer or counsel.
In view of the unauthorized engagement by PHIVIDEC of the legal
services of Atty. Adaza and the nullity of the moves the latter has undertaken
in behalf of the former, there is no more need to discuss the other issue raised
in the petition which is, after all, merely procedural.
WHEREFORE, the petition is denied for lack of merit. Costs against
petitioner.
SO ORDERED.




[G.R. No. 158563. June 30, 2005]
AIR TRANSPORTATION OFFICE (ATO) and MACTAN-CEBU
INTERNATIONAL AIRPORT AUTHORITY (MCIAA), petitioners,
vs. APOLONIO GOPUCO, JR., respondent.
D E C I S I O N
CHICO-NAZARIO, J .:
When private land is expropriated for a particular public use, and that particular
public use is abandoned, does its former owner acquire a cause of action for recovery
of the property?
The trial courts ruling in the negative was reversed by the Court of Appeals in its
Decision
[1]
of 28 February 2001. Hence this petition for review under Rule 45 of the
1997 Rules of Civil Procedure of the said Decision of the court a quo, and its
Resolution
[2]
of 22 May 2003 dismissing petitioners motion for reconsideration.
The facts, as adduced from the records, are as follows:
Respondent Apolonio Gopuco, Jr. was the owner of Cadastral Lot No. 72 consisting
of 995 square meters located in the vicinity of the Lahug Airport in Cebu City covered by
Transfer Certificate of Title (TCT) No. 13061-T.
The Lahug Airport had been turned over by the Unites States Army to the Republic
of the Philippines sometime in 1947 through the Surplus Property Commission, which
accepted it in behalf of the Philippine Government. In 1947, the Surplus Property
Commission was succeeded by the Bureau of Aeronautics, which office was supplanted
by the National Airport Corporation (NAC). The NAC was in turn dissolved and
replaced with the Civil Aeronautics Administration (CAA).
[3]

Sometime in 1949, the NAC informed the owners of the various lots surrounding the
Lahug Airport, including the herein respondent, that the government was acquiring their
lands for purposes of expansion. Some landowners were convinced to sell their
properties on the assurance that they would be able to repurchase the same when
these would no longer be used by the airport. Others, including Gopuco, refused to do
so.
Thus, on 16 April 1952, the CAA filed a complaint with the Court of First Instance
(CFI) of Cebu for the expropriation of Lot No. 72 and its neighboring realties, docketed
as Civil Case No. R-1881.
On 29 December 1961, the CFI promulgated a Decision,
1. Declaring the expropriation of [the subject lots, including Lot No. 72] justified
and in lawful exercise of the right of eminent domain;
2. Declaring . a balance of P1,990 in favor of Apolonio Go Puco, Jr. with legal
interest from November 16, 1947 until fully paid. ;
3. After the payment of the foregoing financial obligation to the landowners,
directing the latter to deliver to the plaintiff the corresponding Transfer Certificates of
Title to their respective lots; and upon the presentation of the said titles to the Register
of Deeds, ordering the latter to cancel the same and to issue, in lieu thereof, new
Transfer Certificates of Title in the name of the plaintiff.
[4]

No appeal was taken from the above Decision on Lot No. 72, and the judgment of
condemnation became final and executory. Thereafter, on 23 May 1962, absolute title
to Lot No. 72 was transferred to the Republic of the Philippines under TCT No. 25030.
[5]

Subsequently, when the Mactan International Airport commenced operations, the
Lahug Airport was ordered closed by then President Corazon C. Aquino in a
Memorandum of 29 November 1989.
[6]
Lot No. 72 was thus virtually abandoned.
[7]

On 16 March 1990, Gopuco wrote
[8]
the Bureau of Air Transportation, through the
manager of the Lahug Airport, seeking the return of his lot and offering to return the
money previously received by him as payment for the expropriation. This letter was
ignored.
[9]

In the same year, Congress passed Republic Act No. 6958 creating the Mactan-
Cebu International Airport Authority (MCIAA) and in part providing for the transfer of the
assets of the Lahug Airport thereto. Consequently, on 08 May 1992, ownership of Lot
No. 72 was transferred to MCIAA under TCT No. 120356.
[10]

On 06 August 1992, Apolonio Gopuco, Jr. filed an amended complaint
[11]
for
recovery of ownership of Lot No. 72 against the Air Transportation Office
[12]
and the
Province of Cebu with the Regional Trial Court (RTC) of Cebu, Branch X, docketed as
Civil Case No. CEB-11914. He maintained that by virtue of the closure of the Lahug
Airport, the original purpose for which the property was expropriated had ceased or
otherwise been abandoned, and title to the property had therefore reverted to him.
Gopuco further alleged that when the original judgment of expropriation had been
handed down, and before they could file an appeal thereto, the CAA offered them a
compromise settlement whereby they were assured that the expropriated lots would be
resold to them for the same price as when it was expropriated in the event that the
Lahug Airport would be abandoned. Gopuco claims to have accepted this
offer.
[13]
However, he failed to present any proof on this matter, and later admitted that
insofar as the said lot was concerned, no compromise agreement was entered into by
the government and the previous owners.
[14]

Lastly, Gopuco asserted that he had come across several announcements in the
papers that the Lahug Airport was soon to be developed into a commercial complex,
which he took to be a scheme of the Province of Cebu to make permanent the
deprivation of his property.
On 20 May 1994, the trial court rendered a Decision
[15]
dismissing the complaint and
directing the herein respondent to pay the MCIAA exemplary damages, litigation
expenses and costs.
Aggrieved by the holding of the trial court, Gopuco appealed to the Court of
Appeals, which overturned the RTC decision, ordered the herein petitioners to reconvey
Lot No. 72 to Gopuco upon payment of the reasonable price as determined by it, and
deleted the award to the petitioners of exemplary damages, litigation expenses and
costs.
The Motion for Reconsideration was denied
[16]
on 22 May 2003, hence this petition,
which raises the following issues:
WHETHER THE COURT OF APPEALS ERRED IN HOLDING THAT
RESPONDENT HAS THE RIGHT TO RECLAIM OWNERSHIP OVER THE
SUBJECT EXPROPRIATED LOT BASED ON THE IMPORT OF THE
DECEMBER 29, 1961 DECISION IN CIVIL CASE NO. 1881.
WHETHER THE COURT OF APPEALS ERRED IN DELETING THE AWARD OF
LITIGATION EXPENSES AND COSTS IN FAVOR OF PETITIONERS.
In deciding the original expropriation case that gave rise to the present controversy,
Civil Case No. R-1881, the CFI reasoned that the planned expansion of the airport
justified the exercise of eminent domain, thus:
As for the public purpose of the expropriation proceeding, it cannot be doubted.
Although the Mactan Airport is being constructed, it does not take away the actual
usefulness and importance of the Lahug Airport; it is handling the air traffic both
civilian and military. From it aircrafts fly to Mindanao and Visayas and pass thru it
on their return flights to the North and Manila. Then, no evidence was adduced to
show how soon is the Mactan Airport to be placed in operation and whether the Lahug
Airport will be closed immediately thereafter. It is for the other departments of the
Government to determine said matters. The Court cannot substitute its judgment for
those of the said departments or agencies. In the absence of such a showing, the
Court will presume that the Lahug Airport will continue to be in
operation.
[17]
(emphasis supplied)
By the time Gopuco had filed his action for recovery of ownership of Lot No. 72,
Lahug Airport had indeed ceased to operate. Nevertheless, the trial court held:
The fact of abandonment or closure of the Lahug Airport admitted by the defendant
did not by itself, result in the reversion of the subject property back to the
plaintiff. Nor did it vest in the plaintiff the right to demand reconveyance of said
property.
When real property has been acquired for public use unconditionally, either by
eminent domain or by purchase, the abandonment or non-use of the real property,
does not ipso facto give to the previous owner of said property any right to recover the
same (Fery vs. Municipality of Cabanatuan, 42 Phil. 28).
[18]

In reversing the trial court, the Court of Appeals called attention to the fact that both
parties cited Fery v. Municipality of Cabanatuan,
[19]
which the trial court also relied on in
its Decision. The court a quo agreed in Gopucos interpretation of Fery that when the
CFI in Civil Case No. R-1881 held that,
. . . [T]hen, no evidence was adduced to show how soon is the Mactan Airport to be
placed in operation and whether the Lahug Airport will be closed immediately
thereafter.In the absence of such a showing, the Court will presume that the Lahug
Airport will continue to be in operation, . . . .
[20]

the expropriation of the property was conditioned on its continued devotion to its public
purpose. Thus, although the MCIAA stressed that nothing in the judgment of
expropriation expressly stated that the lands would revert to their previous owners
should the public use be terminated or abandoned, the Court of Appeals nevertheless
ruled that,
. . . [W]hile, there is no explicit statement that the land is expropriated with the
condition that when the purpose is ended the property shall return to its owner, the full
import of the decision (in Civil Case No. R-1881) suggests that the expropriation was
granted because there is no clear showing that Lahug Airport will be closed, the
moment Mactan International Airport is put to operation. It stands to reason that
should that public use be abandoned, then the expropriated property should revert
back to its former owner.
Moreover, the foundation of the right to exercise the power of eminent domain is
genuine necessity. Condemnation is justified only if it is for the public good and there
is genuine necessity of a public character. Thus, when such genuine necessity no
longer exists as when the State abandons the property expropriated, government
interest must yield to the private right of the former land owner, whose property right
was disturbed as a consequence of the exercise of eminent domain.
Justice, equity and fair play demand that the property should revert back to plaintiff-
appellant upon paying the reasonable value of the land to be based on the prevailing
market value at the time of judicial demand to recover the property. If the State
expects landowners to cooperate in its bid to take private property for its public use,
so must it apply also the same standard, to allow the landowner to reclaim the
property, now that the public use has been abandoned.
[21]

In this petition, the MCIAA reiterates that the Republic of the Philippines validly
expropriated Lot No. 72 through the proceedings in Civil Case No. R-1881, the
judgment of which had long become final and executory. It further asserts that said
judgment vested absolute and unconditional title in the government, specifically on the
petitioners, there having been no condition whatsoever that the property should revert to
its owners in case the Lahug Airport should be abandoned.
On the other hand, the respondent would have us sustain the appellate courts
interpretation of Fery as applied to the original judgment of expropriation, to the effect
that this was subject to the condition that the Lahug Airport will continue to be in
operation.
We resolve to grant the petition.
In Fery, the Court asked and answered the same question confronting us
now: When private land is expropriated for a particular public use, and that particular
public use is abandoned, does the land so expropriated return to its former owner?
[22]

The answer to that question depends upon the character of the title acquired by the
expropriator, whether it be the State, a province, a municipality, or a corporation
which has the right to acquire property under the power of eminent domain. If, for
example, land is expropriated for a particular purpose, with the condition that when
that purpose is ended or abandoned the property shall return to its former
owner, then, of course, when the purpose is terminated or abandoned the former
owner reacquires the property so expropriated. If, for example, land is
expropriated for a public street and the expropriation is granted upon condition that
the city can only use it for a public street, then, of course, when the city abandons its
use as a public street, it returns to the former owner, unless there is some statutory
provision to the contrary. . . If upon the contrary, however, the decree of
expropriation gives to the entity a fee simple title, then of course, the land becomes
the absolute property of the expropriator, whether it be the State, a province, or
municipality, and in that case the non-user does not have the effect of defeating the
title acquired by the expropriation proceedings. (10 R.C.L., 240, sec. 202; 20 C.J.
1234, secs. 593-599 and numerous cases cited; Reichling vs. Covington Lumber Co.,
57 Wash., 225; 135 Am. St. Rep., 976; McConihay vs. Wright, 121 U.S., 201.)
When land has been acquired for public use in fee simple, unconditionally, either
by the exercise of eminent domain or by purchase, the former owner retains no
rights in the land, and the public use may be abandoned or the land may be
devoted to a different use, without any impairment of the estate or title acquired,
or any reversion to the former owner. (Fort Wayne vs. Lake Shore, etc. Ry. Co.,
132 Ind., 558; 18 L.R.A., 367.) (Emphases Supplied)
[23]

Did the judgment of expropriation in Civil Case No. R-1881 vest absolute and
unconditional title in the government? We have already had occasion to rule on this
matter in Mactan-Cebu International Airport Authority v. Court of Appeals,
[24]
which is a
related action for reconveyance of a parcel of land also subject of the expropriation
proceedings in Civil Case No. R-1881. One of the landowners affected by the said
proceeding was Virginia Chiongbian, to whom the CFI ordered the Republic of the
Philippines to pay P34,415.00, with legal interest computed from the time the
government began using her land. Like the herein respondent, she did not appeal from
the CFIs judgment. Also like Gopuco, she eventually filed for the reconveyance of her
property when the airport closed. Although she was upheld by both the RTC of Cebu
and the Court of Appeals, on appeal we held that the terms of the judgment(in Civil
Case No. R-1881) are clear and unequivocal and granted title to Lot No. 941 in fee
simple to the Republic of the Philippines. There was no condition imposed to the
effect that the lot would return to CHIONGBIAN or that CHIONGBIAN had a right
to repurchase the same if the purpose for which it was expropriated is ended or
abandoned or if the property was to be used other than as the Lahug
Airport.
[25]
Moreover, we held that although other lot owners were able to successfully
reacquire their lands by virtue of a compromise agreement, since CHIONGBIAN was
not a party to any such agreement, she could not validly invoke the same.
The respondent would have us revisit this ruling for three reasons. First, because
he claims there is no showing that the government benefited from entering into
compromise agreements with the other lot owners; second, because such a doctrine
supposedly discriminates against those who have neither the werewithal nor the savvy
to contest the expropriation, or agree to modify the judgment; and third, because there
exists between the government and the owners of expropriated realty an implied
contract that the properties involved will be used only for the public purpose for which
they were acquired in the first place.
As to respondents first and second arguments, we have time and again ruled that a
compromise agreement, when not contrary to law, public order, public policy, morals, or
good customs, is a valid contract which is the law between the parties.
[26]
It is a contract
perfected by mere consent,
[27]
whereby the parties, making reciprocal concessions,
avoid litigation or put an end to one already commenced. It has the force of law and is
conclusive between the parties,
[28]
and courts will not relieve parties from obligations
voluntarily assumed, simply because their contracts turned out to be unwise.
[29]
Note
that respondent has not shown that any of the compromise agreements were in any
way tainted with illegality, irregularity or imprudence. Indeed, anyone who is not a party
to a contract or agreement cannot be bound by its terms, and cannot be affected by
it.
[30]
Since Gopuco was not a party to the compromise agreements, he cannot legally
invoke the same.
[31]

Lastly, Gopuco argues that there is present, in cases of expropriation, an implied
contract that the properties will be used only for the public purpose for which they were
acquired. No such contract exists.
Eminent domain is generally 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.
[32]
Also often referred
to as expropriation and, with less frequency, as condemnation, it is, like police power
and taxation, an inherent power of sovereignty and 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. It is a right to
take or reassert dominion over property within the state for public use or to meet a
public exigency and is said to be an essential part of governance even in its most
primitive form and thus inseparable from sovereignty.
[33]
In fact, all separate interests of
individuals in property are held of the government under this tacit agreement or implied
reservation. Notwithstanding the grant to individuals, the eminent domain, the highest
and most exact idea of property, remains in the government, or in the aggregate body of
people in their sovereign capacity; and they have the right to resume the
possession of the property whenever the public interest so requires it.
[34]

The ubiquitous character of eminent domain is manifest in the nature of the
expropriation proceedings. Expropriation proceedings are not adversarial in the
conventional sense, for the condemning authority is not required to assert any
conflicting interest in the property. Thus, by filing the action, the condemnor in effect
merely serves notice that it is taking title and possession of the property, and the
defendant asserts title or interest in the property, not to prove a right to possession, but
to prove a right to compensation for the taking.
[35]

The only direct constitutional qualification is thus that private property shall not be
taken for public use without just compensation.
[36]
This prescription is intended to
provide a safeguard against possible abuse and so to protect as well the individual
against whose property the power is sought to be enforced.
[37]

In this case, the judgment on the propriety of the taking and the adequacy of the
compensation received have long become final. We have also already held that the
terms of that judgment granted title in fee simple to the Republic of the
Philippines. Therefore, pursuant to our ruling in Fery, as recently cited in Reyes v.
National Housing Authority,
[38]
no rights to Lot No. 72, either express or implied, have
been retained by the herein respondent.
We are not unaware of the ruling in Heirs of Timoteo Moreno v. Mactan-Cebu
International Airport Authority,
[39]
concerning still another set of owners of lots declared
expropriated in the judgment in Civil Case No. R-1881. As with Chiongbian and the
herein respondent, the owners of the lots therein did not appeal the judgment of
expropriation, but subsequently filed a complaint for reconveyance. In ordering MCIAA
to reconvey the said lots in their favor, we held that the predicament of petitioners
therein involved a constructive trust akin to the implied trust referred to in Art.
1454
[40]
of the Civil Code.
[41]
However, we qualified our Decision in that case, to the
effect that,
We adhere to the principles enunciated in Fery and in Mactan-Cebu International
Airport Authority, and do not overrule them. Nonetheless the weight of their import,
particularly our ruling as regards the properties of respondent Chiongbian in Mactan-
Cebu International Airport Authority, must be commensurate to the facts that were
established therein as distinguished from those extant in the case at bar.Chiongbian
put forth inadmissible and inconclusive evidence, while in the instant case we
have preponderant proof as found by the trial court of the existence of the right
of repurchase in favor of petitioners.
Neither has Gopuco, in the present case, adduced any evidence at all concerning a
right of repurchase in his favor. Heirs of Moreno is thus not in point.
The trial court was thus correct in denying Gopucos claim for the reconveyance of
Lot No. 72 in his favor. However, for failure of the petitioners to present any proof that
this case was clearly unfounded or filed for purposes of harassment, or that the herein
respondent acted in gross and evident bad faith, the reimposition of litigation expenses
and costs has no basis. It is not sound public policy to set a premium upon the right to
litigate where such right is exercised in good faith, as in the present case.
[42]

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in
CA-G.R. SP No. 49898 dated 28 February 2001, and its Resolution of 22 May 2003 are
hereby REVERSED and SET ASIDE. The Decision of RTC-Branch X of Cebu dated 20
May 1994 in Civil Case No. CEB-11914 is REINSTATED with the modification that the
award of exemplary damages, litigation expenses and costs are DELETED.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.



PATRICIA L. TIONGSON, PACITA G.R. No. 166964
L. GO, ROBERTO LAPERAL III,
ROSA R. MANOTOK, GEORGE M.
BOCANEGRA, PHILIP L. MANOTOK,
MARIA TERESA M. ESCALER,
JOSE CLEMENTE L. MANOTOK,
RAMON SEVERINO L. MANOTOK,
THELMA R. MANOTOK, JOSE MA.
MANOTOK, JESUS JUDE MANOTOK,
JR., MA. THELMA R. MANOTOK,
SEVERINO MANOTOK III, MA.
MAMERTA MANOTOK, FERNANDO
MANOTOK, FROILAN MANOTOK,
SEVERINO MANOTOK IV, FAUSTO
MANOTOK, FAUSTO MANOTOK III,
MILAGROS M. DORMIDO, IGNACIO V.
MANOTOK, JR., FELISA MYLENE V.
MANOTOK, MARY ANNE V. MANOTOK,
MICHAEL MARSHALL V. MANOTOK,
MA. CRISTINA E. SISON AND MIGUEL
A.B. SISON, represented by their
Attorney-in-fact, ROSA R. MANOTOK,
Petitioners, Present:

Davide, Jr., C.J. (Chairman),
- versus - Quisumbing,
Ynares-Santiago,
Carpio, and
Azcuna, JJ.
NATIONAL HOUSING AUTHORITY,
Respondent. Promulgated:

October 11, 2005
x ---------------------------------------------------------------------------------------- x


DECISION


YNARES-SANTIAGO, J.:


This petition for review on certiorari seeks to set aside the March 25, 2004
Decision
[1]
of the Court of Appeals in CA-G.R. CV No. 70209, and its February 4,
2005 Resolution,
[2]
which denied petitioners motion for reconsideration.

The facts show that on April 3, 1987, respondent National Housing
Authority (NHA) filed a complaint for eminent domain with the Regional Trial
Court of Manila, Branch 35, against petitioners who are owners of several lots
located in Tondo, Manila with a total area of 66,783.40 square meters and an
aggregate value of P21,024,136.50. Instead of an answer, petitioners filed motions
to dismiss with prayer for actual, moral and exemplary damages and attorneys
fees.

On March 11, 1988, NHA deposited the amount of P21,107,485.07 with the
Philippine National Bank (PNB) as provisional just compensation for the subject
lots, as evidenced by Certificate of Time Deposit No. 233991-B. The deposit is
now under PNB (Escolta Branch) Fiduciary Account No. 068-576012-6.

On March 11, 1991, the trial court rendered a Decision, the dispositive
portion of which states:

WHEREFORE, the prayer of the defendants in their motion to dismiss is
GRANTED, and the complaint of the plaintiff is DISMISSED.

The counterclaims of the defendants are also ordered DISMISSED.

No pronouncement as to costs.
[3]


The Court of Appeals affirmed the lower court in a Decision dated February
26, 1993. On petition before this Court, we resolved to declare the case
terminated for failure of NHA to file the petition on time. The resolution became
final and executory on July 26, 1993.

Thus, NHA filed on September 7, 2000 a motion for leave of court to
withdraw deposit but failed to specify a date for hearing. On October 30, 2000,
NHA filed a second motion for leave to withdraw deposit which set the hearing on
November 10, 2000.

On November 8, 2000, the trial court issued an Order
[4]
expunging the first
motion from the records. It also declared that the amount sought to be
withdrawn by NHA constitutes advance payment if the expropriation proceeds,
and as indemnity for damages should the proceedings not succeed, as in the
instant case. The trial court noted that petitioners might have sustained damages
in the course of the expropriation proceedings which they could pursue or
waive. The motion being litigious, the trial court declared that the same be set for
hearing.

NHAs motion for reconsideration was denied on December 8, 2000.
[5]


On appeal, the Court of Appeals held that the dismissal of petitioners
counterclaim barred them from presenting evidence to prove damages. It ruled
that the trial courts assessment that they suffered damages is conjectural and
inconsistent with the dismissal of the counterclaim.

The dispositive portion of the Court of Appeals Decision reads:

WHEREFORE, the order of the Regional Trial Court of Manila
(Branch 35) dated November 8, 2000 is REVERSED and SET ASIDE and
that Court is directed to release to the National Housing Authority the
amount of P21,107,485.07, represented by PNB (Escolta branch)
Fiduciary Account No. 068-576012-6, including accrued interest
thereon.

SO ORDERED.
[6]


Petitioners motion for reconsideration was denied, hence, the instant
petition based on the following issues:

I. THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR IN EXCESS OF
JURISDICTION IN ACTING AND GRANTING THE MOTION FILED BY
RESPONDENT NHA FOR WITHDRAWAL OF ITS DEPOSIT IN
QUESTION ALTHOUGH SAID MOTION SHOULD HAVE BEEN
TREATED AS A MERE SCRAP OF PAPER FOR LACK OF NOTICE OF
HEARING.

II. THE HONORABLE COURT OF APPEALS HAD ALSO COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR IN
EXCESS OF JURISDICTION IN GRANTING THE MOTION OF
RESPONDENT NHA TO WITHDRAW ITS DEPOSIT IN QUESTION
EVEN BEFORE A HEARING ON SAID ISSUE CAN BE HELD TO
DETERMINE THE AMOUNT OF DAMAGES SUFFERED BY
PETITIONERS MANOTOK RESULTING FROM THE FINAL DISMISSAL
OF THE COMPLAINT FOR EXPROPRIATION OF THEIR SUBJECT
LOTS.

The petition lacks merit.

Expropriation proceedings, or the procedure to enforce the states right of
eminent domain, are governed by Rule 67 of the Rules of Court. There are two
stages in every action for expropriation: first, condemnation of the property after
determination that its acquisition is for public purpose; and, second, the
ascertainment of just compensation.
[7]


During the condemnation stage, the court may either issue 1) an order of
expropriation, declaring that the plaintiff has a lawful right to take the property
sought to be condemned for public use or purpose, or 2) an order of dismissal, if it
appears that the expropriation is not for some public use.

In the case at bar, the trial court dismissed NHAs complaint for
expropriation upon determination that its acquisition is not for public
purpose. Along with the dismissal of the complaint, the trial court also dismissed
the counterclaim interposed by petitioners. The Court of Appeals correctly held
that this counterclaim for actual, moral and exemplary damages and attorneys
fees is compulsory. As such, it is auxiliary to the proceeding in the original suit
and derives its jurisdictional support therefrom. In the case of Financial Building
Corp. v. Forbes Park Assoc., Inc.,
[8]
we stated:

... A counterclaim presupposes the existence of a claim against the
party filing the counterclaim. Hence, where there is no claim against
the counterclaimant, the counterclaim is improper and it must be
dismissed, more so where the complaint is dismissed at the instance of
the counterclaimant. In other words, if the dismissal of the main action
results in the dismissal of the counterclaim already filed, it stands to
reason that the filing of a motion to dismiss the complaint is an implied
waiver of the compulsory counterclaim because the grant of the motion
ultimately results in the dismissal of the counterclaim.
[9]


The aforementioned doctrine is in consonance with the primary objective
of a counterclaim which is to avoid and prevent circuity of action by allowing the
entire controversy between the parties to be litigated and finally determined in
one action, wherever this can be done with justice to all parties concerned.
[10]


It is true that we held in National Power Corporation v. Court of
Appeals
[11]
(NAPOCOR) that when the defendant claims that his land suffered
damage because of the expropriation, the dismissal of the action should not
foreclose the defendants right to have the damages ascertained either in the
same case or in a separate action.
[12]
However, this pronouncement is not
applicable in the instant case.

In the NAPOCOR case, the motion to dismiss was filed not only by the
property owner, Pobre, but also by the expropriating authority. In the instant
case, only the property owners moved to dismiss the complaint. When the trial
court granted NAPOCORs motion to dismiss, it also allowed Pobre to adduce
evidence on his claim for damages. In effect, the trial court made a reservation to
allow Pobre to recover damages. Thereafter, Pobre presented evidence and
recounted in detail the scope of damage caused by NAPOCOR. In contrast, the
court below dismissed petitioners counterclaim without reservation as to their
claim for damages. Petitioners did not adduce evidence as to the extent of
damage caused by NHA. NHA appealed the dismissal of the complaint while
petitioners opted not to appeal the dismissal of their counterclaim. The dismissal
of the complaint for expropriation became final and executory on July 26,
1993. Plainly, the same is already beyond review.

Thus, on September 7, 2000 or after seven years from the finality of the
dismissal of the complaint for expropriation, NHA filed a motion for leave to
withdraw the deposit. Petitioners did not oppose the motion. In fact, the records
are bereft of evidence that petitioners took action to pursue their claim for
damages during the entire seven years. They did not file a motion or pleading in
court to ask for a hearing or to claim the damages they now seek. Clearly, they
cannot claim to have been deprived of due process as they had the time and
opportunity to pursue their claim for the damages they may have sustained as a
result of the filing of the complaint for expropriation.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the
Court of Appeals dated March 25, 2004 and February 4, 2005 in CA-G.R. CV No.
70209, respectively, are hereby AFFIRMED in toto.

EUGENIO G. PALILEO, LAURO G.
PALILEO AND THE HEIRS OF AURELIO
G. PALILEO, NAMELY: AURELIO
PALILEO, OLIVIA L. PALILEO AND
TEOFILO L. PALILEO,
P e t i t i o n e r s,


- versus -


NATIONAL IRRIGATION
ADMINISTRATION,
R e s p o n d e n t.
G.R. No. 148574

Present:

PUNO,
Chairman,
AUSTRIA-MARTINEZ,
CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.


Promulgated:

October 11, 2005
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N


CHICO-NAZARIO, J.:


This is an appeal by certiorari from the Decision
[1]
dated 10 April 2001 of
the Court of Appeals in CA-GR CV No. 62854, reversing the Decision of the
Regional Trial Court of San Pablo City, Laguna, Branch 30, in Civil Case No. SP-
4270 for recovery of possession with damages which ordered respondent National
Irrigation Administration (NIA) to pay petitioners P100,000 with legal interest for
its use of the land. Likewise assailed is the Resolution
[2]
dated 15 June 2001
denying petitioners motion for reconsideration.

The appeal stemmed from the antecedents per summary of the Court of
Appeals which we paraphrase as follows:


Lot 1, Psu-26200 situated at Barangay Manaol, Municipality of Nagcarlan,
Province of Laguna, was originally registered under Original Certificate of Title No.
2140 pursuant to Decree No. 13700 in the name of Olivia Gomez Vda. De Palileo,
mother of petitioners Eugenio G. Palileo, Lauro G. Palileo and the late Aurelio G.
Palileo, herein represented by his heirs.
[3]


Petitioners are in possession of the subject property, having inherited the
same from their mother who died on 14 January 1980. Said parcel of land was
subdivided into three (3) lots namely: (1) Lot 1-A, with an area of 61,595 square
meters, registered in the name of petitioner Eugenio G. Palileo under Transfer
Certificate of Title No. T-152619; (2) Lot 1-B, with an area of 61,596 square
meters, registered in the names of the heirs of Aurelio G. Palileo, herein
petitioners Aurelio L. Palileo, Olivia L. Palileo and Teofilo L. Palileo under Transfer
Certificate of Title No. T-152620; and (3) Lot 1-C, with an area of 61,596 square
meters, registered in the name of petitioner Lauro G. Palileo under Transfer
Certificate of Title No. T-152621, all of the Registry of Deeds for the Province of
Laguna.
[4]
The transfer of title in petitioners name was entered in the books of
the Registry of Deeds of Laguna on 12 September 1994.
[5]


Respondent NIA, on the other hand, has been on the property since 1956,
having built thereon a canal in 1956 and an access road in 1983. NIA access road
and the canal took an area of over 10,000 square meters. Records of respondent
showed that the lot occupied by the canal was expropriated by virtue of a court
order as early as 24 February 1958 and that information regarding the
construction of access roads, under a foreign-assisted program, had been
disseminated by the respondent among municipal mayors sometime in April
1978. It does not appear, however, whether payment of just compensation had
been made upon such expropriated property of herein petitioners.
[6]


Records likewise bear out that the respective lots of petitioners were
benefited by the irrigation system of the respondent. In a letter dated 11 January
1994, respondent NIA assessed petitioner Olivia Palileo irrigation service fee
amounting to P16,221.40.
[7]


Shortly, in a letter dated 28 March 1994, petitioner Eugenio Palileo made a
formal claim for reasonable rentals on the affected portions of the land. Since
their demands were refused by the respondent, petitioners instituted the present
action on 10 July 1995 for recovery of possession with damages against the
respondent alleging that respondent illegally constructed an irrigation canal with
an adjacent road, eating up a total of 10,570 square meters. Petitioners prayed
for a judgment: (a) underscoring the fact that they are the lawful registered
owners of the 10,570 square meter-portion of the lot taken by the defendant
unlawfully; (b) ordering the respondent to bestow peaceful possession of the
subject property to petitioners; and (c) ordering the respondent to pay petitioners
reasonable compensation for the continued use of the subject portion during all
the time prior to this suit in the sum of not less than P100,000.00, acceptance fee,
moral and exemplary damages as well as litigation expenses.
[8]


In its Answer with Counterclaim and Affirmative Defenses, respondent,
represented by the Office of the Government Corporate Counsel, alleged that it is
empowered and authorized under par. (e), Sec. 1 of Presidential Decree No. 552
(P.D. No. 552), amending certain sections of Republic Act No. 3601 entitled, An
Act Creating the National Irrigation Administration to acquire, by any mode of
acquisition, real and personal properties and all appurtenant rights, easements,
concessions and privileges, whether the same are already devoted to private or
public use in connection with the development of projects by the NIA.
[9]


Respondent further stated in its Answer that the subject parcels of land
were devoted to irrigation project since 1956 and acquired by NIAs predecessors
through expropriation proceedings which was granted per Court Order released
on 24 February 1958. With respect to the NIA road, it is unflinching in saying that
sometime in 1978 to 1979, a Memorandum of Agreement between NIA and
petitioners predecessors-in-interest was executed for the occupation of the
subject parcels of land and the cutting down of its fruit bearing trees and that
notices of the proposed construction of NIA access roads and other irrigation
facilities were disseminated to the municipal mayors and farmers on 27 April
1978 to allow NIA to proceed with the construction. Respondent added that due
compensation on plant damages was given on 27 June 1984.
[10]
Finally,
respondent opined that the present action has already prescribed pursuant to
par. (3), Sec. 1 of P.D. No. 552. Respondent thus prayed that judgment be
rendered dismissing the complaint for utter lack of merit and on its counterclaim,
that petitioners be ordered to pay respondent the sums of P155,317.65 as
payment of their unpaid irrigation service fee and 20% thereof as attorneys fees
and costs of suit.
[11]


On 6 January 1998, the trial court rendered judgment in favor of the
petitioners in the following tenor:

1. Plaintiffs being the lawful and registered owners of the
10,570 square meters of land usurped by the defendant the herein
defendant is hereby ordered to pay the plaintiffs the sum of P100,000.00
for its use of the land with legal interest from 1956 until fully paid;
P10,000.00 for attorneys fees and P15,000.00 for litigation expenses and
to pay the costs.

Defendants counterclaim is hereby DISMISSED.
[12]




Respondents motion for reconsideration failed to sway the trial court. On
appeal, the Court of Appeals promulgated the assailed Decision dated 10 April
2001 reversing the decision of the trial court, with the fallo:

WHEREFORE, premises considered, the appeal is hereby GRANTED.
The appealed Decision in Civil Case No. SP-4270 is hereby REVERSED and
SET ASIDE and a new judgment is hereby rendered DISMISSING the
complaint. Plaintiffs-appellees are hereby ordered to pay to appellant NIA
the sum of P155,317.65 representing unpaid irrigation fees/administration
charges with interest at 6% per annum from June 30, 1994 until fully paid.

No pronouncement as to costs.
[13]




Petitioners were likewise unsuccessful in moving for the reconsideration of
the Court of Appeals Decision. Hence, hard done by the ruling, petitioners
elevated the matter to us via the instant appeal, opposing the Decision and
Resolution of the Court of Appeals on the following assignment of errors:

I. THE COURT A QUO COMMITTED A SERIOUS ERROR IN LAW IN RULING
THAT UNDER NIAS CHARTER, PETITIONERS CAUSE OF ACTION TO SEEK
COMPENSATION FOR NIAS USE/EXPROPRIATION OF EXPROPRIATED
PROPERTIES HAD LONG PRESCRIBED.

II. THE COURT A QUO COMMITTED A SERIOUS ERROR IN LAW IN
HOLDING PETITIONERS LIABLE FOR IRRIGATION FEES DESPITE THE
ABSENCE OF ANY AGREEMENT WITH THE LATTER.
[14]




The pith of this controversy is whether or not the Court of Appeals
committed reversible error in setting aside the ruling of the trial
court. Concretely, the questions are: (1) whether prescription bars petitioners
claims and (2) whether petitioners are liable to respondent for irrigation fees.

Petitioners, in their brief, ardently argue that the Court of Appeals
overlooked the fact that there is no record of any payment of just compensation to
the petitioners and there was no expropriation case filed by respondent with regard
to its taking in 1983 of a portion of petitioners property for use as access
road.
[15]
They are effusive on their argument that there is no basis to hold them
liable to respondent for irrigation dues as there was no agreement between
petitioners and respondent for the latter to render irrigation service on their
properties.
[16]



En contra, respondent waxes lyrical that the subject parcels of land were
devoted for the irrigation project since 1956, and were acquired by respondents
predecessor, the Department of Public Works and Highways, thru expropriation
proceedings, which the expropriations court granted in an order dated 24 February
1958.
[17]
As regards the access road, a memorandum of agreement was executed
between respondent and petitioners predecessors-in-interest for the occupation of
the subject parcels of land and the cutting down of its fruit-bearing trees, so says
respondent.
[18]
Finally, respondent whips up support for its contention that the
Court of Appeals correctly awarded the payment of irrigation fees to it inasmuch as
petitioners lands benefited from the irrigation system of respondent.
[19]



We are not inclined to acquiesce in petitioners viewpoint.


The 1987 Constitution explicitly provides for the exercise of the power of
eminent domain over private properties upon payment of just
compensation.
[20]
In Republic of the Philippines v. Court of Appeals,
[21]
the Court
characterized the power of eminent domain in this wise:

The right of eminent domain is usually understood to be an ultimate
right of the sovereign power to appropriate any property within its
territorial sovereignty for a public purpose. Fundamental to the
independent existence of a State, it requires no recognition by the
Constitution, whose provisions are taken as being merely confirmatory of
its presence and as being regulatory, at most, in the due exercise of the
power. In the hands of the legislature, the power is inherent, its scope
matching that of taxation, even that of police power itself, in many
respects. It reaches to every form of property the State needs for public use
and, as an old case so puts it, all separate interests of individuals in
property are held under a tacit agreement or implied reservation vesting
upon the sovereign the right to resume the possession of the property
whenever the public interest so requires it.

The ubiquitous character of eminent domain is manifest in the nature
of the expropriation proceedings. Expropriation proceedings are not
adversarial in the conventional sense, for the condemning authority is not
required to assert any conflicting interest in the property. Thus, by filing
the action, the condemnor in effect merely serves notice that it is taking title
and possession of the property, and the defendant asserts title or interest in
the property, not to prove a right to possession, but to prove a right to
compensation for the taking.



The constitutional restraints are public use and just compensation.
[22]
Here,
the expropriated property has been shown to be for the continued utilization by the
NIA of irrigation canal and access road, which property has assumed a public
character upon its expropriation. However, the court order, which is the best
evidence to prove that the area covered by the irrigation canal was indeed
expropriated pursuant to an order of the court, was not adduced in
evidence. Notwithstanding the absence of the court order, we are inclined to give
more credence to the respondents explanation that the construction of the canal
was by virtue of a court order dated 24 February 1958.


For one, the records bear out a photocopy of an entry in NIAs Log Book
stating that the lot supposedly occupied by the irrigation canal was expropriated by
virtue of a court order released on 24 February 1958.
[23]
On record, too, is a
Certification
[24]
dated 9 May 1997 issued by the Land Irrigation System Custodian,
Erlinda A. Payra, stating that the aforesaid photocopy of the entry in NIAs log
book is a true and faithful reproduction of the original. Said certification was
subscribed before the Clerk of Court of Sta. Cruz, Laguna. The entry in the log
book and the certification issued by the Land Irrigation System custodian must be
considered admissible and competent evidence as they form part of official
records. This is pursuant to the rule that entries in official records made in the
performance of his duty by a public officer are prima facie evidence of the facts
therein stated.
[25]
Having been made by public officers in the performance of their
duties, the evidentiary value of such document must, therefore, be sustained in the
absence of strong, complete and conclusive proof of its falsity or nullity.
[26]



Moreover, there is no dispute that the irrigation canal of respondent has been
in existence dating back 1956 and that it was devoted to public use. Case law has
it that the unpaid landowner can not recover possession of property taken for
public use even while no requisite expropriation proceedings were first
instituted.
[27]
The landowner was merely given the relief of recovering
compensation for his property computed at its market value at the time it was taken
and appropriated by the State.
[28]


Alfonso v. Pasay City
[29]
is a case where there was no expropriation
proceedings but this Court denied recovery of possession by the registered owner
of a portion of a private lot taken by the Pasay City and used for road purposes and
instead decreed payment of its market value at the time it was taken and
appropriate. It would, therefore, make no difference that the order of expropriation
for the irrigation canal was not adduced in evidence in the case at bar because
under prevailing jurisprudence,
[30]
whether or not there was expropriation
proceedings, the only relief available to the owner of the private property taken for
public use is to recover compensation.

In the same way, it is immaterial that respondent failed to produce the
memorandum of agreement for the access road, which agreement respondent NIA
claims to have entered into with petitioners predecessor-in-interest. From the
evidence on record, respondent NIA has occupied, utilized and, for all intents and
purposes, exercised dominion over the property. Further, it is undisputed that the
access road was taken by respondent for public use. Hence, such taking, even in
the absence of an order of expropriation or memorandum of agreement, shall not
entitle the owner to the recovery of possession but only to just compensation,
following existing case law.
[31]


It is on the matter of compensation which is of foremost concern in the case
at bar inasmuch as petitioners pummel on their claim that they were not paid for
the lot taken by respondent on which the irrigation canal and the access road were
built. Petitioners would pound on the dearth of evidence to prove payment of just
compensation.

True, in expropriation proceedings, the owner of the private property taken
for public use is entitled, as a matter of right, to just compensation, but more to the
point, P.D. No. 552, which took effect in 1974, has provided for the period upon
which all actions against the NIA for compensation must be instituted. P.D. No.
552 added the following paragraph to Republic Act No. 3601 (An Act Creating the
National Irrigation Administration):


Sec. 1. . . .

(e) To acquire, by any mode of acquisition, real and personal
properties, and all appurtenant rights, easements, concessions and
privileges, whether the same are already devoted to private or public use in
connection with the development of projects by the NIA;

The National Irrigation Administration is empowered to exercise
the right of eminent domain in the manner provided by law for the
institution of expropriation proceedings.


All actions for the recovery of compensation and damages against
the National Irrigation Administration under paragraphs (1), (2), and (3)
hereof, shall be filed with a competent court within five (5) years from the
date of entry of the land or destruction of the improvements or crops, after
which period, the right of possession and/or ownership of the NIA shall be
considered vested and absolute. All other actions for the recovery of
compensation and damages to private property and improvements
occasioned by the construction, operation and maintenance of irrigation
facilities and other hydraulic structures under the administration of the
National Irrigation Administration, which have accrued ten (10) or more
years prior to the approval of this decree are deemed to have prescribed
and are barred forever.



With respect to the irrigation canal occupied by respondent, the above-
quoted provision of P.D. No. 552 provides that all other actions for the recovery of
compensation and damages to private property and improvements which have
accrued ten or more years prior to the approval of this decree (in 1974) are
deemed to have prescribed and are barred forever. Inasmuch as the canal was
built as early as 1956, it is therefore clear that the claim for compensation with
respect to the lot occupied by the irrigation canal is already time barred for having
accrued 18 years prior to the approval of P.D. No. 552 in 1974.

As for the access road which was built in 1983, P.D. No. 552 provides that
claims for compensation and damages ought to be taken within five years from the
time it was built in 1983, or on or before 1988. As earlier noted, petitioners first
instituted this proceeding for payment against respondent only in 1995. The
unusually long delay in bringing the action to compel payment against herein
respondent would militate against them consistently with the rule that one should
take good care of his own concern.
[32]


As pointed out by the Court of Appeals with alacrity, Sec. 1(e) of P.D. No.
552 expressly provided for the prescriptive periods within which any action for
recovery of compensation and damages as a result of appellant NIAs exercise of
the right of eminent domain may be filed. The Civil Code itself provided that the
prescriptions of actions in the Civil Code are without prejudice to those
specified in special laws, which in this case is P.D. No. 552. Thus, Article 1115 of
the Civil Code provides-


ART. 1115. The provisions of the present Title are understood to be
without prejudice to what in this Code or in special laws is established with
respect to specific cases of prescription.


In fine, it is immaterial that respondent was unable to produce proof of
payment of the lot occupied by the latters irrigation canal and access road because
in any event, all claims for payment by petitioners has already prescribed by virtue
of the explicit provisions of P.D. No. 552.

We can not feign a blind eye to the fact that the present action was triggered
by the respondents demand for irrigation fees against petitioners on 11 January
1994. Subsequent to the receipt of the demand letter by petitioners through their
tiller, petitioner Eugenio G. Palileo wrote respondent on 28 March 1994 claiming
payment for the right of way. On 12 September 1994, petitioners caused the
transfer of the property in their name and in July 1995, commenced the present
action. Indeed, the series of events culminating in the filing of the present suit
would demonstrate that the present action was precipitated by the respondents
demand for payment of irrigation fees, which, to us, constitutes a valid and legal
claim.

On this note, we affirm the findings as well as conclusions of facts of the
Court of Appeals, to wit:


As to appellants counterclaim for the payment by plaintiffs-
appellees of irrigation fees or administration charges, We find the same to
have legal basis and the amount thereof sufficiently established by the
evidence on record. Except for their bare denial of such unpaid irrigation
or administration fees owing to the appellant NIA, plaintiffs-appellees had
not shown by evidence that they, through their tenants, had not been
benefited by the irrigation service provided by the appellant for several
years now. Sec. 1 (b) of P.D. No. 552 expressly provided that NIA has the
right to enforce the collection of such unpaid irrigation or administration
charges by judicial action and such shall even be preferred liens first, upon
the land benefited, and then on the crops raised thereon.
[33]
(Emphases
supplied)



Petitioners make much ado about the absence of a written agreement to
prove their availment of respondents irrigation services. They enthuse that
absent any agreement and sans proof that they are beneficiaries of the irrigation
facility, no payment can be exacted from them. On record is a demand letter
dated 11 January 1994 of Romeo R. Anonuevo, Provincial Irrigation Officer of the
National Irrigation Administration of Region IV, addressed to petitioner Olivia
Palileo thru a certain Arsenio Bueta, whom petitioners admit as one of the tillers
of the land. Likewise on record are the respective statements of account for
petitioners as of 31 August 1996, also signed by the Provincial Irrigation Officer of
respondent. These documents would show the irrigation consumption of
petitioners lots as well as petitioners outstanding balance in irrigation fees. We
accord weight to these documents signed by the Provincial Irrigation Officer
applying the presumption that official acts or functions were regularly done. In
the absence of clear and convincing evidence to the contrary, the presumption of
regularity of official acts by government officials must necessarily prevail.
[34]



Indeed, not only is the award of payment of irrigation fees based on the law
governing the NIA, it is likewise based on the equitable postulate that having
benefited from the services provided by respondent, it is unjust for petitioners to
retain benefit without paying for it.
[35]


All given, the findings and conclusions of the Court of Appeals are in rhyme
with the facts and the law and there are no compelling reasons for this Court to
depart from the Court of Appeals verdict.


WHEREFORE, the present petition is hereby DENIED. Accordingly, the
Decision and the Resolution dated 10 April 2001 and 15 June 2001, of the Court of
Appeals in CA-G.R CV No. 62854, are hereby AFFIRMED. Costs against petitioners.

SO ORDERED.



G.R. No. 136349 January 23, 2006
LOURDES DE LA PAZ MASIKIP, Petitioner,
vs.
THE CITY OF PASIG, HON. MARIETTA A. LEGASPI, in her capacity as Presiding Judge of the
Regional Trial Court of Pasig City, Branch 165 and THE COURT OF APPEALS, Respondents.

D E C I S I O N
SANDOVAL GUTIERREZ, J .:
Where the taking by the State of private property is done for the benefit of a small community which
seeks to have its own sports and recreational facility, notwithstanding that there is such a
recreational facility only a short distance away, such taking cannot be considered to be for public
use. Its expropriation is not valid. In this case, the Court defines what constitutes a genuine
necessity for public use.
This petition for review on certiorari assails the Decision
1
of the Court of Appeals dated October 31,
1997 in CA-G.R. SP No. 41860 affirming the Order
2
of the Regional Trial Court, Branch 165, Pasig
City, dated May 7, 1996 in S.C.A. No. 873. Likewise assailed is the Resolution
3
of the same court
dated November 20, 1998 denying petitioners Motion for Reconsideration.
The facts of the case are:
Petitioner Lourdes Dela Paz Masikip is the registered owner of a parcel of land with an area of 4,521
square meters located at Pag-Asa, Caniogan, Pasig City, Metro Manila.
In a letter dated January 6, 1994, the then Municipality of Pasig, now City of Pasig, respondent,
notified petitioner of its intention to expropriate a 1,500 square meter portion of her property to be
used for the "sports development and recreational activities" of the residents of Barangay Caniogan.
This was pursuant to Ordinance No. 42, Series of 1993 enacted by the then Sangguniang Bayan of
Pasig.
Again, on March 23, 1994, respondent wrote another letter to petitioner, but this time the purpose
was allegedly "in line with the program of the Municipal Government to provide land opportunities to
deserving poor sectors of our community."
On May 2, 1994, petitioner sent a reply to respondent stating that the intended expropriation of her
property is unconstitutional, invalid, and oppressive, as the area of her lot is neither sufficient nor
suitable to "provide land opportunities to deserving poor sectors of our community."
In its letter of December 20, 1994, respondent reiterated that the purpose of the expropriation of
petitioners property is "to provide sports and recreational facilities to its poor residents."
Subsequently, on February 21, 1995, respondent filed with the trial court a complaint for
expropriation, docketed as SCA No. 873. Respondent prayed that the trial court, after due notice and
hearing, issue an order for the condemnation of the property; that commissioners be appointed for
the purpose of determining the just compensation; and that judgment be rendered based on the
report of the commissioners.
On April 25, 1995, petitioner filed a Motion to Dismiss the complaint on the following grounds:
I
PLAINTIFF HAS NO CAUSE OF ACTION FOR THE EXERCISE OF THE POWER OF EMINENT
DOMAIN, CONSIDERING THAT:
(A) THERE IS NO GENUINE NECESSITY FOR THE TAKING OF THE PROPERTY
SOUGHT TO BE EXPROPRIATED.
(B) PLAINTIFF HAS ARBITRARILY AND CAPRICIOUSLY CHOSEN THE PROPERTY
SOUGHT TO BE EXPROPRIATED.
(C) EVEN ASSUMING ARGUENDO THAT DEFENDANTS PROPERTY MAY BE
EXPROPRIATED BY PLAINTIFF, THE FAIR MARKET VALUE OF THE PROPERTY TO BE
EXPROPRIATED FAR EXCEEDS SEVENTY-EIGHT THOUSAND PESOS (P78,000.00)
II
PLAINTIFFS COMPLAINT IS DEFECTIVE IN FORM AND SUBSTANCE, CONSIDERING THAT:
(A) PLAINTIFF FAILS TO ALLEGE WITH CERTAINTY THE PURPOSE OF THE
EXPROPRIATION.
(B) PLAINTIFF HAS FAILED TO COMPLY WITH THE PREREQUISITES LAID DOWN IN
SECTION 34, RULE VI OF THE RULES AND REGULATIONS IMPLEMENTING THE
LOCAL GOVERNMENT CODE; THUS, THE INSTANT EXPROPRIATION PROCEEDING IS
PREMATURE.
III
THE GRANTING OF THE EXPROPRIATION WOULD VIOLATE SECTION 261 (V) OF THE
OMNIBUS ELECTION CODE.
IV
PLAINTIFF CANNOT TAKE POSSESSION OF THE SUBJECT PROPERTY BY MERELY
DEPOSITING AN AMOUNT EQUAL TO FIFTEEN PERCENT (15%) OF THE VALUE OF THE
PROPERTY BASED ON THE CURRENT TAX DECLARATION OF THE SUBJECT PROPERTY.
4

On May 7, 1996, the trial court issued an Order denying the Motion to Dismiss,
5
on the ground
that there is a genuine necessity to expropriate the property for the sports and recreational
activities of the residents of Pasig. As to the issue of just compensation, the trial court held that
the same is to be determined in accordance with the Revised Rules of Court.
Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order of July 31,
1996. Forthwith, it appointed the City Assessor and City Treasurer of Pasig City as commissioners to
ascertain the just compensation. This prompted petitioner to file with the Court of Appeals a special
civil action for certiorari, docketed as CA-G.R. SP No. 41860. On October 31, 1997, the Appellate
Court dismissed the petition for lack of merit. Petitioners Motion for Reconsideration was denied in a
Resolution dated November 20, 1998.
Hence, this petition anchored on the following grounds:
THE QUESTIONED DECISION DATED 31 OCTOBER 1997 (ATTACHMENT "A")
AND RESOLUTION DATED 20 NOVEMBER 1998 (ATTACHMENT "B") ARE CONTRARY TO LAW,
THE RULES OF COURT AND JURISPRUDENCE CONSIDERING THAT:
I
A. THERE IS NO EVIDENCE TO PROVE THAT THERE IS GENUINE NECESSITY FOR
THE TAKING OF THE PETITIONERS PROPERTY.
B. THERE IS NO EVIDENCE TO PROVE THAT THE PUBLIC USE REQUIREMENT FOR
THE EXERCISE OF THE POWER OF EMINENT DOMAIN HAS BEEN COMPLIED WITH.
C. THERE IS NO EVIDENCE TO PROVE THAT RESPONDENT CITY OF PASIG HAS
COMPLIED WITH ALL CONDITIONS PRECEDENT FOR THE EXERCISE OF THE POWER
OF EMINENT DOMAIN.
THE COURT A QUOS ORDER DATED 07 MAY 1996 AND 31 JULY 1996, WHICH WERE
AFFIRMED BY THE COURT OF APPEALS, EFFECTIVELY AMOUNT TO THE TAKING OF
PETITIONERS PROPERTY WITHOUT DUE PROCESS OF LAW:
II
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING OF RULE ON ACTIONABLE
DOCUMENTS TO THE DOCUMENTS ATTACHED TO RESPONDENT CITY OF
PASIGS COMPLAINT DATED 07 APRIL 1995 TO JUSTIFY THE COURT A QUOS DENIAL OF
PETITIONERS RESPONSIVE PLEADING TO THE COMPLAINT FOR EXPROPRIATION (THE
MOTION TO DISMISS DATED 21 APRIL 1995).
III
THE COURT OF APPEALS GRAVELY ERRED IN APPLYING THE RULE ON HYPOTHETICAL
ADMISSION OF FACTS ALLEGED IN A COMPLAINT CONSIDERING THAT THE MOTION TO
DISMISS FILED BY PETITIONER IN THE EXPROPRIATION CASE BELOW WAS THE
RESPONSIVE PLEADING REQUIRED TO BE FILED UNDER THE THEN RULE 67 OF THE
RULES OF COURT AND NOT AN ORIDNARY MOTION TO DISMISS UNDER RULE 16 OF THE
RULES OF COURT.
The foregoing arguments may be synthesized into two main issues one substantive and one
procedural. We will first address the procedural issue.
Petitioner filed her Motion to Dismiss the complaint for expropriation on April 25, 1995. It was denied
by the trial court on May 7, 1996. At that time, the rule on expropriation was governed by Section 3,
Rule 67 of the Revised Rules of Court which provides:
"SEC. 3. Defenses and objections. Within the time specified in the summons, each defendant, in
lieu of an answer, shall present in a single motion to dismiss or for other appropriate relief, all his
objections and defenses to the right of the plaintiff to take his property for the use or purpose
specified in the complaint. All such objections and defenses not so presented are waived. A copy of
the motion shall be served on the plaintiffs attorney of record and filed with the court with proof of
service."
The motion to dismiss contemplated in the above Rule clearly constitutes the responsive pleading
which takes the place of an answer to the complaint for expropriation. Such motion is the pleading
that puts in issue the right of the plaintiff to expropriate the defendants property for the use specified
in the complaint. All that the law requires is that a copy of the said motion be served on plaintiffs
attorney of record. It is the court that at its convenience will set the case for trial after the filing of the
said pleading.
6

The Court of Appeals therefore erred in holding that the motion to dismiss filed by petitioner
hypothetically admitted the truth of the facts alleged in the complaint, "specifically that there is a
genuine necessity to expropriate petitioners property for public use." Pursuant to the above Rule,
the motion is a responsive pleading joining the issues. What the trial court should have done was to
set the case for the reception of evidence to determine whether there is indeed a genuine necessity
for the taking of the property, instead of summarily making a finding that the taking is for public use
and appointing commissioners to fix just compensation. This is especially so considering that the
purpose of the expropriation was squarely challenged and put in issue by petitioner in her motion to
dismiss.
Significantly, the above Rule allowing a defendant in an expropriation case to file a motion to dismiss
in lieu of an answer was amended by the 1997 Rules of Civil Procedure, which took effect on July 1,
1997. Section 3, Rule 67 now expressly mandates that any objection or defense to the taking of the
property of a defendant must be set forth in an answer.
The fact that the Court of Appeals rendered its Decision in CA-G.R. SP No. 41860 on October 31,
after the 1997 Rules of Civil Procedure took effect, is of no moment. It is only fair that the Rule at the
time petitioner filed her motion to dismiss should govern. The new provision cannot be applied
retroactively to her prejudice.
We now proceed to address the substantive issue.
In the early case of US v. Toribio,
7
this Court defined the power of eminent domain as "the right of a
government to take and appropriate private property to public use, whenever the public exigency
requires it, which can be done only on condition of providing a reasonable compensation therefor." It
has also been described as the power of the State or its instrumentalities to take private property for
public use and is inseparable from sovereignty and inherent in government.
8

The power of eminent domain is lodged in the legislative branch of the government. It delegates the
exercise thereof to local government units, other public entities and public utility
corporations,
9
subject only to Constitutional limitations. Local governments have no inherent power
of eminent domain and may exercise it only when expressly authorized by statute.
10
Section 19 of
the Local Government Code of 1991 (Republic Act No. 7160) prescribes the delegation by Congress
of the power of eminent domain to local government units and lays down the parameters for its
exercise, thus:
"SEC. 19. Eminent Domain. A local government unit may, through its chief executive and acting
pursuant to an ordinance, exercise the power of eminent domain for public use, purpose or welfare
for the benefit of the poor and the landless, upon payment of just compensation, pursuant to the
provisions of the Constitution and pertinent laws: Provided, however, That, the power of eminent
domain may not be exercised unless a valid and definite offer has been previously made to the
owner and such offer was not accepted: Provided, further, That, the local government unit may
immediately take possession of the property upon the filing of expropriation proceedings and upon
making a deposit with the proper court of at least fifteen percent (15%) of the fair market value of the
property based on the current tax declaration of the property to be expropriated: Provided, finally,
That, the amount to be paid for expropriated property shall be determined by the proper court, based
on the fair market value at the time of the taking of the property."
Judicial review of the exercise of eminent domain is limited to the following areas of concern: (a) the
adequacy of the compensation, (b) the necessity of the taking, and (c) the public use character of
the purpose of the taking.
11

In this case, petitioner contends that respondent City of Pasig failed to establish a genuine necessity
which justifies the condemnation of her property. While she does not dispute the intended public
purpose, nonetheless, she insists that there must be a genuine necessity for the proposed use and
purposes. According to petitioner, there is already an established sports development and
recreational activity center at Rainforest Park in Pasig City, fully operational and being utilized by its
residents, including those from Barangay Caniogan. Respondent does not dispute this. Evidently,
there is no "genuine necessity" to justify the expropriation.
The right to take private property for public purposes necessarily originates from "the necessity" and
the taking must be limited to such necessity. In City of Manila v. Chinese Community of Manila,
12
we
held that the very foundation of the right to exercise eminent domain is a genuine necessity
and that necessity must be of a public character. Moreover, the ascertainment of the necessity
must precede or accompany and not follow, the taking of the land. In City of Manila v. Arellano Law
College,
13
we ruled that "necessity within the rule that the particular property to be expropriated must
be necessary, does not mean an absolute but only a reasonable or practical necessity, such as
would combine the greatest benefit to the public with the least inconvenience and expense to the
condemning party and the property owner consistent with such benefit."
Applying this standard, we hold that respondent City of Pasig has failed to establish that there is a
genuine necessity to expropriate petitioners property. Our scrutiny of the records shows that the
Certification
14
issued by the Caniogan Barangay Council dated November 20, 1994, the basis for the
passage of Ordinance No. 42 s. 1993 authorizing the expropriation, indicates that the intended
beneficiary is the Melendres Compound Homeowners Association, a private, non-profit organization,
not the residents of Caniogan. It can be gleaned that the members of the said Association are
desirous of having their own private playground and recreational facility. Petitioners lot is the
nearest vacant space available. The purpose is, therefore, not clearly and categorically public. The
necessity has not been shown, especially considering that there exists an alternative facility for
sports development and community recreation in the area, which is the Rainforest Park, available to
all residents of Pasig City, including those of Caniogan.
The right to own and possess property is one of the most cherished rights of men. It is so
fundamental that it has been written into organic law of every nation where the rule of law prevails.
Unless the requisite of genuine necessity for the expropriation of ones property is clearly
established, it shall be the duty of the courts to protect the rights of individuals to their private
property. Important as the power of eminent domain may be, the inviolable sanctity which the
Constitution attaches to the property of the individual requires not only that the purpose for the taking
of private property be specified. The genuine necessity for the taking, which must be of a public
character, must also be shown to exist.
WHEREFORE, the petition for review is GRANTED. The challenged Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 41860 are REVERSED. The complaint for expropriation filed
before the trial court by respondent City of Pasig, docketed as SCA No. 873, is ordered DISMISSED.
SO ORDERED.



AMOS P. FRANCIA, JR., G.R. No. 170432
CECILIA P. FRANCIA,
AND HEIRS OF BENJAMIN
P. FRANCIA, Present:
Petitioners,
PUNO, C.J., Chairperson,
CARPIO,
CORONA,
AZCUNA and
- v e r s u s - LEONARDO-DE CASTRO, JJ.



MUNICIPALITY OF
MEYCAUAYAN,
Respondent. Promulgated:

March 24, 2008

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

R E S O L U T I O N


CORONA, J.:


On February 6, 2003, respondent Municipality of Meycauayan, Bulacan filed
a complaint for expropriation
[1]
against petitioners Amos P. Francia, Jr., Cecilia P.
Francia and Benjamin P. Francia
[2]
in the Regional Trial Court (RTC) of Malolos,
Bulacan, Branch 16. Respondent needed petitioners' 16,256 sq. m. idle property
at the junction of the North Expressway, Malhacan-Iba-Camalig main road artery
and the MacArthur Highway.
[3]
It planned to use it to establish a common public
terminal for all types of public utility vehicles with a weighing scale for heavy
trucks.

In their answer,
[4]
petitioners denied that the property sought to be
expropriated was raw land. It was in fact developed
[5]
and there were plans for
further development. For this reason, respondents offer price of P2,333,500
(or P111.99 per square meter) was too low.

After trial, the RTC ruled that the expropriation was for a public purpose.
The construction of a common terminal for all public utility conveyances (serving
as a two-way loading and unloading point for commuters and goods) would
improve the flow of vehicular traffic during rush hours. Moreover, the property
was the best site for the proposed terminal because of its accessibility. Thus, on
November 8, 2004, the RTC issued the following order:
[6]


WHEREFORE, premises considered, after [respondent] has
deposited with this Court the fifteen percent (15%) of the fair market
value of the property based on the current tax declaration of the
property to be expropriated, it may take immediate possession of the
property upon issuance of writ of possession that this court will issue
for that purpose.

Further, the purposes of assessment and determination of the
area needed that will suit the purpose of expropriation and just
compensation of the lot sought to be expropriated, the court hereby
appoints commissioners to be composed of the officer-in-charge of
this court, Lerida Socorro E. Joson and one each from [respondent] and
[petitioners].

Notify all parties concerned.

SO ORDERED.
[7]



Petitioners moved for the reconsideration of the November 8, 2004 order
but the motion was denied in an order dated January 31, 2005.

Aggrieved, petitioners filed a petition for certiorari in the Court of Appeals
(CA) contending that the RTC committed grave abuse of discretion in issuing its
November 8, 2004 and January 31, 2005 orders. They claimed that the trial court
issued the orders without conducting a hearing to determine the existence of a
public purpose.



On July 28, 2005, the CA rendered a decision
[8]
partially granting the
petition. Finding that petitioners were deprived of an opportunity to controvert
respondent's allegations, the appellate court nullified the order of expropriation
except with regard to the writ of possession. According to the CA, a hearing was
not necessary because once the expropriator deposited the required amount
(with the Court), the issuance of a writ of possession became ministerial.

Petitioners moved for partial reconsideration but their motion was denied.
Hence, this recourse.

Petitioners essentially aver that the CA erred in upholding the RTC's orders
that, in expropriation cases, prior determination of the existence of a public
purpose was not necessary for the issuance of a writ of possession.

We deny the petition.

Section 19 of Republic Act 7160
[9]
provides:

Section 19. Eminent Domain. A local government unit may, through
its chief executive and acting pursuant to an ordinance, exercise the
power of eminent domain for public use, or purpose, or welfare for the
benefit of the poor and the landless, upon payment of just
compensation, pursuant to the provisions of the Constitution and
pertinent laws; Provided, however, That the power of eminent domain
may not be exercised unless a valid and definite offer has been
previously made to the owner, and that such offer was not
accepted; Provided, further, That the local government unit may
immediately take possession of the property upon the filing of the
expropriation proceedings and upon making a deposit with the
proper court of at least fifteen percent (15%) of the fair market value
of the property based on the current tax declaration of the property
to be expropriated; Provided, finally, That, the amount to be paid for
the expropriated property shall be determined by the proper court,
based on the fair market value at the time of the taking of the
property. (emphasis supplied)
[10]



Before a local government unit may enter into the possession of the
property sought to be expropriated, it must (1) file a complaint for expropriation
sufficient in form and substance in the proper court and (2) deposit with the said
court at least 15% of the property's fair market value based on its current tax
declaration.
[11]
The law does not make the determination of a public purpose a
condition precedent to the issuance of a writ of possession.
[12]


WHEREFORE, the petition is hereby DENIED.


Costs against petitioners.

SO ORDERED.


ASEAN PACIFIC PLANNERS, APP
CONSTRUCTION AND
DEVELOPMENT CORPORATION


G.R. No. 162525


AND CESAR GOCO,
Petitioners,


- versus -


Present:

QUISUMBING, J., Chairperson,
CARPIO MORALES,
TINGA,
VELASCO, JR., and
BRION, JJ.
CITY OF URDANETA, CEFERINO
J. CAPALAD, WALDO C. DEL
CASTILLO, NORBERTO M. DEL
PRADO, JESUS A. ORDONO AND
AQUILINO MAGUISA,


Respondents.

Promulgated:

September 23, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J .:
The instant petition seeks to set aside the Resolutions
[1]
dated April 15,
2003 and February 4, 2004 of the Court of Appeals in CA-G.R. SP No. 76170.
This case stemmed from a Complaint
[2]
for annulment of contracts with prayer
for preliminary prohibitory injunction and temporary restraining order filed by
respondent Waldo C. Del Castillo, in his capacity as taxpayer, against respondents
City of Urdaneta and Ceferino J. Capalad doing business under the name JJEFWA
Builders, and petitioners Asean Pacific Planners (APP) represented by Ronilo G.
Goco and Asean Pacific Planners Construction and Development Corporation
(APPCDC) represented by Cesar D. Goco.
Del Castillo alleged that then Urdaneta City Mayor Rodolfo E. Parayno
entered into five contracts for the preliminary design, construction and
management of a four-storey twin cinema commercial center and hotel involving a
massive expenditure of public funds amounting to P250 million, funded by a loan
from the Philippine National Bank (PNB). For minimal work, the contractor was
allegedly paid P95 million. Del Castillo also claimed that all the contracts are void
because the object is outside the commerce of men. The object is a piece of land
belonging to the public domain and which remains devoted to a public purpose as a
public elementary school. Additionally, he claimed that the contracts, from the
feasibility study to management and lease of the future building, are also void
because they were all awarded solely to the Goco family.
In their Answer,
[3]
APP and APPCDC claimed that the contracts are
valid. Urdaneta City Mayor Amadeo R. Perez, Jr., who filed the citys
Answer,
[4]
joined in the defense and asserted that the contracts were properly
executed by then Mayor Parayno with prior authority from the Sangguniang
Panlungsod. Mayor Perez also stated that Del Castillo has no legal capacity to sue
and that the complaint states no cause of action. For respondent Ceferino J.
Capalad, Atty. Oscar C. Sahagun filed an Answer
[5]
with compulsory counterclaim
and motion to dismiss on the ground that Del Castillo has no legal standing to sue.
Respondents Norberto M. Del Prado, Jesus A. Ordono and Aquilino
Maguisa became parties to the case when they jointly filed, also in their capacity as
taxpayers, a Complaint-in-Intervention
[6]
adopting the allegations of Del Castillo.
After pre-trial, the Lazaro Law Firm entered its appearance as counsel
for Urdaneta City and filed an Omnibus Motion
[7]
with prayer to (1)
withdraw Urdaneta Citys Answer; (2) drop Urdaneta City as defendant and be
joined as plaintiff; (3) admit Urdaneta Citys complaint; and (4) conduct a new pre-
trial. Urdaneta City allegedly wanted to rectify its position and claimed that
inadequate legal representation caused its inability to file the necessary pleadings
in representation of its interests.
In its Order
[8]
dated September 11, 2002, the Regional Trial Court (RTC) of
Urdaneta City, Pangasinan, Branch 45, admitted the entry of appearance of the
Lazaro Law Firm and granted the withdrawal of appearance of the City Prosecutor.
It also granted the prayer to drop the city as defendant and admitted its complaint
for consolidation with Del Castillos complaint, and directed the defendants to
answer the citys complaint.
In its February 14, 2003 Order,
[9]
the RTC denied reconsideration of
the September 11, 2002 Order. It also granted Capalads motion to expunge all
pleadings filed by Atty. Sahagun in his behalf. Capalad was dropped as defendant,
and his complaint filed by Atty. Jorito C. Peralta was admitted and consolidated
with the complaints of Del Castillo and Urdaneta City. The RTC also directed APP
and APPCDC to answer Capalads complaint.
Aggrieved, APP and APPCDC filed a petition for certiorari before the Court
of Appeals. In its April 15, 2003 Resolution, the Court of Appeals dismissed the
petition on the following grounds: (1) defective verification and certification of
non-forum shopping, (2) failure of the petitioners to submit certified true copies of
the RTCs assailed orders as mere photocopies were submitted, and (3) lack of
written explanation why service of the petition to adverse parties was not
personal.
[10]
The Court of Appeals also denied APP and APPCDCs motion for
reconsideration in its February 4, 2004 Resolution.
[11]

Hence, this petition, which we treat as one for review on certiorari under Rule
45, the proper remedy to assail the resolutions of the Court of Appeals.
[12]

Petitioners argue that:
I.
THE APPELLATE COURT PALPABLY ERRED AND GRAVELY
ABUSED ITS JUDICIAL PREROGATIVES BY SUMMARILY
DISMISSING THE PETITION ON THE BASIS OF PROCEDURAL
TECHNICALITIES DESPITE SUBSTANTIAL COMPLIANCE
[THEREWITH]
II.
THE TRIAL COURT PALPABLY ERRED AND GRAVELY
ABUSED ITS JUDICIAL PREROGATIVES BY CAPRICIOUSLY
(a.) Entertaining the taxpayers suits of private respondents del
Castillo, del Prado, Ordono and Maguisa despite their clear lack
of legal standing to file the same.
(b.) Allowing the entry of appearance of a private law firm to
represent the City of Urdaneta despite the clear statutory and
jurisprudential prohibitions thereto.
(c.) Allowing Ceferino J. Capalad and the City of Urdaneta to switch
sides, by permitting the withdrawal of their respective answers
and admitting their complaints as well as allowing the appearance
of Atty. Jorito C. Peralta to represent Capalad although Atty.
Oscar C. Sahagun, his counsel of record, had not withdrawn from
the case, in gross violation of well settled rules and case law on
the matter.
[13]

We first resolve whether the Court of Appeals erred in denying
reconsideration of its April 15, 2003 Resolution despite APP and APPCDCs
subsequent compliance.
Petitioners argue that the Court of Appeals should not have dismissed the
petition on mere technicalities since they have attached the proper documents in
their motion for reconsideration and substantially complied with the rules.
Respondent Urdaneta City maintains that the Court of Appeals correctly
dismissed the petition because Cesar Goco had no proof he was authorized to sign the
certification of non-forum shopping in behalf of APPCDC.
Indeed, Cesar Goco had no proof of his authority to sign the verification and
certification of non-forum shopping of the petition for certiorari filed with the
Court of Appeals.
[14]
Thus, the Court of Appeals is allowed by the rules the
discretion to dismiss the petition since only individuals vested with authority by a
valid board resolution may sign the certificate of non-forum shopping in behalf of
a corporation. Proof of said authority must be attached; otherwise, the petition is
subject to dismissal.
[15]

However, it must be pointed out that in several cases,
[16]
this Court had
considered as substantial compliance with the procedural requirements the
submission in the motion for reconsideration of the authority to sign the
verification and certification, as in this case. The Court notes that the attachments
in the motion for reconsideration show that on March 5, 2003, the Board of
Directors of APPCDC authorized Cesar Goco to institute the petition before the
Court of Appeals.
[17]
On March 22, 2003, Ronilo Goco doing business under the
name APP, also appointed his father, Cesar Goco, as his attorney-in-fact to file the
petition.
[18]
When the petition was filed on March 26, 2003
[19]
before the Court of
Appeals, Cesar Goco was duly authorized to sign the verification and certification
except that the proof of his authority was not submitted together with the petition.
Similarly, petitioners submitted in the motion for reconsideration certified
true copies of the assailed RTC orders and we may also consider the same as
substantial compliance.
[20]
Petitioners also included in the motion for
reconsideration their explanation
[21]
that copies of the petition were personally
served on the Lazaro Law Firm and mailed to the RTC and Atty. Peralta because
of distance. The affidavit of service
[22]
supported the explanation. Considering the
substantial issues involved, it was thus error for the appellate court to deny
reinstatement of the petition.
Having discussed the procedural issues, we shall now proceed to address the
substantive issues raised by petitioners, rather than remand this case to the Court of
Appeals. In our view, the issue, simply put, is: Did the RTC err and commit grave
abuse of discretion in (a) entertaining the taxpayers suits; (b) allowing a private law
firm to represent Urdaneta City; (c) allowing respondents Capalad
and Urdaneta City to switch from being defendants to becoming complainants; and
(d) allowing Capalads change of attorneys?
On the first point at issue, petitioners argue that a taxpayer may only sue
where the act complained of directly involves illegal disbursement of public funds
derived from taxation. The allegation of respondents Del Castillo, Del Prado,
Ordono and Maguisa that the construction of the project is funded by the PNB loan
contradicts the claim regarding illegal disbursement since the funds are not directly
derived from taxation.
Respondents Del Castillo, Del Prado, Ordono and Maguisa counter that their
personality to sue was not raised by petitioners APP and APPCDC in their Answer
and that this issue was not even discussed in the RTCs assailed orders.
Petitioners contentions lack merit. The RTC properly allowed the
taxpayers suits. In Public Interest Center, Inc. v. Roxas,
[23]
we held:
In the case of taxpayers suits, the party suing as a taxpayer must
prove that he has sufficient interest in preventing the illegal expenditure of
money raised by taxation. Thus, taxpayers have been allowed to sue
where there is a claim that public funds are illegally disbursed or that
public money is being deflected to any improper purpose, or that public
funds are wasted through the enforcement of an invalid or unconstitutional
law.
x x x x
Petitioners allegations in their Amended Complaint that the loan
contracts entered into by the Republic and NPC are serviced or paid
through a disbursement of public funds are not disputed by respondents,
hence, they are invested with personality to institute the same.
[24]

Here, the allegation of taxpayers Del Castillo, Del Prado, Ordono and
Maguisa that P95 million of the P250 million PNB loan had already been paid for
minimal work is sufficient allegation of overpayment, of illegal disbursement, that
invests them with personality to sue. Petitioners do not dispute the allegation as
they merely insist, albeit erroneously, that public funds are not involved. Under
Article 1953
[25]
of the Civil Code, the city acquired ownership of the money loaned
from PNB, making the money public fund. The city will have to pay the loan by
revenues raised from local taxation or by its internal revenue allotment.
In addition, APP and APPCDCs lack of objection in their Answer on the
personality to sue of the four complainants constitutes waiver to raise the objection
under Section 1, Rule 9 of the Rules of Court.
[26]

On the second point, petitioners contend that only the City Prosecutor can
represent Urdaneta City and that law and jurisprudence prohibit the appearance of
the Lazaro Law Firm as the citys counsel.
The Lazaro Law Firm, as the citys counsel, counters that the city was inutile
defending its cause before the RTC for lack of needed legal advice. The city has no
legal officer and both City Prosecutor and Provincial Legal Officer are
busy. Practical considerations also dictate that the city and Mayor Perez must have
the same counsel since he faces related criminal cases. Citing Mancenido v. Court
of Appeals,
[27]
the law firm states that hiring private counsel is proper where rigid
adherence to the law on representation would deprive a party of his right to redress a
valid grievance.
[28]

We cannot agree with the Lazaro Law Firm. Its appearance
as Urdaneta Citys counsel is against the law as it provides expressly who should
represent it. The City Prosecutor should continue to represent the city.
Section 481(a)
[29]
of the Local Government Code (LGC) of 1991
[30]
mandates
the appointment of a city legal officer. Under Section 481(b)(3)(i)
[31]
of the LGC,
the city legal officer is supposed to represent the city in all civil actions, as in this
case, and special proceedings wherein the city or any of its officials is a
party. In Ramos v. Court of Appeals,
[32]
we cited that under Section 19
[33]
of
Republic Act No. 5185,
[34]
city governments may already create the position of city
legal officer to whom the function of the city fiscal (now prosecutor) as legal adviser
and officer for civil cases of the city shall be transferred.
[35]
In the case
of Urdaneta City, however, the position of city legal officer is still vacant, although
its charter
[36]
was enacted way back in 1998.
Because of such vacancy, the City Prosecutors appearance as counsel
of Urdaneta City is proper. The City Prosecutor remains as the citys legal adviser
and officer for civil cases, a function that could not yet be transferred to the city
legal officer. Under the circumstances, the RTC should not have allowed the entry
of appearance of the Lazaro Law Firm vice the City Prosecutor. Notably, the citys
Answer was sworn to before the City Prosecutor by Mayor Perez. The City
Prosecutor prepared the citys pre-trial brief and represented the city in the pre-trial
conference. No question was raised against the City Prosecutors actions until the
Lazaro Law Firm entered its appearance and claimed that the city lacked adequate
legal representation.
Moreover, the appearance of the Lazaro Law Firm as counsel
for Urdaneta City is against the law. Section 481(b)(3)(i) of the LGC provides when a
special legal officer may be employed, that is, in actions or proceedings where a
component city or municipality is a party adverse to the provincial government. But
this case is not between Urdaneta City and theProvince of Pangasinan. And we have
consistently held that a local government unit cannot be represented by private
counsel
[37]
as only public officers may act for and in behalf of public entities and
public funds should not be spent to hire private lawyers.
[38]
Pro bono representation
in collaboration with the municipal attorney and prosecutor has not even been
allowed.
[39]

Neither is the law firms appearance justified under the instances listed
in Mancenido when local government officials can be represented by private
counsel, such as when a claim for damages could result in personal liability. No
such claim against said officials was made in this case. Note that before it joined
the complainants, the city was the one sued, not its officials. That the firm
represents Mayor Perez in criminal cases, suits in his personal capacity,
[40]
is of no
moment.
On the third point, petitioners claim that Urdaneta City is estopped to
reverse admissions in its Answer that the contracts are valid and, in its pre-trial
brief, that the execution of the contracts was in good faith.
We disagree. The court may allow amendment of pleadings.
Section 5,
[41]
Rule 10 of the Rules of Court pertinently provides that if
evidence is objected to at the trial on the ground that it is not within the issues raised
by the pleadings, the court may allow the pleadings to be amended and shall do so
with liberality if the presentation of the merits of the action and the ends of
substantial justice will be subserved thereby. Objections need not even arise in this
case since the Pre-trial Order
[42]
dated April 1, 2002 already defined as an issue
whether the contracts are valid. Thus, what is needed is presentation of the parties
evidence on the issue. Any evidence of the city for or against the validity of the
contracts will be relevant and admissible. Note also that underSection 5, Rule 10,
necessary amendments to pleadings may be made to cause them to conform to the
evidence.
In addition, despite Urdaneta Citys judicial admissions, the trial court is still
given leeway to consider other evidence to be presented for said admissions may
not necessarily prevail over documentary evidence,
[43]
e.g., the contracts
assailed. A partys testimony in open court may also override admissions in the
Answer.
[44]

As regards the RTCs order admitting Capalads complaint and dropping
him as defendant, we find the same in order. Capalad insists that Atty. Sahagun
has no authority to represent him. Atty. Sahagun claims otherwise. We note,
however, that Atty. Sahagun represents petitioners who claim that the contracts are
valid. On the other hand, Capalad filed a complaint for annulment of the
contracts. Certainly, Atty. Sahagun cannot represent totally conflicting
interests. Thus, we should expunge all pleadings filed by Atty. Sahagun in behalf
of Capalad.
Relatedly, we affirm the order of the RTC in allowing Capalads change of
attorneys, if we can properly call it as such, considering Capalads claim that Atty.
Sahagun was never his attorney.
Before we close, notice is taken of the offensive language used by Attys.
Oscar C. Sahagun and Antonio B. Escalante in their pleadings before us and the
Court of Appeals. They unfairly called the Court of Appeals a court of
technicalities
[45]
for validly dismissing their defectively prepared petition. They
also accused the Court of Appeals of protecting, in their view, an incompetent
judge.
[46]
In explaining the concededly strong language, Atty. Sahagun further
indicted himself. He said that the Court of Appeals dismissal of the case shows its
impatience and readiness to punish petitioners for a perceived slight on its
dignity and such dismissal smacks of retaliation and does not augur for the cold
neutrality and impartiality demanded of the appellate court.
[47]

Accordingly, we impose upon Attys. Oscar C. Sahagun and Antonio B.
Escalante a fine of P2,000
[48]
each payable to this Court within ten days from notice
and we remind them that they should observe and maintain the respect due to the
Court of Appeals and judicial officers;
[49]
abstain from offensive language before the
courts;
[50]
and not attribute to a Judge motives not supported by the record.
[51]
Similar
acts in the future will be dealt with more severely.
WHEREFORE, we (1) GRANT the petition; (2) SET ASIDE the
Resolutions dated April 15, 2003 and February 4, 2004 of the Court of Appeals in
CA-G.R. SP No. 76170; (3) DENY the entry of appearance of the Lazaro Law
Firm in Civil Case No. U-7388 and EXPUNGE all pleadings it filed as counsel of
Urdaneta City; (4) ORDER the City Prosecutor to represent Urdaneta City in Civil
Case No. U-7388; (5) AFFIRM the RTC in admitting the complaint of Capalad;
and (6) PROHIBIT Atty. Oscar C. Sahagun from
representing Capalad and EXPUNGE all pleadings that he filed in behalf of
Capalad.
Let the records of Civil Case No. U-7388 be remanded to the trial court for
further proceedings.
Finally, we IMPOSE a fine of P2,000 each on Attys. Oscar C. Sahagun and
Antonio B. Escalante for their use of offensive language, payable to this Court
within ten (10) days from receipt of this Decision.
SO ORDERED.


SPOUSES CIRIACO and
ARMINDA ORTEGA,
Petitioners,

- versus -

CITY OF CEBU,
Respondent.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
CITY OF CEBU,
Petitioner,




- versus -




SPOUSES CIRIACO and
ARMINDA ORTEGA,
Respondents.
G.R. No. 181562-63








G.R. No. 181583-84

Present:

YNARES-SANTIAGO, J.,
Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA, and
PERALTA, JJ.

Promulgated:

October 2, 2009

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


DECISION

NACHURA, J .:


These are consolidated petitions for review on certiorari filed by petitioners
Ciriaco and Arminda Ortega (Spouses Ortega) in G.R. Nos. 181562-63
and petitioner City of Cebu (Cebu City) in G.R. Nos. 181583-84 assailing the
Decision of the Court of Appeals (CA) in the similarly consolidated petitions
docketed as CA-G.R. SP No. 80187 and CA-G.R. SP No. 00147, respectively.
[1]


The facts, summarized by the CA, follow.

Spouses Ciriaco and Arminda Ortega x x x are the registered
owners of a parcel of land known as Lot No. 310-B, situated in
Hipodromo, Cebu City, with an area of 5,712 square meters and covered
by Transfer Certificate of Title No. 113311, issued by the Register of
Deeds of the City of Cebu.

One-half of the above described land is occupied by squatters.
On September 24, 1990, [the Spouses Ortega] filed an ejectment case
against the squatters before the Municipal Trial Court in Cities (MTCC)
of Cebu City, which rendered decision in favor of [the spouses Ortega].
The case eventually reached the Supreme Court, which affirmed the
decision of the MTCC. The decision of the MTCC became final and
executory, and a writ of execution was issued on February 1, 1994.

On May 23, 1994, the Sangguniang Panglungsod of [Cebu City]
enacted City Ordinance No. 1519, giving authority to the City Mayor to
expropriate one-half (1/2) portion (2,856 square meters) of [the spouses
Ortegas] land (which is occupied by the squatters), and appropriating
for that purpose the amount of P3,284,400.00 or at the price of ONE
THOUSAND ONE HUNDRED FIFTY PESOS (P1,150.00) per square
meter. The amount will be charged against Account No. 8-93-310,
Continuing Appropriation, Account No. 101-8918-334, repurchase of
lots for various projects. The value of the land was determined by the
Cebu City Appraisal Committee in Resolution No. 19, series of 1994,
dated April 15, 1994.

Pursuant to said ordinance, [Cebu City] filed a Complaint for
Eminent Domain [before the Regional Trial Court (RTC), Branch 23,
Cebu City] against [the spouses Ortega], docketed as Civil Case No.
CEB-16577.

On March 13, 1998, the [RTC] issued an order declaring that
[Cebu City] has the lawful right to take the property subject of the
instant case, for public use or purpose described in the complaint upon
payment of just compensation.

Based on the recommendation of the appointed Commissioners
(one of whom was the City Assessor of [Cebu City], the [RTC] issued
another Order dated May 21, 1999, fixing the value of the land subject to
expropriation at ELEVEN THOUSAND PESOS (P11,000.00) per
square meter and ordering [Cebu City] to pay [Spouses Ortega] the sum
of THIRTY ONE MILLION AND FOUR HUNDRED SIXTEEN
THOUSAND PESOS (P31,416,000.00) as just compensation for the
expropriated portion of Lot No. 310-B.

The Decision of the [RTC] became final and executory because of
[Cebu Citys] failure to perfect an appeal on time, and a Writ of
Execution was issued on September 17, 1999 to enforce the courts
judgment. Upon motion of [the Spouses Ortega], the [RTC] issued an
Order dated March 11, 2002, quoted as follows:

Reading of the aforestated resolution shows that
the City Council of Cebu approved Ordinance No. 1519
appropriating the sum of P3,284,400.00 for payment of the
subject lot chargeable to Account No. 101-8918-334.

In view thereof, the above-mentioned sum is now
subject for execution or garnishment for the same is no
longer exempt from execution.

[Cebu City] filed an Omnibus Motion to Stay Execution,
Modification of Judgment and Withdrawal of the Case, contending that
the price set by the [RTC] as just compensation to be paid to [the
Spouses Ortega] is way beyond the reach of its intended beneficiaries for
its socialized housing program. The motion was denied by the [RTC].
[Cebu Citys] Motion for Reconsideration was likewise denied.

By virtue of the Order of the [RTC], dated July 2, 2003, x x x
Sheriff Benigno B. Reas[,] Jr. served a Notice of Garnishment to
Philippine Postal Bank, P. del Rosario and JunqueraBranch Cebu City,
garnishing [Cebu Citys] bank deposit therein.

Hence, [Cebu City] filed the instant Petition for Certiorari before
[the CA] (CA-G.R. SP NO. 80187).

During the pendency of x x x CA-G.R. SP NO. 80187, [Cebu
City] filed before the [RTC] a Motion to Dissolve, Quash or Recall the
Writ of Garnishment, contending that Account No. 101-8918-334
mentioned in Ordinance No. 1519 is not actually an existing bank
account and that the garnishment of [Cebu Citys] bank account with
Philippine Postal Bank was illegal, because government funds and
properties may not be seized under writ of execution or garnishment to
satisfy such judgment, on obvious reason of public policy. The [RTC]
issued an Order dated March 8, 2004, denying said motion.
[Cebu Citys] Motion for Reconsideration was also denied.

[The Spouses Ortega] filed an Ex-Parte Motion to Direct the New
Manager of Philippine Postal Bank to Release to the Sheriff the
Garnished Amount, which was granted by the [RTC]. [Cebu City] filed a
Motion for Reconsideration, but the same was denied.

Hence, [Cebu City] filed another Petition for Certiorari (CA-
G.R. SP NO. 00147) [with the Court of Appeals].
[2]


Ruling on the petitions for certiorari, the CA disposed of the cases, to wit:

WHEREFORE, all the foregoing premises considered, the
instant Petitions for Certiorari are hereby PARTIALLY GRANTED.
The assailed Orders of the [RTC] [Assailed Orders dated March 11,
2002 and July 2, 2003, respectively, in CA-G.R SP NO. 80187] are
hereby ANNULLED AND SET ASIDE insofar as they denied
[Cebu Citys] Motion to Stay Execution, but they are hereby
AFFIRMED insofar as they denied [Cebu Citys] Motion to Modify
Judgment and Withdraw from the Expropriation Proceedings.
Furthermore, the assailed Orders of the [RTC dated March 8, 2004 in
CA-G.R. SP NO. 00147] are hereby ANNULLED AND SET ASIDE.
Let the Decision of the [RTC] be executed in a manner prescribed by
applicable law and jurisprudence.

SO ORDERED.
[3]


Hence, these consolidated appeals by petitioners Cebu City and the Spouses
Ortega positing the following issues:

1. Whether the CA erred in affirming the RTCs denial of Cebu Citys
Omnibus Motion to Modify Judgment and to be Allowed to Withdraw from the
Expropriation Proceedings.

2. Whether the deposit of Cebu City with the Philippine Postal Bank,
appropriated for a different purpose by its Sangguniang Panglungsod, can be
subject to garnishment as payment for the expropriated lot covered by City
Ordinance No. 1519.

We deny both petitions.

On the first issue, the CA did not err in affirming the RTCs Order that the
expropriation case had long been final and executory. Consequently, both the
Order of expropriation and the Order fixing just compensation by the RTC can no
longer be modified. In short, Cebu City cannot withdraw from the expropriation
proceedings.

Section 4, Rule 67 of the Rules of Court on Expropriation provides:

SEC. 4. Order of expropriation. If the objections to and the
defenses against the right of the plaintiff to expropriate the property are
overruled, or when no party appears to defend as required by this Rule,
the court may issue an order of expropriation declaring that the plaintiff
has a lawful right to take the property sought to be expropriated, for the
public use or purpose described in the complaint, upon the payment of
just compensation to be determined as of the date of the taking of the
property or the filing of the complaint, whichever came first.

A final order sustaining the right to expropriate the property may
be appealed by any party aggrieved thereby. Such appeal, however, shall
not prevent the court from determining the just compensation to be paid.

After the rendition of such an order, the plaintiff shall not be
permitted to dismiss or discontinue the proceeding except on such terms
as the court deems just and equitable.


Plainly, from the aforequoted provision, expropriation proceedings speak of
two (2) stages, i.e.:

1. Determination of the authority of the plaintiff to exercise
the power of eminent domain and the propriety of its exercise in the
context of the facts involved in the suit. This ends with an order, if not of
dismissal of the action, of condemnation [or order of expropriation]
declaring that the plaintiff has the lawful right to take the property
sought to be condemned, for the public use or purpose described in the
complaint, upon the payment of just compensation to be determined as
of the date of the filing of the complaint; and

2. Determination by the court of the just compensation for
the property sought to be taken.
[4]


We held in the recent case of Republic v. Phil-Ville Development and
Housing Corporation
[5]
that:

[A]n order of expropriation denotes the end of the first stage of
expropriation. Its end then paves the way for the second stagethe
determination of just compensation, and, ultimately, payment. An order
of expropriation puts an end to any ambiguity regarding the right of
the petitioner to condemn the respondents properties. Because an
order of expropriation merely determines the authority to exercise the
power of eminent domain and the propriety of such exercise, its issuance
does not hinge on the payment of just compensation. After all, there
would be no point in determining just compensation if, in the first
place, the plaintiffs right to expropriate the property was not first
clearly established.
[6]



Conversely, as is evident from the foregoing, an order by the trial court
fixing just compensation does not affect a prior order of expropriation. As applied
to the case at bar, Cebu City can no longer ask for modification of the judgment,
much less, withdraw its complaint, after it failed to appeal even the first stage of
the expropriation proceedings.

Cebu City is adamant, however, that it should be allowed to withdraw its
complaint as the just compensation fixed by the RTC is too high, and the intended
expropriation of the Spouses Ortegas property is dependent on whether Cebu City
would have sufficient funds to pay for the same.

We cannot subscribe to Cebu Citys ridiculous contention.

It is well-settled in jurisprudence that the determination of just compensation
is a judicial prerogative.
[7]
In Export Processing Zone Authority v. Dulay,
[8]
we
declared:

The determination of just compensation in eminent domain
cases is a judicial function. The executive department or the legislature
may make the initial determinations but when a party claims a violation
of the guarantee in the Bill of Rights that private property may not be
taken for public use without just compensation, no statute, decree, or
executive order can mandate that its own determination shall prevail
over the courts findings. Much less can the courts be precluded from
looking into the just-ness of the decreed compensation.


We, therefore, hold that P.D. No. 1533, which eliminates the
courts discretion to appoint commissioners pursuant to Rule 67 of the
Rules of Court, is unconstitutional and void. To hold otherwise would be
to undermine the very purpose why this Court exists in the first place.

Likewise, in the recent cases of National Power Corporation v. dela
Cruz
[9]
and Forfom Development Corporation v. Philippine National
Railways,
[10]
we emphasized the primacy of judicial prerogative in the
ascertainment of just compensation as aided by the appointed commissioners, to
wit:

Though the ascertainment of just compensation is a judicial
prerogative, the appointment of commissioners to ascertain just
compensation for the property sought to be taken is amandatory
requirement in expropriation cases. While it is true that the findings
of commissioners may be disregarded and the trial court may substitute
its own estimate of the value, it may only do so for valid reasons; that is,
where the commissioners have applied illegal principles to the evidence
submitted to them, where they have disregarded a clear preponderance of
evidence, or where the amount allowed is either grossly inadequate or
excessive. Thus, trial with the aid of the commissioners is a substantial
right that may not be done away with capriciously or for no reason at
all.


As regards the second issue raised by the Spouses Ortega, we quote with
favor the CAs disquisition thereon, to wit:

While the claim of [the Spouses Ortega] against [Cebu City] is
valid, the [RTC] cannot, by itself, order the City Council of [Cebu City]
to enact an appropriation ordinance in order to satisfy its judgment.

The proper remedy of [the Spouses Ortega] is to file a mandamus
case against [Cebu City] in order to compel its Sangguniang
Panglungsod to enact an appropriation ordinance for the satisfaction of
[the Spouses Ortegas] claim. This remedy is provided in the case
of Municipality of Makati v. Court of Appeals, which provides:

Nevertheless, this is not to say that private
respondent and PSB are left with no legal recourse. Where
a municipality fails or refuses, without justifiable reason[s],
to effect payment of a final money judgment rendered
against it, the claimant may avail of the remedy of
mandamus in order to compel the enactment and approval
of the necessary appropriation ordinance, and the
corresponding disbursement of municipal
funds therefor. x x x.

x x x x

The Sangguniang Panglungsod of [Cebu City] enacted Ordinance
No. 1519, appropriating the sum of P3,284,400.00 for payment of just
compensation for the expropriated land, chargeable to Account No. 101-
8918-334.

Pursuant to such ordinance, the [RTC] issued an order
dated March 11, 2002, which was the basis for the issuance of the Writ
of Garnishment, garnishing [Cebu Citys] bank account with Philippine
Postal Bank.

However, Philippine Postal Bank issued a Certification
dated February 7, 2005, certifying that Account No. 8-93-310
(Continuing Account) and Account No. 101-8918-334 intended for
purchase of lot for various projects are not bank account numbers with
Philippine Postal Bank.

It is a settled rule that government funds and properties may not
be seized under writs of execution or garnishment to satisfy judgments,
based on obvious consideration of public policy. Disbursements of
public funds must be covered by the corresponding appropriation as
required by law. The functions and public services rendered by the State
cannot be allowed to be paralyzed or disrupted by the diversion of public
funds from their legitimate and specific objects, as appropriated by law.

In Municipality of Makati v. Court of Appeals, x x x where the
Municipality of Makati enacted an ordinance appropriating certain sum
of money as payment for the land the municipality expropriated,
chargeable to Account No. S/A 265-537154-3 deposited in PNB Buendia
Branch, the Supreme Court held that the trial court has no authority to
garnish the Municipalitys other bank account (Account No. S/A 263-
530850-7) in order to cover the deficiency in Account No. S/A 265-
537154-3, even if both accounts are in the same branch of the PNB. In
said case, the Supreme Court held:

Absent any showing that the municipal council
of Makati has passed an ordinance appropriating from its
public funds an amount corresponding to the balance due
under the RTC decision dated June 4, 1987, less the sum
of P99,743.94 deposited in Account No. S/A 265-537154-
3, no levy under execution may be validly effected on the
public funds of petitioner deposited in Account No. S/A
263-530850-7.

The foregoing rules find application in the case at bar. While the
Sangguniang Panglungsod of petitioner enacted Ordinance No. 1519
appropriating the sum of P3,284,400.00 for payment of just
compensation for the expropriated land, such ordinance cannot be
considered as a source of authority for the [RTC] to garnish [Cebu
Citys] bank account with Philippine Postal Bank, which was already
appropriated for another purpose. [Cebu Citys] account with Philippine
Postal Bank was not specifically opened for the payment of just
compensation nor was it specifically appropriated by Ordinance No.
1519 for such purpose. Said account, therefore, is exempt from
garnishment.

Since the [RTC] has no authority to garnish [Cebu Citys] other
bank accounts in order to satisfy its judgment, consequently, it has no
authority to order the release of [Cebu Citys] other deposits with
Philippine Postal Bank x x x.
[11]



Even assuming that Cebu City Ordinance No. 1519 actually appropriated the
amount of P3,284,400.00 for payment of just compensation thus, within the
reach of a writ of garnishment issued by the trial court
[12]
there remains the
inescapable fact that the Philippine Postal Bank account referred to in the
ordinance does not actually exist, as certified to by the Bank. Accordingly, no writ
of garnishment may be validly issued against such non-existent account with
Philippine Postal Bank. This circumstance translates to a situation where there is
no valid appropriation ordinance.

WHEREFORE, the petitions in G.R. Nos. 181562-63 and 181583-84 are
hereby DENIED. The Decision of the Court of Appeals in CA-G.R. SP Nos.
80187 and 00147 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.



G.R. No. 172410 April 14, 2008
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE TOLL REGULATORY BOARD
(TRB), petitione,
vs.
HOLY TRINITY REALTY DEVELOPMENT CORP., respondent.
D E C I S I O N
CHICO-NAZARIO, J .:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to set aside
the Decision
1
dated 21 April 2006 of the Court of Appeals in CA-G.R. SP No. 90981 which, in turn,
set aside two Orders
2
dated 7 February 2005
3
and 16 May 2005
4
of the Regional Trial Court (RTC)
of Malolos, Bulacan, in Civil Case No. 869-M-2000.
The undisputed factual and procedural antecedents of this case are as follows:
On 29 December 2000, petitioner Republic of the Philippines, represented by the Toll Regulatory
Board (TRB), filed with the RTC a Consolidated Complaint for Expropriation against landowners
whose properties would be affected by the construction, rehabilitation and expansion of the North
Luzon Expressway. The suit was docketed as Civil Case No. 869-M-2000 and raffled to Branch 85,
Malolos, Bulacan. Respondent Holy Trinity Realty and Development Corporation (HTRDC) was one
of the affected landowners.
On 18 March 2002, TRB filed an Urgent Ex-Parte Motion for the issuance of a Writ of Possession,
manifesting that it deposited a sufficient amount to cover the payment of 100% of the zonal value of
the affected properties, in the total amount of P28,406,700.00, with the Land Bank of the Philippines,
South Harbor Branch (LBP-South Harbor), an authorized government depository. TRB maintained
that since it had already complied with the provisions of Section 4 of Republic Act No. 8974
5
in
relation to Section 2 of Rule 67 of the Rules of Court, the issuance of the writ of possession
becomes ministerial on the part of the RTC.
The RTC issued, on 19 March 2002, an Order for the Issuance of a Writ of Possession, as well as
the Writ of Possession itself. HTRDC thereafter moved for the reconsideration of the 19 March 2002
Order of the RTC.
On 7 October 2002, the Sheriff filed with the RTC a Report on Writ of Possession stating, among
other things, that since none of the landowners voluntarily vacated the properties subject of the
expropriation proceedings, the assistance of the Philippine National Police (PNP) would be
necessary in implementing the Writ of Possession. Accordingly, TRB, through the Office of the
Solicitor General (OSG), filed with the RTC an Omnibus Motion praying for an Order directing the
PNP to assist the Sheriff in the implementation of the Writ of Possession. On 15 November 2002,
the RTC issued an Order directing the landowners to file their comment on TRBs Omnibus Motion.
On 3 March 2003, HTRDC filed with the RTC a Motion to Withdraw Deposit, praying that the
respondent or its duly authorized representative be allowed to withdraw the amount
of P22,968,000.00, out of TRBs advance deposit of P28,406,700.00 with LBP-South Harbor,
including the interest which accrued thereon. Acting on said motion, the RTC issued an Order dated
21 April 2003, directing the manager of LBP-South Harbor to release in favor of HTRDC the amount
of P22,968,000.00 since the latter already proved its absolute ownership over the subject properties
and paid the taxes due thereon to the government. According to the RTC, "(t)he issue however on
the interest earned by the amount deposited in the bank, if there is any, should still be threshed
out."
6

On 7 May 2003, the RTC conducted a hearing on the accrued interest, after which, it directed the
issuance of an order of expropriation, and granted TRB a period of 30 days to inquire from LBP-
South Harbor "whether the deposit made by DPWH with said bank relative to these expropriation
proceedings is earning interest or not."
7

The RTC issued an Order, on 6 August 2003, directing the appearance of LBP Assistant Vice-
President Atty. Rosemarie M. Osoteo and Department Manager Elizabeth Cruz to testify on whether
the Department of Public Works and Highways (DPWHs) expropriation account with the bank was
earning interest. On 9 October 2003, TRB instead submitted a Manifestation to which was attached
a letter dated 19 August 2003 by Atty. Osoteo stating that the DPWH Expropriation Account was an
interest bearing current account.
On 11 March 2004, the RTC issued an Order resolving as follows the issue of ownership of the
interest that had accrued on the amount deposited by DPWH in its expropriation current account
with LBP-South Harbor:
WHEREFORE, the interest earnings from the deposit of P22,968,000.00 respecting one
hundred (100%) percent of the zonal value of the affected properties in this expropriation
proceedings under the principle of accession are considered as fruits and should properly
pertain to the herein defendant/property owner [HTRDC]. Accordingly, the Land Bank as the
depositary bank in this expropriation proceedings is (1) directed to make the necessary
computation of the accrued interest of the amount of P22,968,000.00 from the time it was
deposited up to the time it was released to Holy Trinity Realty and Development Corp. and
thereafter (2) to release the same to the defendant Holy Trinity Development Corporation
through its authorized representative.
8

TRB filed a Motion for Reconsideration of the afore-quoted RTC Order, contending that the payment
of interest on money deposited and/or consigned for the purpose of securing a writ of possession
was sanctioned neither by law nor by jurisprudence.
TRB filed a Motion to Implement Order dated 7 May 2003, which directed the issuance of an order of
expropriation. On 5 November 2004, the RTC issued an Order of Expropriation.
On 7 February 2005, the RTC likewise granted TRBs Motion for Reconsideration. The RTC ruled
that the issue as to whether or not HTRDC is entitled to payment of interest should be ventilated
before the Board of Commissioners which will be created later for the determination of just
compensation.
Now it was HTRDCs turn to file a Motion for Reconsideration of the latest Order of the RTC. The
RTC, however, denied HTRDCs Motion for Reconsideration in an Order dated 16 May 2005.
HTRDC sought recourse with the Court of Appeals by filing a Petition for Certiorari, docketed as CA-
G.R. SP No. 90981. In its Decision, promulgated on 21 April 2006, the Court of Appeals vacated the
Orders dated 7 February 2005 and 16 May 2005 of the RTC, and reinstated the Order dated 11
March 2004 of the said trial court wherein it ruled that the interest which accrued on the amount
deposited in the expropriation account belongs to HTRDC by virtue of accession. The Court of
Appeals thus declared:
WHEREFORE, the foregoing premises considered, the assailed Orders dated 07 February
and 16 May 2005 respectively of the Regional Trial Court of Malolos, Bulacan (Branch 85)
are hereby VACATED and SET ASIDE. Accordingly, the Order dated 11 March 2004 is
hereby reinstated.
9

From the foregoing, the Republic, represented by the TRB, filed the present Petition for Review
on Certiorari, steadfast in its stance that HTRDC is "entitled only to an amount equivalent to the
zonal value of the expropriated property, nothing more and nothing less."
10
According to the TRB,
the owner of the subject properties is entitled to an exact amount as clearly defined in both Section 4
of Republic Act No. 8974, which reads:
Section 4. Guidelines for Expropriation Proceedings. Whenever it is necessary to acquire
real property for the right-of-way, site or location for any national government infrastructure
project through expropriation, the appropriate implementing agency shall initiate the
expropriation proceedings before the proper court under the following guidelines:
(a) Upon the filing of the complaint, and after due notice to the defendant, the implementing
agency shall immediately pay the owner of the property the amount equivalent to the sum
of (1) one hundred (100%) percent of the value of the property based on the current
relevant zonal valuation of the Bureau of Internal Revenue (BIR); and (2) the value of the
improvements and/or structures as determined under Section 7 hereof.
and Section 2, Rule 67 of the Rules of Court, which provides:
Sec. 2. Entry of plaintiff upon depositing value with authorized government depositary.
Upon the filing of the complaint or at anytime thereafter and after due notice to the
defendant, the plaintiff shall have the right to take or enter upon the possession of the real
property involved if he deposits with the authorized government depositary an amount
equivalent to the assessed value of the property for purposes of taxation to be held by
such bank subject to the orders of the court. Such deposit shall be in money, unless in lieu
thereof the court authorizes the deposit of a certificate of deposit of a government bank of
the Republic of the Philippines payable on demand to the authorized government depositary.
The TRB reminds us that there are two stages
11
in expropriation proceedings, the determination of
the authority to exercise eminent domain and the determination of just compensation. The TRB
argues that it is only during the second stage when the court will appoint commissioners and
determine claims for entitlement to interest, citingLand Bank of the Philippines v.
Wycoco
12
and National Power Corporation v. Angas.
13

The TRB further points out that the expropriation account with LBP-South Harbor is not in the name
of HTRDC, but of DPWH. Thus, the said expropriation account includes the compensation for the
other landowners named defendants in Civil Case No. 869-M-2000, and does not exclusively belong
to respondent.
At the outset, we call attention to a significant oversight in the TRBs line of reasoning. It failed to
distinguish between the expropriation procedures under Republic Act No. 8974 and Rule 67 of the
Rules of Court. Republic Act No. 8974 and Rule 67 of the Rules of Court speak of different
procedures, with the former specifically governing expropriation proceedings for national government
infrastructure projects. Thus, in Republic v. Gingoyon,
14
we held:
There are at least two crucial differences between the respective procedures under Rep. Act
No. 8974 and Rule 67. Under the statute, the Government is required to make
immediate payment to the property owner upon the filing of the complaint to be
entitled to a writ of possession, whereas in Rule 67, the Government is required only
to make an initial deposit with an authorized government depositary. Moreover, Rule 67
prescribes that the initial deposit be equivalent to the assessed value of the property for
purposes of taxation, unlike Rep. Act No. 8974 which provides, as the relevant standard for
initial compensation, the market value of the property as stated in the tax declaration or the
current relevant zonal valuation of the Bureau of Internal Revenue (BIR), whichever is
higher, and the value of the improvements and/or structures using the replacement cost
method.
x x x x
Rule 67 outlines the procedure under which eminent domain may be exercised by the
Government. Yet by no means does it serve at present as the solitary guideline through
which the State may expropriate private property. For example, Section 19 of the Local
Government Code governs as to the exercise by local government units of the power of
eminent domain through an enabling ordinance. And then there is Rep. Act No. 8974, which
covers expropriation proceedings intended for national government infrastructure projects.
Rep. Act No. 8974, which provides for a procedure eminently more favorable to the property
owner than Rule 67, inescapably applies in instances when the national government
expropriates property "for national government infrastructure projects." Thus, if expropriation
is engaged in by the national government for purposes other than national infrastructure
projects, the assessed value standard and the deposit mode prescribed in Rule 67 continues
to apply.
There is no question that the proceedings in this case deal with the expropriation of properties
intended for a national government infrastructure project. Therefore, the RTC correctly applied the
procedure laid out in Republic Act No. 8974, by requiring the deposit of the amount equivalent to
100% of the zonal value of the properties sought to be expropriated before the issuance of a writ of
possession in favor of the Republic.
The controversy, though, arises not from the amount of the deposit, but as to the ownership of the
interest that had since accrued on the deposited amount.
Whether the Court of Appeals was correct in holding that the interest earned by the deposited
amount in the expropriation account would accrue to HRTDC by virtue of accession, hinges on the
determination of who actually owns the deposited amount, since, under Article 440 of the Civil Code,
the right of accession is conferred by ownership of the principal property:
Art. 440. The ownership of property gives the right by accession to everything which is
produced thereby, or which is incorporated or attached thereto, either naturally or artificially.
The principal property in the case at bar is part of the deposited amount in the expropriation account
of DPWH which pertains particularly to HTRDC. Such amount, determined to be P22,968,000.00 of
the P28,406,700.00 total deposit, was already ordered by the RTC to be released to HTRDC or its
authorized representative. The Court of Appeals further recognized that the deposit of the amount
was already deemed a constructive delivery thereof to HTRDC:
When the [herein petitioner] TRB deposited the money as advance payment for the
expropriated property with an authorized government depositary bank for purposes of
obtaining a writ of possession, it is deemed to be a "constructive delivery" of the amount
corresponding to the 100% zonal valuation of the expropriated property. Since [HTRDC] is
entitled thereto and undisputably the owner of the principal amount deposited by [herein
petitioner] TRB, conversely, the interest yield, as accession, in a bank deposit should
likewise pertain to the owner of the money deposited.
15

Since the Court of Appeals found that the HTRDC is the owner of the deposited amount, then the
latter should also be entitled to the interest which accrued thereon.
We agree with the Court of Appeals, and find no merit in the instant Petition.
The deposit was made in order to comply with Section 4 of Republic Act No. 8974, which requires
nothing less than the immediate payment of 100% of the value of the property, based on the current
zonal valuation of the BIR, to the property owner. Thus, going back to our ruling in Republic v.
Gingoyon
16
:
It is the plain intent of Rep. Act No. 8974 to supersede the system of deposit under Rule 67
with the scheme of "immediate payment" in cases involving national government
infrastructure projects. The following portion of the Senate deliberations, cited by PIATCO in
its Memorandum, is worth quoting to cogitate on the purpose behind the plain meaning of the
law:
THE CHAIRMAN (SEN. CAYETANO). "x x x Because the Senate believes that, you
know, we have to pay the landowners immediately not by treasury bills but by cash.
Since we are depriving them, you know, upon payment, no, of possession, we might
as well pay them as much, no, hindi lang 50 percent.
x x x x
THE CHAIRMAN (REP. VERGARA). Accepted.
x x x x
THE CHAIRMAN (SEN. CAYETANO). Oo. Because this is really in favor of the
landowners, e.
THE CHAIRMAN (REP. VERGARA). Thats why we need to really secure the
availability of funds.
x x x x
THE CHAIRMAN (SEN. CAYETANO). No, no. Its the same. It says here: iyong first
paragraph, diba? Iyong zonal talagang magbabayad muna. In other words, you
know, there must be a paymentkaagad. (TSN, Bicameral Conference on the
Disagreeing Provisions of House Bill 1422 and Senate Bill 2117, August 29, 2000,
pp. 14-20)
x x x x
THE CHAIRMAN (SEN. CAYETANO). Okay, okay, no. Unang-una, it is not
deposit, no. Its payment."
REP. BATERINA. Its payment, ho, payment."
The critical factor in the different modes of effecting delivery which gives legal effect to the act is the
actual intention to deliver on the part of the party making such delivery.
17
The intention of the TRB in
depositing such amount through DPWH was clearly to comply with the requirement of immediate
payment in Republic Act No. 8974, so that it could already secure a writ of possession over the
properties subject of the expropriation and commence implementation of the project. In fact, TRB did
not object to HTRDCs Motion to Withdraw Deposit with the RTC, for as long as HTRDC shows (1)
that the property is free from any lien or encumbrance and (2) that respondent is the absolute owner
thereof.
18

A close scrutiny of TRBs arguments would further reveal that it does not directly challenge the Court
of Appeals determinative pronouncement that the interest earned by the amount deposited in the
expropriation account accrues to HTRDC by virtue of accession. TRB only asserts that HTRDC is
"entitled only to an amount equivalent to the zonal value of the expropriated property, nothing more
and nothing less."
We agree in TRBs statement since it is exactly how the amount of the immediate payment shall be
determined in accordance with Section 4 of Republic Act No. 8974, i.e., an amount equivalent to
100% of the zonal value of the expropriated properties. However, TRB already complied therewith
by depositing the required amount in the expropriation account of DPWH with LBP-South Harbor. By
depositing the said amount, TRB is already considered to have paid the same to HTRDC, and
HTRDC became the owner thereof. The amount earned interest after the deposit; hence, the interest
should pertain to the owner of the principal who is already determined as HTRDC. The interest is
paid by LBP-South Harbor on the deposit, and the TRB cannot claim that it paid an amount more
than what it is required to do so by law.
Nonetheless, we find it necessary to emphasize that HTRDC is determined to be the owner of only a
part of the amount deposited in the expropriation account, in the sum of P22,968,000.00. Hence, it is
entitled by right of accession to the interest that had accrued to the said amount only.
We are not persuaded by TRBs citation of National Power Corporation v. Angas and Land Bank of
the Philippines v. Wycoco, in support of its argument that the issue on interest is merely part and
parcel of the determination of just compensation which should be determined in the second stage of
the proceedings only. We find that neither case is applicable herein.
The issue in Angas is whether or not, in the computation of the legal rate of interest on just
compensation for expropriated lands, the applicable law is Article 2209 of the Civil Code which
prescribes a 6% legal interest rate, or Central Bank Circular No. 416 which fixed the legal rate at
12% per annum. We ruled in Angas that since the kind of interest involved therein is interest by way
of damages for delay in the payment thereof, and not as earnings from loans or forbearances of
money, Article 2209 of the Civil Code prescribing the 6% interest shall apply. In Wycoco, on the
other hand, we clarified that interests in the form of damages cannot be applied where there is
prompt and valid payment of just compensation.
The case at bar, however, does not involve interest as damages for delay in payment of just
compensation. It concerns interest earned by the amount deposited in the expropriation account.
Under Section 4 of Republic Act No. 8974, the implementing agency of the government pays just
compensation twice: (1) immediately upon the filing of the complaint, where the amount to be paid is
100% of the value of the property based on the current relevant zonal valuation of the BIR (initial
payment); and (2) when the decision of the court in the determination of just compensation becomes
final and executory, where the implementing agency shall pay the owner the difference between the
amount already paid and the just compensation as determined by the court (final payment).
19

HTRDC never alleged that it was seeking interest because of delay in either of the two payments
enumerated above. In fact, HTRDCs cause of action is based on the prompt initial payment of just
compensation, which effectively transferred the ownership of the amount paid to HTRDC. Being the
owner of the amount paid, HTRDC is claiming, by the right of accession, the interest earned by the
same while on deposit with the bank.
That the expropriation account was in the name of DPWH, and not of HTRDC, is of no moment. We
quote with approval the following reasoning of the Court of Appeals:
Notwithstanding that the amount was deposited under the DPWH account, ownership over
the deposit transferred by operation of law to the [HTRDC] and whatever interest, considered
as civil fruits, accruing to the amount of Php22,968,000.00 should properly pertain to
[HTRDC] as the lawful owner of the principal amount deposited following the principle of
accession. Bank interest partake the nature of civil fruits under Art. 442 of the New Civil
Code. And since these are considered fruits, ownership thereof should be due to the owner
of the principal. Undoubtedly, being an attribute of ownership, the [HTRDCs] right over the
fruits (jus fruendi), that is the bank interests, must be respected.
20

Considering that the expropriation account is in the name of DPWH, then, DPWH should at most be
deemed as the trustee of the amounts deposited in the said accounts irrefragably intended as initial
payment for the landowners of the properties subject of the expropriation, until said landowners are
allowed by the RTC to withdraw the same.
As a final note, TRB does not object to HTRDCs withdrawal of the amount of P22,968,000.00 from
the expropriation account, provided that it is able to show (1) that the property is free from any lien or
encumbrance and (2) that it is the absolute owner thereof.
21
The said conditions do not put in
abeyance the constructive delivery of the said amount to HTRDC pending the latters compliance
therewith. Article 1187
22
of the Civil Code provides that the "effects of a conditional obligation to give,
once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation."
Hence, when HTRDC complied with the given conditions, as determined by the RTC in its
Order
23
dated 21 April 2003, the effects of the constructive delivery retroacted to the actual date of
the deposit of the amount in the expropriation account of DPWH.
WHEREFORE, the Petition is DENIED. The Court of Appeals Decision dated 21 April 2006 in CA-
G.R. SP No. 90981, which set aside the 7 February 2005 and 16 May 2005 Orders of the Regional
Trial Court of Malolos, Bulacan, is AFFIRMED. No costs.
SO ORDERED.
Ynares-Santiago, Chairperson, Austria-Martinez, Reyes, Leonardo-de Castro
*
, JJ., concur.



SECOND DIVISION


SPOUSES MARCOS R. ESMAQUEL and
VICTORIA
SORDEVILLA,
Petitioners,



- versus -




MARIA COPRADA,
Respondent.
G.R. No. 152423

Present:

CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.

Promulgated:

December 15, 2010
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x


D E C I S I O N


PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to set aside the Decision
[1]
and the Resolution
[2]
of the
Court of Appeals, dated April 6, 2001 and February 15, 2002, respectively, (CA) in
CA-G.R. SP No. 49994.

The antecedents are as follows:

On February 24, 1997, petitioners, spouses Marcos Esmaquel and Victoria
Sordevilla (Victoria) filed an ejectment case
[3]
against respondent Maria V.
Coprada before the 2
nd
Municipal Circuit Trial Court (MCTC) of Magdalena, Liliw
and Majayjay Laguna. Petitioners claimed that they are the registered owners of a
parcel of land situated in M.H. Del Pilar St., Barangay San Miguel, Majayjay,
Laguna, containing an area of Two Hundred Fifty-Three (253) square meters and
covered by Transfer Certificate of Title (TCT) No. T-93542. In 1945, respondent
was able to persuade the petitioners to allow her and her family to use and
occupy the land for their residence, under the condition that they will vacate the
premises should petitioners need to use the same. Respondent and her family
were allowed to construct their residential house. Since then, the petitioners
never made an attempt to drive them away out of pity, knowing that respondent
and her eight children have no other place to live in. Also, respondent and her
family have been occupying the subject premises free of rent, including payment
of realty taxes. Respondent's present circumstances have completely
improved, i.e., some of her children are already working; they are regularly
sending her financial assistance; and she has acquired her own residential house
at Barangay Panglan, Majayjay, Laguna. Because of this, petitioners verbally
demanded that respondent vacate the subject land, but the latter refused. Thus,
petitioners were forced to send a demand letter dated August 22, 1996, giving
respondent until November 30, 1996 to vacate the subject premises. However,
respondent still ignored said demand, which prompted petitioners to bring a
complaint before thebarangay authorities. No settlement was reached, hence, a
certification to file action in Court was issued. Petitioners were, therefore,
constrained to lodge an ejectment case against the respondent before the MCTC.

Respondent admitted that petitioners are the registered owners of the subject
land. However, she averred that in 1945, it was Emiliana Coprada (petitioner
Victoria Sordevilla's mother and original owner of the subject land) and not the
petitioners who gave permission to her late husband Brigido Coprada to use the
subject lot. Emiliana allowed her nephew Brigido and his family to occupy the lot
as their permanent abode, because of her love and affection for her nephew, and
also, due to the fact that the said lot is virtually a wasteland. Thereafter, Brigido
and his family cleared the area and built therein a nipa hut to dwell in. When
Emiliana died, the ownership of the property was inherited by her only child,
petitioner Victoria Sordevilla. Respondent alleged that sometime in the early
1960's, petitioner Victoria offered the said lot for sale for P2,000.00 to respondent,
who readily agreed. The purchase price was paid in installments and was fully paid
in 1962. Due to their close relationship, the agreement was never reduced to
writing. Respondent further maintained that since the execution of the oral sale of
the subject lot, she has been the one paying the realty taxes due on the property.
After the sale, respondent built on the subject land a semi-concrete
structure. Respondent stated that petitioners' claim is barred by laches. Even
granting, without admitting, that respondent's claim of ownership over the property
is improper because petitioners are the registered owners thereof, respondent
argued that she is a builder in good faith, because she was able to build the
structure on the subject lot with the prior permission of the owner.

In its Decision
[4]
dated September 11, 1997, the MCTC rendered judgment
dismissing the complaint. It held that laches had already set in which prevented
petitioners from questioning the validity of the purported sale between Victoria and
Maria.

On appeal, the Regional Trial Court (RTC) reversed the MCTCs judgment.
The RTC ruled that respondent's occupation of the subject property was by virtue
of petitioners' tolerance and permission. Hence, respondent is bound by an implied
promise that she will vacate the property upon demand. Thus, her possession over
the subject property became unlawful after the petitioners demanded her to vacate
the property. The RTC found that respondent failed to prove the alleged oral sale
and that petitioners have adequately proven that they are entitled to the possession
of the subject land as registered owners thereof. The RTC ordered the respondent
and all other persons claiming rights under her to vacate and surrender the
possession of the subject land to the petitioners and to remove any and all
improvements she introduced on the parcel of land.
[5]


Respondent filed a Motion for Reconsideration, which was denied by the
RTC in an Order
[6]
dated November 24, 1998. Obviously dissatisfied by the
Decision, respondent filed with the CA a petition for review with prayer for
temporary restraining order and preliminary injunction.
[7]


In its Decision dated April 6, 2001, the CA granted respondent's petition,
reversed the Decision of the RTC and affirmed in toto the Decision of the MCTC.
Petitioners filed a Motion for Reconsideration, which was denied by the CA in a
Resolution
[8]
dated February 15, 2002. Hence, the instant petition raising the
following grounds:

I
THE RIGHT OF THE REGISTERED OWNERS TO RECOVER POSSESSION IS NEVER BARRED BY
LACHES AND/OR THE PERSON WHO HAS A TORRENS TITLE OVER A PARCEL OF LAND IS
ENTITLED TO THE POSSESSION THEREOF.

II
THE OWNERSHIP AND RIGHT OF PETITIONERS TO RECOVER POSSESSION OF THE
SUBJECT PROPERTY CANNOT BE DEFEATED BY UNPROVEN ORAL SALE.




III
LACHES HAD SET IN AGAINST [RESPONDENT].


IV
THE CERTIFICATE OF TITLE IS NOT SUBJECT TO COLLATERAL ATTACK.
[9]


The petition is meritorious.

The pertinent point of inquiry in this case is whether or not petitioners have
a valid ground to evict respondent from the subject property.

An action for forcible entry or unlawful detainer is governed by Section 1,
Rule 70 of the Rules of Court, which provides:


SECTION 1. Who may institute proceedings, and when. - Subject to the
provisions of the next succeeding section, a person deprived of the possession of
any land or building by force, intimidation, threat, strategy, or stealth, or a lessor,
vendor, vendee, or other person against whom the possession of any land or
building is unlawfully withheld after the expiration or termination of the right to
hold possession by virtue of any contract, express or implied, or the legal
representatives or assigns of any such lessor, vendor, vendee, or other person,
may, at any time within one (1) year after such unlawful deprivation or
withholding of possession, bring an action in the proper Municipal Trial Court
against the person or persons unlawfully withholding or depriving of possession,
or any person or persons claiming under them, for the restitution of such
possession, together with damages and costs.

In unlawful detainer cases, the possession of the defendant was originally
legal, as his possession was permitted by the plaintiff on account of an express or
implied contract between them. However, defendant's possession became illegal
when the plaintiff demanded that defendant vacate the subject property due to the
expiration or termination of the right to possess under their contract, and defendant
refused to heed such demand.
[10]


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. Where the issue of ownership is raised by any of
the parties, the courts may pass upon the same in order to determine who has
the right to possess the property. The adjudication is, however, merely provisional
and would not bar or prejudice an action between the same parties involving title
to the property.
[11]
Since the issue of ownership was raised in the unlawful
detainer case, its resolution boils down to which of the parties' respective
evidence deserves more weight.

In the case at bar, petitioners' cause of action for unlawful detainer is based
on their ownership of the land covered by TCT No. T-93542 and on their claim
that they merely tolerated respondent's stay thereat. Respondent's possession, as
well as those persons claiming right under her, became unlawful upon her refusal
to vacate the premises. Petitioners contend that since they are the registered owners
of the subject land, they are entitled to the possession thereof and their right to
recover possession over it is never barred by laches. They maintain that
respondent's claim of ownership is based on an unproven oral sale, which does not
exist. Further, respondent cannot rely on the Tax Declarations as she was paying
taxes in the petitioners' name, as the declared owners of the property. Moreover,
she started paying the taxes only in 1984 despite her claim that the property was
sold to her in 1962. Even assuming that the sale took place in 1962, respondent is
guilty of laches as she failed to take any positive action for the delivery and
conveyance to her of the portion of the property she is occupying. Finally,
respondent cannot collaterally attack the title of the petitioners to the subject land.

On her part, respondent, although admitting that the property is registered in
petitioners' name, claimed that the 100-square-meters portion of the property,
where her house was erected, was already sold to her by petitioner Victoria. Thus,
by virtue of the sale, she and her family have the right to possess the said property.
The non-presentation of receipt and deed of sale, non-delivery of the owner's
certificate of title, and her payment of the real property taxes in the name of the
petitioners were due to the close relationship between the parties and the existing
practice of palabra de honor in their day to day transactions. Respondent further
alleged that she is not guilty of laches; rather, it is the registered owners' right to
recover possession of their property which is barred by laches.

In the present case, respondent failed to present evidence to substantiate
her allegation that a portion of the land was sold to her in 1962. In fact, when
petitioners sent a letter
[12]
to the respondent, demanding her to vacate the
subject property, the respondent, in reply
[13]
to the said letter, never mentioned
that she purchased the subject land in 1962. If the sale really took place, the
respondent should have immediately and categorically claimed that in her letter
response. Clearly therefore, respondent's submission that there was an oral sale
is a mere afterthought.

On the other hand, it is undisputed that the subject property is covered by
Transfer Certificate of Title No. T-93542, registered in the name of the petitioners.
As against the respondent's unproven claim that she acquired a portion of the
property from the petitioners by virtue of an oral sale, the Torrens title of
petitioners must prevail. Petitioners' title over the subject property is evidence of
their ownership thereof. It is a fundamental principle in land registration 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. Moreover,
the age-old rule is that the person who has a Torrens title over a land is entitled to
possession thereof.
[14]


Further, respondent's argument that petitioners are no longer the owners of
a portion of the subject land because of the sale in her favor is a collateral attack
on the title of the petitioners, which is not allowed. The validity of petitioners'
certificate of title cannot be attacked by respondent in this case for ejectment.
Under Section 48 of Presidential Decree No. 1529, a certificate of title shall not be
subject to collateral attack. It cannot be altered, modified or canceled, except in a
direct proceeding for that purpose in accordance with law. The issue of the
validity of the title of the petitioners can only be assailed in an action expressly
instituted for that purpose. Whether or not the respondent has the right to claim
ownership over the property is beyond the power of the trial court to determine
in an action for unlawful detainer.
[15]


In Rodriguez v. Rodriguez,
[16]
citing the case of Co v. Militar,
[17]
the Court
held that:

[T]he 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.

It is settled that a Torrens Certificate of title is indefeasible and binding
upon the whole world unless and until it has been nullified by a court of
competent jurisdiction. Under existing statutory and decisional law, the power to
pass upon the validity of such certificate of title at the first instance properly
belongs to the Regional Trial Courts in a direct proceeding for cancellation of
title.

As the registered owner, petitioner had a right to the possession of the
property, which is one of the attributes of ownership. x x x


Anent the issue on laches, the CA's ruling that petitioners' long inaction to
assert their rights over the subject land bars them from recovering the same is
without basis. Also, the doctrine invoked by the appellate court that a registered
owner may loose his right to recover its possession by reason of laches is not
applicable here.

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.
[18]
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.
[19]


Respondent first acquired possession of the subject lot by mere tolerance.
From 1945 until the filing of the complaint for ejectment in 1997, the nature of
that possession has never changed. Petitioners allowed the respondent to possess
the property with the knowledge that the respondent will vacate the same upon
demand. Hence, until such demand to vacate was communicated by the
petitioners to the respondent, petitioners are not required to do any act to
recover the subject land, precisely because they knew of the nature of the
respondent's possession, i.e., possession by mere tolerance. Thus, it cannot be
said that petitioners are guilty of failure or neglect to assert a right within a
reasonable time. Further, after the petitioners gave a demand letter to the
respondent giving the latter until November 30, 1996 to vacate the subject
premises, which respondent failed to heed, they immediately filed a complaint
before the barangay authorities and, thereafter, lodged an ejectment case before
the MCTC on February 24, 1997. In sum, We find that petitioners are not guilty of
laches as would bar their claim to the property in question.

In contrast, respondent, who is claiming that a portion of the property was
sold to her in 1962, has herself failed within a long period of time to have that
portion transferred in her name. Respondent had to wait for almost 35 years
since 1962, and were it not for the filing of the ejectment suit in 1997, she would
not have bothered to assert her rights under the alleged sale. Respondent's
failure to assert that right only goes to prove that no sale ever transpired between
the parties.

Moreover, as the registered owners, petitioners' right to eject any person
illegally occupying their property is not barred by laches. In Gaudencio Labrador,
represented by Lulu Labrador Uson, as Attorney-in-Fact v. Spouses Ildefonso Perlas
and Pacencia Perlas and Spouse Rogelio Pobre and Melinda Fogata Pobre,
[20]
the
Court held that:

x x x As a registered owner, petitioner has a right to eject any person illegally
occupying his property. This right is imprescriptible and can never be barred
by laches. In Bishop v. Court of Appeals, we held, thus:

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.

Since respondent's occupation of the subject lot is by mere tolerance or
permission of the petitioners, without any contract between them, respondent is
bound by an implied promise that she will vacate the same upon demand, failing
which a summary action for ejectment is the proper remedy against her.
[21]


In respondent's Answer filed before the MCTC, she claimed that since she
was able to build a structure on the subject lot with the prior permission from the
owner, she is a builder in good faith and thus entitled to be reimbursed the
necessary and useful expenses under Articles 546 and 548 of the Civil Code of the
Philippines. Without such reimbursement, she has the right of retention over the
property and she cannot just be ejected from the premises.

Respondent's argument does not hold water. Since respondent's occupation
of the subject property was by mere tolerance, she has no right to retain its
possession underArticle 448 of the Civil Code. She is aware that her tolerated
possession may be terminated any time and she cannot be considered as builder
in good faith.
[22]
It is well settled that both Article 448
[23]
and Article 546
[24]
of
the New Civil Code, which allow full reimbursement of useful improvements and
retention of the premises until reimbursement is made, apply only to a possessor
in good faith, i.e., one who builds on land with the belief that he is the owner
thereof. Verily, persons whose occupation of a realty is by sheer tolerance of its
owners are not possessors in good faith.
[25]
At the time respondent built the
improvements on the premises in 1945, she knew that her possession was by
mere permission and tolerance of the petitioners; hence, she cannot be said to be
a person who builds on land with the belief that she is the owner thereof.

Respondent's reliance on her payment of realty taxes on the property is
unavailing. She started paying taxes only in 1984 despite her claim that she
bought the property in 1962. Further, aside from the rule that tax declarations
and corresponding tax receipts cannot be used to prove title to or ownership of a
real property inasmuch as they are not conclusive evidence of the same,
[26]
the
RTC found that although the payment for said taxes were received from
respondent, the declared owner was petitioner Victoria.

It must be stressed, however, that the court's adjudication of ownership in
an ejectment case is merely provisional, and affirmance of the RTC's decision
would 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.
[27]


WHEREFORE, the petition is GRANTED. The Decision and the Resolution of
the Court of Appeals, dated April 6, 2001 and February 15, 2002, respectively, in
CA-G.R. SP No. 49994, affirming the Decision of the 2
nd
Municipal Circuit Trial
Court in Civil Case No. 1875, are REVERSED and SET ASIDE. The Decision of the
Regional Trial Court of Santa Cruz, Laguna, Branch 26, in Civil Case No. SC-3580,
is REINSTATED.

SO ORDERED.




[G.R. No. 97761. April 14, 1999]
AGUEDA DE VERA, MARIO DE LA CRUZ, EVANGELINE DELA CRUZ,
and EDRONEL DE LA CRUZ, petitioners, vs. HON. COURT OF
APPEALS, and RICARDO RAMOS, respondents.
D E C I S I O N
PURISIMA, J .:
At bar is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, seeking to reverse and set aside the Decision
[1]
of the Court of Appeals
[2]
in CA-
G.R. CV No. 21507 affirming with modification the Decision
[3]
dated August 2, 1988 of
the Regional Trial Court, Branch 19,
[4]
Cauayan, Isabela, in Civil Case No. Br. II-1861.
From the records on hand, it appears that:
On January 14, 1983, private respondent Ricardo Ramos filed a Complaint
[5]
against
the herein petitioners for recovery of property with damages, docketed as Civil Case No.
Br II-1861 before the said court of origin. On June 29, 1983, an Amended
Complaint
[6]
was presented the pertinent portion of which alleged:
xxx
2. That the plaintiff is the legal and absolute owner of a certain parcel of land
known as Lot 2, H-4-617, and particularly described as follows:
Bounded on the NE., by Road; on the SW, by Provincial Road; and on the
W., by National Road. containing an area of 3,670 square meters, more or
less.
his title thereto being evidenced by Original Certificate of Title No. P-5619 of
the Register of Deeds of Isabela;
3. That the defendants are occupying a triangular portion of the above-
described property containing an area of 22 square meters, more or less,
and which is bounded as follows:
On the NE., by the Road; on the SE., by Lot 3841-B of the subdivision plan,
Psd 2-02-013907
wherein they have constructed a house of strong and permanent
materials this year 1983 after removing their previous building of light
materials in January or February of 1970;
4. That the plaintiff has demanded that the defendants remove their
improvement thereon and vacate the said portion, ... but the defendants have
refused and failed, without any just or lawful cause to do so, to the present
time; xxx
In their Answer,
[7]
the herein petitioners theorized, inter alia, that they have been in
possession not only of 22 square meters but 70 square meters of land through their
predecessor-in-interest, Teodoro de la Cruz (husband of defendant-appellant Agueda
De Vera and father of the rest of the defendants-appellants) and subsequently by
themselves, as owners, before 1956; that said 70 square meter area occupied by them
is a portion of Lot 7005, Cad 211, over which their predecessor-in-interest, Teodoro de
la Cruz, had, during his lifetime, a pendingMiscellaneous Sales Application which was
given due course and favorably recommended by the District Land Officer for Isabela to
the Director of Lands; that Teodoro de la Cruz also declared the said land for taxation
purposes and after his death, by his heirs, and that plaintiff-appellees cause of action is
already barred by prescription and/or laches.
During the pre-trial conference on November 15, 1983, as agreed upon by the
parties, the trial court appointed the Chief of the Survey Party of the Bureau of Lands in
Cauayan, Isabela, as Commissioner of the court to conduct a relocation survey of
subject property and to indicate in the survey returns or commissioners report whether
or not the land in dispute forms part of the property and road-right-of-way of the private
respondent.
On April 30, 1984, the said Commissioner submitted his Report On The Result Of
The Relocation Survey,
[8]
relevant portion of which, stated:
III. RESULT OF THE RELOCATION SURVEY
Attached herewith, which is made part of this report, is a Relocation Survey
Plan No. 2-02-000160 duly approved by the Regional Director, Region II,
Bureau of Lands, Tuguegarao, Cagayan, showing the result of the relocation
survey, to wit:
1. Area bounded by black lines designated as Lot 9841-A, Psd-2-02-013907 a
portion of Lot 7004, Cad. 211 with an area of 22 Sq. Meters represents the
land being covered by Transfer Certificate of Title No. T-133705 of the
Plaintiff Ricardo Ramos;
x x x
4. Areas designated as portions A, B and C, represents the land in
question between the parties in Civil Case No. Br. II-1861, which portions are
respectively described, to wit:
a. Portion A with an area of 51 Square Meters, which is a portion of Lot 7005,
Cad. 211, represents the land being claimed by the defendants Agueda de
Vera, Et al, said area allegedly being covered by Miscellaneous Sales
Application of their predecessor-in-interest the late Teodoro dela Cruz;
b. Portion B with an area of 5 Square Meters, represents that part of Lot
9841-B, Psd-2-02-013905 of Ricardo Ramos, being occupied by the house of
defendants Agueda de Vera, Et al;
c. Portion C with an area of 18 Square Meters, represents that part of Lot
9841-B, Psd-2-02-013907 of Ricardo Ramos, being occupied by the house of
defendants, Agueda de Vera, Et al;
5. Portion A being a part of Lot 7005, Cad. 211, is separate and distinct from
the 22 Square Meters lot covered by Transfer Certificate of Title No. T-133705
of the plaintiff Ricardo Ramos, said 22 Sq. Meters lot being a part of Lot 7004,
Cad. 211;
x x x
7. That the adjoining boundary of Lot 9841-A, Psd-2-02-013907 on the
Northwest, which appears as National Road in Transfer Certificate of Title No.
T-133705 is erroneous, considering that there is still a gap (designated as
Portion A in the attached Relocation Plan) between said Lot 9841-A and that
of the 60 meters National Road-right-of-way;
x x x
On October 24, 1984, the private respondent sent in his Opposition
[9]
to the
aforesaid Report, branding the same as erroneous. On March 4, 1985, after the filing of
private respondents Reply
[10]
to petitioners Rejoinder,
[11]
the court of origin issued
an Order,
[12]
holding thus:
Since the purpose of the appointment of the Court Commissioner is to
determine whether or not the area occupied by the defendants is within the
titled property of the plaintiff, the relocation of the land in question became
imperative. As a matter of fact, the record shows that both parties agreed to
said relocation (See order of November 15, 1983). It must be noticed that the
report of the Commissioner is adverse to the plaintiff as the formers findings
show that only a portion of 22 square meters of the plaintiffs lot is occupied by
the defendants and that between the National Road and the plaintiffs property
is an area of 51 square meters (portion A) which the Commissioner found to
be part of Lot 7005, Cad. 211.
Inasmuch as the plaintiff was given the full opportunity to check the
accurateness of Commissioners Report and there being no proof adduced by
him that the same is erroneous, except the blue print plan of the subdivision
survey Psd-2-02-013907, the execution of which, the defendants had no
participation whatsoever, the Court has no other alternative but to reject the
plaintiffs objection to said report.
WHEREFORE, in view of the foregoing considerations and finding no error in
the report of the Commissioner, the Court hereby approves the same.
SO ORDERED.(Underline supplied)
After trial on the merits, or on August 2, 1988, to be precise, the same trial court
promulgated its Decision,
[13]
the decretal portion of which is to the following effect:
WHEREFORE, in view of the foregoing considerations, judgment is hereby
rendered:
(1) DECLARING the plaintiff the owner of all lands adjoining Lot 9841-A in the
West up to the National Road, and ORDERING the defendants, their agents,
representatives, or any person or persons acting on their authority, to vacate
the same and to deliver the possession thereof to the plaintiff;
(2) ORDERING the defedants (sic) to remove, at their expense, all
improvements they have constructed or erected thereon within thirty (30) days
from the finality of this decision;
(3) ORDERING the defendants, jointly and severally, to pay the plaintiff a
monthly rent of P273.70 from April 27, 1981, and an additional P724.70 a
month from receipt of this decision until the possession of saidland (sic) is
delivered to the plaintiff;
(4) ORDERING the defendants, jointly and severally, to pay the plaintiff the
sum of P5,000.00 as attorneys fees; and
(5) ORDERING the defendants, jointly and severally, to pay the costs.
SO ORDERED.
Not satisfied with the judgment below, petitioners elevated the case to the Court of
Appeals, arguing, among others, that: (1) the trial court erred in not dismissing the
complaint on the ground of laches; (2) the trial court erred in holding that defendants-
appellants are possessors in bad faith and (3) that defendants-appellants cannot be
made liable to plaintiff-appellee for rental payments for the use of the disputed property,
for attorneys fees and the costs of suit.
On March 21, 1991, the Court of Appeals decided the case, modifying the Decision
below and disposing thus:
CONFORMABLY TO THE FOREGOING, the judgment appealed from is
hereby MODIFIED, dismissing plaintiff-appellees complaint as regards
Portion A, consequently deleting the monthly rents decreed by the lower
court in favor of plaintiff-appellee as regards said portion, and is AFFIRMED in
all other respects.
No pronouncement as to costs.
SO ORDERED.
Undaunted, petitioners have come to this Court via the present petition; contending
that:
THE DECISION DATED 13 MARCH 1991 (ANNEX A) RENDERED WITH
GRAVE ABUSE OF DISCRETION BY RESPONDENT HONORABLE COURT
OF APPEALS, INSOFAR AS IT AFFIRMS THE DECISION DATED 02
AUGUST 1988 OF THE LOWER COURT, WAS PASSED ON A QUESTION
OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND WITH THE
APPLICABLE DECISIONS OF THIS HONORABLE COURT, CONSIDERING
THAT:
I.
LACHES CAN DEFEAT THE TITLE OF PRIVATE RESPONDENT OVER
THE PROPERTIES DESCRIBED BY RESPONDENT HONORABLE COURT
OF APPEALS AS PORTIONS B AND C OF THE DISPUTED PROPERTY
CONSIDERING THAT SAID PRIVATE RESPONDENT HAD KNOWLEDGE
OF THE PRESENCE OF THE PETITIONERS ON SAID PORTIONS OF THE
PROPERTY EVEN BEFORE HE APPLIED IN 1947 FOR A HOMESTEAD
PATENT THEREFOR.
II.
PETITIONERS WERE NOT POSSESSORS IN BAD FAITH OF PORTIONS
B AND C OF THE DISPUTED PROPERTY: THUS,
THEY CANNOT BE MADE LIABLE TO PRIVATE RESPONDENT FOR
THEIR USE THEREOF.
The pivotal issue for determination here is: whether or not the Court of Appeals
erred in adjudging the herein petitioners as possessors and builders in bad faith of
Portions B and C of the property under controversy.
Germane records on hand disclose that on September 20, 1947, private respondent
Ricardo Ramos filed a homestead application for the parcel of land in litigation
here. His Homestead Application No. 4-617 was approved by the District Land Officer
on November 22, 1947. In 1949, the said private respondent had fully complied with the
cultivation and residence requirements of the Public Land Act. Thus, on December 15,
1955, Homestead Patent No. V-62617
[14]
was issued to homestead applicant Ricardo
Ramos, on the basis of which Original Certificate of Title No. P-5619
[15]
was issued by
the Register of Deeds of Isabela, covering an area of 9 hectares, 28 acres and 20
centares.
After the issuance of his Homestead Patent No. V-62617, Ricardo Ramos brought a
complaint for recovery of possession against several people before the then Court of
First Instance of Isabela, docketed as Civil Case No. Br. II-162, entitled "Ricardo
Ramos vs. Eleuterio Viernes, et al. Therein, a decision for the ejectment of the said
defendants was rendered.
[16]

However, a protracted litigation between Ricardo Ramos and the defendants in
Civil Case No Br. II-162, led by Jose Ganadin, ensued with the latter averring that
Homestead Patent No. V-62617 and Original Certificate No. P-5619 were obtained in
violation of Section 19 of the Public Land Law, as amended by Act No. 456, and
consequently, null and void. The case eventually reached this Court which, on January
27, 1981, came out with a decision adjudging the validity of the title of the private
respondent, Ricardo Ramos.
[17]

On April 27, 1981, private respondent wrote petitioners reminding them that their
house is on his titled property, and asking them, (de Veras) whether they were going to
buy the portion occupied by them (de Veras) or to lease the same on a yearly or
monthly basis; otherwise, he (Ricardo Ramos) would be constrained to take proper
legal action against them. But the letter of private respondent was ignored by
petitioners.
In light of the factual background of the case, the Court is of the irresistible
conclusion that the principle of laches finds no application under the premises.
Laches is the failure of 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, or to assert a right within reasonable time, warranting a presumption that the
party entitled thereto has either abandoned it or declined to assert it.
[18]

Fundamentally, laches is an equitable doctrine, its application is controlled by
equitable considerations.
[19]
Concomitantly, it is a better rule 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.
[20]

Under the factual milieu of the case at bar, private respondents failure to assert his
rights over subject parcel of land for 23 years (1958-81) was due to the prolonged
litigation he was embroiled with the herein petitioners, in Civil Case No. Br. II -162. As
the validity of his patent itself was being questioned, the cause of action of private
respondent vis-a-vis the land he acquired by homestead patent had to be kept dormant,
pending determination of the validity of the said homestead patent. Therefore, the delay
is not unreasonable and considering that the essence of laches is the
unreasonableness of the delay in the prosecution or institution of a case, the principle of
laches finds no room for application here. The Court of Appeals explained thus:
xxx It is inequitous for Us to consider said 23 year period, on which plaintiff-appellees
ownership over said portions still hanged as a big question, as part of plaintiff-appellees
alleged delay in enforcing his rights where the pendency of said question precisely
crippled his actions. Sans said 23 year period, plaintiff-appellee, far from being
neglectful, has been vigilant over his rights, as evidenced by his letter (1981) and the
ultimate filing of the instant complaint (1983).
[21]

Furthermore, the question of laches is addressed to the sound discretion of the
court, and we find no fact or circumstance of such substance as to disturb the lower
courts finding on this point. Thus, from the foregoing, laches cannot defeat private
respondents ownership and recovery of possession of Portions B and C.
In theorizing that their possession of the land in litigation could not have been in bad
faith, petitioners alleged that their possession over Portions B and C was by virtue of
a valid title, viz: the Miscellaneous Sales Application, and in possessing the said
Portions B and C, they honestly believed that the same formed part of the lot with
an area of 70 square meters covered by their Miscellaneous Sales Application; private
respondents knowledge that they (petitioners) had been occupying the said portions
for several years prior to his filing of the application for a homestead patent, opens to
question the validity of his homestead patent and the title derived therefrom; petitioners
reasoned out.
Article 526 of the New Civil Code, provides:
Article 526 - He is deemed a possessor in good faith who is not aware that
there exists in his title or mode of acquisition any flaw which invalidates it.
He is deemed a possessor in bad faith who possesses in any case contrary to
the foregoing.
Mistake upon a doubtful or difficult question of law may be the basis of good
faith.
In his Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. II,
1993 ed., Dr. Arturo Tolentino opines:
In distinguishing good faith and bad faith possession, the Code refers to
the manner of acquisition in general. A possessor in good faith is one who is
unaware that there exists a flaw which invalidates his acquisition of the thing.
Good faith consists in the possessors belief that the person from whom he
received a thing was the owner of the same and could convey his title. It
consists in an honest intention to abstain from taking any unconscientious
advantage of another, and is the opposite of fraud. Since good faith is a state
of the mind, and is not a visible, tangible fact that can be seen or touched, it
can only be determined by outward acts and proven conduct. It implies
freedom from knowledge and circumstances which ought to put a person on
inquiry. xxx
[22]

Records disclose that prior to the construction in 1983 of petitioners house on the
land under controversy (Portions B and C), a demand letter dated April 27,
1981 was sent by private respondent to the petitioners, informing them that the land
they were possessing and occupying is within his (private respondents) titled property.
In the same letter, the private respondent gave petitioner Agueda de Vera the
option to either pay him the value of the property or lease the same on a yearly or
monthly basis. However, the contending parties failed to reach a compromise
agreement. The lower court found, that the defendants (herein petitioners) are
occupying ... an area of 22 square meters(Portions B and C),..., in which land,
defendants constructed a house of strong materials in 1983 after dismantling
heir (sic) previous building erected thereon on or about January or February, 1970.
[23]

The facts and circumstances aforestated are outward acts and proven
conduct indicating bad faith of petitioners as possessor and builder.
Articles 449, 450 and 451 of the New Civil Code, read:
Article 449 - He who builds ... in bad faith on the land of another, losses what
is built, ... without right to indemnity.
xxx xxx xxx
Article 450 - The owner of the land on which anything has been built, ... in
bad faith may demand the demolition of the work, ... in order to replace things
in their former condition at the expense of the person who built, ...; or he may
compel the builder ... to pay the price of the land, ...
- and -
Article 451 - In the cases of the two preceding articles, the landowner is
entitled to damages from the builder...
Under the aforecited Articles 449 and 450, the landowner has three alternative
rights, either:
1. to appropriate what has been built without any obligation to pay indemnity therefor;
or
2. to demand the builder to remove what he had built; or
3. to compel the builder to pay the value of the land.
In any event, he (landowner) is entitled to be indemnified by the builder in bad faith,
pursuant to Article 451 supra.
In the case under consideration, private respondent Ricardo Ramos availed of the
second alternative,
[24]
which option is legally feasible under the attendant facts and
circumstances.
Lastly, the land titles relied upon by herein petitioners do not suffice to establish
good faith on their part. Even the action on their public land application is
only recommendatory and not yet final, as it was still subject to the approval of the
Director of Lands. The tax declarations prove only the de Veras claim of ownership,
and when not supported by other effective evidence, are no proof of the right of
possession of subject realty.
[25]

In contrast, Portions B and C are covered by Original Certificate of Title No. P-
5619 and Transfer Certificate of Title No. T-133705, issued in the name of private
respondent Ricardo Ramos, which is conclusive as to all matters therein contained,
particularly, the identity of the owner of the land covered thereby.
All things studiedly considered, the court believes, and so holds, that the
respondent court erred not in modifying the decision of the trial court of origin in Civil
Case No. Br. II-1861.
WHEREFORE, for lack of merit, the Petition is hereby DENIED and the Decision of
the Court of Appeals in CA GR CV No. 21507 AFFIRMED in toto. No pronouncement as
to costs.
SO ORDERED.
Romero, (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.

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