JUAN L. PEREZ, LUIS KEH, CHARLIE LEE and ROSENDO G.
died in 1984), for her 1/7 share of the annual rental of the fishpond. Maria
TANSINSIN, JR., petitioners, vs. COURT OF APPEALS, LUIS
CRISOSTOMO and VICENTE ASUNCION, respondents.
DECISION
GONZAGA-REYES, J.:
Petition for review on certiorari of CAs decision affirming the decision of RTC
Bulacan that disposed of Civil Case No. 5610-M Crisostomo vs Keh
a) directing PEREZ to CRISOSTOMO to occupy and operate the
`Papaya Fishpond for a period of 5 years at the rental rates of
P150,000.00 for the first six months and P175,000.00 for the
remaining five years
Facts:
Petitioner Juan Perez is a usufructuary of a land called "Papaya
Fishpond located in Sto. Rosario, Hagonoy, Bulacan who entered into a
contract leasing the fishpond to Luis Keh for a period of 5 years and
renewable for another 5 years by agreement of the parties, under the
condition that for the first 5-year period the annual rental would be
P150,000.00 and for the next 5 years, P175,000.00. The contract states that
the lessee cannot sublease the fishpond nor assign his rights to anyone.
Crisostomo, a businessman engaged in the operation of fishpondswas
persuaded by Ming Cosim and petitioner Charlie Lee to take over Papaya
Fishpond and executed a written agreement denominated as pakiao
buwis where Crisostomo would take possession of the Papaya Fishpond in 6
months for P128,000.00. Crisostomo paid P75,000.00 to Keh at the house of
Lee and paid the balance only after he had received a copy of a written
agreement that Keh ceded, conveyed and transferred all his rights and
interests over the fishpond to petitioner Lee. From Crisostomos point of
view, that document assured him of continuous possession of the property
for as long as he paid the agreed. For the operation of the fishpond
Crisostomo paid the amount of P150,000.00 at the Malabon, Metro Manila
office of petitioner Keh with receipt issued to him:
RECEIPT
as full payment of the yearly leased rental of the Papaya Fishpond
Mr. Luis Keh has not transferred his rights over the fishpond to any person.
JUAN L. PEREZ ET AL.
LUIS KEH
Crisostomo incurred expenses for repairs and improvement of the
fishpond however, petitioners Tansinsin and Juan Perez, in the company of
armed men, went to the fishpond and presented a letter showing that Keh
had surrendered possession of the fishpond to the usufructuaries.
Keh, Juan Perez and Lee refused to accept the rental. Crisostomo then
with the then Court of First Instance of Bulacan an action for injunction and
damage, issuance of a restraining order enjoining Keh, Perez and Lee from
entering the premises and taking possession of the fishpond
That same day, lower court granted the prayer for a restraining
order. Later Crisostomo paid one of the usufructuaries, Maria Perez (who
Perez issued a notarized receipt for that amount.
On January 11, 1980, the court lifted the restraining order thereby
effectively depriving private respondent of possession over the fishpond. On
February 14, 1980, the parties submitted a partial compromise agreement
with the following stipulations:
1. The amount of P128,572.00 that private respondent deposited
as rental with the Office of the Clerk of Court under O.R. No.
21630 dated November 15, 1979 be withdrawn from that office
and deposited with the Paluwagan ng Bayan Savings & Loan
Association, Inc. (Paombong, Bulacan branch) and which
deposit shall not be withdrawn unless authorized by the court;
and
2. The plaintiff could personally harvest milkfish with commercial
value in the presence of Perez and under the supervision of the
deputy clerk of court within the appointed period and that the
net proceeds of the sale (P123,993.85 per the Report dated
March 4, 1980 of the deputy clerk of court) be deposited in the
name of the deputy clerk of court of Branch 6 of the then Court
of First Instance of Bulacan with the same branch of the
Paluwagan ng Bayan Savings & Loan Association, Inc. and
which deposit shall not be withdrawn unless upon order of the
court after hearing.
The court approved that agreement on that same date.
Thereafter, the usufructuaries entered into a contract of lease with
Vicente Raymundo and Felipe Martinez for the six-year period of June 1,
1981 to May 30, 1987 in consideration of the annual rentals of P550,000.00
for the first two years and P400,000.00 for the next four years. Upon
expiration of that lease, the same property was leased to Pat Laderas for P1
million a year.
The complaint was later amended to include petitioner Tansinsin, the
alleged administrator of the fishpond, as one of the defendants. [9] Except in
the joint answer that the defendants had filed, petitioners Keh and Lee did
not appear before the court. Neither did they testify.
In their defense, petitioners Juan Perez and Tansinsin presented
evidence to prove that they had negotiated for the lease of the property with
Benito Keh in 1975. However, they averred, for reasons unknown to
petitioner Perez, in the contract of lease that petitioner Tansinsin prepared,
petitioner Luis Keh was named as lessee. Petitioner Perez had never met
Keh or Lee but according to petitioner Tansinsin, petitioner Luis Keh was
substituted for Benito Keh because the latter was preoccupied with his other
businesses. Sometime in 1979, petitioner Kehs agent named Catalino
Alcantara relayed to petitioner Perez, Kehs intention to surrender possession
of the fishpond to the usufructuaries. Because petitioner Perez demanded
that said intention should be made in writing, on June 5, 1979, Perez
received from Keh a letter to that effect.
 When private respondent received a copy of that letter of petitioner Keh,
he took the position that petitioner Perez had no right to demand possession
of the fishpond from him because Perez had no contract with him. Private
respondent was allowed four (4) months within which to vacate the premises
but he immediately filed the complaint for injunction and
damages. Thereafter, private respondents counsel, Atty. Angel Cruz, and
other persons tried to prevail upon petitioner Perez to allow private
respondent to occupy the property for three (3) more years. Petitioner Perez
declined that proposition.
On September 6, 1989, the lower court rendered the aforesaid
decision. It arrived at the conclusion that the defendants therein conspired
with one another to exploit the plaintiffs naivete and educational
inadequacies and, in the process, to defraud him by inducing him into taking
possession of the `Papaya Fishpond in their fond hope that, as soon as the
plaintiff applying his known expertise as a successful fishpond operator shall
have considerably improved the fishpond, they will regain possession of the
premises and offer the lease thereof to other interested parties at much
higher rental rates as laid bare by supervening realities. That conclusion was
founded on the following:
1. The plaintiffs (private respondent Crisostomos) testimony bears
the hallmarks of truth: candid, straightforward and uncontrived.
He had proven himself a much more credible witness than his
opponents.
2. The notarized receipt of Maria Perez of her share as a
usufructuary in the rental for 1979-80 is a clear avowal of
plaintiffs legitimate operation of the Papaya Fishpond as
assignee or transferee thereof. It was impossible for the other
usufructuaries, especially Juan Perez who was residing in the
same locality and actively involved in the affairs of the fishpond,
not to have known that plaintiff occupied the fishpond for one
and a half years as assignee of Keh and Lee. It was
unbelievable that both Tansinsin and Perez would only perceive
the plaintiff as a mere encargado of Keh and Lee.
3. The receipt whereby Tansinsin acknowledged payment of
P150,000.00 as rental for June 1978-May 1979 bears tell-tale
signs of the conspiracy. Firstly, the statement Mr. Luis Keh has
not transferred his rights over the fishpond to any person is
entirely irrelevant to that receipt unless it was intended to
preempt plaintiffs claim of rights and interests over the said
property as either sub-lessee or assignee. Secondly, Kehs
having signified Conforme to the above is a gratuitous notation
as it actually indicates that the money came from the
plaintiff. Thirdly, Atty. Tansinsins receipt of the amount for and
in behalf of JUAN L. PEREZ ET AL. illustrates his active and
dominant role in the affairs of the fishpond whether as
administrator thereof or as beneficiary of a share from its fruits.
4. Service upon plaintiff of Kehs letter surrendering possession of
the fishpond implied that defendants knew that plaintiff was in
possession thereof. That they resorted to the intimidating
presence of armed men is proof that they expected the plaintiff
to refuse to give up possession of the property. These
circumstances completely belie the protestations of Perez and
Tansinsin of lack of knowledge of the contract entered into
between the plaintiff, and Lee and Keh.
5. The nonpresentation of Lee and Keh on the witness stand by
Atty. Tansinsin can very well be construed as a smart maneuver
to cover up the sinister cabal for deception inferrable from the
attendant facts and circumstances. In their joint answer, Keh
and Lee tried to relieve Perez of any liability in favor of the
plaintiff. That is understandable because, should the Court
disregard the reliance of Perez on the prohibition against sub-
lease or assignment of the Papaya Fishpond, then all the
defendants shall have exposed themselves to unavoidable
liability for the acts complained of by the plaintiff.
6. Atty. Tansinsin was the common legal counsel of all the
defendants and, by his testimony, even the plaintiff. Atty.
Tansinsins denial that he was plaintiffs counsel was his way of
deflecting plaintiffs imputations of professional improprieties
against him. Plaintiff must have assumed that Atty. Tansinsin
was also his lawyer considering that they were on very friendly
terms and therefore Atty. Tansinsin might have been
instrumental in dispelling whatever fears plaintiff had
entertained as regards the business transactions involved.
7. The fact that the fishpond was subsequently rented out for
astronomical amounts is proof that the plaintiff had considerably
improved the fishpond.[10]
The lower court added:
Bluntly yet succinctly put, the foregoing circumstances when viewed
collectively with other cogent aspects of the instant case inexorably lead to
the Courts well-considered view that the defendants tempted by the bright
prospect of a lucrative business coup embarked themselves in an egregious
scheme to take undue advantage of the gullibility of the plaintiff who, as
borne by ensuing events, proved himself an ideal victim to prey
upon: pathetically unsuspecting yet only too eager to invest his material
resources and self-acquired technical know-how to redeem what was then a
dwindling business enterprise from total collapse. Plaintiffs impressive
performance, alas, only redounded ultimately to the supreme benefit
exclusively of the defendants. A classic case of ako ang nagsaing, iba ang
kumain!
The defendants elevated the case to the Court of Appeals which, as
earlier mentioned, affirmed the decision of the trial court and disposed of the
appeal on February 18, 1992 as follows:
WHEREFORE, in view of all the foregoing, judgment appealed from, is
hereby AFFIRMED.
However, intervenor-appellant is hereby declared co-usufructuary of the
Papaya fishpond, and is, therefore, entitled to all rights and interest due to
the usufructuaries of the said fishpond.
SO ORDERED.
On the defendant-appellants contention that the principle of res
judicata should be applied because the Court of Appeals had ruled on the
issue of possession in CA-G.R. No. 10415-R, a petition for certiorari and
injunction with preliminary mandatory injunction, the Court of Appeals held
that said principle was unavailing. The petition in CA-G.R. No. 10415-R
involved a writ of injunction which presupposes the pendency of a principal or
main action. Moreover, the decision in that case did not resolve the issue of
who should be in possession of the Papaya Fishpond as findings of fact of
the trial court cannot be reviewed in a certiorari proceeding.
The Court of Appeals ruled further that appellee Crisostomo cannot be
considered a possessor in bad faith, considering that he took possession of
the fishpond when appellants Keh and Lee assigned to him appellant Kehs
leasehold right. It held that appellant Perez knew of the transfer of
possession of the fishpond to appellee and that the receipt evidencing
payment of the 1978-1979 rental even bears an expressed admission by Lee
that the payment came from appellee Crisostomo.
Agreeing with the court a quo that defendants-appellants employed
fraud to the damage and prejudice of plaintiff-appellee, the Court of Appeals
held that appellants should be held liable for damages. As regards the
intervention pro interesse suo, the appellate court ruled that the same should
be allowed because, even if the litigation would not be technically binding
upon him, complications might arise that would prejudice his rights. Pointing
out that a usufruct may be transferred, assigned or disposed of, the Court of
Appeals ruled that the intervenor cannot be excluded as a usufructuary
because he had acquired his right as such from a sale in execution of the
share of Jorge Lorenzo, one of the usufructuaries of the fishpond.
Herein petitioners filed a motion for the reconsideration of that Decision
of the Court of Appeals. They alleged that the Decision was premature
because it was rendered when they had not yet even received a copy of the
intervenors brief wherein assignments of errors that directly affected their
rights and interests were made. They insisted that the principle of res
judicata was applicable because in G.R. No. 64354, this Court upheld the
Decision of the Court of Appeals in CA G.R. No. 10415. They added that
appellee Crisostomo was guilty of forum shopping because the issue of
possession had been squarely decided in CA-G.R. No. 10415. They stressed
that the contract of lease between Keh and the usufructuaries prohibited
subleasing of the fishpond; that by the receipt dated June 6, 1978, it was Keh
who paid the rental; that appellee Crisostomo was a perjured witness
because in the notebook showing his expenses, the amount of P150,000.00
for rentals does not appear; that the term of the contract had expired and
there was no renewal thereof, and that the consideration of P150,000.00 was
grossly inadequate. They averred that the Court of Appeals erred in awarding
damages that were not prayed for in the second amended complaint and that
amounts not specified in the complaint were awarded as damages. They
disclaimed that Atty. Tansinsin was the administrator of the fishpond.
On October 30, 1992, the Court of Appeals denied the motion for
reconsideration for lack of merit. It ruled that the Decision was not
prematurely promulgated considering that the intervention proceeding is
solely between intervenor and defendants-appellants, which is completely
separable and has nothing to do with the merits of the appeal.
In the instant petition for review on certiorari, petitioners raise six (6)
grounds for giving due course to it.[11] Those grounds may be distilled into the
following: (a) the applicability of the principle of res judicata; (b) the
premature promulgation of the Decision of the Court of Appeals, and (c)
private respondent was not a sublesee of the fishpond under the law.
In arguing that the principle of res judicata applies in this case,
petitioners rely on the portion of the Decision[12] of the Court of Appeals in
CA-G.R. No. 10415 that states:
We find no basis for declaring respondent Judge guilty of grave abuse of
discretion on this regard. The trial courts finding that petitioner does not
appear entitled to any contract or law to retain possession of the fishpond in
question since he is neither an assignee or sub-lessee and, therefore, merely
a stranger to the contract of lease is a finding of fact review of which is not
proper in a certiorari proceedings. Not only is petitioner not a party to the
lease agreement over the fishpond in question but also the very authority
upon which he predicates his possession over the fishpond that
the leasehold right of Luis Keh had been assigned to him undoubtedly lacks
basis for the very contract between Luis Keh and the lessors expressly
provides
That the lessee cannot sub-lease above-described fishpond nor assign his
rights to anyone.
X x x x x x x x x.
(Underscoring supplied by petitioners.)[13]
Petitioners assert that said Decision of the Court of Appeals which was
in effect upheld by this Court when it denied the petition for review
on certiorari in G. R. No. 64354 (Luis Crisostomo v. Intermediate Appellate
Court),[14] is res judicata to the issue of possession in this case.[15] However,
as expressed in that quoted portion of the Decision in CA-G.R. No. 10415,
the issue of whether private respondent is an assignee or a sub-lessee is a
finding of fact review of which is not proper in a certiorari proceeding or the
proceeding in that case.
CA-G.R. No. 10415 was spawned by the lifting on January 11, 1980 of
the restraining order previously issued by the trial court on June 14,
1979. Private respondent filed a special civil action of certiorari and injunction
with preliminary mandatory injunction and/or mandatory restraining order to
question the order of January 11, 1980. Thus, the issue in that petition was
whether or not the trial court gravely abused its discretion in lifting the
restraining order. The statement in that Decision of the Court of Appeals that
a writ of preliminary injunction may be denied if the party applying for it has
insufficient title or interest to sustain it and no claim to an ultimate relief (is)
sought by no means resolved the issue of who is entitled to possess the
fishpond. In denying the petition for certiorari, the Court of Appeals was
simply saying that there was no reason to restore private respondent to the
possession of the fishpond pursuant to the restraining order that he had
earlier obtained. The issue of possession was collaterally discussed only to
resolve the propriety of the lifting of the restraining order based on evidence
available at that time. Hence, there was no judgment on the merits in the
main case or in Civil Case No. 5610-M. Simply put, the Decision in CA-G.R.
No. 10415 involves an interlocutory order on the propriety of the lifting of the
restraining order and not a judgment on the merits of Civil Case No. 5610-M.
For res judicata to apply, the following requisites must concur: (a) the
former judgment must be final; (b) the court which rendered it had jurisdiction
over the subject matter and the parties; (c) the judgment must be on the
merits, and (d) there must be between the first and second actions identity of
parties, subject matter and causes of action.[16] The Decision in CA-G.R. No.
10415 having resolved only an interlocutory matter, the principle of res
judicata cannot be applied in this case. There can be no res judicata where
the previous order in question was not an order or judgment determinative of
an issue of fact pending before the court but was only an interlocutory order
because it required the parties to perform certain acts for final
adjudication.[17] In this case, the lifting of the restraining order paved the way
for the possession of the fishpond on the part of petitioners and/or their
representatives pending the resolution of the main action for injunction. In
other words, the main issue of whether or not private respondent may be
considered a sublessee or a transferee of the lease entitled to possess the
fishpond under the circumstances of the case had yet to be resolved when
the restraining order was lifted.
Petitioners assail the Court of Appeals Decision as premature and
therefore null and void, because prior to the promulgation of that Decision,
private respondent-intervenor Vicente Asuncion failed to furnish them with a
copy of his brief the assignment of errors of which allegedly directly affected
their rights and interests.[18] While it is true that petitioners were deprived of
the opportunity to contravene the allegations of the intervenor in his brief,
that fact can not result in the nullity of the Decision of the Court of
Appeals.[19] Vicente Asuncion intervened pro interesse suo or according to
his interest.[20]Intervention pro interesse suo is a mode of intervention in
equity wherein a stranger desires to intervene for the purpose of asserting a
property right in the res, or thing, which is the subject matter of the litigation,
without becoming a formal plaintiff or defendant, and without acquiring
control over the course of a litigation, which is conceded to the main actors
therein.[21] In this case, intervenor Vicente Asuncion aimed to protect his right
as a usufructuary. Inasmuch as he has the same rights and interests as
petitioner Juan Perez, any judgment rendered in the latters favor entitled him
to assert his right as such usufructuary against his co-usufructuary. Should
said intervenor claim his share in the usufruct, no rights of the petitioners
other than those of Juan Perez would be prejudiced thereby.
Worth noting is the fact that after the trial court had allowed Vicente
Asuncions intervention pro interesse suo, petitioner Juan Perez filed a
petition for certiorari docketed as CA-G.R. No. 13519 to set aside the order
denying his motion to dismiss the pleading in intervention. In its Decision of
January 27, 1988, the Seventh Division of the Court of Appeals [22] denied the
petition for certiorari for lack of merit. It upheld the trial courts ruling to allow
the intervention pro interesse suo to protect Vicente Asuncions right as a co-
usufructuary in the distribution or disposition of the amounts representing the
rentals that were deposited with the court. That Vicente Asuncion had filed
Civil Case No. 8215-M seeking recovery of his alleged share in the fruits of
the Papaya Fishpond from 1978 would not be a reason for the dismissal of
the motion for intervention pursuant to Rule 16, Sec. 1 (e) of the Rules of
Court.[23] The Court of Appeals explained as follows:
Indeed, if by means of intervention a stranger to a lawsuit is permitted to
intervene without thereby becoming a formal plaintiff or defendant (Joaquin v.
Herrera, 37 Phil. 705, 723 [1918]), then there is in the case at bar no identity
of parties to speak of. Lis pendens as a ground for a motion to dismiss
requires as a first element identity of parties in the two cases.
Nor is there an identity of relief sought. Civil Case No. 8295-M seeks an
accounting of the proceeds of the fishpond while Civil Case No. 5610-M is for
injunction to prevent the petitioner from retaking the fishpond from Luis
Crisostomo. The herein private respondent sought to intervene in the latter
case simply to protect his right as usufructuary in the money deposited in the
court by the plaintiff Luis Crisostomo. We hold that in allowing the
intervention in this case the trial court acted with prudence and exercised its
discretion wisely.[24]
Unconvinced by the Court of Appeals Decision in CA-G.R. SP No.
13519, petitioner Juan Perez filed a petition for review on certiorari with this
Court under G.R. No. 82096. On May 9, 1988, this Court denied the petition
on the grounds that the issues raised are factual and that there is no
sufficient showing that the findings of the respondent court are not supported
by substantial evidence or that the court had committed any reversible error
in the questioned judgment.[25] The Resolution of the Court dated May 9,
1988 became final and executory on August 26, 1988.[26]
Moreover, granting that the intervention be considered as Vicente
Asuncions appeal, a litigants failure to furnish his opponent with a copy of his
appeal does not suffice to warrant dismissal of that appeal.In such an
instance, all that is needed is for the court to order the litigant to furnish his
opponent with a copy of his appeal.[27] This is precisely what happened in this
case. On May 13, 1992, the Court of Appeals issued a Resolution directing
counsel for intervenor to furnish herein petitioners with a copy of intervenor
Vicente Asuncions brief within a 10-day period. It also granted petitioners an
opportunity to file a reply-brief or memorandum and the intervenor, a reply to
said memorandum.[28] That Resolution is proper under the premises
because, by the nature of an intervention pro interesse suo, it can proceed
independently of the main action. Thus, in the Resolution of October 30,
1992, in resolving the issue of the alleged prematurity of its Decision, the
Court of Appeals held that the proceeding is solely between intervenor and
defendants-appellants, which is completely separable and has nothing to do
with the merits of the appeal.[29]
At the hearing of Civil Case No. 5610-M, petitioner Juan Perez
attempted to establish the death on October 14, 1979 of Jorge
Lorenzo,[30] the usufructuary from whom Vicente Asuncion derived his right to
intervene pro interesse suo. Since under Article 603 of the Civil Code a
usufruct is extinguished by the death of the usufructuary, unless a contrary
intention clearly appears, there is no basis by which to arrive at the
conclusion that the usufruct originally exercised by Jorge Lorenzo has indeed
been extinguished or, on the contrary, has survived Lorenzos demise on
account of provisions in the document constituting the usufruct. That matter
is best addressed in Civil Case No. 8215-M wherein Vicente Asuncion seeks
his share as a transferee of the usufruct established for Jorge Lorenzo. All
that is discussed here is the matter of intervention pro interesse suo vis--
vis the issue of prematurity of the Decision of the Court of Appeals.
Petitioners principal argument against the Court of Appeals Decision in
favor of private respondent Crisostomo is that he could not have been an
assignee or sub-lessee of the fishpond because no contract authorized him
to be so. Petitioners argument is anchored on factual issues that, however,
have no room for discussion before this Court. It is well-entrenched doctrine
that questions of fact are not proper subjects of appeal by certiorari under
Rule 45 of the Rules of Court as this mode of appeal is confined to questions
of law.[31] Factual findings of the Court of Appeals are conclusive on the
parties and carry even more weight when said court affirms the factual
findings of the trial court.[32] Accordingly, this review shall be limited to
questions of law arising from the facts as found by both the Court of Appeals
and the trial court.
Admittedly, the contract between the usufructuaries and petitioner Keh
has a provision barring the sublease of the fishpond. However, it was
petitioner Keh himself who violated that provision in offering the operation of
the fishpond to private respondent. Apparently on account of private
respondents apprehensions as regards the right of petitioners Keh and Lee
to transfer operation of the fishpond to him, on January 9, 1978, petitioner
Keh executed a document ceding and transferring his rights and interests
over the fishpond to petitioner Lee. That the same document might have
been a ruse to inveigle private respondent to agree to their proposal that he
operate the fishpond is of no moment. The fact is, petitioner Keh did transfer
his rights as a lessee to petitioner Lee in writing and that, by virtue of that
document, private respondent acceded to take over petitioner Kehs rights as
a lessee of the fishpond.
Although no written contract to transfer operation of the fishpond to
private respondent was offered in evidence,[33] the established facts further
show that petitioner Juan Perez and his counsel, petitioner Tansinsin, knew
of and acquiesced to that arrangement by their act of receiving from the
private respondent the rental for 1978-79. By their act of receiving rental from
private respondent through the peculiarly written receipt dated June 6, 1978,
petitioners Perez and Tansinsin were put in estoppel to question private
respondents right to possess the fishpond as a lessee. Estoppel in
pais arises when one, by his acts, representations or admissions, or by his
own silence when he ought to speak out, intentionally or through culpable
negligence, induces another to believe certain facts to exist and such other
rightfully relies and acts on such belief, so that he will be prejudiced if the
former is permitted to deny the existence of such facts.[34]
Nevertheless, we hesitate to grant private respondents prayer that he
should be restored to the possession of the fishpond as a consequence of
his unjustified ejectment therefrom. To restore possession of the fishpond to
him would entail violation of contractual obligations that the usufructuaries
have entered into over quite a long period of time now. Supervening events,
such as the devaluation of the peso as against the dollar as well as the
addition of improvements in the fishpond that the succeeding lessees could
have introduced, have contributed to the increase in rental value of the
property. To place private respondent in the same position he was in before
the lifting of the restraining order in 1980 when he was deprived the right to
operate the fishpond under the contract that already expired in 1985 shall be
to sanction injustice and inequity. This Court, after all, may not supplant the
right of the usufructuaries to enter into contracts over the fishpond through
this Decision. Nonetheless, under the circumstances of the case, it is but
proper that private respondent should be properly compensated for the
improvements he introduced in the fishpond.
Article 1168 of the Civil Code provides that when an obligation consists
in not doing and the obligor does what has been forbidden him, it shall also
be undone at his expense. The lease contract prohibited petitioner Luis Keh,
as lessee, from subleasing the fishpond. In entering into the agreement
for pakiao-buwis with private respondent, not to mention the apparent artifice
that was his written agreement with petitioner Lee on January 9, 1978,
petitioner Keh did exactly what was prohibited of him under the contract to
sublease the fishpond to a third party. That the agreement for pakiao-
buwis was actually a sublease is borne out by the fact that private
respondent paid petitioners Luis Keh and Juan Perez, through petitioner
Tansinsin the amount of annual rental agreed upon in the lease contract
between the usufructuaries and petitioner Keh. Petitioner Keh led private
respondent to unwittingly incur expenses to improve the operation of the
fishpond. By operation of law, therefore, petitioner Keh shall be liable to
private respondent for the value of the improvements he had made in the
fishpond or for P486,562.65 with interest of six percent (6%) per annum from
the rendition of the decision of the trial court on September 6, 1989.[35]
 The law supports the awards of moral and exemplary damages in favor
of private respondent and against the petitioners. Their conspiratorial
scheme to utilize private respondents expertise in the operation of fishponds
to bail themselves out of financial losses has been satisfactorily established
to warrant a ruling that they violated Article 21 of the Civil Code and therefore
private respondent should be entitled to an award of moral damages. Article
21 states that (a)ny person who wilfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall
compensate the latter for the damage. Exemplary damages shall likewise be
awarded pursuant to Article 2229 of the Civil Code.[36] Because private
respondent was compelled to litigate to protect his interest, attorneys fees
shall also be awarded.[37]
WHEREFORE, in light of the foregoing premises, the decision of the
Court of Appeals is AFFIRMED insofar as it (a) directs the release to private
respondent of the amounts of P128,572.00 and P123,993.85 deposited with
the Paluwagan ng Bayan Savings Bank in Paombong, Bulacan and (b)
requires private respondent Crisostomo to pay petitioner Juan Perez the
rental for the period June 1979 to January 1980 at the rate of P150,000.00
per annum less the amount of P21,428.00 already paid to usufructuary Maria
Perez. It should, however, be subject to the MODIFICATIONS that:
1. Petitioner Luis Keh shall pay private respondent Luis Crisostomo
in the amount of P486,562.25 with legal interest from the
rendition of the judgment in Civil Case No. 5610-M or on
September 6, 1989, and
2. Petitioners be made liable jointly and severally liable for moral
damages of P50,000.00, exemplary damages of P20,000 and
attorneys fees of P10,000.00.
No costs.
SO ORDERED.
Xxxxxxxxxxxxxxxxxxxxxxxxxx
G.R. No. L-29158 December 29, 1928
Estate of the deceased Rosendo Hernaez. RAFAEL R.
ALUNAN, administrator-appellee,
vs.
ELEUTERIA CH. VELOSO, opponent-appellant.
Hipolito Alo for appellant.
R. Nolan for appellee.
AVANCEA, C. J.:
This case deals with an account filed in these intestate proceedings for
the settlement of the estate of the deceased Rosendo Hernaez by his
judicial administrator, Rafael Alunan, and approved by the court below.
Jose Hernaez, one of the heirs interested in this proceedings, assigned
the whole of his portion to Eleuteria Ch. Veloso, and the latter objects to
some of the items of the account filed, assigning four errors to the
resolution of the court below.
In the first place, it is alleged that the lower court erred in imposing a
preferred lien of P12,683.83 upon the Panaogao Hacienda, adjudicated
to the appellant Eleuteria Ch. Veloso. Before the partition, Jose Hernaez
leased said Panaogao Hacienda for two harvests the stipulated rent
being 12 per cent of all the sugar to be produced thereon, provided,
however, that he should pay at least 12 per cent of 8,000, even if the
production should fall below this amount. During the two years Jose
Hernaez produced less than 8,000 piculs, and only 12 per cent of what
he did produce was collected from him as rent, thus leaving him indebted
in an amount equal to the difference between 12 per cent of the sugar he
produced, and 12 per cent of 8,000 piculs which he had to pay at least.
The P12,683.83 to which the first error refers is the value of this
difference and is therefore a legal debt of Jose Hernaez's transmitted to
the appellant, and affecting here participation in the intestate estate.
According to an agreement previously entered into by and between the
heirs, the share belonging or which may belong to each heir shall be
liable and subject to a lien in favor of all the heirs for any account or debt
pending which the heirs may owe to the intestate estate.
This first error then is not well grounded. 1awphi1.net
As to the second error, which is made to consist in the lower court having
held that the sum of P20,000 is another lien upon the said Panaogao
Hacienda, in favor of the administrator Rafael Alunan, should the latter be
ordered to pay that sum in civil case No. 6391 of the Court of First
Instance of Iloilo, Mr. Alunan is agreeable that this holding be eliminated
from the judgment appealed from.
The third error refers to the sum of P24,991.42 as attorney's fees and
compensation of the administrators who took part in this proceeding. This
amount, it is alleged, is excessive. It appears that a great part of these
fees were paid to Jose Hernaez himself, the appellant's predecessor in
interest, and most of these fees, as well as of the attorney's fees, have
already been approved by the court below. At all events, since it has
been found necessary to employ several lawyers and more than one
administrator in this proceeding, and taking into account the unusual
amount of the interests involved, we find no merit in the objection to this
item of the account.
The fourt error is made to consist in the lower court having admitted the
partition proposed by the administrator in his account. According to this
account, the total amount to be partitioned among the heirs is
P88,979.08, which the administrator distributed equally among all the
heirs, including the widow's each one receiving P11,122.38.
This partition is object to with respect to the widow. It is alleged that the
distributed amount is in money, and since the widow's right is only a
usufruct, and as there can be no usufruct of money, since it is a fungible
thing, the adjudication made to the widow was erroneous. It is incorrect to
say that there can be no usufruct of money, because it is a fungible thing
(art. 482, Civil Code).
It is likewise alleged, that, at any rate, this amount which should go to the
widow should be offset by the P55,000 which she has already received
as a pension. Neither do we find any ground for this error, since,
according to the agreement of the heirs already referred to, her portion in
the inheritance either wholly or in part.
Lastly, it is alleged, that the portion given to the widow is not in
accordance with law. We find the objection with respect to this point to be
correct. The widow, according to the law, only has a right to a portion of
the estate equal to that of the legitime of each of the children without
betterment. In the instant case none of the children received a
betterment. Consequently, the widow should receive a portion equal to
the share of each in the two-thirds of the distributable amount making up
the legitime, to be taken from the one-third forming the betterment. Then,
the other free third, which the decedent failed to dispose of, must be
partitioned among the heirs to the exclusion of the widow, as an addition
to their legitime. Working out the computations on this basis, the widow
should receive only P8,474.19.
Therefore, it being understood that there be eliminated from the decision
the holding that the Panaogao Hacienda, which was adjudged to the
appellant, should answer for the amount of P20,000 as a lien in favor of
Rafael Alunan should the latter be ordered to pay it in civil case No. 6391
of the Court of First Instance of Iloilo, and it being further understood that
the widow's portion is only P8,474.19, the remainder of the P88,979.08
which is distributable, pertaining to the heirs, share and share alike,
excluding the widow, the judgment appealed from is affirmed, without
special pronouncement as to costs. So ordered.
Xxxxxxxxxxxxxxxxxxxxxxxxx
G.R. No. 152809 August 3, 2006
MERCEDES MORALIDAD, Petitioner,
vs.
SPS. DIOSDADO PERNES and ARLENE PERNES, Respondents.
DECISION
GARCIA, J.:
Under consideration is this petition for review on certiorari under Rule 45
of the Rules of Court to nullify and set aside the following issuances of
the Court of Appeals (CA) in CA-G.R. SP No. 61610, to wit:
1. Decision dated September 27, 2001, 1 affirming an earlier decision of
the Regional Trial Court (RTC) of Davao City which reversed that of the
Municipal Trial Court in Cities (MTCC), Davao City, Branch 1, in an action
for unlawful detainer thereat commenced by the petitioner against the
herein respondents; and
2. Resolution dated February 28, 2002, 2 denying petitioners motion for
reconsideration.
At the heart of this controversy is a parcel of land located in Davao City
and registered in the name of petitioner Mercedes Moralidad under
Transfer Certificate of Title (TCT) No. T-123125 of the Registry of Deeds
of Davao City.
In her younger days, petitioner taught in Davao City, Quezon City and
Manila. While teaching in Manila, she had the good fortune of furthering
her studies at the University of Pennsylvania, U.S.A. While schooling, she
was offered to teach at the Philadelphia Catholic Archdiocese, which she
did for seven (7) years. Thereafter, she worked at the Mental Health
Department of said University for the next seventeen (17) years.
During those years, she would come home to the Philippines to spend
her two-month summer vacation in her hometown in Davao City. Being
single, she would usually stay in Mandug, Davao City, in the house of her
niece, respondent Arlene Pernes, a daughter of her younger sister,
Rosario.
Back in the U.S.A. sometime in 1986, she received news from Arlene that
Mandug at the outskirts of Davao City was infested by NPA rebels and
many women and children were victims of crossfire between government
troops and the insurgents. Shocked and saddened about this
development, she immediately sent money to Araceli, Arlenes older
sister, with instructions to look for a lot in Davao City where Arlene and
her family could transfer and settle down. This was why she bought the
parcel of land covered by TCT No. T-123125.
Petitioner acquired the lot property initially for the purpose of letting
Arlene move from Mandug to Davao City proper but later she wanted the
property to be also available to any of her kins wishing to live and settle
in Davao City. Petitioner made known this intention in a document she
executed on July 21, 1986. 3 The document reads:
I, MERCEDES VIA MORALIDAD, of legal age, single, having been born
on the 29th day of January, 1923, now actually residing at 8021
Lindbergh Boulevard, Philadelphia, Pennsylvania, U.S.A., wishes to
convey my honest intention regarding my properties situated at Palm
Village Subdivision, Bajada, Davao City, 9501, and hereby declare:
1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build
their house therein and stay as long as they like;
2. That anybody of my kins who wishes to stay on the aforementioned
real property should maintain an atmosphere of cooperation, live in
harmony and must avoid bickering with one another;
3. That anyone of my kins may enjoy the privilege to stay therein and
may avail the use thereof. Provided, however, that the same is not
inimical to the purpose thereof;
4. That anyone of my kins who cannot conform with the wishes of the
undersigned may exercise the freedom to look for his own;
5. That any proceeds or income derived from the aforementioned
properties shall be allotted to my nearest kins who have less in life in
greater percentage and lesser percentage to those who are better of in
standing.
xxx xxx xxx
Following her retirement in 1993, petitioner came back to the Philippines
to stay with the respondents on the house they build on the subject
property. In the course of time, their relations turned sour because
members of the Pernes family were impervious to her suggestions and
attempts to change certain practices concerning matters of health and
sanitation within their compound. For instance, Arlenes eldest son, Myco
Pernes, then a fourth year veterinary medicine student, would answer
petitioner back with clenched fist and at one time hurled profanities when
she corrected him. Later, Arlene herself followed suit. Petitioner brought
the matter to the local barangay lupon where she lodged a complaint for
slander, harassment, threat and defamation against the Pernes Family.
Deciding for petitioner, the lupon apparently ordered the Pernes family to
vacate petitioners property but not after they are reimbursed for the
value of the house they built thereon. Unfortunately, the parties could not
agree on the amount, thus prolonging the impasse between them.
Other ugly incidents interspersed with violent confrontations meanwhile
transpired, with the petitioner narrating that, at one occasion in July 1998,
she sustained cuts and wounds when Arlene pulled her hair, hit her on
the face, neck and back, while her husband Diosdado held her, twisting
her arms in the process.
Relations having deteriorated from worse to worst, petitioner, on July 29,
1998, lodged a formal complaint before the Regional Office of the
Ombudsman for Mindanao, charging the respondent spouses, who were
both government employees, with conduct unbecoming of public
servants. This administrative case, however, did not prosper.
Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an
unlawful detainer suit against the respondent spouses. Petitioner alleged
that she is the registered owner of the land on which the respondents
built their house; that through her counsel, she sent the respondent
spouses a letter demanding them to vacate the premises and to pay
rentals therefor, which the respondents refused to heed.
In their defense, the respondents alleged having entered the property in
question, building their house thereon and maintaining the same as their
residence with petitioners full knowledge and express consent. To prove
their point, they invited attention to her written declaration of July 21,
1986, supra, wherein she expressly signified her desire for the spouses
to build their house on her property and stay thereat for as long as they
like.
The MTCC, resolving the ejectment suit in petitioners favor, declared that
the respondent spouses, although builders in good faith vis--vis the
house they built on her property, cannot invoke their bona fides as a valid
excuse for not complying with the demand to vacate. To the MTCC,
respondents continued possession of the premises turned unlawful upon
their receipt of the demand to vacate, such possession being merely at
petitioners tolerance, and sans any rental. Accordingly, in its decision
dated November 17, 1999, 4 the MTCC rendered judgment for the
petitioner, as plaintiff therein, to wit:
WHEREFORE, judgment is hereby rendered in favor of herein plaintiff
and against the defendants, as follows:
a) Directing the defendants, their agents and other persons acting on
their behalf to vacate the premises and to yield peaceful possession
thereof to plaintiff;
b) Ordering defendants to pay P2,000.00 a month from the filing of this
complaint until they vacate premises;
c) Sentencing defendants to pay the sum of P120,000.00 5 as attorneys
fees and to pay the cost of suit.
Defendants counterclaim are hereby dismissed except with respect to the
claim for reimbursement of necessary and useful expenses which should
be litigated in an ordinary civil actions. (sic)
Dissatisfied, the respondent spouses appealed to the RTC of Davao City.
In the meantime, petitioner filed a Motion for Execution Pending Appeal.
The motion was initially granted by the RTC in its Order of February 29,
2000, but the Order was later withdrawn and vacated by its subsequent
Order dated May 9, 2000 6 on the ground that immediate execution of the
appealed decision was not the prudent course of action to take,
considering that the house the respondents constructed on the subject
property might even be more valuable than the land site.
Eventually, in a decision 7 dated September 30, 2000, the RTC reversed
that of the MTCC, holding that respondents possession of the property in
question was not, as ruled by the latter court, by mere tolerance of the
petitioner but rather by her express consent. It further ruled that Article
1678 of the Civil Code on reimbursement of improvements introduced is
inapplicable since said provision contemplates of a lessor-lessee
arrangement, which was not the factual milieu obtaining in the case.
Instead, the RTC ruled that what governed the parties relationship are
Articles 448 and 546 of the Civil Code, explaining thus:
Since the defendants-appellees [respondents] are admittedly possessors
of the property by permission from plaintiff [petitioner], and builders in
good faith, they have the right to retain possession of the property subject
of this case until they have been reimbursed the cost of the
improvements they have introduced on the property.
Indeed, this is a substantive right given to the defendants by law, and this
right is superior to the procedural right to [sic] plaintiff to immediately ask
for their removal by a writ of execution by virtue of a decision which as we
have shown is erroneous, and therefore invalid. (Words in brackets
supplied),
and accordingly dismissed petitioners appeal, as follows:
WHEREFORE, in view of the foregoing, the Decision appealed from is
REVERSED and declared invalid. Consequently, the motion for
execution pending appeal is likewise denied.
Counter-claims of moral and exemplary damages claimed by defendants
are likewise dismissed. However, attorneys fees in the amount of fifteen
thousand pesos is hereby awarded in favor of defendants-appellants, and
against plaintiffs.
SO ORDERED. 8
Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.
On September 27, 2001, the CA, while conceding the applicability of
Articles 448 and 546 of the Civil Code to the case, ruled that it is still
premature to apply the same considering that the issue of whether
respondents right to possess a portion of petitioners land had already
expired or was already terminated was not yet resolved. To the CA, the
unlawful detainer suit presupposes the cessation of respondents right to
possess. The CA further ruled that what governs the rights of the parties
is the law on usufruct but petitioner failed to establish that respondents
right to possess had already ceased. On this premise, the CA concluded
that the ejectment suit instituted by the petitioner was premature. The
appellate court thus affirmed the appealed RTC decision, disposing:
WHEREFORE, premises considered, the instant petition for review is
hereby denied for lack of merit. Accordingly, the petitioners complaint for
Unlawful Detainer is DISMISSED.
SO ORDERED.
With the CAs denial of her motion for reconsideration in its Resolution of
February 28, 2002, petitioner is now before this Court raising the
following issues:
I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN
DISMISSING THE UNLAWFUL DETAINER CASE FOR BEING
PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH
LAW AND JURISPRUDENCE.
II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN
APPLYING ARTICLES 448 AND 546 AND THE PROVISIONS OF THE
CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF THE CIVIL
CODE.
The Court rules for the petitioner.
The Court is inclined to agree with the CA that what was constituted
between the parties herein is one of usufruct over a piece of land, with
the petitioner being the owner of the property upon whom the naked title
thereto remained and the respondents being two (2) among other
unnamed usufructuaries who were simply referred to as petitioners kin.
The Court, however, cannot go along with the CAs holding that the
action for unlawful detainer must be dismissed on ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in the following
wise:
ART. 562. Usufruct gives a right to enjoy the property of another with the
obligation of preserving its form and substance, unless the title
constituting it or the law otherwise provides.
Usufruct, in essence, is nothing else but simply allowing one to enjoy
anothers property. 9 It is also defined as the right to enjoy the property of
another temporarily, including both the jus utendi and the jus
fruendi, 10 with the owner retaining the jus disponendi or the power to
alienate the same. 11
It is undisputed that petitioner, in a document dated July 21, 1986, supra,
made known her intention to give respondents and her other kins the
right to use and to enjoy the fruits of her property. There can also be no
quibbling about the respondents being given the right "to build their own
house" on the property and to stay thereat "as long as they like."
Paragraph #5 of the same document earmarks "proceeds or income
derived from the aforementioned properties" for the petitioners "nearest
kins who have less in life in greater percentage and lesser percentage to
those who are better of (sic) in standing." The established facts
undoubtedly gave respondents not only the right to use the property but
also granted them, among the petitioners other kins, the right to enjoy
the fruits thereof. We have no quarrel, therefore, with the CAs ruling that
usufruct was constituted between petitioner and respondents. It is thus
pointless to discuss why there was no lease contract between the parties.
However, determinative of the outcome of the ejectment case is the
resolution of the next issue, i.e., whether the existing usufruct may be
deemed to have been extinguished or terminated. If the question is
resolved in the affirmative, then the respondents right to possession,
proceeding as it did from their right of usufruct, likewise ceased. In that
case, petitioners action for ejectment in the unlawful detainer case could
proceed and should prosper.
The CA disposed of this issue in this wise:
xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as
amended, provides xxx
xxx xxx xxx
 From the foregoing provision, it becomes apparent that for an action for
unlawful detainer to prosper, the plaintiff [petitioner] needs to prove that
defendants [respondents] right to possess already expired and
terminated. Now, has respondents right to possess the subject portion of
petitioners property expired or terminated? Let us therefore examine
respondents basis for occupying the same.
It is undisputed that petitioner expressly authorized respondents o
occupy portion of her property on which their house may be built. Thus
"it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their
house therein and stay as long as they like." From this statement, it
seems that petitioner had given the respondents the usufructuary rights
over the portion that may be occupied by the house that the latter would
build, the duration of which being dependent on how long respondents
would like to occupy the property. While petitioner had already demanded
from the respondents the surrender of the premises, this Court is of the
opinion that the usufructuary rights of respondents had not been
terminated by the said demand considering the clear statement of
petitioner that she is allowing respondents to occupy portion of her land
as long as the latter want to. Considering that respondents still want to
occupy the premises, petitioner clearly cannot eject respondents. 12
We disagree with the CAs conclusion of law on the matter. The term or
period of the usufruct originally specified provides only one of the bases
for the right of a usufructuary to hold and retain possession of the thing
given in usufruct. There are other modes or instances whereby the
usufruct shall be considered terminated or extinguished. For sure, the
Civil Code enumerates such other modes of extinguishment:
ART. 603. Usufruct is extinguished:
(1) By the death of the usufructuary, unless a contrary intention clearly
appears;
(2) By expiration of the period for which it was constituted, or by the
fulfillment of any resolutory condition provided in the title creating the
usufruct;
(3) By merger of the usufruct and ownership in the same person;
(4) By renunciation of the usufructuary;
(5) By the total loss of the thing in usufruct;
(6) By the termination of the right of the person constituting the usufruct;
(7) By prescription. (Emphasis supplied.)
The document executed by the petitioner dated July 21, 1986 constitutes
the title creating, and sets forth the conditions of, the usufruct. Paragraph
#3 thereof states "[T]hat anyone of my kins may enjoy the privilege to
stay therein and may avail the use thereof. Provided, however, that the
same is not inimical to the purpose thereof" (Emphasis supplied). What
may be inimical to the purpose constituting the usufruct may be gleaned
from the preceding paragraph wherein petitioner made it abundantly clear
"that anybody of my kins who wishes to stay on the aforementioned
property should maintain an atmosphere of cooperation, live in harmony
and must avoid bickering with one another." That the maintenance of a
peaceful and harmonious relations between and among kin constitutes
an indispensable condition for the continuance of the usufruct is clearly
deduced from the succeeding Paragraph #4 where petitioner stated
"[T]hat anyone of my kins who cannot conform with the wishes of the
undersigned may exercise the freedom to look for his own." In fine, the
occurrence of any of the following: the loss of the atmosphere of
cooperation, the bickering or the cessation of harmonious relationship
between/among kin constitutes a resolutory condition which, by express
wish of the petitioner, extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable that there
were indeed facts and circumstances whereby the subject usufruct may
be deemed terminated or extinguished by the occurrence of the
resolutory conditions provided for in the title creating the usufruct,
namely, the document adverted to which the petitioner executed on July
21, 1986.
As aptly pointed out by the petitioner in her Memorandum, respondents
own evidence before the MTCC indicated that the relations between the
parties "have deteriorated to almost an irretrievable level." 13 There is no
doubt then that what impelled petitioner to file complaints before the local
barangay lupon, the Office of the Ombudsman for Mindanao, and this
instant complaint for unlawful detainer before the MTCC is that she could
not live peacefully and harmoniously with the Pernes family and vice
versa.
Thus, the Court rules that the continuing animosity between the petitioner
and the Pernes family and the violence and humiliation she was made to
endure, despite her advanced age and frail condition, are enough factual
bases to consider the usufruct as having been terminated.
To reiterate, the relationship between the petitioner and respondents
respecting the property in question is one of owner and usufructuary.
Accordingly, respondents claim for reimbursement of the improvements
they introduced on the property during the effectivity of the usufruct
should be governed by applicable statutory provisions and principles on
usufruct. In this regard, we cite with approval what Justice Edgardo Paras
wrote on the matter:
If the builder is a usufructuary, his rights will be governed by Arts. 579
and 580. In case like this, the terms of the contract and the pertinent
provisions of law should govern (3 Manresa 215-216; se also Montinola
vs. Bantug, 71 Phil. 449). 14 (Emphasis ours.)
By express provision of law, respondents, as usufructuary, do not have
the right to reimbursement for the improvements they may have
introduced on the property. We quote Articles 579 and 580 of the Civil
Code:
Art. 579. The usufructuary may make on the property held in usufruct
such useful improvements or expenses for mere pleasure as he may
deem proper, provided he does not alter its form or substance; but he
shall have no right to be indemnified therefor. He may, however, remove
such improvements, should it be possible to do so without damage to the
property. (Emphasis supplied.)
Art. 580. The usufructuary may set off the improvements he may have
made on the property against any damage to the same.
Given the foregoing perspective, respondents will have to be ordered to
vacate the premises without any right of reimbursement. If the rule on
reimbursement or indemnity were otherwise, then the usufructuary might,
as an author pointed out, improve the owner out of his property. 15 The
respondents may, however, remove or destroy the improvements they
may have introduced thereon without damaging the petitioners property.
Out of the generosity of her heart, the petitioner has allowed the
respondent spouses to use and enjoy the fruits of her property for quite a
long period of time. They opted, however, to repay a noble gesture with
unkindness. At the end of the day, therefore, they really cannot begrudge
their aunt for putting an end to their right of usufruct. The disposition
herein arrived is not only legal and called for by the law and facts of the
case. It is also right.
WHEREFORE, the petition is GRANTED. The assailed Decision and
Resolution of the CA are REVERSED and SET ASIDE. Accordingly, the
decision of the MTCC is REINSTATED with MODIFICATION that all of
respondents counterclaims are dismissed, including their claims for
reimbursement of useful and necessary expenses.
No pronouncement as to costs.
SO ORDERED.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
[ G.R. No. L-9023, November 13, 1956 ]
BISLIG BAY LUMBER COMPANY. INC., PLAINTIFF
AND APPELLEE, VS. THE PROVINCIAL
GOVERNMENT OP SURIGAO, DEFENDANT AND
APPELLANT.
DECISION
BAUTISTA ANGELO, J.:
Bislig Bay Lumber Co., Inc. is a timber concessionaire
of a portion of public forest located in the provinces of
Agusan and Surigao. With a view to developing and
exploiting its concession, the company constructed at
its expense a road from the barrio Mangagoy into the
area of the concession in Surigao, with a length of
approximately 5.3 kilometers, a portion of which, or
about 580 linear meters, is on a private property of the
company. The expenses incurred by the company in
the construction of said road amounted to P113,370,
upon which the provincial assessor of Surigao assessed
a tax in the amount of P669.33.
Of this amount, the sum of P595.92 corresponds to the
road constructed within the area of the concession.
This was paid under protest Later, the company filed
an action for its refund in the Court of First Instance of
Manila alleging that the road is not subject to tax.
Defendant filed a motion to dismiss on two grounds (1)
that the venue is improperly laid, and (2) that the
complaint states no -cause of action; but this motion
was denied. Thereafter, defendant filed its answer
invoking the same defenses it set up in its motions to
dismiss. In the meantime, Congress approved Republic
Act No. 1125 creating the Court of Tax Appeals,
whereupon plaintiff moved that the case be forwarded
to the latter court as required by said Act. This motion
however, was denied and, after due trial, the court
rendered decision ordering defendant to refund to
plaintiff the amount claimed in the 'complaint This is
an appeal from said decision.
The first error assigned refers to the jurisdiction of the
lower court. It is contended that since the present case
involves an assessment of land tax the determination
of which comes under the exclusive jurisdiction of the
Court of Tax Appeals under Republic Act No. 1125, the
lower court erred in assuming jurisdiction over the
case.
It is true that under section 22 of said Act the only
cases that are required to be certified and remanded to
the Court of Tax Appeals which upon its approval are
pending determination before a court of first instance
are apparently confined to those involving disputed
assessment of internal revenue taxes or custom duties,
and the present case admittedly refers to an
assessment of land tax, but it does not mean that
because of that apparent omission or oversight the
instant case should not be remanded to the Court of
Tax Appeals, for in interpreting the context of the
section above adverted to we should hot ignore section
7 of the same act which defines the extent and scope of
the jurisdiction of said court. As we have held in a
recent case, "section 22 of Republic Act No. 1125
should be interpreted in such a manner as to make it
harmonize with section 7 of the same Act and that the
primordial purpose behind the approval of said Act by
Congress is to give to the Court of Tax Appeals
exclusive appellate jurisdiction 'over all tax, customs,
and real estate assessment cases through out the
Philippines and to hear and decide them as soon as
possible'" (Ollada vs. The Court of Tax Appeals, 99
Phil., 604). Considering this interpretation of the law,
it logically follows that the lower court did not act
properly in denying the motion to remand the instant
case to the Court of Tax Appeals.
Considering, however, that it would be more
expeditious to decide this case now than to remand it
to the Court of Tax Appeals because, even if this course
is taken, it may ultimately be appealed to this court, we
will now proceed to discuss the case on the merits.
The Tax in question has been assessed under section 2
of Commonwealth Act No. 470 which provides:
"Sec. 2. Incidence of real property tax;. Except in
chartered cities, there shall be levied, assessed, and
collected, an annual ad-valorem tax on real property,
including land, buildings, machinery, and other
improvements not hereinafter specifically exempted."
Note that said section authorizes the levy of real tax not
only on lands, buildings, or machinery that may be
erected thereon, but also on any other improvements,
and considering the road constructed by appellee on
the timber concession granted to it as an improvement,
appellant assessed the tax now in dispute upon the
authority of the above provision of the law.
It is the theory of appellant that, inasmuch as the road
was constructed by appellee for its own use and benefit
it is subject to real tax even if it was constructed on a
public land. On the other hand, it is the theory of
appellee that said road is exempt from real tax because
(1) the road belongs to the national government by
right of accession, (2) the road cannot be removed or
separated from the land on which it is constructed an
dso it is part and parcel of the public land, and (3),
according to the evidence, the road was built not only
for the use and benefit of appellee but also of the public
in general.
We are inclined to uphold the theory of appellee. 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 accession not only because it
is inherently incorporated or attached to the timber
land leased to appellee but also because upon the
expiration of the concession, said road would
ultimately pass to the national government (Articles
440 and 445, new Civil Code; Toba-tabo vs. Molero, 22
Phil., 418). In the second place, while the road was
constructed by appellee primarily for its use and
benefit, the privilege is not exclusive, for, under the
lease contract entered into by the appellee and the
government and by public in by the general. Thus,
under said lease contract, appellee cannot prevent the
use of portions, of the concession for homesteading
purposes (clause 12). It is also in 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 (clause 13). The government has
reserved the right to set aside communal forest for the
use of the inhabitants of the region, and to set forest
reserves for public uses (clause 14). It can also grant
licenses covering any portion of the territory for the
cutting and extraction of timber to be used in public
works, for mining purposes, or for the construction of
railway lines (clause 15). And, if it so desires, it can
provide for logging railroad, cable ways timber chute
os slide, telephone lines, pumping stations log
landings, and other rights of way for the use of forest
licensees, concessionaires, permittees, or other lessees
(clause 26). 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 Commonwealth Act No. 470.
We are not oblivious of the fact that the present
assessment was made by appellant on the strength of
an opinion rendered by the Secretary of Justice, but we
find that the same is. predicated on authorities which
are not in point, for they refer to improvements that
belong to the lessee although constructed on lands
belonging to the government. It is well settled that a
real tax, being a burden upon the capital, should be
paid by the owner of the land and not by a usufructuary
(Mercado vs. Rizal, 67 Phil., 608; Article 597, new Civil
Code). Appellee is but a partial usufructuary of the
road in question.
Wherefore, the decision appealed from is affirmed,
without costs.
Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
147 Phil. 699
ZALDIVAR, J.:
Appeal from the decision of the Court of Tax Appeals,
in its CTA Case No. 1705, declaring
respondent Samar Mining Company, Inc. (hereinafter
referred to as Samar for short) exempt from paying the
real property tax assessed against it by the Provincial
Assessor of Zamboanga del Sur.
There is no dispute as to the facts of this case. Samar is
a domestic corporation engaged in the mining
industry. As the mining claims and the mill
of Samar are located inland and at a great distance
from the loading point or pier site, it decided to
construct a gravel road as a convenient means of
hauling its ores from the mine site at Buug to the pier
area at Pamintayan, Zamboanga del Sur; that as an
initial step in the construction of a 42-kilometer road
which would traverse public lands Samar, in 1958 and
1959, filed with the Bureau of Lands and the Bureau of
Forestry miscellaneous lease applications for a road
right of way on lands under the jurisdiction of said
bureaus where the proposed road would traverse; that
having been given temporary permit to occupy and use
the lands applied for by it, said respondent constructed
a road thereon, known as the Samico road; that
although the gravel road was finished in 1959, and had
since then been used by the respondent in hauling its
iron ores from its mine site to the pier area, and that its
lease applications were approved on October 7, 1965,
the execution of the corresponding lease contracts were
held in abeyance even up to the time this case was
brought to the Court of Tax Appeals.[1]
On June 5, 1964, Samar received a letter from the Pro-
vincial Assessor of Zamboanga del Sur assessing the
13.8 kilometer road[2]constructed by it for real estate
tax purposes in the total sum of P1,117,900.00. On
July 14, 1964, Samar appealed to the Board of
Assessment Appeals of Zamboanga del Sur,
(hereinafter referred to as Board, for short), contesting
the validity of the assessment upon the ground that the
road having been constructed entirely on a public land
cannot be considered an improvement subject to tax
within the meaning of section 2 of Commonwealth Act
470, and invoking further the decision or this Court in
the case of Bislig Bay Lumber Company, Inc. vs. The
Provincial Government of Surigao, G.R. No. L-9023,
promulgated on November 13, 1956. On February 10,
1965, after the parties had submitted a stipulation of
facts, Samar received a resolution of the Board, dated
December 22, 1964, affirming the validity of the
assessment made by the Provincial Assessor
of Zamboanga del Sur under tax declaration No. 3340,
but holding in abeyance its enforceability until the
lease contracts were duly executed.
On February 16, 1965, Samar moved to reconsider the
resolution of the Board, praying for the cancellation of
tax declaration No. 3340, and on August 3,
1965, Samar received Resolution No. 13 not only
denying its motion for reconsideration but modifying
the Board's previous resolution of December 22, 1964
declaring the assessment immediately enforceable, and
that the taxes to be paid by Samarshould accrue or
commence with the year 1959. When its second
motion for reconsideration was again denied by the
Board,Samarelevated the case to the Court
of Tax Appeals.
The jurisdiction of the Court of Tax Appeals to take
cognizance of the case was assailed by herein
petitioners (the Board and the Provincial Assessor
of Zamboanga del Sur) due to the failure of Samar to
first pay the realty tax imposed upon it before
interposing the appeal, and prayed that the
resolution of the Board appealed from be affirmed. On
June 28, 1967, the Court of Tax Appeals ruled that it
had jurisdiction to entertain the appeal and then
reversed the resolution of the Board. The Court of Tax
Appeals ruled that since the road is constructed on
public lands such that it is an integral part of the
lands and not an independent improvement thereon,
and that upon the termination of the lease the road as
an improvement will automatically be owned by the
national government, Samar should be exempt from
paying the real estate tax assessed against
it. Dissatisfied with the decision of the Court of Tax
Appeals, petitioners Board and Placido L. Lumbay, as
Provincial Assessor of Zamboanga del Sur, interposed
the present petition for review before this Court.
The issue to be resolved in the present
appeal is whether or not respondent Samar should pay
realty tax on the assessed value of the road it
constructed on alienable or disposable public
lands tnat are leased to it by the government.
Petitioners maintain that the road is an improvement
and, therefore, taxable under Section 2 of the
Assessment Law (Commonwealth Act No. 470) which
provides as follows:
"Sec. 2. Incidence of real property tax. - Except in
chartered cities, there shall be levied, assessed, and
collected, an annual advalorem tax on real property
including land, buildings, machinery, and other
improvements not hereinafter specifically exempted."
There is no question that the road constructed by
respondent Samar on the public lands leased to it by
the government is an improvement. But as to whether
the same is taxable under
the aforequoted provision of the Assessment Law, this
question has already been answered in the negative by
this Court. In the case of Bislig Bay Lumber Co., Inc.
vs. Provincial Government of Surigao, 100 Phil., 303,
where a similar issue was raised as to whether the
timber concessionaire should be required to pay realty
tax for the road it constructed at its own expense
within the territory of the lumber concession granted
to it, this Court, after citing Section 2 of
Commonwealth Act 470, held:
"Note that said section authorizes the levy of real tax
not only on lands, buildings, or machinery that may be
erected thereon, but also on any other improvements,
and considering the road constructed by appellee on
the timber concession granted to it as an improvement,
appellant assessed the tax now in dispute upon the
authority of the above provision of the law.
"It is the theory of appellant that, inasmuch as the road
was constructed by appellee for its own use and benefit
it is subject to real tax even if it was constructed on a
public land. On the other hand, it is the theory
of appellee that said road is exempt from real tax
because (1) the road belongs to the national
government by right of accession, (2) the road cannot
be removed or separated from the land on which it is
constructed and so it is part and parcel of the public
land, and (3), according to the evidence, the road was
built not only for the use and benefit of appellee but
also of the public in general.
"We are inclined to uphold the theory of appellee. 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 leased to appellee but also because upon the
expiration of the concession, said road would ul-
timately pass to the national government (Articles 440
and 445, new Civil Code; Tobatabo vs. Molero, 22 Phil.,
418). In the second place, while the road was
constructed by appellee primarily for its use and
benefit, the privilege is not exclusive, for, under the
lease contract entered into by the appellee and
the government, its use can also be availed of by the
employees of the government and by the public in
general. x x x 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 Commonwealth Act No. 470.
"We are not oblivious of the fact that the present
assessment was made by appellant on the strength of
an opinion rendered by the Secretary of Justice, we
find that the same is predicated on authorities which
are not in point, for they refer to improvements that
belong to the lessees although constructed on lands
belonging to the government. It is well settled
that a real tax, being a burden upon the
capital, shod be paid by the owner of the land and not
by a usufructuary(Mercado vs. Rizal, 67 Phil., 608;
Article 597, new Civil Code). Appellee is but a
partial usufructuary of the road in question."
Again, in the case of Municipality of Cotabato, et
al. vs. Santos, et al., 105 Phil., 963, this Court ruled that
the lessee who introduced improvements consisting of
dikes, gates and guard-houses on swamp lands leased
to him by the Bureau of Fisheries, in convertihg the
swamps into fishponds, is exempt from payment of
realty taxes on those improvements. This Court held:
"We however believe that the assessment on the
improvements introduced by defendant on the
fishpond has included more than what is authorized by
law. The improvements as assessed consist of dikes,
gates and guardhouses and bodegas totals P6,850.00
which appellants are not now questioning, but they
dispute the assessment on the dikes and gates in this
wise: 'After the swamps were leased to appellants, the
latter cleared the swamps and built dikes, by pushing
the soil to form these dikes in the same way that
paddies are built on lands intended for the
cultivation of palay, the only difference being that dikes
used in fishponds are relatively much larger than the
dikes used in ricelands.' We believe this contention to
be correct, because those dikes can really be considered
as integral parts of the fishponds and not as
independent improvements. They cannot be
taxed under the assessment law. The assessment,
therefore, with regard to improvements
should be modified by excluding the dikes and gates."
It is contended by petitioners that the ruling in
the Bislig case is not applicable in the present case
because if the concessionaire in the Bislig case was
exempt from paying the realty tax it was because the
road in that case was constructed on a timberland or
on an indisposablepublic land, while in the instant case
what is being taxed is the 13.8 kilometer portion or the
road traversing alienable public lands. This contention
has no merit. The pronouncement in the Bislig case
contains no hint whatsoever that the road was not
subject to tax because it was constructed on inalienable
public lands. What is emphasized in the Bislig case is
that the improvement is exempt from taxation because
it is an integral part of the public land on which it is
constructed and the improvement is the property of the
government by right of accession. Under Section 3(a)
of the Assessment Law (Com. Act 470), all properties
owned by the government, without any distinction, are
exempt from taxation.
It is also contended by petitioners that the Court of Tax
Appeals can not take cognizance or the appeal
of Samar from the resolution of the Board assessing
realty tax on the road in question, because Samar had
not first paid under protest the realty tax assessed
against it as required under the provisions of Section
54 of the Assessment Law (Com. Act 470), which partly
reads as follows:
"SEC. 54. Restriction upon power of Court to impeach
tax. -- No court shall entertain any suit assailing the
validity of a tax assessment under this Act until the
taxpayer shall have paid under protest the taxes
assessed against him, nor shall any court declare any
tax invalid by reason ...."
The extent and scope of the jurisdiction of the Court of
Tax Appeals regarding matters related to assessment of
real property taxes are provided for in Section 7, parag-
raph (3) and Section 11 of Republic Act No. 1125,
which partly read as follows:
"SEC. 7. Jurisdiction. The Court of Tax Appeals shall
exercise exclusive appellate jurisdiction to review by
appeal, as herein provided -
x x x x
(3) Decisions of provincial or city Board of Assessment
Appeals in cases involving the assessment and taxation
of real property or other matters arising under the
Assessment Law, including rules and regulations
relative thereto."
"SEC. 11. Who may appeal; effect of appeal. - Any
person, association or corporation adversely affected
by a decision or ruling of x x xany provincial or city
Board of Assessment Appeals may file an appeal in the
Court of Tax Appeals within thirty days after the
receipt of such decision or ruling."
In this connection the Court or Tax Appeals, in the
decision appealed from, said:
"Prior to the enactment or Republic Act No. 1125, all
civil actions involving the legality of any tax, impost or
assessment were under the jurisdiction of the Court of
First Instance (Sec. 44, Republic Act No. 296). It is
clear, therefore, tnat before the creation of the Court or
Tax Appeals all cases involving the legality of
assessments for real property taxes, as well as the
refund thereof, were properly brought and taken
cognizance by the said court. However, with the
passage by Congress and the approval by the President
of Republic Act No. 1125, the jurisdiction over cases
involving the validity of realty tax assessment were
transferred from the Court of First Instance to
the Court of Tax Appeals (See Sec. 22, Rep. Act No.
1125). The only exception to the grant of exclusive
appellate jurisdiction to the Tax Court relates to cases
involving the refund of real property
taxes which remained with the Court of First
Instance (See City of Cabanatuan, et al. vs. Gatmaitan,
et al., G.R. No. L-19129, February 28, 1963).
"A critical and analytical study of Section 7 of Republic
Act No. 1125, in relation to subsections (1), (2) and (3)
thereof, will readily show that it was the intention of
Congress to lodge in the Court of Tax Appeals the
exclusive appellate jurisdiction over cases involving the
legality of real property tax assessment, as
distinguished from cases involving the refund of real
property taxes. To require the taxpayer, as contended
by respondents, to pay first the disputed real property
tax before he can file an appeal assailing the legality
and validity of the realty tax assessment will render
nugatory the appellate jurisdictional power of the
Court of Tax Appeals as envisioned in Section 7(3), in
relation to Section 11, of Republic Act No. 1125. If we
follow the contention of respondents to its logical
conclusion, we cannot conceive of a case involving the
legality and validity of real property tax assessment,
decided by the Board of Assessment Appeals, which
can be appealed to the Court of Tax Appeals. The
position taken by respondents is, therefore, in conflict
with the Explanatory Note contained in House Bill No.
175, submitted during the First Session, Third
Congress of the Republic of the Philippines, and the
last paragraph of Section 21 of Republic Act No. 1125
which provides as follows:
SEC. 21. General provisions. -
x x x
Any law or part of law, or any executive order, rule or
regulation or part thereof, inconsistent with the
provisions of this Act is hereby repealed.
"Accordingly, we hold that this Court can entertain and
give due course to petitioner's appeal assailing the
legality and validity of the real property tax assessment
here in question without paying first the disputed real
property tax as required by Section 54 of
the Assessment Law."
We agree with the foregoing view of the Court of Tax
Appeals. It should be noted that what is involved in
the present case is simply an assessment of realty
tax, as fixed by the Provincial Assessor
of Zamboanga del Sur, which was disputed
by Samar before the Board of Assessment Appeals of
said province. There was no demand yet for payment
of the realty tax. In fact the letter of the Provincial
Assessor, of June 5, 1964, notifying Samar of the
assessment, states as follows:
"Should you find the same to be not in accordance with
law or its valuation to be not satisfactory, you may
appeal this assessment under Section 17 of
Commonwealth Act 470 to the Board of Assessment
Appeals, through the Municipal Treasurer
of Buug,Zamboanga del Sur, within 60 days from the
date of your receipt hereof."[3]
Accordingly Samar appealed to the Board questioning
the validity of the assessment. The Board rendered a
resolution over-ruling the contention of Samar that the
assessment was illegal. Then Samar availed of its right
to appeal from the decision of the Board to the Court of
Tax Appeals as provided in Section 11 of Republic Act
1125. Section 11 does not require that before an appeal
from the decision of the Board of Assessment Appeals
can be brought to the Court of Tax Appeals it must first
be shown that the party disputing the assessment had
paid under protest the realty tax assessed. In the
absence of such a requirement under the law, all that is
necessary for a party aggrieved by the decision of the
Board of Assessment Appeals is to file his notice of
appeal to the Court of Tax Appeals within 30 days after
receipt of the decision of the Board of Assessment
Appeals, as provided in Section 11 of Republic Act 1125.
This Court, in the case of City
of Cabanatuan vs. Gatmaitan[4], said:
"... if the real estate tax has already been paid it is futile
for a taxpayer to take the matter to the City Board of
Assessment Appeals for the jurisdiction of that body is
merely confined to the determination of the
reasonableness of the assessment or taxation of the
property and is not extended to the authority of
requiring the refund of the tax unlike cases involving
assessment of internal revenue taxes. In the
circumstances, we hold that this case comes under the
jurisdiction of the proper court of first instance it
involving the refund of a real estate tax which does not
come under the appellate jurisdiction of the Court of
Tax Appeals."
From the aforequoted portion of the decision of this
Court, We gather that the only question that may be
brought before the City or Provincial Board of
Assessment Appeals is the question which relates to
the reasonableness or legality of the realty tax that is
assessed against a taxpayer. Such being the
case, it would be unjust to require the realty owner to
first pay the tax, that he precisely questions, before he
can lodge an appeal to the Court of Tax Appeals. We
believe that it is not the intendment of the law that in
questioning before the Court of Tax Appeals the
validity or reasonableness of the assessment approved
by the Board of Assessment Appeals the taxpayer
should first pay the questioned tax. It is Our view that
in so far as appeals from the decision or resolution of
the Board of Assessment Appeals, Section 54 of
Commonwealth Act 470 does not apply, and said
section can be considered as impliedly repealed by
Sections 7, 11 and 21 of Republic Act 1125.
IN VIEW OF THE FOREGOING, the decision of
the Court of Tax Appeals, appealed from, is affirmed,
without pronouncement as to costs.
IT IS SO ORDERED.