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Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-37409 May 23, 1988
NICOLAS VALISNO, plaintiff-appellant,
vs.
FELIPE ADRIANO, defendant-appellee.
Honorio Valisno Garcia I for plaintiff-appelant.
Felipe K Medina for defendant-appellee.
GRIÑO-AQUINO, J.:
This case was certified to this Court by the Court of Appeals in a resolution dated August 10, 1973, the
sole issue being a question of law and beyond its jurisdiction. to decide.
Admitted by the parties in their pleading and established during the trial on the merits are the following
material facts:
On June 20, 1960, 'the plaintiff-appellant file against the defendant-appellee an action for damages
docketed as Civil Case No. 3472 in the Court of First Instance of Nueva Ecija. The complaint alleged that
the plaintiff is the absolute owner and actual possessor of a 557,949-square-meter parcel of land in La
Fuente, Santa Rosa, Nueva Ecija, and more particularly described in his Transfer Certificate of Title No.
NT-16281. The plaintiff-appellant Valisno bought the land from the defendant-appellees sister, Honorata
Adriano Francisco, on June 6,1959. (Deed of Absolute Sale, Exh. "A".) The land which is planted with
watermelon, peanuts, corn, tobacco, and other vegetables adjoins that of the appellee Felipe Adriano
on the bank of the Pampanga River. Both parcels of land had been inherited by Honorata Adriano
Francisco and her brother, Felipe Adriano, from their father, Eladio Adriano. At the time of the sale of
the land to Valisno, the land was irrigated by water from the Pampanga River through a canal about
seventy (70) meters long, traversing the appellee's land.
On December 16, 1959, the appellee levelled a portion of the irrigation canal so that the appellant was
deprived of the irrigation water and prevented from cultivating his 57-hectare land.
The appellant filed in the Bureau of Public Works and Communications a complaint for deprivation of
water rights. A decision was rendered on March 22, 1960 ordering Adriano to reconstruct the irrigation
canal, "otherwise judicial action shall be taken against him under the provisions of Section 47 of Act
2152 (the Irrigation Act), as amended." Instead of restoring the irrigation canal, the appellee asked for a
reinvestigation of the case by the Bureau of Public Works and Communications. A reinvestigation was
granted.
In the meantime, plaintiff Valisno rebuilt the irrigation canal at his own expense because his need for
water to irrigate his watermelon fields was urgent.
On June 20, 1960, he filed a complaint for damages in the Court of First Instance (now Regional Trial
Court) of Nueva Ecija (Civil Case No. 3472) claiming that he suffered damages amounting to P8,000
when he failed to plant his fields that year (1960) for lack of irrigation water, P800 to reconstruct the
canal on defendant Adriano's land, and P1,500 for attorney's fees and the costs of suit.
On October 25, 1961, the Secretary of Public Works and Communications reversed the Bureau's decision
by issuing a final resolution dismissing Valisno's complaint. The Secretary held that Eladio Adriano's
water rights which had been granted in 1923 ceased to be enjoyed by him in 1936 or 1937, when his
irrigation canal collapsed. His non-use of the water right since then for a period of more than five years
extinguished the grant by operation of law, hence the water rights did not form part of his hereditary
estate which his heirs partitioned among themselves. Valisno, as vendee of the land which Honorata
received from her father's estate did not acquire any water rights with the land purchased.
In his answer to the damage suit (Civil Case No. 3472), the defendant Felipe Adriano admitted that he
levelled the irrigation canal on his land, but he averred: that neither his late father nor his sister
Honorata possessed water rights for the land which she sold to the appellant; that he (the appellee)
applied for water rights for his land in 1956 and obtained the same in 1958; and that he had a perfect
right to level his land for his own use because he merely allowed his sister to use his water rights when
she still owned the adjacent land. He set up a counterclaim for P3,000 as damages incurred by him in
levelling the land on which the appellant dug an irrigation canal, P2,000 as actual damages, P3,000 as
attorney's fees, and expenses of litigation.
In a decision dated April 21, 1966, the trial court held that the plaintiff had no right to pass through the
defendant's land to draw water from the Pampanga River. It pointed out that under Section 4 of the
Irrigation Law, controversies between persons claiming a right to water from a stream are within the
jurisdiction of the Secretary of Public Works and his decision on the matter is final, unless an appeal is
taken to the proper court within thirty days. The court may not pass upon the validity of the decision of
the Public Works Secretary collaterally. Furthermore, there was nothing in the plaintiff 's evidence to
show that the resolution was not valid. It dismissed the complaint and counterclaim.
The plaintiff's motion for reconsideration of the decision was denied by the trial court. The plaintiff
appealed to the Court of Appeals which certified the case to Us upon the legal question of whether the
provisions of the Irrigation Act (Act No. 2152) or those of the Civil Code should apply to this case.
The plaintiff-appellant argues that while the trial court correctly held that the Secretary of Public Works
may legally decide who between the parties is entitled to apply for water rights under the Irrigation Act,
it erred in ruling that the Secretary has authority to hear and decide the plaintiff 's claim for damages for
the defendant's violation of his (plaintiff's) right to continue to enjoy the easement of aqueduct or water
through the defendant's land under Articles 642, 643, and 646 of the Civil Code, which provide:
Article 642. Any person who may wish to use upon his own estate any water of which he can dispose
shall have the right to make it flow through the intervening estates, with the obligation to indemnify
their owners, as well as the owners of the lower estates upon which the waters may filter or descend.
Article 643. One desiring to make use of the right granted inthe preceding article is obliged:
(1) To prove that he can dispose of the water and that it is sufficient for the use for which it is
intended;
(2) To show that the proposed right of way is the most convenient and the least onerous to third
persons;
(3) To indemnify the owner of the servient estate in the manner determined by the laws and
regulations.
Article 646. For legal purposes, the easement of aqueduct shall be considered as continuous and
apparent, even though the flow of the water may not be continuous, or its use depends upon the needs
of the dominant estate, or upon a schedule of alternate days or hours.
The existence of the irrigation canal on defendant's land for the passage of water from the Pampanga
River to Honorata's land prior to and at the time of the sale of Honorata's land to the plaintiff was
equivalent to a title for the vendee of the land to continue using it as provided in Article 624 of the Civil
Code:
Article 624. The existence of an apparent sign of easement between two estates, established or
maintained by the owner of both shall be considered, should either of them be alienated, as a title in
order that he easement may continue actively and passively, unless at the time, theownership of the
two estates is divided, the contrary should be provided in the title of conveyance of either of them, or
the sign aforesaid should be removed before the execution of the deed.
This provision shall also apply in case of the division of a thing owned in common on by two or more
persons (Civil Code)
This provision was lifted from Article 122 of the Spanish Law of Waters which provided:
Article 122. Whenever a tract of irrigated land which previously received its waters from a single point is
divided through inheritance, sale or by virtue of some other title, between two or more owners, the
owners of the higher estates are under obligation to give free passage to the water as an easement of
conduit for the irrigation of the lower estates, and without right to any compensation therefore unless
otherwise stipulated in the deed of conveyance. (Art. 122, Spanish Law of Waters of August 3, 1866.)
No enlightened concept of ownership can shut out the Idea of restrictions thereon, such as easements.
Absolute and unlimited dominion is unthinkable, inasmuch as the proper enjoyment of property
requires mutual service and forbearance among adjoining estates (Amor vs. Florentino, 74 Phil. 403).
As indicated in the decision dated March 22, 1960 of the Bureau of Works "the principal issue involved
in this case falls under the subject of servitude of waters which are governed by Article 648 of the new
Civil Code and the suppletory laws mentioned in the cases of Lunod vs. Meneses 11 Phil. 128) and
Osmena vs. Camara (C.A. 380 62773) which are the irrigation law and the Spanish Law of Waters of
August 3, 1866, specifically Article 122 thereof.
The deed of sale in favor of Valisno included the "conveyance and transfer of the water rights and
improvements" appurtenant to Honorata Adriano's property. By the terms of the Deed of Absolute Sale,
the vendor Honorata Adriano Francisco sold, ceded, conveyed and transferred to Dr. Nicolas Valisno all
"rights, title, interest and participations over the parcel of land above- described, together with one
Berkely Model 6 YRF Centrifugal Pump G" suction, 6" discharge 500-1500 GPM, with Serial No. 5415812
and one (1) set of suction pipe and discharge of pipe with elbow, nipples, flanges and footvalves," and
the water rights and such other improvements appertaining to the property subject of this sale.
According to the appellant, the water right was the primary consideration for his purchase of Honorata's
property, for without it the property would be unproductive.
Water rights, such as the right to use a drainage ditch for irrigation purposes, which are appurtenant to
a parcel of land, pass with the conveyance of the land, although not specifically mentioned in the
conveyance. The purchaser's easement of necessity in a water ditch running across the grantor's land
cannot be defeated even if the water is supplied by a third person (Watson vs. French, 112 Me 371 19
C.J. 868-897). The fact that an easement by grant may also have qualified as an easement of necessity
does detract from its permanency as property right, which survives the determination of the necessity
(Benedicto vs. CA, 25 SCRA 145).<äre||anº•1àw>
As an easement of waters in favor of the appellant has been established, he is entitled to enjoy it free
from obstruction, disturbance or wrongful interference (19 CJ 984), such as the appellee's act of levelling
the irrigation canal to deprive him of the use of water from the Pampanga River.
WHEREFORE, the appealed decision is set aside, and a new one is entered ordering the appellee to grant
the appellant continued and unimpeded use of the irrigation ditch traversing his land in order to obtain
water from the Pampanga River to irrigate appellant's land. Let the records of this case be remanded to
the court a quo for the reception of evidence on the appellant's claim for damages.
SO ORDERED.
Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.
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SUPREME COURT
Manila
EN BANC
G.R. No. L-10619 February 28, 1958
LEOGARIO RONQUILLO, ET AL., plaintiffs-appellants,
vs.
JOSE ROCO, as Administrator of VICENTE, ROCO Y. DOMINGUEZ ET AL., defendants-appellees.
Moises B. Cruz for appellants.
Vicente Roco, Jr. for appellees.
MONTEMAYOR, J.:
Involving as it does only a question of law, the present appeal from the order of the Court of First
Instance of Camarines Sur, dated March 6, 1955, dismissing the amended and supplemental complaint
of plaintiffs on motion of defendants that it did not state a cause of action, was taken directly to this
Court.
The facts and the issue involved in the appeal are well and correctly stated in the appealed order, the
pertinent portion of which we are reproducing and making our own:
The amended and supplemental complaint alleged that the plaintiffs have been in the continuous and
uninterrupted use of a road or passage way which traversed the land of the defendants and their
predecessors in interest, in going to Igualdad Street and the market place of Naga City, from their
residential land and back, for more than 20 years; that the defendants and the tenants of Vicente Roco,
the predecessors in interest of the said defendants have long recognized and respected the private legal
easement of road right of way of said plaintiffs; that on May 12, 1953, the defendants Jose Roco thru his
co-defendants, Raymundo Martinez and their men with malice aforethought and with a view to
obstructing the plaintiffs' private legal easement over the property of the late Vicente Roco, started
constructing a chapel in the middle of the said right of way construction actually impeded, obstructed
and disturbed the continuous exercise of the rights of the plaintiffs over said right of way; that on July
10, 1954 the new defendants Natividad Roco and Gregorio Miras, Jr. with the approval of the defendant,
Jose Roco and with the help of their men and laborers, by means of force, intimidation, and threats,
illegally and violently planted wooden posts, fenced with barbed wire and closed hermitically the road
passage way and their right of way in question against their protests and opposition, thereby preventing
them from going to or coming from their homes to Igualdad Street and the public market of the City of
Naga.
It is very clear from the allegations of the plaintiffs in their amended and supplemental complaint, that
they claim to have acquired the easement of right of way over the land of the defendants and the
latter's predecessors in interest, Vicente Roco, thru prescription by their continuous and uninterrupted
use of a narrow strip of land of the defendants as passage way or road in going to Igualdad Street and
the public market of Naga City, from their residential land or houses, and return.
The only question therefore to determine in this case, is whether an easement of right of way can be
acquired thru prescription.
The dismissal was based on the ground that an easement of right of way though it may be apparent is,
nevertheless, discontinuous or intermittent and, therefore, cannot be acquired through prescription,
but only by virtue of a title. Under old as well as the New Civil Code, easements may be continuous
discontinuous (intermittent), apparent or non-apparent, discontinuous being those used at more or less
long intervals and which depend upon acts of man (Articles 532 and 615 of the Old and New Civil Codes,
respectively). Continuous and apparent easements are acquired either, by title or prescription,
continuous non-apparent easements and discentinuous ones whether apparent or not, may be acquired
only by virtue of a title (Articles 537 and 539, and 620 and 622 of the Old and New Civil Codes,
respectively).
Both Manresa and Sanchez Roman are of the opinion the easement of right of way is a discontinuous
one:
En cambio, las servidumbres discontinues se ejercitan por un hecho del hombre, y precisamente por eso
son y tienen que ser discontinuas, porque es imposible fisicamente que su uso sea incesante. Asi, la
servidumbre de paso es discontinua, porque no es posible que el hombre este pasando continuamente
por el camino, vereda o senda de que se trate. (4 Manresa, Codigo Civil Español, 5th ed, p. 529).
. . . "5º Por razon de los modos de disfrutar las servidumbres, en continuas y discontinuas (1). Las
continuas son aquelles cuyo uso es o puede ser incesante, sin la intervencion de ningun hecho del
hombre, como son las de luces y otras de la misma especie; y las discontinuas, las que se usan
intervalos, mas o menos largos, y dependen de actos del hombre, como las de sen senda, carrera y otras
de esta clase. (3 Sanchez Roman, Derecho Civil, p. 488).
Under the provisions of the Civil Code, old and new, particularly the articles thereof aforecited, it would
therefore appear that the easement of right of way may not be acquired through prescription. Even
Article 1959 of the Old Civil Code providing for prescription of ownership and other real rights in real
property, excludes therefrom the exception established by Article 539, referring to discontinuous
easements, such as, easement of right of way. (Bargayo vs. Camumot, 40 Phil., 857, 867).
In the case of Cuayong vs. Benedicto, 37 Phil., 781 where the point in issue was whether or not vested
rights in a right of way can be acquired through user from time immemorial, this Court said:
It is evident, therefore, that no vested right by user from time immemorial had been acquired by
plaintiffs at the time the Civil Code took effect. Under that Code (Article 539) ino discontinuous
easement could be acquired by prescription in any event.
However, in the case of Municipality of Dumangas is Bishop of Jaro, 34 Phil., 545, this same Tribunal
held that the continued use by the public of a path over land adjoining the Catholic church in going to
and from said church through its side door, has given the church the right to such use by prescription,
and that because of said use by the public, an easement of right of way over said land has been acquired
by prescription, not only by the church, but also by the public, which without objection or protest on the
part of the owner of said land, had continually availed itself of the easement.
The minority of which the writer of this opinion is a part, believes that the easement of right of way may
now be acquired through prescription, at least since the introduction into this jurisdiction of the special
law on prescription through the Old Code of Civil Procedure, Act No. 190. Said law, particularly, Section
41 thereof, makes no distinction as to the real rights which are subject to prescription, and there would
appear to be no valid reason, at least to the writer of this opinion, why the continued use of a path or a
road or right of way by the party, specially by the public, for ten years or more, not by mere tolerance of
the owner of the land, but through adverse use of it, cannot give said party a vested right to such right
of way through prescription.
The uninterrupted and continuous enjoyment of a right of way necessary to constitute adverse
possession does not require the use thereof every day for the statutory period, but simply the exercise
of the right more or less frequently according to the nature of the use. (17 Am. Jur. 972)
Even under the case of Cuaycong vs. Benedicto (supra), this Tribunal insinuated the rule that no
discontinuous easement, like an easement of right of way, may, under Article 539 of the Old Civil Code,
be acquired, might possibly have been changed by the provisions of the Code of Civil Procedure relative
to prescription.
. . . Assuming, without deciding, that this rule has been changed by the provisions of the present Code of
Civil Procedure relating to prescription, and that since its enactment discontinuous easement of
acquired by prescription, it is clear that this would not by avail plaintiffs. The Code of Civil Procedure
went into effect on October 1, 1901. The term of prescription for the acquisition of right in real estate is
fixed by the Code (section 41) at ten years. The evidence shows that in February, 1911, before the
expiration of the term of ten years since the time the Code of Civil Procedure took effect, the
defendants interrupted the use of the road by plaintiffs by constructing and maintaining a toll gate on, it
collecting toll from persons making use of it with carts and continued to do so until they were enjoin by
the granting of the preliminary injunction by the trial court in December 1912. . . (Cuayong vs.
Benedicto, 37 Phil., 781, 796).
Professor Tolentino in his Commentaries and Jurisprudence on the Civil Code, Vol. I, p. 340, would
appear to be of the opinion that under, the provision of the Code of Civil Procedure relative to
prescription, even discontinuous easements, like the easement right of way, may be acquired through
prescription:
. . . "It is submitted that under Act No. 190, even discontinuous servitudes can be acquired by
prescription, provided it can be shown that the servitude was actual, open, public, continuous, under a
claim of title exclusive of any other right and adverse to all other claimants'."
However, the opinion of the majority must prevail, and it is held that under the present law, particularly,
the provisions of the Civil Code, old and new, unless and until the same is changed or clarified, the
easement of right of way may not be acquired through prescription.
In view of the foregoing, the order appealed from is hereby affirmed. No costs.
Bengzon, Bautista Angelo, Labrador, Concepcion, Endencia, and Felix, JJ., concur.
Padilla, J., concurs in the result.
Separate Opinions
REYES, J.B.L., J., concurring:
I would like to elaborate my reasons for concurring with the majority in declaring the easement of right
of way not acquirable by prescription.
The essence of this easement ("servidumbre de paso") lies in the power of the dominant owner to cross
or traverse the servient tenement without being prevented or disturbed by its owner. As a servitude, it
is a limitation on the servient owner's rights of ownership, because it restricts his right to exclude others
from his property. But such limitation exists only when the dominant owner actually crosser, or passes
over the servient estate; because when he does not, the servient owner's right of exclusion is perfect
and undisturbed. Since the dominant owner can not be continually and uninterruptedly crossing the
servient estate, but can do so only at intervals, the easement is necessarily of an intermittent or
discontinuous nature.
Because possession of a right consists in the enjoyment of that right (old Civil Code, Art. 430; Art. 423,
new Civil Code) and to enjoy a right is to exercise it, it follows that the possession (enjoyment or
exercise) of a right of way is intermittent and discontinuous. From this premise, it is inevitable to
conclude, with Manresa and Sanchez Roman, that such easement can not be acquired by acquisitive
prescription (adverse possession) because the latter requires that the possession be continuous or
uninterrupted (old Civil Code, Art. 1941; new Civil Code, Art. 1118).
The Code of Civil Procedure (Act 190) did not change the situation. Observe that its section 41, in
conferring prescriptive title upon "ten years adverse possession" qualifies it by the succeeding words
"uninterruptedly continued for ten years which is the same condition of continuity that is exacted by the
Civil Code.
SEC. 41. Title to Land by Prescription. — Ten years actual adverse possession by any person claiming to
be the owner for that time of any land or interest in land, uninterruptedly continued for ten years by
occupancy, descent, grants, or otherwise, in whatever way such occupancy may have commenced or
continued, shall vest in every actual occupant or possessor of such land a full and complete title, saving
to the persons under disabilities the rights secured the next section. In order to constitute such title by
prescription or adverse possession, the possession by the claimant or by the person under or through
whom he claims must have been actual, open, public, continous, under a claim of title exclusive of any
other right and adverse to all other claimants. But failure to occupy or cultivate land solely by reason of
war shall not be deemed to constitute an interruption of possession of the claimant, and his title by
prescription shall he complete, if in other regrets perfect, notwithstanding such failure to occupy or
cultivate the land during the continuance of war.
The case of Municipality of Dumangas vs. Bishop of Jaro, 34 Phil. 541, does not, if properly analyzed,
constitute authority to hold that the easement of right of way is acquirable by prescription or adverse
possession. The Court there said:
The record shows that the church of the pueblo of Dumangas was constructed in or about the year
1987; that wall on the southeast side adjoins the building lot in question; and that since the construction
of the church there has been a side door in this wall through which the worshippers attending divine
service enter and leave, they having to pass over and cross the land in question. It is therefore to be
presumed that the use of said side door also carries with it the use by faithful Catholics of the municipal
land over which they have had to pass in order to gain access to said place of worship, and, as this use of
the land has been continuous, it is evident that the Church has acquired a right to such use by
prescription, in view of the time that has elapsed since the church was built and dedicated to religious
worship, during which period the municipality has not prohibited the passage over the land by the
persons who attend services customarily held in said church.
The record does not disclose the date when the Government ceded to the Church the land on which the
church building was afterwards erected, nor the date of the laying out of the adjacent square that is
claimed by the municipality and on which the side door of the church, which is used as an entrance by
the people who frequent this building, gives. There are good grounds for presuming that in apportioning
lands at the time of the establishment of the pueblo of Dumangas and in designating the land adjacent
to the church as a public square, this latter was impliedly encumbered with the easement of a right of
way to allow the public to enter and leave the church — a case provided for by article 567 of the Civil
Code — for the municipality has never erected any building or executed any work which would have
obstructed the passage and access to the side door of the church, and the public has been enjoying the
right of way over the land in question for an almost immemorable length of time. Therefore an
easement of right of way over said land has been acquired by prescription, not only by the church, but
also by the public which, without objection or protest, has continually availed itself of the easement in
question. (34 Phil., pp. 545-546).
It will be seen that the ratio decidendi of that case lies in the application of Article 567 of the old Civil
Code that provides as follows:
ART. 567. When an estate acquired by purchase, exchange, or partition is enclosed by other estates of
the vendor, exchanger, or co-owner, the latter shall be obliged to grant a right of way without
indemnity, in the absence of an agreement to the contrary.
Bearing in mind the provisions of the article quoted in relation to the wording of the decision in the
Dumangas case, it can be seen that what the court had in mind is that when the Spanish Crown
apportioned the land occupied by the Church of Dumangas, it impliedly burdened the neighboring public
square (which was also Crown property at the time) with an easement of right of way to allow the public
to enter and leave the church, because without such easement the grant in favor of ecclesiastical
authorities would be irrisory: what would be the use of constructing a church if no one could enter it?
Now, if there was an implied grant of the right of way by the Spanish Crown, it was clearly unnecessary
to justify the existence of the easement through prescriptive acquisition. Why then does the decision
repeatedly speak of prescription? Plainly, the word "prescription" was used in the decision not in the
sense of adverse possession for ten or thirty years, but in the sense of "immemorial usage" that under
the law anterior to the Civil Code of 1889, was one of the ways in which the servitude of right of way
could be acquired.1 This view is confirmed by the fact that throughout the passages hereinabove
quoted, the court's decision stresses that the people of Dumangas have been passing over the public
square to go to church since the town was founded and the church was built, an "almost immemorable
length of time." It would seem that the term "priscription" used in said case was merely a loose
expression that is apt to mislead unless the court's reasoning is carefully analyzed.
Since 1889, however, the Civil Code repealed the prior legislation; and thereafter the right of way could
only be acquired by title and not by adverse possession (usucapio), saving those servitudes already
acquired before the Code came into effect (Decisions, Supreme Court of Spain 27 Oct. 1900, 1st
February 1912; 11 May 1927, and 7 January 1920).
Paras, C.J. and Reyes A., J., concur.
Footnotes
1 In fact, the Siete Partidas. (law 25, Title 31, of the Third Partida), in treating of this servitude declared
that to this servitude by lapse of time "ha menester que aya usado dellas — tanto tiempo de que non se
puedan acordar los omes quanto ha que lo comenzaran usar".
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SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-66520 August 30, 1988
EDUARDO C. TAÑEDO, petitioner,
vs.
HON. JUANITO A. BERNAD, Presiding Judge of the Regional Trial Court, 7th Judicial Region, Branch XXI,
Cebu City; Spouses ROMEO SIM and PACITA S. SIM; and Spouses ANTONIO CARDENAS and MAE LINDA
CARDENAS, respondents.
Numeriano F. Capangpangan for petitioner.
Meinrado P. Parades for private respondents.
PADILLA, J.:
This is a petition for review on certiorari of the Order issued by the respondent judge, Hon. Juanita A.
Bernad on 5 December 1983, which dismissed the complaint for legal redemption filed by the petitioner
in Civil Case No. CEB-994 of the Regional Trial Court of Cebu, and the Order of the same respondent
judge, dated 20 January 1984, which denied petitioner's motion for reconsideration.
The facts, in brief, are as follows:
The private respondent Antonio Cardenas was the owner of two (2) contiguous parcels of land situated
in Cebu City which he had inherited from Lourdes Cardenas and more particularly known as Lot 7501-A,
with an area of 140 square meters and Lot 7501-B, with an area of 612 square meters. On Lot 7501-A is
constructed an apartment building, while the improvements on Lot 7501-B consist of one four-door
apartment of concrete and strong materials; one two-storey house of strong materials; a bodega of
strong materials; and a septic tank for the common use of the occupants of Lots 7501-A and 7501-B. A
small portion of the apartment building on Lot 7501-A also stands on Lot 7501-B.
On 5 February 1982, said Antonio Cardenas sold Lot 7501-A to herein petitioner Eduardo C. Tañedo. 1
Antonio Cardenas, on that same day, also mortgaged Lot 7501-B to said Eduardo C. Tañedo as a security
for the payment of a loan in the amount of P10,000.00. 2
Antonio Cardenas further agreed that he would sell Lot 7501-B only to Eduardo Tañedo in case he
should decide to sell it, as the septic tank in Lot 7501-B services Lot 7501-A and the apartment building
on Lot 7501-A has a part standing on Lot 7501-B. This was confirmed in a letter, dated 26 February 1982,
wherein Antonio Cardenas asked Tañedo not to deduct the mortgage loan of P10,000.00 from the
purchase price of Lot 7501-A "because as we have previously agreed, I will sell to you Lot 7501-B."3
Antonio Cardenas, however, sold Lot 7501-B to the herein respondent spouses Romeo and Pacita Sim. 4
Upon learning of the sale, Eduardo Tañedo offered to redeem the property from Romeo Sim. But the
latter refused. Instead, Romeo Sim blocked the sewage pipe connecting the building of Eduardo Tañedo
built on Lot 7501-A, to the septic tank in Lot 7501-B. He also asked Tañedo to remove that portion of his
building enroaching on Lot 7501-B. As a result, Eduardo Tañedo, invoking the provisions of Art. 1622 of
the Civil Code, filed an action for legal redemption and damages, with a prayer for the issuance of a writ
of preliminary injunction, before the Regional Trial Court of Cebu, docketed therein as Civil Case No.
CEB-994, against the spouses Romeo and Pacita Sim, Antonio Cardenas and his wife Mae Linda
Cardenas, the Register of Deeds of Cebu City, and Banco Cebuano, Cebu City Development Bank. 5
Answering, the spouses Romeo and Pacita Sim claimed that they are the absolute owners of Lot 7501-B
and that Eduardo Tañedo has no right to redeem the land under Art. 1622 of the Civil Code as the land
sought to be redeemed is much bigger than the land owned by Tañedo. 6
Antonio Cardenas, upon the other hand, admitted that he had agreed to sell Lot 7501-B to Eduardo
Tañedo and claimed by way of cross-claim against the spouses Romeo and Pacita Sim that the Deed of
Sale he had executed in favor of said spouses was only intended as an equitable mortgage, to secure the
payment of amounts received by him from said spouses as petty loans . 7
In answer to the cross-claim, the spouses Romeo and Pacita Sim insisted that the sale executed by
Antonio Cardenas of Lot 7501-B in their favor was an absolute one. 8
Thereafter, or on 14 October 1983, the spouses Romeo and Pacita Sim filed motions to dismiss the
complaint and the cross-claim, for lack of cause of action. 9
Acting upon these motions and other incidental motions, the respondent judge issued the questioned
order of 5 December 1983 dismissing the complaint and cross-claim.10
Tañedo filed a motion for reconsideration of the order, but his motion was denied on 20 January 1984.
11
Hence, the present recourse by petitioner Tanedo.

The Court finds merit in the petition. The dismissal of the complaint on the ground of lack of cause of
action, is precipitate. The settled rule where dismissal of an action is sought on the ground that the
complaint does not state a cause of action is, that the insufficiency of the cause of action must appear
on the face of the complaint. And the test of the sufficiency of the ultimate facts alleged in the
complaint to constitute a cause of action, is whether or not, admitting the facts alleged, the court can
render a valid judgment upon the same in accordance with the prayer of the complaint. For this
purpose, the movant is deemed to admit hypothetically the truth of the facts thus averred. 12
In the instant case, it cannot be denied that petitioner Tanedo cannot redeem the entire Lot 7501-B
from the spouses Romeo and Pacita Sim pursuant to the provisions of Art. 1622 Romeo and Pacita Sim
pursuant to the provisions of Art. 1622 of the Civil Code, since the lot sought to be redeemed, has an
area of 612 square meters which is much bigger, area-wise, than the lot owned by petitioner Tañedo.
However, the petitioner seeks to purchase only that small portion of Lot 7501-B occupied by his
apartment building, because the spouses Romeo and Pacita Sim had told him to remove that portion of
his building which enroaches upon Lot 7501-B. Whether or not this is possible should have been
determined at the pre-trial stage or trial on the merits.
Besides, the action of petitioner Tañedo is also one for recovery of damages by reason of breach of
promise by the respondent Antonio Cardenas to sell Lot 7501-B. Paragraphs 3 and 4 of the amended
complaint read, as follows:
3. That by written agreement, plaintiff and defendant spouses Antonio Cardenas and Mae Linda
Cardenas agreed that in the event they decide to sell the adjacent Lot No. 7501-B of the subdivision plan
(LRC) Psd. 23638, a portion of Lot No. 7501 of the cadastral survey of Cebu, LRC (GLRC) Cad. Record No.
9465, situated in the City of Cebu, containing an area of SIX HUNDRED TWELVE (612) Square meters
more or less which lot is adjacent to Lot No. 7501-A of the plaintiff and where part of the plaintiffs
apartment is standing on, the same should be sold to the plaintiff, but far from compliance of the
written agreement, defendant spouses Antonio Cardenas and Mae Linda Cardenas sureptiously [sic] sold
the aforestated Lot No. -7501-B- to the defendant spouses, Romeo Sim and Pacita Sim on July 23, 1982
as per Deed of Sale notarized by Notary Public, Jorge S. Omega and entered in his Notarial Register as
Doc. No. 462; Page No. -94- Book No. 11, Series of 1982;
4. That due to the sale by the defendant spouses Antonio Cardenas and Mae Linda Cardenas of the
property in question to spouses Romeo Sim and Pacita Lim, plaintiff suffered moral damages in the form
of mental anguish, sleepless nights, mental torture, for which he is entitled to a compensation in the
amount to be established during the trial of the case and has incurred litigation expenses subject for
reimbursentent and attorneys fee in the sum of P10,000.00 which should be chargeable to both
defendant spouses;13
and the plaintiff (herein petitioner) prayed, among others: "(c) That defendant spouses Romeo Sim and
Pacita Sim and spouses Antonio Cardenas and Mae Linda Cardenas be ordered to pay plaintiff moral
damages, litigation expenses and attorneys fees in the amount of P50,000.00." 14
That there was a written agreement, as alleged in the complaint, between the plaintiff Eduardo Tañedo
and the defendant Antonio Cardenas is admitted by the latter. In his answer, he alleged the following:
ALLEGATIONS as to written agreement is ADMITTED, but, specifically denies that herein defendants
SUREPTIOUSLY [sic] SOLD the lot in question to the other defendant Spouses Sim the truth is, that the
herein defendants [sic] was required to execute the Deed of Sale described in this paragraph 3 as
security for the personal loans and other forms of indebtedness incurred from the Spouses Sims but
never as a conveyance to transfer ownership;15
Considering this admission of defendant Cardenas, and that his promise to sell Lot 7501-B to Eduardo
Tañedo appears to be for a valuable consideration, a trial is necessary to determine, at the very least,
the amount of damages suffered by the plaintiff Eduardo Tafiedo by reason of such breach of promise to
sell, if indeed there is such a breach.
Moreover, the finding of the trial court that petitioner Tañedo's right to continue to use the septic tank,
erected on Lot 7501-B, ceased upon the subdivision of the land and its subsequent sale to different
owners who do not have the same interest,16 also appears to be contrary to law. Article 631 of the Civil
Code enumerates the grounds for the extinguishment of an easement. Said article provides:
Art. 631. Easements are extinguished:
(1) By merger in the same person of the ownership of the dominant and servient estates;
(2) By non-user for ten years; with respect to discontinuous easements, this period shall be
computed from the day on which they ceased to be used; and, with respect to continuous easements,
from the day on which an act contrary to the same took place;
(3) When either or both of the estates fall into such condition that the easement cannot be used;
but it shall revive if the subsequent condition of the estates or either of them should again permit its
use, unless when the use becomes possible, sufficient time for prescription has elapsed, in accordance
with the provisions of the preceding number;
(4) By the expiration of the term or the fulfillment of the conditions, if the easement is temporary
or conditional;
(5) By the renunciation of the owner of the dominant estate;
(6) By the redemption agreed upon between the owners of the dominant and servient estates.
As can be seen from the above provisions, the alienation of the dominant and servient estates to
different persons is not one of the grounds for the extinguishment of an easement. On the contrary, use
of the easement is continued by operation of law. Article 624 of the Civil Code provides:
Art. 624. The existence of an apparent sign of easement between two estates, established or maintained
by the owner of both, shall be considered, should either of them be alienated, as a title in order that the
easement may continue actively and passively, unless, at the time the ownership of the two estates is
divided, the contrary should be provided in the title of conveyance of either of them, or the sign
aforesaid should be removed before the execution of the deed. This provision shall also apply in case of
the division of a thing owned in common by two or more persons.
In the instant case, no statement abolishing or extinguishing the easement of drainage was mentioned
in the deed of sale of Lot 7501-A to Eduardo Tañedo. Nor did Antonio Cardenas stop the use of the drain
pipe and septic tank by the occupants of Lot 7501-A before he sold said lot to Eduardo Tafiedo. Hence,
the use of the septic tank is continued by operation of law. Accordingly, the spouses Romeo and Pacita
Sim the new owners of the servient estate (Lot 7501- B), cannot impair, in any manner whatsoever, the
use of the servitude. 17
WHEREFORE, the Orders complained of are hereby REVERSED and SET ASIDE. The respondent judge or
another one designated in his place is directed to proceed with the trial of this case on the merits. With
costs against private respondents.
SO ORDERED.
Melencio-Herrera, Paras, Sarmiento and Regalado, JJ., concur.
Footnotes
1 Amended Complaint, par. 2, Original Record, p. 7.
2 Original Record, p. 32.
3 Rollo, pp, 28-29.
4 Id., p. 30.
7 Id., p. 24.
8 Id., p. 49.
9 Id., p. 87, 91.
10 Rollo, p. 32.
11 Id., p. 43.
12 Azur vs. Prov. Board, G.R. No. L-22333, Feb. 27, 1969, 27 SCRA 50.
14 Id.,p. 10.
15 Id.,p. 24.
16 Id.,p. 124.
17 Art. 629, Civil Code.
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SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 80511 January 25, 1991
COSTABELLA CORPORATION, petitioner,

vs.
COURT OF APPEALS, KATIPUNAN LUMBER CO., INC., AURORA BUSTOS LOPEZ, MANUEL S. SATORRE, JR.,
JOSEFA C. REVILLES, FELIX TIUKINHOY, JR., PERFECTA L. CHUANGCO, and CESAR T. ESPINA, respondents.
Roco, Bunag, Kapunan & Migallos for petitioner.
Albano, Garcia & Diaz Law Offices for Katipunan Lumber Co., Inc.
Zosa & Quijano Law Offices for respondents.
SARMIENTO, J.:
The principal issue raised in this petition for review on certiorari of the decision1 dated May 30, 1986 of
the Court of Appeals,2 which modified the decision3 rendered by the Regional Trial Court of Lapu-Lapu
City in Cebu, is whether or not the private respondents had acquired an easement of right of way, in the
form of a passageway, on the petitioner's property.
It is admitted that the petitioner owns the real estate properties designated as Lots Nos. 5122 and 5124
of the Opon Cadastre, situated at Sitio Buyong, Maribago, Lapu-Lapu City, on which it had constructed a
resort and hotel. The private respondents, on the other hand, are the owners of adjoining properties
more particularly known as Lots Nos. 5123-A and 5123-C of the Opon Cadastre.
Before the petitioner began the construction of its beach hotel, the private respondents, in going to and
from their respective properties and the provincial road, passed through a passageway which traversed
the petitioner's property. In 1981, the petitioner closed the aforementioned passageway when it began
the construction of its hotel, but nonetheless opened another route across its property through which
the private respondents, as in the past, were allowed to pass. (Later, or sometime in August, 1982, when
it undertook the construction of the second phase of its beach hotel, the petitioner fenced its property
thus closing even the alternative passageway and preventing the private respondents from traversing
any part of it.)
As a direct consequence of these closures, an action for injunction with damages was filed against the
petitioner by the private respondents on September 2, 1982 before the then Court of First Instance of
Cebu.4
In their complaint, the private respondents assailed the petitioner's closure of the original passageway
which they (private respondents) claimed to be an "ancient road right of way" that had been existing
before World War II and since then had been used by them, the community, and the general public,
either as pedestrians or by means of vehicles, in going to and coming from Lapu-Lapu City and other
parts of the country. The private respondents averred that by closing the alleged road right of way in
question, the petitioner had deprived them access to their properties and caused them damages.
In the same complainant, the private respondents likewise alleged that the petitioner had constructed a
dike on the beach fronting the latter's property without the necessary permit, obstructing the passage
of the residents and local fishermen, and trapping debris and flotsam on the beach. They also claimed
that the debris and flotsam that had accumulated prevented them from using their properties for the
purpose for which they had acquired them. The complaint this prayed for the trial court to order the re-
opening of the original passageway across the petitioner's property as well as the destruction of the
dike.5
In its answer,6 the petitioner denied the existence of an ancient road through its property and counter-
averred, among others, that it and its predecessors-in-interest had permitted the temporary,
intermittent, and gratuitous use of, or passage through, its property by the private respondents and
others by mere tolerance and purely as an act of neighborliness. It justified the walling in of its property
in view of the need to insure the safety and security of its hotel and beach resort, and for the protection
of the privacy and convenience of its hotel patrons and guests. At any rate, the petitioner alleged, the
private respondents were not entirely dependent on the subject passageway as they (private
respondents) had another existing and adequate access to the public road through other properties.
With respect to the dike it allegedly constructed, the petitioner stated that what it built was a
breakwater on the foreshore land fronting its property and not a dike as claimed by the private
respondents. Moreover, contrary to the private respondents' accusation, the said construction had
benefitted the community especially the fishermen who used the same as mooring for their boats
during low tide. The quantity of flotsam and debris which had formed on the private respondents' beach
front on the other hand were but the natural and unavoidable accumulations on beaches by the action
of the tides and movement of the waves of the sea. The petitioner's answer then assailed the private
respondents' complaint for its failure to implead as defendants the owners of the other properties
supposedly traversed by the alleged ancient road right way, indispensable parties without whom no
final adjudication of the controversy could be rendered.7
After trial, the court a quo rendered a decision on March 15, 1984 finding that the private respondents
had acquired a vested right over the passageway in controversy based on its long existence and its
continued use and enjoyment not only by the private respondents, but also by the community at large.
The petitioner in so closing the said passageway, had accordingly violated the private respondents'
vested right. Thus, the trial court ordered the petitioner:
1. To open and make available the road in question to the plaintiffs and the general public at all
times free of any obstacle thereof, unless the defendant, shall provide another road equally accessible
and convenient as the road or passage closed by the defendant;
2. To pay the plaintiff Katipunan Lumber Company, Inc. the amount of FIVE THOUSAND PESOS
(P5,000.00) a month beginning January, 1983, and the plaintiff Perfecto Guangco the sum of TWO
HUNDRED PESOS (P200.00) a month beginning September, 1982, representing their respective
expenditures they had incurred in other beach resorts after the road was closed, until the passageway
claimed by them is opened and made available to them, or if the defendant chooses to provide another
road, until such road is made available and conveniently passable to the plaintiffs and the general
public; and
3. To pay the sum of FIFTEEN THOUSAND PESOS (P15,000.00) attorney's fees, and to pay the
costs.8
Both parties elevated the trial court's decision to the Court of Appeals, with the petitioner questioning
the alleged "vested right" of the private respondents over the subject passageway, and the private
respondents assailing the dismissal of their complaint insofar as their prayer for the demolition of the
petitioner's "dike" is concerned.
In its decision, the respondent Appellate Court held as without basis the trial court's finding that the
private respondents had acquired a vested right over the passageway in question by virtue of
prescription.9 The appellate court pointed out that an easement of right of way is a discontinuous one
which, under Article 622 of the New Civil Code, may only be acquired by virtue of a title and not by
prescription.10 That notwithstanding, the appellate court went on to rule that ". . . in the interest of
justice and in the exercise by this Court of its equity jurisdiction, there is no reason for Us in not treating
the easement here sought by appellees Katipunan Lumber Co., Inc. and Perfecta Guangco as one that is
not dependent upon the claims of the parties but a compulsory one that is legally demandable by the
owner of the dominant estate from the owner of the servient estate."11 Thus the appellate court: (1)
granted the private respondents the right to an easement of way on the petitioner's property using the
passageway in question, unless the petitioner should provide another passageway equally accessible
and convenient as the one it closed; (2) remanded the case to the trial court for the determination of
the just and proper indemnity to be paid to the petitioner by the private respondents for the said
easement; and (3) set aside the trial court's award of actual damages and attorney's fees.12
On petitioner's motion for partial reconsideration, the respondent court issued on October 27, 1987 a
resolution13 denying the said motion. The Appellate Court however in denying the petitioner's motion
for reconsideration stated that:
. . . While it is true that there is another outlet for the plaintiff to the main road, yet such outlet is a new
road constructed in 1979, while the road closed by defendant existed since over 30 years before.
Legally, the old road could be closed; but since the existing outlet is inconvenient to the plaintiff,
equitably the plaintiff should be given a chance to pay for a more convenient outlet through the land of
the defendant at a point least prejudicial to the latter. In any event, the plaintiff shall pay for all
damages that defendant corporation may sustain and the defendant regulates the manner of use of the
right of way to protect defendant's property and its customers. This is the gist of Our decision.14
Now before us, the petitioner contends that the decision of the respondent appellate court is grossly
erroneous and not in accord with the provisions of Articles 649 and 650 of the Civil Code on easements
and the prevailing jurisprudence on the matter.
The petition is meritorious.
It is already well-established that an easement of right of way, as is involved here, is discontinuous15

and as such can not be acquired by prescription.16 Insofar therefore as the appellate court adhered to
the foregoing precepts, it stood correct. Unfortunately, after making the correct pronouncement, the
respondent Appellate Court did not order the reversal of the trial court's decision and the dismissal of
the complaint after holding that no easement had been validly constituted over the petitioner's
property. Instead, the Appellate Court went on to commit a reversible error by considering the
passageway in issue as a compulsory easement which the private respondents, as owners of the
"dominant" estate, may demand from the petitioner the latter being the owner of the "servient" estate.
It is provided under Articles 649 and 650 of the New Civil Code that:
Art. 649. The owner, or any person who by virtue of a real right may cultivate or use any
immovable, which is surrounded by other immovables pertaining to other persons and without
adequate outlet to a public highway, is entitled to demand a right of way through the neighboring
estates, after payment of the proper indemnity.
Should this easement be established in such a manner that its use may be continuous for all the needs
of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of
the land occupied and the amount of the damage caused to the servient estate.
In case the right of way is limited to the necessary passage for the cultivation of the estate surrounded
by others and for the gathering of its crops through the servient estate without a permanent way, the
indemnity shall consist in the payment of the damage caused by such encumbrance.
This easement is not compulsory if the isolation of the immovable is due to the proprietor's own acts.
Art. 650. The easement of right of way shall be established at the point least prejudicial to the
servient estate, and, insofar as consistent with this rule, where the distance from the dominant estate to
a public highway may be the shortest.
Based on the foregoing, the owner of the dominant estate may validly claim a compulsory right of way
only after he has established the existence of four requisites, to wit: (1) the (dominant) estate is
surrounded by other immovables and is without adequate outlet to a public highway; (2) after payment
of the proper indemnity; (3) the isolation was not due to the proprietor's own acts; and (4) the right of
way claimed is at a point least prejudicial to the servient estate. Additionally, the burden of proving the
existence of the foregoing pre-requisites lies on the owner of the dominant estate.17
Here, there is absent any showing that the private respondents had established the existence of the four
requisites mandated by law. For one, they failed to prove that there is no adequate outlet from their
respective properties to a public highway. On the contrary, as alleged by the petitioner in its answer to
the complaint, and confirmed by the appellate court, "there is another outlet for the plaintiffs (private
respondents) to the main road."18 Thus, the respondent Court of Appeals likewise admitted that
"legally the old road could be closed."19 Yet, it ordered the re- opening of the old passageway on the
ground that "the existing outlet (the other outlet) is inconvenient to the plaintiff."20 On this score, it is
apparent that the Court of Appeals lost sight of the fact that the convenience of the dominant estate has
never been the gauge for the grant of compulsory right of way.21 To be sure, the true standard for the
grant of the legal right is "adequacy." Hence, when there is already an existing adequate outlet from the
dominant estate to a public highway, even if the said outlet, for one reason or another, be inconvenient,
the need to open up another servitude is entirely unjustified. For to justify the imposition of an
easement or right of way, "there must be a real, not a fictitious or artificial necessity for it."22
Further, the private respondents failed to indicate in their complaint or even to manifest during the trial
of the case that they were willing to indemnify fully the petitioner for the right of way to be established
over its property. Neither have the private respondents been able to show that the isolation of their
property was not due to their personal or their predecessors-in-interest's own acts. Finally, the private
respondents failed to allege, much more introduce any evidence, that the passageway they seek to be
re-opened is at a point least prejudicial to the petitioner. Considering that the petitioner operates a
hotel and beach resort in its property, it must undeniably maintain a strict standard of security within its
premises. Otherwise, the convenience, privacy, and safety of its clients and patrons would be
compromised. That indubitably will doom the petitioner's business. It is therefore of great importance
that the claimed light of way over the petitioner's property be located at a point least prejudicial to its
business.
Hence, the Private respondents' properties can not be said to be isolated, for which a compulsory
easement is demandable. Insofar therefore as the Appellate Court declared the case to be proper as a
controversy for a compulsory right of way, this Court is constrained to hold that it was in error.
Servitudes of right of way are an ancient concept, which date back to the iter, actus, and via of the
Romans.23 They are demanded by necessity, that is, to enable owners of isolated estates to make full
use of their properties, which lack of access to public roads has denied them.24 Under Article 649 of the
Civil Code, they are compulsory and hence, legally demandable, subject to indemnity and the
concurrence of the other conditions above-referred to.
As also earlier indicated, there must be a real necessity therefor, and not mere convenience for the
dominant estate. Hence, if there is an existing outlet, otherwise adequate, to the highway, the
"dominant" estate can not demand a right of way, although the same may not be convenient. Of course,
the question of when a particular passage may be said to be "adequate" depends on the circumstances
of each case. Manresa, however, says: "In truth, not only the estate which absolutely does not possess it
should be considered in this condition, but also that which does not have one sufficiently safe or
serviceable; an estate bordering a public road through an inaccessible slope or precipice, is in fact
isolated for all the effects of the easement requested by its owner. On the other hand, an estate which
for any reason has necessarily lost its access to a public road during certain periods of the year is in the
same condition. . . . There are some who propound the query as to whether the fact that a river flows
between the estate and the public road should be considered as having the effect of isolating the estate.
. . . If the river may be crossed conveniently at all times without the least danger, it cannot be said that
the estate is isolated; in any other case, the answer is in the affirmative."25
The isolation of the dominant estate is also dependent on the particular need of the dominant owner,
and the estate itself need not be totally landlocked. What is important to consider is whether or not a
right of way is necessary to fill a reasonable need therefor by the owner.26 Thus, as Manresa had
pointed out, if the passageway consists of an "inaccessible slope or precipice,"27 it is as if there is no
passageway, that is, one that can sufficiently fulfill the dominant owner's necessities, although by the
existence of that passageway the property can not be truly said that the property is isolated. So also,
while an existing right of way may have proved adequate at the start, the dominant owner's need may
have changed since then, for which Article 651 of the Code allows adjustments as to width.28
But while a right of way is legally demandable, the owner of the dominant estate is not at liberty to
impose one based on arbitrary choice. Under Article 650 of the Code, it shall be established upon two
criteria: (1) at the point least prejudicial to the servient state; and (2) where the distance to a public
highway may be the shortest. According, however, to one commentator, "least prejudice" prevails over
"shortest distance."29 Yet, each case must be weighed according to its individual merits, and judged
according to the sound discretion of the court. "The court," says Tolentino, "is not bound to establish
what is the shortest; a longer way may be established to avoid injury to the servient tenement, such as
when there are constuctions or walls which can be avoided by a roundabout way, or to secure the
interest of the dominant owner, such as when the shortest distance would place the way on a
dangerous decline."30
It is based on these settled principles that we have resolved this case.
WHEREFORE, the decision dated May 30, 1986, and the resolution dated October 27, 1987, of the
respondent Court of Appeals are SET ASIDE and the private respondents' complaint is hereby
DISMISSED. Costs against the private respondents.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.
Footnotes
1 Ejercito, Bienvenido C., J., ponente, Coquia, Jorge R., and Castro-Bartolome, Floreliana, JJ., concurring;
Rollo, 52-59.
2 The Court of Appeals was impleaded as a party respondent by virtue of the Court Resolution dated
September 11, 1989.
3 Penned by Judge Teodoro K. Risos; Rollo, Id., 44-50.
4 Rollo, id., 11.
5 Id., 28-31.
6 Id., 12.
7 Id., 33-42.
8 Id., 50.
9 Id., 57.
10 Id.
11 Id., 58.
12 Id., 59.
13 Id., 61.
14 Id.
15 Ronquillo vs. Roco, 103 Phil. 84 (1958); Cuaycong vs. Benedicto, 37 Phil. 781 (1918).
16 CIVIL CODE, art. 622; Ronquillo vs. Roco, supra, Cuaycong vs. Benedicto, supra.
17 Locsin vs. Climaco, No. L-27319, January 31, 1969, 26 SCRA 816; Angela Estate, Inc. vs. Court of First
Instance of Negros Occidental, No. L-27084, July 31, 1968, 24 SCRA 500; Bacolod-Murcia Milling Co., Inc.
vs. Capitol Subdivision, No. L-25887, July 26, 1966, 17 SCRA 731.
18 Rollo, id., 61.

19 Id.
20 Id.
21 Rivera vs. Intermediate Appellate Court, No. 74249, January 20, 1989, 169 SCRA 307; Ramos, Sr. vs.
Gatchalian Realty, Inc., No. 75905, October 12, 1987, 154 SCRA 703.
22 Ramos, Sr. vs. Gatchalian Realty, Inc., supra, 712; see also, II TOLENTINO, CIVIL CODE OF THE
PHILIPPINES 371. (1972 ed.).
23 II FRANCISCO, CIVIL CODE OF THE PHILIPPINES, 787.
24 Id.
25 Id., 789.
26 Id., 790.
27 Id., 789.
28 Id., 790.
29 TOLENTINO, id., 373.
30 Id., 374.

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SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 77628 March 11, 1991
TOMAS ENCARNACION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and THE INTESTATE ESTATE OF THE LATE EUSEBIO DE SAGUN and
THE HEIRS OF THE LATE ANICETA MAGSINO VIUDA DE SAGUN,* respondents.
Esteban M. Mendoza for petitioner.
Oscar Gozos for private respondents.
FERNAN, C.J.:
Presented for resolution in the instant petition for review is the not-so-usual question of whether or not
petitioner is entitled to a widening of an already existing easement of right-of-way. Both the trial court
and the Appellate Court ruled that petitioner is not so entitled, hence the recourse to this Court. We
reverse.
The facts are undisputed.

Petitioner Tomas Encarnacion and private respondent Heirs of the late Aniceta Magsino Viuda de Sagun
are the owners of two adjacent estates situated in Buco, Talisay, Batangas. ** Petitioner owns the
dominant estate which has an area of 2,590 square meters and bounded on the North by Eusebio de
Sagun and Mamerto Magsino, on the south by Taal Lake, on the East by Felino Matienzo and on the
West by Pedro Matienzo. Private respondents co-own the 405-square-meter servient estate which is
bounded on the North by the National Highway (Laurel-Talisay Highway), on the South by Tomas
Encarnacion, on the East by Mamerto Magsino and on the West by Felipe de Sagun. In other words, the
servient estate stands between the dominant estate and the national road.
Prior to 1960, when the servient estate was not yet enclosed with a concrete fence, persons going to the
national highway just crossed the servient estate at no particular point. However, in 1960 when private
respondents constructed a fence around the servient estate, a roadpath measuring 25 meters long and
about a meter wide was constituted to provide access to the highway. One-half meter width of the path
was taken from the servient estate and the other one-half meter portion was taken from another lot
owned by Mamerto Magsino. No compensation was asked and non was given for the portions
constituting the pathway.1
It was also about that time that petitioner started his plant nursery business on his land where he also
had his abode. He would use said pathway as passage to the highway for his family and for his
customers.
Petitioner's plant nursery business through sheer hard work flourished and with that, it became more
and more difficult for petitioner to haul the plants and garden soil to and from the nursery and the
highway with the use of pushcarts. In January, 1984, petitioner was able to buy an owner-type jeep
which he could use for transporting his plants. However, that jeep could not pass through the roadpath
and so he approached the servient estate owners (Aniceta Vda. de Sagun and Elena Romero Vda. de
Sagun) and requested that they sell to him one and one-half (1 1/2) meters of their property to be
added to the existing pathway so as to allow passage for his jeepney. To his utter consternation, his
request was turned down by the two widows and further attempts at negotiation proved futile.
Petitioner then instituted an action before the Regional Trial Court of Batangas, Branch 6 (Tanauan) to
seek the issuance of a writ of easement of a right of way over an additional width of at least two (2)
meters over the De Saguns' 405-square-meter parcel of land.2
During the trial, the attention of the lower court was called to the existence of another exit to the
highway, only eighty (80) meters away from the dominant estate. On December 2, 1985, the lower court
rendered judgment dismissing petitioner's complaint. It ruled:
It is clear, therefore, that plaintiff at present has two outlets to the highway: one, through the
defendants' land on a one meter wide passageway, which is bounded on both sides by concrete walls
and second, through the dried river bed eighty meters away. The plaintiff has an adequate outlet to the
highway through the dried river bed where his jeep could pass.
The reasons given for his claim that the one-meter passageway through defendants' land be widened to
two and one-half meters to allow the passage of his jeep, destroying in the process one of the concrete
fences and decreasing defendants' already small parcel to only about 332.5 square meters, just because
it is nearer to the highway by 25 meters compared to the second access of 80 meters or a difference of
only 65 meters and that passage through defendants' land is more convenient for his (plaintiffs)
business and family use are not among the conditions specified by Article 649 of the Civil Code to entitle
the plaintiff to a right of way for the passage of his jeep through defendant's land.3
On appeal, the Court of Appeals affirmed the decision of the trial court on January 28, 1987 and rejected
petitioner's claim for an additional easement.
In sustaining the trial court, the Court of Appeals opined that the necessity interposed by petitioner was
not compelling enough to justify interference with the property rights of private respondents. The
Appellate Court took into consideration the presence of a dried river bed only eighty (80) meters away
from the dominant estate and conjectured that petitioner might have actually driven his jeep through
the river bed in order to get to the highway, and that the only reason why he wanted a wider easement
through the De Sagun's estate was that it was more convenient for his business and family needs.
After evaluating the evidence presented in the case, the Court finds that petitioner has sufficiently
established his claim for an additional easement of right of way, contrary to the conclusions of the
courts a quo.
While there is a dried river bed less than 100 meters from the dominant tenement, that access is grossly
inadequate.1âwphi1 Generally, the right of way may be demanded: (1) when there is absolutely no
access to a public highway, and (2) when, even if there is one, it is difficult or dangerous to use or is
grossly insufficient. In the present case, the river bed route is traversed by a semi-concrete bridge and
there is no ingress nor egress from the highway. For the jeep to reach the level of the highway, it must
literally jump four (4) to five (5) meters up. Moreover, during the rainy season, the river bed is
impassable due to the floods. Thus, it can only be used at certain times of the year. With the inherent
disadvantages of the river bed which make passage difficult, if not impossible, it is if there were no
outlet at all.
Where a private property has no access to a public road, it has the right of easement over adjacent
servient estates as a matter of law.4
With the non-availability of the dried river bed as an alternative route to the highway, we transfer our
attention to the existing pathway which straddles the adjoining properties of the De Sagun heirs and
Mamerto Magsino.
The courts below have taken against petitioner his candid admission in open court that he needed a
wider pathway for the convenience of his business and family. (TSN, August 2, 1985, pp. 24-26). We
cannot begrudge petitioner for wanting that which is convenient. But certainly that should not detract
from the more pressing consideration that there is a real and compelling need for such servitude in his
favor.
Article 651 of the Civil Code provides that "(t)he width of the easement of right of way shall be that
which is sufficient for the needs of the dominant estate, and may accordingly be changed from time to
time." This is taken to mean that under the law, it is the needs of the dominant property which
ultimately determine the width of the passage. And these needs may vary from time to time. When
petitioner started out as a plant nursery operator, he and his family could easily make do with a few
pushcarts to tow the plants to the national highway. But the business grew and with it the need for the
use of modern means of conveyance or transport. Manual hauling of plants and garden soil and use of
pushcarts have become extremely cumbersome and physically taxing. To force petitioner to leave his
jeepney in the highway, exposed to the elements and to the risk of theft simply because it could not
pass through the improvised pathway, is sheer pigheadedness on the part of the servient estate and can
only be counter-productive for all the people concerned. Petitioner should not be denied a passageway
wide enough to accomodate his jeepney since that is a reasonable and necessary aspect of the plant
nursery business.
We are well aware that an additional one and one-half (1 1/2) meters in the width of the pathway will
reduce the servient estate to only about 342.5 square meters. But petitioner has expressed willingness
to exchange an equivalent portion of his land to compensate private respondents for their loss. Perhaps,
it would be well for respondents to take the offer of petitioner seriously.5 But unless and until that
option is considered, the law decrees that petitioner must indemnify the owners of the servient estate
including Mamerto Magsino from whose adjoining lot 1/2 meter was taken to constitute the original
path several years ago. Since the easement to be established in favor of petitioner is of a continuous and
permanent nature, the indemnity shall consist of the value of the land occupied and the amount of the
damage caused to the servient estate pursuant to Article 649 of the Civil Code which states in part:
Art. 649. The owner, or any person who by virtue of a real right may cultivate or use any
immovable, which is surrounded by other immovables pertaining to other persons and without
adequate outlet to a public highway, is entitled to demand a right of way through the neighboring
estates, after payment of the proper indemnity.
Should this easement be established in such a manner that its use may be continuous for all the needs
of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of
the land occupied and the amount of the damage caused to the servient estate.
xxx xxx xxx
WHEREFORE, in conformity with the foregoing discussion, the appealed decision of the Court of Appeals
dated January 28, 1987 is REVERSED and SET ASIDE. Petitioner Tomas Encarnacion is hereby declared
entitled to an additional easement of right of way of twenty-five (25) meters long by one and one-half (1
1/2) meters wide over the servient estate or a total area of 62.5 square meters after payment of the
proper indemnity.
SO ORDERED.
Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.
Footnotes
* The name "Aniceta de Sagun Viuda de Magsino'' in the original caption of the instant petition is
erroneous. See the captions in the Complaint and the subsequent Decision of the trial court.(Original
Records, pp. 1 and 103).
** The servient estate originally belonged to Eusebio de Sagun, the son of Aniceta Magsino Vda. de
Sagun. After Eusebio's death, his widow Elena sold her share of the estate to her mother-in-law and co-
heir Aniceta. During the pendency of the civil case for the grant of easement, Aniceta also died leaving
six children as her heirs. None of the children resides in the estate which as of 1985 is being
administered by Aniceta's brother, Mamerto Magsino. (Original Record, pp. 77-78; TSN, August 9, 1985,
pp. 22, 30-31).
1 TSN, August 9, 1985, pp. 17-19; July 19, 1985, p. 30.

2 Civil Case No. T-392.
3 Rollo, p. 33,
4 Jariol vs. Court of Appeals, G.R. No. 57641, October 23, 1982, 117 SCRA 913.
5 See Original Record, pp. 44-45.
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SUPREME COURT
Manila
EN BANC
G.R. No. L-5044 December 1, 1909
EDWIN CASE, petitioner-appellant,
vs.
THE HEIRS OF TUASON Y SANTIBAÑEZ, opponents-appellees.

Hartigan and Rohde, and Roman Lacson for appellant.
Rosado, Sanz and Opisso for appellees.
TORRES, J.:
On the 7th of December, 1906, the attorneys for Edwin Case filed a petition with the Court of Land
Registration requesting that the property owned by the applicant, described in the petition, be
registered in accordance with the provisions of Land Registration Act. After a written opposition was
presented by Felipe R. Caballero on the 6th of June, 1907, on behalf of the heirs of late Pablo Tuason
and Leocadia Santibañez, counsel for the applicant, Case, on August 2, 1907, amended the original
petition and set forth: that said property, situated in Calle Escolta, district of Binondo, consists of a
parcel of land and the building erected thereon bearing Nos. 142 and 152; it is bounded on the
northwest, approximately, by the estero of Santa Cruz and the property of Carmen de Ayala de Roxas;
on the southeast by the River Pasig; on the southwest by the property of the heirs of Tuason and
Santibañez; and on the northwest by Calle Escolta and the aforesaid property of Carmen de Ayala de
Roxas; that the total area is 3,251.84 square meters, its description and boundaries being detailed in the
plan attached to the petition; that according to the last assessment made for the purposes of taxation
the land was valued at P170,231 and the buildings thereon at P30,000; that the property is free from all
incumbrance, and no one has any interest therein or right thereto; that on the northeast side the
property has in its favor the right of easement over some 234.20 square meters of land owned by the
said Ayala de Roxas, and that the applicant acquired the property by succession from Doña Clotilde
Romree.
In the written opposition above alluded to, counsel for the heirs of Pablo Tuason and Leocadia
Santibañez alleged that the parties whom he represents are owners in common of the property
adjoining that of the petitioner on the southwest; that the latter, in making the plan attached to his
petition, extended his southwest boundary line to a portion of the lot of the said heirs of Tuason and
Santibañez in the form indicated by the red line in the annexed plan; that the true dividing line between
the property of the petitioner and that of the said heirs is the walls indicated in black ink on the
accompanying plan; that said walls belong to the opponents, and that about two years ago, when the
applicant made alterations in the buildings erected on his land, he improperly caused a portion of them
to rest on the wall owned by the parties whom he represents, at point 12, 13, and 14 of said plan; for
which reason the opponent prayed the court to direct the applicant to amend the line marked in his
plan with the letters Y, X, U, T, S, and R, so that it may agree with the wall indicated by the numbers 1, 2,
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, and 14 on the plan which accompanies the written opposition, reducing
the area to whatever it may be after the amendment has been made; that the applicant be compelled to
remove the supports that he placed for his buildings on the wall of the representatives of the petitioner,
and that he be sentenced to pay the costs.
The case was brought to trial, both parties adduced evidence, and their exhibits were made of record.
The court, assisted by the interested parties and their respective experts, made an inspection of the two
properties, in view of which it entered judgment on the 31st of July, 1908, sustaining the opposition
offered by the representative of the heirs of Pablo Tuason Leocadia Santibañez, and after declaring a
general default granted the registration of the property described in the application filed by Edwin Case,
with the exclusion of the wall claimed by the opponents and shown on their plan by the lines numbered
1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, and 14; and in view of the fact that the lines drawn on the plan
offered in evidence by the applicant under letter G are not correctly drawn, once this decision shall have
become final, let the dividing line of both properties be fixed by common accord between the two
parties and their experts, taking as a base for the same the amended line of walls drawn on the plan of
the opponents, but should they not reach an agreement a surveyor of the Court of Land Registration
shall be detailed to fix the same at the expense of the parties; the court also ordered the cancellation of
the registration entries of the property entered in the name of Clotilde Romree, principal of the
petitioner, at page 142 and those following of volume 15, section of Binondo and 52 of the register,
property No. 828, first entry.
On the 12th of August, 1908, the petitioner moved for a new trial on the ground that the evidence was
not sufficient to justify the decision of the court in excluding the wall claimed by the opponents; that
said decision was contrary to the law, in so far as it excludes the said wall, and that the conclusions of
fact therein are openly and manifestly contrary to the weight of the evidence in so far as they referred
to the exclusion of said wall. The said motion was overruled on the 15th of same month, to which
overruling the applicant excepted and announced his intention to perfect the corresponding bill of
exceptions which was filed, approved, and submitted to this court together with the proper assignment
of errors.
In the appeal interposed by the applicant against the decision of the Court of Land Registration, now
before this court, the questions set up are merely of fact.
The question is whether the wall that with slight interruption runs from Calle Escolta to the River Pasig,
and which divides the adjoining properties of the applicant, Edwin Case, and of the opponents, belongs
to the former, as he claimed in the first instance, or is a dividing wall as affirmed in his brief in this
second instance, or is the property of the said opponents, the heirs of the late Tuason and Santibañez.
lawphi1.net
The trial court after considering the evidence adduced by both parties to the suit, found that the wall in
controversy belongs to the opponents for the reason, among others, that in the public document by
which one of their original ancestors acquired on the 19th of April, 1796, the property now possessed by
them, it appears that property was then already inclosed by a stone wall. This document, which was
offered in evidence by the opponents, has not been impugned by the applicant. On the contrary, it was
acknowledge as the title deed of the property adjoining that of the applicant by the witness Juan B.
Tuason, who knows the one and the other.
It is fully proven that two walls extend from Calle Escolta to the interior of both properties, the one
backing the other, and which respectively support the edifices of the petitioner and of the opponents
from points 36, 35, 34, 33, 32, 31, and 30 on the plan of the petitioner corresponding to points 1 to 6 on
that of the opponents.
This section of the wall of the opponents embraced within the points mentioned in the plans offered in
evidence by the parties, for very reason that it supports only the property of the opponents and not that
of the petitioner, can not be a party wall, one-half of which along its entire length would belong to the
adjoining building owned by Mr. Case. There is not sufficient proof to sustain such claim, and besides,
the building erected thereon disproves the pretension of the petitioner.
It should, however, be noted that the portion of the wall between the numbers 3, 4, 5, and 6 on the plan
of the opponents, which corresponds to numbers 33, 32, 31, and 30 of that of the petitioner, and which
constitutes the cesspool on the property of the latter, belongs to him, and it has so been admitted by
counsel for the opponents, for the reason that the petitioner had acquired it by prescription, the
opponents having lost control over the area of land covered by the said cesspool together with the walls
that inclose it.
Under article 572 of the Civil Code the easement of party walls is presumed, unless there is a title or
exterior sign, or proof to the contrary, among others, in dividing walls adjoining buildings up to the
common point of elevation.
The legal presumption as to party walls is limited to the three cases dealt with in the said article of the
code, and is that of juris tantum unless the contrary appear from the title of ownership of the adjoining
properties, that is to say, that the entire wall in controversy belongs to one of the property owners, or
where there is no exterior sign to destroy such presumption and support a presumption against the
party wall.lawphi1.net (Art. 573, Civil Code.)
The intermediate portion of the walls in question, lying between numbers 6 and 13 on the defendants'
plan, equivalent to a little more than numbers 30 to 25 on the plan of the petitioner, is the portion
against which no other wall appears to have been erected on the land owned by Mr. Case. In spite of
this it can not be presumed that the aforesaid portion was a party wall, and that it was not exclusively
owned by the defendants, inasmuch as the latter have proven by means of a good title that has not
been impugned by the petitioner, that when one of their ancestors and principals acquired the property
the lot was already inclosed by the wall on which the building was erected; it must therefore be
understood that in the purchase of the property the wall by which the land was inclosed was necessarily
included.
The above documentary evidence has not been overcome by any other presented by the petitioner, but
apart from that record discloses the existence of certain unquestionable signs. These consist of
constructions made by the petitioner himself on his own property which entirely destroy any
presumption that it is a party wall, and indeed gives rise to a presumption against it.
Three openings have been made in the wall , undoubtedly to allow the passage of air and light. Two of
them are beveled on the side toward the land of the objectors, and the third has recently been beveled
on the other. A rafter or lintel was found imbedded in the wall on the side of the property of the
opponents. These things constitute exterior signs and were recorded as the result of personal inspection
by the trial court in company with the experts of both parties. These signs positively and conclusively
prove that the said wall is not a party wall, but the exclusive property of the defendant. This is further
confirmed by the testimony of the witnesses at the trial.
The fact that the petitioner built a wall and backed it against the one in question to support the edifice
he had constructed between points 21 and 13 of the corrected plan is a further indication that the
neighboring wall is not a party one. He knew perfectly well that he had no right to rest his building on
the latter. That he built a terrace about four years previously over the wall between points 30, 29, 28,
and 27 does not prove that the whole of the wall, from the Escolta to the River Pasig, is a party wall, but
it does show that he usurped a portion thereof to the prejudice of the real owner.
Neither can it be presumed that that part of the wall bordering on the River Pasig comprised between
points 13 and 14 is a party wall. It was shown in the proceedings as resulting from the above-mentioned
ocular inspection that the side of the said wall, which is rather a low one, there is another, a higher one
erected on the petitioner's land and backed against the one in question. The first one, as has been said,
forms part of that which has surrounded the property from the date of its acquisition, more than a
century ago, until the present date. It is absolutely independent of that built by the petitioner, and that
it is the exclusive property of the objectors and is not a party wall can not be denied.
It therefore appears from the proceedings that, with the exception of the small portion of the wall in
question occupied by the latrine on the property of the petitioner, and which the opponents admit that
he has acquired by prescription, the whole of said wall from the Escolta to the River Pasig can not be
presumed to be a party wall; the evidence to the contrary conclusively proves that it belonged
exclusively to the defendants, and it has been further shown in the case that at one time an old building
belonging to the opponents used to rest on a portion of the wall near the river.lawphi1.net
In view of the foregoing, and considering that the judgment appealed from is in accordance with the law
and the merits of the case, it is our opinion that the same should be affirmed in full, as we do hereby
affirm it, with the costs against the petitioner. So ordered.
Arellano, C. J., Mapa, Johnson, Carson, and Moreland, JJ., concur.
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SUPREME COURT
Manila
EN BANC
G.R. No. 6076 December 29, 1911
SEVERINA and FLORA CHOCO, plaintiffs-appellants,
vs.
ISIDRO SANTAMARIA, defendant-appellant.

Manuel Torres, for plaintiffs.
Leodegario Azarraga, for defendant.
MAPA, J.:
The judgment rendered in this case in first instance is in part as follows:
From the evidence presented at the trial, I find that the defendants is in possession of a parcel of land
on the corner of Calles Pescadores and P. Rada, in the district of Tondo, city of Manila, and that he was
erected a house thereon flush with the boundary line of the adjacent property; that the plaintiffs are the
owners of the land on both sides of the defendant's house, erected as stated, both on Calle Pescadores
and Calle P. Rada; that the defendant in the building of his house has made several openings and
windows in the walls of the house on both sides overlooking then property of the plaintiff; that at the
time the defendant was building his house, and the windows and the openings were being made, the
plaintiffs protested, and later on and in the year 1905 made written protest and demand on the
defendant, and the defendant received the written protest and referred it to his counsel, who, from the
evidence, appears to have suggested an amicable and adjustment of the matter, but the adjustment was
not made, and this action was brought.
It is likewise established that the entrance to the defendant's house is in Calle Pescadores, and taking it
as the front of his house he has put a large window in its upper story, on the balcony of said house,
marked 1 on Exhibit A, overlooking Calle P. Rada; and that this window and its balcony do not face
directly toward the house of the plaintiffs.
There have also been constructed two windows in the rear wall of the house of the defendant, in the
first story of the house, which are marked 8 and 9 on exhibit A, and these windows are each 50 by 80
centimeters, and are placed immediately under the ceiling of the first story, and each of these windows
is equally divided into four panes.
On the right hand side of the house, entering from Calle Pescadores, there is a window or opening in the
wall of the house in the second story, which is about 25 by 35 centimeters, and is located a little more
than half way from the floor of the ceiling of the second story and this is subdivided into smaller panes;
and on the same side there are three windows which are marked 2, 3, and 4 on Exhibit A, located
immediately under the ceiling of the first story, and each of the three is 25 by 25 centimeters.
There are two other windows on the same side located immediately under the ceiling, which are marked
as 5 and 6 on Exhibit A and also on Exhibit C, and one of these windows is about 35 by 67 centimeters,
and the other about 75 by 90 centimeters.
It also appears that there is wire screening over all these openings or windows.1awphil.net
The law provides that the owner of a wall which is not a party wall, adjoining another's estate, may
make in it windows or openings to admit light at the height of the ceiling joist, or immediately under the
ceiling, thirty centimeters square, with an iron gate embedded in the wall and a wire screen.
In this case the windows are in a wall not a party wall adjoining the plaintiff's estate, and the window
marked 2, 3, and 4, as appears on Exhibit A, are less than thirty centimeters square and have a wire
screen, but there does not appear to be the iron gate embedded in the wall.
The windows marked 5 and 6, as indicated in Exhibit A, have a wire screen but are more than thirty
centimeters square, and have the iron grate embedded in the wall.
The window marked 7 on Exhibit A has a wire screen, but is more than 30 centimeters square and has
not the iron grate embedded on the wall.
The windows 8 and 9, as indicated on Exhibit A, have a wire screen but no iron grate embedded in the
wall, and are of a greater dimension than thirty centimeter square.
The window marked One on Exhibit A is located in a balcony which overlooks the street, while the
premises of the plaintiff may be seen from it, it is not adjoining their estate.
The court finds that the plaintiffs are entitled to a decree for closing all the windows or openings in the
walls of the defendant's house, as herein before described, which directly overlook the premises of the
plaintiffs, or that in some other way the provisions of the law be complied with so that they may remain
open.
All these openings and windows can be made to comply with the law, with the exception of that marked
7, which is not immediately under the ceiling (techo).
Let judgment be entered in favor of the plaintiffs, Severina and Flora Choco, and against the defendant,
Isidro Santamaria, forever prohibiting the opening of the window marked No. 7, as hereinbefore stated,
which must be closed, and forever prohibiting the opening of the windows and openings marked, as
herein before stated, 2, 3, 4, 5, 6, 8, and 9, which must be closed or made to conform to the
requirements of law with regard to dimensions and an iron grate embedded in the wall, with the costs
of the action.
The plaintiffs appealed from that judgment and allege in their appeal in this instance:1awphil.net
1. That the lower court erred by not ordering in his judgment the final and perpetual closing of the
large window opened in the balcony of the back part of the appellee's house and marked No. 1 in the
photographic Exhibits A and D, on the ground that the said window is in the balcony which overlooks
Calle Padre Rada and that, though the appellant's lot can be seen through the window, it is not
contiguous to the latter's property.
2. That the trial court also erred in ordering in his judgment that the openings and windows, Nos.
2, 3, 4, 5, 6, 8, and 9, might continue open if they were fixed so as to comply with the requirements of
the law as regards their dimensions and the placing of iron grates embedded in the wall.
3. That the lower court also erred in denying the appellant's petition for rehearing.
It appears obvious to us, from the evidence, that the window No. 1, referred to in the first assignment of
errors, is next appellants' lot. To judge from the photographic views, Exhibits A and D, it opens on the
boundary line between the said lot and that the appellee and is situated perpendicularly above a part of
the wall that belongs to the appellants. This opinion is corroborated by the testimony of the defendant's
witness who took the said photographs, in so far as he said that "a part of the window in question is in
front of the plaintiffs' property, and a person approaching the window may clearly see the said lot." And
certainly if it is in front of this lot, it is unquestionable that it directly overlooks the same; but even
though it did not and only a side or oblique view of the lot could be obtained from it, it could not be
kept open, since between it and the plaintiffs' property there does not intervene the distance required
by law — that of two meters in the first case, and 60 centimeters in the second. In reality, there is no
distance at all between the said window and the plaintiffs' lot, because, as we have said, this window is
perpendicular to the boundary line of the said lot; therefore, its opening is a manifest violation of the
provisions of article 582 of the Civil Code which reads as follows:
Windows with direct views, or balconies or any similar openings projecting over the estate of the
neighbor, can not be made if there is not a distance of, at least, 2 meters between the wall in which they
are built and said estate.
Neither can side nor oblique views be opened over said property, unless there is a distance of 60
centimeters.
Because of the lack of the distance required by law, the window in question must be closed, and
consequently the judgment appealed from should be modified in this sense, as regards this window.
With respect to the second assignment of error, the question raised by the appellants concerns the
proper interpretation of article 581 of the Civil Code which describes as follows:itc-alf
The owner of the wall which is not a party-wall, adjoining anothers estate, may make in it windows or
openings to admit light, at the height of the ceiling joists or immediately under the ceiling, of the
dimentions of 30 centimeters square and, in any case, with an iron grate embedded in the wall and a
wire screen.
The windows mentioned in this part of the appeal are those indicated by Nos. 2, 3, 4, 5, 6, 8, and 9, in
the defendant's Exhibit A. They are all situated immediately under the ceiling of the first door and are
provided with wire screens; some of them measure more and other less than 30 centimeters square and
none of them have iron grates embedded in the wall. Owing to this last circumstance, none of them fully
comply with the conditions required by the law; moreover, those numbered 5, 6, 8, and 9, have the
additional defect of being greater than 30 centimeters square. The trial judge therefore ordered, in the
judgment, that all the aforementioned windows be closed or that they be made to conform to the law
with respect to their dimentions and the placing of the iron grates embedded in the wall. The appellants
maintain that these windows should have been ordered closed absolutely and finally, and,
consequently, that the option allowed the defendant to keep them open, provided that he brought
them within the terms of the law, in contrary to the same and, therefore, illegal.
It is alleged as a ground for such averment that none of the ceiling joist, which is the first condition
required by law.
We understand by ceiling joist — say the appellants — in a building composed of any given number of
stories, the long pieces to which are nailed the boards that form the ceiling of the last story of the
building, counting the stories from below; and this interpretation which we give to the words ceiling
joists must be that most in harmony with the spirit of article 581 of the code, the subject of our
examination, since immediately after them in the same article, in explanation, are found the words or
immediately under "los techos," in order to indicate, without the least doubt, the sole place or height
where openings or windows may be made in conformity within the law. It is needless to say that a
building, though composed of several stories, can have but one techo. . . .
This last assertion is incorrect. By techo is understood that part of a construction which covers the
rooms under it and certainly forms one of the essential parts of every story. A story is composed of
earth, payment and ceiling, the latter, that is, the ceiling, being that part of the story that the visible to
the observer situated below in the room covered by it. (Hispano-American Encyclopedic Dictionary, by
Montaner and Simon.) Consequently, every story has a ceiling, and not, as the appellants maintain, the
upper one alone.
Nor is their definition exact of the word joists, as it is employed in article 581 of the Code. According to
the dictionary of the Spanish Academy, these are, in architecture, understood to be a kind of beam laid
horizontally and serving in buildings to support others of for bracing and connecting the parts of the
structure. Mucius Scaevola says in his Civil Code, volume 10, page 448:
The horizontal timbers that are placed upon the tops of the uprights, that is, what are commonly called
beams, intended to serve for connection and main support of the timbers of the different floors that
separate the stories of the building, are called joists.
According to these definitions each floor necessarily has joists, that is, beams, since, in the last analysis
they are what support and secure the structure of the story immediately above; therefore it is not true
that there may be joists only in the top story, as the appellants claim by saying that they understand to
be such the long timbers to which are fastened the boards of the ceiling at the top story of the building.
On the contrary, carefully considered, it is precisely the top story that does not need joists, since it does
not have to support any other higher portion of the building. It has only to support the weight of the
roof, which undoubtedly much less than that of a whole story. So that, according to Mucius Scaevola
(work cited, vol. 10, p. 487), it can not be said that the top story has joists. And because it certainly does
not have them, is reason why the code in said article 581 employs the phrase or immediately under "los
techos" in referring to the top story.
The author's words in expounding this theory in his commentary on article 581 of the Civil Code are as
follows:
We said elsewhere that these (the joists) were horizontal timbers that rest upon the tops of the
uprights; they form, then, the upper limit of the different stories of a house; and therefore, in referring
to the top story, which can not be said to have joists, article 581 makes use of the phrase or immediately
under "los techos."
This does not mean that the italicized phrase refers solely and exclusively to the top story, since lower
stories also have techos, as above set forth. In our opinion what the author cited means is that in
speaking of the top story, which has no joists, the words or article 581 of the code, at the height of the
ceiling joists, fail to apply, the phase or immediately under "los techos" alone being thereto applicable,
in distinction from the lower stories, with regard to which both phrases are applicable as they have at
the same time joists and techo. In referring to the lower stories either phrase may, in connection with
the other, determine the place, which surely can be more than one, where it is permissible to open the
windows called regulation windows, whenever in them the joists are actually joined to or placed next to
the techo which forms the top of each of said stories. Both phrases therefore express the same idea
with reference to the lower stories.
Aside from what has been said here, the object of the law in authorizing the opening of the windows in
question in all the stories of a building, without any exception, is clear. Their purpose is, as article 581
itself says, to furnish light to the rooms, and it is evident at a glance that the rooms of the lower stories
have as much need for light as those of the top story. No good reason exists for having one story in
better condition than another, whichever it may be, connection with this provision of law.
The defendant is ordered to close finally and forever the window marked No. 1 in Exhibit A, the
judgment appealed from in so far as it refers to said window being thus modified, but affirmed in all
other respects; without special finding as to costs in this instance.
Arellano, C.J., Johnson and Carson, JJ., concur.
Separate Opinions
MORELAND, J., dissenting:

I cannot conform to a decision which, in the twentieth century and in a civilized country, makes it an
offense for a person to put windows in his own house.
The law, if any (and I do not believe that the law invoked covers the case), upon which the decision is
based, together with the reasons for its existence, disappeared with the American occupation, and with
the advent of American institutions, Constitution and laws.
Moreover, it might be well be that such a law would seriously conflict with those laws, rules and
regulations which are necessary to assure and preserve the public health.
SOLID MANILA CORP. vs. BIO

HONG TRADING CO.-
Easement and Servitudes
Servitudes are merely accessories to the tenement of which they form part, and even if they are
possessed of a separate juridical existence, they cannot be alienated from the tenement or
mortgaged separately.
Note: In a personal servitude, there is no "owner of a dominant tenement" to speak of, and the
easement pertains to persons without a dominant estate, in this case, the public at large. (Merger,
which presupposes ownership, is not possible.)
FACTS:
Solid Manila Corp. is the owner of a parcel of land located in Ermita. The same lies in the vicinity of
another parcel registered under Bio Hong Trading whose title came from a prior owner. In the deed
of sale between Bio Hong and the vendor, 900 sqm of the lot was reserved as an easement of way.
The construction of the private alley was annotated on Bio Hong’s title stating among other things
"(6) That the alley shall remain open at all times, and no obstructions whatsoever shall be placed
thereon; and (7) that the owner of the lot on which the alley has been constructed shall allow the
public to use the same, and allow the City to lay pipes for sewer and drainage purposes, and shall
not act (sic) for any indemnity for the use thereof”
The petitioner claims that ever since, it (along with other residents of neighboring estates) made use
of the above private alley and maintained and contributed to its upkeep, until sometime in 1983,
when, and over its protests, the private respondent constructed steel gates that precluded
unhampered use.
On December 6, 1984, the petitioner commenced suit for injunction against the private respondent,
to have the gates removed and to allow full access to the easement.
The trial court ordered Bi Hong to open the gates but the latter argued that the easement has been
extinguished by merger in the same person of the dominant and servient estates upon the purchase
of the property from its former owner.
CA reversed holding that an easement is a mere limitation on ownership and that it does not impair
the private respondent's title, and that since the private respondent had acquired title to the property,
"merger" brought about an extinguishment of the easement.
Thus, Solid went to the SC alleging that the very deed of sale executed between the Bio Hong and
the previous owner of the property "excluded" the alley in question, and that in any event, the intent
of the parties was to retain the "alley" as an easement notwithstanding the sale.
[While the case was pending, Bio Hong asked the RTC to cancel the annotation in question, which it
granted subject to the final outcome of the prior case.]
ISSUE:
1) Whether or not easements may be alienated (sold) from the tenement or mortgaged separately
2) Whether or not the easement had been extinguished by merger.
HELD: NO to both
1) The sale included the alley. The court rejected Solid’s contention that the alley was not included in
the sale. It was included but there was a limitation on its use-the easement. As a mere right of way, it
cannot be separated from the tenement and maintain an independent existence. (Art. 617)
Even though Bio Hong acquired ownership over the property –– including the disputed alley –– as a
result of the conveyance, it did not acquire the right to close that alley or otherwise put up
obstructions thereon and thus prevent the public from using it, because as a servitude, the alley is
supposed to be open to the public.
2) No genuine merger took place as a consequence of the sale in favor of the private respondent
corporation. According to the Civil Code, a merger exists when ownership of the dominant and
servient estates is consolidated in the same person. Merger requires full ownership of both estates.
Note that The servitude in question is a personal servitude (established for the benefit of a
community, or of one or more persons to whom the encumbered estate does not belong). In a
personal servitude, there is therefore no "owner of a dominant tenement" to speak of, and the
easement pertains to persons without a dominant estate, in this case, the public at large. Thus,
merger could not have been possible.
FLORO v. LLENADO- Legal
Easement
A legal easement cannot arise merely for the convenience of the dominant estate. The owner must
prove that the easement is absolutely necessary and least restrictive on the servient estate.
FACTS:
Mr Floro owned the Floro Park Subdivision situated in Bulacan. The subdivision has its own access
roads from the MacArthur Highway through road lot 4. Another fellow, Llenado, owned the Llenado
Homes Subdivision. He obtained the same from Mr. de Castro, when it was known as the Emmanuel
Homes Subdivision, Llenado Homes was bounded on the south by the Palanas Creek, 5 which
separates it from the Floro Park Subdivision. To the west sat the ricelands belonging to Marcial
Ipapo. The controversy brewed since Llenado Homes did not have any passage to the MacArthur
Highway. However, a proposed access road passing the abandoned riceland of Marcial Ipapo has
been specifically provided in the subdivision plan of the former Emmanuel Homes Subdivision. This
plan was approved by the HLURB.
Because the access road through the Ipapo Riceland did not exist yet, the Llenados sought, and
were granted, oral permission by the Floros to use Road Lots 4 and 5 of the Floro Park . At this
point, remember that the agreement was merely provisional as the parties were still drafting a
contract.
Later, Floro discovered grave damage to the lots in question from the passage of heavy machinery.
He then barricaded Road Lot 5 with a pile of rocks, wooden posts and adobe stones. He essentially
implied Llenados to keep out off property.
Llenado pursued an easement claim with the RTC. The RTC denied the request. On appeal by
LLenado, and ordered that Mr. Floro remove the barricades. Mr. Floro went to the SC
ISSUE:
Whether or not the requirements for legal easement existed to allow Llenado to claim the same
against Mr. Floro.
HELD: NO.
As in the earlier case, the court held that to be entitled to a compulsory easement of right of way, the
preconditions provided under Arts. 649 and 650 of the Civil Code must be established. These
include:
that the dominant estate is surrounded by other immovables and has no adequate outlet to a public
highway; (2) that proper indemnity has been paid; (3) that the isolation was not due to acts of the
proprietor of the dominant estate; (4) that the right of way claimed is at a point least prejudicial to the
servient estate and, in so far as consistent with this rule, where the distance from the dominant
estate to a public highway may be the shortest.
For this case, it is apparent that the elements have not been met. The original subdivision
development plan presented by Llenado indicates an existing and prior agreement with Ms. Ipapo to
create a right of way through the abandoned Ipapo ricefield. Ipapo had long agreed to these terms
but Llenado apparently thought it too much work and cost to develop such road. It was easier for him
to create an easement via the Floro property.
The court ruled time and again that one may not claim a legal easement merely out of convenience.
Convenience motivated Llenando to abandon the Ipapo access road development and pursue an
access road through the Floro estate. He was stacking the cards in his favor to the unnecessary
detriment of his neighbor. The court refused to countenance his behavior.
QUIMEN V. CA- Easement

LEAST DAMAGE > SHORTEST DISTANCE
When the easement may be established on any of several tenements surrounding the dominant
estate, the one where the way is shortest and will cause the least damage should be chosen.
However, as elsewhere stated, if these two (2) circumstances do not concur in a single tenement,
the way which will cause the least damage should be used, even if it will not be the shortest.
FACTS:
Anastacia Quimen, together with her 3 brothers and sister, inherited a piece of property in Bulacan.
They agreed to subdivide the property equally among themselves. The shares of Anastacia and 3
other siblings were next to the municipal road. Anastacia’s was at the extreme left of the road while
the lots on the right were sold by her brothers to Catalina Santos. A portion of the lots behind
Anastacia’s were sold by her (as her brother’s adminstratix) brother to Yolanda.
Yolanda was hesitant to buy the back property at first because it d no access to the public road.
Anastacia prevailed upon her by assuring her that she would give her a right of way on her adjoining
property (which was in front) for p200 per square meter.
Yolonda constructed a house on the lot she bought using as her passageway to the public highway
a portion of anastacia’s property. But when yolanda finally offered to pay for the use of the pathway
anastacia refused to accept the payment. In fact she was thereafter barred by Anastacia from
passing through her property.
After a few years, Yolanda purchased another lot from the Quimens (a brother), located directly
behind the property of her parents who provided her a pathway gratis et amore between their house,
extending about 19m from the lot of Yolanda behind the sari-sari store of one brother, and
Anastacia’s perimeter fence.
In 1987, Yolanda filed an action with the proper court praying for a right of way through Anastacia’s
property. The proposed right of way was at the extreme right of Anastacia’s property facing the
public highway, starting from the back of the sari-sari store and extending inward by 1m to her
property and turning left for about 5m to avoid the store in order to reach the municipal road. The
way was unobstructed except for an avocado tree standing in the middle.
The trial court dismissed the complaint for lack of cause of action, explaining that the right of way
through the brother’s property was a straight path and to allow a detour by cutting through
Anastacia’s property would no longer make the path straight. They held that it was more practical to
extend the existing pathway to the public road by removing that portion of the store blocking the path
as that was the shortest route to the public road and the least prejudicial to the parties concerned
than passing through Anastacia’s property.
CA reversed and held that Yolanda was entitled to a right of way on Anastacia’s property. The court,
however, did not award damages to her and held that Anastacia was not in bad faith when she
resisted the claim.
Anastacia went to the SC alleging that her lot should be considered as a servient estate despite the
fact that it does not abut or adjoin the property of private respondent. She denies ever promising
Yolonda a right of way.
Anastacia also argues that when Yolanda purchased the second lot, the easement of right of way
she provided was ipso jure extinguished as a result of the merger of ownership of the dominant and
the servient estates in one person so that there was no longer any compelling reason to provide
private respondent with a right of way as there are other surrounding lots suitable for the purpose.
She also strongly maintains that the proposed right of way is not the shortest access to the public
road because of the detour and that, moreover, she is likely to suffer the most damage as she
derives a net income of P600.00 per year from the sale of the fruits of her avocado tree, and
considering that an avocado has an average life span of seventy (70) years, she expects a
substantial earning from it.
ISSUE:
1) Whether or not there was a valid grant of an easement
2) Whether or not the right of way proposed by Yolonda is the least onerous/least prejudicial to the
parties
HELD: YES to both

1) A right of way in particular is a privilege constituted by covenant or granted by law to a person or
class of persons to pass over another’s property when his tenement is surrounded by realties
belonging to others without an adequate outlet to the public highway. The owner of the dominant
estate can demand a right of way through the servient estate provided he indemnifies the owner
thereof for the beneficial use of his property.
The conditions for a valid grant of an easement of right of way are:
(a) the dominant estate is surrounded by other immovables without an adequate outlet to a public
highway;
(b) the dominant estate is willing to pay the proper indemnity;
(c) the isolation was not due to the acts of the dominant estate; and,
(d) the right of way being claimed is at a point least prejudicial to the servient estate.
These elements were clearly present. The evidence clearly shows that the property of private
respondent is hemmed in by the estates of other persons including that of petitioner; that she offered
to pay P200.00 per square meter for her right of way as agreed between her and petitioner; that she
did not cause the isolation of her property; that the right of way is the least prejudicial to the servient
estate. These facts are confirmed in the ocular inspection report of the clerk of court, more so that
the trial court itself declared that “[t]he said properties of Antonio Quimen which were purchased by
plaintiff Yolanda Quimen Oliveros were totally isolated from the public highway and there appears an
imperative need for an easement of right of way to the public highway.
2) Article 650 of the NCC explicitly states that “the easement of right of way shall be established at
the point least prejudicial to the servient estate and, insofar as consistent with this rule, where the
distance from the dominant estate to a public highway may be the shortest.”
The criterion of least prejudice to the servient estate must prevail over the criterion of shortest
distance although this is a matter of judicial appreciation. When the easement may be established
on any of several tenements surrounding the dominant estate, the one where the way is shortest
and will cause the least damage should be chosen. However, as elsewhere stated, if these two (2)
circumstances do not concur in a single tenement, the way which will cause the least damage
should be used, even if it will not be the shortest.
TC’s findings:
> Yolanda’s property was situated at the back of her father’s property and held that there existed an
available space of about 19m long which could conveniently serve as a right of way between the
boundary line and the house of Yolanda’ s father
> The vacant space ended at the left back of the store which was made of strong materials
> Which explained why Yolanda requested a detour to the lot of Anastacia and cut an opening of
one (1) meter wide and five (5) meters long to serve as her right of way to the public highway.
CA’s finding:
> The proposed right of way of Yolanda, which is 1m wide and 5m long at the extreme right of
Anastacia’s property will cause the least prejudice and/or damage as compared to the suggested
passage through the property of Yolanda’ s father which would mean destroying the sari-sari store
made of strong materials.
Absent any showing that these findings and conclusion are devoid of factual support in the records,
or are so glaringly erroneous, the SC accepts and adopts them. As between a right of way that
would demolish a store of strong materials to provide egress to a public highway, and another right
of way which although longer will only require an avocado tree to be cut down, the second
alternative should be preferred.
FIRST DIVISION
[G.R. No. 95252. September 5, 1997]
LA VISTA ASSOCIATION, INC., petitioner, vs. COURT OF APPEALS,

SOLID HOMES, INC., ATENEO DE MANILA UNIVERSITY,
ROMULO VILLA, LORENZO TIMBOL, EMDEN ENCARNACION,
VICENTE CASIO, JR., DOMINGO REYES, PEDRO C. MERCADO,
MARIO AQUINO, RAFAEL GOSECO, PORFIRIO CABALU, JR. and
ANTONIO ADRIANO, in their behalf and in behalf of the residents
of LOYOLA GRAND VILLAS, INC., PHASES I AND II, respondents.
DECISION
BELLOSILLO, J.:
MANGYAN ROAD is a 15-meter wide thoroughfare in Quezon City abutting

Katipunan Avenue on the west, traversing the edges of La Vista Subdivision on the north
and of the Ateneo de Manila University and Maryknoll (now Miriam) College on the
south. Mangyan Road serves as the boundary between LA VISTA on one side and
ATENEO and MARYKNOLL on the other. It bends towards the east and ends at the gate
of Loyola Grand Villas Subdivision. The road has been the subject of an endless dispute,
the disagreements always stemming from this unresolved issue: Is there an easement of
right-of-way over Mangyan Road?
In resolving this controversy, the Court would wish to write finis to this seemingly
interminable debate which has dragged on for more than twenty years.
The area comprising the 15-meter wide roadway was originally part of a vast tract of
land owned by the Tuasons in Quezon City and Marikina. On 1 July 1949 the Tuasons
sold to Philippine Building Corporation a portion of their landholdings amounting to
1,330,556 square meters by virtue of a Deed of Sale with Mortgage. Paragraph three (3)
of the deed provides that x x x the boundary line between the property herein sold and
the adjoining property of the VENDORS shall be a road fifteen (15) meters wide, one-half
of which shall be taken from the property herein sold to the VENDEE and the other half
from the portion adjoining belonging to the VENDORS.
On 7 December 1951 the Philippine Building Corporation, which was then acting for
and in behalf of Ateneo de Manila University (ATENEO) in buying the properties from the
Tuasons, sold, assigned and formally transferred in a Deed of Assignment with
Assumption of Mortgage, with the consent of the Tuasons, the subject parcel of land to
ATENEO which assumed the mortgage. The deed of assignment states -
The ASSIGNEE hereby agrees and assumes to pay the mortgage obligation on the
above-described land in favor of the MORTGAGOR and to perform any and all terms
and conditions as set forth in the Deed of Sale with Mortgage dated July 1, 1949,
hereinabove referred to, which said document is incorporated herein and made an
integral part of this contract by reference x x x x
On their part, the Tuasons developed a part of the estate adjoining the portion sold
to Philippine Building Corporation into a residential village known as La Vista
Subdivision. Thus the boundary between LA VISTA and the portion sold to Philippine
Building Corporation was the 15-meter wide roadway known as the Mangyan Road.
On 6 June 1952 ATENEO sold to MARYKNOLL the western portion of the land
adjacent to Mangyan Road. MARYKNOLL then constructed a wall in the middle of the
15-meter wide roadway making one-half of Mangyan Road part of its school campus. The
Tuasons objected and later filed a complaint before the then Court of First Instance of
Rizal for the demolition of the wall. Subsequently, in an amicable settlement,
MARYKNOLL agreed to remove the wall and restore Mangyan Road to its original width
of 15 meters.
Meanwhile, the Tuasons developed its 7.5-meter share of the 15-meter wide
boundary. ATENEO deferred improvement on its share and erected instead an adobe
wall on the entire length of the boundary of its property parallel to the 15-meter wide
roadway.
On 30 January 1976 ATENEO informed LA VISTA of the formers intention to develop
some 16 hectares of its property along Mangyan Road into a subdivision. In response,
LA VISTA President Manuel J. Gonzales clarified certain aspects with regard to the use
of Mangyan Road. Thus -
x x x The Mangyan Road is a road fifteen meters wide, one-half of which is taken
from your property and the other half from the La Vista Subdivision. So that the
easement of a right-of-way on your 7 1/2 m. portion was created in our favor and
likewise an easement of right-of-way was created on our 7 1/2 portion of the road in
your favor (paragraph 3 of the Deed of Sale between the Tuasons and the Philippine
Building Corporation and Ateneo de Manila dated 1 July 1949 x x x x
On 28 April 1976 LA VISTA President Manuel J. Gonzales, in a letter to ATENEO

President Fr. Jose A. Cruz, S. J., offered to buy under specified conditions the property
ATENEO was intending to develop. One of the conditions stipulated by the LA VISTA
President was that [i]t is the essence of the offer that the mutual right of way between the
Ateneo de Manila University and La Vista Homeowners Association will be
extinguished. The offer of LA VISTA to buy was not accepted by ATENEO. Instead, on
10 May 1976 ATENEO offered to sell the property to the public subject to the condition
that the right to use the 15-meter roadway will be transferred to the vendee who will
negotiate with the legally involved parties regarding the use of such right as well as the
development costs for improving the access road.
LA VISTA became one of the bidders. However it lost to Solid Homes, Inc., in the
bidding. Thus on 29 October 1976 ATENEO executed a Deed of Sale in favor of Solid
Homes, Inc., over parcels of land covering a total area of 124,424 square meters subject,
among others, to the condition that -
7. The VENDOR hereby passes unto the VENDEE, its assigns and successors-in-
interest the privileges of such right of way which the VENDOR acquired, and still
has, by virtue of the Deeds mentioned in the immediately preceeding paragraph
hereof; provided, that the VENDOR shall nonetheless continue to enjoy said right of
way privileges with the VENDEE, which right of way in favor of the VENDOR shall
be annotated on the pertinent road lot titles. However it is hereby agreed that the
implementation of such right of way shall be for the VENDEEs sole responsibility
and liability, and likewise any development of such right of way shall be for the full
account of the VENDEE. In the future, if needed, the VENDOR is therefore free to
make use of the aforesaid right of way, and/or Mangyan Road access, but in such a
case the VENDOR shall contribute a pro-rata share in the maintenance of the area.
Subsequently, Solid Homes, Inc., developed a subdivision now known as Loyola

Grand Villas and together they now claim to have an easement of right-of-way along
Mangyan Road through which they could have access to Katipunan Avenue.
LA VISTA President Manuel J. Gonzales however informed Solid Homes, Inc., that
LA VISTA could not recognize the right-of-way over Mangyan Road because, first,
Philippine Building Corporation and its assignee ATENEO never complied with their
obligation of providing the Tuasons with a right-of-way on their 7.5-meter portion of the
road and, second, since the property was purchased for commercial purposes, Solid
Homes, Inc., was no longer entitled to the right-of-way as Mangyan Road was established
exclusively for ATENEO in whose favor the right-of-way was originally constituted. LA
VISTA, after instructing its security guards to prohibit agents and assignees of Solid
Homes, Inc., from traversing Mangyan Road, then constructed one-meter high cylindrical
concrete posts chained together at the middle of and along the entire length of Mangyan
Road thus preventing the residents of LOYOLA from passing through.
Solid Homes, Inc., complained to LA VISTA but the concrete posts were not
removed. To gain access to LOYOLA through Mangyan Road an opening through the
adobe wall of ATENEO was made and some six (6) cylindrical concrete posts of LA VISTA
were destroyed. LA VISTA then stationed security guards in the area to prevent entry to
LOYOLA through Mangyan Road.
On 17 December 1976, to avert violence, Solid Homes, Inc., instituted the instant
case, docketed as Civil Case No. Q-22450, before the then Court of First Instance of Rizal
and prayed that LA VISTA be enjoined from preventing and obstructing the use and
passage of LOYOLA residents through Mangyan Road. LA VISTA in turn filed a third-
party complaint against ATENEO. On 14 September 1983 the trial court issued a
preliminary injunction in favor of Solid Homes, Inc. (affirming an earlier order of 22
November 1977), directing LA VISTA to desist from blocking and preventing the use of
Mangyan Road. The injunction order of 14 September 1983 was however nullified and
set aside on 31 May 1985 by the then Intermediate Appellate Court[1] in AC-G.R. SP No.
02534. Thus in a petition for review on certiorari, docketed as G.R. No. 71150, Solid
Homes, Inc., assailed the nullification and setting aside of the preliminary injuntion issued
by the trial court.
Meanwhile, on 20 November 1987 the Regional Trial Court of Quezon City rendered
a decision on the merits[2] in Civil Case No. Q-22450 affirming and recognizing the
easement of right-of-way along Mangyan Road in favor of Solid Homes, Inc., and ordering
LA VISTA to pay damages thus -
ACCORDINGLY, judgment is hereby rendered declaring that an easement of a right-

of-way exists in favor of the plaintiff over Mangyan Road, and, consequently, the
injunction prayed for by the plaintiff is granted, enjoining thereby the defendant, its
successors-in-interest, its/their agents and all persons acting for and on its/their behalf,
from closing, obstructing, preventing or otherwise refusing to the plaintiff, its
successors-in-interest, its/their agents and all persons acting for and on its/their behalf,
and to the public in general, the unobstructed ingress and egress on Mangyan Road,
which is the boundary road between the La Vista Subdivision on one hand, and the
Ateneo de Manila University, Quezon City, and the Loyola Grand Villas Subdivision,
Marikina, Metro Manila, on the other; and, in addition the defendant is ordered to pay
the plaintiff reasonable attorneys fees in the amount of P30,000.00. The defendant-
third-party plaintiff is also ordered to pay the third-party defendant reasonable
attorneys fees for another amount of P15,000.00. The counter-claim of the defendant
against the plaintiff is dismissed for lack of merit. With costs against the defendant.
Quite expectedly, LA VISTA appealed to the Court of Appeals, docketed as CA-G.R.

CV No. 19929. On 20 April 1988 this Court, taking into consideration the 20 November
1987 Decision of the trial court, dismissed the petition docketed as G.R. No. 71150
wherein Solid Homes, Inc., sought reversal of the 31 May 1985 Decision in AC-G.R. SP
No. 02534 which nullified and set aside the 14 September 1983 injunction order of the
trial court. There we said -
Considering that preliminary injunction is a provisional remedy which may be granted

at any time after the commencement of the action and before judgment when it is
established that the plaintiff is entitled to the relief demanded and only when his
complaint shows facts entitling such reliefs (Section 3(a), Rule 58) and it appearing
that the trial court had already granted the issuance of a final injunction in favor of
petitioner in its decision rendered after trial on the merits (Sections 7 & 10, Rule 58,
Rules of Court), the Court resolved to Dismiss the instant petition having been
rendered moot and academic. An injunction issued by the trial court after it has
already made a clear pronouncement as to the plaintiffs right thereto, that is, after the
same issue has been decided on the merits, the trial court having appreciated the
evidence presented, is proper, notwithstanding the fact that the decision rendered is
not yet final (II Moran, pp. 81-82, 1980 ed.). Being an ancillary remedy, the
proceedings for preliminary injunction cannot stand separately or proceed
independently of the decision rendered on the merit of the main case for
injunction. The merit of the main case having been already determined in favor of the
applicant, the preliminary determination of its non-existence ceases to have any force
and effect.[3]
On the other hand, in CA-G.R. CV No. 19929, several incidents were presented for
resolution: two (2) motions filed by Solid Homes, Inc., to cite certain officers of LA VISTA
for contempt for alleged violation of the injunction ordaining free access to and egress
from Mangyan Road, to which LA VISTA responded with its own motion to cite Solid
Homes, Inc., for contempt; a motion for leave to intervene and to re-open Mangyan Road
filed by residents of LOYOLA; and, a petition praying for the issuance of a restraining
order to enjoin the closing of Mangyan Road. On 21 September 1989 the incidents were
resolved by the Court of Appeals[4] thus -
1. Defendant-appellant La Vista Association, Inc., its Board of Directors and other

officials and all persons acting under their orders and in their behalf are ordered to
allow all residents of Phase I and II of Loyola Grand Villas unobstructed right-of-way
or passage through the Mangyan Road which is the boundary between the La Vista
Subdivision and the Loyola Grand Villas Subdivision;
2. The motion to intervene as plaintiffs filed by the residents of Loyola Grand Villas
Subdivision is GRANTED; and
3. The motions for contempt filed by both plaintiff-appellee and defendant-appellant

are DENIED.
This resolution is immediately executory. [5]
On 15 December 1989 both motions for reconsideration of Solid Homes, Inc., and LA
VISTA were denied. In separate petitions, both elevated the 21 September 1989 and 15
December 1989 Resolutions of the Court of Appeals to this Court. The petition of Solid
Homes, Inc., docketed as G.R. No. 91433, prayed for an order directing the appellate
court to take cognizance of and hear the motions for contempt, while that of LA VISTA in
G.R. No. 91502 sought the issuance of a preliminary injunction to order Solid Homes,
Inc., ATENEO and LOYOLA residents to desist from intruding into Mangyan Road.
On 22 May 1990, pending resolution of G.R. Nos. 91433 and 91502, the Second
Division of the Court of Appeals[6] in CA-G.R. CV No. 19929 affirmed in toto the Decision
of the trial court in Civil Case No. Q-22450. On 6 September 1990 the motions for
reconsideration and/or re-raffle and to set the case for oral argument were denied. In view
of the affirmance of the Decision by the Court of Appeals in CA-G.R. CV No. 19929 this
Court dismissed the petition in G.R. No. 91502 for being moot as its main concern was
merely the validity of a provisional or preliminary injunction earlier issued. We also denied
the petition in G.R. No. 91433 in the absence of a discernible grave abuse of discretion
in the ruling of the appellate court that it could not entertain the motions to cite the parties
for contempt because a charge of contempt committed against a superior court may be
filed only before the court against whom the contempt has been committed (Sec. 4, Rule
71, Rules of Court).[7]
Consequently we are left with the instant case where petitioner LA VISTA assails the
Decision of respondent Court of Appeals affirming in toto the Decision of the trial court
which rendered a judgment on the merits and recognized an easement of right-of-way
along Mangyan Road, permanently enjoining LA VISTA from closing to Solid Homes, Inc.,
and its successors-in-interest the ingress and egress on Mangyan Road.
In its first assigned error, petitioner LA VISTA argues that respondent appellate court
erred in disregarding the decisions in (a) La Vista Association, Inc., v. Hon.
Ortiz,[8] affirmed by this Court in Tecson v. Court of Appeals;[9] (b) La Vista Association,
Inc., v. Hon. Leviste,[10] affirmed by this Court in Rivera v. Hon. Intermediate Appellate
Court;[11] and, (c) La Vista v. Hon. Mendoza,[12] and in holding that an easement of right-of-
way over Mangyan Road exists.[13]
We do not agree with petitioner. The reliance of petitioner on the cited cases is out of
place as they involve the issuance of a preliminary injunction pending resolution of a case
on the merits. In the instant case, however, the subject of inquiry is not merely the
issuance of a preliminary injunction but the final injunctive writ which was issued after trial
on the merits. A writ of preliminary injunction is generally based solely on initial and
incomplete evidence. The opinion and findings of fact of a court when issuing a writ of
preliminary injunction are interlocutory in nature and made even before the trial on the
merits is terminated. Consequently there may be vital facts subsequently presented
during the trial which were not obtaining when the writ of preliminary injunction was
issued. Hence, to equate the basis for the issuance of a preliminary injunction with that
for the issuance of a final injunctive writ is erroneous. And it does not necessarily mean
that when a writ of preliminary injunction issues a final injunction follows. Accordingly,
respondent Court of Appeals in its assailed Decision rightly held that -
We are unswayed by appellants theory that the cases cited by them in their Brief
(pages 17 and 32) and in their motion for early resolution (page 11, Rollo) to buttress
the first assigned error, are final judgments on the merits of, and therefore res
judicata to the instant query. It is quite strange that appellant was extremely cautious
in not mentioning this doctrine but the vague disquisition nevertheless points to this
same tenet, which upon closer examination negates the very proposition. Generally, it
is axiomatic that res judicata will attach in favor of La Vista if and when the case
under review was disposed of on the merits and with finality (Manila Electric Co., vs.
Artiaga, 50 Phil. 144; 147; S. Diego vs. Carmona, 70 Phil. 281; 283; cited in
Comments on the Rules of Court, by Moran, Volume II, 1970 edition, page
365; Roman Catholic Archbishop vs. Director of Lands, 35 Phil. 339; 350-351, cited
in Remedial Law Compendium, by Regalado, Volume I, 1986 Fourth revised Edition,
page 40). Appellants suffer from the mistaken notion that the merits of
the certiorari petitions impugning the preliminary injunction in the cases cited by it
are tantamount to the merits of the main case, subject of the instant appeal. Quite the
contrary, the so-called final judgments adverted to dealt only with the propriety of the
issuance or non-issuance of the writ of preliminary injunction, unlike the present
recourse which is directed against a final injunctive writ under Section 10, Rule
58. Thus the invocation of the disputed matter herein is misplaced. [14]
We thus repeat what we said in Solid Homes, Inc., v. La Vista [15] which respondent
Court of Appeals quoted in its assailed Decision [16] -
Being an ancillary remedy, the proceedings for preliminary injunction cannot stand
separately or proceed independently of the decision rendered on the merits of the main
case for injunction. The merits of the main case having been already determined in
favor of the applicant, the preliminary determination of its non-existence ceases to
have any force and effect.
Petitioner LA VISTA in its lengthy Memorandum also quotes our ruling in Ramos,
Sr., v. Gatchalian Realty, Inc.,[17] no less than five (5) times[18] -
To allow the petitioner access to Sucat Road through Gatchalian Avenue inspite of a
road right-of-way provided by the petitioners subdivision for its buyers simply
because Gatchalian Avenue allows petitioner a much greater ease in going to and
coming from the main thoroughfare is to completely ignore what jurisprudence has
consistently maintained through the years regarding an easement of a right-of-way,
that mere convenience for the dominant estate is not enough to serve as its basis. To
justify the imposition of this servitude, there must be a real, not a fictitious or
artificial, necessity for it (See Tolentino, Civil Code of the Philippines, Vol. II, 2nd
ed., 1972, p. 371)
Again this is misplaced. Ramos, Sr., v. Gatchalian Realty, Inc.,[19] concerns a legal or
compulsory easement of right-of-way -
Since there is no agreement between the contending parties in this case granting a
right-of-way by one in favor of the other, the establishment of a voluntary easement
between the petitioner and the respondent company and/or the other private
respondents is ruled out. What is left to examine is whether or not petitioner is entitled
to a legal or compulsory easement of a right-of-way -
which should be distinguished from a voluntary easement. A legal or compulsory

easement is that which is constituted by law for public use or for private interest. By
express provisions of Arts. 649 and 650 of the New Civil Code, the owner of an estate
may claim a legal or compulsory right-of-way only after he has established the existence
of four (4) requisites, namely, (a) the estate is surrounded by other immovables and is
without adequate outlet to a public highway; (b) after payment of the proper indemnity;
(c) the isolation was not due to the proprietors own acts; and, (d) the right-of-way claimed
is at a point least prejudicial to the servient estate, and insofar as consistent with this rule,
where the distance from the dominant estate to a public highway may be the shortest. [20] A
voluntary easement on the other hand is constituted simply by will or agreement of the
parties.
From the facts of the instant case it is very apparent that the parties and their
respective predecessors-in-interest intended to establish an easement of right-of-way
over Mangyan Road for their mutual benefit, both as dominant and servient estates. This
is quite evident when: (a) the Tuasons and the Philippine Building Corporation in 1949
stipulated in par. 3 of their Deed of Sale with Mortgage that the boundary line between
the property herein sold and the adjoining property of the VENDORS shall be a road
fifteen (15) meters wide, one-half of which shall be taken from the property herein sold to
the VENDEE and the other half from the portion adjoining belonging to the vendors; (b)
the Tuasons in 1951 expressly agreed and consented to the assignment of the land to,
and the assumption of all the rights and obligations by ATENEO, including the obligation
to contribute seven and one-half meters of the property sold to form part of the 15-meter
wide roadway; (c) the Tuasons in 1958 filed a complaint against MARYKNOLL and
ATENEO for breach of contract and the enforcement of the reciprocal easement on
Mangyan Road, and demanded that MARYKNOLL set back its wall to restore Mangyan
Road to its original width of 15 meters, after MARYKNOLL constructed a wall in the middle
of the 15-meter wide roadway; (d) LA VISTA President Manuel J. Gonzales admitted and
clarified in 1976, in a letter to ATENEO President Fr. Jose A. Cruz, S.J., that Mangyan
Road is a road fifteen meters wide, one-half of which is taken from your property and the
other half from the La Vista Subdivision. So that the easement of a right-of-way on your
7 1/2 m. portion was created in our favor and likewise an easement of right-of-way was
created on our 7 1/2 m. portion of the road in your favor; (e) LA VISTA, in its offer to buy
the hillside portion of the ATENEO property in 1976, acknowledged the existence of the
contractual right-of-way as it manifested that the mutual right-of-way between the Ateneo
de Manila University and La Vista Homeowners Association would be extinguished if it
bought the adjacent ATENEO property and would thus become the owner of both the
dominant and servient estates; and, (f) LA VISTA President Luis G. Quimson, in a letter
addressed to the Chief Justice, received by this Court on 26 March 1997, acknowledged
that one-half of the whole length of (Mangyan Road) belongs to La Vista Assn., Inc. The
other half is owned by Miriam (Maryknoll) and the Ateneo in equal portions;
These certainly are indubitable proofs that the parties concerned had indeed
constituted a voluntary easement of right-of-way over Mangyan Road and, like any other
contract, the same could be extinguished only by mutual agreement or by renunciation of
the owner of the dominant estate. Thus respondent Court of Appeals did not commit a
reversible error when it ruled that -
Concerning the pivotal question posed herein on the existence of an easement, we are
of the belief, and thus hereby hold that a right-of-way was properly appreciated along
the entire route of Mangyan Road.Incidentally, the pretense that the court a quo erred
in holding that Mangyan Road is the boundary road between La Vista and Ateneo
(page 31, Appellants Brief) does not raise any critical eyebrow since the same is
wholly irrelevant to the existence of a servitude thereon from their express admission
to the contrary (paragraph 1, Answer).
Ones attention should rather be focused on the contractual stipulations in the deed of
sale between the Tuason Family and the Philippine Building Corporation (paragraph
3, thereof) which were incorporated in the deed of assignment with assumption of
mortgage by the Philippine Building Corporation in favor of Ateneo (first paragraph,
page 4 of the deed) as well as in the deed of sale dated October 24, 1976 when the
property was ultimately transferred by Ateneo to plaintiff-appellee. Like any other
contractual stipulation, the same cannot be extinguished except by voluntary
rescission of the contract establishing the servitude or renunciation by the owner of
the dominant lots (Chuanico vs. Ibaez, 7 CA Reports, 2nd Series, 1965 edition, pages
582; 589, cited in Civil Law Annotated, by Padilla, Volume II, 1972 Edition,
pages602-603), more so when the easement was implicitly recognized by the letters of
the La Vista President to Ateneo dated February 11 and April 28, 1976 (page 22,
Decision; 19 Ruling Case Law 745).
The free ingress and egress along Mangyan Road created by the voluntary agreement
between Ateneo and Solid Homes, Inc., is thus legally demandable (Articles 619 and
625, New Civil Code) with the corresponding duty on the servient estate not to
obstruct the same so much so that -
When the owner of the servient tenement performs acts or constructs works impairing
the use of the servitude, the owner of the dominant tenement may ask for the
destruction of such works and the restoration of the things to their condition before the
impairment was committed, with indemnity for damages suffered (3 Sanchez Roman
609). An injunction may also be obtained in order to restrain the owner of the servient
tenement from obstructing or impairing in any manner the lawful use of the servitude
(Resolme v. Lazo, 27 Phil. 416; 417; 418). (Commentaries and Jurisprudence on the
Civil Code of the Philippines, by Tolentino, Volume 2, 1963 edition, page 320) [21]
Resultantly, when the court says that an easement exists, it is not creating one. For,
even an injunction cannot be used to create one as there is no such thing as a judicial
easement.As in the instant case, the court merely declares the existence of an easement
created by the parties. Respondent court could not have said it any better -
It must be emphasized, however, that We are not constituting an easement along

Mangyan Road, but merely declaring the existence of one created by the manifest will
of the parties herein in recognition of autonomy of contracts (Articles 1306 and 619,
New Civil Code; Tolentino, supra, page 308; Civil Code of the Philippines, by Paras,
Volume II, 1984 edition, page 549). [22]
The argument of petitioner LA VISTA that there are other routes to LOYOLA from
Mangyan Road is likewise meritless, to say the least. The opening of an adequate outlet
to a highway can extinguish only legal or compulsory easements, not voluntary
easements like in the case at bar. The fact that an easement by grant may have also
qualified as an easement of necessity does not detract from its permanency as a property
right, which survives the termination of the necessity.[23]
That there is no contract between LA VISTA and Solid Homes, Inc., and thus the
court could not have declared the existence of an easement created by the manifest will
of the parties, is devoid of merit. The predecessors-in-interest of both LA VISTA and Solid
Homes, Inc., i.e., the Tuasons and the Philippine Building Corporation, respectively,
clearly established a contractual easement of right-of-way over Mangyan Road. When
the Philippine Building Corporation transferred its rights and obligations to ATENEO the
Tuasons expressly consented and agreed thereto. Meanwhile, the Tuasons themselves
developed their property into what is now known as LA VISTA. On the other hand,
ATENEO sold the hillside portions of its property to Solid Homes, Inc., including the right
over the easement of right-of-way. In sum, when the easement in this case was
established by contract, the parties unequivocally made provisions for its observance by
all who in the future might succeed them in dominion.
The contractual easement of right-of-way having been confirmed, we find no reason
to delve on the issue concerning P.D. No. 957 which supposedly grants free access to
any subdivision street to government or public offices within the subdivision. In the instant
case, the rights under the law have already been superseded by the voluntary easement
of right-of-way.
Finally, petitioner questions the intervention of some LOYOLA residents at a time
when the case was already on appeal, and submits that intervention is no longer
permissible after trial has been concluded. Suffice it to say that in Director of Lands v.
Court of Appeals,[24] we said -
It is quite clear and patent that the motions for intervention filed by the movants at this
stage of the proceedings where trial has already been concluded, a judgment thereon
had been promulgated in favor of private respondent and on appeal by the losing party
x x x the same was affirmed by the Court of Appeals and the instant petition for
certiorari to review said judgment is already submitted for decision by the Supreme
Court, are obviously and manifestly late, beyond the period prescribed under x x
x Section 2, Rule 12 of the Rules of Court (now Sec. 2, Rule 19, 1997 Rules of Civil
Procedure).
But Rule 12 of the Rules of Court, like all other Rules therein promulgated, is simply
a rule of procedure, the whole purpose and object of which is to make the powers of
the Court fully and completely available for justice. The purpose of procedure is not
to thwart justice. Its proper aim is to facilitate the application of justice to the rival
claims of contending parties. It was created not to hinder and delay but to facilitate
and promote the administration of justice. It does not constitute the thing itself which
courts are always striving to secure to litigants. It is designed as the means best
adopted to obtain that thing. In other words, it is a means to an end.
The denial of the motions for intervention arising from the strict application of the
Rule due to alleged lack of notice to, or the alleged failure of, movants to act
seasonably will lead the Court to commit an act of injustice to the movants, to their
successors-in-interest and to all purchasers for value and in good faith and thereby
open the door to fraud, falsehood and misrepresentation, should intervenors claims be
proven to be true.
After all, the intervention does not appear to have been filed to delay the
proceedings. On the contrary, it seems to have expedited the resolution of the case as
the incidents brought forth by the intervention, which could have been raised in another
case, were resolved together with the issues herein resulting in a more thorough disposal
of this case.
WHEREFORE, the Decision of respondent Court of Appeals dated 22 May 1990 and
its Resolution dated 6 September 1990, which affirmed the Decision of the RTC-Br. 89,
Quezon City, dated 20 November 1987, are AFFIRMED.
SO ORDERED.
Vitug, Kapunan, and Hermosisima, Jr., JJ., concur.
[1]
Decision penned by Justice Simeon M. Gopengco, concurred in by Justices Lino M. Patajo and Jose
Racela,Jr.
[2]
Decision penned by Judge Rodolfo A. Ortiz, RTC-Br. 89, Quezon City.
[3]
Resolution of 20 April 1988, G.R. No. 71150, p. 2.
[4]
Resolution penned by Justice Santiago M. Kapunan (now a member of this Court), concurred in by
Justices Lorna S. Lombos-De la Fuente and Minerva G. Reyes.
[5]
See Resolution of 4 March 1992 in G.R. Nos. 91433 and 91502, pp. 3-4.
[6]
Decision penned by Justice Jose A. R. Melo (now a member of this Court), concurred in by Justices
Antonio M. Martinez and Filemon H. Mendoza.
[7]
See Resolution of the Court of Appeals in CA-G.R. CV No. 19929, 21 September 1989, p. 7.
[8]
CA-G.R. No. 02534, 31 May 1985.
[9]
G.R. No. 89283, 23 August 1989.
[10]
CA-G.R. SP No. 03083, 6 January 1996.
[11]
G.R. No. 74249, 20 January 1989, 169 SCRA 307.
[12]
CA-G.R. SP No. 16410, 22 May 1989.
[13]
Memorandum of Petitioner, p. 18.
[14]
CA- G.R. CV No. 19929, 22 May 1990, pp. 9-10.
[15]
G.R. No. 71150, 20 April 1988.
[16]
Id., pp. 12-13.
[17]
G.R. No. 75905, 12 October 1987, 154 SCRA 703, 712.
[18]
Memorandum of Petitioner, pp. 21-22, 25, 29-30, 32-33, 45.
[19]
See Note 17, p. 710.
[20]
Vda. de Baltazar v. Court of Appeals, G.R. No. 106082, 27 June 1995, 245 SCRA 333, citing Locsin v.
Climaco, No. L-27319, 31 January 1969, 26 SCRA 816 and Angela Estate v. CFI of Negros
Occidental, L-27084, 31 July 1968, 24 SCRA 500, 510.
[21]
CA-G.R. CV No. 19929, 22 May 1990, pp. 11-12.
[22]
Id., p. 13.
[23]
Benedicto v. Court of Appeals, No. L-22733, 25 September 1968, 25 SCRA 145.
[24]
No. L-45168, 25 September 1979, 93 SCRA 238, 245-246.
LA VISTA ASSOCIATION, INC

vs. CA- Easement of Right of
Way
Like any other contractual stipulation, a voluntary easement cannot be extinguished except by
voluntary recession of the contract establishing the servitude or renunciation by the owner of the
dominant lots.
FACTS:
The controversy in this case is regarding the right of way in Manyan road. The road is a 15 meter
wide road abutting Katipunan Avenue on the west, traverses the edges of La Vista Subdivision on
the north and of the Ateneo de Manila University and Maryknoll College on the south. The said road
was originally owned by the Tuasons sold a portion of their land to Philippine Building Corporation.
Included in such sale was half or 7.5 meters width of the Mangyan road. The said corporation
assigned its rights, with the consent of the tuasons, to AdMU through a Deed of Assignment with
Assumption of Mortgage. Ateneo later on sold to Maryknoll the western portion of the land. Tuason
developed their land which is now known as La Vista. On January, 1976, Ateneo and La Vista
acknowledged the voluntary easement or a Mutual right of way wherein the parties would allow the
other to use their half portion of the Manyan road (La Vista to use AdMU’s 7.5 meters of the
mangyan road and also the other way around.) Ateneo auctioned off the property wherein Solid
Homes Inc., the developer of Loyola Grand Villas, was the highest bidder.
ADMU transferred not only the property, but also the right to negotiate the easement on the road.
However, La Vista did not want to recognize the easement thus they block the road using 6
cylindrical concrete and some guards over the entrance of the road blocking the entrance of the
residents of Loyola Grand Villas. Solid Homes Inc. filed for injunction and La vista in turn filed a third
party complaint against AdMU. Some of the arguments of the petitioner were that Loyola residents
had adequate outlet to a public highway using other roads and also that AdMU has not yet finalized
the negotiation of the easement.
ISSUES: Whether or not there is an easement of right of

way?
RULING: YES.
There was a voluntary easement of right of way which was acknowledged on January 1976 by the
Tuasons and Admu (the easement was established by PBC and the Tuasons but I don’t think I can
find the details regarding it in the case… I just saw the one regarding “acknowledgement” between
admu and the Tuasons.) Being such, the 4 requisites for a compulsory easement need not be met.
And like any other contractual stipulation, the same cannot be extinguished except by voluntary
recession of the contract establishing the servitude or renunciation by the owner of the dominant
lots. In the case at bar, all the predecessors-in-interest of both parties recognized the existence of
such easement and there was no agreement yet to revoke the same. The free ingress and egress
along Mangyan Road created by the voluntary agreement is thus demandable.
The Court also emphasized that they are not creating an easement but merely declaring one (there
no such thing as a judicial easement)
FIRST DIVISION
[G.R. No. 136996. December 14, 2001]
EDILBERTO ALCANTARA, FLORENCIO VILLARMIA, POLICARPIO

OBREGON,+ RICARDO ROBLE, ESCOLASTICA ONDONG,
ESTEBAN RALLOS, HENRY SESBINO, SERGIO SESBINO,
MANUEL CENTENO,+ RENATO CRUZ, MARCELINO CENEZA,
BUENAVENTURA ONDONG, and BENJAMIN
HALASAN, petitioners, vs. CORNELIO B. RETA, JR. respondent.
DECISION
PARDO, J. :
The Case
In this petition for review,[1] petitioners seek to review the decision[2] of the
Court of Appeals affirming the decision[3] of the Regional Trial Court, Davao City, Branch 14,
dismissing petitioners complaint for the exercise of the right of first refusal under Presidential
Decree No. 1517, injunction with preliminary injunction, attorneys fees and nullity of amicable
settlement.
The Facts
Edilberto Alcantara, Florencio Villarmia, Policarpio Obregon, Ricardo Roble, Escolastica

Ondong, Esteban Rallos, Henry Sesbino, Sergio Sesbino, Manuel Centeno, Renato Cruz, Marcelo
Ceneza, Buenaventura Ondong and Benjamin Halasan, filed with the Regional Trial Court, Davao
City, Branch 14, a complaint[4] against Cornelio B. Reta, Jr. for the exercise of the right of right of
first refusal under Presidential Decree No. 1517, injunction with preliminary injunction, attorneys
fees and nullity of amicable settlement.
The plaintiffs claimed that they were tenants or lessees of the land located in Barangay Sasa,
Davao City, covered by Transfer Certificate of Title No. T-72594, owned by Reta; that the land
has been converted by Reta into a commercial center; and that Reta is threatening to eject them
from the land. They assert that they have the right of first refusal to purchase the land in accordance
with Section 3(g) of Presidential Decree No. 1517 since they are legitimate tenants or lessees
thereof.
They also claimed that the amicable settlement executed between Reta and Ricardo Roble
was void ab initio for being violative of Presidential Decree No. 1517.
On the other hand, Reta claimed that the land is beyond the ambit of Presidential Decree No.
1517 since it has not been proclaimed as an Urban Land Reform Zone; that the applicable law is
Batas Pambansa Blg. 25 for failure of the plaintiffs to pay the rentals for the use of the land; and
that the amicable settlement between him and Ricardo Roble was translated to the latter and fully
explained in his own dialect.
On March 8, 1994, the trial court rendered a decision dismissing the complaint and ordering
the plaintiffs to pay Reta certain sums representing rentals that had remained unpaid.[5]
On April 6, 1994, plaintiffs appealed the decision to the Court of Appeals.[6]
On December 9, 1998, the Court of Appeals promulgated a decision[7] affirming in toto the
decision of the trial court.
Hence, this appeal.[8]
The Issue
The issue is whether petitioners have the right of first refusal under Presidential Decree No.
1517.
The Courts Ruling
The petition is without merit.

The area involved has not been proclaimed an Urban Land Reform Zone (ULRZ). In fact,
petitioners filed a petition with the National Housing Authority requesting that the land they were
occupying be declared as an ULRZ. On May 27, 1986, the request was referred to Mr. Jose L.
Atienza, General Manager, National Housing Authority, for appropriate action.[9] The request was
further referred to acting mayor Zafiro Respicio, Davao City, as per 2nd Indorsement dated July 1,
1986.[10] Clearly, the request to have the land proclaimed as an ULRZ would not be necessary if
the property was an ULRZ.
Presidential Decree No. 1517, otherwise known as The Urban Land Reform Act, pertains to
areas proclaimed as Urban Land Reform Zones.[11] Consequently, petitioners cannot claim any
right under the said law since the land involved is not an ULRZ.
To be able to qualify and avail oneself of the rights and privileges granted by the said decree,
one must be: (1) a legitimate tenant of the land for ten (10) years or more; (2) must have built his
home on the land by contract; and, (3) has resided continuously for the last ten (10)
years. Obviously, those who do not fall within the said category cannot be considered legitimate
tenants and, therefore, not entitled to the right of first refusal to purchase the property should the
owner of the land decide to sell the same at a reasonable price within a reasonable time.[12]
Respondent Reta denies that he has lease agreements with petitioners Edilberto Alcantara and
Ricardo Roble.[13] Edilberto Alcantara, on the other hand, failed to present proof of a lease
agreement other than his testimony in court that he bought the house that he is occupying from his
father-in-law.[14]
Respondent Reta allowed petitioner Ricardo Roble to use sixty-two (62) coconut trees for
P186 from where he gathered tuba. This arrangement would show that it is a usufruct and not a
lease. 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.[15]
Petitioner Roble was allowed to construct his house on the land because it would facilitate his
gathering of tuba. This would be in the nature of a personal easement under Article 614 of the
Civil Code.[16]
Whether the amicable settlement[17] is valid or not, the conclusion would still be the same since
the agreement was one of usufruct and not of lease. Thus, petitioner Roble is not a legitimate tenant
as defined by Presidential Decree No. 1517.
As to the other petitioners, respondent Reta admitted that he had verbal agreements with them.
This notwithstanding, they are still not the legitimate tenants contemplated by Presidential Decree
No. 1517, who can exercise the right of first refusal.
A contract has been defined as a meeting of the minds between two persons whereby one
binds himself, with respect to the other, to give something or to render some service.[18]
Clearly, from the moment respondent Reta demanded that the petitioners vacate the premises,
the verbal lease agreements, which were on a monthly basis since rentals were paid
monthly,[19] ceased to exist as there was termination of the lease.
Indeed, none of the petitioners is qualified to exercise the right of first refusal under P. D. No.
1517.
Another factor which militates against petitioners claim is the fact that there is no intention on
the part of respondent Reta to sell the property. Hence, even if the petitioners had the right of first
refusal, the situation which would allow the exercise of that right, that is, the sale or intended sale
of the land, has not happened. P. D. No. 1517 applies where the owner of the property intends to
sell it to a third party.[20]
The Fallo
WHEREFORE, the Court DENIES the petition. The Court AFFIRMS the decision of the
Court of Appeals[21] and the resolution denying reconsideration thereof.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, and Ynares-Santiago, JJ., concur.
Puno, J., on official leave.
+
Deceased.
+
Deceased.
[1]
Under Rule 45 of the Revised Rules of Court.
[2]
In CA-G. R. CV No. 53624 promulgated on December 9 1998, Petition, Annex A, Rollo, pp. 23-27, Artemio G.
Tuquero, J., ponente, Eubulo G. Verzola and Renato C. Dacudao, JJ., concurring.
[3]
In Civil Case No. 17,495 rendered on March 8, 1994, Decision, Original Record, Civil Case No. 17,495, pp. 234-
249, Judge William M. Layague, presiding.
[4]
Docketed as Civil Case No. 17,495, Petition, Annex B, Rollo, pp. 29-36.
[5]
Decision, Original Record, Civil Case No. 17,495, pp. 234-249.
[6]
Notice of Appeal, Original Record, Civil Case No. 17,495, p. 250. Docketed as CA-G. R. CV No. 53624
[7]
Petition, Annex A, Rollo, pp. 23-27.
[8]
Petition, Rollo, pp. 10-22. On June 23, 1999, we resolved to give due course to the petition (Rollo, pp. 79-80).
[9]
Exhibit A-4, Original Record, Civil Case No. 17,495, pp. 100-E to 100-G.
[10]
Exhibits A-1 and A-2, Original Record, Civil Case No. 17,495, pp. 100-C to 100-D.
[11]
Sen Po Ek Marketing Corporation v. Martinez, 325 SCRA 210, 224 (2000).
[12]
Carreon v. Court of Appeals, 353 Phil. 271, 280 (1998).
[13]
Comment on the Petition for Review on Certiorari, Rollo, pp. 52-62, at p. 53.
[14]
T.S.N., August 27, 1986, p. 20.
[15]
Art. 562, Civil Code of the Philippines.
[16]
Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Volume 2, 1992 ed.,
p. 318.
[17]
Complaint, Annex A, Original Record, Civil Case No. 17,495, p. 9.
[18]
Art. 1305, Civil Code.
[19]
The first part of Art. 1687, Civil Code of the Philippines, provides: If the period for the lease has not been fixed, it
is understood to be from year to year, if the rent agreed upon is annual; from month to month, if it is monthly; from
week to week, if the rent is weekly; and from day to day, if the rent is to be paid daily. [Emphasis supplied]
[20]
Bermudez v. Intermediate Appellate Court, 227 SCRA 327, 331 (1986).
[21]
In CA-G. R. CV No. 53624.
SYLLABI/SYNOPSIS
SECOND DIVISION
[G.R. No. 114170. January 15, 1999]
PROSPERITY CREDIT RESOURCES, INC., petitioner, vs. COURT OF

APPEALS and METROPOLITAN FABRICS, INC., respondents.
DECISION
MENDOZA, J.:
For review in this case is a decision[1] of the Sixth Division of the Court of Appeals in CA GR.
28684-SP dated November 26, 1993 setting aside a writ of preliminary mandatory injunction
issued by the Regional Trial Court of Quezon City (Branch 95).
On August 3, 1984, petitioner Prosperity Credit Resources, Inc. gave a loan to private
respondent Metropolitan Fabrics, Inc.[2] To secure the payment of the loan, private respondent
mortgaged to petitioner seven parcels of land located at 685 Tandang Sora Avenue, Bo. Banlat,
Quezon City.[3] The lots comprise a commercial compound with Tandang Sora Avenue as the
nearest public road.
By October 27, 1987, private respondents loan amounted to P10.5 million.[4] As private
respondent defaulted in the payment of the loan, petitioner foreclosed the mortgage and, in the
ensuing public bidding, became the highest bidder and purchaser of the seven (7) lots subject of
the mortgage.
Later, private respondent negotiated with petitioner for the redemption of three lots covered
by TCT Nos. 317705, 317706, and 317707,[5] all located on the southern and middle portions of
the compound. As the reacquisition of these three lots by private respondent would leave the
remaining four lots on the northwestern side without access to Tandang Sora Avenue, petitioner
acceded to private respondents request on the condition that petitioner be given a right of way on
the existing private road which forms part of the area to be redeemed by private respondent. The
parties agreement was embodied in a Memorandum of Undertaking, dated September 18, 1987,
the full text of which reads:[6]
MEMORANDUM OF UNDERTAKING
KNOW ALL MEN THESE PRESENTS:
That METROPOLITAN FABRICS, INC. is the registered owner of that certain land
covered by Transfer Certificate of Title No. 317709, more particularly described as
follows:
A parcel of land (Lot 11 (Existing Road) of the consolidation-subdn. plan (LRC)

Pcs-27706, approved as a non-subdn. project, being a portion of the consolidation
of Lots 373-E, (LRC) Psd-16383; 377-B, Fls-2163-D; 377-C-1,2,3, & 4 (LRC)
Psd-5025; 377-C-5-A, & B, (LRC) Psd-9474; 384-A & 387-B-1, (LRC) Psd-
254813; 388-A & C, Psd-30663; 388-B-1,2,3,4 & 5, Psd-54827; 389-A-1,2 & 3,
389-B-1 (LRC) Psd-10087; and 389-B-2-C, (LRC) Psd-18842; LRC (GLRO)
Rec. No. 5975) situated in the Bo. of Banlat, Quezon City, Metro Manila, Is. of
Luzon ...... containing of an area of FIVE THOUSAND THREE HUNDRED
SIXTY SEVEN (5,367)SQUARE METERS, more or less.
That the above-described lot, being an existing private road, will remain open to
ingress and egress for whatever kind of passage in favor of PROSPERITY
FINANCIAL RESOURCES, INC. or its successors-in-interest, the mortgagee of Lots
1,4,5,6,7,8 and 9 of the consolidation-subdivision plan, Pcs-27706 of Transfer
Certificates of Title Nos. 317699, 317702, 317703, 317704, 317705, 317706 &
317707, respectively, in the name of METROPOLITAN FABRICS, INC.
DONE this Sep. 18 1987 in the city of Manila.
On November 7, 1991, petitioner filed an injunctive suit in the Regional Trial Court of Quezon
City (Branch 95). Petitioner alleged that, in violation of the terms of the Memorandum of
Agreement, private respondent refused to allow petitioner to make excavations on one side of the
access road for the installation of water pipes; that it banned entry of petitioners trucks and those
of its tenants between 11:30 A.M. to 1:00 P.M. and 10:00 P.M. to 7:00 A.M.; and that it subjected
the vehicles to unnecessary searches. Petitioner sought the issuance of a writ of preliminary
mandatory injunction requiring private respondent to allow [petitioner] to proceed with the MWSS
installation project over the road lot in question, to allow [petitioners] and [its] tenants delivery
trucks and other vehicles access to the same at any time and without undergoing unnecessary
searches, and to otherwise recognize [petitioners] right of way over the said lot.[7] Petitioner prayed
that, after trial, the writ be made final.
On December 21, 1991, private respondent filed an answer with counterclaim, alleging that
petitioners right to undertake excavations on the access road was not provided for in the
Memorandum of Undertaking.[8] As counterclaim, private respondent alleged that it was petitioner
which caused damage to private respondents tenants by undertaking, without its
consent, construction works on the access road which raised its level to about a meter and caused
serious flooding of the nearby buildings whenever it rained;[9] and that, as a result, its tenants
demanded compensation for damage to their merchandise and equipment occasioned by the
flooding. Private respondent prayed for P2.1 million as counterclaim.[10]
The trial court required the parties to submit position papers in connection with petitioners
prayer for a preliminary mandatory injunction.[11] After the parties had done so, the trial
court granted, on February 14, 1992, petitioners prayer for a preliminary writ, conditioned upon
the filing by petitioner of a bond in the amount of P500,000.00. The trial court said in part:
. . . [T]he court finds that to deny plaintiffs application for a preliminary mandatory
injunction writ would be to disregard its right of way in respect of the road lot in
question, a right clearly set forth in defendants memorandum of undertaking of
September 18, 1987; indeed, no cogent reason appears to warrant treating the
terms for whatever kind of passage contained therein as nothing more than a useless,
meaningless redundancy . . . .
ACCORDINGLY, plaintiffs subject application is hereby granted and the Court

hereby directs that upon the filing and approval of the corresponding injunction bond
in the sum of P500,000.00, . . . let corresponding preliminary mandatory injunction
writ be issued directing defendant to allow plaintiff to proceed with its MWSS
installation project over the road lot in question, to allow plaintiffs and its tenants
delivery trucks and other vehicles access to the same at any time and without
undergoing unnecessary searches, and to otherwise recognize plaintiffs right of way
over the said road lot, pending the termination of this litigation and/or unless a
contrary order is issued by this Court . . . .[12]
On March 2, 1992, the trial court issued the writ upon filing of the required bond by
petitioner.[13] Private respondent filed a motion for reconsideration of the orders granting injunction
which the trial court denied.[14] However, it increased the injunction bond to P2.1 million.[15]
Private respondent filed a petition for certiorari and prohibition with the Court of Appeals to
annul the aforesaid orders, dated February 14, 1992 and March 2, 1992, of the trial court. On
November 26, 1994, the appellate court granted the petition and set aside the questioned orders
after finding that the trial court had acted with grave abuse of discretion in issuing them.[16] Its
motion for reconsideration having been denied on February 28, 1994, petitioner filed the present
petition for review on certiorari alleging that:[17]
1. THE COURT OF APPEALS GRAVELY ERRED WHEN IT
EXERCISED CERTIORARI POWERS TO REVERSE AN ERROR OF JUDGMENT
COMMITTED BY THE REGIONAL TRIAL COURT, UPON FINDING THAT THE
LOWER COURT MISUNDERSTOOD THE RIGHT OF HEREIN PETITIONER
PROSPERITY OVER THE ROAD LOT IN QUESTION.
2. THE COURT OF APPEALS GROSSLY ERRED WHEN IT APPLIED THE DOCTRINE
ENUNCIATED IN RIVAS V. SEC (190 SCRA 295) DESPITE THE DIVERSITY IN
FACTUAL SETTING OF THE INSTANT CASE VIS-A-VIS THAT OBTAINING IN THE
CITED CASE.
3. THE COURT OF APPEALS GRAVELY ERRED WHEN IT DECIDED THE MERITS OF
THE MAIN CASE IN A CERTIORARI PROCEEDING PRACTICALLY RENDERING
ACADEMIC THE HEARING PROPER YET TO BE CONDUCTED BY THE REGIONAL
TRIAL COURT.
4. THE COURT OF APPEALS GRAVELY ERRED WHEN IT MADE FINDINGS OF FACTS
ON THE BASIS OF THE REPRESENTATION AND RECITAL OF FACTS MADE IN THE
MFI PETITION AND PROCEEDED TO INTERPRET THE MEMORANDUM OF
UNDERTAKING WITHOUT CONSIDERING FACTS AND CIRCUMSTANCES
SURROUNDING ITS EXECUTION WHICH WERE YET TO BE ESTABLISHED IN A
FULL BLOWN TRIAL.
The assignment of errors raises a single question: whether, in issuing a writ of preliminary
mandatory injunction ordering private respondent to allow petitioner to undertake excavations
along the access road for the purpose of installing water pipes, the Regional Trial Court gravely
abused its discretion.
As held in Pelejo v. Court of Appeals,[18] to justify the issuance of the writ of preliminary
mandatory injunction the following must be shown: (1) that the complainant has a clear legal right;
(2) that his right has been violated and the invasion is material and substantial; and (3) that there
is an urgent and permanent necessity for the writ to prevent serious damage.
The right of the complainant must be clear and unmistakable because, unlike an ordinary
preliminary injunction, the writ of preliminary mandatory injunction requires the performance of
a particular act or acts[19] and thus tends to do more than maintain the status quo.[20] In the case at
bar, petitioner anchors its alleged right to the preliminary mandatory injunction on the
Memorandum of Undertaking, dated September 18, 1987, which provides that:
[T]he above-described lot, being an existing private road, will remain open to
ingress and egress for whatever kind of passage in favor of PROSPERITY
FINANCIAL RESOURCES, INC. or its successors-in-interest.
There is no question as to the meaning of the terms ingress and egress. They give petitioner
the right to use the private road as a means of entry into and exit from its property on the
northwestern side of the compound. The question concerns the meaning of the phrase for whatever
kind of passage. The trial court read this phrase to mean that petitioner had the right to make
excavations on the side of the access road in order to install a network of water pipes. The word
passage does not, however, clearly and unmistakably convey a meaning that includes a right
to install water pipes on the access road. The ordinary meaning of the word, as defined in Websters
Dictionary, is that it is the act or action of passing: movement or transference from one place or
point to another.[21] Its legal meaning is not different. It means, according to Blacks Law
Dictionary, the act of passing; transit; transition.[22] To achieve a meaning such as that
which petitioner proposes requires the consideration of evidence showing the parties intention in
using the word which can only be done during trial on the merits. Until such time, petitioner cannot
claim to have a clear and unmistakable right justifying the issuance of a writ of preliminary
mandatory injunction in this case. Thus, the trial court should have observed caution and denied
petitioners application for the preliminary writ.
Petitioner contends that resort should be made to facts surrounding the execution of the
Memorandum of Undertaking which, according to it, shows the intention of the parties to give
petitioner the right to install water pipes along the side of the access road.[23] It cites Rule 130
11[24] of the 1964 Rules of Court, which provides:
SEC.11. Interpretation according to circumstances. For the proper construction of an

instrument, the circumstances under which it was made, including the situation of the
subject thereof and of the parties to it, may be shown, so that the judge may be placed
in the position of those whose language he is to interpret.
That is precisely what we are saying. The recourse petitioner proposes must await the
presentation of the parties evidence during trial and the determination of their intention must be
made by the trial court, not by this Court. Petitioner cannot circumvent the process by asking this
Court to determine the facts surrounding the execution of their agreement. Indeed, for us to
undertake such inquiry would be to expand the scope of the present review and intrude into the
domain of the trial court. Petitioner will have ample opportunity to substantiate its allegations on
this point during the trial of the case. Rule 130 11, which petitioner invokes, is actually a rule for
interpretation of documentary evidence formally offered at the trial. It does not apply to
preliminary proceedings concerning the issuance of ancillary remedies.
Anent petitioners contention that the writ of certiorari does not lie because the error sought
to be corrected is an error of judgment, suffice it to say that the lower court acted with grave abuse
of discretion in issuing the writ of preliminary mandatory injunction despite the doubt on
petitioners right to it.
WHEREFORE, the decision of the Court of Appeals, dated November 26, 1993, and its
resolution, dated February 28, 1994, are hereby AFFIRMED.
SO ORDERED.
Bellosillo, (Chairman), Puno, and Martinez, JJ.,concur.
Buena, J., no part. Did not participate in the deliberation.
[1]
Per Justice Arturo Buena, Chairman, and concurred in by Justices Artemon Luna and Alfredo Lagamon.
[2]
Petition, Rollo, p. 12.
[3]
Ibid.
[4]
Ibid.
[5]
Petition, CA Rollo, p.5.
[6]
Petition, Annex F, Rollo, pp. 103-104.
[7]
Petition, Annex L, Rollo, pp. 117-118.
[8]
Id., Annex P, id., p. 169.
[9]
Id., Annex J, id., p. 111.
[10]
Id., Annex P, id., p. 70.
[11]
Id., Annex N, id., p. 121.
[12]
Petition, Annex A, CA Rollo, p. 31-A.
[13]
Id., Annex C, id., p. 33.
[14]
Id., Annex B, id., p. 32.
[15]
Ibid.
[16]
Petition, Annex A, Rollo, p. 51.
[17]
Petition, id., pp. 20-21.
[18]
117 SCRA 665 (1982).
[19]
1964 RULES OF COURT, Rule 58, 1 is substantially the same as Rule 58, 1 of the 1997 RULES OF CIVIL
PROCEDURE.
[20]
Manila Electric Railroad and Light Company v. Del Rosario, 22 Phil. 433 (1912); Bautista v. Barcelona, 100
Phil. 1078 (1957).
[21]
WEBSTER'S THIRD NEW INTERNATIONAL DICTIONARY 1650 (3rd ed., 1993).
[22]
Blacks Law Dictionary 1012 (5th ed., 1979).
[23]
Petition, Rollo, pp. 29-32.
[24]
Now Rule 130, 13 of the Revised Rules On Evidence.
VILLANUEVA VS. VELASCO-

Legal Easement
A legal easement is one mandated by law, constituted for public use or for private interest and
becomes a continuing property right unless its removal is provided for in a title of conveyance or the
sign of the easement is removed before the execution of the conveyance; Essential requisites for an
easement to be compulsory are: (1) the dominant estate is surrounded by other immovables and has
no adequate outlet to a public highway; (2) proper indemnity has been paid; (3) the isolation was not
due to acts of the proprietor of the dominant estate; (4) the right of way claimed is at point least
prejudicial to the servient estate; and (5) to the extent consistent with the foregoing rule, where the
distance from the dominant estate to a public highway may be the shortest.
FACTS:
Petitioner Bryan Villanueva bought a parcel of land in QC from Pacific Banking Corporation which it
acquired from the spouses Maximo and Justina Gabriel. When he bought it, there was a small house
on its southeastern portion. It occupies one meter of two meter wide easement of right of way the
Gabriel spouses granted to Espinolas, predecessors-in-interest of the private respondents, in a
contract of easement of right of way. Amongst others, the contract provides that the easement’s
purpose is to have an outlet to Tandang Sora which is the nearest public road and the least
burdensome (Espinolas’s property being the dominant estate and Gabriel spouses’s as the servient
estate.) It was also provided in the contract that the easement “shall be binding to the successors,
assigns without prejudice in cases of sale of subject property that will warrant the circumstances.”
The private respondents were able to acquire a writ of demolition on the house obstructing the
easement against the Spouses Gabriel. The petitioner filed a third party claim with prayer to quash
the writ saying that he was not made a party to the civil case and that the writ of demolition should
not prosper since the easement which is meant to protect was not annotated in the petitioner’s title.
CA ruled in favor of the private respondents saying that the easement exists even though it was not
annotated in the torrens title because servitudes are inseparable from the estate to which they
actively or passively belong. And that Villanueva is bound by the contact of easement, not only as a
voluntary easement but as a legal easement.
ISSUE:
Whether or not the easement on the property binds petitioner?
RULING:
YES. A legal easement is mandated by law, and continues to exists unless its removal is provided
for in a title of conveyance or the sign of the easement is removed before the execution of the
conveyance conformably with Art 647 in accordance with Article 617 of the Civil Code.
Essential requisites for an easement to be compulsory are: (1) the dominant estate is surrounded by
other immovables and has no adequate outlet to a public highway; (2) proper indemnity has been
paid; (3) the isolation was not due to acts of the proprietor of the dominant estate; (4) the right of way
claimed is at point least prejudicial to the servient estate; and (5) to the extent consistent with the
foregoing rule, where the distance from the dominant estate to a public highway may be the shortest.
The existence of the easement has been established by the lower courts and the same has become
conclusive to the SC. The small house occupying one meter of the two-meter wide easement
obstructs the entry of private respondent’s cement mixer and motor vehicle (no mention of what
kind.) Accordingly, the petitioner has to demolish the house to make way for the easement.
NATIONAL IRRIGATION
ADMINISTRATION VS. CA-
Easement and Just
Compensation
When a land, originally public land is awarded to a provate individual, a legal easement may be
constituted and thus no just compensation is required. It would be otherwise if the land were
originally private property, in which case, just compensation must be paid for the taking of a part
thereof for public use as an easement of a right of way.
FACTS:
A free patent over three (3) hectares of land, situated in the province of Cagayan was issued in the
name of Vicente Manglapus, and registered under OCT No. P-24814. The land was granted subject
to the following proviso expressly stated in the title:
"... it shall not be subject to any encumbrance whatsoever in favor of any corporation, association or
partnership except with the consent of the grantee and the approval of the Secretary of Agriculture
and Natural Resources and solely for educational, religious or charitable purposes or for a right of
way; and subject finally to all conditions and public easements and servitudes recognized and
prescribed by law especially those mentioned in sections 109, 110, 111, 112, 113 and 114 of
Commonwealth Act No. 141 as amended..."
Subsequently, respondent Manglapus acquired the lot from Vicente Manglapus by absolute sale.
Sometime in 1982, NIA was to construct canals in Amulung, Cagayan and Alcala, Cagayan. NIA
then entered a portion of Manglapus' land and made diggings and fillings thereon. Manglapus filed a
complaint for damages against NIA.
ISSUE:
Whether or not the NIA should pay Manglapus just compensation for the taking of a portion of his
property for use as easement of a right of way.
RULING: No.
The transfer certificate of title contains such a reservation. It states that title to the land shall be:
". . . subject to the provisions of said Land Registration Act and the Public Land Act, as well as those
of Mining Laws, if the land is mineral, and subject, further to such conditions contained in the original
title as may be subsisting."
Under the Original Certificate of Title, there was a reservation and condition that the land is subject
to "to all conditions and public easements and servitudes recognized and prescribed by law
especially those mentioned in Sections 109, 110, 111, 112, 113 and 114, Commonwealth Act No.
141, as amended." This reservation, unlike the other provisos imposed on the grant, was not limited
by any time period and thus is a subsisting condition.
Section 112, Commonwealth Act No. 141, provides that lands granted by patent,
"shall further be subject to a right of way sot exceeding twenty meters in width for public highways,
railroads,irrigation ditches, aqueducts, telegraphs and telephone lines, and similar works..."
We note that the canal NIA constructed was only eleven (11) meters in width. This is well within the
limit provided by law. Manglapus has therefore no cause to complain.
Article 619 of the Civil Code provides that, "Easements are established either by law or by the will of
the owners. The former are called legal and the latter voluntary easements." In the present case, we
find and declare that a legal easement of a right-of-way exists in favor of the government.
The land was originally public land, and awarded to respondent Manglapus by free patent. The ruling
would be otherwise if the land were originally private property, in which case, just compensation
must be paid for the taking of a part thereof for public use as an easement of a right of way.
HIDALGO ENTERPRISES, INC.

vs. BALANDAN, et al.- Attractive
Nuisance Doctrine
Attractive nuisance doctrine generally is not applicable to bodies of water, artificial (e.g. water tanks)
as well as natural, in the absence of some unusual condition or artificial feature other than the mere
water and its location.
FACTS:
Guillermo Balandan and his wife is claiming damages in the sum of P2,000 for the death of their son,
Mario. Petitioner was the owner of an Ice plant, who had in their premises 2 tanks filled of water, 9
feet deep. The factory was fenced but Ingress and egress was easily made because the gates were
always open and there was no guard assigned in the said gate. Also the tanks didn’t have any
barricade or fence. One day when Mario was playing with his friend, they saw the tank inside the
factory and began playing and swimming inside it. While bathing, Mario sank to the bottom of the
tank, only to be fished out later, already as a cadaver, having died of ‘asphyxia secondary to
drowning.’ The lower decided in the favor of the parents saying that the petitioner is liable for
damages due to the doctrine of attractive nuisance.
ISSUE: Whether or not the doctrine of attractive nuisance
is applicable in this case?
RULING: NO.
The doctrine of attractive nuisance states that “One who maintains on his premises dangerous
instrumentalities or appliances of a character likely to attract children in play, and who fails to
exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a
child of tender years who is injured thereby, even if the child is technically a trespasser in the
premises. American Jurisprudence shows us that the attractive nuisance doctrine generally is not
applicable to bodies of water, artificial as well as natural, in the absence of some unusual condition
or artificial feature other than the mere water and its location. In the case bar, the tanks themselves
cannot fall under such doctrine thus the petitioners cannot be held liable for Mario’s death.
Acap v. CA
Facts:
Felixberto Oruma sold his inherited land to Cosme Pido, which land is rented
by petitioner Teodoro Acap. When Cosme died intestate, his heirs executed a
“Declaration of Heirship and Waiver of Rights” in favor of private respondent
Edy delos Reyes. Respondent informed petitioner of his claim over the land,
and petitioner paid the rental to him in 1982. However in subsequent years,
petitioner refused to pay the rental, which prompted respondent to file a
complaint for the recovery of possession and damages. Petitioner averred that
he continues to recognize Pido as the owner of the land, and that he will pay the
accumulated rentals to Pido’s widow upon her return from abroad. The lower
court ruled in favor of private respondent.
Issues:
(1) Whether the “Declaration of Heirship and Waiver of Rights” is a recognized

mode of acquiring ownership by private respondent
(2) Whether the said document can be considered a deed of sale in favor of
private respondent
Held:
An asserted right or claim to ownership or a real right over a thing arising from
a juridical act, however justified, is not per sesufficient to give rise to ownership
over the res. That right or title must be completed by fulfilling certain
conditions imposed by law. Hence, ownership and real rights are acquired only
pursuant to a legal mode or process. While title is the juridical justification,
mode is the actual process of acquisition or transfer of ownership over a thing
in question.
In a Contract of Sale, one of the contracting parties obligates himself to transfer

the ownership of and to deliver a determinate thing, and the other party to pay
a price certain in money or its equivalent. Upon the other hand, a declaration of
heirship and waiver of rights operates as a public instrument when filed with
the Registry of Deeds whereby the intestate heirs adjudicate and divide the
estate left by the decedent among themselves as they see fit. It is in effect an
extrajudicial settlement between the heirs under Rule 74 of the Rules of Court.
Hence, there is a marked difference between a sale of hereditary rights and
a waiver of hereditary rights. The first presumes the existence of a contract or
deed of sale between the parties. The second is, technically speaking, a mode of
extinction of ownership where there is an abdication or intentional
relinquishment of a known right with knowledge of its existence and intention
to relinquish it, in favor of other persons who are co-heirs in the succession.
Private respondent, being then a stranger to the succession of Cosme Pido,
cannot conclusively claim ownership over the subject lot on the sole basis of the
waiver document which neither recites the elements of either a sale, or a
donation, or any other derivative mode of acquiring ownership.
A notice of adverse claim is nothing but a notice of a claim adverse to the
registered owner, the validity of which is yet to be established in court at some
future date, and is no better than a notice of lis pendens which is a notice of a
case already pending in court. It is to be noted that while the existence of said
adverse claim was duly proven, there is no evidence whatsoever that a deed of
sale was executed between Cosme Pido's heirs and private respondent
transferring the rights of Pido's heirs to the land in favor of private
respondent. Private respondent's right or interest therefore in the tenanted lot
remains an adverse claim which cannot by itself be sufficient to cancel the
OCT to the land and title the same in private respondent's name.
Consequently, while the transaction between Pido's heirs and private
respondent may be binding on both parties, the right of petitioner as a
registered tenant to the land cannot be perfunctorily forfeited on a mere
allegation of private respondent's ownership without the corresponding proof
thereof.

Custom Search
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SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 118114 December 7, 1995
TEODORO ACAP, petitioner,
vs.
COURT OF APPEALS and EDY DE LOS REYES, respondents.
PADILLA, J.:
This is a petition for review on certiorari of the decision1 of the Court of Appeals, 2nd Division, in CA-
G.R. No. 36177, which affirmed the decision2 of the Regional Trial Court of Himamaylan, Negros
Occidental holding that private respondent Edy de los Reyes had acquired ownership of Lot No. 1130 of
the Cadastral Survey of Hinigaran, Negros Occidental based on a document entitled "Declaration of
Heirship and Waiver of Rights", and ordering the dispossession of petitioner as leasehold tenant of the
land for failure to pay rentals.
The facts of the case are as follows:
The title to Lot No. 1130 of the Cadastral Survey of Hinigaran, Negros Occidental was evidenced by OCT
No. R-12179. The lot has an area of 13,720 sq. meters. The title was issued and is registered in the name
of spouses Santiago Vasquez and Lorenza Oruma. After both spouses died, their only son Felixberto
inherited the lot. In 1975, Felixberto executed a duly notarized document entitled "Declaration of
Heirship and Deed of Absolute Sale" in favor of Cosme Pido.
The evidence before the court a quo established that since 1960, petitioner Teodoro Acap had been the
tenant of a portion of the said land, covering an area of nine thousand five hundred (9,500) meters.
When ownership was transferred in 1975 by Felixberto to Cosme Pido, Acap continued to be the
registered tenant thereof and religiously paid his leasehold rentals to Pido and thereafter, upon Pido's
death, to his widow Laurenciana.
The controversy began when Pido died intestate and on 27 November 1981, his surviving heirs executed
a notarized document denominated as "Declaration of Heirship and Waiver of Rights of Lot No. 1130
Hinigaran Cadastre," wherein they declared; to quote its pertinent portions, that:
. . . Cosme Pido died in the Municipality of Hinigaran, Negros Occidental, he died intestate and without
any known debts and obligations which the said parcel of land is (sic) held liable.
That Cosme Pido was survived by his/her legitimate heirs, namely: LAURENCIANA PIDO, wife, ELY,
ERVIN, ELMER, and ELECHOR all surnamed PIDO; children;
That invoking the provision of Section 1, Rule 74 of the Rules of Court, the above-mentioned heirs do
hereby declare unto [sic] ourselves the only heirs of the late Cosme Pido and that we hereby adjudicate
unto ourselves the above-mentioned parcel of land in equal shares.
Now, therefore, We LAURENCIANA3 , ELY, ELMER, ERVIN and ELECHOR all surnamed PIDO, do hereby
waive, quitclaim all our rights, interests and participation over the said parcel of land in favor of EDY DE
LOS REYES, of legal age, (f)ilipino, married to VIRGINIA DE LOS REYES, and resident of Hinigaran, Negros
Occidental, Philippines. . . .4 (Emphasis supplied)
The document was signed by all of Pido's heirs. Private respondent Edy de los Reyes did not sign said
document.
It will be noted that at the time of Cosme Pido's death, title to the property continued to be registered
in the name of the Vasquez spouses. Upon obtaining the Declaration of Heirship with Waiver of Rights in
his favor, private respondent Edy de los Reyes filed the same with the Registry of Deeds as part of a
notice of an adverse claim against the original certificate of title.
Thereafter, private respondent sought for petitioner (Acap) to personally inform him that he (Edy) had
become the new owner of the land and that the lease rentals thereon should be paid to him. Private
respondent further alleged that he and petitioner entered into an oral lease agreement wherein
petitioner agreed to pay ten (10) cavans of palay per annum as lease rental. In 1982, petitioner allegedly
complied with said obligation. In 1983, however, petitioner refused to pay any further lease rentals on
the land, prompting private respondent to seek the assistance of the then Ministry of Agrarian Reform
(MAR) in Hinigaran, Negros Occidental. The MAR invited petitioner to a conference scheduled on 13
October 1983. Petitioner did not attend the conference but sent his wife instead to the conference.
During the meeting, an officer of the Ministry informed Acap's wife about private respondent's
ownership of the said land but she stated that she and her husband (Teodoro) did not recognize private
respondent's claim of ownership over the land.
On 28 April 1988, after the lapse of four (4) years, private respondent filed a complaint for recovery of
possession and damages against petitioner, alleging in the main that as his leasehold tenant, petitioner
refused and failed to pay the agreed annual rental of ten (10) cavans of palay despite repeated
demands.
During the trial before the court a quo, petitioner reiterated his refusal to recognize private
respondent's ownership over the subject land. He averred that he continues to recognize Cosme Pido as
the owner of the said land, and having been a registered tenant therein since 1960, he never reneged on
his rental obligations. When Pido died, he continued to pay rentals to Pido's widow. When the latter left
for abroad, she instructed him to stay in the landholding and to pay the accumulated rentals upon her
demand or return from abroad.
Petitioner further claimed before the trial court that he had no knowledge about any transfer or sale of
the lot to private respondent in 1981 and even the following year after Laurenciana's departure for
abroad. He denied having entered into a verbal lease tenancy contract with private respondent and that
assuming that the said lot was indeed sold to private respondent without his knowledge, R.A. 3844, as
amended, grants him the right to redeem the same at a reasonable price. Petitioner also bewailed
private respondent's ejectment action as a violation of his right to security of tenure under P.D. 27.
On 20 August 1991, the lower court rendered a decision in favor of private respondent, the dispositive
part of which reads:
WHEREFORE, premises considered, the Court renders judgment in favor of the plaintiff, Edy de los
Reyes, and against the defendant, Teodoro Acap, ordering the following, to wit:
1. Declaring forfeiture of defendant's preferred right to issuance of a Certificate of Land Transfer

under Presidential Decree No. 27 and his farmholdings;
2. Ordering the defendant Teodoro Acap to deliver possession of said farm to plaintiff, and;
3. Ordering the defendant to pay P5,000.00 as attorney's fees, the sum of P1,000.00 as expenses
of litigation and the amount of P10,000.00 as actual damages.5
In arriving at the above-mentioned judgment, the trial court stated that the evidence had established
that the subject land was "sold" by the heirs of Cosme Pido to private respondent. This is clear from the
following disquisitions contained in the trial court's six (6) page decision:
There is no doubt that defendant is a registered tenant of Cosme Pido. However, when the latter died
their tenancy relations changed since ownership of said land was passed on to his heirs who, by
executing a Deed of Sale, which defendant admitted in his affidavit, likewise passed on their ownership
of Lot 1130 to herein plaintiff (private respondent). As owner hereof, plaintiff has the right to demand
payment of rental and the tenant is obligated to pay rentals due from the time demand is made. . . .6
xxx xxx xxx
Certainly, the sale of the Pido family of Lot 1130 to herein plaintiff does not of itself extinguish the
relationship. There was only a change of the personality of the lessor in the person of herein plaintiff
Edy de los Reyes who being the purchaser or transferee, assumes the rights and obligations of the
former landowner to the tenant Teodoro Acap, herein defendant.7
Aggrieved, petitioner appealed to the Court of Appeals, imputing error to the lower court when it ruled
that private respondent acquired ownership of Lot No. 1130 and that he, as tenant, should pay rentals
to private respondent and that failing to pay the same from 1983 to 1987, his right to a certificate of
land transfer under P.D. 27 was deemed forfeited.
The Court of Appeals brushed aside petitioner's argument that the Declaration of Heirship and Waiver of
Rights (Exhibit "D"), the document relied upon by private respondent to prove his ownership to the lot,
was excluded by the lower court in its order dated 27 August 1990. The order indeed noted that the
document was not identified by Cosme Pido's heirs and was not registered with the Registry of Deeds of
Negros Occidental. According to respondent court, however, since the Declaration of Heirship and
Waiver of Rights appears to have been duly notarized, no further proof of its due execution was
necessary. Like the trial court, respondent court was also convinced that the said document stands as
prima facie proof of appellee's (private respondent's) ownership of the land in dispute.
With respect to its non-registration, respondent court noted that petitioner had actual knowledge of the
subject sale of the land in dispute to private respondent because as early as 1983, he (petitioner)
already knew of private respondent's claim over the said land but which he thereafter denied, and that
in 1982, he (petitioner) actually paid rent to private respondent. Otherwise stated, respondent court
considered this fact of rental payment in 1982 as estoppel on petitioner's part to thereafter refute
private respondent's claim of ownership over the said land. Under these circumstances, respondent
court ruled that indeed there was deliberate refusal by petitioner to pay rent for a continued period of
five years that merited forfeiture of his otherwise preferred right to the issuance of a certificate of land
transfer.
In the present petition, petitioner impugns the decision of the Court of Appeals as not in accord with the
law and evidence when it rules that private respondent acquired ownership of Lot No. 1130 through the
aforementioned Declaration of Heirship and Waiver of Rights.
Hence, the issues to be resolved presently are the following:
1. WHETHER OR NOT THE SUBJECT DECLARATION OF HEIRSHIP AND WAIVER OF RIGHTS IS A

RECOGNIZED MODE OF ACQUIRING OWNERSHIP BY PRIVATE RESPONDENT OVER THE LOT IN QUESTION.
2. WHETHER OR NOT THE SAID DOCUMENT CAN BE CONSIDERED A DEED OF SALE IN FAVOR OF
PRIVATE RESPONDENT OF THE LOT IN QUESTION.
Petitioner argues that the Regional Trial Court, in its order dated 7 August 1990, explicitly excluded the
document marked as Exhibit "D" (Declaration of Heirship, etc.) as private respondent's evidence because
it was not registered with the Registry of Deeds and was not identified by anyone of the heirs of Cosme
Pido. The Court of Appeals, however, held the same to be admissible, it being a notarized document,
hence, a prima facie proof of private respondents' ownership of the lot to which it refers.
Petitioner points out that the Declaration of Heirship and Waiver of Rights is not one of the recognized
modes of acquiring ownership under Article 712 of the Civil Code. Neither can the same be considered a
deed of sale so as to transfer ownership of the land to private respondent because no consideration is
stated in the contract (assuming it is a contract or deed of sale).
Private respondent defends the decision of respondent Court of Appeals as in accord with the evidence
and the law. He posits that while it may indeed be true that the trial court excluded his Exhibit "D" which
is the Declaration of Heirship and Waiver of Rights as part of his evidence, the trial court declared him
nonetheless owner of the subject lot based on other evidence adduced during the trial, namely, the
notice of adverse claim (Exhibit "E") duly registered by him with the Registry of Deeds, which contains
the questioned Declaration of Heirship and Waiver of Rights as an integral part thereof.
We find the petition impressed with merit.
In the first place, an asserted right or claim to ownership or a real right over a thing arising from a
juridical act, however justified, is not per se sufficient to give rise to ownership over the res. That right
or title must be completed by fulfilling certain conditions imposed by law. Hence, ownership and real
rights are acquired only pursuant to a legal mode or process. While title is the juridical justification,
mode is the actual process of acquisition or transfer of ownership over a thing in question.8
Under Article 712 of the Civil Code, the modes of acquiring ownership are generally classified into two
(2) classes, namely, the original mode (i.e., through occupation, acquisitive prescription, law or
intellectual creation) and the derivative mode (i.e., through succession mortis causa or tradition as a
result of certain contracts, such as sale, barter, donation, assignment or mutuum).
In the case at bench, the trial court was obviously confused as to the nature and effect of the
Declaration of Heirship and Waiver of Rights, equating the same with a contract (deed) of sale. They are
not the same.
In a Contract of Sale, one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other party to pay a price certain in money or its equivalent.9
Upon the other hand, a declaration of heirship and waiver of rights operates as a public instrument
when filed with the Registry of Deeds whereby the intestate heirs adjudicate and divide the estate left
by the decedent among themselves as they see fit. It is in effect an extrajudicial settlement between the
heirs under Rule 74 of the Rules of Court.10
Hence, there is a marked difference between a sale of hereditary rights and a waiver of hereditary
rights. The first presumes the existence of a contract or deed of sale between the parties.11 The second
is, technically speaking, a mode of extinction of ownership where there is an abdication or intentional
relinquishment of a known right with knowledge of its existence and intention to relinquish it, in favor of
other persons who are co-heirs in the succession.12 Private respondent, being then a stranger to the
succession of Cosme Pido, cannot conclusively claim ownership over the subject lot on the sole basis of
the waiver document which neither recites the elements of either a sale,13 or a donation,14 or any
other derivative mode of acquiring ownership.
Quite surprisingly, both the trial court and public respondent Court of Appeals concluded that a "sale"
transpired between Cosme Pido's heirs and private respondent and that petitioner acquired actual
knowledge of said sale when he was summoned by the Ministry of Agrarian Reform to discuss private
respondent's claim over the lot in question. This conclusion has no basis both in fact and in law.
On record, Exhibit "D", which is the "Declaration of Heirship and Waiver of Rights" was excluded by the
trial court in its order dated 27 August 1990 because the document was neither registered with the
Registry of Deeds nor identified by the heirs of Cosme Pido. There is no showing that private respondent
had the same document attached to or made part of the record. What the trial court admitted was
Annex "E", a notice of adverse claim filed with the Registry of Deeds which contained the Declaration of
Heirship with Waiver of rights and was annotated at the back of the Original Certificate of Title to the
land in question.
A notice of adverse claim, by its nature, does not however prove private respondent's ownership over
the tenanted lot. "A notice of adverse claim is nothing but a notice of a claim adverse to the registered
owner, the validity of which is yet to be established in court at some future date, and is no better than a
notice of lis pendens which is a notice of a case already pending in court."15
It is to be noted that while the existence of said adverse claim was duly proven, there is no evidence
whatsoever that a deed of sale was executed between Cosme Pido's heirs and private respondent
transferring the rights of Pido's heirs to the land in favor of private respondent. Private respondent's
right or interest therefore in the tenanted lot remains an adverse claim which cannot by itself be
sufficient to cancel the OCT to the land and title the same in private respondent's name.
Consequently, while the transaction between Pido's heirs and private respondent may be binding on
both parties, the right of petitioner as a registered tenant to the land cannot be perfunctorily forfeited
on a mere allegation of private respondent's ownership without the corresponding proof thereof.
Petitioner had been a registered tenant in the subject land since 1960 and religiously paid lease rentals
thereon. In his mind, he continued to be the registered tenant of Cosme Pido and his family (after Pido's
death), even if in 1982, private respondent allegedly informed petitioner that he had become the new
owner of the land.
Under the circumstances, petitioner may have, in good faith, assumed such statement of private
respondent to be true and may have in fact delivered 10 cavans of palay as annual rental for 1982 to
private respondent. But in 1983, it is clear that petitioner had misgivings over private respondent's claim
of ownership over the said land because in the October 1983 MAR conference, his wife Laurenciana
categorically denied all of private respondent's allegations. In fact, petitioner even secured a certificate
from the MAR dated 9 May 1988 to the effect that he continued to be the registered tenant of Cosme
Pido and not of private respondent. The reason is that private respondent never registered the
Declaration of Heirship with Waiver of Rights with the Registry of Deeds or with the MAR. Instead, he
(private respondent) sought to do indirectly what could not be done directly, i.e., file a notice of adverse
claim on the said lot to establish ownership thereover.
It stands to reason, therefore, to hold that there was no unjustified or deliberate refusal by petitioner to
pay the lease rentals or amortizations to the landowner/agricultural lessor which, in this case, private
respondent failed to establish in his favor by clear and convincing evidence.16
Consequently, the sanction of forfeiture of his preferred right to be issued a Certificate of Land Transfer
under P.D. 27 and to the possession of his farmholdings should not be applied against petitioners, since
private respondent has not established a cause of action for recovery of possession against petitioner.
WHEREFORE, premises considered, the Court hereby GRANTS the petition and the decision of the Court
of Appeals dated 1 May 1994 which affirmed the decision of the RTC of Himamaylan, Negros Occidental
dated 20 August 1991 is hereby SET ASIDE. The private respondent's complaint for recovery of
possession and damages against petitioner Acap is hereby DISMISSED for failure to properly state a
cause of action, without prejudice to private respondent taking the proper legal steps to establish the
legal mode by which he claims to have acquired ownership of the land in question.
SO ORDERED.
Davide, Jr., Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.
Footnotes
1 Penned by Purisima, J., Chairman, with Isnani, J. and Ibay-Somera, J. concurring.
2 Penned by Executive Judge Jose Aguirre, Jr.
3 The RTC decision used the name Luzviminda. The CA used the name Laudenciana.
4 Annex A, Petition; Rollo, p. 14.
5 Annex "D", Petition Rollo, p. 29.
6 Ibid., p. 27.
7 Ibid., p. 28.
8 Reyes, An Outline of Philippine Civil Law, Vol. II p. 20.
9 Article 1458, Civil Code.
10 Paulmitos v. CA, G.R. No. 61584, Nov. 25, 1992, 215 SCRA 867, 868; Uberas v. CFI of Negros, G.R.
No. 4248, October 30, 1978, 86 SCRA 145, 147; Abrasia v. Carian, G.R. No. 9510, October 31, 1957.
11 See Aguirre v. Atienza, G.R. No. L-10665, Aug. 30, 1958; Mari v. Bonilla, G.R. No. 852, March 19,
1949; Robles v. CA, 647494 83 SCRA 181, 182, May 15, 1978.
12 See Borromeo Herrera v. Borromeo, G.R. No. L-41171, July 23, 1987, 152 SCRA 171.
13 See note 10 - supra.

14 Osorio v. Osorio and Ynchausti Steamship Co. No. 16544, March 20, 1921.
15 Somes v. Government of the Philippines, No. 42754, October 30, 1935.62 Phil. 432.
16 See Laureto v. CA, G.R. No. 95838, August 7, 1992, 212 SCRA 397. Cuno v. CA, G.R. L-62985, April
2, 1984, 128 SCRA 567.
DE LUNA VS. JUDGE ABRIGO-

Onerous Donation
Property, Ownership And Its Modifications
inShare2
FACTS:
De Luna donated a portion of a 75 sq. m. lot to the Luzonian University Foundation. The donation
was embodied in a Deed of Donation Intervivos and was subject to certain terms and conditions. In
case of violation or non-compliance, the property would automatically revert to the donor. When the
Foundation failed to comply with the conditions, de Luna “revived” the said donation by executing a
Revival of Donation Intervivos with the following terms and conditions:
1) The Donee shall construct on the land and at its expense a Chapel, Nursery, and Kindergarten
School to be named after St. Veronica
2) Construction shall start immediately and must be at least 70% completed three years from the
date of the Deed unless the Donor grants extensions
3) Automatic reversion in case of violation
The Foundation accepted and the donation was registered and annotated in the TCT. By a Deed of
Segregation, the foundation was issued a TCT for area the lot donated while the remaining area was
retained by the De Luna.
The children and only heirs of the late De Luna (died after the donation) filed a complaint with the
RTC for the cancellation of the donation on the ground that the terms were violated. The Foundation
defended itself by saying that it had partially and substantially complied with the conditions and that
the donor granted it an indefinite extension of time to complete construction.
The RTC dismissed the petition on the ground of prescription (for being filed after 4 years). The heirs
did not file an MR and went straight to the SC.
ISSUE:
Whether the action prescribes in 4 years (based on art. 764 NCC-judicial decree of revocation of the
donation) or in 10 years (based on art. 1144 –enforcement of a written contract)
RULING: 10 years
The donation subject of this case is one with an onerous cause.
Under the old Civil Code, it is a settled rule that donations with an onerous cause are governed not
by the law on donations but by the rules on contract. On the matter of prescription of actions for the
revocation of onerous donation, it was held that the general rules on prescription apply. The same
rules apply under the New Civil Code as provided in Article 733 thereof which provides:
Donations with an onerous cause shall be governed by the rules on contracts, and remuneratory
donations by the provisions of the present Title as regards that portion which exceeds the value of
the burden imposed.
It is true that under Article 764 of the New Civil Code, actions for the revocation of a donation must
be brought within four (4) years from the non-compliance of the conditions of the donation. However,
said article does not apply to onerous donations in view of the specific provision of Article 733
providing that onerous donations are governed by the rules on contracts. The rules on prescription
and not the rules on donation applies in the case at bar.
REYES V. MOSQUEDA-
Donation Inter Vivos
The nature of the disposition made is the determinative factor which makes the donation ― inter
vivos or ― mortis causa and not the title given to a deed of donation.
FACTS:
Dr. Emilio Pascual died intestate and was survived by his sister Ursula Pascual and the children of
his late sisters, herein petitioners Ruperto Reyes et. al. The heirs of Dr. Pascual filed Special
Proceedings No. 73-30-M in the CFI for the administration of Pascual’s estate. Ursula then filed a
motion to exclude some properties included alleging that these were donated to her in a donation
mortis causa in 1966. This was granted by the CFI without prejudice to its final determination in a
separate action. An appeal was made to the SC. The SC then issued a TRO enjoining the CFI from
enforcing the order.
Among the properties donated to Ursula is lot 24 which was also donated in 1969 in a deed of
donation inter vivos in favor of Ofelia Parungao who was then a minor at the time of the donation.
When she reached the age of majority, she had the donation registered but found out that the
certificate of title was missing so she filed a petition for reconstitution of title which was granted and
she registered the donation and was issued a new TCT in her name.
Ursula then sold the lot in favor of the Reyes. Benjamin Reyes filed a complaint for declaration of
nullity of Ofelia’s TCT which prompted Ofelia to file a petition for recovery of possession against
Benjamin Reyes. The CFI issued a joint decision for the 2 cases ruling that Ofelia’s TCT was null
and void. The IAC affirmed thus an appeal to the SC.
ISSUES:
(1) Whether or not the probate has jurisdiction to exclude properties donated to Ursula
(2) Whether or not the donation executed in favor of Ursula was a donation inter vivos
RULING:
(1) YES
It was stressed in the order of the probate court that it was without prejudice to the final
determination in a separate action. It is well-settled that although a probate court cannot adjudicate
or determine title to properties, it can determine whether or not the properties should be included in
the inventory to be administered. Such determination is not conclusive and is subject to the final
decision in a separate action.
(2) YES
Although the donation was entitled ―donations mortis causa it has been held that dispositions in a
deed of donation do not depend on the title or term used in the deed of donation. It is the body of the
document which should be considered in ascertaining the intention of the donor.
For a donation to be a donation mortis causa, the following characteristics should be present:
1. It conveys no title before the death of the transferor or the transferor retains ownership over the
property
2. Before his death, the transfer should be revocable by the transferor at will
3. The transfer is void should the transferor survive the transferee
The following are not present in the case. The transfer of ownership was immediate and
independent of the death of the donor. The provision stating that the donor has reserved sufficient
properties for himself to maintain him for life confirms the intention of the donor to give naked
ownership immediately after execution of the deed of donation.
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SUPREME COURT
Manila
EN BANC
G.R. No. L-11240 December 18, 1957
CONCHITA LIGUEZ, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, MARIA NGO VDA. DE LOPEZ, ET AL., respondents.
Ruiz, Ruiz and Ruiz for appellant.
Laurel Law Offices for appellees.
REYES, J.B.L., J.:
From a decision of the Court of Appeals, affirming that of the Court of First Instance of Davao dismissing
her complaint for recovery of land, Conchita Liguez has resorted to this Court, praying that the aforesaid
decision be reversed on points of law. We granted certiorari on October 9, 1956.
The case began upon complaint filed by petitioner-appellant against the widow and heirs of the late
Salvador P. Lopez to recover a parcel of 51.84 hectares of land, situated in barrio Bogac-Linot, of the
municipality of Mati, Province of Davao. Plaintiff averred to be its legal owner, pursuant to a deed of
donation of said land, executed in her favor by the late owner, Salvador P. Lopez, on 18 May 1943. The
defense interposed was that the donation was null and void for having an illicit causa or consideration,
which was the plaintiff's entering into marital relations with Salvador P. Lopez, a married man; and that
the property had been adjudicated to the appellees as heirs of Lopez by the court of First Instance, since
1949.
The Court of Appeals found that the deed of donation was prepared by the Justice of the Peace of Mati,
Davao, before whom it was signed and ratified on the date aforesaid. At the time, the appellant Liguez
was a minor, only 16 years of age. While the deed recites—
That the DONOR, Salvador P. Lopez, for and in the consideration of his love and affection for the said
DONEE, Conchita Liguez, and also for the good and valuable services rendered to the DONOR by the
DONEE, does by these presents, voluntarily give grant and donate to the said donee, etc. (Paragraph 2,
Exhibit "A")
the Court of Appeals found that when the donation was made, Lopez had been living with the parents of
appellant for barely a month; that the donation was made in view of the desire of Salvador P. Lopez, a
man of mature years, to have sexual relations with appellant Conchita Liguez; that Lopez had confessed
to his love for appellant to the instrumental witnesses, with the remark that her parents would not
allow Lopez to live with her unless he first donated the land in question; that after the donation,
Conchita Liguez and Salvador P. Lopez lived together in the house that was built upon the latter's orders,
until Lopez was killed on July 1st, 1943, by some guerrillas who believed him to be pro-Japanese.
It was also ascertained by the Court of Appeals that the donated land originally belonged to the conjugal
partnership of Salvador P. Lopez and his wife, Maria Ngo; that the latter had met and berated Conchita
for living maritally with her husband, sometime during June of 1943; that the widow and children of
Lopez were in possession of the land and made improvements thereon; that the land was assessed in
the tax rolls first in the name of Lopez and later in that of his widow.; and that the deed of donation was
never recorded.
Upon these facts, the Court of Appeals held that the deed of donation was inoperative, and null and
void (1) because the husband, Lopez, had no right to donate conjugal property to the plaintiff appellant;
and (2) because the donation was tainted with illegal cause or consideration, of which donor and donee
were participants.
Appellant vigorously contends that the Court of First Instance as well as the Court of Appeals erred in
holding the donation void for having an illicit cause or consideration. It is argued that under Article 1274
of the Civil Code of 1889 (which was the governing law in 1948, when the donation was executed), "in
contracts of pure beneficence the consideration is the liberality of the donor", and that liberality per se
can never be illegal, since it is neither against law or morals or public policy.
The flaw in this argument lies in ignoring that under Article 1274, liberality of the do or is deemed causa
in those contracts that are of "pure" beneficence; that is to say, contracts designed solely and
exclusively to procure the welfare of the beneficiary, without any intent of producing any satisfaction for
the donor; contracts, in other words, in which the idea of self-interest is totally absent on the part of the
transferor. For this very reason, the same Article 1274 provides that in remuneratory contracts, the
consideration is the service or benefit for which the remuneration is given; causa is not liberality in these
cases because the contract or conveyance is not made out of pure beneficence, but "solvendi animo." In
consonance with this view, this Supreme Court in Philippine Long Distance Co. vs. Jeturian * G.R. L-7756,
July 30, 1955, like the Supreme Court of Spain in its decision of 16 Feb. 1899, has ruled that bonuses
granted to employees to excite their zeal and efficiency, with consequent benefit for the employer, do
not constitute donation having liberality for a consideration.
Here the facts as found by the Court of Appeals (and which we can not vary) demonstrate that in making
the donation in question, the late Salvador P. Lopez was not moved exclusively by the desire to benefit
appellant Conchita Liguez, but also to secure her cohabiting with him, so that he could gratify his sexual
impulses. This is clear from the confession of Lopez to the witnesses Rodriguez and Ragay, that he was in
love with appellant, but her parents would not agree unless he donated the land in question to her.
Actually, therefore, the donation was but one part of an onerous transaction (at least with appellant's
parents) that must be viewed in its totality. Thus considered, the conveyance was clearly predicated
upon an illicit causa.
Appellant seeks to differentiate between the alleged liberality of Lopez, as causa for the donation in her
favor, and his desire for cohabiting with appellant, as motives that impelled him to make the donation,
and quotes from Manresa and the jurisprudence of this Court on the distinction that must be
maintained between causa and motives (De Jesus vs. Urrutia and Co., 33 Phil. 171). It is well to note,
however that Manresa himself (Vol. 8, pp. 641-642), while maintaining the distinction and upholding the
inoperativeness of the motives of the parties to determine the validity of the contract, expressly excepts
from the rule those contracts that are conditioned upon the attainment of the motives of either party.
. . . distincion importantisima, que impide anular el contrato por la sola influencia de los motivos a no
ser que se hubiera subordinando al cumplimiento de estos como condiciones la eficacia de aquel.
The same view is held by the Supreme Court of Spain, in its decisions of February 4, 1941, and December
4, 1946, holding that the motive may be regarded as causa when it predetermines the purpose of the
contract.
In the present case, it is scarcely disputable that Lopez would not have conveyed the property in
question had he known that appellant would refuse to cohabit with him; so that the cohabitation was an
implied condition to the donation, and being unlawful, necessarily tainted the donation itself.
The Court of Appeals rejected the appellant's claim on the basis of the well- known rule "in pari delicto
non oritur actio" as embodied in Article 1306 of 1889 (reproduced in Article 1412 of the new Civil Code):
ART. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal
offense, the following rules shall be observed:
(1) When 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;
(2) When only one of the contracting parties is at fault, he cannot recover, what he has given by
reason of the contract, or ask for fulfillment of what has been promised him. The other, who is not at
fault, may demand the return of what he has given without any obligation to comply with his promise.
In our opinion, the Court of Appeals erred in applying to the present case the pari delicto rule. First,
because it can not be said that both parties here had equal guilt when we consider that as against the
deceased Salvador P. Lopez, who was a man advanced in years and mature experience, the appellant
was a mere minor, 16 years of age, when the donation was made; that there is no finding made by the
Court of Appeals that she was fully aware of the terms of the bargain entered into by and Lopez and her
parents; that, her acceptance in the deed of donation (which was authorized by Article 626 of the Old
Civil Code) did not necessarily imply knowledge of conditions and terms not set forth therein; and that
the substance of the testimony of the instrumental witnesses is that it was the appellant's parents who
insisted on the donation before allowing her to live with Lopez. These facts are more suggestive of
seduction than of immoral bargaining on the part of appellant. It must not be forgotten that illegality is
not presumed, but must be duly and adequately proved.
In the second place, the rule that parties to an illegal contract, if equally guilty, will not be aided by the
law but will both be left where it finds them, has been interpreted by this Court as barring the party
from pleading the illegality of the bargain either as a cause of action or as a defense. Memo auditor
propriam turpitudinem allegans. Said this Court in Perez vs. Herranz, 7 Phil. 695-696:
It is unnecessary to determine whether a vessel for which a certificate and license have been
fraudulently obtained incurs forfeiture under these or any other provisions of this act. It is enough for
this case that the statute prohibits such an arrangement as that between the plaintiff and defendant so
as to render illegal both the arrangement itself and all contracts between the parties growing out of it.
It does not, however, follow that the plaintiff can succeed in this action. There are two answers to his
claim as urged in his brief. It is a familiar principle that the courts will not aid either party to enforce an
illegal contract, but will leave them both where it finds them; but where the plaintiff can establish a
cause of action without exposing its illegality, the vice does not affect his right to recover. The American
authorities cited by the plaintiff fully sustain this doctrine. The principle applies equally to a defense. The
law in those islands applicable to the case is found in article 1305 of the Civil Code, shutting out from
relief either of the two guilty parties to an illegal or vicious contract.
In the case at bar the plaintiff could establish prima facie his sole ownership by the bill of sale from
Smith, Bell and Co. and the official registration. The defendant, on his part, might overthrow this title by
proof through a certain subsequent agreement between him and the plaintiff, dated March 16, 1902,
that they had become owners in common of the vessel, 'the agreement not disclosing the illegal motive
for placing the formal title in the plaintiff. Such an ownership is not in itself prohibited, for the United
States courts recognize the equitable ownership of a vessel as against the holder of a legal title, where
the arrangement is not one in fraud of the law. (Weston vs. Penniman, Federal Case 17455; Scudder vs.
Calais Steamboat Company, Federal Case 12566.).
On this proof, the defendant being a part owner of the vessel, would have defeated the action for its
exclusive possession by the plaintiff. The burden would then be cast upon the plaintiff to show the
illegality of the arrangement, which the cases cited he would not be allowed to do.
The rule was reaffirmed in Lima vs. Lini Chu Kao, 51 Phil. 477.
The situation confronting us is exactly analogous. The appellant seeks recovery of the disputed land on
the strength of a donation regular on its face. To defeat its effect, the appellees must plead and prove
that the same is illegal. But such plea on the part of the Lopez heirs is not receivable, since Lopez,
himself, if living, would be barred from setting up that plea; and his heirs, as his privies and successors in
interest, can have no better rights than Lopez himself.
Appellees, as successors of the late donor, being thus precluded from pleading the defense of
immorality or illegal causa of the donation, the total or partial ineffectiveness of the same must be
decided by different legal principles. In this regard, the Court of Appeals correctly held that Lopez could
not donate the entirety of the property in litigation, to the prejudice of his wife Maria Ngo, because said
property was conjugal in character and the right of the husband to donate community property is
strictly limited by law (Civil Code of 1889, Arts. 1409, 1415, 1413; Baello vs. Villanueva, 54 Phil. 213).
ART. 1409. The conjugal partnership shall also be chargeable with anything which may have been given
or promised by the husband alone to the children born of the marriage in order to obtain employment
for them or give then, a profession or by both spouses by common consent, should they not have
stipulated that such expenditures should be borne in whole or in part by the separate property of one of
them.".
ART. 1415. The husband may dispose of the property of the conjugal partnership for the purposes
mentioned in Article 1409.)
ART. 1413. In addition to his powers as manager the husband may for a valuable consideration alienate
and encumber the property of the conjugal partnership without the consent of the wife.
The text of the articles makes it plain that the donation made by the husband in contravention of law is
not void in its entirety, but only in so far as it prejudices the interest of the wife. In this regard, as
Manresa points out (Commentaries, 5th Ed., pp. 650-651, 652-653), the law asks no distinction between
gratuitous transfers and conveyances for a consideration.
Puede la mujer como proprietaria hacer anular las donaciones aun durante el matrimonio? Esta es, en
suma, la cuestion, reducida a determinar si la distinta naturaleza entre los actos a titulo oneroso y los
actos a titulo lucrativo, y sus especiales y diversas circunstancias, pueden motivar una solucion diferente
en cuanto a la epoca en que la mujer he de reclamar y obtener la nulidad del acto; cuestion que no deja
de ser interesantisima.lawphi1.net
El Codigo, a pesar de la variacion que ha introducido en el proyecto de 1851, poniendo como segundo
parrafo del articulo 1.413, o como limitacion de las enajenaciones u obligaciones a titulo oneroso, lo que
era una limitacion general de todos los actos del marido, muestra, sin embargo, que no ha variado de
criterio y que para el las donaciones deben en todo equipararse a cualquier otro acto ilegal o
frraudulento de caracter oneroso, al decir en el art. 1.419: "Tambien se traera a colacion en el inventario
de la sociedad— el importe de las donaciones y enajenaciones que deban considerarse ilegales o
fraudulentas, con sujecion al art. 1.413.' (Debio tambien citarse el articulo 1.415, que es el que habla de
donaciones.)lawphi1.net
"En resumen: el marido solo puede donar los bienes gananciales dentro de los limites marcados en el
art. 1.415. Sin embargo, solo la mujer o sus herederos pueden reclamar contra la valides de la donacion,
pues solo en su interes establece la prohibicion. La mujer o sus herederos, para poder dejar sin efecto el
acto, han de sufrir verdadero perjuicio, entendiendose que no le hay hasta, tanto que, terminada por
cualquier causa la sociedad de gananciales, y hecha su liquidacion, no pueda imputarse lo donado al
haber por cualquier concepto del marido, ni obtener en su consecuencia la mujer la dibida
indemnizacion. La donacioni reviste por tanto legalmente, una eficacia condicional, y en armonia con
este caracter, deben fijarse los efectos de la misma con relacion a los adquirentes y a los terceros
poseedores, teniendo, en su caso, en cuenta lo dispuesto en la ley Hipotecaria. Para prevenir todo
perjuicio, puede la mujer, durante el matrimonio inmediatamente al acto, hacer constar ante los
Tribunales su existencia y solicitor medidas de precaucion, como ya se ha dicho. Para evitarlo en lo
sucesivo, y cuando las circunstancias lo requieran, puede instar la declaracion de prodigalidad.
To determine the prejudice to the widow, it must be shown that the value of her share in the property
donated can not be paid out of the husband's share of the community profits. The requisite data,
however, are not available to us and necessitate a remand of the records to the court of origin that
settled the estate of the late Salvador P. Lopez.
The situation of the children and forced heirs of Lopez approximates that of the widow. As privies of
their parent, they are barred from invoking the illegality of the donation. But their right to a legitime out
of his estate is not thereby affected, since the legitime is granted them by the law itself, over and above
the wishes of the deceased. Hence, the forced heirs are entitled to have the donation set aside in so far
as in officious: i.e., in excess of the portion of free disposal (Civil Code of 1889, Articles 636, 654)
computed as provided in Articles 818 and 819, and bearing in mind that "collationable gifts" under
Article 818 should include gifts made not only in favor of the forced heirs, but even those made in favor
of strangers, as decided by the Supreme Court of Spain in its decisions of 4 May 1899 and 16 June 1902.
So that in computing the legitimes, the value of the property to herein appellant, Conchita Liguez,
should be considered part of the donor's estate. Once again, only the court of origin has the requisite
date to determine whether the donation is inofficious or not.
With regard to the improvements in the land in question, the same should be governed by the rules of
accession and possession in good faith, it being undisputed that the widow and heirs of Lopez were
unaware of the donation in favor of the appellant when the improvements were made.
The appellees, relying on Galion vs. Garayes, 53 Phil. 43, contend that by her failure to appear at the
liquidation proceedings of the estate of Salvador P. Lopez in July 1943, the appellant has forfeited her
right to uphold the donation if the prejudice to the widow Maria Ngo resulting from the donation could
be made good out of the husband's share in the conjugal profits. It is also argued that appellant was
guilty of laches in failing to enforce her rights as donee until 1951. This line of argument overlooks the
capital fact that in 1943, appellant was still a minor of sixteen; and she did not reach the age of majority
until 1948. Hence, her action in 1951 was only delayed three years. Nor could she be properly expected
to intervene in the settlement of the estate of Lopez: first, because she was a minor during the great
part of the proceedings; second, because she was not given notice thereof ; and third, because the
donation did not make her a creditor of the estate. As we have ruled in Lopez vs. Olbes, 15 Phil. 547-
548:
The prima facie donation inter vivos and its acceptance by the donees having been proved by means of a
public instrument, and the donor having been duly notified of said acceptance, the contract is perfect
and obligatory and it is perfectly in order to demand its fulfillment, unless an exception is proved which
is based on some legal reason opportunely alleged by the donor or her heirs.
So long as the donation in question has not been judicially proved and declared to be null, inefficacious,
or irregular, the land donated is of the absolute ownership of the donees and consequently, does not
form a part of the property of the estate of the deceased Martina Lopez; wherefore the action instituted
demanding compliance with the contract, the delivery by the deforciant of the land donated, or that it
be, prohibited to disturb the right of the donees, should not be considered as incidental to the probate
proceedings aforementioned.
The case of Galion vs. Gayares, supra, is not in point. First, because that case involved a stimulated
transfer that case have no effect, while a donation with illegal causa may produce effects under certain
circumstances where the parties are not of equal guilt; and again, because the transferee in the Galion
case took the property subject to lis pendens notice, that in this case does not exist.
In view of the foregoing, the decisions appealed from are reversed and set aside, and the appellant
Conchita Liguez declared entitled to so much of the donated property as may be found, upon proper
liquidation, not to prejudice the share of the widow Maria Ngo in the conjugal partnership with Salvador
P. Lopez or the legitimes of the forced heirs of the latter. The records are ordered remanded to the
court of origin for further proceedings in accordance with this opinion. Costs against appellees. So
ordered.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion, and
Endencia, JJ., concur.

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SUPREME COURT
Manila
EN BANC
G.R. No. L-35648 February 27, 1987
PERSHING TAN QUETO, petitioner,
vs.
COURT OF APPEALS, JUAN POMBUENA and RESTITUTA TACALINAR GUANGCO DE POMBUENA,

respondents.
RESOLUTION
PARAS, J.:
This is a Motion for Reconsideration of the decision dated May 16,1983 of this Court * in the above-
entitled case, asking for the reversal of said decision on the following grounds:
1. Decison erred in disregarding the fact that Lot No. 304-B was registered in the name of the
husband, Juan Pombuena, as per OCT. No. 0-1160 issued pursuant to the November 22, 1938 Decision
(Exhibit 3) of the Cadastral Court in Cadastral Case No. 12, G.L.R.O. Cad. Rec. No. 1638, and that
petitioner had the right to rely on said OCT;
2. The Decision erred in misinterpreting the admission in the Answer of petitioner to the complaint
in the unlawful detainer Case No. 448 (City Court of Ozamiz City) as his admission that Lot 304-B is the
paraphernal property of the wife, Restituta Tacalinar;
3. The Decision erred in reforming the Contract of Sale (Exh. B) of Lot 304-B from Basilides
Tacalinar (mother) to the respondent, Restituta Tacalinar Guangco de Pombuena, from a sale to a
conveyance of the share of the wife Restituta Tacalinar (daughter) in the future hereditary estate of her
parents;
4. The Decision erred in over-looking that the barter agreement is an onerous contract of
exchange, whereby private respondents-spouses received valuable consideration, concessions and other
benefits therefor and in concluding that 'the barter agreement has no effect;
5. The Decision erred in disregarding the fact that petitioner constructed his concrete building on
Lot No. 304-B in good faith relying OCT No. 0-1160, after the dismissal of the ejectment case and only
after the execution of said barter agreement;
6. The Decision erred in confusing the conclusion of law that petitioner is a builder in bad faith
with a finding of fact. The rule is that questions of law are reviewable on appeal or by certiorari.
Moreover, the rule on finding of fact is subject to well-settled exceptions. (pp. 257-258, Rollo)
It wig be recalled that the undisputed relevant facts indicate:
(1) that Restituta Tacalinar Guanaco de Pombuena (RESTITUTA, for short) received the questioned
lot (no. 304-B), of the Cadastre Survey of the Municipality of Centro, Mizamis Occidental, either as a
purported donation or by way of purchase on (February 11, 1927) (with P50.00) as the alleged
consideration thereof;
(2) that the transaction took place during her mother's lifetime, her father having predeceased the
mother;
(3) that the donation or sale was consummated while RESTITUTA was already married to her
husband Juan Pombuena (JUAN, for short);
(4) that on January 22, 1935, JUAN filed for himself and his supposed co-owner RESTITUTA an
application for a Torrens Title over the land;
(5) that under date of November 22, 1938 a decision was promulgated in GLRC No. 1638 (Cadastral
Case No. 12) pronouncing JUAN ('married to RESTITUTA') as the owner of the land;
(6) that on September 22, 1949 a contract of lease over the lot was entered into between Pershing
Tan Queto (TAN QUETO, for short, the herein petitioner) and RESTITUTA (with the consent of her
husband JUAN) for a period of ten (10) years;
(7) that on December 27, 1960 RESTITUTA sued TAN QUETO for unlawful detainer (the lease
contract having expired) before the Municipal Court of Ozamis City;
(8) that as a consequence of the cadastral case, an Original Certificate of Title (Exh. 10) was issued
in JUAN's name ("married to RESTITUTA") on April 22, 1962;
(9) that the unlawful detainer case was won by the spouses in the Municipal Court; but on appeal in
the Court of First Instance, the entire case was DISMISSED because of an understanding (barter)
whereby TAN QUETO became the owner of the disputed lot, and the spouses RESTITUTA and JUAN in
turn became the owners of a parcel of land (with the house constructed thereon) previously owned
(that is, before the barter) by TAN QUETO;
(10) that after the barter agreement dated October 10, 1962 between JUAN and TAN QUETO, the
latter constructed (See p. 257, Rollo, Vol. II) on the disputed land a concrete building, without any
objection on the part of RESTITUTA;
(11) that later, RESTITUTA sued both JUAN and TAN QUETO for reconveyance of the title over the
registered but disputed lot, for annulment of the barter, and for recovery of the land with damages.
The two principal issues are clearly the following:

(1) Is the questioned lot paraphernal or conjugal?
(2) In having constructed the building on the lot, should TAN QUETO be regarded as a builder in
good faith (and hence entitled to reimbursement) or a builder in bad faith (with no right to
reimbursement)?
The finding by both the Court of First Instance and the Court of Appeals that the disputed lot is
paraphernal and that TAN QUETO is a builder in bad faith were regarded by Us in Our assailed decision
as findings of facts and thus ordinarily conclusive on Us. Assuming they are factual findings, still if they
are erroneous inferences from certain facts, they cannot bind this Court.
A second hard look at the circumstances of the case has constrained Us to rule as follows:
(1) The land is conjugal, not paraphernal. How was ownership transferred, if at all, from her mother
to RESTITUTA? The oral donation of the lot cannot be a valid donation interviews because it was not
executed in a public instrument (Art. 749, Civil Code), nor as a valid donation mortis causa for the
formalities of a will were not complied with. The allegation that the transfer was a conveyance to
RESTITUTA of her hereditary share in the estate of her mother (or parents) cannot be sustained for the
contractual transmission of future inheritance is generally prohibited.
The fact is ownership was acquired by both JUAN and RESTITUTA by tradition (delivery) as a
consequence of the contract of sale (See Art. 712, Civil Code) with P50.00 (then a considerable amount)
as the cause or consideration of the transaction. The lot is therefore conjugal, having been acquired by
the spouses thru onerous title (the money used being presumably conjugal there being no proof that
RESTITUTA had paraphernal funds of her own). The contention that the sale was fictitious or simulated
(and therefore void) is bankrupt. Firstly, there was a valid consideration therefor. Secondly, assuming
that there had indeed been a simulation, the parties thereto cannot use said simulation to prejudice a
stranger to said stratagem (like petitioner herein).
One nagging question has been posed. But did not TAN QUETO admit in his Answer that RESTITUTA was
the owner of the lot. This is not so. He admitted RESTITUTA was an owner" (not the owner) of the lot,
and this is true, for she was a co-owner (with JUAN, and therefore "an owner. " Surely, there is no
admission of RESTITUTA's exclusive ownership. And yet this is the basis of the trial court's conclusion
that the lot was indeed paraphernal.
(2) Was Tan Queto a possessor and builder in good faith or in bad faith?
Even assuming that despite registration of the lot as conjugal, Tan Queto nursed the belief that the lot
was actually RESTITUTA's (making him in bad faith), still RESTITUTA's failure to prohibit him from
building despite her knowledge that construction was actually being done, makes her also in bad faith.
The net resultant of mutual bad faith would entitle TAN QUETO to the rights of a builder in good faith
(Art. 448, Civil Code), ergo, reimbursement should be given him if RESTITUTA decides to appropriate the
building for herself (Art. 448, Civil Code).
However, as already previously intimated, TAN QUETO having bartered his own lot and small house with
the questioned lot with JUAN (who has been adverted to by a court decision and by the OCT a conjugal
owner) may be said to be the OWNER-POSSESSOR of the lot. Certainly he is not merely a possessor or
builder in good faith (this phrase presupposes ownership in another); much less is he a builder in bad
faith. He is a builder-possessor jus possidendi because he is the OWNER himself. Please note that the
Chapter on Possession (jus possesionis, not jus possidendi) in the Civil Code refers to a possessor other
than the owner. Please note further that the difference between a builder (or possessor) in good faith
and one in bad faith is that the former is NOT AWARE of the defect or flaw in his title or mode of
acquisition while the latter is AWARE of such defect or flaw (Art. 526, Civil Code). But in either case
there is a flaw or defect. In the case of TAN QUETO there is no such flaw or defect because it is he
himself (not somebody else) who is the owner of the property.
WHEREFORE, Our decision promulgated on May 16,1983 is hereby SET ASIDE, and a new one is hereby
rendered declaring the questioned lot together with the building thereone, as TAN QUETO's exclusive
property. No costs..
SO ORDERED.
Teehankee, C.J., Yap, Fernan, Narvasa, Alampay, Cruz, Feliciano, Gancayco, Bidin and Sarmiento, JJ.,
concur.
Padilla, J., took no part.
Cortes, J., took no part.

Separate Opinions
MELENCIO-HERRERA, J., concurring:
I vote to uphold the Decision of May 16, 1983 and to deny reconsideration.
GUTIERREZ, JR., J., concurring:
I reiterate my vote in the decision sought to be reconsidered & dissent herein.
Separate Opinions
MELENCIO-HERRERA, J., concurring:
I vote to uphold the Decision of May 16, 1983 and to deny reconsideration.
GUTIERREZ, JR., J., concurring:
I reiterate my vote in the decision sought to be reconsidered & dissent herein.
Footnotes
* Affirming the Decision of the Court of Appeals in G.R. No. 39492-R penned by Justice Ramon C.
Fernandez concurred in by Justices Hermogenes Concepcion, Jr. and Cecilia Munoz Palma which
affirmed the Decision of the Trial Judge Geronimo R. Marave.
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SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 72908 August 11, 1989
EUFEMIA PAJARILLO, CLAUDIO SUTERIO, JR., NYMIA SUTERIO and MARILYN SUTERIO, petitioners,
vs.
INTERMEDIATE APPELLATE COURT, THIRD CIVIL CASES DIVISION, SALUD SUTERIO and PEDRO MATIAS,
respondents.
Agustin A. Ferrer for petitioners.
Alfredo I. Raya for respondents.

CRUZ, J.:
This is one of those distasteful litigations involving a controversy among close relatives over properties
left by a common ascendant. The petitioners are the widow and children of the brother of the principal
private respondent. She and her brother appear to be the only remaining issue of the mother who
seems to have caused all the present confusion. The record does not show how close, if at all, the
members of this small family were. What is certain is that there is no affection now among the
protagonists in this case.
The mother was Juana Balane de Suterio, who had a brother named Felipe Balane and a sister named
Perfecta Balane de Cordero. Perfecta died in 1945 leaving inter alia a tract of land consisting of about 28
hectares and covered by TCT No. 4671 in the Registry of Deeds of Quezon Province. On May 20, 1946,
Juana and Felipe executed a public instrument entitled "Extra-judicial Settlement of the Estate of the
Deceased Perfecta Balane de Cordero." 1 In it they disposed of the said property as follows:
EXTRA-JUDICIAL SETTLEMENT OF THE ESTATE OF DECEASED PERFECTA BALANE DE CORDERO.
This agreement made to 20th day of May, 1946, by and between Felipe Balane and Juana Balane de
Suterio, both of age and residents of Macalelon, Tayabas, Philippines.
WITNESSETH:
That whereas, the said Felipe Balane and Juana Balane de Suterio are the only brother and sister
respectively and forced heirs of Perfecta Balane de Cordero who dies intestate on January 21, 1945;
That whereas, the said Perfects Balane de Cordero, deceased, left property described as follows:
TRANSFER CERTIFICATE OF TITLE NO. 4671.
Province of Tayabas.
A parcel of land (Lot No. 6-A, Plan Psu-12210), with an buildings and improvements except those herein
expressly noted as belonging to other person, situated in the barrio of Luctol, Municipality of Macalelon.
Bounded on the NE., by Lot No. 6-B; on the E., by property by Andrea Fernandez, the sapa Luctob and
the sapa Patay; on the SE., by properties of Andrea Fernandez and Silvestra Mereis on the SW., by
properties of Felix Rodriguez, Dionisio Fornea Placido Abistado and Adriano Abistado and the mangrove
of the government; and on the NW., by properties of Orilleneda Mariano, Glindro Maxima Orilleneda
Placida Forcados and Basilio Rabe .. .. .. .. .. .. .. containing an area of TWO HUNDRED EIGHTY FIVE
THOUSAND THREE HUNDRED FIFTY-THREE SQUARE METERS (285,353) more or less.
That whereas, we Felipe Balane and Juana Balane de Suterio, the only heirs of the property described
above left by the deceased Perfecta Balane de Cordero, do hereby agree in carrying out the antemortem
wish of our beloved deceased sister that in consideration of love and affection the property described
above be donated to Salud Sutexio de Matias.
That whereas, the estate left by the said Perfecta Balane de Castro, deceased, is not free from obligation
or debt. It has an incumbrance of about ONE THOUSAND PESOS (P1,000.00) to the Philippine National
Bank, Tayabas Branch.
That whereas, Salud Suterio de Matias, to whom this property is donated extra-judicially as agreed upon
by both heirs, shall assume the said obligation to the Philippine National Bank, Tayabas Branch.
NOW, THEREFORE, we Felipe Balane and Juana Balane de Suterio have mutually agreed and covenanted
to adjudicate, give, transfer and convey the property described above to Salud Suterio de Matias heirs,
executors, administrators and assign.
And the donee does hereby accept this donation and does hereby express her gratitutde for the
kindness and liberality of the donor.
IN WITNESS WHEREOF, we have hereunto set our hands tills 20th day of May, 1946.
(Sgd.) FELIPE BALANE FELIPE BALANE
(Sgd.) JUANA BALANE DE SUTERIO JUANA BALANE DE SUTERIO

(Acknowledgment)
On June 20, 1946, Salud Suterio executed the following public instrument, 2 petitioner Eufemia Pajarillo
was one of the witnesses:
KNOW ALL MEN BY THESE PRESENTS:
That on May 20, 1946, FELIPE BALANE and JUANA BALANE DE SUTERIO, the only heirs to the properties
of the late PERFECTA BALANE DE CORDERO, executed a DEED OF DONATION in favor of the undersigned
and the said donation was made, in accordance to the antemortem wish of my late aunt, Perfecta
Balane de Cordero, to the effect that the property described in the Deed of Donation, be given to me
because of her love and affection for me, being her only niece.
That, I, SALUD SUTERIO, DE MATIAS, the only DONEE, do hereby receive and accept this donation and
further express my gratitude for the kindness and liberality of the DONORS, FELIPE BALANE and JUANA
BALANE DE SUTERIO.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of June, 1946.
(Sgd.) SALUD SUTERIO DE MATIAS
SUTERIO DE MATIAS
Donee
Signed in the presence of
(Sgd.) SOFRONIO BALANE
(Sgd.) EUFEMIA P. SUTERIO

(Acknowledgment)
These instruments were never registered nor was title transferred in Salud's name although she says she
immediately took possession of the land. Meantime, intestate proceedings were instituted on the estate
of Perfecta and the said land was among those included in the inventory of the properties belonging to
the decedent. 3 Salud interposed no objection to its inclusion nor did she oppose its subsequent
adjudication to her mother Juana in the project of partition. It is not clear if the land was ever registered
in Juana's name. However, there is evidence that Juana confirmed the earlier donation of the land to
Salud but requested that she be allowed to possess the same and enjoy its fruits, until her death. 4 It has
also not been controverted that Salud paid the P1,000.00 loan for which the land was mortgaged.
Salud says that sometime in 1951, acceding to this request, she transferred the possession of the land to
her mother, who was then staying with Claudio and his family. During the period they were occupying
the land, Claudio paid the realty taxes thereon . 5 On May 25, 1956, Juana executed a deed of absolute
sale conveying the land to Claudio for the declared consideration of P12,000.00. 6 Two years later, on
August 27, 1958, Claudio had the land registered in as name and was issued TCT No. 32050 in the land
records of Quezon Province. 7
Claudio died in 1961 and his mother in 1963. On June 30, 1965, the private respondents filed a
complaint for the reconveyance of the property on the ground that the deed of sale in favor of Claudio
was fictitious and its registration in his name was null and void . 8
Salud (joined by her husband) alleged that she was unaware until later of the supposed sale of the land
to Claudio. She faulted it as having been procured through fraud and improper influence on her sick and
aged mother. She claimed that no compensation was actually paid by Claudio and that the transaction
was deliberately concealed from her by her brother and the defendants. 9 For their part, the defendants
assailed the donation to Salud as legally inefficacious and defective and contended that her complaint
was barred by prescription, estoppel and res judicata. They also filed a counterclaim questioning the
sale to Salud by her mother of another tract of land, in which they said they were entitled to share as
Juana's heirs. 10
On April 17,1979, Judge Juan M. Montecillo of the Court of First Instance of Quezon rendered judgment
upholding the donation to the plaintiff and annulling the deed of sale and the registration of the land in
favor of Claudio Suterio, Sr. The defendants were required to reconvey the land to Salud Suterio even as
their counterclaim was dismissed for lack of evidence. 11 On appeal, the decision was affirmed in toto.
12 The respondent court is now sought to be reversed in this petition for certiorari under Rule 45 of the
Rules of Court.
We hold at the outset that, contrary to the ruling in the challenged decision, the petitioners have the
legal personality to challenge the validity of the donation on which Salud bases her claim to the property
under litigation. As defendants in the complaint for reconveyance, they had every right to resist the
plaintiffs' allegation that she was the owner of the subject property by virtue of the claimed donation.
Recognition of that donation would topple the props of their own contention that Juana could dispose
of the property as its owner when she sold it to Claudio Suterio in 1956.
The petitioners also assail the intrinsic validity of the extrajudical settlement and submit that it is not
really a donation as conceptually understood in civil law. Their argument is that the real donor of the
property was Perfecta, the deceased sister, who, however, could no longer bestow the intended gift. For
their part, Felipe and Juana could not have made, the donation either because they were not moved by
the same sentiments Perfects had for her niece Salud. That feeling would have provided the required
consideration if Perfects herself had made the donation, but not the other two.
This appears to be too much nitpicking, if not sophistry. Felipe and Juana had declared themselves the
heirs of Perfecta and the owners of the property in question. As such, they were free to give the land to
whomever they pleased and for whatever reason they saw fit. Hence, if they chose to respect Perfecta's
wishes and carry out her intentions by donating the land to Salud, there was no legal impediment to
their doing so. In fact, that was not only the legal but also the moral thing to do.
There is no question that Felipe and Juana could have simply disregarded their sister's sentiments and
decided not to donate the property to Salud, keeping the same for themselves. The fact that they did
not do this speaks well indeed of their integrity and their loyalty as well to their deceased sister. The
extrajudicial settlement also reflects their own affection for Salud which constituted the valid
consideration for their own act of liberality. Notably, in her acceptance of the donation, Salud referred
to 'the donors Felipe Balane and Juana Balane de Suterio," and not Perfecta.
It is also pointed out that the donation is defective in form because of non-compliance with the
requirements of the law regarding its acceptance. As it was executed in 1946, the applicable rule is
Article 633 of the old Civil Code reading as follows:
Art. 633. In order that a donation of real property be valid it must be made by public instrument in
which the property donated must be specifically described and the amount of the charges to be
assumed by the donee expressed.
The acceptance may be made, in the deed of gift or in a separate public writing; but it shall produce no
effect if not made during the lifetime of the donor.
If the acceptance is made, by separate public instrument, authentic notice thereof shall be given the
donor, and this proceeding shall be noted in both instruments.
There is no question that the donation was accepted in a separate public instrument and that it was duly
communicated to the donors. Even the petitioners cannot deny this. But what they do contend is that
such acceptance was not "noted in both instruments," meaning the extrajudicial partition itself and the
instrument of acceptance, as required by the Civil Code.
That is perfectly true. There is nothing in either of the two instruments showing that "authentic notice"
of the acceptance was made by Salud to Juana and Felipe. And while the first instrument contains the
statement that "the donee does hereby accept this donation and does hereby express her gratitude for
the kindness and liberality of the donor," the only signatories thereof were Felipe Balane and Juana
Balane de Suterio. That was in fact the reason for the separate instrument of acceptance signed by Salud
a month later.
A strict interpretation of Article 633 can lead to no other conclusion than the annulment of the donation
for being defective in form as urged by the petitioners. This would be in keeping with the unmistakable
language of the above-quoted provision. However, we find that under the circumstances of the present
case, a literal adherence to the requirement of the law might result not in justice to the parties but
conversely a distortion of their intentions. It is also a policy of the Court to avoid such an intepretation.
The purpose of the formal requirement is to insure that the acceptance of the donation is duly
communicated to the donor. In the case at bar, it is not even suggested that Juana was unaware of the
acceptance for she in fact confirmed it later and requested that the donated land be not registered
during her lifetime by Salud. 13 Given this significant evidence, the Court cannot in conscience declare
the donation ineffective because there is no notation in the extrajudicial settlement of the donee's
acceptance. That would be placing too much stress on mere form over substance. It would also
disregard the clear reality of the acceptance of the donation as manifested in the separate instrument
dated June 20,1946, and as later acknowledged by Juana.
The cases cited by the parties in their respective memoranda are not really in point. In Legasto v.
Verzosa, 14 there was no evidence whatsoever that the claimed donations had been accepted, as
stressed by Justice Villa-Real. The same observation is made of Santos v. Robledo, 15 where Justice
Torres noted that the acceptance of the donation did not appear in the deed of donation or in any other
instrument.
The petitioners would also fault the private respondents for laches and argue that Salud's inaction in
protection of her rights should bar her from asserting them at this late hour. Specifically, it is pointed
out that she failed to register the deed of donation and its acceptance in 1946; did not oppose the
inclusion of the subject land in the inventory of Perfecta's properties submitted in the intestate
proceedings in 1946; did not object to the adjudication of the land to Juana in the project of partition in
1951; did not protest the sale of the land to Claudio Suterio in 1956; and did not question its registration
in his name in 1958. It is contended that all these acts constitute laches, which has been described by
this Court thus:
An estoppel by laches arises from the negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert it either has abandoned it or declined to
assert it. 16
The problem with the petitioners' theory is that it would regard Juana and Salud as strangers when they
are in fact mother and daughter. One may expect a person to be vigilant of his rights when dealing with
an acquaintance or associate, or even with a friend, but not when the other person is a close relative, as
in the case at bar. To begin with, the land came from Juana herself. Secondly, she requested her
daughter not to register the land as long as she was still alive so she could enjoy its fruits until her death.
To Salud, it was not difficult to comply with this request, coming as it did from her own mother. There
was no reason to disobey her. She did not have to protect herself against her own mother. Indeed, what
would have been unseemly was her registering the land against her mother's request as if she had no
confidence in her. Salud did no less than what any dutiful daughter would have done under the
circumstances.
If Salud did not protest the inclusion of the land in the inventory of Perfecta's properties and its
subsequent adjudication to Juana in the intestate proceedings, it was because she did not feel
threatened by these acts. She did not distrust her mother. Moreover, Juana had herself acknowledged
the donation when she was asked in whose name the property would be registered following the
intestate proceedings. Salud felt safe because she had the extrajudicial settlement to rely on to prove
that her mother and her uncle had donated the subject land to her.
There is nothing in this instrument to suggest that the donation was to take effect upon the death of the
donors as to make it a donation mortis causa, as urged by the petitioners. The donation became
effective upon acceptance by Salud except that, in obedience to her mother's request, she chose not to
register the land in the meantime and to allow her mother to enjoy its fruits. What was deferred was
not its effectivity but only its enjoyment by Salud. Registration was not necessary to make the donation
a binding commitment insofar as the donors and the donee were concerned. 17
As for her inaction against the deed of sale in favor of her brother Claudio, it should be noted in the first
place that she was not aware of it when it was executed in 1956. Her mother, who was already 76 years
old at the time, never informed her about it, nor did her brother or any of the defendants, for reasons of
their own. It was only later, when the sale was registered in 1958 and a new title to the land was issued
to Claudio, that she started asking questions. Even then, being a sister to Claudio, she did not
immediatey take legal steps.
It is natural, even among non-relatives, to seek a non-judicial settlement through extra-legal measures
before going to court. It is more so in the case of relatives, who should avoid as much as possible the
asperity and bitterness of litigation. That is what Salud did when she repeatedly asked the petitioners
for the return of the property albeit to no avail. It was only when it became clear that amicable
persuasion was not possible that she decided to sue the wife and children of her departed brother.
The petitioners stress that it took Salud all of seven years from the registration of the land in Claudios's
name before she filed the complaint for reconveyance against them. That is true. But if one remembers
that her brother died only in 1961 and her own mother only in 1963, at the age of 83, it will be easy to
understand the reason for the delay, which would otherwise have been unjustified. Suits among
brothers and sisters are especially painful to their parents. Salud must have thought many times about
filing her complaint against her brother Claudio while her old mother was still alive. In fact, Salud
hesitated still even after her mother's death and took two more years before she finally filed her
complaint against Claudio's wife and children.
It is clear that Juana Balane de Suterio had no right to sell the subject land to Claudio because she was
no longer its owner, having previously donated it to her daughter Salud. Juana herself was holding the
land merely as a trustee of Salud, who had transferred possession to her mother at the old woman's
request. The deed of sale was itself vitiated by bad faith as Claudio is presumed to have known of the
previous donation to his sister Salud, whose acceptance of the donation was formally witnessed by hiw
own wife, the herein principal petitioner. 18 When Claudio registered the land in his name knowing
there was a flaw in his title, an implied trust was created in favor of Salud as the real owner of the
property in accordance with Article 1456 of the Civil Code, reading as follows:
If the property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.
As trustor, Salud had every right to sue for the recovery of the land in the action for reconveyance
against Claudio's heirs. As we said in Vda. de Jacinto, et al. v. Vda. de Jacinto, et al. ... 19
Public policy demands that a person guilty of fraud or at least, of breach of trust, should not be allowed
to use a Torrens title as a shield against the consequences of his own wrongdoing.
The petitioners do not insist on prescription as a bar to the action for reconveyance, and understandably
so. The legal principle is that if the registration of the land is fraudulent and the person in whose name
the land is registered thus holds it as a mere trustee, the real owner is entitled to file an action for
reconveyance of the property within a period of ten years. As we have held in many cases:
Where the action is one for reconveyance based on constructive trust, a ten-year period is allowed. 20
An action for reconveyance of realty, based upon a constructive or implied trust resulting from fraud,
may be barred by prescription. The prescriptive period is reckoned from the issuance of the title which
operates as a constructive notice. 21
While actions to enforce a constructive trust prescribe in 10 years from registration of the property,
private respondents' right commenced from actual discovery of petitioner's act of defraudation. 22
The record shows that while the land was registered in the name of Claudio Suterio, Sr. in 1958, the
complaint for reconveyance was filed by the petitioners in 1965, or still within the ten-year prescriptive
period.
The last issue raised by the petitioners, viz., the validity of the deed of sale executed by Juana Balane de
Suterio on January 29,1950, in favor of Salud Suterio, 23 need not detain us too long. The trial court
sustained the contract for lack of sufficient evidence to invalidate it and was upheld by the respondent
court. We see no reason to disturb their factual finding, absent a showing that it was reached arbitrarily.
Interestingly, it occurred to the petitioners to question the transaction only when they were sued by the
private respondents, after ten years from the date of the sale. This is an even longer period than the
nine years during which the petitioners say Salud Suterio was sleeping on her rights following the sale of
her land to Claudio Suterio.
WHEREFORE, the petition is DENIED, with costs against the petitioners. It is so ordered.
Narvasa, Gancayco, Griñ;o-Aquino and Medialdea, JJ., concur.

Footnotes
1 Exhibit "A"."
2 Exhibit "B."
3 Exhibit "12-A."
4 Exhibit "D."
5 Exhibits "4" to "4-G".
6 Exhibit "l."
7 Exhibit "2."
8 Record on Appeal, p. 1.
9 Ibid., pp. 4-5.
10 Id., p. 27.
11 Id., p. 69.
12 Rollo, p. 46. Penned by Ejercito, J., with Coquia, Zosa and Bartolome, JJ., concurring.
13 TSN, January 15, 1970, p. 54.

14 54 Phil. 766.
15 28 Phil. 245.
16 Tijam, et al. v. Sibonghanoy, 23 SCRA 29.
17 Sapto, et al. v. Fabiana, 103 Phil. 683.
18 Exhibit "B."
19 115 Phil. 263.
20 Quiniano v. Court of Appeals, 39 SCRA 221.
21 Sinaon v. Sorongon 136 SCRA 407.
22 Adille v. Court of Appeals, 157 SCRA 455.
23 Exhibit "Q".
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SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-58671 November 22, 1985
EDUVIGIS J. CRUZ, petitioner,
vs.
COURT OF APPEALS, ET AL., respondents.
PLANA, J.:
This a petition for review of the decision of the defunct Court of Appeals dated August 20, 1981 in CA-
G.R. No. 65338-H reversing that of the Court of First Instance of Rizal. and dismissing petitioner's
complaint for revocation of donation against herein private respondents Teresita, Lydia and all
surnamed De Leon.
In Eduvigis J. Cruz, a childless widow, donated a 235.5 sq.m residential lot in San Isidro, Taytay Rizal
together with the two-door apartment erected thereon to her grandnieces private respondents herein,
in a deed of donation entitled "Kasulatan Sa Kaloobpala". The property was accordingly transferred to
the names of private respondents.
In 1974, Eduvigis Cruz judicially adopted Cresencia Ocreto, a minor, after which she extrajudicially tried
to revoke the donation, but the donees resisted, alleging that—
(a) the property in question was co-owned by Eduvigis Cruz and her brother. the late Maximo Cruz,
grandfather of the donees, hence the latter own 1/2 of the property by inheritance; and
(b) Eduvigis Cruz owns another property, an agricultural land of more than two hectares situated in
Barrio Dolores, Taytay, Rizal, hence the donation did not impair the presumptive legitime of the adopted
child.
In 1975, petitioner filed a complaint against the donees for revocation of donation in the Court of First
Instance of Rizal (Civil Case No. 21049) invoking Article 760, paragraph 3 of the New Civil Code, which
reads:
Art. 760, Ever donation inter vivos made by a person having no children or descendants, legitimate or
legitimated by subsequent marriage, or illegitimate, may be revoked or reduced as provided in the next
article, by the happening of any of these events:
xxx xxx xxx
(3) If the donor should subsequently adopt a minor child.
After trial, the trial court rendered a decision revoking the donation. It did not find merit in defendants'
claim that the lot, by donor and her deceased brother, Maximo Cruz, because the donor's ownership
was deemed admitted by the donees by accepting the deed of donation. It also rejected defendants'
argument that the donation did not impair the legitime, saying that claim was "beside the point" and did
not limit plaintiff's right under Art. 760 of the Civil Code.
On appeal, the Court of Appeals reversed the trial court and dismissed the complaint. It found that.—
a) the trial court took into consideration only Article 760 of the Civil Code and ignored Article 761
which states: " In the cases referred to in the preceding article, the donation shall be revoked or reduced
insofar as it exceeds the portion that may be freely disposed of by will, taking into account the whole
estate of the donor of by will, taking into account the whole estate of the donor at the time of the birth,
appearance or adoption of a child.
(b) Eduvigis Cruz owns another lot in Dolores Taytay Rizal, although the subject of a pending
litigation valued at P273,420.00 in 1977.
(c) The donated lot did not belong entirely to Eduvigis as ½ thereof belonged to her brother
Maximo Cruz, grandfather of defendants. 1974 it had a total market value of P17,000. One-half thereof
was P8,500. Adding thereto a P50,000 value of the apartment house constructed thereon, the total
value of the donation would still be within the free portion of donor's estate and therefore would not
impair the legitime of the adopted child.
(d) In an action for revocation of donation, the donor has the burden to show that the donation has
impaired the legitime of the subsequent child; but in this case, Eduvigis did not even allege it in her
complaint.
In the instant petition for review, petitioner imputes to the appellate court alleged errors which boil
down to the question as to whether under the facts as established and the law, the decision under
review correctly dismissed the complaint to annul the subject donation. We hold that it did.
In the case of the subsequent adoption of a minor by one who had previously donated some or all of his
properties to another, the donor may sue for the annulment or reduction of the donation within four
years from the date of adoption, if the donation impairs the legitime of the adopted, taking into account
the whole estate of the donor at the time of the adoption of the child. (Civil Code, Articles 760, 761 and
763). Of course, the burden of proof is on the plaintiff-donor, who must allege and establish the
requirements prescribed by law, on the basis of which annulment or reduction of the donation can be
adjudged.
Unfortunately, in the case at bar, the complaint for annulment does not allege that the subject donation
impairs the legitime of the adopted child. Indeed it contains no indication at all of the total assets of the
donor.
Nor is there proof of impairment of legitime. On the contrary, there is unrebutted evidence that the
donor has another piece of land (27,342 sq. m.) situated in Dolores, Taytay, Rizal worth P273,420.00 in
1977, although then subject to litigation.
The legal situation of petitioner-donor, as plaintiff, is made worse by the factual finding of the Court of
Appeals that the grandfather of the donees was the owner pro indiviso of one-half of the donated land,
the effect of which is to reduce the value of the donation which can then more easily be taken from the
portion of the estate within the free disposal of petitioner.
WHEREFORE, the decision under review is affirmed.

SO ORDERED.
Teehankee (Chairman), Gutierrez, Jr., De la Fuente and Patajo, JJ., concur.
Melencio-Herrera and Relova, JJ., are on leave.
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SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 77425 June 19, 1991
THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the
SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,
vs.
HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA
RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.
G.R. No. 77450 June 19, 1991
THE ROMAN CATHOLIC ARCHBISHOP OF MANILA, THE ROMAN CATHOLIC BISHOP OF IMUS, and the
SPOUSES FLORENCIO IGNAO and SOLEDAD C. IGNAO, petitioners,
vs.
HON. COURT OF APPEALS, THE ESTATE OF DECEASED SPOUSES EUSEBIO DE CASTRO and MARTINA
RIETA, represented by MARINA RIETA GRANADOS and THERESA RIETA TOLENTINO, respondents.
Severino C. Dominguez for petitioner Roman Catholic Bishop of Imus, Cavite.
Dolorfino and Dominguez Law Offices for Sps. Ignao.
Joselito R. Enriquez for private respondents.
REGALADO, J.:
These two petitions for review on certiorari1 seek to overturn the decision of the Court of Appeals in
CA-G.R. CV No. 054562 which reversed and set aside the order of the Regional Trial Court of Imus, Cavite
dismissing Civil Case No. 095-84, as well as the order of said respondent court denying petitioner's
motions for the reconsideration of its aforesaid decision.
On November 29, 1984, private respondents as plaintiffs, filed a complaint for nullification of deed of
donation, rescission of contract and reconveyance of real property with damages against petitioners
Florencio and Soledad C. Ignao and the Roman Catholic Bishop of Imus, Cavite, together with the Roman
Catholic Archbishop of Manila, before the Regional Trial Court, Branch XX, Imus, Cavite and which was
docketed as Civil Case No. 095-84 therein.3
In their complaint, private respondents alleged that on August 23, 1930, the spouses Eusebio de Castro
and Martina Rieta, now both deceased, executed a deed of donation in favor of therein defendant
Roman Catholic Archbishop of Manila covering a parcel of land (Lot No. 626, Cadastral Survey of Kawit),
located at Kawit, Cavite, containing an area of 964 square meters, more or less. The deed of donation
allegedly provides that the donee shall not dispose or sell the property within a period of one hundred
(100) years from the execution of the deed of donation, otherwise a violation of such condition would
render ipso facto null and void the deed of donation and the property would revert to the estate of the
donors.
It is further alleged that on or about June 30, 1980, and while still within the prohibitive period to
dispose of the property, petitioner Roman Catholic Bishop of Imus, in whose administration all
properties within the province of Cavite owned by the Archdiocese of Manila was allegedly transferred
on April 26, 1962, executed a deed of absolute sale of the property subject of the donation in favor of
petitioners Florencio and Soledad C. Ignao in consideration of the sum of P114,000. 00. As a
consequence of the sale, Transfer Certificate of Title No. 115990 was issued by the Register of Deeds of
Cavite on November 15, 1980 in the name of said petitioner spouses.
What transpired thereafter is narrated by respondent court in its assailed decision.4
On December 17, 1984, petitioners Florencio Ignao and Soledad C. Ignao filed a motion to dismiss based
on the grounds that (1) herein private respondents, as plaintiffs therein, have no legal capacity to sue;
and (2) the complaint states no cause of action.
On December 19, 1984, petitioner Roman Catholic Bishop of Imus also filed a motion to dismiss on three
(3) grounds, the first two (2) grounds of which were identical to that of the motion to dismiss filed by
the Ignao spouses, and the third ground being that the cause of action has prescribed.
On January 9, 1985, the Roman Catholic Archbishop of Manila likewise filed a motion to dismiss on the
ground that he is not a real party in interest and, therefore, the complaint does not state a cause of
action against him.
After private respondents had filed their oppositions to the said motions to dismiss and the petitioners
had countered with their respective replies, with rejoinders thereto by private respondents, the trial
court issued an order dated January 31, 1985, dismissing the complaint on the ground that the cause of
action has prescribed.5
Private respondents thereafter appealed to the Court of Appeals raising the issues on (a) whether or not
the action for rescission of contracts (deed of donation and deed of sale) has prescribed; and (b)
whether or not the dismissal of the action for rescission of contracts (deed of donation and deed of sale)
on the ground of prescription carries with it the dismissal of the main action for reconveyance of real
property.6
On December 23, 1986, respondent Court of Appeals, holding that the action has not yet prescibed,
rendered a decision in favor of private respondents, with the following dispositive portion:
WHEREFORE, the Order of January 31, 1985 dismissing appellants' complaint is SET ASIDE and Civil Case
No. 095-84 is hereby ordered REINSTATED and REMANDED to the lower court for further proceedings.
No Costs.7
Petitioners Ignao and the Roman Catholic Bishop of Imus then filed their separate motions for
reconsideration which were denied by respondent Court of Appeals in its resolution dated February 6,
1987,8 hence, the filing of these appeals by certiorari.
It is the contention of petitioners that the cause of action of herein private respondents has already
prescribed, invoking Article 764 of the Civil Code which provides that "(t)he donation shall be revoked at
the instance of the donor, when the donee fails to comply with any of the conditions which the former
imposed upon the latter," and that "(t)his action shall prescribe after four years from the non-
compliance with the condition, may be transmitted to the heirs of the donor, and may be exercised
against the donee's heirs.
We do not agree.
Although it is true that under Article 764 of the Civil Code an action for the revocation of a donation
must be brought within four (4) years from the non-compliance of the conditions of the donation, the
same is not applicable in the case at bar. The deed of donation involved herein expressly provides for
automatic reversion of the property donated in case of violation of the condition therein, hence a
judicial declaration revoking the same is not necessary, As aptly stated by the Court of Appeals:
By the very express provision in the deed of donation itself that the violation of the condition thereof
would render ipso facto null and void the deed of donation, WE are of the opinion that there would be
no legal necessity anymore to have the donation judicially declared null and void for the reason that the
very deed of donation itself declares it so. For where (sic) it otherwise and that the donors and the
donee contemplated a court action during the execution of the deed of donation to have the donation
judicially rescinded or declared null and void should the condition be violated, then the phrase reading
"would render ipso facto null and void" would not appear in the deed of donation.9
In support of its aforesaid position, respondent court relied on the rule that a judicial action for
rescission of a contract is not necessary where the contract provides that it may be revoked and
cancelled for violation of any of its terms and conditions.10 It called attention to the holding that there
is nothing in the law that prohibits the parties from entering into an agreement that a violation of the
terms of the contract would cause its cancellation even without court intervention, and that it is not
always necessary for the injured party to resort to court for rescission of the contract.11 It reiterated the
doctrine that a judicial action is proper only when there is absence of a special provision granting the
power of cancellation.12
It is true that the aforesaid rules were applied to the contracts involved therein, but we see no reason
why the same should not apply to the donation in the present case. Article 732 of the Civil Code
provides that donations inter vivos shall be governed by the general provisions on contracts and
obligations in all that is not determined in Title III, Book III on donations. Now, said Title III does not have
an explicit provision on the matter of a donation with a resolutory condition and which is subject to an
express provision that the same shall be considered ipso facto revoked upon the breach of said
resolutory condition imposed in the deed therefor, as is the case of the deed presently in question. The
suppletory application of the foregoing doctrinal rulings to the present controversy is consequently
justified.
The validity of such a stipulation in the deed of donation providing for the automatic reversion of the
donated property to the donor upon non-compliance of the condition was upheld in the recent case of
De Luna, et al. vs. Abrigo, et al.13 It was held therein that said stipulation is in the nature of an
agreement granting a party the right to rescind a contract unilaterally in case of breach, without need of
going to court, and that, upon the happening of the resolutory condition or non-compliance with the
conditions of the contract, the donation is automatically revoked without need of a judicial declaration
to that effect. While what was the subject of that case was an onerous donation which, under Article
733 of the Civil Code is governed by the rules on contracts, since the donation in the case at bar is also
subject to the same rules because of its provision on automatic revocation upon the violation of a
resolutory condition, from parity of reasons said pronouncements in De Luna pertinently apply.
The rationale for the foregoing is that in contracts providing for automatic revocation, judicial
intervention is necessary not for purposes of obtaining a judicial declaration rescinding a contract
already deemed rescinded by virtue of an agreement providing for rescission even without judicial
intervention, but in order to determine whether or not the rescission was proper.14
When a deed of donation, as in this case, expressly provides for automatic revocation and reversion of
the property donated, the rules on contract and the general rules on prescription should apply, and not
Article 764 of the Civil Code. Since Article 1306 of said Code authorizes the parties to a contract to
establish such stipulations, clauses, terms and conditions not contrary to law, morals, good customs,
public order or public policy, we are of the opinion that, at the very least, that stipulation of the parties
providing for automatic revocation of the deed of donation, without prior judicial action for that
purpose, is valid subject to the determination of the propriety of the rescission sought. Where such
propriety is sustained, the decision of the court will be merely declaratory of the revocation, but it is not
in itself the revocatory act.
On the foregoing ratiocinations, the Court of Appeals committed no error in holding that the cause of
action of herein private respondents has not yet prescribed since an action to enforce a written contract
prescribes in ten (10) years.15 It is our view that Article 764 was intended to provide a judicial remedy in
case of non-fulfillment or contravention of conditions specified in the deed of donation if and when the
parties have not agreed on the automatic revocation of such donation upon the occurrence of the
contingency contemplated therein. That is not the situation in the case at bar.
Nonetheless, we find that although the action filed by private respondents may not be dismissed by
reason of prescription, the same should be dismissed on the ground that private respondents have no
cause of action against petitioners.
The cause of action of private respondents is based on the alleged breach by petitioners of the
resolutory condition in the deed of donation that the property donated should not be sold within a
period of one hundred (100) years from the date of execution of the deed of donation. Said condition, in
our opinion, constitutes an undue restriction on the rights arising from ownership of petitioners and is,
therefore, contrary to public policy.
Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property
from the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of
the property donated. Although the donor may impose certain conditions in the deed of donation, the
same must not be contrary to law, morals, good customs, public order and public policy. The condition
imposed in the deed of donation in the case before us constitutes a patently unreasonable and undue
restriction on the right of the donee to dispose of the property donated, which right is an indispensable
attribute of ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual
or for an unreasonable period of time.
Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by
analogy.1âwphi1 Under the third paragraph of Article 494, a donor or testator may prohibit partition for
a period which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions
of the testator declaring all or part of the estate inalienable for more than twenty (20) years are void.
It is significant that the provisions therein regarding a testator also necessarily involve, in the main, the
devolution of property by gratuitous title hence, as is generally the case of donations, being an act of
liberality, the imposition of an unreasonable period of prohibition to alienate the property should be
deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the
regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the
normative policy expressed in the aforesaid Articles 494 and 870 of the Code.
In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the
property for an entire century, being an unreasonable emasculation and denial of an integral attribute
of ownership, should be declared as an illegal or impossible condition within the contemplation of
Article 727 of the Civil Code. Consequently, as specifically stated in said statutory provision, such
condition shall be considered as not imposed. No reliance may accordingly be placed on said prohibitory
paragraph in the deed of donation. The net result is that, absent said proscription, the deed of sale
supposedly constitutive of the cause of action for the nullification of the deed of donation is not in truth
violative of the latter hence, for lack of cause of action, the case for private respondents must fail.
It may be argued that the validity of such prohibitory provision in the deed of donation was not
specifically put in issue in the pleadings of the parties. That may be true, but such oversight or inaction
does not prevent this Court from passing upon and resolving the same.
It will readily be noted that the provision in the deed of donation against alienation of the land for one
hundred (100) years was the very basis for the action to nullify the deed of d donation. At the same
time, it was likewise the controverted fundament of the motion to dismiss the case a quo, which motion
was sustained by the trial court and set aside by respondent court, both on the issue of prescription.
That ruling of respondent court interpreting said provision was assigned as an error in the present
petition. While the issue of the validity of the same provision was not squarely raised, it is ineluctably
related to petitioner's aforesaid assignment of error since both issues are grounded on and refer to the
very same provision.
This Court is clothed with ample authority to review matters, even if they are not assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a just decision of the case:16 Thus,
we have held that an unassigned error closely related to an error properly assigned,17 or upon which
the determination of the question properly assigned is dependent, will be considered by the appellate
court notwithstanding the failure to assign it as error.18
Additionally, we have laid down the rule that the remand of the case to the lower court for further
reception of evidence is not necessary where the Court is in a position to resolve the dispute based on
the records before it. On many occasions, the Court, in the public interest and for the expeditious
administration of justice, has resolved actions on the merits instead of remanding them to the trial court
for further proceedings, such as where the ends of justice, would not be subserved by the remand of the
case.19 The aforestated considerations obtain in and apply to the present case with respect to the
matter of the validity of the resolutory condition in question.
WHEREFORE, the judgment of respondent court is SET ASIDE and another judgment is hereby rendered
DISMISSING Civil Case No. 095-84 of the Regional Trial Court, Branch XX, Imus, Cavite.
SO ORDERED.
Melencio-Herrera and Paras, JJ., concur.
Padilla, J., took no part.
Sarmiento, J., is on leave.
Footnotes
1 G.R. No. 77425 was filed by petitioner Roman Catholic Bishop of Imus, and G.R. No. 77450 by
petitioners Florencio and Soledad C. Ignao.
2 Penned by Justice Felipe B. Kalalo, with the concurrence of Justices Floreliana Castro-Bartolome and
Esteban M. Lising.
3 Original Record, 1-9.
4 Rollo, G.R. No. 77425, 20.
5 Original Record, 71-74.
6 Rollo, G.R. No. 77425, 27-28.
7 Ibid., Id., 30.
8 Ibid., Id., 32.

9 Ibid., Id., 28.
10 Lopez vs. Commissioner of Customs, et al., 37 SCRA 327 (1971).
11 Froilan vs. Pan Oriental Shipping Co., et al., 12 SCRA 276 (1964).
12 De la Rama Steamship Co., Inc. vs. Tan, etc., et al., 99 Phil. 1034(1956).
13 181 SCRA 150 (1990).
14 University of the Philippines vs. Angeles, etc., et al., 35 SCRA 102 (1970).
15 Art. 1144(1), Civil Code.
16 Insular Life Assurance Co., Ltd. Employees-NATU vs. Insular Life Assurance Co., Ltd., et al., 76 SCRA 50
(1977).
17 Philippine Commercial and International Bank vs. Court of Appeals, et al, 159 SCRA 24 (1988).
18 Soco vs. Militante, etc., et al., 123 SCRA 160 (1983); Ortigas, Jr. vs, Lufthansa German Airlines, 64
SCRA 610 (1975).
19 Escudero, et al. vs. Dulay, etc., et al., 158 SCRA 69 (1988); Lianga Bay Logging Co., Inc. vs. Court of
Appeals, et al., 157 SCRA 357 (1988).

EDUARTE V. CA- Revocation of
Donation
Property, Ownership And Its Modifications
inShare1
All crimes which offend the donor show ingratitude and are causes for revocation of donation.
FACTS:
Pedro Calapine was the registered owner of a parcel of land. He executed a deed of donation
inter vivos of ½ of the land to his niece, Helen Doria. Subsequently, he executed another deed of
donation inter vivos ceding the other ½ of the property to Helen Doria. Helen Doria donated a
protion of the lot (157 sqm) to the Calauan Christian Reformed Church. Helen Doria sold and
conveyed the remaining portion save some 700 meters for his residence. Pedro Calapine sought
to annul the sale and donation to eduarte and CCRC on the ground that the deed of donation was
a forgery and that Doria was unworthy of his liberality claiming ingratitude (commission of
offense against the person, honor or property of donor [par. 1])
ISSUE:
W/N the falsification of public document committed by Doria is an act of ingratitude against
Calapine (considering that falsification is a crime against public interest)?
RULING: YES
In commentaries of Tolentino, it is said that “all crimes which offend the donor show ingratitude
and are causes of revocation.” Petitioner attempted to categorize the offenses according to their
classification under the RPC by deleting the first sentence. However, this is unwarranted
considering that illegal detention, threats and coercion are considered crimes against the person
of the donor despite the fact that they are classified as crimes against personal liberty and
security under the RPC.
Note: Eduarte and the Church still won although the donation was deemed by the Court to be
revocable. The Court applied the CHAIN OF TITLE THEORY because the lands were
registered lands and it has already passed from the forger (Doria) to innocent purchasers for
value (Eduarte, et al.).
FIRST DIVISION
[G.R. No. 132681. December 3, 2001]
RICKY Q. QUILALA, petitioner, vs. GLICERIA ALCANTARA, LEONORA

ALCANTARA, INES REYES and JOSE REYES, respondents.
DECISION
YNARES-SANTIAGO, J.:
On February 20, 1981, Catalina Quilala executed a Donation of Real Property Inter Vivos in
favor of Violeta Quilala over a parcel of land located in Sta. Cruz, Manila, containing an area of
94 square meters, and registered in her name under Transfer Certificate of Title No. 17214 of the
Register of Deeds for Manila.
The Donation of Real Property Inter Vivos consists of two pages. The first page contains the
deed of donation itself, and is signed on the bottom portion by Catalina Quilala as donor, Violeta
Quilala as donee, and two instrumental witnesses.[1] The second page contains the
Acknowledgment, which states merely that Catalina Quilala personally appeared before the notary
public and acknowledged that the donation was her free and voluntary act and deed. There appear
on the left-hand margin of the second page the signatures of Catalina Quilala and one of the
witnesses, and on the right-hand margin the signatures of Violeta Quilala and the other
witness.[2] The Acknowledgment reads:
REPUBLIC OF THE PHILIPPINES )

QUEZON CITY ) S.S.
Before Me, a Notary Public, for and in the City of Quezon, Philippines, this 20 th day
of Feb. 1981, personally appeared CATALINA QUILALA, with Residence
Certificate No. 19055265 issued at Quezon City on February 4, 1981, known to me
and to me known to be the same person who executed the foregoing instruments and
acknowledged to me that the same is her own free and voluntary act and deed.
I hereby certify that this instrument consisting of two (2) pages, including the page on
which this acknowledgement is written, has been signed by CATALINA QUILALA
and her instrumental witnesses at the end thereof and on the left-hand margin of page
2 and both pages have been sealed with my notarial seal.
In witness whereof, I have hereunto set my hand, in the City of Quezon, Philippines,
this 20th day of Feb., 1981.
(SGD.) NOTARY PUBLIC

Until December 31, 1981
(illegible)
DOC NO. 22;

PAGE NO. 6;
BOOK NO. XV;
SERIES OF 1981.
The deed of donation was registered with the Register of Deeds and, in due course, TCT No.
17214 was cancelled and TCT No. 143015 was issued in the name of Violeta Quilala.
On November 7, 1983, Catalina Quilala died. Violeta Quilala likewise died on May 22,
1984. Petitioner Ricky Quilala alleges that he is the surviving son of Violeta Quilala.
Meanwhile, respondents Gliceria Alcantara, Leonora Alcantara, Ines Reyes and Juan Reyes,
claiming to be Catalinas only surviving relatives within the fourth civil degree of consanguinity,
executed a deed of extrajudicial settlement of estate, dividing and adjudicating unto themselves
the above-described property.
On September 13, 1984, respondents instituted against petitioner and Guillermo T. San Pedro,
the Registrar of Deeds of Manila, an action for the declaration of nullity of the donation inter
vivos, and for the cancellation of TCT No. 143015 in the name of Violeta Quilala. The case was
docketed as Civil Case No. 84-26603 of the Regional Trial Court of Manila, Branch
17. Subsequently, respondents withdrew their complaint as against Guillermo T. San Pedro and he
was dropped as a party-defendant.
The trial court found that the deed of donation, although signed by both Catalina and Violeta,
was acknowledged before a notary public only by the donor, Catalina. Consequently, there was no
acceptance by Violeta of the donation in a public instrument, thus rendering the donation null and
void. Furthermore, the trial court held that nowhere in Catalinas SSS records does it appear that
Violeta was Catalinas daughter. Rather, Violeta was referred to therein as an adopted child, but
there was no positive evidence that the adoption was legal. On the other hand, the trial court found
that respondents were first cousins of Catalina Quilala. However, since it appeared that Catalina
died leaving a will, the trial court ruled that respondents deed of extrajudicial settlement can not
be registered. The trial court rendered judgment as follows:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs Gliceria Alcantara,

Leonarda Alcantara, Ines Reyes and Juan Reyes and against defendant Ricky A.
Quilala, as follows:
1. Declaring null and void the deed of donation of real property inter vivos executed
on February 20, 1981 by Catalina Quilala in favor of Violeta Quilala (Exhs. A as well
as 11 and 11-A.);
2. Ordering the Register of Deeds of Manila to cancel Transfer Certificate of Title No.
143015 in the name of Violeta Quilala and to issue a transfer certificate of title in the
name of the Estate of Catalina Quilala;
3. Dismissing the complaint insofar as it seeks the registration of the deed of

extrajudicial settlement (Exhs. B and B-1.) and the issuance by the Register of Deeds
of Manila of a transfer certificate of title in the names of the plaintiffs; and
4. Dismissing the counterclaim of defendant Ricky A. Quilala.
No costs.
SO ORDERED. [3]
Petitioner appealed the aforesaid decision. On July 30, 1997, the Court of Appeals rendered a
decision affirming with modification the decision of the trial court by dismissing the complaint for
lack of cause of action without prejudice to the filing of probate proceedings of Catalinas alleged
last will and testament.[4]
WHEREFORE, the appealed decision is hereby AFFIRMED with the following

MODIFICATION:
(3) DISMISSING the complaint for lack of cause of action without prejudice to the
filing of the necessary probate proceedings by the interested parties so as not to render
nugatory the right of the lawful heirs.
Petitioner filed a motion for reconsideration, which the Court of Appeals denied on February
11, 1998.[5] Hence, this petition for review, raising the following assignment of errors:
A. THE COURT OF APPEALS ERRED IN RULING THAT THE DEED OF DONATION OF
REAL PROPERTY INTER-VIVOS IS NOT REGISTRABLE.
B. THE COURT OF APPEALS ERRED ON UPHOLDING THE LOWER COURTS RULING
THAT VIOLETA QUILALA IS NOT THE DAUGHTER OF CATALINA QUILALA.[6]
The principal issue raised is the validity of the donation executed by Catalina in favor of
Violeta. Under Article 749 of the Civil Code, the donation of an immovable must be made in a
public instrument in order to be valid,[7] specifying therein the property donated and the value of
the charges which the donee must satisfy. As a mode of acquiring ownership, donation results in
an effective transfer of title over the property from the donor to the donee,[8] and is perfected from
the moment the donor knows of the acceptance by the donee,[9] provided the donee is not
disqualified or prohibited by law from accepting the donation. Once the donation is accepted, it is
generally considered irrevocable,[10] and the donee becomes the absolute owner of the
property.[11] The acceptance, to be valid, must be made during the lifetime of both the donor and
the donee.[12] It may be made in the same deed or in a separate public document,[13] and the donor
must know the acceptance by the donee.[14]
In the case at bar, the deed of donation contained the number of the certificate of title as well
as the technical description as the real property donated. It stipulated that the donation was made
for and in consideration of the love and affection which the DONEE inspires in the DONOR, and
as an act of liberality and generosity.[15] This was sufficient cause for a donation. Indeed, donation
is legally defined as an act of liberality whereby a person disposes gratuitously of a thing or right
in favor of another, who accepts it.[16]
The donees acceptance of the donation was explicitly manifested in the penultimate paragraph
of the deed, which reads:
That the DONEE hereby receives and accepts the gift and donation made in her favor
by the DONOR and she hereby expresses her appreciation and gratefulness for the
kindness and generosity of the DONOR. [17]
Below the terms and stipulations of the donation, the donor, donee and their witnesses affixed
their signature. However, the Acknowledgment appearing on the second page mentioned only the
donor, Catalina Quilala. Thus, the trial court ruled that for Violetas failure to acknowledge her
acceptance before the notary public, the same was set forth merely on a private instrument, i.e., the
first page of the instrument. We disagree.
The pertinent provision is Section 112, paragraph 2 of Presidential Decree No. 1529, which
states:
Deeds, conveyances, encumbrances, discharges, powers of attorney and other

voluntary instruments, whether affecting registered or unregistered land, executed in
accordance with law in the form of public instruments shall
be registrable: Provided, that, every such instrument shall be signed by the person or
persons executing the same in the presence of at least two witnesses who shall
likewise sign thereon, and shall be acknowledged to be the free act and deed of the
person or persons executing the same before a notary public or other public officer
authorized by law to take acknowledgment. Where the instrument so
acknowledged consists of two or more pages including the page whereon
acknowledgment is written, each page of the copy which is to be registered in the
office of the Register of Deeds, or if registration is not contemplated, each page of the
copy to be kept by the notary public, except the page where the signatures already
appear at the foot of the instrument, shall be signed on the left margin thereof by the
person or persons executing the instrument and their witnesses, and all the pages
sealed with the notarial seal, and this fact as well as the number of pages shall be
stated in the acknowledgment. Where the instrument acknowledged relates to a sale,
transfer, mortgage or encumbrance of two or more parcels of land, the number thereof
shall likewise be set forth in said acknowledgment. (underscoring ours).
As stated above, the second page of the deed of donation, on which the Acknowledgment
appears, was signed by the donor and one witness on the left-hand margin, and by the donee and
the other witness on the right-hand margin. Surely, the requirement that the contracting parties and
their witnesses should sign on the left-hand margin of the instrument is not absolute. The
intendment of the law merely is to ensure that each and every page of the instrument is
authenticated by the parties. The requirement is designed to avoid the falsification of the contract
after the same has already been duly executed by the parties. Hence, a contracting party affixes his
signature on each page of the instrument to certify that he is agreeing to everything that is written
thereon at the time of signing.
Simply put, the specification of the location of the signature is merely directory. The fact that
one of the parties signs on the wrong side of the page, that does not invalidate the document. The
purpose of authenticating the page is served, and the requirement in the above-quoted provision is
deemed substantially complied with.
In the same vein, the lack of an acknowledgment by the donee before the notary public does
not also render the donation null and void. The instrument should be treated in its entirety. It cannot
be considered a private document in part and a public document in another part. The fact that it
was acknowledged before a notary public converts the deed of donation in its entirety a public
instrument. The fact that the donee was not mentioned by the notary public in the acknowledgment
is of no moment. To be sure, it is the conveyance that should be acknowledged as a free and
voluntary act. In any event, the donee signed on the second page, which contains the
Acknowledgment only. Her acceptance, which is explicitly set forth on the first page of the
notarized deed of donation, was made in a public instrument.
It should be stressed that this Court, not being a trier of facts, can not make a determination
of whether Violeta was the daughter of Catalina, or whether petitioner is the son of Violeta. These
issues should be ventilated in the appropriate probate or settlement proceedings affecting the
respective estates of Catalina and Violeta. Suffice it to state that the donation, which we declare
herein to be valid, will still be subjected to a test on its inofficiousness under Article 771, [18] in
relation to Articles 752, 911 and 912 of the Civil Code. Moreover, property donated inter vivos is
subject to collation after the donors death,[19]whether the donation was made to a compulsory heir
or a stranger,[20] unless there is an express prohibition if that had been the donors intention.[21]
WHEREFORE, in view of the foregoing, the petition is GRANTED. The appealed decision
of the Court of Appeals is REVERSED and SET ASIDE, and a new judgment is rendered
dismissing Civil Case No. 84-26603.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.
[1]
Rollo, p. 94.
[2]
Ibid., p. 95.
[3]
CA Rollo, pp. 33-34; penned by Judge Catalino Castaeda, Jr.
Penned by Associate Justice Maximiano C. Asuncion, concurred in by Associate Justices Jesus M. Elbinias and
[4]
Ramon A. Barcelona; CA Rollo, pp. 175-178.

Penned by Associate Jesus M. Justice Elbinias, concurred in by Associate Justices Minerva G. Reyes and Ramon
[5]
A. Barcelona; CA Rollo, p. 196.

[6]
Rollo, p. 25.
[7]
Duque v. Domingo, 80 SCRA 654 [1977].
[8]
Civil Code, Article 712.
[9]
Vda. de Arceo v. Court of Appeals, 185 SCRA 489 [1990]. The exceptions to irrevocability are: officiousness,
[10]
failure of the donee to comply with charges, and ingratitude.

[11]
Tanpingco v. IAC, 207 SCRA 652 [1992]; Quijada v. CA, 299 SCRA 695 [1998].
[12]
[13]
Civil Code, Article 749, second par.
[14]
Abellera v. Balanag, 37 Phil. 865 [1918]; Alejandro v. Geraldez, 78 SCRA 295 [1977].
[15]
Rollo, p. 94.
[16]
[17]
Ibid.
Donations which in accordance with the provisions of Article 752, are inofficious, bearing in mind, the estimated
[18]
net value of the donors property at the time of his death, shall be reduced with regard to the excess; but this reduction
shall not prevent the donations from taking effect during the life of the donor, nor shall it bar the donee from
appropriating the fruits.
For the reduction of donations the provisions of this Chapter and of Articles 911 and 912 of this Code shall govern.
[19]
Civil Code, Book III, Title IV, Chapter 4, Section 5.
[20]
Vda. de Tupas v. Regional Trial Court of Negros Occidental, 144 SCRA 622 [1986].
[21]
De Roma v. Court of Appeals, 152 SCRA 205 [1987].
Synopsis/Syllabi
THIRD DIVISION
[G.R. No. 107132. October 8, 1999]
MAXIMA HEMEDES, petitioner, vs. THE HONORABLE COURT OF

APPEALS, DOMINIUM REALTY AND CONSTRUCTION
CORPORATION, ENRIQUE D. HEMEDES, and R & B INSURANCE
CORPORATION, respondents.
[G.R. No. 108472. October 8, 1999]
R & B INSURANCE CORPORATION, petitioner, vs. THE HONORABLE

COURT OF APPEALS DOMINIUM REALTY AND CONSTRUCTION
CORPORATION, ENRIQUE D. HEMEDES and MAXIMA
HEMEDES, respondents.
DECISION
GONZAGA_REYES, J.:
Assailed in these petitions for review on certiorari is the decision[1] of the eleventh division
of the Court of Appeals in CA-G.R. CV No. 22010 promulgated on September 11, 1992
affirming in toto the decision of Branch 24 of the Regional Trial Court of Laguna in Civil Case
No. B-1766 dated February 22, 1989,[2] and the resolution dated December 29, 1992 denying
petitioner R & B Insurance Corporations (R & B Insurance) motion for reconsideration. As the
factual antecedents and issues are the same, we shall decide the petitions jointly.
The instant controversy involves a question of ownership over an unregistered parcel of land,
identified as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters, situated in Sala,
Cabuyao, Laguna. It was originally owned by the late Jose Hemedes, father of Maxima Hemedes
and Enrique D. Hemedes. On March 22, 1947 Jose Hemedes executed a document entitled
Donation Inter Vivos With Resolutory Conditions[3] whereby he conveyed ownership over the
subject land, together with all its improvements, in favor of his third wife, Justa Kauapin, subject
to the following resolutory conditions:
(a) Upon the death or remarriage of the DONEE, the title to the property donated shall
revert to any of the children, or their heirs, of the DONOR expressly designated by the
DONEE in a public document conveying the property to the latter; or
(b) In absence of such an express designation made by the DONEE before her death
or remarriage contained in a public instrument as above provided, the title to the
property shall automatically revert to the legal heirs of the DONOR in common.
Pursuant to the first condition abovementioned, Justa Kausapin executed on September 27,
1960 a Deed of Conveyance of Unregistered Real Property by Reversion[4] conveying to Maxima
Hemedes the subject property under the following terms -
That the said parcel of land was donated unto me by the said Jose Hemedes, my
deceased husband, in a deed of DONATION INTER VIVOS WITH RESOLUTORY
CONDITIONS executed by the donor in my favor, and duly accepted by me on
March 22, 1947, before Notary Public Luis Bella in Cabuyao, Laguna;
That the donation is subject to the resolutory conditions appearing in the said deed of
DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS, as follows:
(a) Upon the death or remarriage of the DONEE, the title to the property donated shall
revert to any of the children, or their heirs, of the DONOR expressly designated by the
DONEE in a public document conveying the property to the latter; or
(b) In absence of such an express designation made by the DONEE before her death
or remarriage contained in a public instrument as above provided, the title to the
property shall automatically revert to the legal heirs of the DONOR in common.
That, wherefore, in virtue of the deed of donation above mentioned and in the exercise
of my right and privilege under the terms of the first resolutory condition therein
contained and hereinabove reproduced, and for and in consideration of my love and
affection, I do hereby by these presents convey, transfer, and deed unto my designee,
MAXIMA HEMEDES, of legal age, married to RAUL RODRIGUEZ, Filipino and
resident of No. 15 Acacia Road, Quezon City, who is one of the children and heirs of
my donor, JOSE HEMEDES, the ownership of, and title to the property hereinabove
described, and all rights and interests therein by reversion under the first resolutory
condition in the above deed of donation; Except the possession and enjoyment of the
said property which shall remain vested in me during my lifetime, or widowhood and
which upon my death or remarriage shall also automatically revert to, and be
transferred to my designee, Maxima Hemedes.
Maxima Hemedes, through her counsel, filed an application for registration and confirmation
of title over the subject unregistered land. Subsequently, Original Certificate of Title (OCT) No.
(0-941) 0-198[5] was issued in the name of Maxima Hemedes married to Raul Rodriguez by the
Registry of Deeds of Laguna on June 8, 1962, with the annotation that Justa Kausapin shall have
the usufructuary rights over the parcel of land herein described during her lifetime or widowhood.
It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her husband
Raul Rodriguez constituted a real estate mortgage over the subject property in its favor to serve as
security for a loan which they obtained in the amount of P6,000.00. On February 22, 1968, R & B
Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes failed to pay the loan
even after it became due on August 2, 1964. The land was sold at a public auction on May 3, 1968
with R & B Insurance as the highest bidder and a certificate of sale was issued by the sheriff in its
favor. Since Maxima Hemedes failed to redeem the property within the redemption period, R & B
Insurance executed an Affidavit of Consolidation dated March 29, 1974 and on May 21, 1975 the
Register of Deeds of Laguna cancelled OCT No. (0-941) 0-198 and issued Transfer Certificate of
Title (TCT) No. 41985 in the name of R & B Insurance. The annotation of usufruct in favor of
Justa Kausapin was maintained in the new title.[6]
Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa
Kausapin executed a Kasunduan on May 27, 1971 whereby she transferred the same land to her
stepson Enrique D. Hemedes, pursuant to the resolutory condition in the deed of donation executed
in her favor by her late husband Jose Hemedes. Enrique D. Hemedes obtained two declarations of
real property - in 1972, and again, in 1974, when the assessed value of the property was
raised. Also, he has been paying the realty taxes on the property from the time Justa Kausapin
conveyed the property to him in 1971 until 1979. In the cadastral survey of Cabuyao, Laguna
conducted from September 8, 1974 to October 10, 1974, the property was assigned Cadastral No.
2990, Cad. 455-D, Cabuyao Cadastre, in the name of Enrique Hemedes. Enrique Hemedes is also
the named owner of the property in the records of the Ministry of Agrarian Reform office at
Calamba, Laguna.
On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and
Construction Corporation (Dominium). On April 10, 1981, Justa Kausapin executed an affidavit
affirming the conveyance of the subject property in favor of Enrique D. Hemedes as embodied in
the Kasunduan dated May 27, 1971, and at the same time denying the conveyance made to Maxima
Hemedes.
On May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery, Inc.
(Asia Brewery) who, even before the signing of the contract of lease, constructed two warehouses
made of steel and asbestos costing about P10,000,000.00 each. Upon learning of Asia Brewerys
constructions upon the subject property, R & B Insurance sent it a letter on March 16, 1981
informing the former of its ownership of the property as evidenced by TCT No. 41985 issued in
its favor and of its right to appropriate the constructions since Asia Brewery is a builder in bad
faith. On March 27, 1981, a conference was held between R & B Insurance and Asia Brewery but
they failed to arrive at an amicable settlement.
On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein
she asserted that she is the rightful owner of the subject property by virtue of OCT No. (0-941) 0-
198 and that, as such, she has the right to appropriate Asia Brewerys constructions, to demand its
demolition, or to compel Asia Brewery to purchase the land. In another letter of the same date
addressed to R & B Insurance, Maxima Hemedes denied the execution of any real estate mortgage
in favor of the latter.
On August 27, 1981, Dominium and Enrique D. Hemedes filed a complaint[7] with the Court
of First Instance of Binan, Laguna for the annulment of TCT No. 41985 issued in favor of R & B
Insurance and/or the reconveyance to Dominium of the subject property. Specifically, the
complaint alleged that Dominium was the absolute owner of the subject property by virtue of the
February 28, 1979 deed of sale executed by Enrique D. Hemedes, who in turn obtained ownership
of the land from Justa Kausapin, as evidenced by the Kasunduan dated May 27, 1971. The
plaintiffs asserted that Justa Kausapin never transferred the land to Maxima Hemedes and that
Enrique D. Hemedes had no knowledge of the registration proceedings initiated by Maxima
Hemedes.
After considering the merits of the case, the trial court rendered judgment on February 22,
1989 in favor of plaintiffs Dominium and Enrique D. Hemedes, the dispositive portion of which
states
WHEREFORE, judgment is hereby rendered:
(a) Declaring Transfer Certificate of Title No. 41985 of the Register of Deeds of Laguna null and
void and ineffective;
(b) Declaring Dominium Realty and Construction Corporation the absolute owner and possessor
of the parcel of land described in paragraph 3 of the complaint;
(c) Ordering the defendants and all persons acting for and/or under them to respect such
ownership and possession of Dominium Realty and Construction Corporation and to forever
desist from asserting adverse claims thereon nor disturbing such ownership and possession;
and
(d) Directing the Register of Deeds of Laguna to cancel said Transfer Certificate of Title No.
41985 in the name of R & B Insurance Corporation, and in lieu thereof, issue a new transfer
certificate of title in the name of Dominium Realty and Construction Corporation. No
pronouncement as to costs and attorneys fees.[8]
Both R & B Insurance and Maxima Hemedes appealed from the trial courts decision. On
September 11, 1992 the Court of Appeals affirmed the assailed decision in toto and on December
29, 1992, it denied R & B Insurances motion for reconsideration. Thus, Maxima Hemedes and R
& B Insurance filed their respective petitions for review with this Court on November 3, 1992 and
February 22, 1993, respectively.
In G.R. No. 107132[9], petitioner Maxima Hemedes makes the following assignment of errors
as regards public respondents ruling
I
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING

ARTICLE 1332 OF THE NEW CIVIL CODE IN DECLARING AS SPURIOUS
THE DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY
REVERSION EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER
MAXIMA HEMEDES.
II
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AS

VOID AND OF NO LEGAL EFFECT THE KASUNDUAN DATED 27 MAY 1971
EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF RESPONDENT ENRIQUE
HEMEDES AND THE SALE OF THE SUBJECT PROPERTY BY RESPONDENT
ENRIQUE HEMEDES IN FAVOR OF RESPONDENT DOMINIUM REALTY
AND CONSTRUCTION CORPORATION.
III
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING

RESPONDENTS ENRIQUE AND DOMINIUM IN BAD FAITH.
IV
RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING
THAT ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 ISSUED IN THE
NAME OF PETITIONER MAXIMA HEMEDES NULL AND VOID.
V
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO

LOAN WAS OBTAINED BY PETITIONER MAXIMA HEMEDES FROM
RESPONDENT R & B INSURANCE CORPORATION.
VI
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO

REAL ESTATE MORTGAGE OVER THE SUBJECT PROPERTY WAS
EXECUTED BY PETITIONER MAXIMA HEMEDES IN FAVOR OF
RESPONDENT R & B INSURANCE CORPORATION.
VII
RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE

VALID TITLE COVERING THE SUBJECT PROPERTY IS THE ORIGINAL
CERTIFICATE OF TITLE NO. (0-941) 0-198 IN THE NAME OF PETITIONER
MAXIMA HEMEDES AND NOT THE TRANSFER CERTIFICATE OF TITLE
(TCT) NO. 41985 IN THE NAME OF R & B INSURANCE CORPORATION.[10]
Meanwhile, in G.R. No. 108472[11], petitioner R & B Insurance assigns almost the same errors,
except with regards to the real estate mortgage allegedly executed by Maxima Hemedes in its
favor.Specifically, R & B Insurance alleges that:
I
RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332

OF THE CIVIL CODE.
II
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic)

THE KASUNDUAN BY AND BETWEEN JUSTA KAUSAPIN AND ENRIQUE
NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN BY WAY OF A
DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY
REVERSION CEDED THE SUBJECT PROPERTY TO MAXIMA SOME ELEVEN
(11) YEARS EARLIER.
III
RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic)
THE AFFIDAVIT OF REPUDIATION OF JUSTA KAUSAPIN
NOTWITHSTANDING THE FACT THAT SHE IS A BIAS (sic) WITNESS AND
EXECUTED THE SAME SOME TWENTY-ONE (21) YEARS AFTER THE
EXECUTION OF THE DEED OF CONVEYANCE IN FAVOR OF MAXIMA.
IV
RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE

COMPLAINT OF ENRIQUE AND DOMINIUM HAS PRESCRIBED AND/OR
THAT ENRIQUE AND DOMINIUM WERE GUILTY OF LACHES.
V
RESPONDENT COURT SERIOUSLY ERRED IN FINDING R & B AS A

MORTGAGEE NOT IN GOOD FAITH.
VI
RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE

DAMAGES PRAYED FOR BY R & B IN ITS COUNTERCLAIM AND
CROSSCLAIM.[12]
The primary issue to be resolved in these consolidated petitions is which of the two
conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the second in favor of
Enrique D. Hemedes, effectively transferred ownership over the subject land.
The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima Hemedes
on the strength of the Deed of Conveyance of Unregistered Real Property by Reversion executed
by Justa Kausapin. Public respondent upheld the trial courts finding that such deed is sham and
spurious and has no evidentiary value under the law upon which claimant Maxima Hemedes may
anchor a valid claim of ownership over the property. In ruling thus, it gave credence to the April
10, 1981 affidavit executed by Justa Kausapin repudiating such deed of conveyance in favor of
Maxima Hemedes and affirming the authenticity of the Kasunduan in favor of Enrique D.
Hemedes. Also, it considered as pivotal the fact that the deed of conveyance in favor of Maxima
Hemedes was in English and that it was not explained to Justa Kausapin, although she could not
read nor understand English; thus, Maxima Hemedes failed to discharge her burden, pursuant to
Article 1332 of the Civil Code, to show that the terms thereof were fully explained to Justa
Kausapin. Public respondent concluded by holding that the registration of the property on the
strength of the spurious deed of conveyance is null and void and does not confer any right of
ownership upon Maxima Hemedes. [13]
Maxima Hemedes argues that Justa Kausapins affidavit should not be given any credence
since she is obviously a biased witness as it has been shown that she is dependent upon Enrique
D. Hemedes for her daily subsistence, and she was most probably influenced by Enrique D.
Hemedes to execute the Kasunduan in his favor. She also refutes the applicability of article 1332. It
is her contention that for such a provision to be applicable, there must be a party seeking to enforce
a contract; however, she is not enforcing the Deed of Conveyance of Unregistered Real Property
by Reversion as her basis in claiming ownership, but rather her claim is anchored upon OCT No.
(0-941) 0-198 issued in her name, which document can stand independently from the deed of
conveyance. Also, there exist various circumstances which show that Justa Kausapin did in fact
execute and understand the deed of conveyance in favor of Maxima Hemedes. First, the Donation
Intervivos With Resolutory Conditions executed by Jose Hemedes in favor of Justa Kausapin was
also in English, but she never alleged that she did not understand such document. Secondly, Justa
Kausapin failed to prove that it was not her thumbmark on the deed of conveyance in favor of
Maxima Hemedes and in fact, both Enrique D. Hemedes and Dominium objected to the request of
Maxima Hemedes counsel to obtain a specimen thumbmark of Justa Kausapin.[14]
Public respondents finding that the Deed of Conveyance of Unregistered Real Property By
Reversion executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not supported
by the factual findings in this case.. It is grounded upon the mere denial of the same by Justa
Kausapin. A party to a contract cannot just evade compliance with his contractual obligations by
the simple expedient of denying the execution of such contract. If, after a perfect and binding
contract has been executed between the parties, it occurs to one of them to allege some defect
therein as a reason for annulling it, the alleged defect must be conclusively proven, since the
validity and fulfillment of contracts cannot be left to the will of one of the contracting parties.[15]
Although a comparison of Justa Kausapins thumbmark with the thumbmark affixed upon the
deed of conveyance would have easily cleared any doubts as to whether or not the deed was forged,
the records do not show that such evidence was introduced by private respondents and the lower
court decisions do not make mention of any comparison having been made.[16] It is a legal
presumption that evidence willfully suppressed would be adverse if produced.[17] The failure of
private respondents to refute the due execution of the deed of conveyance by making a comparison
with Justa Kausapins thumbmark necessarily leads one to conclude that she did in fact affix her
thumbmark upon the deed of donation in favor of her stepdaughter.
Moreover, public respondents reliance upon Justa Kausapins repudiation of the deed of
conveyance is misplaced for there are strong indications that she is a biased witness. The trial court
found that Justa Kausapin was dependent upon Enrique D. Hemedes for financial
assistance.[18] Justa Kausapins own testimony attests to this fact -
Atty. Conchu:
Q: Aling Justa, can you tell the Honorable Court why you donated this particular property to Enrique
Hemedes?
A: Because I was in serious condition and he was the one supporting me financially.
Q: As of today, Aling Justa are you continuing to receive any assistance from Enrique Hemedes?
A: Yes Sir.
(TSN pp. 19 and 23, November 17, 1981)[19]
Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for financial
support. The transcripts state as follows:
Atty. Mora:
Now you said that Justa Kausapin has been receiving from you advances for food, medicine & other
personal or family needs?
E. Hemedes:
A: Yes.
Q: Was this already the practice at the time this Kasunduan was executed?
A: No that was increased, no, no, after this document.
xxx xx xxx
Q: And because of these accommodations that you have given to Justa Kausapin; Justa Kausapin has in
turn treated you very well because shes very grateful for that, is it not?
A: I think thats human nature.
Q: Answer me categorically, Mr. Hemedes shes very grateful?
A: Yes she might be grateful but not very grateful.
(TSN, p. 34, June 15, 1984)[20]
A witness is said to be biased when his relation to the cause or to the parties is such that he
has an incentive to exaggerate or give false color to his statements, or to suppress or to pervert the
truth, or to state what is false.[21] At the time the present case was filed in the trial court in 1981,
Justa Kausapin was already 80 years old, suffering from worsening physical infirmities and
completely dependent upon her stepson Enrique D. Hemedes for support. It is apparent that
Enrique D. Hemedes could easily have influenced his aging stepmother to donate the subject
property to him. Public respondent should not have given credence to a witness that was obviously
biased and partial to the cause of private respondents. Although it is a well-established rule that
the matter of credibility lies within the province of the trial court, such rule does not apply when
the witness credibility has been put in serious doubt, such as when there appears on the record
some fact or circumstance of weight and influence, which has been overlooked or the significance
of which has been misinterpreted.[22]
Finally, public respondent was in error when it sustained the trial courts decision to nullify
the Deed of Conveyance of Unregistered Real Property by Reversion for failure of Maxima
Hemedes to comply with article 1332 of the Civil Code, which states:
When one of the parties is unable to read, or if the contract is in a language not
understood by him, and mistake or fraud is alleged, the person enforcing the contract
must show that the terms thereof have been fully explained to the former.
Article 1332 was intended for the protection of a party to a contract who is at a disadvantage
due to his illiteracy, ignorance, mental weakness or other handicap.[23] This article contemplates a
situation wherein a contract has been entered into, but the consent of one of the parties is vitiated
by mistake or fraud committed by the other contracting party.[24] This is apparent from the ordering
of the provisions under Book IV, Title II, Chapter 2, section 1 of the Civil Code, from which article
1332 is taken. Article 1330 states that -
A contract where consent is given through mistake, violence, intimidation, undue
influence, or fraud is voidable.
This is immediately followed by provisions explaining what constitutes mistake, violence,

intimidation, undue influence, or fraud sufficient to vitiate consent.[25] In order that mistake may
invalidate consent, it should refer to the substance of the thing which is the object of the contract,
or to those conditions which have principally moved one or both parties to enter into the
contract.[26] Fraud, on the other hand, is present when, through insidious words or machinations of
one of the contracting parties, the other is induced to enter into a contract which, without them, he
would not have agreed to.[27] Clearly, article 1332 assumes that the consent of the contracting party
imputing the mistake or fraud was given, although vitiated, and does not cover a situation where
there is a complete absence of consent.
In this case, Justa Kausapin disclaims any knowledge of the Deed of Conveyance of
Unregistered Real Property by Reversion in favor of Maxima Hemedes. In fact, she asserts that it
was only during the hearing conducted on December 7, 1981 before the trial court that she first
caught a glimpse of the deed of conveyance and thus, she could not have possibly affixed her
thumbmark thereto.[28] It is private respondents own allegations which render article 1332
inapplicable for it is useless to determine whether or not Justa Kausapin was induced to execute
said deed of conveyance by means of fraud employed by Maxima Hemedes, who allegedly took
advantage of the fact that the former could not understand English, when Justa Kausapin denies
even having seen the document before the present case was initiated in 1981.
It has been held by this Court that mere preponderance of evidence is not sufficient to
overthrow a certificate of a notary public to the effect that the grantor executed a certain document
and acknowledged the fact of its execution before him. To accomplish this result, the evidence
must be so clear, strong and convincing as to exclude all reasonable controversy as to the falsity
of the certificate, and when the evidence is conflicting, the certificate will be upheld. [29] In the
present case, we hold that private respondents have failed to produce clear, strong, and convincing
evidence to overcome the positive value of the Deed of Conveyance of Unregistered Real Property
by Reversion a notarized document. The mere denial of its execution by the donor will not suffice
for the purpose.
In upholding the deed of conveyance in favor of Maxima Hemedes, we must concomitantly
rule that Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights over the
subject property. Justa Kausapin sought to transfer to her stepson exactly what she had earlier
transferred to Maxima Hemedes the ownership of the subject property pursuant to the first
condition stipulated in the deed of donation executed by her husband. Thus, the donation in favor
of Enrique D. Hemedes is null and void for the purported object thereof did not exist at the time
of the transfer, having already been transferred to his sister.[30] Similarly, the sale of the subject
property by Enrique D. Hemedes to Dominium is also a nullity for the latter cannot acquire more
rights than its predecessor-in-interest and is definitely not an innocent purchaser for value since
Enrique D. Hemedes did not present any certificate of title upon which it relied.
The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and his
being designated as owner of the subject property in the cadastral survey of Cabuyao, Laguna and
in the records of the Ministry of Agrarian Reform office in Calamba, Laguna cannot defeat a
certificate of title, which is an absolute and indefeasible evidence of ownership of the property in
favor of the person whose name appears therein.[31] Particularly, with regard to tax declarations and
tax receipts, this Court has held on several occasions that the same do not by themselves
conclusively prove title to land.[32]
We come now to the question of whether or not R & B Insurance should be considered an
innocent purchaser of the land in question. At the outset, we note that both the trial court and
appellate court found that Maxima Hemedes did in fact execute a mortgage over the subject
property in favor of R & B Insurance. This finding shall not be disturbed because, as we stated
earlier, it is a rule that the factual findings of the trial court, especially when affirmed by the Court
of Appeals, are entitled to respect, and should not be disturbed on appeal.[33]
In holding that R & B Insurance is not a mortgagee in good faith, public respondent stated
that the fact that the certificate of title of the subject property indicates upon its face that the same
is subject to an encumbrance, i.e. usufructuary rights in favor of Justa Kausapin during her lifetime
or widowhood, should have prompted R & B Insurance to ...investigate further the circumstances
behind this encumbrance on the land in dispute, but which it failed to do. Also, public respondent
considered against R & B Insurance the fact that it made it appear in the mortgage contract that
the land was free from all liens, charges, taxes and encumbrances.[34]
R & B Insurance alleges that, contrary to public respondents ruling, the presence of an
encumbrance on the certificate of title is not reason for the purchaser or a prospective mortgagee
to look beyond the face of the certificate of title. The owner of a parcel of land may still sell the
same even though such land is subject to a usufruct; the buyers title over the property will simply
be restricted by the rights of the usufructuary. Thus, R & B Insurance accepted the mortgage
subject to the usufructuary rights of Justa Kausapin. Furthermore, even assuming that R & B
Insurance was legally obliged to go beyond the title and search for any hidden defect or inchoate
right which could defeat its right thereto, it would not have discovered anything since the mortgage
was entered into in 1964, while the Kasunduan conveying the land to Enrique D. Hemedes was
only entered into in 1971 and the affidavit repudiating the deed of conveyance in favor of Maxima
Hemedes was executed by Justa Kausapin in 1981.[35]
We sustain petitioner R & B Insurances claim that it is entitled to the protection of a mortgagee
in good faith.
It is a well-established principle that every person dealing with registered land may safely rely
on the correctness of the certificate of title issued and the law will in no way oblige him to go
behind the certificate to determine the condition of the property.[36] An innocent purchaser for
value[37] 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 such purchase
or before he has notice of the claim of another person.[38]
The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes OCT
dose not impose upon R & B Insurance the obligation to investigate the validity of its mortgagors
title.Usufruct gives a right to enjoy the property of another with the obligation of preserving its
form and substance.[39] The usufructuary is entitled to all the natural, industrial and civil fruits of
the property[40]and may personally enjoy the thing in usufruct, lease it to another, or alienate his
right of usufruct, even by a gratuitous title, but all the contracts he may enter into as such
usufructuary shall terminate upon the expiration of the usufruct.[41]
Clearly, only the jus utendi and jus fruendi over the property is transferred to the
usufructuary.[42] The owner of the property maintains the jus disponendi or the power to alienate,
encumber, transform, and even destroy the same.[43] This right is embodied in the Civil Code, which
provides that the owner of property the usufruct of which is held by another, may alienate it,
although he cannot alter the propertys form or substance, or do anything which may be prejudicial
to the usufructuary.[44]
There is no doubt that the owner may validly mortgage the property in favor of a third person
and the law provides that, in such a case, the usufructuary shall not be obliged to pay the debt of
the mortgagor, and should the immovable be attached or sold judicially for the payment of the
debt, the owner shall be liable to the usufructuary for whatever the latter may lose by reason
thereof.[45]
Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is not
sufficient cause to require R & B Insurance to investigate Maxima Hemedes title, contrary to public
respondents ruling, for the reason that Maxima Hemedes ownership over the property remained
unimpaired despite such encumbrance. R & B Insurance had a right to rely on the certificate of
title and was not in bad faith in accepting the property as a security for the loan it extended to
Maxima Hemedes.
Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond the
certificate of title and investigate the title of its mortgagor, still, it would not have discovered any
better rights in favor of private respondents. Enrique D. Hemedes and Dominium base their claims
to the property upon the Kasunduan allegedly executed by Justa Kausapin in favor of Enrique
Hemedes. As we have already stated earlier, such contract is a nullity as its subject matter was
inexistent. Also, the land was mortgaged to R & B Insurance as early as 1964, while the Kasunduan
was executed only in 1971 and the affidavit of Justa Kausapin affirming the conveyance in favor
of Enrique D. Hemedes was executed in 1981. Thus, even if R & B Insurance investigated the title
of Maxima Hemedes, it would not have discovered any adverse claim to the land in derogation of
its mortgagors title. We reiterate that at no point in time could private respondents establish any
rights or maintain any claim over the land.
It is a well-settled principle that where innocent third persons rely upon the correctness of a
certificate of title and acquire rights over the property, the court cannot just disregard such
rights. Otherwise, public confidence in the certificate of title, and ultimately, the Torrens system,
would be impaired for everyone dealing with registered property would still have to inquire at
every instance whether the title has been regularly or irregularly issued. [46] Being an innocent
mortgagee for value, R & B Insurance validly acquired ownership over the property, subject only
to the usufructuary rights of Justa Kausapin thereto, as this encumbrance was properly annotated
upon its certificate of title.
The factual findings of the trial court, particularly when affirmed by the appellate court, carry
great weight and are entitled to respect on appeal, except under certain circumstances.[47] One such
circumstance that would compel the Court to review the factual findings of the lower courts is
where the lower courts manifestly overlooked certain relevant facts not disputed by the parties and
which, if properly considered, would justify a different conclusion.[48] Also, it is axiomatic that the
drawing of the proper legal conclusions from such factual findings are within the peculiar province
of this Court.[49]
As regards R & B Insurances prayer that Dominium be ordered to demolish the warehouses
or that it be declared the owner thereof since the same were built in bad faith, we note that such
warehouses were constructed by Asia Brewery, not by Dominium. However, despite its being a
necessary party in the present case, the lower courts never acquired jurisdiction over Asia Brewery,
whether as a plaintiff or defendant, and their respective decisions did not pass upon the
constructions made upon the subject property. Courts acquire jurisdiction over a party plaintiff
upon the filing of the complaint, while jurisdiction over the person of a party defendant is acquired
upon the service of summons in the manner required by law or by his voluntary appearance. As a
rule, if a defendant has not been summoned, the court acquires no jurisdiction over his person, and
any personal judgment rendered against such defendant is null and void.[50] In the present case,
since Asia Brewery is a necessary party that was not joined in the action, any judgment rendered
in this case shall be without prejudice to its rights.[51]
As to its claim for moral damages, we hold that R & B Insurance is not entitled to the same
for it has not alleged nor proven the factual basis for the same. Neither is it entitled to exemplary
damages, which may only be awarded if the claimant is entitled to moral, temperate, liquidated or
compensatory damages.[52] R & B Insurances claim for attorneys fees must also fail. The award of
attorneys fees is the exception rather than the rule and counsels fees are not to be awarded every
time a party wins a suit. Its award pursuant to article 2208 of the Civil Code demands factual, legal
and equitable justification and cannot be left to speculation and conjecture.[53] Under the
circumstances prevailing in the instant case, there is no factual or legal basis for an award of
attorneys fees.
WHEREFORE, the assailed decision of public respondent and its resolution dated February
22, 1989 are REVERSED. We uphold petitioner R & B Insurances assertion of ownership over
the property in dispute, as evidenced by TCT No. 41985, subject to the usufructuary rights of Justa
Kausapin, which encumbrance has been properly annotated upon the said certificate of title. No
pronouncement as to costs.
SO ORDERED.
Panganiban, and Purisima, JJ., concur.
Melo, J., please see dissenting opinion.
Vitug, J., please see Separate (Concurring) Opinion.
[1]
Penned by Pacita Canizares-Nye; Manuel C. Herrera and Justo P. Torres, Jr., concurring.
[2]
Entitled Dominium Realty and Construction Corporation and Enrique D. Hemedes vs. R & B Insurance Corporation
and Maxima Hemedes.
[3]
Annex D of Maxima Hemedes Petition; Rollo, pp. 113-114.
[4]
Annex E of Maxima Hemedes Petition; Rollo, pp. 115-117.
[5]
Annex "H" of Maxima Hemedes' Petition; Rollo, pp. 122-124.
[6]
Rollo of G.R. No. 108472, p. 17.
[7]
Docketed as Civil Case No. B-1766.
[8]
Rollo of G.R. No. 107132, pp. 107-108.
[9]
Entitled Maxima Hemedes vs. The Honorable Court of Appeals, Eleventh Division, Dominium Realty and
Construction Corporation, Enrique D. Hemedes, and R & B Insurance Corporation.
[10]
Rollo of G.R. No. 107132, p. 28.
[11]
Entitled R & B Insurance Corporation vs. The Honorable Court of Appeals, Eleventh Division, Dominium Realty
and Construction Corporation, Enrique D. Hemedes, and Maxima Hemedes.
[12]
Rollo of G.R. No. 108472, p. 34.
[13]
Ibid., pp. 63-64, 91-96.
[14]
Rollo of G.R. No. 107132, pp. 29-41.
[15]
Chavez vs. IAC, 191 SCRA 211 (1990).
[16]
Rollo, pp. 61, 90-96.
[17]
Rules of Court, Rule 131, sec. 3(e); Sulit vs. Court of Appeals, 268 SCRA 441 (1997).
[18]
Rollo of G.R. No. 107132, p. 94.
[19]
Ibid., p. 37.
[20]
Ibid., pp. 39-40.
[21]
People vs. Dones, 254 SCRA 696 (1996).
[22]
People vs. Subido, 253 SCRA 196 (1996), citing People vs. Aguilar, 222 SCRA 394 (1993).
[23]
Bunyi vs. Reyes, 39 SCRA 504 (1971), citing the Report of the Code Commission, p. 136.
[24]
Yanas vs. Acaylar, 136 SCRA 52 (1985); Heirs of Enrique Zambales vs. CA, 120 SCRA 897 (1983);
Bunyi vs. Reyes, supra.
[25]
Civil Code, arts. 1331-1344.
[26]
Id., art. 1331.
[27]
Id., art. 1338.
[28]
Rollo of G.R. No. 108472, p. 64
[29]
Bunyi vs. Reyes, supra., citing Robinson vs. Villafuerte, 18 Phil. 171; Jocson vs. Estacion, 60 Phil. 1055.
[30]
Civil Code, art. 1409.
[31]
Heirs of Leopoldo Vencilao, Sr. vs. CA, 288 SCRA 574 (1998).
[32]
Ibid; Titong vs. CA, 287 SCRA 102 (1998).
[33]
People vs. Cahindo, 266 SCRA 554 (1997).
[34]
Rollo of G.R. No. 108472, pp. 65-66.
[35]
Ibid., pp. 47-55.
[36]
Legarda vs. CA, 280 SCRA 642 (1997).
[37]
The phrase innocent purchaser for value or any equivalent phrase shall be deemed to include an innocent lessee,
mortgagee, or other encumbrancer for value. Presidential Decree No. 1529, sec. 32.
[38]
Mathay vs. CA, 295 SCRA 556 (1998).
[39]
[40]
Id., art. 566.
[41]
Id., art. 572.
[42]
Tolentino, II Civil Code of the Philippines, 318 (1992), citing Eleizegui vs. Manila Lawn Tennis Club, 2 Phil 309.
[43]
Ibid., 46.
[44]
[45]
Id., art. 600.
[46]
Cruz vs. CA, 281 SCRA 491 (1997).
[47]
Exceptional circumstances that would compel the Supreme Court to review the findings of fact of the lower courts
are: (1) when the conclusion is a finding grounded entirely on speculations, surmises or conjectures; (2) when the
inference made is manifestly absurd, mistaken or impossible; (3) when there is grave abuse of discretion in the
appreciation of facts; (4) when the judgment is premised on a misapprehension of facts; (5) when the findings of fact
are conflicting; (6) when the Court of Appeals in making its findings, went beyond the issues of the case and the same
is contrary to the admissions of both appellant and appellee; (7) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered, would justify a different
conclusion; and (8) when the findings of fact of the Court of Appeals are contrary to those of the trial court, or are
mere conclusions without citation of specific evidence, or where the facts set forth by the petitioner are not disputed
by the respondent, or where the findings of fact of the Court of Appeals are premised on absence of evidence but are
contradicted by the evidence of record. Limketkai Sons Milling, Inc. vs. CA, 255 SCRA 626 (1996); Carolina
Industries, Inc. vs. CMS Stock Brokerage, Inc., G.R. No. L-46908, May 17, 1980; Manlapaz vs. CA, 147 SCRA 236
(1987).
[48]
Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., supra.
[49]
Binalay vs. Manalo, 195 SCRA 374 (1991).
[50]
Arcelona vs. Court of Appeals, 280 SCRA 20 (1997).
[51]
Rules of Court, Rule 3, sec. 9.
[52]
[53]
Morales vs. CA, 274 SCRA 282 (1997).
FIRST DIVISION
[G.R. No. 134685. November 19, 1999]
MARIA ANTONIA SIGUAN, petitioner, vs. ROSA LIM, LINDE LIM, INGRID LIM and NEIL LIM, respondents.
DECISION
DAVIDE, JR., C.J.:
May the Deed of Donation executed by respondent Rosa Lim (hereafter LIM) in favor of her children be
rescinded for being in fraud of her alleged creditor, petitioner Maria Antonia Siguan? This is the pivotal
issue to be resolved in this petition for review on certiorari under Rule 45 of the Revised Rules of Court.
The relevant facts, as borne out of the records, are as follows:
On 25 and 26 August 1990, LIM issued two Metrobank checks in the sums of P300,000 and P241,668,
respectively, payable to cash. Upon presentment by petitioner with the drawee bank, the checks were
dishonored for the reason account closed. Demands to make good the checks proved futile. As a
consequence, a criminal case for violation of Batas Pambansa Blg. 22, docketed as Criminal Cases Nos.
22127-28, were filed by petitioner against LIM with Branch 23 of the Regional Trial Court (RTC) of Cebu
City. In its decision[1] dated 29 December 1992, the court a quo convicted LIM as charged. The case is
pending before this Court for review and docketed as G.R. No. 134685.
It also appears that on 31 July 1990 LIM was convicted of estafa by the RTC of Quezon City in Criminal
Case No. Q-89-2216[2] filed by a certain Victoria Suarez. This decision was affirmed by the Court of
Appeals. On appeal, however, this Court, in a decision[3] promulgated on 7 April 1997, acquitted LIM
but held her civilly liable in the amount of P169,000, as actual damages, plus legal interest.
Meanwhile, on 2 July 1991, a Deed of Donation[4] conveying the following parcels of land and
purportedly executed by LIM on 10 August 1989 in favor of her children, Linde, Ingrid and Neil, was
registered with the Office of the Register of Deeds of Cebu City:
(1) a parcel of land situated at Barrio Lahug, Cebu City, containing an area of 563 sq. m. and covered by
TCT No. 93433;
(2) a parcel of land situated at Barrio Lahug, Cebu City, containing an area of 600 sq. m. and covered by
TCT No. 93434;
(3) a parcel of land situated at Cebu City containing an area of 368 sq. m. and covered by TCT No. 87019;
and
(4) a parcel of land situated at Cebu City, Cebu containing an area of 511 sq. m. and covered by TCT No.
87020.
New transfer certificates of title were thereafter issued in the names of the donees.[5]
On 23 June 1993, petitioner filed an accion pauliana against LIM and her children before Branch 18 of
the RTC of Cebu City to rescind the questioned Deed of Donation and to declare as null and void the new
transfer certificates of title issued for the lots covered by the questioned Deed. The complaint was
docketed as Civil Case No. CEB-14181. Petitioner claimed therein that sometime in July 1991, LIM,
through a Deed of Donation, fraudulently transferred all her real property to her children in bad faith
and in fraud of creditors, including her; that LIM conspired and confederated with her children in
antedating the questioned Deed of Donation, to petitioners and other creditors prejudice; and that LIM,
at the time of the fraudulent conveyance, left no sufficient properties to pay her obligations.
On the other hand, LIM denied any liability to petitioner. She claimed that her convictions in Criminal
Cases Nos. 22127-28 were erroneous, which was the reason why she appealed said decision to the Court
of Appeals. As regards the questioned Deed of Donation, she maintained that it was not antedated but
was made in good faith at a time when she had sufficient property. Finally, she alleged that the Deed of
Donation was registered only on 2 July 1991 because she was seriously ill.
In its decision of 31 December 1994,[6] the trial court ordered the rescission of the questioned deed of
donation; (2) declared null and void the transfer certificates of title issued in the names of private
respondents Linde, Ingrid and Neil Lim; (3) ordered the Register of Deeds of Cebu City to cancel said
titles and to reinstate the previous titles in the name of Rosa Lim; and (4) directed the LIMs to pay the
petitioner, jointly and severally, the sum of P10,000 as moral damages; P10,000 as attorneys fees; and
P5,000 as expenses of litigation.
On appeal, the Court of Appeals, in a decision[7] promulgated on 20 February 1998, reversed the
decision of the trial court and dismissed petitioners accion pauliana. It held that two of the requisites for
filing an accion pauliana were absent, namely, (1) there must be a credit existing prior to the celebration
of the contract; and (2) there must be a fraud, or at least the intent to commit fraud, to the prejudice of
the creditor seeking the rescission.
According to the Court of Appeals, the Deed of Donation, which was executed and acknowledged before
a notary public, appears on its face to have been executed on 10 August 1989. Under Section 23 of Rule
132 of the Rules of Court, the questioned Deed, being a public document, is evidence of the fact which
gave rise to its execution and of the date thereof. No antedating of the Deed of Donation was made,
there being no convincing evidence on record to indicate that the notary public and the parties did
antedate it. Since LIMs indebtedness to petitioner was incurred in August 1990, or a year after the
execution of the Deed of Donation, the first requirement for accion pauliana was not met.
Anent petitioners contention that assuming that the Deed of Donation was not antedated it was
nevertheless in fraud of creditors because Victoria Suarez became LIMs creditor on 8 October 1987, the
Court of Appeals found the same untenable, for the rule is basic that the fraud must prejudice the
creditor seeking the rescission.
Her motion for reconsideration having been denied, petitioner came to this Court and submits the
following issue:
WHETHER OR NOT THE DEED OF DONATION, EXH. 1, WAS ENTERED INTO IN FRAUD OF [THE] CREDITORS
OF RESPONDENT ROSA [LIM].
Petitioner argues that the finding of the Court of Appeals that the Deed of Donation was not in fraud of
creditors is contrary to well-settled jurisprudence laid down by this Court as early as 1912 in the case of
Oria v. McMicking,[8] which enumerated the various circumstances indicating the existence of fraud in a
transaction. She reiterates her arguments below, and adds that another fact found by the trial court and
admitted by the parties but untouched by the Court of Appeals is the existence of a prior final judgment
against LIM in Criminal Case No. Q-89-2216 declaring Victoria Suarez as LIMs judgment creditor before
the execution of the Deed of Donation.
Petitioner further argues that the Court of Appeals incorrectly applied or interpreted Section 23,[9] Rule
132 of the Rules of Court, in holding that being a public document, the said deed of donation is evidence
of the fact which gave rise to its execution and of the date of the latter. Said provision should be read
with Section 30[10] of the same Rule which provides that notarial documents are prima facie evidence
of their execution, not of the facts which gave rise to their execution and of the date of the latter.
Finally, petitioner avers that the Court of Appeals overlooked Article 759 of the New Civil Code, which
provides: The donation is always presumed to be in fraud of creditors when at the time of the execution
thereof the donor did not reserve sufficient property to pay his debts prior to the donation. In this case,
LIM made no reservation of sufficient property to pay her creditors prior to the execution of the Deed of
Donation.
On the other hand, respondents argue that (a) having agreed on the law and requisites of accion
pauliana, petitioner cannot take shelter under a different law; (b) petitioner cannot invoke the credit of
Victoria Suarez, who is not a party to this case, to support her accion pauliana; (c) the Court of Appeals
correctly applied or interpreted Section 23 of Rule 132 of the Rules of Court; (d) petitioner failed to
present convincing evidence that the Deed of Donation was antedated and executed in fraud of
petitioner; and (e) the Court of Appeals correctly struck down the awards of damages, attorneys fees
and expenses of litigation because there is no factual basis therefor in the body of the trial courts
decision.
The primordial issue for resolution is whether the questioned Deed of Donation was made in fraud of
petitioner and, therefore, rescissible. A corollary issue is whether the awards of damages, attorneys fees
and expenses of litigation are proper.
We resolve these issues in the negative.
The rule is well settled that the jurisdiction of this Court in cases brought before it from the Court of
Appeals via Rule 45 of the Rules of Court is limited to reviewing errors of law. Findings of fact of the
latter court are conclusive, except in a number of instances.[11] In the case at bar, one of the recognized
exceptions warranting a review by this Court of the factual findings of the Court of Appeals exists, to wit,
the factual findings and conclusions of the lower court and Court of Appeals are conflicting, especially on
the issue of whether the Deed of Donation in question was in fraud of creditors.
Article 1381 of the Civil Code enumerates the contracts which are rescissible, and among them are those
contracts undertaken in fraud of creditors when the latter cannot in any other manner collect the claims
due them.
The action to rescind contracts in fraud of creditors is known as accion pauliana. For this action to
prosper, the following requisites must be present: (1) the plaintiff asking for rescission has a credit prior
to the alienation,[12] although demandable later; (2) the debtor has made a subsequent contract
conveying a patrimonial benefit to a third person; (3) the creditor has no other legal remedy to satisfy
his claim; [13] (4) the act being impugned is fraudulent;[14] (5) the third person who received the
property conveyed, if it is by onerous title, has been an accomplice in the fraud.[15]
The general rule is that rescission requires the existence of creditors at the time of the alleged
fraudulent alienation, and this must be proved as one of the bases of the judicial pronouncement setting
aside the contract.[16] Without any prior existing debt, there can neither be injury nor fraud. While it is
necessary that the credit of the plaintiff in the accion pauliana must exist prior to the fraudulent
alienation, the date of the judgment enforcing it is immaterial. Even if the judgment be subsequent to
the alienation, it is merely declaratory, with retroactive effect to the date when the credit was
constituted.[17]
In the instant case, the alleged debt of LIM in favor of petitioner was incurred in August 1990, while the
deed of donation was purportedly executed on 10 August 1989.
We are not convinced with the allegation of the petitioner that the questioned deed was antedated to
make it appear that it was made prior to petitioners credit. Notably, that deed is a public document, it
having been acknowledged before a notary public.[18] As such, it is evidence of the fact which gave rise
to its execution and of its date, pursuant to Section 23, Rule 132 of the Rules of Court.
Petitioners contention that the public documents referred to in said Section 23 are only those entries in
public records made in the performance of a duty by a public officer does not hold water. Section 23
reads:
SEC. 23. Public documents as evidence. Documents consisting of entries in public records made in the
performance of a duty by a public officer are prima facie evidence of the facts therein stated. All other
public documents are evidence, even against a third person, of the fact which gave rise to their
execution and of the date of the latter. (Emphasis supplied).
The phrase all other public documents in the second sentence of Section 23 means those public
documents other than the entries in public records made in the performance of a duty by a public
officer. And these include notarial documents, like the subject deed of donation. Section 19, Rule 132 of
the Rules of Court provides:
SEC. 19. Classes of documents. -- For the purpose of their presentation in evidence, documents are
either public or private.
Public documents are:
(a) . . .
(b) Documents acknowledged before a notary public except last wills and testaments. . . .
It bears repeating that notarial documents, except last wills and testaments, are public documents and
are evidence of the facts that gave rise to their execution and of their date.
In the present case, the fact that the questioned Deed was registered only on 2 July 1991 is not enough
to overcome the presumption as to the truthfulness of the statement of the date in the questioned
deed, which is 10 August 1989. Petitioners claim against LIM was constituted only in August 1990, or a
year after the questioned alienation. Thus, the first two requisites for the rescission of contracts are
absent.
Even assuming arguendo that petitioner became a creditor of LIM prior to the celebration of the
contract of donation, still her action for rescission would not fare well because the third requisite was
not met. Under Article 1381 of the Civil Code, contracts entered into in fraud of creditors may be
rescinded only when the creditors cannot in any manner collect the claims due them. Also, Article 1383
of the same Code provides that the action for rescission is but a subsidiary remedy which cannot be
instituted except when the party suffering damage has no other legal means to obtain reparation for the
same. The term subsidiary remedy has been defined as the exhaustion of all remedies by the prejudiced
creditor to collect claims due him before rescission is resorted to.[19] It is, therefore, essential that the
party asking for rescission prove that he has exhausted all other legal means to obtain satisfaction of his
claim.[20] Petitioner neither alleged nor proved that she did so. On this score, her action for the
rescission of the questioned deed is not maintainable even if the fraud charged actually did exist.[21]
The fourth requisite for an accion pauliana to prosper is not present either.
Article 1387, first paragraph, of the Civil Code provides: All contracts by virtue of which the debtor
alienates property by gratuitous title are presumed to have been entered into in fraud of creditors when
the donor did not reserve sufficient property to pay all debts contracted before the donation. Likewise,
Article 759 of the same Code, second paragraph, states that the donation is always presumed to be in
fraud of creditors when at the time thereof the donor did not reserve sufficient property to pay his
debts prior to the donation.
For this presumption of fraud to apply, it must be established that the donor did not leave adequate
properties which creditors might have recourse for the collection of their credits existing before the
execution of the donation.
As earlier discussed, petitioners alleged credit existed only a year after the deed of donation was
executed. She cannot, therefore, be said to have been prejudiced or defrauded by such alienation.
Besides, the evidence disclose that as of 10 August 1989, when the deed of donation was executed, LIM
had the following properties:
(1) A parcel of land containing an area of 220 square meters, together with the house constructed
thereon, situated in Sto. Nio Village, Mandaue City, Cebu, registered in the name of Rosa Lim and
covered by TCT No. 19706;[22]
(2) A parcel of land located in Benros Subdivision, Lawa-an, Talisay, Cebu;[23]
(3) A parcel of land containing an area of 2.152 hectares, with coconut trees thereon, situated at Hindag-
an, St. Bernard, Southern Leyte, and covered by Tax Declaration No. 13572.[24]
(4) A parcel of land containing an area of 3.6 hectares, with coconut trees thereon, situated at Hindag-
an, St. Bernard, Southern Leyte, and covered by Tax Declaration No. 13571.[25]
During her cross-examination, LIM declared that the house and lot mentioned in no. 1 was bought by
her in the amount of about P800,000 to P900,000.[26] Thus:
ATTY. FLORIDO:
Q These properties at the Sto. Nio Village, how much did you acquire this property?
A Including the residential house P800,000.00 to P900,000.00.
Q How about the lot which includes the house. How much was the price in the Deed of Sale of the house
and lot at Sto. Nio Violage [sic]?
A I forgot.
Q How much did you pay for it?
A That is P800,000.00 to P900,000.00.
Petitioner did not adduce any evidence that the price of said property was lower. Anent the property in
no. 2, LIM testified that she sold it in 1990.[27] As to the properties in nos. 3 and 4, the total market
value stated in the tax declarations dated 23 November 1993 was P56,871.60. Aside from these tax
declarations, petitioner did not present evidence that would indicate the actual market value of said
properties. It was not, therefore, sufficiently established that the properties left behind by LIM were not
sufficient to cover her debts existing before the donation was made. Hence, the presumption of fraud
will not come into play.
Nevertheless, a creditor need not depend solely upon the presumption laid down in Articles 759 and
1387 of the Civil Code. Under the third paragraph of Article 1387, the design to defraud may be proved
in any other manner recognized by the law of evidence. Thus in the consideration of whether certain
transfers are fraudulent, the Court has laid down specific rules by which the character of the transaction
may be determined. The following have been denominated by the Court as badges of fraud:
(1) The fact that the consideration of the conveyance is fictitious or is inadequate;
(2) A transfer made by a debtor after suit has begun and while it is pending against him;
(3) A sale upon credit by an insolvent debtor;
(4) Evidence of large indebtedness or complete insolvency;
(5) The transfer of all or nearly all of his property by a debtor, especially when he is insolvent or greatly
embarrassed financially;
(6) The fact that the transfer is made between father and son, when there are present other of the
above circumstances; and
(7) The failure of the vendee to take exclusive possession of all the property.[28]
The above enumeration, however, is not an exclusive list. The circumstances evidencing fraud are as
varied as the men who perpetrate the fraud in each case. This Court has therefore declined to define it,
reserving the liberty to deal with it under whatever form it may present itself.[29]
Petitioner failed to discharge the burden of proving any of the circumstances enumerated above or any
other circumstance from which fraud can be inferred. Accordingly, since the four requirements for the
rescission of a gratuitous contract are not present in this case, petitioners action must fail.
In her further attempt to support her action for rescission, petitioner brings to our attention the 31 July
1990 Decision[30] of the RTC of Quezon City, Branch 92, in Criminal Case No. Q-89-2216. LIM was
therein held guilty of estafa and was ordered to pay complainant Victoria Suarez the sum of P169,000
for the obligation LIM incurred on 8 October 1987. This decision was affirmed by the Court of Appeals.
Upon appeal, however, this Court acquitted LIM of estafa but held her civilly liable for P169,000 as
actual damages.
It should be noted that the complainant in that case, Victoria Suarez, albeit a creditor prior to the
questioned alienation, is not a party to this accion pauliana. Article 1384 of the Civil Code provides that
rescission shall only be to the extent necessary to cover the damages caused. Under this Article, only the
creditor who brought the action for rescission can benefit from the rescission; those who are strangers
to the action cannot benefit from its effects.[31] And the revocation is only to the extent of the plaintiff
creditors unsatisfied credit; as to the excess, the alienation is maintained.[32] Thus, petitioner cannot
invoke the credit of Suarez to justify rescission of the subject deed of donation.
Now on the propriety of the trial courts awards of moral damages, attorneys fees and expenses of
litigation in favor of the petitioner. We have pored over the records and found no factual or legal basis
therefor. The trial court made these awards in the dispositive portion of its decision without stating,
however, any justification for the same in the ratio decidendi. Hence, the Court of Appeals correctly
deleted these awards for want of basis in fact, law or equity.
WHEREFORE, the petition is hereby DISMISSED and the challenged decision of the Court of Appeals in
CA-G.R. CV. No. 50091 is AFFIRMED in toto.
No pronouncement as to costs.
SO ORDERED.
Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.
[1] Original Record (OR), 42.
[2] Id., 135.

[3] G.R. No. 102784, 271 SCRA 12 [1997].
[4] OR, 10-12.
[5] Id., 6-9.
[6] OR, 160; Rollo, 22. Per Judge Galicano C. Arriesgado.
[7] Rollo, 31. Per Tuquero, A., J., with Imperial, J., and Verzola, E., JJ., concurring.
[8] 21 Phil. 243 [1912].
[9] Sec. 23. Public documents as evidence. -- Documents consisting of entries in public records made in
the performance of a duty by a public officer are prima facie evidence of the facts therein stated. All
other public documents are evidence, even against a third person, of the fact which gave rise to their
execution and of the date of the latter.
[10] Sec. 30. Proof of notarial documents. -- Every instrument duly acknowledged or proved and
certified as provided by law may be presented in evidence without further proof, the certificate of
acknowledgment being prima facie evidence of the execution of the instrument or document involved.
[11] In Sta. Maria v. Court of Appeals, 285 SCRA 351 [1998], the Court enumerated some of the
instances when the factual findings of the Court of Appeals are not deemed conclusive, to wit: (1) when
the findings are grounded entirely on speculation, surmises, or conjectures; (2) when the inference
made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4)
when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting;
(6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings
are contrary to the admissions of both the appellant and the appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioners main and reply briefs are not disputed by the respondent; and (10) when the findings of fact
are premised on the supposed absence of evidence and contradicted by the evidence on record.
[12] Panlilio v. Victoria, 35 Phil. 706 [1916]; Solis v. Chua Pua Hermanos, 50 Phil. 636 [1927].
[13] Article 1383, Civil Code.
[14] 4 Tolentino, Arturo M., Civil Code of the Philippines 576 (1991), [hereafter 4 Tolentino]; citing 8
Manresa 756, 2 Castan 543-555, and 3 Camus 207.
[15] 4 Tolentino 576, citing 2 Castan 543-555 and 3 Camus 107.
[16] Solis v. Chua Pua Hernanes, supra note 12, at 639.
[17] 4 Tolentino 576-577, citing Sentencia (Cuba) of 7 May 1910 and 1 Gasperi 484-485.
[18] Section 19(b), Rule 132, Rules of Court.
[19]19 Moreno, Federico B., Philippine Law Dictionary 915 (1988).
[20] Article 1177, Civil Code.
[21] See Goquiolay v. Sycip, 9 SCRA 663, 677 [1963]; Solis v. Chua Pua Hermanos, supra note 12, at 639-
640.
[22] Exhibit M; Exhibit 2; OR, 114.
[23] TSN, 12 November 1993, 4.
[24] Exhibit N; OR, 146.
[25] Exhibit O; Id., 147.

[26] TSN, 12 November 1993, 7.
[27] Id., 6.
[28] Oria v. McMicking, supra note 8.
[29] Rivera v. Litam & Co., 4 SCRA 1072 [1962].
[30] Exhibit K; OR, 135.
[31] 4 Paras, Edgardo L., Civil Code Of The Philippines, 70 (1994); 4 Tolentino 586, citing 7 Planiol &
Ripert 274-275.
[32] 4 TOLENTINO 586, Citing 7 Planiol & Ripert 271-272.
Synopsis/Syllabi
THIRD DIVISION
[G.R. No. 119730. September 2, 1999]
RODOLFO NOCEDA, petitioner, vs. COURT OF APPEALS and AURORA ARBIZO DIRECTO, respondents.
DECISION
GONZAGA-REYES, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to reverse the decision
dated March 31, 1995 of the respondent Court of Appeals[1] in CA GR CV No. 38126, affirming with
modification the decision of the Regional Trial Court, Branch 71, of Iba, Zambales,[2] in an action by
private respondent against petitioner for recovery of possession and ownership and
rescission/annulment of donation.
The facts of the case as summarized by the respondent Court are as follows:[3]
On June 1, 1981, plaintiff Aurora Directo, defendant Rodolfo Noceda, and Maria Arbizo, the daughter,
grandson, and widow, respectively, of the late Celestino Arbizo, who died in 1956, extrajudicially settled
a parcel of land, Lot 1121, located at Bitaog, San Isidro, Cabangan, Zambales, which was said to have an
area of 66,530 square meters. Plaintiff Directos share was 11,426 square meters, defendant Noceda got
13,294 square meters, and the remaining 41,810 square meters went to Maria Arbizo (Exhibit G). On the
same date, plaintiff Directo donated 625 square meters of her share to defendant Noceda, who is her
nephew being the son of her deceased sister, Carolina (Exhibit D). However, on August 17, 1981,
another extrajudicial settlement-partition of Lot 1121 was executed by plaintiff Directo, defendant
Noceda, and Maria Arbizo. Three fifths of the said land went to Maria Arbizo while plaintiff Directo and
defendant Noceda got only one-fifth each. In said extrajudicial settlement-partition as well as in the Tax
Declaration 16-0032 over Lot 1121 in the name of the late Celestino Arbizo, the said parcel of land was
said to have an area of only 29,845 square meters (Exhibit C). Sometime in 1981, defendant Noceda
constructed his house on the land donated to him by plaintiff Directo. Plaintiff Directo fenced the
portion allotted to her in the extrajudicial settlement, excluding the donated portion, and constructed
thereon three huts. But in 1985, defendant Noceda removed the fence earlier constructed by plaintiff
Directo, occupied the three huts (3) and fenced the entire land of plaintiff Directo without her consent.
Plaintiff Directo demanded from defendant Noceda to vacate her land, but the latter refused. Hence,
plaintiff Directo filed the present suit, a complaint for the recovery of possession and ownership and
rescission/annulment of donation, against defendant Noceda before the lower court. During the trial,
the lower court ordered that a relocation survey of Lot 1121 be conducted by Engr. Edilberto Quejada of
the Bureau of Lands. After the survey of Lot 1121 in the presence of both parties, Engr. Edilberto
Quejada reported that the area of Lot 1121 stated in the extrajudicial settlement-partition of August 17,
1981 was smaller than the actual area of Lot 1121 which is 127,298 square meters. Engr. Quejada
subdivided Lot 1121, excluding the portions occupied by third persons, known as Lot 8, the salvage zone
and the road lot, on the basis of the actual occupancy of Lot 1121 by the heirs of the late Celestino
Arbizo and the extrajudicial settlement-partition of August 17, 1981. The portion denominated as Lot A,
with an area of 12,957 square meters was the share of defendant Noceda; Lot C, with the same area as
that of Lot A, was the share of plaintiff Directo, a portion of which was donated to defendant Noceda;
and Lot B, with an area of 38,872 square meters, went to Maria Arbizo (Exhibit E).
On November 6, 1991, the Regional Trial Court, Branch 71, of Iba, Zambales rendered a decision, the
dispositive portion of which reads as follows:[4]
WHEREFORE, in view of the foregoing considerations, the Court hereby renders judgment:
(a) Declaring the Extra-Judicial Settlement-Partition dated August 19, 1981, valid;
(b) Declaring the Deed of Donation dated June 1, 1981, revoked;

(c) Ordering the defendant to vacate and reconvey that donated portion of Lot 2, Lot 1121 subject of the
Deed of Donation dated June 1, 1981 to the plaintiff or her heirs or assigns;
(d) Ordering the defendant to remove the house built inside the donated portion at the defendants
expense or pay a monthly rental of P300.00 Philippine Currency;
(e) Ordering the defendant to pay attorneys fees in the amount of P5,000.00; and
(f) To pay the cost.
Rodolfo Nocedo appealed to the respondent Court which affirmed the trial court as follows:[5]
WHEREFORE, judgment is hereby rendered, ORDERING defendant Rodolfo Noceda to VACATE the
portion known as Lot C of Lot 1121 per Exhibit E, which was allotted to plaintiff Aurora Arbizo Directo.
Except for this modification, the Decision, dated November 6, 1991, of the RTC-Iba, Zambales, Branch
71, in Civil Case No. RTC-354-I, is hereby AFFIRMED in all other respects. Costs against defendant
Rodolfo Noceda.
Dissatisfied, petitioner filed the instant petition for review with the following assignment of errors:[6]
THE COURT OF APPEALS ERRED IN HOLDING THAT THE SUBJECT PROPERTY IDENTIFIED AS LOT 1121
CONTAINS AN AREA IN EXCESS OF THAT STATED IN ITS TAX DECLARATION.
THE COURT OF APPEALS ERRED IN HOLDING THAT LOT 1121 SHOULD BE PARTITIONED IN ACCORDANCE
WITH THE EXTRA-JUDICIAL SETTLEMENT DATED 17 AUGUST 1981.
THE COURT OF APPEALS ERRED IN ADJUDICATING AND ALLOTING LOT C AS APPEARING IN THE SURVEY
PLAN PREPARED BY GEODETIC ENGINEER EDILBERTO QUEJADA TO THE RESPONDENT.
THE COURT OF APPEALS ERRED IN FINDING THAT THE PETITIONER USURPED AN AREA ADJUDICATED TO
THE RESPONDENT.
THE COURT OF APPEALS ERRED IN REVOKING THE DEED OF DONATION DATED 1 JUNE 1981.
The first issue raised refers to the actual area of the subject lot known as Lot 1121, which was registered
under Tax Declaration No. 16-0032 under the name of the late Celestino Arbizo. Petitioner claims that
Tax Declaration No. 16-0032 contains only an area of 29,845 sq. meter; thus the respondent Court
exceeded its judicial authority when it sustained the lower courts findings that the subject property
actually contains an area of 127,289 square meters.
We find the argument unmeritorious. The records disclose that the trial court in an Order dated June 8,
1987 gave both parties to this case the chance to have the subject property re-surveyed by a licensed
surveyor to determine the actual area of Lot 1121.[7] Plaintiff Aurora Directo filed a motion/compliance
where she suggested that Geodetic Engineer Edilberto V. Quejada of the Bureau of Lands, Iba, Zambales
be commissioned to undertake the survey[8] said motion was also sent to defendants counsel, Atty.
Eufracio Pagunuran for Comment,[9] but Atty. Pagunuran however failed to file his Comment within the
given period. Thus the trial court designated Engineer Quejada to undertake the survey of Lot 1121.[10]
Petitioner Noceda through counsel belatedly filed his Comment without any opposition to the
appointment of Engineer Quejada but proposed that the latter be tasked to solely (a) re-survey,
determine and identify the metes and bounds of the lot covered by Tax Declaration No. 16-0032; (b) to
identify the areas occupied by the parties therein; and (c) to conduct the re-survey with notice and in
the presence of the parties therein and their respective counsels.[11] The Comment was not, however,
acted upon by the trial court in view of its earlier Order directing Engineer Quejada to undertake the
survey of the land.[12] Engr. Quejada conducted the survey with the conformity and in the presence of
both parties, taking into consideration the extrajudicial partition dated August 17, 1981, deed of
donation dated June 1, 1981 executed by plaintiff Aurora Directo in favor of defendant Rodolfo Noceda
and the actual area occupied by the parties,[13] as well as the sketch plan[14] and the technical
description of Lot 1121 taken from the Records Section of the Bureau of Lands, Manila.[15] The report
and the survey plan submitted by Engr. Quejada were approved by the Trial Court in an Order dated
December 7, 1987.[16] These circumstances show that the lower court ordered the re-survey of the lot
to determine the actual area of Lot 1121 and such survey was done with the conformity and in the
presence of both parties. The actual land area based on the survey plan which was conducted in the
presence of both parties, showed a much bigger area than the area declared in the tax declaration but
such differences are not uncommon as early tax declarations are, more often than not, based on
approximation or estimation rather than on computation.[17] We hold that the respondent court did
not err in sustaining the trial courts findings that the actual area of Lot 1121 is 127,289 square meters.
Petitioner also contends that said judicial determination improperly encroaches on the rights and claims
of third persons who were never impleaded below; that the subject lot was also declared in the name of
one Cecilia Obispo and a Free Patent over the said lot was also issued in her name and that there are
several residential houses constructed and existing on Lot 8 of lot 1121, thus these
possessors/occupants of Lot 8 should be joined as defendants for their non-inclusion would be fatal to
respondents cause of action.
We find no merit in this argument. The respondent Court correctly ratiocinated on this issue as
follows:[18]
The fact that Cecilia Obispo has tax declarations in her name over Lot 1121 and several persons
occupied a portion thereof did not make them indispensable parties in the present case. Defendant
Noceda merely presented the tax declarations in the name of Cecilia Obispo without the alleged free
patent in her name. Moreover, no evidence was presented showing that Cecilia Obispo possessed or
claimed possession of Lot 1121. Tax receipts and declarations of ownership for tax purposes are not
conclusive evidence of ownership of property (Republic vs. Intermediate Appellate Court, 224 SCRA
285).
It was not necessary that the occupants of a portion of Lot 1121, designated as Lot 8, be impleaded in
the present case. Lot 8, though part of Lot 1121, was excluded by Engr. Quejada in determining the
respective portions of Lot 1121 occupied by plaintiff Directo, defendant Noceda and Maria Arbizo
pursuant to the extrajudicial settlement which they executed on August 17, 1981. The result of the
present suit shall not in any way affect the occupants of Lot 8, since the issues involved in the present
case are the usurpation by defendant Noceda of the land adjudicated to plaintiff Directo and the
propriety of the cancellation of the deed of donation in favor of defendant Noceda due to his ingratitude
to plaintiff Directo.
Notably, defendants counsel requested for the appearance of Cecilia Obispo and despite notice to her to
appear in court and bring with her the alleged free patent in her name,[19] she failed to appear and
even failed to intervene to protect whatever interest and right she has over the subject lot. As to the
other possessors of residential houses in Lot 8 of Lot 1121, they are not considered as indispensable
parties to this case. A party is not indispensable to the suit if his interest in the controversy or subject
matter is distinct and divisible from the interest of the other parties and will not necessarily be
prejudiced by a judgment which does complete justice to the parties in court.[20] Private respondent is
not claiming the entire area of Lot 1121 but only a portion thereof which was adjudicated to her based
on the August 17, 1981 extrajudicial settlement and which was denominated in the survey plan as Lot C
of Lot 1121; thus there was no need to implead the occupants of Lot 8.
Petitioner further claims that the subject property could not be partitioned based on the extrajudicial
settlement-partition dated August 17, 1981, since the distributive share of the heirs of the late Celestino
Arbizo and the area of Lot 1121 stated therein were different from the extrajudicial settlement executed
on June 1, 1981; that the discrepancies between the two deeds of partition with respect to the area of
Lot 1121 and the respective share of the parties therein indicated that they never intended that any of
the deeds to be the final determination of the portions of Lot 1121 allotted to them; that the
extrajudicial settlement-partition of August 17, 1981 could not effectively subdivide Lot 1121 because it
partitioned only 29,845 square meters, and not its actual area of 127,298 square meters.
We see no cogent reason to disturb the findings of the respondent Court as follows:[21]
The discrepancies between the extrajudicial settlements executed by plaintiff Directo, defendant
Noceda and Maria Arbizo on June 1, 1981 and August 17, 1981 only meant that the latter was intended
to supersede the former. The signature of defendant Noceda in the extrajudicial settlement of August
17, 1981 would show his conformity to the new apportionment of Lot 1121 among the heirs of the late
Celestino Arbizo. The fact that defendant Noceda occupied the portion allotted to him in the
extrajudicial settlement, as well as the donated portion of the share of plaintiff Directo, presupposes his
knowledge of the extent of boundaries of the portion of Lot 1121 allotted to him. Moreover, the
statement in the extrajudicial settlement of August 17, 1981 with respect to the area of Lot 1121, which
was 29,845 square meters, is not conclusive because it was found out, after the relocation survey was
conducted on Lot 1121, that the parties therein occupied an area larger than what they were supposed
to possess per the extrajudicial settlement- partition of August 17, 1981.
Although in the extrajudicial settlement dated August 17, 1981 the heirs of Celestino Arbizo partitioned
only a 29,845 square meter lot to conform with the area declared under tax declaration 16-0032 yet the
heirs were each actually occupying a bigger portion the total area of which exceeded 29,845 square
meters. This was confirmed by Geodetic Engineer Quejada in his report submitted to the trial court
where he stated among other things:[22]
7. that upon computation of actual survey, it is informed (sic) that the area dated (sic) as per
extrajudicial settlement-partition in the name of Celestino Arbizo was smaller than the computed lots of
their actual occupancy as per survey on the ground;
8. The Lot A, Lot B, and Lot C as appearing on prepared plan for ready reference was subdivided, base
(sic) on stated sharing as per EXTRA JUDICIAL SETTLEMENT-PARTITION base (sic) on actual occupancy.
The survey conducted on Lot 1121 was only a confirmation of the actual areas being occupied by the
heirs taking into account the percentage proportion adjudicated to each heir on the basis of their August
17, 1981 extrajudicial settlement.
Petitioner further alleges that the said partition tries to vest in favor of a third person, Maria Arbizo, a
right over the said property notwithstanding the absence of evidence establishing that she is an heir of
the late Celestino Arbizo since Maria Arbizo was never impleaded as a party in this case and her interest
over Lot 1121 was not established.
Such contention deserves scant consideration. We find no compelling basis to disturb the finding of the
trial court on this factual issue, as follows:[23]
In effect, the defendant denies the allegation of the plaintiff that Maria Arbizo was the third wife of
Celestino Arbizo and Agripina is her half sister with a common father. On this point, the Court believes
the version of the plaintiff. The Court observes that in the Extra-Judicial Settlement-Partition(Exhibit C),
Maria Arbizo is named one of the co-heirs of the defendant, being the widow of his grandfather,
Celestino Arbizo. The names of Anacleto and Agripina do not also appear in the Extra-judicial Settlement
and Partition because according to the plaintiff, they had sold their shares to Maria Arbizo. And the
defendant is one of the signatories to the said Deed of Extra-judicial Settlement-Partition acknowledged
before Notary Public Artemio Maranon. Under the circumstances, the Court is convinced that the
defendant knew that Maria Arbizo was the widow of Celestino Arbizo and he knew of the sale of the
share of Anacleto Arbizo his share, as well as that of Agripina. When the defendant signed the Extra-
Judicial Settlement, he was already an adult since when he testified in 1989, he gave his age as 50 years
old. So that in 1981, he was already 41 years old. If he did not know all of these, the defendant would
have not agreed to the sharing and signed this document and acknowledged it before the Notary Public.
And who could have a better knowledge of the relationship of Agripina and Maria Arbizo to Celestino
Arbizo than the latters daughter? Besides, at the time of the execution of the Extra-Judicial Settlement-
Partition by the plaintiff and defendant, they were still in good terms. There was no reason for the
plaintiff to favor Maria Arbizo and Agripina Arbizo over the defendant. Furthermore, the defendant had
failed to support his allegation that when his grandfather died he had no wife and child.
We likewise find unmeritorious petitioners claim that there exist no factual and legal basis for the
adjudication of Lot C of Lot 1121 to private respondent Aurora Directo. It bears stress that the relocation
survey plan prepared by Geodetic Engineer Quejada was based on the extrajudicial settlement dated
August 17, 1981, and the actual possession by the parties and the technical description of Lot 1121. It
was established by the survey plan that based on the actual possession of the parties, and the
extrajudicial settlement among the heirs the portion denominated as Lot C of Lot 1121 of the survey
plan was being occupied by private respondent Aurora Directo and it was also shown that it is in Lot C
where the 625 square meter area donated by private respondent Directo to petitioner is located. There
is no obstacle to adjudicate Lot C to private respondent as her rightful share allotted to her in the
extrajudicial settlement.
Petitioner argues that he did not usurp the property of respondent Directo since, to date, the metes and
bounds of the parcel of land left by their predecessor in interest, Celestino Arbizo, are still undetermined
since no final determination as to the exact areas properly pertaining to the parties herein; hence they
are still considered as co-owners thereof.
We do not agree.
In this case the source of co-ownership among the heirs was intestate succession. Where there are two
or more heirs, the whole estate of the decedent is, before its partition, owned in common by such heirs
subject to the payment of debts of the deceased.[24] Partition, in general, is the separation, division and
assignment of a thing held in common among those to whom it may belong.[25] The purpose of
partition is to put an end to co-ownership. It seeks a severance of the individual interest of each co-
owner, vesting in each a sole estate in specific property and giving to each one a right to enjoy his estate
without supervision or interference from the other.[26] And one way of effecting a partition of the
decedents estate is by the heirs themselves extrajudicially. The heirs of the late Celestino Arbizo namely
Maria Arbizo, Aurora A. Directo (private respondent) and Rodolfo Noceda (petitioner) entered into an
extrajudicial settlement of the estate on August 17, 1981 and agreed to adjudicate among themselves
the property left by their predecessor-in-interest in the following manner:
To Rodolfo Noceda goes the northern one-fifth (1/5) portion containing an area of 5,989 sq. meters;
To Maria Arbizo goes the middle three-fifths (3/5) portion;
and To Aurora Arbizo goes the southern one-fifth (1/5) portion.[27]
In the survey plan submitted by Engineer Quejada, the portions indicated by red lines and numbered
alphabetically were based on the percentage proportion in the extrajudicial settlement and the actual
occupancy of each heir which resulted to these divisions as follows:[28]
Lot A; the area is 2,957 sq.m.- goes to Rodolfo A. Noceda (1/5)
Lot B; 38,872 sq.m Maria Arbizo (3/5)
Lot C 12,957 sq.m. Aurora Arbizo (1/5)
Thus, the areas allotted to each heir are now specifically delineated in the survey plan. There is no co-
ownership where portion owned is concretely determined and identifiable, though not technically
described, or that said portions are still embraced in one and the same certificate of title does not make
said portions less determinable or identifiable, or distinguishable, one from the other, nor that dominion
over each portion less exclusive, in their respective owners.[29] A partition legally made confers upon
each heir the exclusive ownership of the property adjudicated to him.[30]
We also find unmeritorious petitioners argument that since there was no effective and real partition of
the subject lot there exists no basis for the charge of usurpation and hence there is also no basis for
finding ingratitude against him. It was established that petitioner Noceda occupied not only the portion
donated to him by private respondent Aurora Arbizo-Directo but he also fenced the whole area of Lot C
which belongs to private respondent Directo, thus petitioners act of occupying the portion pertaining to
private respondent Directo without the latters knowledge and consent is an act of usurpation which is
an offense against the property of the donor and considered as an act of ingratitude of a donee against
the donor.[31] The law does not require conviction of the donee; it is enough that the offense be proved
in the action for revocation.[32]
Finally, petitioner contends that granting revocation is proper, the right to enforce the same had already
prescribed since as admitted by private respondent, petitioner usurped her property in the first week of
September 1985 while the complaint for revocation was filed on September 16, 1986, thus more than
one (1) year had passed from the alleged usurpation by petitioner of private respondents share in Lot
1121. We are not persuaded. The respondent Court rejected such argument in this wise:
Article 769 of the New Civil Code states that: The action granted to the donor by reason of ingratitude
cannot be renounced in advance. This action prescribes within one year to be counted from the time the
donor had knowledge of the fact and it was possible for him to bring the action. As expressly stated, the
donor must file the action to revoke his donation within one year from the time he had knowledge of
the ingratitude of the donee. Also, it must be shown that it was possible for the donor to institute the
said action within the same period. The concurrence of these two requisites must be shown by
defendant Noceda in order to bar the present action. Defendant Noceda failed to do so. He reckoned
the one year prescriptive period from the occurrence of the usurpation of the property of plaintiff
Directo in the first week of September, 1985, and not from the time the latter had the knowledge of the
usurpation. Moreover, defendant Noceda failed to prove that at the time plaintiff Directo acquired
knowledge of his usurpation, it was possible for plaintiff Directo to institute an action for revocation of
her donation.
The action to revoke by reason of ingratitude prescribes within one (1) year to be counted from the time
(a) the donor had knowledge of the fact; (b) provided that it was possible for him to bring the action. It
is incumbent upon petitioner to show proof of the concurrence of these two conditions in order that the
one (1) year period for bringing the action be considered to have already prescribed. No competent
proof was adduced by petitioner to prove his allegation. In Civil Cases, the party having the burden of
proof must establish his case by preponderance of evidence.[33] He who alleges a fact has the burden of
proving it and a mere allegation is not evidence.[34]
Factual findings of the Court of Appeals, supported by substantial evidence on record are final and
conclusive on the parties and carry even more weight when the Court of Appeals affirms the factual
findings of the trial court;[35] for it is not the function of this Court to re-examine all over again the oral
and documentary evidence submitted by the parties unless the findings of fact of the Court of Appeals
are not supported by the evidence on record or the judgment is based on the misapprehension of
facts.[36] The jurisdiction of this court is thus limited to reviewing errors of law unless there is a showing
that the findings complained of are totally devoid of support in the record or that they are so glaringly
erroneous as to constitute serious abuse of discretion.[37] We find no such showing in this case.
We find that both the trial court and the respondent Court had carefully considered the questions of
fact raised below and the respondent Courts conclusions are based on the evidence on record. No
cogent reason exists for disturbing such findings.[38] We also note that petitioner in this petition merely
rehashed the same issues and arguments raised in the respondent Court in whose decision we find no
reversible error. Clearly, petitioner failed to present any substantial argument to justify a reversal of the
assailed decision.
WHEREFORE, the petition for review is hereby DENIED. Costs against appellant.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.
[1] Penned by Justice Jaime M. Lantin, concurred in by Justices Ma. Alicia Austria-Martinez and Bernardo
LL. Salas.
[2] Docketed as Civil Case No. RTC-354-I.
[3] Rollo, pp. 33-35.
[4] Records, pp. 209-210.
[5] Rollo, p. 41.

[6] Rollo, pp. 11-12.
[7] Records, p. 54.
[8] Records, pp. 56-57.
[9] Ibid, p. 59.
[10] Ibid, p. 61.
[11] Ibid, pp. 63-64.
[12] Ibid, p. 66.
[13] Ibid, p. 81, Exhibit F.
[14] TSN, November 14, 1988, pp. 2-3.
[15] Ibid, p. 4.
[16] Ibid, p. 87.
[17] Director of Lands vs. Funtilar, 142 SCRA 57; Dolomite Mining Corporation vs. Montalbo, 217 SCRA
687.
[18] Rollo, pp. 36-37.
[19] Records, p. 171.

[20] Servicewide Specialists, Inc. vs. CA, 251 SCRA 70.
[21] Rollo, pp. 37-38.
[22] Exhibit F, Records, p. 82.
[23] Records, p. 206.
[24] Article 1078 of the Civil Code.
[26] Villamor vs. CA, 162 SCRA 574 citing Confesor vs. Pelayo, 111 Phil. 416.
[27] Records, p. 6, Exhibit C.
[28] Rollo, p. 84, Exhibit E.
[29] Dela Cruz vs. Cruz, 32 SCRA 307.
[31] Art. 765. The donation may also be revoked at the instance of the donor, by reason of ingratitude in
the following cases:
(1) If the donee should commit some offense against the person, the honor or the property of the
donor, or of his wife or children under his parental authority;
(2) xxx.
[32] Tolentino, Volume II, 1992 edition, p. 575, citing 7 Colin & Capitant 638.
[33] New Testament Church of God vs. CA, 246 SCRA 266; Sapuan vs. CA, 214 SCRA 701.
[34] P.T. Cerna Corporation vs. CA, 221 SCRA 19.
[35] Meneses vs. CA, 246 SCRA 162; Fortune Motors (Phils.) Corp. vs. CA, 267 SCRA 653.
[36] Navarro vs. CA, 209 SCRA 613; Remalante vs. Tibe, et.al., 158 SCRA 138; Pantranco North Express
Inc. vs. CA, 224 SCRA 477.
[37] BA Finance Corporation vs. CA, 229 SCRA 566; Lim vs. CA, 158 SCRA 307; Samson vs. CA, 141 SCRA
194.
[38] Heirs of Jose Olviga vs. CA, 227 SCRA 330.
THIRD DIVISION
[G.R. No. 126996. February 15, 2000]
HEIRS OF CESARIO VELASQUEZ, namely: ANASTACIA VELASQUEZ,

SOFIA VELASQUEZ, ELISEO VELASQUEZ, JOSE VELASQUEZ,
CORAZON VELASQUEZ, LEONORA VELASQUEZ, and NIEVES
VELASQUEZ, petitioners, vs. THE COURT OF APPEALS and HEIRS OF
ANATALIA DE GUZMAN, namely: SANTIAGO MENESES, ANDRES
MENESES, FELICIDAD MENESES, and APOLONIO
MENESES, respondents.
DECISION
GONZAGA_REYES, J.:
Before us is a Petition for Review on Certiorari filed by petitioners assailing the

December 29, 1995 decision[1] of the Court of Appeals in CA-G.R. CV No. 39729
affirming the decision of the Regional Trial Court of Pangasinan, Branch 40, Dagupan
City[2] in Civil Case No. D-9288 and the resolution dated November 6, 1996 denying their
motion for reconsideration.[3]
Spouses Leoncia de Guzman and Cornelio Aquino died intestate sometime in 1945 and
1947, respectively and were childless. Leoncia de Guzman was survived by her sisters
Anatalia de Guzman (mother of the plaintiffs) and Tranquilina de Guzman (grandmother
of the defendants). During the existence of their marriage, spouses Aquino were able to
acquire the following real properties:
a) A parcel of land (residential) situated in Guiguilonen, Mangaldan,

Pangasinan. Bounded on the S. by Simeon Meneses; on the E. by
Dionisio Muyargas; on the N. by road to San Jacinto; and on the W. by
Juan Magalong; containing an area of 995 sq. m. more or less and
assessed for the current year;
b) A parcel of land (sugar cane) and coconut land situated in Poblacion,

Mangaldan, Pangasinan. Bounded on the N. by Jose Lopez and Cipriano
Serafica; on the E. by road to Mapandan; on the S. by Vicente Doyola and
Dalmacio Gonzales; and on the W. by Eleuterio Serafica; containing an
area of 27,849 sq. m., more or less;
c) A parcel of land situated in Malabago, Mangaldan, Pangasinan.

Bounded on the N. by Fausto Tandingan; on the E. by Segundo Toralba,
Fausto Tandingan and Jacinta Biasaga; on the S. by Roberto Mamapon;
and on the W. by heirs of Estanislao Biasaga and Elena delos Reyes;
containing an area of 2,077 sq. m. more or less;
d) A parcel of land (sugarcane), situated in Embarcadero, Mangaldan,

Pangasinan. Bounded on the N. by Basilio Duya and Bernardo Cano; on
the E. by Simeon Manaois; on the S. by a road; and on the W. by Loreto
de Guzman; containing an area of 2,857 sq. m., more or less; It is covered
by Tax Decl. No. 231;
e) A parcel of residential land situated in Bari, Mangaldan, Pangasinan.

Bounded on the N. by Andres Aquino; on the E. by Arcadio Barromeo; on
the S. by National Road; on the W. by Andres Aquino; containing an area
of 595 sq. m., more or less and covered by Tax Decl. No. 453;
f) A parcel of unirrigated riceland situated in Malabago, Mangaldan,

Pangasinan. Bounded on the N. by Segundo Tandingan and Jacinto
Biasaga; on the E. by Segundo Toralba, Fausto Tandingan and Jacinto
Biasaga; on the S. by Roberto Mamapon; and on the W. by heirs of
Estanislao Biasaga and Elena delos Reyes; containing an area of 2,077
sq. m., more or less, and covered Tax Decl. No. 1156.
Sometime in 1989, the heirs of Anatalia de Guzman represented by Santiago, Andres,
Felicidad and Apolonio,[4] all surnamed Meneses filed a complaint for annulment,
partition and damages against the heirs of Cesario Velasquez (son of Tranquilina de
Guzman) for the latters refusal to partition the above-mentioned conjugal properties of
the Spouses Aquino. The complaint alleged that Leoncia de Guzman, before her death,
had a talk with the plaintiffs mother, Anatalia de Guzman, with plaintiff Santiago
Meneses and Tranquilina de Guzman and his son Cesario Velasquez in attendance;
that in the conference Leoncia told Anatalia de Guzman, Tranquilina de Guzman and
Cesario Velaquez that the documents of donation and partition which she and her
husband earlier executed were not signed by them as it was not their intention to give
away all the properties to Cesario Velasquez because Anatalia de Guzman who is one
of her sisters had several children to support; Cesario Velasquez together with his
mother allegedly promised to divide the properties equally and to give the plaintiffs one-
half (1/2) thereof; that they are entitled to of each of all the properties in question being
the children of Anatalia de Guzman, full blood sister of Leoncia de Guzman. Plaintiffs
further claim that after the death of Leoncia, defendants forcibly took possession of all
the properties and despite plaintiffs repeated demands for partition, defendants refused.
Plaintiffs pray for the nullity of any documents covering the properties in question since
they do not bear the genuine signatures of the Aquino spouses, to order the partition of
the properties between plaintiffs and defendants in equal shares and to order the
defendants to render an accounting of the produce of the land in question from the time
defendants forcibly took possession until partition shall have been effected. [5]
Defendants filed their Amended Answer with counterclaim alleging among others that
during the lifetime of spouses Cornelio Aquino and Leoncia de Guzman, they had
already disposed of their properties in favor of petitioners predecessors-in-interest,
Cesario Velasquez and Camila de Guzman, and petitioners Anastacia and Jose
Velasquez in the following manner:
(1) The third and sixth parcels were conveyed to defendants late parents
Cesario Velasquez and Camila de Guzman, by virtue of a Escritura de
Donation Propter Nuptias dated February 15, 1919;
(2) The second parcel was conveyed to defendants late parents Cesario
Velasquez and Camila de Guzman by virtue of a deed of conveyance
dated July 14, 1939, for which Transfer Certificate of Title No. 15129 was
issued by the Registry of Deeds of Pangasinan in the names of Cesario
Velasquez and Camila de Guzman;
(3) The first parcel was likewise conveyed to defendants Jose Velasquez
and Anastacia Velasquez by virtue of a deed of conveyance (Donation
Inter vivos) dated April 10, 1939;
(4) As to the fourth and fifth parcels, the same were owned and possessed
by third parties.
Defendants denied that a conference took place between Leoncia de Guzman and
plaintiff Santiago Meneses and his mother Anatalia with Tranquilina (defendants
grandmother) and Cesario Velasquez (defendants father), nor did the latter promise to
divide the properties equally with the plaintiffs or to execute a deed of partition; that they
did not forcibly take possession of the subject properties since their possession thereof
has been peaceful, open, continuous and adverse in character to the exclusion of all
others. By way of affirmative defenses, defendants claim that the instant case is already
barred by res judicata since there had been three previous cases involving the same
parties, subject matter and cause of action which were all dismissed, the last of which
was dismissed for failure to prosecute; that plaintiffs action to annul the documents
covering the disposition of the properties is also barred by the statute of limitations; that
the action for partition presupposes the existence of a property held in common as
agreed upon or admitted by the parties but the co-ownership ceases when one of the
parties alleges exclusive ownership, thus the action becomes one for a title and
recovery of ownership and the action prescribes in four years.[6]
On May 18, 1990, a pre-trial order was issued by the trial court which defined the issues
to be resolved as follows:[7]
"x x x
1. Whether or not the properties in question form part of the estate of

Anatalia de Guzman and Sps. Cornelio Aquino and Leoncia de Guzman;
2. Whether or not plaintiffs action is already barred by the statutes of

limitation and res judicata; and
3. Whether or not the properties in question can be the subject of an

action for partition."
After trial, the decision was rendered on April 8, 1992 which ruled as follows: [8]
"From the evidence, the Court finds that the plaintiffs are brothers and
sisters who are the children of Estanislao Meneses and Anatalia de
Guzman and the defendants are the children of plaintiffs counsin Cesario
Velasquez and Camila de Guzman. The defendants mother Tranquilina de
Guzman and plaintiffs mother Anatalia de Guzman and Leoncia de
Guzman are full blooded sisters. The subject six (6) parcels of land were
conjugal properties of Leoncia de Guzman and her husband Cornelio
Aquino were in their possession until their death in 1945 and 1947,
respectively. After the death of plaintiffs mother Anatalia de Guzman on
September 14, 1978, plaintiff Santiago Meneses came across an affidavit
of Cesario Velasquez notarized by Atty. Elpidio Barrozo stating that he is
an adopted son of said spouses Cornelio Aquino and Leoncia de Guzman
(Exhibit "A") which, is however, not supported by evidence (a court order).
The said affidavit mentioned, among other things, a house and a parcel of
land covered by Tax Declaration No. 699 located at Guiguilonen,
Mangaldan, Pangasinan, (Exhibit "B"). The sugar cane and coconut land
situated at Poblacion, Mangaldan, Pangasinan, containing an area of
27,849 square meters covered by Tax Declaration No. 978 (Exhibit "C")
which was in the possession of spouses Cornelio Aquino and Leoncia de
Guzman until their death. Sometime in 1944 Leoncia de Guzman called a
conference among the plaintiffs and spouses Cesario Velasquez and
Camila de Guzman and told them that all their conjugal properties shall be
divided equally between Anatalia de Guzman and Tranquilina de Guzman
and that she did not sign documents regarding the conveyance of their
properties; and that the property (parcel B) in Malabago, Mangaldan,
Pangasinan, which yielding an annual produce worth P15,000.00 was
divided between Anatalia de Guzman and Tranquilina de Guzman.
Spouses Cornelio Aquino and Leoncia de Guzman who were childless

had Anatalia de Guzman and Tranquilina de Guzman as their legal heirs.
The latter succeeded the former over the subject six (6) parcels of land in
equal shares - belongs to Anatalia de Guzman and the other half, to
Tranquilina de Guzman."
This, notwithstanding the claim of defendants that the first parcel was
donated to Jose Velasquez and Anastacia Velasquez by way of "Donation
Intervivos."
The second parcel, sold to Cesario Velasquez and Camila de Guzman;
The third and 6th parcels, donated to Cesario Velasquez and Camila de
Guzman; and
The 4th and 5th parcels, sold to third parties.
The claim of Cesario Velasquez that he was adopted by the Spouses

Cornelio Aquino and Leoncia de Guzman is not supported by evidence.
The Court finds plaintiff Santiago Meneses credible; and his testimony,
credible by itself. Santiago Meneses who is 80 years old testified
spontaneously in a clear, straight forward and convincing manner.
The version of the defendants to the effect that spouses Cornelio de

Guzman and Leoncia de Guzman left no properties cannot be given
serious consideration. It is incredible and unbelievable.
How did the spouses Cornelio Aquino and Leoncia de Guzman support
and maintain themselves if they disposed of their valuable properties, the
six (6) parcels of land in question, during their lifetime? Did they really
leave no properties? These questions remained unanswered.
The defendants failed to prove their allegations that the Spouses Cornelio
Aquino and Leoncia de Guzman disposed of their properties during their
lifetime.
Defendant Eliseo Velasquez is a lawyer and his co-defendant brothers are

retired government officials.
On the other hand, the plaintiffs are simple, innocent country folks who
have not obtained substantial level of education.
The Court believes and so holds that the defendants manipulated the
transfer unto themselves all the properties of Spouses Cornelio Aquino
and Leoncia de Guzman; thus, depriving the plaintiffs their shares in the
inheritance, to their prejudice and damage.
Insofar as the issue of whether or not partition prescribes, the court

believes and so rules that it does not.
xxxxxxxxxxxx
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs:
(1) Declaring Anatalia de Guzman and Tranquilina de

Guzman as the legal heirs of Spouses Cornelio Aquino and
Leoncia de Guzman; and that the former succeeded the
latter over the six (6) parcels of land in question in equal
shares - belongs to Anatalia de Guzman or to her heirs; and
, to Tranquilina de Guzman or to her heirs;
(2) Declaring the Donation Intervivos in favor of Jose

Velasquez and Anastacia Velasquez over the first parcel of
land; the Deed of Sale to Cesario Velasquez and Camila de
Guzman over the second parcel; the Deed of Donation to
Cesario Velasquez and Camila de Guzman over the 3rd and
6th parcels; the Deed of Sale to third parties over the 4th
and 5th parcels as null and void insofar as of the six (6)
parcels are concerned which legitimately belong to the
plaintiffs;
(3) Ordering the defendants to reconvey to the plaintiffs each

of the six (6) properties in question and if this is not possible,
to reconvey the whole of the sugar cane and coconut land
situated at Poblacion, Mangaldan, Pangasinan, containing
an area of 27,849 square meters, covered by Tax
Declaration No. 978 (Exhibit "C") - parcel B, par. 2 of the
complaint; and
(4) Ordering the defendants jointly and severally to pay to
plaintiffs P50,000.00, as damages, P5,000.00, as attorneys
fees and P3,000.00, as litigation expenses."
Dissatisfied, defendants appealed the decision to the respondent Court of Appeals

which affirmed the same in a decision dated December 29, 1995.
The Court of Appeals rejected the defense of res judicata which was never pleaded nor
raised earlier, and for that reason was deemed waived. The appellate court also
dismissed the claim of prescription as an action for partition is imprescriptible. As
regards the previous transfers executed in favor of the defendants, the court affirmed
the trial courts finding that the transfers were repudiated before the death of Leoncia. [9]
A motion for reconsideration was filed by petitioners but the same was denied by the
respondent court in a resolution dated November 6, 1996.
Attributing reversible errors to the appellate court, petitioners elevated the case to this
Court on the following main issues:[10]
I. WHETHER OR NOT THE INSTANT CASE IS BARRED BY RES

JUDICATA AND BY THE STATUTE OF LIMITATIONS.
II. WHETHER OR NOT THE PROPERTIES MENTIONED IN THE

COMPLAINT FORM PART OF THE ESTATE OF THE SPOUSES
CORNELIO AQUINO AND LEONCIA DE GUZMAN.
III. WHETHER OR NOT THE PETITIONERS HAVE ACQUIRED

ABSOLUTE AND EXCLUSIVE OWNERSHIP OF THE PROPERTIES IN
QUESTION.
IV. WHETHER OR NOT PRIVATE RESPONDENT HEIRS OF ANATALIA

DE GUZMAN ARE LEGAL HEIRS OF SPOUSES CORNELIO AQUINO
AND LEONCIA DE GUZMAN.
V. WHETHER OR NOT PARTITION IS THE PROPER ACTION IN THE

INSTANT CASE.
In their Comment, private respondents allege that the issue of res judicata has been
sufficiently discussed and considered and the trial court opted to inquire into their
legitimate grievance and came up with a judicious determination of the case on the
merits; that the present case involves respondents who are simple, ignorant folks who
have not obtained substantial level of education and are unaware of the legal intricacies
and technicalities in pursuing their valid claim. They further contend that this action is
not yet barred by the statute of limitation since an action for partition is imprescriptible
and that the court correctly ruled that the instant action for partition is proper.
We find merit in the petition.
Petitioners contend that public respondent erred when it held that the issue of res
judicata was never raised either in the Answer or at the Pre-trial such that it was not
under consideration. We agree with the petitioner. The records show that the defense
of res judicata was raised in the petitioners Amended Answer filed before the trial court
more particularly under paragraph 18, to wit:
"18. b. The case at bar is already barred by RES JUDICATA, there having
been three (3) previous cases involving either the predecessors-in-interest
of the parties herein or of the present parties themselves, the same
subject matter, and the same cause of action, which were all dismissed,
the last dismissal having been ordered by this very same Honorable Court
in Civil Case No. D-8811 on October 21, 1988 for failure to prosecute
which dismissal has the effect of an adjudication on the merits and
therefore with prejudice as this Honorable Court did not provide otherwise
(Sec. 3, Rule 17) and the Plaintiffs in said case, who are the same
plaintiffs in the present case did not appeal from said order of dismissal."
Said Amended Answer was admitted by the trial court in its Order dated March 2,
1990[11] and was one of the issues stipulated for resolution in its Pre-trial Order dated
May 18, 1990. Thus, it was clear error for respondent court to conclude that res
judicata was never raised in the lower court.
The next question is whether res judicata is present in the instant case. We rule in the
affirmative. Petitioners in their Memorandum established that there were three (3)
earlier cases filed by private respondents against petitioners involving the same subject
matter and issues as in the instant case which were all dismissed, to wit:
"The first Complaint filed by Anatalia de Guzman, mother of private

respondent Santiago Meneses, against Tranquilina de Guzman and his
son Cesario Velasquez, docketed as Civil Case No. 11378 of the then
Court of First Instance of Pangasinan. Said action was dismissed
on August 18, 1950.
Thirty four (34) years after, or on October 9, 1984, private respondent

Santiago Meneses filed a second Complaint similar to the Complaint of his
mother (Civil Case No. 11378) which was docketed as Civil Case No. D-
7584, entitled "Heirs of Anatalia de Guzman, represented by Santiago
Meneses vs. Cesario Velasquez, defendant. In the order of the Regional
Trial Court, Branch 41, Dagupan City, dated May 28, 1986, this Complaint
was dismissed for failure to prosecute without prejudice (Exh. "16").
Private respondent Santiago Meneses refiled the Complaint allegedly

joined this time by his siblings on October 23, 1987; which was docketed
as Civil Case No. P-8811 and entitled "Heirs of Anatalia de Guzman,
namely: Santiago Meneses, Apolonio Meneses, Andres Meneses, Luis
Meneses, Felicidad Meneses, Plaintiffs, versus Heirs of Cesario
Velasquez, namely: Anastacia Velasquez, Sofia Velasquez, Eliseo
Velasquez, Jose Velasquez, Leonora Velasquez, Nieves Velasquez,
Defendants." (Exh. "17"). On October 21, 1988, the Court a quo dismissed
this Complaint as follows: "For failure to prosecute, the case is hereby
dismissed without costs." (Exh. "18")."
Petitioners allegations were never rebutted by private respondents in their Comment as

the only defense raised therein was that the application of the principle of res
judicata should not sacrifice justice to technicality and it is within the power of the court
to suspend its own rules or to except a particular case from its operations whenever the
purpose of justice requires it. We have examined the third complaint filed by private
respondents on October 23, 1987 and compared it with the instant case, and we found
that the allegations contained in both complaints are the same, and that there is identity
of parties, subject matter and cause of action. Thus the requisites of res judicata are
present, namely (a) the former judgment or order must be final; (b) it must be a
judgment or order on the merits; (c) it must have been rendered by a court having
jurisdiction over the subject matter and the parties; and (d) there must be between the
first and the second actions, identity of parties, of subject matter and of cause of action.
Since the dismissal of the third case did not contain any condition at all, it has the effect
of an adjudication on the merits as it is understood to be with prejudice.[12] On this ground
alone, the trial court should have already dismissed this case. However, considering
that this case had already reached this Court by way of a petition for review
on certiorari, it would be more in keeping with substantial justice if the controversy
between the parties were to be resolved on the merits rather than on a procedural
technicality in the light of the express mandate of the rules that they be "liberally
construed in order to promote their object and to assist the parties in obtaining just,
speedy and inexpensive determination of every action and proceeding." [13]
Petitioners next contend that private respondent Santiago Meneses failed to prove the
nullity of the Deeds of Conveyance executed by the Aquino spouses in favor of
petitioners Jose and Anastacia Velasquez and their predecessors-in-interest Cesario
Velasquez and Camila de Guzman since he failed to adduce any evidence to support
his claim other than his bare allegations of its nullity. Petitioners claim that they were
able to show by documentary evidence that the Aquino spouses during their lifetime
disposed of the four parcels of land subject of the complaint, to wit: (a) Escritura de
donation propter nuptias dated February 15, 1919 in favor of then future spouses
Cesario Velasquez and Camila de Guzman (petitioners parents) conveying to them a
portion of the second parcel and the entirety of the third and sixth parcels in the
complaint; (b) Deed of donation inter vivos dated April 10, 1939 conveying the first
parcel in favor of petitioners Anastacia Velasquez and Jose Velasquez; (c) Escritura de
Compraventa dated August 25, 1924 conveying another portion of the second parcel in
favor of Cesario Velasquez and Camila de Guzman with a P500 consideration; (d) Deed
of Conveyance dated July 14, 1939 in favor of Cesario Velasquez and Camila de
Guzman conveying to them the remaining portion of the second parcel for a
consideration of P600 and confirming in the same Deed the Escritura de donation
propter nuptias and Escritura de compraventaabovementioned. Petitioners claim that
the record is bereft of any evidence showing the infirmities in these formidable array of
documentary evidence but the courts below declared their nullity on the basis of the
"telltale" story of Santiago Meneses. They contend that in giving credence to the
testimony of Santiago Meneses that all the deeds of conveyances executed by the
Aquino spouses in favor of the petitioners were a nullity, Santiago would want to make it
appear that the spouses Aquino, in giving dowry thru escritura de donation propter
nuptias and donation inter vivos, were only fooling the innocent youngsters and then
future spouses Cesario Velasquez and Camila de Guzman, and the innocent minors
donees Jose and Anatascia Velasquez respectively.
Petitioners submission is impressed with merit.
After an examination of the records, we find that there is no preponderance of evidence

adduced during the trial to support the findings and conclusions of the courts below,
which error justifies a review of said evidence. As a rule, factual findings of the lower
courts are final and binding upon this Court. This Court is not expected nor required to
examine or contrast the oral and documentary evidence submitted by the
parties.[14] However, although this Court is not a trier of facts, it has the authority to
review and reverse the factual findings of the lower courts if it finds that these do not
conform to the evidence on record,[15] in the instant case, we are not bound to adhere to
the general rule since both courts clearly failed to consider facts and circumstances
which should have drawn a different conclusion.[16]
In actions for partition, the court cannot properly issue an order to divide the property
unless it first makes a determination as to the existence of co-ownership. The court
must initially settle the issue of ownership, the first stage in an action for
partition.[17] Needless to state, an action for partition will not lie if the claimant has no
rightful interest over the subject property. In fact, Section 1 of Rule 69 requires the party
filing the action to state in his complaint the "nature and the extent of his title" to the real
estate. Until and unless the issue of ownership is definitely resolved, it would be
premature to effect a partition of the properties.[18]
We are unable to sustain the findings of the respondent Court that it has been
adequately shown that the alleged transfers of properties to the petitioners predecessor-
in-interest made by the Aquino spouses were repudiated before Leoncias death; thus
private respondents are still entitled to share in the subject properties. There is no
preponderance of evidence to support the findings and conclusions of both courts. The
trial court declared the nullity of the donation inter vivos in favor of petitioners Jose and
Anastacia Velasquez over the first parcel of land described in the complaint, the deed of
sale to Cesario Velasquez and Camila de Guzman over the second parcel and the deed
of donation propter nuptias over the third and sixth parcels and the sale to third parties
of fourth and fifth parcels insofar as the of these parcels of land are concerned which
"legitimately belong to plaintiff." It would appear that the trial court relied solely on the
basis of Santiago Meneses testimony "that in 1944 when his aunt Leoncia de Guzman
was still alive, she called a conference among them, the plaintiffs and their mother
Anatalia, Cesario Velasquez and his mother Tranquilina, telling them that all their
properties which are conjugal in nature shall be divided equally between Anatalia and
Tranquilina and not to believe the documents purportedly signed by her because she
did not sign them".[19] Private respondent Santiago Meneses testimony is to the effect
that Leoncia never signed any deed of conveyance of the subject properties in favor of
the petitioners. However, Santiago Meneses testimony was never corroborated by any
other evidence despite his testimony that the alleged conference was also made in the
presence of third parties. Moreover, if the alleged conference really took place in 1944,
a year before Leoncias death, Leoncia could have executed another set of documents
revoking or repudiating whatever dispositions she had earlier made to show her alleged
intention of giving her properties in equal shares to her sisters Anatalia and Tranquilina
de Guzman but there was none. The trial court found the testimony of Santiago
Meneses who is eighty years old to be credible, and this was affirmed by the
respondent court which stated that the matter of ascribing credibility belongs to the trial
court. However, the fact that a person has reached the "twilight of his life" is not always
a guaranty that he would tell the truth. It is also quite common that advanced age makes
a person mentally dull and completely hazy about things which has appeared to him,
and at times it weakens his resistance to outside influence.[20]
On the other hand, petitioners were able to adduce the uncontroverted and ancient
documentary evidence showing that during the lifetime of the Aquino spouses they had
already disposed of four of the six parcels of land subject of the complaint starting in the
year 1919, and the latest was in 1939 as follows: (a) Escritura de donation propter
nuptias dated February 15, 1919 in favor of the future spouses Cesario Velasquez and
Camila de Guzman (petitioners parents) conveying to them a portion of the second
parcel in the complaint and the entirety of the third and sixth parcels;[21] (b) Deed
of donation inter vivos dated April 10, 1939 conveying the first parcel in favor of
petitioners Anastacia Velasquez and Jose Velasquez;[22] (c) Escritura de
Compraventa dated August 25, 1924 conveying another portion of the second parcel in
favor of Cesario Velasquez and Camila de Guzman with a P500 consideration;[23] (d)
Deed of Conveyance dated July 14, 1939 in favor of Cesario Velasquez and Camila de
Guzman conveying to them the remaining portion of the second parcel for a
consideration of P600 and confirming in the same Deed the Escritura de donation
propter nuptias and Escritura de compraventa abovementioned.[24] It was reversible error
for the court to overlook the probative value of these notarized documents.
A donation as a mode of acquiring ownership results in an effective transfer of title over

the property from the donor to the donee[25] and the donation is perfected from the
moment the donor knows of the acceptance by the donee. [26] And once a donation is
accepted, the donee becomes the absolute owner of the property donated.[27] The
donation of the first parcel made by the Aquino spouses to petitioners Jose and
Anastacia Velasquez who were then nineteen (19) and ten (10) years old respectively
was accepted through their father Cesario Velasquez, and the acceptance was
incorporated in the body of the same deed of donation and made part of it, and was
signed by the donor and the acceptor. Legally speaking there was delivery and
acceptance of the deed, and the donation existed perfectly and irrevocably.
The donation inter vivos may be revoked only for the reasons provided in Articles 760,
764 and 765 of the Civil Code.[28] The donation propter nuptias in favor of Cesario
Velasquez and Camila de Guzman over the third and sixth parcels including a portion of
the second parcel became the properties of the spouses Velasquez since 1919. The
deed of donation propter nuptias can be revoked by the non-performance of the
marriage and the other causes mentioned in article 86 of the Family Code.[29] The
alleged reason for the repudiation of the deed, i.e, that the Aquino spouses did not
intend to give away all their properties since Anatalia (Leoncias sister) had several
children to support is not one of the grounds for revocation of donation either inter
vivos or propter nuptias, although the donation might be inofficious.
The Escritura compraventa over another portion of the second parcel and the Deed of
conveyance dated July 14, 1939 in favor of Cesario and Camila Velasquez over the
remaining portion of the second parcel is also valid. In fact in the deed of sale dated
July 14, 1939, the Aquino spouses ratified and confirmed the rights and interests of
Cesario Velasquez and Camila de Guzman including the previous deeds of conveyance
executed by the Aquino spouses over the second parcel in the complaint and such deed
of sale became the basis for the issuance of TCT No. 15129 in the names of Cesario
Velasquez and Camila de Guzman on July 25, 1939. The best proof of the ownership of
the land is the certificate of title[30] and it requires more than a bare allegation to defeat
the face value of TCT No. 15129 which enjoys a legal presumption of regularity of
issuance.[31] Notably, during the lifetime of Cesario Velasquez, he entered into contracts
of mortgage and lease over the property as annotated at the back of the certificate of
title which clearly established that he exercised full ownership and control over the
property. It is quite surprising that it was only after more than fifty years that private
respondents asserted co-ownership claim over the subject property.
The Aquino spouses had disposed the four parcels of land during their lifetime and the
documents were duly notarized so that these documents enjoy the presumption of
validity.[32] Such presumption has not been overcome by private respondent Santiago
Meneses with clear and convincing evidence. In civil cases, the party having the burden
of proof must establish his case by a preponderance of evidence.[33] Petitioners were
able to establish that these four parcels of land were validly conveyed to them by the
Aquino spouses hence they no longer formed part of the conjugal properties of the
spouses at the time of their deaths. As regards the fourth and fifth parcels, petitioners
alleged that these were also conveyed to third persons and they do not claim any right
thereto.
In view of the foregoing, we conclude that this action of partition cannot be maintained.
The properties sought to be partitioned by private respondents have already been
delivered to petitioners and therefore no longer part of the hereditary estate which could
be partitioned. After finding that no co-ownership exists between private respondents
and petitioners, we find no reason to discuss the other arguments raised by the
petitioners in support of their petition.
WHEREFORE, the petition is GRANTED. The questioned decision and resolution of
respondent Court of Appeals as well as the decision of the Regional Trial Court of
Dagupan City are SET ASIDE. The complaint in the trial court against petitioner is
ORDERED DISMISSED.
SO ORDERED.
Melo, (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.
[1]
Justice Emeterio C. Cui, ponente, concurred in by Justices Ricardo P. Galvez and Antonio P. Solano.
[2]
Penned by Judge Deodoro J. Sison.
[3]
Rollo, p 197.
[4]
Felicidad Meneses Frianela and Apolonio G. Meneses executed a joint affidavit dated June 24, 1991 stating that
the filing of the complaint was the idea of their brother Santiago; that they refused and did not authorize Santiago to
include them as plaintiffs on the ground that they recognize the ownership of the late Cesario Velasquez and
petitioners Jose and Anastacia Velasquez of the lands in question; that Cesario Velasquez had been in actual
physical possession of the lands in question and enjoying the fruits exclusively since he acquired them ; that Jose
and Anastacia have been in actual possession of the land donated to them and in fact Jose had established his family
house thereon for thirty (30) years now. Exhibit "13 ".
[5]
Records, pp. 1- 4.
[6]
Records, pp. 82-94.
[7]
Records, p. 115.
[8]
Rollo, p. 87-90.
[9]
Rollo, pp. 188-194.
[10]
Rollo, p. 233.
[11]
Records, p. 99.
[12]
Section 3 Rule 17 of the old Rules of Court
Sec. 3. Failure to prosecute. - If plaintiff fails to appear at the time of the trial, or to prosecute his action for an
unreasonable length of time, or to comply with these rules or any order of the court, the action may be dismissed
upon motion of the defendant or upon the courts own motion. This dismissal shall have the effect of an adjudication
upon the merits, unless otherwise provided by the court.
[13]
Olivares vs. Gonzales, 159 SCRA 33.
[14]
Imperial vs. CA, 259 SCRA 65, 71.
[15]
Cang vs. CA, 296 SCRA 128; citing PNB vs. CA, 187 SCRA 735 ; Ongsiako vs. IAC, 152 SCRA 627
[16]
P.M. Pastera Brokerage vs. CA, 266 SCRA 365.
[17]
De Mesa v. CA, 231 SCRA 773.
[18]
Fabrica vs. CA, 146 SCRA 250.
[19]
TSN, November 8, 1990, pp. 16-18.
[20]
Regalado, Remedial Law Compendium, Vol. II, p 553 citing People vs. Juarez (CA), 57 OG 2518.
[21]
Exhibit "3".
[22]
Exhibit "1".
[23]
Exhibit "5".
[24]
Exhibit "6".24
[25]
Article 712, Civil Code
Art. 712. Ownership is acquired by occupation and by intellectual creation. Ownership and other real rights over
property are acquired and transmitted by law, by donation, by testate and intestate succession, and in consequence of
certain contracts, by tradition.
They may also be acquired by means of prescription.

[26]
Article 734, Civil Code.
[27]
Tanpingco vs. IAC, 207 SCRA 652; Quijada vs. CA, 299 SCRA 695.
Art. 760. Every donation inter vivos, made by a person having no children or descendants, legitimate or
[28]
legitimated by subsequent marriage, or illegitimate, may be revoked or reduced as provided in the next article, by
the happening of any of these events:
(1) If the donor, after the donation, should have legitimate or legitimated or illegitimate children, even though they
be posthumous;
(2) If the child of the donor, whom the latter believed to be dead when he made the donation, should turn out to be
living;
(3) If the donor should subsequently adopt a minor child.
Art. 764 . The donation shall be revoked at the instance of the donor, when the donee fails to comply with any of the
conditions which the former imposed upon the latter.
In this case, the property donated shall be returned to the donor, the alienations made by the donee and the
mortgages imposed thereon by him being void, with the limitations established, with regard to third persons, by the
Mortgage Law and the Land Registration Laws.
This action shall prescribe after four years from the non compliance with the condition, may be transmitted to the
heirs of the donor, and may be exercised against the donees heirs.
Art. 765. The donation may also be revoked at the instance of the donor, by reason of ingratitude in the following
cases:
(1) If the donee should commit some offense against the person, the honor or the property of the donor, or his wife
or children under his parental authority;
(2) If the donee imputes to the donor any criminal offense, or any act involving moral turpitude, even though he
should prove it, unless the crime or the act has been committed against the donee himself, his wife or children under
his authority;
(3) If he unduly refuses him support when the donee is legally or morally bound to give support to the donor.
[29]
Art. 86. A donation by reason of marriage may be revoked by the donor in the following cases:
(1) If the marriage is not celebrated or judicially declared void ab initio except donations made in the marriage
settlements, which shall be governed by Article 81;
(2) When the marriage takes place without the consent of the parents or guardian, as required by law;
(3) When the marriage is annulled, and the donee acted in bad faith;
(4) Upon legal separation, the donee being the guilty spouse;
(5) If it is with a resolutory condition and the condition is complied with;
(6) When the donee has committed an act of ingratitude as specified by the provisions of the Civil Code on
donations in general.
[30]
Halili vs. CIR 257 SCRA 174.
[31]
Chan vs. CA (Special 7th Division), 298 SCRA 713.
[32]
Favor vs. CA, 194 SCRA 308.
[33]
Section 1 Rule 133, Revised Rules of Court.
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THIRD DIVISION
G.R. No. 110335 June 18, 2001
IGNACIO GONZALES, LILIA R. GONZALES, GUSTAVO R. GONZALES, WIGBERTO R. GONZALES, GILDA

GONZALES-SALUTA, FERNANDO RAMIREZ, OCTAVIO RAMIREZ, JR., IGNACIO RAMIREZ, ESMIRNA
RAMIREZ, MERCEDES GONZALES-FAVIZ, JAIME GONZALES, FEDERICO GONZALES, ROSARIO GONZALES,
PATRICIA GONZALES, DANIEL GONZALES, ALDO GONZALES, CLAUDIA GONZALES and AMANDA
GONZALES, petitioners,
vs.
HONORABLE COURT OF APPEALS, ESTANISLAO SALVADOR, MATEO SALVADOR, ALBERTO SARMIENTO,

MAXIMO ESGUERRA, MAMERTO ANTONIO, VIRGILIO DE GUZMAN, ANGEL FAJARDO, ABAD DELA CRUZ,
PEDRO FAJARDO, JUANITO DE LARA, ELIGIO DE GUZMAN, SALVADOR MARTINEZ, EDUARDO DELA CRUZ,
JOSE MATIAS, SOLEDAD ESTRELLA, ROMAN GUINGON, CIRILO SALVADOR, CATALINA DELA CRUZ,
BERNARDO ESGUERRA, JR., GLORIA CABANA, PAQUITO CHAVEZ, RENATO GARCIA, FRANCISCO PASCUAL,
WALDO SALVADOR, MARIO SALVADOR, PEDRO GARCIA, ALBINO SALVADOR, ANTONIO DE GUZMAN,
AMBROCIO SALVADOR, TERESITA CAPATE, EDUARDO TALENS, BENIGNO CARAIG, ERNESTO BERNABE,
SERGIO CARLOS, SIMEON BALINGAY, ANTONIO NANGEL, TEOFILO BINUYA and WILFREDO DELA CRUZ,
respondents.
MELO, J.:
Per A.M. No. 00-9-03-SC dated February 27, 2001, this case which could have been acted upon earlier,
was raffled to undersigned ponente. Essentially, petitioners seek to annul and set aside the decision
dated March 15, 1993 of the Court of Appeals in its CA-G.R. SP No.26416 which reversed the ruling of
then Secretary of Agrarian Reform Benjamin T. Leong, as well as the order dated May 17, 1993 denying
reconsideration thereof.
The factual antecedents of the instant case may be chronicled as follows:
The now deceased spouses Ignacio Gonzales and Marina Gonzales were the registered owners of two
parcels of agricultural Land situated at Barrio Fortaleza, Cabanatuan City, covered by Transfer Certificate
of Title No. 2742 and denominated as Lot 551-C and Lot 552-A. Lot 551-C contains an area of 46.97
hectares while Lot 552-A contains an area of 37.5735 hectares. Herein petitioners are the successors-in-
interest or the children and grandchildren of said Gonzales spouses. On the other hand, private
respondents are the farmers and tenants of said spouses who have been cultivating the parcels of land
even before World War II either personally or through their predecessors-in-interest.
On May 7, 1969, Marina Gonzales died intestate and appointed as administratrix of her estate was
petitioner Lilia Gonzales. Prior to the partition of said estate, Ignacio Gonzales executed a Deed of
Donation on July 12, 1972 conveying his share of the property, specifically Lot No. 551-C, in favor of his
14 grandchildren. The said donation was not registered. Thus, when Presidential Decree No. 27 (P.D. No.
27) took effect on October 21, 1972, the landholdings of the spouses Gonzales were placed under
Operation Land Transfer by virtue of said decree, and private respondents were accordingly issued the
corresponding Certificates of Land Transfer and Emancipation Patents. On March 5, 1974, the
administratrix Lilia Gonzales filed an application for retention with the then Ministry of Agrarian Reform,
requesting that their property be excluded from the coverage of Operation Land Transfer. After initial
investigation, Hearing Officer Melchor Pagsolingan recommended the denial of said application for
retention and this action was affirmed by Assistant Secretary of Agrarian Reform Benjamin Labayen, in
an order dated September 12, 1977. Apparently, however, a reinvestigation was conducted, resulting in
the present Department of Agrarian Reform (DAR) resolution dated February 23, 1983 recommending
that the land subject of the deed of donation, or Lot No. 551-C, be exempt from Operation Land
Transfer. On September 3, 1991, DAR Secretary Benjamin Leong issued an order declaring that the
subject landholdings covered by the deed of donation are exempt from Operation Land Transfer, and
cancelling the Certificates of Land Transfer issued in favor of private respondents. In so ruling, the DAR
Secretary reasoned:
As the donation had been duly accepted by the donees who were already of legal age on the date of the
donation and by the legal guardians of the donees who were still minors at that time, and the donor
having known of said acceptance, the donation had therefore been perfected in accordance with the
law, and the donees had acquired a valid title to the portion donated on the date the instrument was
executed.
(p. 4, DAR Order.)
Aggrieved by this ruling, private respondents filed a petition for certiorari with the Court of Appeals
which rendered its decision on March 15, 1993, reversing the action of the DAR and upholding the
certificates of land transfer and emancipation patents.
Petitioners moved for a reconsideration of the above decision but the same was denied by the Court of
Appeals in its Resolution dated May 17, 1993.
Thus, the instant petition anchored on the following grounds:
A. the CA failed to reconsider that the land subject of this case does not fall within the purview of P.D.
27;
B. the CA should have found that the evidence clearly shows that the tenants (private respondents
herein) were aware that the land had been donated by Ignacio Gonzales in favor of his grandchildren
prior to the effectivity of P.D. 27; and
C. the effect of non-registration under the land registration laws are inapplicable to the present case.
The first and third assigned errors, being interrelated, shall be jointly discussed.
The sole issue to be resolved is whether the property subject of the deed of donation which was not
registered when P.D. No. 27 took effect, should be excluded from the Operation Land Transfer.
Petitioners insist that the deed of donation executed by Ignacio Gonzales validly transferred the
ownership and possession of Lot 551-C which comprises an area of 46.97 hectares to his 14
grandchildren. They further assert that inasmuch as Lot 551-C had already been donated, the same can
no longer fall within the purview of P.D. No. 27, since each donee shall have a share of about three
hectares only which is within the exemption limit of seven hectares for each landowner provided under
P.D. No. 27.
Article 749 of the Civil Code provides inter alia that "in order that the donation of an immovable may be
valid, it must be made in a public document, specifying therein the property donated and the value of
the charges which the donee must satisfy." Corollarily, Article 709 of the same Code explicitly states that
"the titles of ownership, or other rights over immovable property, which are not duly inscribed or
annotated in the Registry of property shall not prejudice third persons." From the foregoing provisions,
it may be inferred that as between the parties to a donation of an immovable property, all that is
required is for said donation to be contained in a public document. Registration is not necessary for it to
be considered valid and effective. However, in order to bind third persons, the donation must be
registered in the Registry of Property (now Registry of Land Titles and Deeds). Although the non-
registration of a deed of donation shall not affect its validity, the necessity of registration comes into
play when the rights of third persons are affected, as in the case at bar.
It is actually the act of registration that operates to convey registered land or affect title thereto. Thus,
Section 50 of Act No. 496 (Land Registration Act), as amended by Section 51 of P.D. No. 1529 (Property
Registration Decree), provides:
SEC. 51. Conveyance and other dealings by registered owner - . . . But no deed, mortgage, lease, or other
voluntary instrument, except a will purporting to convey or affect registered land, shall take effect as a
conveyance or bind the land, but shall operate only as a contract between the parties and as evidence of
authority to the Register of Deeds to make registration.
The act of registration shall be the operative act to convey or affect the land insofar as third persons are
concerned, . . .
Further, it is an entrenched doctrine in our jurisdiction that registration in a public registry creates
constructive notice to the whole world (Olizon vs. Court of Appeals, 236 SCRA 148 [1994]). Thus, Section
51 of Act No.496, as amended by Section 52 of P.D. No. 1529, provides:
SEC. 52. Constructive notice upon registration - Every conveyance, mortgage, lease, lien, attachment,
order, judgment, instrument or entry affecting registered land shall, if registered, filed or entered in the
Office of the Register of Deeds for the province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such registering, filing or entering.
It is undisputed in this case that the donation executed by Ignacio Gonzales in favor of his grandchildren,
although in writing and duly notarized, has not been registered in accordance with law. For this reason,
it shall not be binding upon private respondents who did not participate in said deed or had no actual
knowledge thereof. Hence, while the deed of donation is valid between the donor and the donees, such
deed, however, did not bind the tenants-farmers who were not parties to the donation. As previously
enunciated by this Court, non-registration of a deed of donation does not bind other parties ignorant of
a previous transaction (Sales vs. Court of Appeals, 211 SCRA 858 [1992]). So it is of no moment that the
right of the tenants-farmers in this case was created by virtue of a decree or law. They are still
considered "third persons" contemplated in our laws on registration, for the fact remains that these
tenants-farmers had no actual knowledge of the deed of donation.
From the foregoing, the ineluctable conclusion drawn is that the unregistered deed of donation cannot
operate to exclude the subject land from the coverage of the Operation Land Transfer of P.D. No. 27,
which took effect on October 21, 1972. To rule otherwise would render ineffectual the rights and
interests that the tenants-farmers immediately acquired upon the promulgation of P.D. No. 27,
especially so because in the case at bar, they have been cultivating the land even before World War II.
Accordingly, the Certificates of Land Transfer and the Emancipation Patents respectively issued to
private respondents over the land in question cannot be cancelled. It should be noted that one of the
recognized modes of acquiring title to land is by emancipation patent which aims to ameliorate the sad
plight of tenants-farmers. By virtue of P.D. No. 27, tenants-farmers are deemed owners of the land they
till. This policy is intended to be given effect by a provision of the law which declares that, "the tenant-
farmer, whether in land classified as landed estate or not, shall be DEEMED OWNER of a portion
constituting a family size farm of five (5) hectares if not irritated and three (3) hectares if irrigated" (P.D.
No. 27, third paragraph). It may, therefore, be said that with respect to Lot 551-C, private respondents
became owners thereof on October 27, 1972, the day P.D. No. 27 took effect.
The second error assigned deals with a question of fact. We have consistently ruled that it is not the
function of this Court to assess and evaluate the evidence all over again, its jurisdiction being generally
limited to reviewing errors of law that might have been committed by the lower court. Nevertheless,
since the factual findings of the Court of Appeals are at variance with those of an administrative agency
such as the Department of Agrarian Reform, we are compelled to review the records presented both in
the Court of Appeals and the said Department (Deiparine vs. Court of Appeals, 299 SCRA 668 [1998]).
Moreover, in the exercise of sound discretion and considering the fact that the parties have relentlessly
pursued this case since 1974 or for a period of 27 years already, this Court has opted to look into the
factual bases of the assailed decision of the Court of Appeals.
Petitioners maintain that private respondents knew of the donation as evidenced by the affidavit and
testimony of Francisco Villanueva and Abad Dela Cruz. This contention is unacceptable. Villanueva
testified that as the overseer of Ignacio Gonzales, he was tasked to inform his co-tenants about the
donation. However, the records show that Villanueva has transferred his right to cultivate the land to a
certain Bemardo Esguerra as early as 1965 (p. 203, Rollo), leading one to logically conclude that
Villanueva was no longer a tenant, much more an overseer, when the donation was executed in 1972.
On the other hand, Dela Cruz, in an Affidavit executed on May 28, 1992, denied testifying before Atty.
Romeo Bello at the Office of the Department of Agrarian Reform to the effect that he and his co-tenants
were aware of the donation. He declared that he had no knowledge of the donation made by Ignacio
Gonzales, nor did he have any idea that an investigation was conducted by DAR on said matter (pp. 204-
205, Rollo).
Likewise, petitioners claim that private respondents had been sharing their produce with the donees or
the grandchildren of Ignacio Gonzales, suggesting thereby that private respondents have recognized the
donees as the new owners of the land. Again, we find this argument to be unfounded. The evidence on
record reveals that the tenants-farmers paid their rentals to Ignacio Gonzales and not to the
grandchildren (pp. 150-194, Rollo).
Petitioners contend that the deed of donation was not registered because of the pendency of the
intestate proceedings. This argument was correctly rejected by the Court of Appeals, in this wise:
We do not agree with respondents that the failure to register the deed of donation was due to the
pendency of the intestate proceedings and the fact that the property had been mortgaged to the
Philippine National Bank (PNB), because the pendency of the intestate proceedings and the real estate
mortgaged to the PNB, do not preclude the registration annotation of the donation at the back of the
certificate of title covering the land.
(p. 4, Court of Appeals Decision.)
Thus, we affirm the conclusion of the appellate court that the land subject of the donation is covered by
Operation Land Transfer. The findings of fact made by the Court of Appeals are conclusive and binding
on the Supreme Court even if contrary to these of the trial court or the administrative agency, so long as
such findings are supported by the records or based on substantial evidence (Tabaco vs. Court of
Appeals, 239 SCRA 485 [1994]). While the foregoing doctrine is not absolute, petitioners have not
sufficiently proved that the findings complained of are totally devoid of support in the records, or that
they are so glaringly erroneous as to constitute serious abuse of discretion.
As a final note, our laws on agrarian reform were enacted primarily because of the realization that there
is an urgent need to alleviate the lives of the vast number of poor farmers in our country. Yet, despite
such laws, the majority of these farmers still live on a hand-to-mouth existence. This can be attributed
to the fact that these agrarian laws have never really been effectively implemented. Certain individuals
have continued to prey on the disadvantaged, and as a result, the farmers who are intended to be
protected and uplifted by the said laws find themselves back in their previous plight or even in a more
distressing situation. This Court ought to be an instrument in achieving a dignified existence for these
farmers free from pernicious restraints and practices, and there's no better time to do it than now.
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated March 15, 1993 in
CA-G.R. SP No. 26416 is hereby AFFIRMED.
SO ORDERED.
Vitug, Panganiban, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concur.

Synopsis/Syllabi
THIRD DIVISION
[G.R. No. 112483. October 8, 1999]
ELOY IMPERIAL, petitioner vs. COURT OF APPEALS, REGIONAL TRIAL

COURT OF LEGASPI CITY, CESAR VILLALON, JR., TERESA
VILLALON, ANTONIO VILLALON, AUGUSTO VILLALON,
ROBERTO VILLALON, RICARDO VILLALON and ESTHER
VILLALON, respondents.
DECISION
GONZAGA-REYES, J.:
Petitioner seeks to set aside the Decision of the Court of Appeals in C.A.-G.R. CV No.
31976[1], affirming the Decision of the Regional Trial Court of Legazpi City[2], which rendered
inofficious the donation made by Leoncio Imperial in favor of herein petitioner, to the extent that
it impairs the legitime of Victor Imperial, and ordering petitioner to convey to herein private
respondents, heirs of said Victor Imperial, that portion of the donated land proportionate to Victor
Imperials legitime.
Leoncio Imperial was the registered owner of a 32,837-square meter parcel of land covered
by Original Certificate of Title No. 200, also known as Lot 45 of the Cadastral Survey of Albay. On
July 7, 1951, Leoncio sold the said lot for P1.00 to his acknowledged natural son, petitioner herein,
who then acquired title over the land and proceeded to subdivide it into several lots. Petitioner and
private respondents admit that despite the contracts designation as one of Absolute Sale, the
transaction was in fact a donation.
On July 28, 1953, or barely two years after the donation, Leoncio filed a complaint for
annulment of the said Deed of Absolute Sale, docketed as Civil Case No. 1177, in the then Court
of First Instance of Albay, on the ground that he was deceived by petitioner herein into signing the
said document. The dispute, however, was resolved through a compromise agreement, approved
by the Court of First Instance of Albay on November 3, 1961[3], under which terms: (1) Leoncio
recognized the legality and validity of the rights of petitioner to the land donated; and (2) petitioner
agreed to sell a designated 1,000-square meter portion of the donated land, and to deposit the
proceeds thereof in a bank, for the convenient disposal of Leoncio. In case of Leoncios death, it
was agreed that the balance of the deposit will be withdrawn by petitioner to defray burial costs.
On January 8, 1962, and pending execution of the above judgment, Leoncio died, leaving only
two heirs --- the herein petitioner, who is his acknowledged natural son, and an adopted son, Victor
Imperial. On March 8, 1962, Victor was substituted in place of Leoncio in the above-mentioned
case, and it was he who moved for execution of judgment. On March 15, 1962, the motion for
execution was duly granted.
Fifteen years thereafter, or on July 26, 1977, Victor died single and without issue, survived
only by his natural father, Ricardo Villalon, who was a lessee of a portion of the disputed
land. Four years hence, or on September 25, 1981, Ricardo died, leaving as his only heirs his two
children, Cesar and Teresa Villalon.
Five years thereafter, or sometime in 1986, Cesar and Teresa filed a complaint for annulment
of the donation with the Regional Trial Court of Legazpi City, docketed as Civil Case No.
7646. Petitioner moved to dismiss on the ground of res judicata, by virtue of the compromise
judgment rendered by the Court of First Instance of Albay. The trial court granted the motion to
dismiss, but the Court of Appeals reversed the trial courts order and remanded the case for further
proceedings.
On October 18, 1989, Cesar and Teresa filed an amended complaint in the same case, Civil
Case No. 7646, for Annulment of Documents, Reconveyance and Recovery of Possession with the
Regional Trial Court of Legazpi City, seeking the nullification of the Deed of Absolute Sale
affecting the above property, on grounds of fraud, deceit and inofficiousness. In the amended
complaint, it was alleged that petitioner caused Leoncio to execute the donation by taking undue
advantage of the latters physical weakness and mental unfitness, and that the conveyance of said
property in favor of petitioner impaired the legitime of Victor Imperial, their natural brother and
predecessor-in-interest.[4]
In his Answer, petitioner: (1) alleged that Leoncio had conveyed sufficient property to Victor
to cover his legitime, consisting of 563 hectares of agricultural land in Manito, Albay; (2) reiterated
the defense of res judicata, and (3) raised the additional defenses of prescription and laches.
Plaintiff Cesar Villalon died on December 26, 1989, while the case was pending in the
Regional Trial Court, and was substituted in this action by his sons, namely, Antonio, Roberto,
Augusto, Ricardo and Cesar, Jr., all surnamed Villalon, and his widow, Esther H. Villalon.
The RTC held the donation to be inofficious and impairing the legitime of Victor, on the basis
of its finding that at the time of Leoncios death, he left no property other than the 32,837-square
meter parcel of land which he had donated to petitioner. The RTC went on further to state that
petitioners allegation that other properties existed and were inherited by Victor was not
substantiated by the evidence.[5]
The legitime of Victor was determined by the trial court in this manner:
Considering that the property donated is 32,837 square meters, one half of that or
16,418 square meters becomes the free portion of Leoncio which could be absorbed in
the donation to defendant. The other half, which is also 16,418 square meters is where
the legitime of the adopted son Victor Imperial has to be taken.
The proportion of the legitime of the legitimate child (including the adopted child) in
relation to the acknowledged natural child (defendant) is 10 is to 5[,] with the
acknowledged natural child getting of the legitime of the legitimate (adopted) child, in
accordance with Art. 895 of the New Civil Code which provides:
The legitime of each of the acknowledged natural children and each of the natural
children by legal fiction shall consist of one-half of the legitime of each of the
legitimate children or descendants.
From the 16,418 square meters left (after the free portion has been taken) plaintiffs are
therefore entitled to 10,940 square meters while defendant gets 5,420 square meters.[6]
The trial court likewise held that the applicable prescriptive period is 30 years under Article
1141 of the Civil Code[7], reckoned from March 15, 1962, when the writ of execution of the
compromise judgment in Civil Case 1177 was issued, and that the original complaint having been
filed in 1986, the action has not yet prescribed. In addition, the trial court regarded the defense of
prescription as having been waived, this not being one of the issues agreed upon at pre-trial.
Thus, the dispositive portion of the RTCs Decision of December 13, 1990 reads:
WHEREFORE, premises considered, the Deed of Absolute Sale otherwise known as

Doc. No. 8; Book No. 14; Page No. 1; Series of 1951 of the Notarial file of Pompeyo
B. Calleja which is considered a donation, is hereby reduced proportionately insofar
as it affected the legitime of the late Victor Imperial, which share is inherited by the
plaintiffs herein, to the extent that plaintiffs are ordered to be given by defendant a
portion of 10,940 square meters thereof.
In order to avoid further conflict, the 10,940 share to be given to plaintiffs should
include the portion which they are presently occupying, by virtue of the extended
lease to their father Ricardo Villalon, where the bungalow in question stands.
The remaining portion to be given to plaintiffs may come from any other portion that
may be agreed upon by the parties, otherwise, this court will appoint a commissioner
to undertake the partition.
The other 21,897 square meters should go to the defendant as part of his legitime and
by virtue of the reduced donation.
No pronouncement as to damages as they were not sufficiently proved.
SO ORDERED.[8]
The Court of Appeals affirmed the RTC Decision in toto.

Before us, petitioner questions the following findings of respondent court: (1) that there was
no res judicata, there being no identity of parties and cause of action between the instant case and
Civil Case No. 1177; (2) that private respondents had a right to question the donation; (3) that
private respondents action is barred by prescription, laches and estoppel; and (4) that the donation
was inofficious and should be reduced.
It is an indispensable requirement in res judicata that there be, between the first and second
action, identity of parties, of subject matter and of cause of action.[9] A perusal of the records leads
us to conclude that there is no identity of parties and of cause of action as between Civil Case No.
1177 and Civil Case No. 7646. Civil Case No. 1177 was instituted by Leoncio in his capacity as
donor of the questioned donation. While it is true that upon his death, Victor was substituted as
plaintiff of the action, such does not alter the fact that Victors participation in the case was in
representation of the interests of the original plaintiff, Leoncio. The purpose behind the rule on
substitution of parties is to ensure that the deceased party would continue to be properly
represented in the suit through the duly appointed legal representative of the estate[10], or his heir,
as in this case, for which no court appointment is required.[11] Petitioners argument, therefore, that
there is substantial identity between Leoncio and private respondents, being heirs and successors-
in-interest of Victor, is unavailing.
Moreover, Leoncios cause of action as donor of the property was fraud, purportedly employed
upon him by petitioner in the execution of the donation. While the same circumstances of fraud
and deceit are alleged in private respondents complaint, it also raises the additional ground of
inofficiousness of donation.
Contrary to petitioners contentions, inofficiousness of donation does not, and could not, form
part of Leoncios cause of action in Civil Case No. 1177. Inofficiousness as a cause of action may
arise only upon the death of the donor, as the value of the donation will then be contrasted with
the net value of the estate of the donor-deceased.[12]
Consequently, while in Civil Case No. 1177, Leoncio sought the revocation in full of the
donation on ground of fraud, the instant case actually has two alternative causes of action. First,
for fraud and deceit, under the same circumstances as alleged in Leoncios complaint, which seeks
the annulment in full of the donation, and which the trial court correctly dismissed because the
compromise agreement in Civil Case No. 1177 served as a ratification and waiver on the part of
Leoncio of whatever defects in voluntariness and consent may have been attendant in the making
of the donation. The second cause of action is the alleged inofficiousness of the donation, resulting
in the impairment of Victors legitime, which seeks the annulment, not of the entire donation, but
only of that portion diminishing the legitime.[13]It is on the basis of this second cause of action that
private respondents prevailed in the lower courts.
Petitioner next questions the right of private respondents to contest the donation. Petitioner
sources his argument from Article 772 of the Civil Code, thus:
Only those who at the time of the donors death have a right to the legitime and their
heirs and successors in interest may ask for the reduction of inofficious donations. xxx
As argued by petitioner, when Leoncio died on January 8, 1962, it was only Victor who was
entitled to question the donation. However, instead of filing an action to contest the donation,
Victor asked to be substituted as plaintiff in Civil Case No. 1177 and even moved for execution of
the compromise judgment therein.
No renunciation of legitime may be presumed from the foregoing acts. It must be remembered
that at the time of the substitution, the judgment approving the compromise agreement has already
been rendered. Victor merely participated in the execution of the compromise judgment. He was
not a party to the compromise agreement.
More importantly, our law on succession does not countenance tacit repudiation of
inheritance. Rather, it requires an express act on the part of the heir. Thus, under Article 1051 of
Civil Code:
The repudiation of an inheritance shall be made in a public or authentic instrument, or

by petition presented to the court having jurisdiction over the testamentary or intestate
proceedings.
Thus, when Victor substituted Leoncio in Civil Case No. 1177 upon the latters death, his act
of moving for execution of the compromise judgment cannot be considered an act of renunciation
of his legitime. He was, therefore, not precluded or estopped from subsequently seeking the
reduction of the donation, under Article 772. Nor are Victors heirs, upon his death, precluded from
doing so, as their right to do so is expressly recognized under Article 772, and also in Article 1053:
If the heir should die without having accepted or repudiated the inheritance, his right
shall be transmitted to his heirs.
Be that as it may, we find merit in petitioners other assignment of errors. Having ascertained
this action as one for reduction of an inofficious donation, we cannot sustain the holding of both
the trial court and the Court of Appeals that the applicable prescriptive period is thirty years, under
Article 1141 of the Civil Code. The sense of both courts that this case is a real action over an
immovable allots undue credence to private respondents description of their complaint, as one for
Annulment of Documents, Reconveyance and Recovery of Possession of Property, which suggests
the action to be, in part, a real action enforced by those with claim of title over the disputed land.
Unfortunately for private respondents, a claim for legitime does not amount to a claim of
title. In the recent case of Vizconde vs. Court of Appeals[14], we declared that what is brought to
collation is not the donated property itself, but the value of the property at the time it was
donated. The rationale for this is that the donation is a real alienation which conveys ownership
upon its acceptance, hence, any increase in value or any deterioration or loss thereof is for the
account of the heir or donee.[15]
What, then, is the prescriptive period for an action for reduction of an inofficious
donation? The Civil Code specifies the following instances of reduction or revocation of
donations: (1) four years, in cases of subsequent birth, appearance, recognition or adoption of a
child;[16] (2) four years, for non-compliance with conditions of the donation;[17] and (3) at any time
during the lifetime of the donor and his relatives entitled to support, for failure of the donor to
reserve property for his or their support.[18] Interestingly, donations as in the instant case,[19] the
reduction of which hinges upon the allegation of impairment of legitime, are not controlled by a
particular prescriptive period, for which reason we must resort to the ordinary rules of prescription.
Under Article 1144 of the Civil Code, actions upon an obligation created by law must be
brought within ten years from the time the right of action accrues. Thus, the ten-year prescriptive
period applies to the obligation to reduce inofficious donations, required under Article 771 of the
Civil Code, to the extent that they impair the legitime of compulsory heirs.
From when shall the ten-year period be reckoned? The case of Mateo vs.
Lagua, 29 SCRA 864, which involved the reduction for inofficiousness of a donation propter
nuptias, recognized that the cause of action to enforce a legitime accrues upon the death of the
donor-decedent. Clearly so, since it is only then that the net estate may be ascertained and on which
basis, the legitimes may be determined.
It took private respondents 24 years since the death of Leoncio to initiate this case. The action,
therefore, has long prescribed.
As for the trial courts holding that the defense of prescription had been waived, it not being
one of the issues agreed upon at pre-trial, suffice it to say that while the terms of the pre-trial order
bind the parties as to the matters to be taken up in trial, it would be the height of injustice for us to
adhere to this technicality when the fact of prescription is manifest in the pleadings of the parties,
as well as the findings of fact of the lower courts.[20]
A perusal of the factual antecedents reveals that not only has prescription set in, private
respondents are also guilty of estoppel by laches. It may be recalled that Leoncio died on January
8, 1962. Fifteen years later, Victor died, leaving as his sole heir Ricardo Villalon, who also died
four years later. While Victor was alive, he gave no indication of any interest to contest the
donation of his deceased father. As we have discussed earlier, the fact that he actively participated
in Civil Case No. 1177 did not amount to a renunciation of his inheritance and does not preclude
him from bringing an action to claim his legitime. These are matters that Victor could not possibly
be unaware of, considering that he is a lawyer[21]. Ricardo Villalon was even a lessee of a portion
of the donated property, and could have instituted the action as sole heir of his natural son, or at
the very least, raised the matter of legitime by way of counterclaim in an ejectment case[22] filed
against him by petitioner in 1979. Neither does it help private respondents cause that five years
have elapsed since the death of Ricardo in 1981 before they filed their complaint with the RTC.
Estoppel by laches is the failure or neglect for an unreasonable or unexplained length of time
to do that which, by exercising due diligence, could or should have been done earlier, warranting
a presumption that the person has abandoned his right or declined to assert it.[23] We find the
necessity for the application of the principle of estoppel by laches in this case, in order to avoid an
injustice.
A final word on collation of donations. We observe that after finding the donation to be
inofficious because Leoncio had no other property at the time of his death, the RTC computed the
legitime of Victor based on the area of the donated property. Hence, in its dispositive portion, it
awarded a portion of the property to private respondents as Victors legitime. This was upheld by
the Court of Appeals.
Our rules of succession require that before any conclusion as to the legal share due to a
compulsory heir may be reached, the following steps must be taken: (1) the net estate of the
decedent must be ascertained, by deducting all the payable obligations and charges from the value
of the property owned by the deceased at the time of his death; (2) the value of all donations subject
to collation would be added to it.[24]
Thus, it is the value of the property at the time it is donated, and not the property itself, which
is brought to collation. Consequently, even when the donation is found inofficious and reduced to
the extent that it impaired Victors legitime, private respondents will not receive a corresponding
share in the property donated. Thus, in this case where the collatable property is an immovable,
what may be received is: (1) an equivalent, as much as possible, in property of the same nature,
class and quality;[25] (2) if such is impracticable, the equivalent value of the impaired legitime in
cash or marketable securities;[26] or (3) in the absence of cash or securities in the estate, so much of
such other property as may be necessary, to be sold in public auction.[27]
We believe this worth mentioning, even as we grant the petition on grounds of prescription
and laches.
ACCORDINGLY, the decision of the Court of Appeals in C.A. G.R. CV No. 31976,
affirming in toto the decision of the Regional Trial Court in Civil Case No. 7646, is reversed and
set aside. No costs.
SO ORDERED.
Melo, Vitug, Panganiban, and Purisima, JJ., concur.
[1]
Rendered by the Seventh Division. Penned by Associate Justice Nathanael P. De Pano, Jr., and concurred in by
Associate Justices Nicolas P. Lapea, Jr. and Ma. Alicia Austria-Martinez.
[2]
Branch 10; presided by Judge Antonio A. Arcangel.
[3]
Annex B of Petition; Rollo, 43.
[4]
Annex C-1 of Petition; Rollo, 52-53.
[5]
Ibid., 66-67.
[6]
RTC Decision; Rollo, 68-69.
[7]
Article 1141 of the Civil Code provides: Real actions over immovables prescribe after thirty years. xxx
[8]
RTC Decision; Rollo, 69-70.
[9]
Casil vs Court of Appeals, 285 SCRA 264; Municipality of San Juan vs. Court of Appeals,279 SCRA711; Cartlet vs.
Court of Appeals, 275 SCRA 97.
[10]
Torres, Jr. vs. Court of Appeals, 278 SCRA 793.
[11]
Revised Rules of Court, Rule 3, Sec. 16.
[12]
Under Article 771 of the Civil Code, (d)onations which in accordance with the provisions of Article 752, are
inofficious bearing in mind the estimated net value of the donors property at the time of his death, shall be reduced
with regard to the excess, but this reduction shall not prevent the donations from taking effect during the life of the
donor, nor shall it bar the donee from appropriating the fruits. xxx.
[13]
See Mateo vs. Lagua, 29 SCRA 864.
[14]
286 SCRA 217; see also Civil Code, Art. 1071.
[15]
Vizconde vs. Court of Appeals, op. cit.
[16]
Civil Code, Art. 763.
[17]
Id., Art. 764.
[18]
Id., Art. 750.
[19]
Governed by Articles 752 and 771 of the Civil Code, which read thus:
Art. 752. xxx (N)o person may give or receive, by way of donation, more than what he may give or receive by will.
The donation shall be inofficious in all that it may exceed this limitation.
Art.771. Donations which in accordance with the provisions of Article 752, are inofficious bearing in mind the
estimated net value of the donors property at the time of his death, shall be reduced with regard to the excess, but this
reduction shall not prevent the donations from taking effect during the life of the donor, nor shall it bar the donee from
appropriating the fruits. xxx
[20]
See Revised Rules of Court, Rule 118; Sec. 3 and Rule 9, Sec. 1 which respectively provide:
Pre-trial order. --- After the pre-trial conference, the court shall issue an order reciting the actions taken, the facts
stipulated, and evidence marked. Such order shall bind the parties, limit the trial to matters not disposed of and control
the course of the action during the trial, unless modified by the court to prevent manifest injustice. (Emphasis supplied)
Defenses and objections not pleaded. --- xxx (W)hen it appears from the pleadings or the evidence on record that the
court has no jurisdiction over the subject matter, that there is an action pending between the same parties for the same
cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.
[21]
Amended Complaint, Annex C-1 of Petition; Rollo, 52.
[22]
Motion to Dismiss Complaint, Annex D of Petition; Rollo, 56-57.
[23]
Madeja vs. Patcho, 132 SCRA 540.
[24]
Civil Code, Art. 908; Vizconde vs. Court of Appeals, supra; Mateo vs. Lagua, supra.
[25]
Civil Code, Article 1073, which provides:
The donees share of the estate shall be reduced by an amount equal to that already received by him; and his co-heirs
shall receive an equivalent, as much as possible, in property of the same nature, class and quality.
[26]
Civil Code, Art. 1074:
Should the provisions of the preceding article be impracticable, if the property donated was immovable, the co-heirs
shall be entitled to receive its equivalent in cash or securities, at the rate of quotation; and should there be neither cash
nor marketable securities in the estate, so much of the other property as may be necessary shall be sold at public
auction. xxx
[27]
Id.
FIRST DIVISION
[G.R. No. 140487. April 2, 2001]
REPUBLIC OF THE PHILIPPINES, petitioner, vs. LEON SILIM and

ILDEFONSA MANGUBAT, respondents.
DECISION
KAPUNAN, J.:
Before the Court is a petition for review under Rule 45 seeking the reversal of the Decision of
the Court of Appeals in CA-G.R. No. 43840, entitled Leon Silim, et al. vs. Wilfredo Palma, et al.,
which declared null and void the donation made by respondents of a parcel of land in favor of the
Bureau of Public Schools, Municipality of Malangas, Zamboanga del Sur.
The antecedents of this case are as follows:
On 17 December 1971, respondents, the Spouses Leon Silim and Ildefonsa Mangubat,
donated a 5,600 square meter parcel of land in favor of the Bureau of Public Schools, Municipality
of Malangas, Zamboanga del Sur (BPS). In the Deed of Donation, respondents imposed the
condition that the said property should be used exclusively and forever for school purposes
only.[1] This donation was accepted by Gregorio Buendia, the District Supervisor of BPS, through
an Affidavit of Acceptance and/or Confirmation of Donation.
Through a fund raising campaign spearheaded by the Parent-Teachers Association of
Barangay Kauswagan, a school building was constructed on the donated land. However, the
Bagong Lipunan school building that was supposed to be allocated for the donated parcel of land
in Barangay Kauswagan could not be released since the government required that it be built upon
a one (1) hectare parcel of land. To remedy this predicament, Assistant School Division
Superintendent of the Province of Zamboanga del Sur, Sabdani Hadjirol, authorized District
Supervisor Buendia to officially transact for the exchange of the one-half (1/2) hectare old school
site of Kauswagan Elementary School to a new and suitable location which would fit the
specifications of the government. Pursuant to this, District Supervisor Buendia and Teresita Palma
entered into a Deed of Exchange whereby the donated lot was exchanged with the bigger lot owned
by the latter. Consequently, the Bagong Lipunan school buildings were constructed on the new
school site and the school building previously erected on the donated lot was dismantled and
transferred to the new location.
When respondent Leon Silim saw, to his surprise, that Vice-Mayor Wilfredo Palma was
constructing a house on the donated land, he asked the latter why he was building a house on the
property he donated to BPS. Vice Mayor Wilfredo Palma replied that he is already the owner of
the said property. Respondent Leon Silim endeavored to stop the construction of the house on the
donated property but Vice-Mayor Wilfredo Palma advised him to just file a case in court.
On February 10, 1982, respondents filed a Complaint for Revocation and Cancellation of
Conditional Donation, Annulment of Deed of Exchange and Recovery of Possession and
Ownership of Real Property with damages against Vice Mayor Wilfredo Palma, Teresita Palma,
District Supervisor Buendia and the BPS before the Regional Trial Court of Pagadian City, Branch
21. In its Decision dated 20 August 1993, the trial court dismissed the complaint for lack of
merit.[2] The pertinent portion of the decision reads:
Thus, it is the considered view of this Court that there was no breach or violation of
the condition imposed in the subject Deed of Donation by the donee. The exchange is
proper since it is still for the exclusive use for school purposes and for the expansion
and improvement of the school facilities within the community. The Deed of
Exchange is but a continuity of the desired purpose of the donation made by plaintiff
Leon Silim.
In sum, it may be safely stated that the aforesaid transaction of exchange is a (sic)
exception to the law invoked by the plaintiffs (Art. 764, Civil Code). The donee, being
the State had the greater reciprocity of interest in the gratuitous and onerous contract
of donation. It would be illogical and selfish for the donor to technically preclude the
donee from expanding its school site and improvement of its school facilities, a
paramount objective of the donee in promoting the general welfare and interests of the
people of Barangay Kauswagan. But it is a well-settled rule that if the contract is
onerous, such as the Deed of Donation in question, the doubt shall be settled in favor
of the greatest reciprocity of interests, which in the instant case, is the donee.
xxx
WHEREFORE, in view of all the foregoing, judgement is hereby rendered:
1. Dismissing the complaint for lack of merit;

2. Dismissing the counterclaim for the sake of harmony and reconciliation between the parties;
3. With costs against plaintiffs.
SO ORDERED.[3]
Not satisfied with the decision of the trial court, respondents elevated the case to the Court of
Appeals. In its Decision dated 22 October 1999, the Court of Appeals reversed the decision of the
trial court and declared the donation null and void on the grounds that the donation was not
properly accepted and the condition imposed on the donation was violated.[4]
Hence, the present case where petitioner raises the following issues:
I. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION NULL
AND VOID DUE TO AN INVALID ACCEPTANCE BY THE DONEE.
II. WHETHER THE COURT OF APPEALS ERRED IN DECLARING THE DONATION
NULL AND VOID DUE TO AN ALLEGED VIOLATION OF A CONDITION IN THE
DONATION.[5]
The Court gives DUE COURSE to the petition.
Petitioner contends that the Court of Appeals erred in declaring the donation null and void for
the reason that the acceptance was not allegedly done in accordance with Articles 745 [6] and
749[7] of the New Civil Code.
We agree.
Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2)
remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple
donation is one where the underlying cause is plain gratuity.[8] This is donation in its truest form.
On the other hand, a remuneratory or compensatory donation is one made for the purpose of
rewarding the donee for past services, which services do not amount to a demandable debt.[9] A
conditional or modal donation is one where the donation is made in consideration of future services
or where the donor imposes certain conditions, limitations or charges upon the donee, the value of
which is inferior than that of the donation given.[10] Finally, an onerous donation is that which
imposes upon the donee a reciprocal obligation or, to be more precise, this is the kind of donation
made for a valuable consideration, the cost of which is equal to or more than the thing donated.[11]
Of all the foregoing classifications, donations of the onerous type are the most distinct. This
is because, unlike the other forms of donation, the validity of and the rights and obligations of the
parties involved in an onerous donation is completely governed not by the law on donations but
by the law on contracts. In this regard, Article 733 of the New Civil Code provides:
Art. 733. Donations with an onerous cause shall be governed by the rules on contracts,
and remuneratory donations by the provisions of the present Title as regards that
portion which exceeds the value of the burden imposed.
The donation involved in the present controversy is one which is onerous since there is a
burden imposed upon the donee to build a school on the donated property.[12]
The Court of Appeals held that there was no valid acceptance of the donation because:
xxx
Under the law the donation is void if there is no acceptance. The acceptance may
either be in the same document as the deed of donation or in a separate public
instrument. If the acceptance is in a separate instrument, "the donor shall be notified
thereof in an authentic form, and his step shall be noted in both instruments.
"Title to immovable property does not pass from the donor to the donee by virtue of a
deed of donation until and unless it has been accepted in a public instrument and the
donor duly noticed thereof.(Abellera vs. Balanag, 37 Phils. 85; Alejandro vs.
Geraldez, 78 SCRA 245). If the acceptance does not appear in the same document, it
must be made in another. Solemn words are not necessary; it is sufficient if it shows
the intention to accept, But in this case, it is necessary that formal notice thereof be
given to the donor and the fact that due notice has been given it must be noted in both
instruments (that containing the offer to donate and that showing acceptance). Then
and only then is the donation perfected. (11 Manresa 155-11, cited in Vol. II, Civil
Code of the Philippines by Tolentino.)."
This Court perused carefully the Deed of Donation marked as exhibit "A" and "1" to
determine whether there was acceptance of the donation. This Court found none. We
further examined the record if there is another document which embodies the
acceptance, we found one. Although the Court found that in the offer of exhibits of
the defendants, a supposed affidavit of acceptance and/or confirmation of the
donation, marked as exhibit "8" appears to have been offered.
However, there is nothing in the record that the exhibits offered by the defendants
have been admitted nor such exhibits appear on record.
Assuming that there was such an exhibit, the said supposed acceptance was not noted
in the Deed of Donation as required under Art. 749 of the Civil Code. And according
to Manresa, supra, a noted civilist, the notation is one of the requirements of
perfecting a donation. In other words, without such a notation, the contract is not
perfected contract. Since the donation is not perfected, the contract is therefore not
valid.[13]
xxx
We hold that there was a valid acceptance of the donation.
Sections 745 and 749 of the New Civil Code provide:
ART. 745. The donee must accept the donation personally, or through an authorized
person with a special power for the purpose, or with a general and sufficient power;
otherwise the donation shall be void.
ART. 749. In order that the donation of an immovable may be laid, it must be made in
a public document, specifying therein the property donated and the value of the charge
which the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public
document, but it shall not take effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof
in an authentic form, and this step shall be noted in both instruments.
Private respondents, as shown above, admit that in the offer of exhibits by the defendants in
the trial court, an affidavit of acceptance and/or confirmation of the donation, marked as Exhibit
"8," was offered in evidence. However, private respondents now question this exhibit because,
according to them "there is nothing in the record that the exhibits offered by the defendants have
been admitted nor such exhibit appear on record."
Respondents' stance does not persuade. The written acceptance of the donation having been
considered by the trial court in arriving at its decision, there is the presumption that this exhibit
was properly offered and admitted by the court.
Moreover, this issue was never raised in the Court of Appeals. Nowhere in their brief did
respondents question the validity of the donation on the basis of the alleged defect in the
acceptance thereof. If there was such a defect, why did it take respondents more than ten (10) years
from the date of the donation to question its validity? In the very least, they are guilty of estoppel.[14]
Respondents further argue that assuming there was a valid acceptance of the donation, the
acceptance was not noted in the Deed of Donation as required in Article 749 of the Civil Code,
hence, the donation is void.
The purpose of the formal requirement for acceptance of a donation is to ensure that such
acceptance is duly communicated to the donor. Thus, in Pajarillo vs. Intermediate Appellate
Court,[15] the Court held:
There is no question that the donation was accepted in a separate public instrument
and that it was duly communicated to the donors. Even the petitioners cannot deny
this. But what they do contend is that such acceptance was not "noted in both
instruments," meaning the extrajudicial partition itself and the instrument of
acceptance, as required by the Civil Code.
That is perfectly true. There is nothing in either of the two instruments showing that
"authentic notice" of the acceptance was made by Salud to Juana and Felipe. And
while the first instrument contains the statement that "the donee does hereby accept
this donation and does hereby express her gratitude for the kindness and liberality of
the donor," the only signatories thereof were Felipe Balane and Juana Balane de
Suterio. That was in fact the reason for the separate instrument of acceptance signed
by Salud a month later.
A strict interpretation of Article 633 can lead to no other conclusion that the
annulment of the donation for being defective in form as urged by the petitioners. This
would be in keeping with the unmistakable language of the above-quoted
provision. However, we find that under the circumstances of the present case, a literal
adherence to the requirement of the law might result not in justice to the parties but
conversely a distortion of their intentions. It is also a policy of the Court to avoid such
as interpretation.
The purpose of the formal requirement is to insure that the acceptance of the donation
is duly communicated to the donor. In the case at bar, it is not even suggested that
Juana was unaware of the acceptance for she in fact confirmed it later and requested
that the donated land be not registered during her lifetime by Salud. Given this
significant evidence, the Court cannot in conscience declare the donation ineffective
because there is no notation in the extrajudicial settlement of the donee's
acceptance. That would be placing too much stress on mere form over substance. It
would also disregard the clear reality of the acceptance of the donation as manifested
in the separate instrument dated June 20, 1946, and as later acknowledged by Juan.
In the case at bar, a school building was immediately constructed after the donation was
executed. Respondents had knowledge of the existence of the school building put up on the
donated lot through the efforts of the Parents-Teachers Association of Barangay Kauswagan. It
was when the school building was being dismantled and transferred to the new site and when Vice-
Mayor Wilfredo Palma was constructing a house on the donated property that respondents came
to know of the Deed of Exchange. The actual knowledge by respondents of the construction and
existence of the school building fulfilled the legal requirement that the acceptance of the donation
by the donee be communicated to the donor.
On respondents' claim, which was upheld by the Court of Appeals, that the acceptance by BPS
District Supervisor Gregorio Buendia of the donation was ineffective because of the absence of a
special power of attorney from the Republic of the Philippines, it is undisputed that the donation
was made in favor of the Bureau of Public Schools. Such being the case, his acceptance was
authorized under Section 47 of the 1987 Administrative Code which states:
SEC. 47. Contracts and Conveyances. - Contracts or conveyances may be executed

for and in behalf of the Government or of any of its branches, subdivisions, agencies,
or instrumentalities, whenever demanded by the exigency or exigencies of the service
and as long as the same are not prohibited by law.
Finally, it is respondents' submission that the donee, in exchanging the donated lot with a
bigger lot, violated the condition in the donation that the lot be exclusively used for school
purposes only.
What does the phrase "exclusively used for school purposes" convey? "School" is simply an
institution or place of education.[16] "Purpose" is defined as "that which one sets before him to
accomplish or attain; an end, intention, or aim, object, plan, project. Term is synonymous with the
ends sought, an object to be attained, an intention, etc."[17] "Exclusive" means "excluding or having
power to exclude (as by preventing entrance or debarring from possession, participation, or use);
limiting or limited to possession, control or use.[18]
Without the slightest doubt, the condition for the donation was not in any way violated when
the lot donated was exchanged with another one. The purpose for the donation remains the same,
which is for the establishment of a school. The exclusivity of the purpose was not altered or
affected. In fact, the exchange of the lot for a much bigger one was in furtherance and enhancement
of the purpose of the donation. The acquisition of the bigger lot paved the way for the release of
funds for the construction of Bagong Lipunan school building which could not be accommodated
by the limited area of the donated lot.
WHEREFORE, the decision of the Court of Appeals is hereby REVERSED and SET ASIDE
and the decision of the Regional Trial Court is REINSTATED.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Pardo, and Ynares-Santiago, JJ., concur.
Puno J., on official leave.
[1]
Rollo, p. 35.
[2]
Id., at 41.
[3]
Id., at 40-42.
[4]
Id., at 30.
[5]
Id., at 11.
[6]
Art. 745. The donee must accept the donation personally, or through an authorized person with a special power for
the purpose, or with a general and sufficient power; otherwise the donation shall be void.
[7]
Art. 749. In order that the donation of an immovable may be valid, it must be made in a public document, specifying
therein the property donated and the value of the charge which the donee must satisfy.
The acceptance may be made in the same deed of donation or in a separate public document, but it shall not take effect
unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic form, and this
step shall be noted in both instruments.
[8]
Art.725, New Civil Code.
[9]
Art. 726, New Civil Code.
[10]
Arts. 726 and 733, New Civil Code.
[11]
Art. 733, New Civil Code.
[12]
Central Philippine University vs. Court of Appeals, 246 SCRA 511, 517 (1995); De Luna vs. Abrigo, 181 SCRA
150 (1990); City of Manila vs. Rizal Park Co., 53 Phil 515, 526 (1929).
[13]
Rollo, pp. 7-8.
[14]
Estoppel by laches, or the negligence or omission to assert a right within a reasonable time, warrants a presumption
that the party entitled to assert it either has abandoned it or declined to assert it (Ochagabra vs. CA, 304 SCRA 587
(1999).
[15]
176 SCRA 340 (1989).
[16]
BLACK'S LAW DICTIONARY, Sixth Edition, p. 1344.
[17]
Id., at 1236.
[18]
Webster's Third New International Dictionary.
GESTOPA VS. CA FACTS-

Acceptance in Donation
Acceptance is a mark that the donation is inter vivos. Donations mortis causa, being in the form of a
will, are not required to be accepted by the donee during the donor’s lifetime.
FACTS:
Spouses Danlag own six parcels of land. To four parcels of land, they executed a donation mortis
causa in favor of respondent Mercedes Danlag-Pilapil, reserving donor's rights to amend, cancel, or
revoke the donation and to sell or encumber such properties. Years later, they executed another
donation, this time inter vivos, to six parcels of land in favor of respondents, reserving their rights to
the fruits of the land during their lifetime and for prohibiting the donee to sell or dispose the
properties donated. Subsequently, the spouses sold 2 parcels to herein petitioners, spouses
Gestopa, and eventually revoking the donation. Respondent filed a petition to quiet title, stating that
she had already become the owner of the parcels of land. Trial Court ruled in favor of petitioners, but
CA reversed.
ISSUE:
Whether the (second) donation was inter vivos or mortis causa
RULING:
It was donation inter vivos. The spouses were aware of the difference between the two donations,
and that they needed to execute another deed of donation inter vivos, since it has a different
application to a donation mortis causa. Also, the court stated four reasons to the matter: (1) that the
spouses donated the parcels of land out of love and affection, a clear indication of a donation inter
vivos; (2) the reservation of a lifetime usufruct; (3) reservation of sufficient properties for
maintenance that shows the intention to part with their six lot; and (4) respondent's acceptance,
contained in the deed of donation. Once a deed of donation has been accepted, it cannot be
revoked, except for officiousness or ingratitude, which the spouses failed to invoke.
SECOND DIVISION
[G.R. No. 111904. October 5, 2000]

SPS. AGRIPINO GESTOPA and ISABEL SILARIO
GESTOPA, petitioners, vs. COURT OF APPEALS and MERCEDES
DANLAG y PILAPIL, respondents.
DECISION
QUISUMBING, J.:
This petition for review,[1] under Rule 45 of the Rules of Court, assails the decision[2]of
the Court of Appeals dated August 31, 1993, in CA-G.R. CV No. 38266, which reversed
the judgment[3] of the Regional Trial Court of Cebu City, Branch 5.
The facts, as culled from the records, are as follows:
Spouses Diego and Catalina Danlag were the owners of six parcels of unregistered
lands. They executed three deeds of donation mortis causa, two of which are dated
March 4, 1965 and another dated October 13, 1966, in favor of private respondent
Mercedes Danlag-Pilapil.[4] The first deed pertained to parcels 1 & 2 with Tax Declaration
Nos. 11345 and 11347, respectively. The second deed pertained to parcel 3, with TD No.
018613. The last deed pertained to parcel 4 with TD No. 016821. All deeds contained the
reservation of the rights of the donors (1) to amend, cancel or revoke the donation during
their lifetime, and (2) to sell, mortgage, or encumber the properties donated during the
donors' lifetime, if deemed necessary.
On January 16, 1973, Diego Danlag, with the consent of his wife, Catalina Danlag,
executed a deed of donation inter vivos[5] covering the aforementioned parcels of land
plus two other parcels with TD Nos. 11351 and 11343, respectively, again in favor of
private respondent Mercedes. This contained two conditions, that (1) the Danlag spouses
shall continue to enjoy the fruits of the land during their lifetime, and that (2) the donee
can not sell or dispose of the land during the lifetime of the said spouses, without their
prior consent and approval. Mercedes caused the transfer of the parcels' tax declaration
to her name and paid the taxes on them.
On June 28, 1979 and August 21, 1979, Diego and Catalina Danlag sold parcels 3
and 4 to herein petitioners, Mr. and Mrs. Agripino Gestopa. On September 29, 1979, the
Danlags executed a deed of revocation[6]recovering the six parcels of land subject of the
aforecited deed of donation inter vivos.
On March 1, 1983, Mercedes Pilapil (herein private respondent) filed with the RTC a
petition against the Gestopas and the Danlags, for quieting of title [7] over the above
parcels of land.She alleged that she was an illegitimate daughter of Diego Danlag; that
she lived and rendered incalculable beneficial services to Diego and his mother, Maura
Danlag, when the latter was still alive. In recognition of the services she rendered, Diego
executed a Deed of Donation on March 20, 1973, conveying to her the six (6) parcels of
land. She accepted the donation in the same instrument, openly and publicly exercised
rights of ownership over the donated properties, and caused the transfer of the tax
declarations to her name. Through machination, intimidation and undue influence, Diego
persuaded the husband of Mercedes, Eulalio Pilapil, to buy two of the six parcels covered
by the deed of donation. Said donation inter vivos was coupled with conditions and,
according to Mercedes, since its perfection, she had complied with all of them; that she
had not been guilty of any act of ingratitude; and that respondent Diego had no legal basis
in revoking the subject donation and then in selling the two parcels of land to the
Gestopas.
In their opposition, the Gestopas and the Danlags averred that the deed of donation
dated January 16, 1973 was null and void because it was obtained by Mercedes through
machinations and undue influence. Even assuming it was validly executed, the intention
was for the donation to take effect upon the death of the donor. Further, the donation was
void for it left the donor, Diego Danlag, without any property at all.
On December 27, 1991, the trial court rendered its decision, thus:
"WHEREFORE, the foregoing considered, the Court hereby renders judgment in

favor of the defendants and against the plaintiff:
1. Declaring the Donations Mortis Causa and Inter Vivos as revoked, and, therefore, has
(sic) no legal effect and force of law.
2. Declaring Diego Danlag the absolute and exclusive owner of the six (6) parcels of land
mentioned in the Deed of revocation (Exh. P-plaintiff, Exh. 6-defendant Diego
Danlag).
3. Declaring the Deeds of Sale executed by Diego Danlag in favor of spouses Agripino
Gestopa and Isabel Gestopa dated June 28, 1979 (Exh. S-plaintiff; Exh. 18-
defendant); Deed of Sale dated December 18, 1979 (Exh. T plaintiff; Exh. 9-
defendant); Deed of Sale dated September 14, 1979 (Exh. 8); Deed of Sale dated
June 30, 1975 (Exh. U); Deed of Sale dated March 13, 1978 (Exh. X) as valid and
enforceable duly executed in accordance with the formalities required by law.
4. Ordering all tax declaration issued in the name of Mercedes Danlag Y Pilapil covering
the parcel of land donated cancelled and further restoring all the tax declarations
previously cancelled, except parcels nos. 1 and 5 described, in the Deed of Donation
Inter Vivos (Exh. "1") and Deed of Sale (Exh. "2") executed by defendant in favor of
plaintiff and her husband.
[5.] With respect to the contract of sale of abovestated parcels of land, vendor Diego
Danlag and spouse or their estate have the alternative remedies of demanding the
balance of the agreed price with legal interest, or rescission of the contract of sale.
SO ORDERED."[8]
In rendering the above decision, the trial court found that the reservation clause in all
the deeds of donation indicated that Diego Danlag did not make any donation; that the
purchase by Mercedes of the two parcels of land covered by the Deed of Donation Inter
Vivos bolstered this conclusion; that Mercedes failed to rebut the allegations of ingratitude
she committed against Diego Danlag; and that Mercedes committed fraud and
machination in preparing all the deeds of donation without explaining to Diego Danlag
their contents.
Mercedes appealed to the Court of Appeals and argued that the trial court erred in
(1) declaring the donation dated January 16, 1973 as mortis causa and that the same
was already revoked on the ground of ingratitude; (2) finding that Mercedes purchased
from Diego Danlag the two parcels of land already covered by the above donation and
that she was only able to pay three thousand pesos, out of the total amount of twenty
thousand pesos; (3) failing to declare that Mercedes was an acknowledged natural child
of Diego Danlag.
On August 31, 1993, the appellate court reversed the trial court. It ruled:
"PREMISES CONSIDERED, the decision appealed from is REVERSED and a new

judgment is hereby rendered as follows:
1. Declaring the deed of donation inter vivos dated January 16, 1973 as not having
been revoked and consequently the same remains in full force and effect;
2. Declaring the Revocation of Donation dated June 4, 1979 to be null and void and
therefore of no force and effect;
3. Declaring Mercedes Danlag Pilapil as the absolute and exclusive owner of the six
(6) parcels of land specified in the above-cited deed of donation inter vivos;
4. Declaring the Deed of Sale executed by Diego Danlag in favor of spouses Agripino
and Isabel Gestopa dated June 28, 1979 (Exhibits S and 18), Deed of Sale dated
December 18, 1979 (Exhibits T and 19), Deed of Sale dated September 14, 1979
(Exhibit 8), Deed of Sale dated June 30, 1975 (Exhibit U), Deed of Sale dated March
13, 1978 (Exhibit X) as well as the Deed of Sale in favor of Eulalio Danlag dated
December 27, 1978 (Exhibit 2) not to have been validly executed;
5. Declaring the above-mentioned deeds of sale to be null and void and therefore of no
force and effect;
6. Ordering spouses Agripino Gestopa and Isabel Silerio Gestopa to reconvey within
thirty (30) days from the finality of the instant judgment to Mercedes Danlag Pilapil
the parcels of land above-specified, regarding which titles have been subsequently
fraudulently secured, namely those covered by O.C.T. T-17836 and O.C.T. No.
17523.
7. Failing to do so, ordering the Branch Clerk of Court of the Regional Trial Court
(Branch V) at Cebu City to effect such reconveyance of the parcels of land covered by
O.C.T. T-17836 and 17523.
SO ORDERED."[9]
The Court of Appeals held that the reservation by the donor of lifetime usufruct
indicated that he transferred to Mercedes the ownership over the donated properties; that
the right to sell belonged to the donee, and the donor's right referred to that of merely
giving consent; that the donor changed his intention by donating inter vivos properties
already donated mortis causa; that the transfer to Mercedes' name of the tax declarations
pertaining to the donated properties implied that the donation was inter vivos; and that
Mercedes did not purchase two of the six parcels of land donated to her.
Hence, this instant petition for review filed by the Gestopa spouses, asserting that:
"THE HONORABLE COURT OF APPEALS, TWELFTH DIVISION, HAS

GRAVELY ERRED IN REVERSING THE DECISION OF THE COURT A
QUO."[10]
Before us, petitioners allege that the appellate court overlooked the fact that the donor
did not only reserve the right to enjoy the fruits of the properties, but also prohibited the
donee from selling or disposing the land without the consent and approval of the Danlag
spouses. This implied that the donor still had control and ownership over the donated
properties. Hence, the donation was post mortem.
Crucial in resolving whether the donation was inter vivos or mortis causa is the
determination of whether the donor intended to transfer the ownership over the properties
upon the execution of the deed.[11]
In ascertaining the intention of the donor, all of the deed's provisions must be read
together.[12] The deed of donation dated January 16, 1973, in favor of Mercedes contained
the following:
"That for and in consideration of the love and affection which the Donor inspires in
the Donee and as an act of liberality and generosity, the Donor hereby gives, donates,
transfer and conveys by way of donation unto the herein Donee, her heirs, assigns and
successors, the above-described parcels of land;
That it is the condition of this donation that the Donor shall continue to enjoy all the
fruits of the land during his lifetime and that of his spouse and that the donee cannot
sell or otherwise, dispose of the lands without the prior consent and approval by the
Donor and her spouse during their lifetime.
xxx
That for the same purpose as hereinbefore stated, the Donor further states that he has
reserved for himself sufficient properties in full ownership or in usufruct enough for
his maintenance of a decent livelihood in consonance with his standing in society.
That the Donee hereby accepts the donation and expresses her thanks and gratitude for
the kindness and generosity of the Donor."[13]
Note first that the granting clause shows that Diego donated the properties out of love
and affection for the donee. This is a mark of a donation inter vivos.[14] Second, the
reservation of lifetime usufruct indicates that the donor intended to transfer the naked
ownership over the properties. As correctly posed by the Court of Appeals, what was the
need for such reservation if the donor and his spouse remained the owners of the
properties? Third, the donor reserved sufficient properties for his maintenance in
accordance with his standing in society, indicating that the donor intended to part with the
six parcels of land.[15] Lastly, the donee accepted the donation. In the case of Alejandro
vs. Geraldez, 78 SCRA 245 (1977), we said that an acceptance clause is a mark that the
donation is inter vivos. Acceptance is a requirement for donations inter
vivos. Donations mortis causa, being in the form of a will, are not required to be accepted
by the donees during the donors' lifetime.
Consequently, the Court of Appeals did not err in concluding that the right to dispose
of the properties belonged to the donee. The donor's right to give consent was merely
intended to protect his usufructuary interests. In Alejandro, we ruled that a limitation on
the right to sell during the donors' lifetime implied that ownership had passed to the
donees and donation was already effective during the donors' lifetime.
The attending circumstances in the execution of the subject donation also
demonstrated the real intent of the donor to transfer the ownership over the subject
properties upon its execution.[16] Prior to the execution of donation inter vivos, the Danlag
spouses already executed three donations mortis causa. As correctly observed by the
Court of Appeals, the Danlag spouses were aware of the difference between the two
donations. If they did not intend to donate inter vivos, they would not again donate the
four lots already donated mortis causa.Petitioners' counter argument that this proposition
was erroneous because six years after, the spouses changed their intention with the deed
of revocation, is not only disingenious but also fallacious. Petitioners cannot use the deed
of revocation to show the spouses' intent because its validity is one of the issues in this
case.
Petitioners aver that Mercedes' tax declarations in her name can not be a basis in
determining the donor's intent. They claim that it is easy to get tax declarations from the
government offices such that tax declarations are not considered proofs of
ownership. However, unless proven otherwise, there is a presumption of regularity in the
performance of official duties.[17] We find that petitioners did not overcome this
presumption of regularity in the issuance of the tax declarations. We also note that the
Court of Appeals did not refer to the tax declarations as proofs of ownership but only as
evidence of the intent by the donor to transfer ownership.
Petitioners assert that since private respondent purchased two of the six parcels of
land from the donor, she herself did not believe the donation was inter vivos. As aptly
noted by the Court of Appeals, however, it was private respondent's husband who
purchased the two parcels of land.
As a rule, a finding of fact by the appellate court, especially when it is supported by
evidence on record, is binding on us.[18] On the alleged purchase by her husband of two
parcels, it is reasonable to infer that the purchase was without private respondent's
consent. Purchase by her husband would make the properties conjugal to her own
disadvantage. That the purchase is against her self-interest, weighs strongly in her favor
and gives credence to her claim that her husband was manipulated and unduly influenced
to make the purchase, in the first place.
Was the revocation valid? A valid donation, once accepted, becomes irrevocable,
except on account of officiousness, failure by the donee to comply with the charges
imposed in the donation, or ingratitude.[19] The donor-spouses did not invoke any of these
reasons in the deed of revocation. The deed merely stated:
"WHEREAS, while the said donation was a donation Inter Vivos, our intention
thereof is that of Mortis Causa so as we could be sure that in case of our death, the
above-described properties will be inherited and/or succeeded by Mercedes Danlag de
Pilapil; and that said intention is clearly shown in paragraph 3 of said donation to the
effect that the Donee cannot dispose and/or sell the properties donated during our life-
time, and that we are the one enjoying all the fruits thereof."[20]
Petitioners cited Mercedes' vehemence in prohibiting the donor to gather coconut

trees and her filing of instant petition for quieting of title. There is nothing on record,
however, showing that private respondent prohibited the donors from gathering
coconuts. Even assuming that Mercedes prevented the donor from gathering coconuts,
this could hardly be considered an act covered by Article 765 of the Civil Code. [21] Nor
does this Article cover respondent's filing of the petition for quieting of title, where she
merely asserted what she believed was her right under the law.
Finally, the records do not show that the donor-spouses instituted any action to
revoke the donation in accordance with Article 769 of the Civil Code.[22] Consequently, the
supposed revocation on September 29, 1979, had no legal effect.
WHEREFORE, the instant petition for review is DENIED. The assailed decision of
the Court of Appeals dated August 31, 1993, is AFFIRMED.
Costs against petitioners.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.
[1] Rollo, pp. 3-10.

[2] Id. at 21-33.
[3] Id. at 10-20.
[4] Records, pp. 61-65.
[5] Id. at 66.
[6] Id. at 78-79.
[7] Id. at 1-4.
[8] Rollo, pp. 19-20.
[9] Id. at 31-32.
[10] Id. at 5.
[11] Reyes vs. Mosqueda, 187 SCRA 661, 671 (1990).
[12] Alejandro vs. Geraldez, 78 SCRA 245, 261 (1977).
[13] Records, p. 66 (back page).
[14] Vita vs. Montanano, 194 SCRA 180, 190 (1991).
[15]
Reyes vs. Mosqueda, 187 SCRA 661, 671 (1990); Concepcion vs. Concepcion, 91 Phil. 823, 827
(1952).
[16] Sicad vs. CA, 294 SCRA 183, 191 (1998).
[17] Revised Rules of Court, Rule 131, Sec. 3 (m).
[18] Guerrero vs. Court of Appeals, 285 SCRA 670, 678 (1998).
[19] Vda. de Arceo vs. CA, 185 SCRA 489, 497 (1990); Alejando vs. Geraldez, 78 SCRA 245, 267 (1977).
[20] Rollo, p. 79.
[21] Art. 765 The donation may also be revoked at the instance of the donor, by reason of ingratitude in the
following cases: (1) If the donee should commit some offense against the person, the honor or the property
of the donor, or of his wife or children under his parental authority. (2) If the donee imputes to the donor
any criminal offense, or any act involving moral turpitude, even though he should prove it, unless the crime
or the act has been committed against the donee himself, his wife or children under his authority; (3) If he
unduly refuses him support when the donee is legally or morally bound to give support to the donor.
[22] Article 769. The action granted to the donor by reason of ingratitude cannot be renounced in
advance. This action prescribes within one year, to be counted from the time the donor had knowledge of
the fact and it was possible for him to bring the action.
Secretary of Education vs. Heirs of Rufino Dulay (G.R. No.

164748, January 27, 2006, 480 SCRA 452)
FACTS:
On August 3, 1981, the spouses Rufino Dulay, Sr. and Ignacia Vicente Dulay executed a deed of
donation over a 10,000-square-meter portion of their property in favor of the Ministry of Education and
Culture.
The property was subdivided. On April 13, 1983, a Transfer Certificate of Title was issued in the name of
the Ministry of Education and Culture, represented by Laurencio C. Ramel, the Superintendent of Schools
of Isabela. However, the property was not used for school purposes and remained idle.
Sometime in 1988, the DECS, through its Secretary, started construction of the Rizal National High
School building on a parcel of land it acquired from Alejandro Feliciano. The school site was about 2
kilometers away from the land donated by the spouses Dulay.
In a letter to the DECS Secretary dated August 19, 1994, the spouses Dulay requested that the property
be returned to them considering that the land was never used since 1981, or a period of more than 13
years. On August 28, 1994, the Barangay Council of Rizal, Santiago City issued Resolution No. 397
recognizing the right of the donors to redeem the subject parcel of land because of the DECS’ failure to
utilize it for the intended purpose. It further resolved that the Rizal National High School no longer needed
the donated land "considering its distance from the main campus and [the] failure to utilize the property
for a long period of time."
On August 31, 1997, the heirs of Dulay, Sr., herein respondents, filed a complaint for the revocation of the
deed of donation and cancellation of the title, alleging that (1) there was a condition in the deed of
donation: that the DECS, as donee, utilize the subject property for school purposes, that is, the
construction of a building to house the Rizal National High School, (2) the DECS did not fulfill the
condition and that the land remained idle up to the present, and (3) the donation inter vivos was
inofficious, since the late Rufino Dulay, Sr. donated more than what he could give by will.
Petitioners, through the Office of the Solicitor General (OSG), interposed the following defenses: (a) the
DECS complied with said condition because the land was being used by the school as its technology and
home economics laboratory; (b) the donation was not inofficious for the donors were the owners of five
other parcels of land, all located at Rizal, Santiago City; (c) the DECS acquired the disputed property by
virtue of purchase made on December 8, 1997 by the barangay of Rizal, Santiago City in the amount of
P18,000.00 as certified by its former Barangay Captain, Jesus San Juan;11 and (d) the action of the
respondents had prescribed. The OSG also claimed that students planted a portion of the land with rice,
mahogany seedlings, and fruit-bearing trees; the produce would then be sold and the proceeds used for
the construction of a school building on the subject property.
ISSUE:
(1) Whether or nor the DECS had complied with the condition imposed on the the deed of donation.
(2) Whether the respondents' right to seek the revocation of the deed of donation is already barred by
prescription and laches.
HELD:
The contention of petitioners has no merit.
As gleaned from the CA decision, petitioners failed to prove that the donated property was used for
school purposes as indicated in the deed of donation:
We find it difficult to sustain that the defendant-appellants have complied with the condition of donation. It
is not amiss to state that other than the bare allegation of the defendant-appellants, there is nothing in the
records that could concretely prove that the condition of donation has been complied with by the
defendant-appellants. In the same breadth, the planting of palay on the land donated can hardly be
considered and could not have been the "school purposes" referred to and intended by the donors when
they had donated the land in question. Also, the posture of the defendant-appellants that the land
donated is being used as technology and home economics laboratory of the Rizal National High School is
far from being the truth considering that not only is the said school located two kilometers away from the
land donated but also there was not even a single classroom built on the land donated that would
reasonably indicate that, indeed, classes have been conducted therein. These observations, together with
the unrebutted ocular inspection report made by the trial court which revealed that the land donated
remains idle and without any improvement thereon for more than a decade since the time of the donation,
give Us no other alternative but to conclude that the defendant-appellants have, indeed, failed to comply
with what is incumbent upon them in the deed of donation.
The right to seek the revocation of donation had not yet prescribed when respondents filed their complaint
Anent the second issue, we reject the contention of the OSG that respondents’ cause of action is already
barred by prescription under Article 764 of the New Civil Code, or four years from the non-compliance
with the condition in the deed of donation. Since such failure to comply with the condition of utilizing the
property for school purposes became manifest sometime in 1988 when the DECS utilized another
property for the construction of the school building, the four-year prescriptive period did not commence on
such date. Petitioner was given more than enough time to comply with the condition, and it cannot be
allowed to use this fact to its advantage. It must be stressed that the donation is onerous because the
DECS, as donee, was burdened with the obligation to utilize the land donated for school purposes. Under
Article 733 of the New Civil Code, a donation with an onerous cause is essentially a contract and is thus
governed by the rules on contract.
FIRST DIVISION
MULTI-REALTY DEVELOPMENT G.R. No. 146726

CORPORATION,
Petitioner,
Present:
PANGANIBAN, C.J.,
- versus - Chairperson,
YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO, SR., and
THE MAKATI TUSCANY CHICO-NAZARIO, JJ.
CONDOMINIUM
CORPORATION,
Respondent.
Promulgated:
June 16, 2006

x-----------------------------------------------------------------------------------------x
DECISION
CALLEJO, SR., J.:

Before this Court is a petition for review on certiorari of the Decision[1] of the
Court of Appeals in CA-G.R. CV No. 44696 dismissing the appeal of Multi-Realty
Development Corporation on the ground of prescription.
Multi-Realty is a domestic corporation engaged in the real estate business,

and the construction and development of condominiums. It developed, among
others, the Ritz Towers Condominium, and the former Galeria de Magallanes, both
built in the Municipality (now city) of Makati.
In the 1970s, Multi-Realty constructed a 26-storey condominium at the

corner of Ayala Avenue and Fonda Street in Makati City, known as
the Makati TuscanyCondominium Building (Makati Tuscany, for short). The
building was one of the Philippines first condominium projects, making it necessary
for Multi-Realty and the government agencies concerned with the project, to
improve and formulate rules and regulations governing the project as construction
progressed.
Makati Tuscany consisted of 160 condominium units, with 156 units from the
2 to the 25th floors, and 4 penthouse units in the 26th floor. Two hundred seventy
nd
(270) parking slots were built therein for apportionment among its unit owners.
One hundred sixty-four (164) of the parking slots were so allotted, with each unit
at the 2nd to the 25thfloors being allotted one (1) parking slot each, and each
penthouse unit with two slots. Eight (8) other parking slots, found on the ground
floor of the Makati Tuscany were designated as guest parking slots, while the
remaining 98 were to be retained by Multi-Realty for sale to unit owners who would
want to have additional slots.
According to Multi-Realty, the intention to allocate only 8 parking slots to

the Makati Tuscanys common areas was reflected in its color-coded ground floor
plan, upper basement plan and lower basement plan prepared by its architect, C.D.
Arguelles and Associates. These plans, which depict common areas as yellow zones
and areas reserved for unit owners as red zones, clearly show that, of the 270
parkings slots, 262 were designated red zones, and only 8 first-floor parking slots
were designated yellow zones or common areas.
Pursuant to Republic Act No. 4726, otherwise known as the Condominium

Act, the Makati Tuscany Condominium Corporation (MATUSCO) was organized and
established to manage the condominium units.
In 1975, Multi-Realty executed a Master Deed and Declaration of

Restrictions[2] (Master Deed, for short) of the Makati Tuscany. Sections 5 and 7
provide:
SEC. 5. Accessories to Units. To be considered as part of each unit and reserved

for the exclusive use of its owner are the balconies adjacent thereto and the parking lot
or lots which are to be assigned to each unit.
xxxx
SEC. 7. The Common Areas. The common elements or areas of

the Makati Tuscany shall comprise of all the parts of the project other than the units,
including without limitation the following:
xxxx
(d) All driveways, playgrounds, garden areas and PARKING AREAS OTHER THAN
THOSE ASSIGNED TO EACH UNIT UNDER SEC. 5 ABOVE;[3]
The Master Deed was filed with the Register of Deeds in 1977. Multi-Realty
executed a Deed of Transfer in favor of MATUSCO over these common
areas. However, the Master Deed and the Deed of Transfer did not reflect or
specify the ownership of the 98 parking slots. Nevertheless, Multi-Realty sold 26 of
them in 1977 to 1986 to condominium unit buyers who needed additional parking
slots. MATUSCO did not object, and certificates of title were later issued by the
Register of Deeds in favor of the buyers. MATUSCO issued Certificates of
Management covering the condominium units and parking slots which Multi-Realty
had sold.
At a meeting of MATUSCOs Board of Directors on March 13, 1979, a
resolution was approved, authorizing its President, Jovencio Cinco, to negotiate
terms under which MATUSCO would buy 36 of the unallocated parking slots from
Multi-Realty. During another meeting of the Board of Directors on June 14, 1979,
Cinco informed the Board members of Multi-Realtys proposal to sell all of the
unassigned parking lots at a discounted price of P15,000.00 per lot, or some 50%
lower than the then prevailing price of P33,000.00 each. The Board agreed to hold
in abeyance any decision on the matter to enable all its members to ponder upon
the matter.
In the meantime, the fair market value of the unallocated parking slots
reached P250,000.00 each, or a total of P18,000,000.00 for the 72 slots.
In September 1989, Multi-Realty, through its President, Henry Sy, who was also a
member of the Board of Directors of MATUSCO, requested that two Multi-Realty
executives be allowed to park their cars in two of Makati Tuscanys remaining 72
unallocated parking slots. In a letter, through its counsel, MATUSCO denied the
request, asserting, for the first time, that the remaining unallocated parking slots
were common areas owned by it. In another letter, MATUSCO offered, by way of
goodwill gesture, to allow Multi-Realty to use two unallocated parking slots, which
offer was rejected by the latter.
On April 26, 1990, Multi-Realty, as plaintiff, filed a complaint, docketed as Civil Case
No. 90-1110, against MATUSCO, as defendant, for Damages and/or Reformation of
Instrument with prayer for temporary restraining order and/or preliminary
injunction. The case was raffled to Branch 59 of the Makati RTC.
Multi-Realty alleged therein that it had retained ownership of the 98 unassigned
parking slots. Considering, however, that Makati Tuscany was one of its first
condominium projects in the Philippines, this was not specified in Section 7(d) of
the Master Deed since the documentation and the terms and conditions therein
were all of first impression. It was further alleged that the mistake was discovered
for the first time when MATUSCO rejected its request to allow its (Multi-Realtys)
executives to park their cars in two of the unassigned parking lots.
In its Answer with counterclaim, MATUSCO alleged that Multi-Realty had no

cause of action against it for reformation of their contract. By its own admission,
Multi-Realty sold various parking slots to third parties despite its knowledge that
the parking areas, other than those mentioned in Sec. 5 of the Master Deed,
belonged to MATUSCO. MATUSCO prayed that judgment be rendered in its favor
dismissing the complaint; and, on its counterclaim, to order the plaintiff to render
an accounting of the proceeds of the sale of the parking slots other than those
described in Sec. 5 of the Master Deed; to pay actual damages equivalent to the
present market value of the parking areas other than those described in Sec. 5 of
the Master Deed, amounting to no less than P250,000.00 per slot plus reasonable
rentals thereon at no less than P400.00 per slot per month from date of sale until
payment by plaintiff to defendant of the market value of these parking areas.
After trial, the RTC rendered a decision, the dispositive portion of which
reads:
Premises considered, this case is dismissed. Defendants counterclaim is, likewise,

dismissed, the same not being compulsory and no filing fee having been paid. Plaintiff is,
however, ordered to pay defendant attorneys fees in the amount of P50,000.00.
Cost against plaintiff.
SO ORDERED.[4]
The trial court ruled that Multi-Realty failed to prove any ground for the
reformation of its agreement with MATUSCO relative to the ownership of the
common areas.There is no evidence on record to prove that the defendant acted
fraudulently or inequitably to the prejudice of the plaintiff, and the latter was
estopped, by deed, from claiming that it owned the common areas. It also held that
the defendant was not estopped from assailing plaintiffs ownership over the
disputed parking slots.
Multi-Realty appealed the decision to the CA via a petition under Rule 41 of

the Rules of Court, contending that:
THE TRIAL COURT ERRED IN DISMISSING THE COMPLAINT AND DISALLOWING THE
PLAINTIFF-APPELLANT FROM REFORMING THE MASTER DEED BECAUSE:
THERE IS VALID GROUND FOR REFORMATION OF THE MASTER DEED

SINCE THE MASTER DEED DID NOT REFLECT THE TRUE INTENTION OF THE
PARTIES REGARDING THE OWNERSHIP OF THE EXTRA NINETY-EIGHT
PARKING [SLOTS] DUE TO MISTAKE.
II
THE REGISTRATION OF THE MASTER DEED WITH THE REGISTER OF DEEDS

DID NOT MAKE PLAINTIFF-APPELLANT GUILTY OF ESTOPPEL BY DEED.
III
THE TRIAL COURT ERRED IN FINDING THAT DEFENDANT-APPELLEE IS NOT

ESTOPPED FROM QUESTIONING THE OWNERSHIP OF PLAINTIFF-
APPELLANT OVER THE DISPUTED PARKING LOTS.[5]
In support of its appeal, Multi-Realty reiterated its contentions in the trial

court, insisting that it had adduced evidence to prove all the requisites for the
reformation of Section 7(d) of the Master Deed under Article 1359 of the New Civil
Code. It was never its intention to designate the 98 unassigned parking slots as
common areas, and, as shown by the evidence on record, this was known to
MATUSCO. Under Article 1364 of the New Civil Code, an instrument may be
reformed if, due to lack of skill on the part of the drafter, the deed fails to express
the true agreement or intention of the parties therein. Since MATUSCO knew that
it (Multi-Realty) owned the 98 parking slots when the Master Deed was executed,
its registration did not make Multi-Realty guilty of estoppel by deed. In fact,
MATUSCO failed to object to the sale of some of the parking slots to third parties.
It was also pointed out that Multi-Realty remained in possession thereof.
Multi-Realty further claimed that the trial court erred in not declaring that
MATUSCO was estopped from assailing the ownership over the parking slots, as it
not only conformed to the sale of some of the unassigned parking slots but likewise
failed to assail the ownership thereon for a period of 11 years. It insisted that the
sale of the said parking slots was made in accord with law, morals and public order,
and that MATUSCOs claim of ownership of the unassigned parking slots was merely
an afterthought.
MATUSCO, for its part, appealed the trial courts dismissal of its counterclaim.
On Multi-Realtys appeal, MATUSCO countered that the 270 parking slots

were to be apportioned as follows:
1 parking lot for each ordinary unit - 156
2 parking lots for each of the 4 Penthouse
Apartment Units - 8
of the remaining 106 parking lots, 34 parking lots were designated and allocated
as part of common areas which would be allocated purely for visitors, while the
remaining 72 units would become part of the Condominium Corporations
income-earning common areas - 106
----
270[6]
====
It was further averred that Multi-Realty, through Henry Sy, executed the
Master Deed in July 1975 and the Deed of Transfer in 1977, in which the ownership
of the common areas was unconditionally transferred to MATUSCO; Multi-Realty
sold 26 of the 34 parking slots in bad faith, which had been allocated purposely for
visitors of unit owners, amounting to millions of pesos; the action for reformation
has no legal basis because the transfer of the 106 unassigned parking slots which
form part of the common areas is contrary to Section 16[7] of the Condominium Act.
MATUSCO further pointed out that the unassigned parking slots could be
transferred only by the affirmative votes of all the members of Multi-Realty, and
that the Master Deed and the Deed of Transfer were prepared by the latter with
the assistance of its renowned lawyers. If there was a mistake in the drafting of the
Master Deed in 1975, the deed should have been corrected in 1977 upon the
execution of the Deed of Transfer. With the social and economic status of Henry
Sy, Multi-Realtys President, it is incredible that the Master Deed and the Deed of
Transfer failed to reflect the true agreement of the parties. MATUSCO went on to
state that Multi-Realty failed to adduce a preponderance of evidence to prove the
essential requirements for reformation of the questioned documents. Even if there
was a mistake in drafting the deeds, reformation could not be given due course
absent evidence that defendant-appellee acted fraudulently or inequitably.
On its claim of ownership over the unassigned parking slots, MATUSCO

averred that it is not estopped to do so because the sales thereof were illegal, and
it had no knowledge that Multi-Realty had been selling the same. Having acted
fraudulently and illegally, Multi-Realty cannot invoke estoppel against it.
On the RTC decision dismissing its counterclaim, MATUSCO averred that said
decision is erroneous, as it had adduced evidence to prove its entitlement to said
counterclaim.
In reply, Multi-Realty averred that MATUSCOs counterclaim had already

prescribed because it was filed only in 1990, long after the period therefor had
elapsed in 1981.
On August 21, 2000, the CA rendered its decision dismissing Multi-Realtys

appeal on the ground that its action below had already prescribed. The dispositive
portion of the decision reads:
WHEREFORE, foregoing premises considered, the appeal having no merit in fact

and in law, is hereby ORDERED DISMISSED, and the judgment of the trial court is
MODIFIED by deleting the award of attorneys fees not having been justified but
AFFIRMED as to its Order dismissing both the main complaint of plaintiff-appellant and
the counterclaim of defendant-appellant. With costs against both parties.[8]
The appellate court ruled that it was justified in dismissing Multi-Realtys

appeal on the ground of prescription as it was clothed with ample authority to
review the lower courts rulings even those not assigned as errors on appeal,
especially if the consideration of the matter is necessary to arrive at a just decision
of the case, and to avoid dispensing piecemeal justice. The CA cited the rulings of
this Court in Servicewide Specialists, Inc. v. Court of Appeals,[9] and Dinio v.
Laguesma.[10]
Multi-Realty filed a motion for reconsideration of the decision, contending
that:
THIS HONORABLE COURT VIOLATED SECTION 8 OF RULE 51 OF THE RULES OF COURT TO
MRDCS SUBSTANTIAL AND UNFAIR PREJUDICE BY RESOLVING MRDCS APPEAL ON THE
GROUND OF PRESCRIPTION, EVEN THOUGH NEITHER PARTY HAD ASSIGNED OR ARGUED
AS AN ERROR THE TRIAL COURTS FAILURE TO DISMISS THE ACTION FILED BY MRDC
BELOW AS PRESCRIBED.
THIS HONORABLE COURT ERRED IN COUNTING THE RUNNING OF THE PRESCRIPTIVE

PERIOD FROM THE DATE OF EXECUTION OF THE MASTER DEED IN 1975, BECAUSE UNDER
ARTICLE 1150 OF THE CIVIL CODE, AND THE SUPREME COURTS DECISIONS IN TORMON
VS. CUTANDA, AND VELUZ VS. VELUZ, MRDCS PERIOD TO FILE A SUIT FOR REFORMATION
ONLY BEGAN RUNNING IN 1989, AFTER DEFENDANT-APPELLANT MAKATI TUSCANY
CONDOMINIUM CORPORATIONS REPUDIATION OF THE PARTIES TRUE AGREEMENT GAVE
RISE TO MRDCS RIGHT OF ACTION.[11]
Multi-Realty further averred that the appellate court misapplied Rule 51,
Section 8 of the 1997 Rules of Court as well as the ruling of this Court in
the Servicewide Specialists case. It pointed out that, when it filed its Brief, as
appellee, Rule 51, Section 7 of the 1964 Rules of Court was still in effect, under
which an error which does not affect the jurisdiction over the subject matter will
not be considered unless stated in the assignment of error and properly assigned
in the Brief, as the court may pass upon plain and clerical errors only. Multi-Realty
insisted that the parties did not raise the issue of whether its action had already
prescribed when it filed its complaint in their pleadings below and in the
respondents Brief. It claimed that it was deprived of its right to due process when
the appellate court denied its appeal based on a ruling of this Court under the 1997
Rules of Civil Procedure. It insisted that the ruling of this Court in Servicewide
Specialist, Inc. was promulgated when the 1997 Rules of Civil Procedure was in
effect.
On January 18, 2001, the CA issued a Resolution denying Multi-Realtys

motion for reconsideration. The appellate court cited the ruling of this Court
in Rosello-Bentir v. Hon. Leanda,[12] to support its ruling that the action of petitioner
had already prescribed when it was filed with the RTC. Multi-Realty received its
copy of said Order of denial on January 29, 2001.
Multi-Realty, now petitioner, filed the instant petition for review

on certiorari, alleging that:
THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE IN A
MANNER INCONSISTENT WITH LAW, AND DEPARTED WITH UNFAIRLY PREJUDICIAL
EFFECT FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS LAID DOWN IN SECTION 8
OF RULE 51 OF THE RULES OF COURT WHEN IT DISMISSED MULTI-REALTYS APPEAL ON
THE BASIS OF PRESCRIPTION, EVEN THOUGH NEITHER PARTY RAISED [NOR] DISCUSSED
THE TRIAL COURTS FAILURE TO ENFORCE THE ALLEGEDLY APPLICABLE TIME BAR AS AN
ERROR IN THEIR BRIEFS.
THE HONORABLE COURT OF APPEALS DECIDED A MATTER OF SUBSTANCE IN A MANNER

PROBABLY NOT IN ACCORD WITH ARTICLE 1150 OF THE CIVIL CODE, WHEN IT
DISREGARDED THIS HONORABLE COURTS RULINGS IN TORMON V. CUTANDA AND VELUZ
V. VELUZ, AND RULED THAT THE PRESCRIPTIVE PERIODAPPLICABLE TO AN ACTION FOR
REFORMATION
BEGINS TO RUN FROM THE DATE THE INSTRUMENT TO BE REFORMED IS EXECUTED,
RATHER THAN FROM THE DATE ON WHICH THE TRUE AGREEMENT THE REFORMATION IS
MEANT TO EXPRESS IS VIOLATED.
THE HONORABLE COURT OF APPEALS OVERLOOKED RELEVANT FACTS SUSTAINING A

DECISION ALLOWING REFORMATION OF THE MASTER DEED WHEN IT FAILED TO REVERSE
THE TRIAL COURTS DECISION AND FIND THAT MATUSCOS CONSISTENT RECOGNITION OF,
AND PARTICIPATION IN, THE SALES OF UNALLOCATED PARKING SLOTS MADE BY MULTI-
REALTY, AND ITS EFFORTS TO BUY THE UNALLOCATED PARKING SLOTS FROM MULTI-
REALTY, ESTOP IT FROM ASSERTING TITLE TO THE UNALLOCATED PARKING SLOTS.[13]
The Court is to resolve two issues: (1) whether the CA erred in dismissing
petitioners appeal on the ground of prescription; and (2) whether petitioners
action had already prescribed when it was filed in 1990.
On the issue of prescription, petitioner asserts that under Article 1150 in
relation to Article 1144 of the New Civil Code, its action for reformation of the
Master Deed accrued only in 1989, when respondent, by overt acts, made known
its intention not to abide by their true agreement; since the complaint below was
filed in 1990, the action was filed within the prescriptive period therefor. Petitioner
cites the rulings of this Court in Tormon v. Cutanda,[14] Veluz v. Veluz,[15] and Espaol
v. Chairman, Philippine Veterans Administration[16] to bolster its claim.
In its comment on the petition, respondent avers that, as held by this Court
in Rosello-Bentir v. Hon. Leanda,[17] the prescriptive period for the petitioner to file
its complaint commenced in 1975, upon the execution of the Master Deed in its
favor. Considering that the action was filed only in 1990, the same, by then, had
already prescribed.
On the first issue, we sustain petitioners contention that the CA erred in

dismissing its appeal solely on its finding that when petitioner filed its complaint
below in 1990, the action had already prescribed. It bears stressing that in
respondents answer to petitioners complaint, prescription was not alleged as an
affirmative defense. Respondent did not raise the issue throughout the
proceedings in the RTC. Indeed, the trial court did not base its ruling on the
prescription of petitioners action; neither was this matter assigned by respondent
as an error of the RTC in its brief as defendant-appellant in the CA.
Settled is the rule that no questions will be entertained on appeal unless they
have been raised below. Points of law, theories, issues and arguments not
adequately brought to the attention of the lower court need not be considered by
the reviewing court as they cannot be raised for the first time on appeal. Basic
considerations of due process impel this rule.[18]
Truly, under Section 7, Rule 51 of the 1964 Rules of Court, no error which
does not affect the jurisdiction over the subject matter will be considered unless
stated in the assignment of errors and properly argued in the brief, save as the
Court, at its option, may pass upon plain errors not specified, and clerical errors.
Even at that time, the appellate court was clothed with ample authority to review
matters even if not assigned as errors in their appeal if it finds that their
consideration is necessary in arriving at a just decision of the case.[19] It had ample
authority to review and resolve matters not assigned and specified as errors by
either of the parties on appeal if it found that the matter was essential and
indispensable in order to arrive at a just decision of the case. It has broad
discretionary power, in the resolution of a controversy, to take into consideration
matters on record unless the parties fail to submit to the court specific questions
for determination. Where the issues already raised also rest on other issues not
specifically presented, as long as the latter issues bear relevance and close relation
to the former and as long as they arise from matters on record, the appellate court
has authority to include them in its discussion of the controversy as well as to pass
upon them. In brief, in those cases wherein questions not particularly raised by the
parties surface as necessary for the complete adjudication of the rights and
obligations of the parties and such questions fall within the issues already framed
by the parties, the interests of justice dictate that the court consider and resolve
them.[20]
When the appeals of the petitioner and that of the respondent were
submitted to the CA for decision, the 1997 Rules of Civil Procedure was already in
effect. Section 8,Rule 51 of said Rules, reads:
SEC. 8. Questions that may be decided. No error which does not affect the
jurisdiction over the subject matter or the validity of the judgment appealed from or the
proceedings therein will be considered unless stated in the assignment of errors, or
closely related to or dependent on an assigned error and properly argued in the brief,
save as the court may pass upon plain errors and clerical errors.
This provision was taken from the former rule with the addition of errors affecting
the validity of the judgment or closely related to or dependent on an assigned
error.[21] The authority of the appellate court to resolve issues not raised in the
briefs of the parties is even broader.
Nevertheless, given the factual backdrop of the case, it was inappropriate for
the CA, motu proprio, to delve into and resolve the issue of whether petitioners
action had already prescribed. The appellate court should have proceeded to
resolve petitioners appeal on its merits instead of dismissing the same on a ground
not raised by the parties in the RTC and even in their pleadings in the CA.
Even if we sustain the ruling of the CA that it acted in accordance with the Rules of
Court in considering prescription in denying petitioners appeal, we find and so rule
that it erred in holding that petitioners action had already prescribed when it was
filed in the RTC on April 26, 1990.
Prescription is rightly regarded as a statute of repose whose object is to
suppress fraudulent and stale claims from springing up at great distances of time
and surprising the parties or their representatives when the facts have become
obscure from the lapse of time or the defective memory or death or removal of
witnesses. The essence of the statute of limitations is to prevent fraudulent claims
arising from unwarranted length of time and not to defeat actions asserted on the
honest belief that they were sufficiently submitted for judicial
determination.[22] Our laws do not favor property rights hanging in the air,
uncertain, over a long span of time.[23]
Article 1144 of the New Civil Code provides that an action upon a written contract
must be brought within ten (10) years from the time the right of action accrues:
Art. 1144. The following actions must be brought within ten years from the time the right
of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
In relation thereto, Article 1150 of the New Civil Code provides that the time
for prescription of all actions, when there is no special provision which ordains
otherwise, shall be counted from the day they may be brought. It is the legal
possibility of bringing the action that determines the starting point for the
computation of the period of prescription.[24]
The term right of action is the right to commence and maintain an action. In
the law of pleadings, right of action is distinguished from a cause of action in that
the former is a remedial right belonging to some persons while the latter is a formal
statement of the operational facts that give rise to such remedial right. The former
is a matter of right and depends on the substantive law while the latter is a matter
of statute and is governed by the law of procedure. The right of action springs from
the cause of action, but does not accrue until all the facts which constitute the
cause of action have occurred.[25]
A cause of action must always consist of two elements: (1) the plaintiffs
primary right and the defendants corresponding primary duty, whatever may be
the subject to which they relate person, character, property or contract; and (2)
the delict or wrongful act or omission of the defendant, by which the primary right
and duty have been violated.[26]
To determine when all the facts which constitute a cause of action for
reformation of an instrument may be brought and when the right of the petitioner
to file such action accrues, the second paragraph of Section 1, Rule 63, must be
considered because an action for the reformation of an instrument may be brought
under said Rule:
SECTION 1. Who may file petition. Any person interested under a deed, will,
contract or other written instrument, whose rights are affected by a statute, executive
order or regulation, ordinance, or any other governmental regulation may, before breach
or violation thereof, bring an action in the appropriate Regional Trial Court to determine
any question of construction or validity arising, and for a declaration of his rights or duties,
thereunder.
An action for the reformation of an instrument, to quiet title to real property or

remove clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code,
may be brought under this Rule (emphasis supplied).
Such a petition is a special civil action determinative of the rights of the

parties to the case. It is permitted on the theory that courts should be allowed to
act, not only when harm is actually done and rights jeopardized by physical wrongs
or physical attack upon existing legal relations, but also when challenge, refusal,
dispute or denial thereof is made amounting to a live controversy. The uncertainty
and insecurity which may thereby be avoided may hamper or disturb the freedom
of the parties to transact business or to make improvements on their property
rights. A situation is thus created when a judicial declaration may serve to prevent
a dispute from ripening into violence or destruction.[27]
The concept and meaning of the term cause of action in proceedings for
declaratory relief, vis--vis an ordinary civil action, is broadened. It is not, as in
ordinary civil action, the wrong or delict by which the plaintiffs rights are violated,
but it is extended to a mere denial, refusal or challenge raising at least an
uncertainty or insecurity which is injurious to plaintiffs rights.[28]
For a petition for declaratory relief to prosper, the following conditions sine
qua non must concur: (1) there must be a justiciable controversy; (2) the
controversy must be between persons whose interests are adverse; (3) the party
seeking declaratory relief must have a legal interest in the controversy; and (4) the
issue involved must be ripe for judicial determination.[29]
To controvert is to dispute; to deny, to oppose or contest; to take issue

[30]
on. The controversy must be definite and concrete, touching on the legal
relations of the parties having adverse legal interests. It must be a real and
substantial controversy admitting of specific relief through a decree of a conclusive
character as distinguished from an opinion advising what the law would be upon a
hypothetical state of facts.[31]
The fact that the plaintiffs desires are thwarted by its own doubts, or by the
fears of others, does not confer a cause of action. No defendant has wronged the
plaintiff or has threatened to do so.[32] However, the doubt becomes a justiciable
controversy when it is translated into a claim of right which is actually
contested.[33] As explained by this Court, a dispute between the parties is justiciable
when there is an active antagonistic assertion of a legal right on one side and a
denial thereof on the other, concerning a real, not merely a theoretical question or
issue.[34]
In sum, one has a right of action to file a complaint/petition for reformation
of an instrument when his legal right is denied, challenged or refused by another;
or when there is an antagonistic assertion of his legal right and the denial thereof
by another concerning a real question or issue; when there is a real, definitive and
substantive controversy between the parties touching on their legal relations
having adverse legal interests. This may occur shortly after the execution of the
instrument or much later.[35]
A party to an instrument is under no obligation to seek a reformation of an

instrument while he is unaware that any opposition will be made to carry out the
actual agreement.[36] The statute of limitations does not begin to run against an
equitable cause of action for the reformation of an instrument because of
mistake until the mistake has been discovered or ought to have been
discovered.[37] The mere recording of a deed does not charge the grantor with
constructive notice of a mistake therein, but is to be considered with other facts
and circumstances in determining whether the grantor be charged with notice
actual or constructive.[38]
In State ex rel. Pierce County v. King County,[39] the appellate court ruled
that:
In equitable actions for reformation on the ground of mistake the rule on the
question of when the period of limitation or laches commences to run is as stated by this
Court in State v. Lorenz, 22 Wash. 289, 60 P. 644, 647:
* * * that the statute did not begin to run against the right of appellant to reform the
deed [because of a mistake therein] until the assertion on the part of respondents of their
adverse claim.
In Chebalgoity v. Branum, 16 Wash.2d 251, 133 P.2d 288, 290, we said:

Nor is his right to maintain it [an action for reformation grounded on mistake] impaired
by lapse of time, for the bar of the statue of limitations does not begin to run until the
assertion of an adverse claim against the party seeking reformation.
The rule is also stated in 53 C.J. 1003, reformation of instruments, as follows:
[ 155] C. Time for Bringing Action. An action to reform an instrument may be brought as
soon as the cause of action accrues. * * * On the other hand, a party to an instrument is
under no obligation to seek its correction before his cause of action is finally vested or
while he is unaware that any opposition will be made in carrying out the actual
agreement, where for a long time the rights and duties of the parties are the same under
the writing and under the terms which it is alleged were intended, and the failure to take
any action toward reformation until his right vests or opposition is manifest does not
prejudice his suit.[40]
In this case, before petitioner became aware of respondents denial of its right
under their true contract, petitioner could not be expected to file an action for the
reformation of the Master Deed. As Justice Jose BL Reyes, ratiocinated in Tormon
v. Cutanda:[41]
It follows that appellants cause of action arose only when the appellees made known their
intention, by overt acts, not to abide by the true agreement; and the allegations of the
complaint establish that this happened when the appellees executed the affidavit of
consolidation of the title allegedly acquired by appellees under the fictitious pacto de
retro sale. It was then, and only then, that the appellants cause of action arose to enforce
the true contract and have the apparent one reformed or disregarded, and the period of
extinctive prescription began to run against her.Since the consolidation affidavit was
allegedly made only in September 1960, and the complaint was filed in Court the
following November 1960, just two months afterward, the action of appellant had not
prescribed.[42]
The Courts ruling in the Tormon case was reiterated in Veluz v. Veluz.[43]
In the more recent case of Naga Telephone Co., Inc. v. Court of
Appeals,[44] the Court made the following declaration:
Article 1144 of the New Civil Code provides, inter alia, that an action upon a
written contract must be brought within ten (10) years from the time the right of action
accrues. Clearly, the ten (10) years period is to be reckoned from the time the right of
action accrues which is not necessarily the date of execution of the contract. As correctly
ruled by respondent court, private respondents right of action arose sometime during the
latter part of 1982 or in 1983 when according to Atty. Luis General, Jr. x x x, he was asked
by (private respondents) Board of Directors to study said contract as it already appeared
disadvantageous to (private respondent) (p. 31, tsn, May 8, 1989). Private respondents
cause of action to ask for reformation of said contract should thus be considered to have
arisen only in 1982 or 1983, and from 1982 to January 2, 1989 when the complaint in this
case was filed, ten (10) years had not yet elapsed.[45]
This ruling was reiterated in Pilipinas Shell Petroleum Corporation v. John

Bordman Ltd. of Iloilo, Inc., [46] where the Court declared that the cause of action of
respondent therein arose upon its discovery of the short deliveries with certainty,
since prior thereto, it had no indication that it was not getting what it was paying
for. The Court declared that before then, there was yet no issue to speak of, and as
such, respondent could not have brought an action against petitioner. It was
stressed that it was only after the discovery of the short deliveries that respondent
got into position to bring an action for specific performance. Thus, the Court
declared that the action was brought within the prescriptive period.[47]
In the present case, petitioner executed the Master Deed in 1975. However,
petitioner had no doubt about its ownership of the unassigned parking lots, and
even sold some of them. Respondent did not even object to these sales, and even
offered to buy some of the parking slots. Respondent assailed petitioners
ownership only in 1989 and claimed ownership of the unassigned parking slots, and
it was then that petitioner discovered the error in the Master Deed; the dispute
over the ownership of the parking slots thereafter ensued. It was only then that
petitioners cause of action for a reformation of the Master Deed accrued. Since
petitioner filed its complaint in 1990, the prescriptive period had not yet elapsed.
The CA erred in relying on the ruling of this Court in Rosello-Bentir v.
Hon. Leanda.[48] In that case, the Leyte Gulf Traders, Inc. leased a parcel of land
owned by YolandoRosello-Bentir. The lease agreement was entered into on May 5,
1968 and was for a period of 20 years. The parties therein agreed, inter alia, that:
4. IMPROVEMENT. The lessee shall have the right to erect on the leased premises any
building or structure that it may desire without the consent or approval of the Lessor x x
x provided that any improvements existing at the termination of the lease shall remain as
the property of the Lessor without right to reimbursement to the Lessee of the cost or
value thereof.[49]
On May 5, 1989, the lessor Rosello-Bentir sold the property and the corporation
questioned the sale, alleging that they had a verbal agreement that the lessor has
the right to equal the offers of prospective buyers of the property. It insisted,
however, that the said agreement was inadvertently omitted in the
contract. On May 15, 1992, the corporation filed a complaint for reformation of
instrument, specific performance, annulment of conditional sale and damages with
a prayer for a writ of preliminary injunction, alleging that the contract of lease failed
to reflect the true agreement of the parties.
In his answer to the complaint, the lessor alleged that the corporation was
guilty of laches for not bringing the case for reformation of the lease contract within
the prescriptive period of 10 years from its execution. On December 15, 1995, the
trial court issued an Order dismissing the complaint on the ground that the action
had already prescribed. Plaintiff filed a motion for the reconsideration of the Order
and, on May 10, 1996, the trial court granted the motion and set aside its Order,
this time, declaring that its Order dated December 15, 1995 dismissing the
complaint was premature and precipitate and denied the corporation its right to
due process. The trial court declared that, aside from plaintiffs cause of action for
reformation of lease contract, plaintiff had other causes of action such as specific
performance, annulment of conditional sale and damages, which must first be
resolved before the trial on the merits of its case.
On appeal to the CA, the lessor alleged that the RTC committed grave abuse
of discretion amounting to excess or lack of jurisdiction in setting aside
the December 15, 1995 Order of the RTC. For its part, the CA rendered judgment
dismissing the petition for certiorari on its finding that the complaint had not yet
prescribed when it was filed in the court below. The CA declared that the
prescriptive period for the action for reformation of the lease contract should be
reckoned not from the execution of the contract of lease in 1968, but from the date
of the four-year extension of the lease contract after it expired in 1988. According
to the CA, the extended period of the lease was an implied new lease within the
contemplation of Article 1670 of the New Civil Code under which provision, the
other terms of the original contract were deemed revived in the implied new lease.
However, we reversed this CA decision and declared that the action for
reformation of the lease contract was inappropriate because petitioner had already
breached the deed.[50] Even supposing that the four-year extended lease could be
considered as an implied new lease under Article 1670 of the New Civil Code, the
other terms contemplated therein were only those terms which are germane to
the lessees right of continued enjoyment of the leased property. We concluded
that the prescriptive period of 10 years, as provided for in Article 1144 of the Civil
Code, applies by operation of law and not by the will of the parties, and that,
therefore, the right of action for reformation accrues from the date of the
execution of the contract of lease in 1968.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of

the Court of Appeals in CA-G.R. CV No. 44696 is SET ASIDE. The Court of Appeals is
directed to resolve petitioners appeal with reasonable dispatch. No costs.
ORDERED.
ROMEO J. CALLEJO, SR.

Associate Justice
WE CONCUR:
ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson
CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice Associate Justice
MINITA V. CHICO-NAZARIO
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified
that the conclusions in the above decision were reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
ARTEMIO V. PANGANIBAN
Chief Justice
[1]
Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices Ramon Mabutas, Jr. (retired) and Martin S.
Villarama, Jr., concurring; rollo, pp. 93-100.
[2]
Records, pp. 55-61.
[3]
Rollo, p. 174.
[4]
Records, p. 544.
[5]
CA rollo, pp. 52-53.
[6]
Rollo, p. 174.
[7]
Section 16. A condominium corporation shall not, during its existence, sell, exchange, lease, or otherwise dispose
of the common areas owned or held by or in the condominium project unless authorized by the affirmative vote of a
simple majority of the registered owners: Provided, That prior notifications to all registered owners are done:
and Provided, further, That the condominium corporation may expand or integrate the project with another upon the
affirmative vote of a simple majority of the registered owners, subject only to the final approval of the Housing and
Land Use Regulatory Board.
[8]
Rollo, p. 17.
[9]
327 Phil. 431, 443 (1996).
[10]
339 Phil. 309 (1997).
[11]
Rollo, p. 198.
[12]
386 Phil. 802, 812 (2000).
[13]
Rollo, pp. 64-65.
[14]
119 Phil. 84 (1963).
[15]
133 Phil 459 (1968).
[16]
G.R. No. L-44616, June 29, 1985, 137 SCRA 314 (1985).
[17]
Supra note 12.
[18]
Mendoza v. Court of Appeals, G.R. No. 116216, June 20, 1997, 274 SCRA 527, 538-539.
[19]
Korean Air Lines, Co. Ltd. v. Court of Appeals, G.R. No. 114061, August 3, 1994, 234 SCRA 717, 725, citing Vda.
de Javellana v. CA, 123 SCRA 799 (1983).
[20]
Insular Life Assurance Co. Ltd. Employees Association-NATU v. InsularLife Assurance Co., Ltd., No. L-
25291, March 10, 1977, 76 SCRA 50, 61-62.
[21]
J.Y. Feria, 1997 RULES OF CIVIL PROCEDURE, ANNOTATED (1997 ed.,) 209.
[22]
Yuchengco v. Republic of the Philippines, 388 Phil. 1039, 1061 (2000).
[23]
Ochagabia v. Court of Appeals, G.R. No. 125590, March 11, 1999, 304 SCRA 587, 593.
[24]
Tolentino v. Court of Appeals, L-41427, June 10, 1988, 162 SCRA 66, 72.
[25]
De Guzman, Jr. v. Court of Appeals, G.R. Nos. 92029-30, December 20, 1990, 192 SCRA 507, 508.
[26]
Consolidated Dairy Products, Co. v. Court of Appeals, G.R. No. 100401, August 24, 1992, 212 SCRA 810, 818.
[27]
Moran, COMMENTS ON THE RULES OF COURT, VOL 3. (1970 ed.), 149.
[28]
Id. at 144.
[29]
Caltex (Philippines), Inc. v. Palomar, 124 Phil. 763, 770 (1966).
[30]
In Re Pittsburghs City Charter, 297 Pa. 502, 147 A. 525 (1929).
[31]
Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 57 S.Ct. 461 (1937).
[32]
Willing v. Chicago Auditorium Association, 277 U.S. 274, 48 S.Ct. 507 (1928).
[33]
Tolentino v. Board of Accountancy, 90 Phil. 83, 88 (1951).
[34]
Caltex (Philippines), Inc. v. Palomar, supra note 29, at 771-772.
[35]
See Banco Filipino Savings and Mortgage Bank v. Court of Appeals, 388 Phil. 27 (2000).
[36]
Stewart v. Warren, 153 S.W. 2d 545, 202 Ark. 873 (1941).
[37]
See Johnson v. U.S., 340 F.3d 1219 (2003).
[38]
American Mining Co. v. Basin & Bay State Mining Co., 39 Mont. 476, 104 P. 525 (1909).
[39]
29 Wash. 2d 37, 185 P.2d 134 (1947).
[40]
29 Wash.2d 37, 44, 185 P.2d 134, 137.
[41]
Supra note 14.
[42]
Id. at 87-88.
[43]
Supra note 15.
[44]
G.R. No. 107112, February 24, 1994, 230 SCRA 351.
[45]
Id. at 369.
[46]
Pilipinas Shell Petroleum Corporation v. John Bordman Ltd. of Iloilo, Inc., G.R. No. 159831, October 14, 2005,
473 SCRA 151.
[47]
Id. at 171.
[48]
Supra note 12.
[49]
Id. at 809.
[50]
Id. at 813.
THIRD DIVISION
[G.R. No. 115838. July 18, 2002]
CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE

CASTRO, petitioners, vs. COURT OF APPEALS and FRANCISCO
ARTIGO, respondents.
DECISION
CARPIO, J.:
The Case
Before us is a Petition for Review on Certiorari[1] seeking to annul the Decision of the
Court of Appeals[2] dated May 4, 1994 in CA-G.R. CV No. 37996, which affirmed in toto the
decision[3] of the Regional Trial Court of Quezon City, Branch 80, in Civil Case No. Q-89-
2631. The trial court disposed as follows:
WHEREFORE, the Court finds defendants Constante and Corazon Amor de
Castro jointly and solidarily liable to plaintiff the sum of:
a) P303,606.24 representing unpaid commission;

b) P25,000.00 for and by way of moral damages;
c) P45,000.00 for and by way of attorneys fees;
d) To pay the cost of this suit.
Quezon City, Metro Manila, December 20, 1991.
The Antecedent Facts
On May 29, 1989, private respondent Francisco Artigo (Artigo for brevity) sued
petitioners Constante A. De Castro (Constante for brevity) and Corazon A. De Castro
(Corazon for brevity) to collect the unpaid balance of his brokers commission from the De
Castros.[4] The Court of Appeals summarized the facts in this wise:
x x x. Appellants were co-owners of four (4) lots located at EDSA corner New
[5]
York and Denver Streets in Cubao, Quezon City. In a letter dated January 24,
1984 (Exhibit A-1, p. 144, Records), appellee was authorized by appellants to act
[6]
as real estate broker in the sale of these properties for the amount of P23,000,000.00,
five percent (5%) of which will be given to the agent as commission. It was appellee
who first found Times Transit Corporation, represented by its president Mr. Rondaris, as
prospective buyer which desired to buy two (2) lots only, specifically lots 14 and
15. Eventually, sometime in May of 1985, the sale of lots 14 and 15 was consummated.
Appellee received from appellants P48,893.76 as commission.
It was then that the rift between the contending parties soon emerged.
Appellee apparently felt short changed because according to him, his total
commission should be P352,500.00 which is five percent (5%) of the agreed
price of P7,050,000.00 paid by Times Transit Corporation to appellants for the
two (2) lots, and that it was he who introduced the buyer to appellants and
unceasingly facilitated the negotiation which ultimately led to the
consummation of the sale. Hence, he sued below to collect the balance
of P303,606.24 after having received P48,893.76 in advance.
On the other hand, appellants completely traverse appellees claims and

essentially argue that appellee is selfishly asking for more than what he truly
deserved as commission to the prejudice of other agents who were more
instrumental in the consummation of the sale. Although appellants readily
concede that it was appellee who first introduced Times Transit Corp. to them,
appellee was not designated by them as their exclusive real estate agent but
that in fact there were more or less eighteen (18) others whose collective
efforts in the long run dwarfed those of appellees, considering that the first
negotiation for the sale where appellee took active participation failed and it
was these other agents who successfully brokered in the second
negotiation. But despite this and out of appellants pure liberality, beneficence
and magnanimity, appellee nevertheless was given the largest cut in the
commission (P48,893.76), although on the principle of quantum meruit he
would have certainly been entitled to less. So appellee should not have been
heard to complain of getting only a pittance when he actually got the lions
share of the commission and worse, he should not have been allowed to get
the entire commission. Furthermore, the purchase price for the two lots was
only P3.6 million as appearing in the deed of sale and not P7.05 million as
alleged by appellee. Thus, even assuming that appellee is entitled to the
entire commission, he would only be getting 5% of the P3.6 million,
or P180,000.00.
Ruling of the Court of Appeals
The Court of Appeals affirmed in toto the decision of the trial court.
First. The Court of Appeals found that Constante authorized Artigo to act as agent in
the sale of two lots in Cubao, Quezon City. The handwritten authorization letter signed by
Constante clearly established a contract of agency between Constante and Artigo. Thus,
Artigo sought prospective buyers and found Times Transit Corporation (Times Transit for
brevity).Artigo facilitated the negotiations which eventually led to the sale of the two
lots. Therefore, the Court of Appeals decided that Artigo is entitled to the 5% commission
on the purchase price as provided in the contract of agency.
Second. The Court of Appeals ruled that Artigos complaint is not dismissible for
failure to implead as indispensable parties the other co-owners of the two lots. The Court
of Appeals explained that it is not necessary to implead the other co-owners since the
action is exclusively based on a contract of agency between Artigo and Constante.
Third. The Court of Appeals likewise declared that the trial court did not err in
admitting parol evidence to prove the true amount paid by Times Transit to the De Castros
for the two lots.The Court of Appeals ruled that evidence aliunde could be presented to
prove that the actual purchase price was P7.05 million and not P3.6 million as appearing
in the deed of sale.Evidence aliunde is admissible considering that Artigo is not a party,
but a mere witness in the deed of sale between the De Castros and Times Transit. The
Court of Appeals explained that, the rule that oral evidence is inadmissible to vary the
terms of written instruments is generally applied only in suits between parties to the
instrument and strangers to the contract are not bound by it. Besides, Artigo was not suing
under the deed of sale, but solely under the contract of agency. Thus, the Court of
Appeals upheld the trial courts finding that the purchase price was P7.05 million and not
P3.6 million.
Hence, the instant petition.
The Issues
According to petitioners, the Court of Appeals erred in -

I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR FAILURE TO
IMPLEAD INDISPENSABLE PARTIES-IN-INTEREST;
II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON THE GROUND THAT
ARTIGOS CLAIM HAS BEEN EXTINGUISHED BY FULL PAYMENT, WAIVER, OR
ABANDONMENT;
III. CONSIDERING INCOMPETENT EVIDENCE;
IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY;
V. SANCTIONING AN AWARD OF MORAL DAMAGES AND ATTORNEYS FEES;
VI. NOT AWARDING THE DE CASTROS MORAL AND EXEMPLARY DAMAGES, AND
ATTORNEYS FEES.
The Courts Ruling
The petition is bereft of merit.
First Issue: whether the complaint merits dismissal for failure to implead other
co-owners as indispensable parties
The De Castros argue that Artigos complaint should have been dismissed for failure
to implead all the co-owners of the two lots. The De Castros claim that Artigo always knew
that the two lots were co-owned by Constante and Corazon with their other siblings Jose
and Carmela whom Constante merely represented. The De Castros contend that failure
to implead such indispensable parties is fatal to the complaint since Artigo, as agent of
all the four co-owners, would be paid with funds co-owned by the four co-owners.
The De Castros contentions are devoid of legal basis.
An indispensable party is one whose interest will be affected by the courts action in
the litigation, and without whom no final determination of the case can be had. [7] The
joinder of indispensable parties is mandatory and courts cannot proceed without their
presence.[8] Whenever it appears to the court in the course of a proceeding that an
indispensable party has not been joined, it is the duty of the court to stop the trial and
order the inclusion of such party.[9]
However, the rule on mandatory joinder of indispensable parties is not applicable to
the instant case.
There is no dispute that Constante appointed Artigo in a handwritten note dated
January 24, 1984 to sell the properties of the De Castros for P23 million at a 5 percent
commission. The authority was on a first come, first serve basis. The authority reads in
full:
24 Jan. 84
To Whom It May Concern:
This is to state that Mr. Francisco Artigo is authorized as our real estate
broker in connection with the sale of our property located at Edsa Corner New
York & Denver, Cubao, Quezon City.
Asking price P23,000,000.00 with

5% commission as agents fee.
C.C. de Castro
owner & representing
co-owners
This authority is on a first-come
First serve basis CAC
Constante signed the note as owner and as representative of the other co-
owners. Under this note, a contract of agency was clearly constituted between Constante
and Artigo. Whether Constante appointed Artigo as agent, in Constantes individual or
representative capacity, or both, the De Castros cannot seek the dismissal of the case
for failure to implead the other co-owners as indispensable parties. The De Castros
admit that the other co-owners are solidarily liable under the contract of
agency,[10] citing Article 1915 of the Civil Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a common
transaction or undertaking, they shall be solidarily liable to the agent for all the
consequences of the agency.
The solidary liability of the four co-owners, however, militates against the De Castros
theory that the other co-owners should be impleaded as indispensable parties. A noted
commentator explained Article 1915 thus
The rule in this article applies even when the appointments were made by the
principals in separate acts, provided that they are for the same
transaction. The solidarity arises from the common interest of the
principals, and not from the act of constituting the agency. By virtue of
this solidarity, the agent can recover from any principal the whole
compensation and indemnity owing to him by the others. The parties,
however, may, by express agreement, negate this solidary responsibility. The
solidarity does not disappear by the mere partition effected by the principals
after the accomplishment of the agency.
If the undertaking is one in which several are interested, but only some create
the agency, only the latter are solidarily liable, without prejudice to the effects
of negotiorum gestio with respect to the others. And if the power granted
includes various transactions some of which are common and others are not,
only those interested in each transaction shall be liable for it. [11]
When the law expressly provides for solidarity of the obligation, as in the liability of
co-principals in a contract of agency, each obligor may be compelled to pay the entire
obligation.[12]The agent may recover the whole compensation from any one of the co-
principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the
solidary debtors. This article reads:
Art. 1216. The creditor may proceed against any one of the solidary debtors
or some or all of them simultaneously. The demand made against one of them
shall not be an obstacle to those which may subsequently be directed against
the others, so long as the debt has not been fully collected.
Thus, the Court has ruled in Operators Incorporated vs. American Biscuit Co.,
Inc.[13] that
x x x solidarity does not make a solidary obligor an indispensable party

in a suit filed by the creditor. Article 1216 of the Civil Code says that the
creditor `may proceed against anyone of the solidary debtors or some or all of
them simultaneously. (Emphasis supplied)
Second Issue: whether Artigos claim has been extinguished by full payment,
waiver or abandonment
The De Castros claim that Artigo was fully paid on June 14, 1985, that is, Artigo was
given his proportionate share and no longer entitled to any balance. According to them,
Artigo was just one of the agents involved in the sale and entitled to a proportionate share
in the commission. They assert that Artigo did absolutely nothing during the second
negotiation but to sign as a witness in the deed of sale. He did not even prepare the
documents for the transaction as an active real estate broker usually does.
The De Castros arguments are flimsy.
A contract of agency which is not contrary to law, public order, public policy, morals
or good custom is a valid contract, and constitutes the law between the parties. [14] The
contract of agency entered into by Constante with Artigo is the law between them and
both are bound to comply with its terms and conditions in good faith.
The mere fact that other agents intervened in the consummation of the sale and were
paid their respective commissions cannot vary the terms of the contract of agency
granting Artigo a 5 percent commission based on the selling price. These other agents
turned out to be employees of Times Transit, the buyer Artigo introduced to the De
Castros. This prompted the trial court to observe:
The alleged `second group of agents came into the picture only during the so-
called `second negotiation and it is amusing to note that these (sic) second
group, prominent among whom are Atty. Del Castillo and Ms. Prudencio,
happened to be employees of Times Transit, the buyer of the properties. And
their efforts were limited to convincing Constante to part away with the
properties because the redemption period of the foreclosed properties is
around the corner, so to speak. (tsn. June 6, 1991).
xxx
To accept Constantes version of the story is to open the floodgates of fraud

and deceit. A seller could always pretend rejection of the offer and wait for
sometime for others to renew it who are much willing to accept a commission
far less than the original broker. The immorality in the instant case easily
presents itself if one has to consider that the alleged `second group are
the employees of the buyer, Times Transit and they have not bettered
the offer secured by Mr. Artigo for P7 million.
It is to be noted also that while Constante was too particular about the
unrenewed real estate brokers license of Mr. Artigo, he did not bother at all to
inquire as to the licenses of Prudencio and Castillo. (tsn, April 11, 1991, pp.
39-40). (Emphasis supplied)
[15]
In any event, we find that the 5 percent real estate brokers commission is reasonable and
within the standard practice in the real estate industry for transactions of this nature.
The De Castros also contend that Artigos inaction as well as failure to protest estops
him from recovering more than what was actually paid him. The De Castros cite Article
1235 of the Civil Code which reads:
Art. 1235. When the obligee accepts the performance, knowing its
incompleteness and irregularity, and without expressing any protest or
objection, the obligation is deemed fully complied with.
The De Castros reliance on Article 1235 of the Civil Code is misplaced. Artigos
acceptance of partial payment of his commission neither amounts to a waiver of the
balance nor puts him in estoppel. This is the import of Article 1235 which was explained
in this wise:
The word accept, as used in Article 1235 of the Civil Code, means to take as
satisfactory or sufficient, or agree to an incomplete or irregular
performance. Hence, the mere receipt of a partial payment is not
equivalent to the required acceptance of performance as would
extinguish the whole obligation. (Emphasis supplied)
[16]
There is thus a clear distinction between acceptance and mere receipt. In this case,
it is evident that Artigo merely received the partial payment without waiving the
balance. Thus, there is no estoppel to speak of.
The De Castros further argue that laches should apply because Artigo did not file his
complaint in court until May 29, 1989, or almost four years later. Hence, Artigos claim for
the balance of his commission is barred by laches.
Laches means the failure or neglect, for an unreasonable and unexplained length of
time, to do that which by exercising due diligence could or should have been done earlier.
It is negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or declined to assert
it.[17]
Artigo disputes the claim that he neglected to assert his rights. He was appointed as
agent on January 24, 1984. The two lots were finally sold in June 1985. As found by the
trial court, Artigo demanded in April and July of 1985 the payment of his commission by
Constante on the basis of the selling price of P7.05 million but there was no response
from Constante.[18] After it became clear that his demands for payment have fallen on deaf
ears, Artigo decided to sue on May 29, 1989.
Actions upon a written contract, such as a contract of agency, must be brought within
ten years from the time the right of action accrues.[19] The right of action accrues from the
moment the breach of right or duty occurs. From this moment, the creditor can institute
the action even as the ten-year prescriptive period begins to run.[20]
The De Castros admit that Artigos claim was filed within the ten-year prescriptive
period. The De Castros, however, still maintain that Artigos cause of action is barred by
laches. Laches does not apply because only four years had lapsed from the time of the
sale in June 1985. Artigo made a demand in July 1985 and filed the action in court on
May 29, 1989, well within the ten-year prescriptive period. This does not constitute an
unreasonable delay in asserting ones right. The Court has ruled, a delay within the
prescriptive period is sanctioned by law and is not considered to be a delay that
would bar relief.[21] In explaining that laches applies only in the absence of a statutory
prescriptive period, the Court has stated -
Laches is recourse in equity. Equity, however, is applied only in the absence, never
in contravention, of statutory law. Thus, laches, cannot, as a rule, be used to
abate a collection suit filed within the prescriptive period mandated by the Civil
Code.[22]
Clearly, the De Castros defense of laches finds no support in law, equity or

jurisprudence.
Third issue: whether the determination of the purchase price was made in
violation of the Rules on Evidence
The De Castros want the Court to re-examine the probative value of the evidence
adduced in the trial court to determine whether the actual selling price of the two lots
was P7.05 million and not P3.6 million. The De Castros contend that it is erroneous to
base the 5 percent commission on a purchase price of P7.05 million as ordered by the
trial court and the appellate court. The De Castros insist that the purchase price is P3.6
million as expressly stated in the deed of sale, the due execution and authenticity of which
was admitted during the trial.
The De Castros believe that the trial and appellate courts committed a mistake in
considering incompetent evidence and disregarding the best evidence and parole
evidence rules. They claim that the Court of Appeals erroneously affirmed sub silentio the
trial courts reliance on the various correspondences between Constante and Times
Transit which were mere photocopies that do not satisfy the best evidence rule. Further,
these letters covered only the first negotiations between Constante and Times Transit
which failed; hence, these are immaterial in determining the final purchase price.
The De Castros further argue that if there was an undervaluation, Artigo who signed
as witness benefited therefrom, and being equally guilty, should be left where he presently
stands.They likewise claim that the Court of Appeals erred in relying on evidence
which were not offered for the purpose considered by the trial court. Specifically, Exhibits
B, C, D and E were not offered to prove that the purchase price was P7.05 Million. Finally,
they argue that the courts a quo erred in giving credence to the perjured testimony of
Artigo. They want the entire testimony of Artigo rejected as a falsehood because he was
lying when he claimed at the outset that he was a licensed real estate broker when he
was not.
Whether the actual purchase price was P7.05 Million as found by the trial court and
affirmed by the Court of Appeals, or P3.6 Million as claimed by the De Castros, is a
question of fact and not of law. Inevitably, this calls for an inquiry into the facts and
evidence on record. This we can not do.
It is not the function of this Court to re-examine the evidence submitted by the parties,
or analyze or weigh the evidence again.[23] This Court is not the proper venue to consider
a factual issue as it is not a trier of facts. In petitions for review on certiorari as a mode of
appeal under Rule 45, a petitioner can only raise questions of law. Our pronouncement
in the case of Cormero vs. Court of Appeals[24] bears reiteration:
At the outset, it is evident from the errors assigned that the petition is
anchored on a plea to review the factual conclusion reached by the
respondent court. Such task however is foreclosed by the rule that in petitions
for certiorari as a mode of appeal, like this one, only questions of law distinctly
set forth may be raised. These questions have been defined as those that do
not call for any examination of the probative value of the evidence presented
by the parties. (Uniland Resources vs. Development Bank of the Philippines,
200 SCRA 751 [1991] citing Goduco vs. Court of appeals, et al., 119 Phil.
531; Hernandez vs. Court of Appeals, 149 SCRA 67). And when this court is
asked to go over the proof presented by the parties, and analyze, assess and
weigh them to ascertain if the trial court and the appellate court were correct
in according superior credit to this or that piece of evidence and eventually, to
the totality of the evidence of one party or the other, the court cannot and will
not do the same. (Elayda vs. Court of Appeals, 199 SCRA 349 [1991]). Thus,
in the absence of any showing that the findings complained of are totally
devoid of support in the record, or that they are so glaringly erroneous as to
constitute serious abuse of discretion, such findings must stand, for this court
is not expected or required to examine or contrast the oral and documentary
evidence submitted by the parties. (Morales vs. Court of Appeals, 197 SCRA
391 [1991] citing Santa Ana vs. Hernandez, 18 SCRA 973 [1966]).
We find no reason to depart from this principle. The trial and appellate courts are in
a much better position to evaluate properly the evidence. Hence, we find no other
recourse but to affirm their finding on the actual purchase price.
Fourth Issue: whether award of moral damages and attorneys fees is proper
The De Castros claim that Artigo failed to prove that he is entitled to moral damages
and attorneys fees. The De Castros, however, cite no concrete reason except to say that
they are the ones entitled to damages since the case was filed to harass and extort money
from them.
Law and jurisprudence support the award of moral damages and attorneys fees in
favor of Artigo. The award of damages and attorneys fees is left to the sound discretion
of the court, and if such discretion is well exercised, as in this case, it will not be disturbed
on appeal.[25] Moral damages may be awarded when in a breach of contract the defendant
acted in bad faith, or in wanton disregard of his contractual obligation.[26] On the other
hand, attorneys fees are awarded in instances where the defendant acted in gross and
evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable
claim.[27] There is no reason to disturb the trial courts finding that the defendants lack of
good faith and unkind treatment of the plaintiff in refusing to give his due commission
deserve censure. This warrants the award of P25,000.00 in moral damages
and P45,000.00 in attorneys fees. The amounts are, in our view, fair and
reasonable. Having found a buyer for the two lots, Artigo had already performed his part
of the bargain under the contract of agency. The De Castros should have exercised
fairness and good judgment in dealing with Artigo by fulfilling their own part of the bargain
- paying Artigo his 5 percent brokers commission based on the actual purchase price of
the two lots.
WHEREFORE, the petition is denied for lack of merit. The Decision of the Court of
Appeals dated May 4, 1994 in CA-G.R. CV No. 37996 is AFFIRMED in toto.
SO ORDERED.
Puno, (Chairman), and Panganiban, JJ., concur.
Sandoval-Gutierrez, J., no part due to close family relation with a party.
[1]
Under Rule 45 of the Rules of Court.
Seventh Division composed of Justices Ricardo J. Francisco (Chairman and Ponente); Salome A.
[2]
Montoya and Ramon A. Barcelona (Members).

[3]
Penned by Judge Benigno T. Dayaw.
[4]
When referred to collectively.
[5]
Referring to the De Castros.
[6]
Referring to Artigo.
Rule 3, Section 7 of the Rules of Court; Seno vs. Mangubat, 156 SCRA 113 (1987); Quisumbing vs. Court
[7]
of Appeals, 189 SCRA 325 (1990); Lozano vs. Ballesteros, 195 SCRA 681 (1991).
[8]
Ibid.
[9]
Vicente J. Francisco, The Revised Rules of Court, Vol. 1, p. 271, 1973 ed.
[10]
Memorandum of Petitioner dated April 23, 1997, p.8; Rollo, p. 175.
Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. 5, pp..
[11]
428-429, 1992 ed.

Art. 1207 of the Civil Code provides as follows: Art. 1207. The concurrence of two or more creditors or
[12]
of two or more debtors in one and the same obligation does not imply that each one of the former has a
right to demand, or that each one of the latter is bound to render, entire compliance with the
prestation. There is solidary liability only when the obligation expressly so states, or when the law or the
nature of the obligation requires solidarity.
[13]
154 SCRA 738 (1987), reiterated in Republic vs. Sandiganbayan, 173 SCRA 72 (1989).
[14]
San Andres vs. Rodriguez, 332 SCRA 769 (2000).
[15]
Decision dated December 20, 1991 of RTC Judge Benigno T. Dayan, Rollo, pp. 33-34.
[16]
Tolentino, supra, see note 11, Vol. 4, p. 279.
Republic vs. Court of Appeals, 301 SCRA 366 (1999); Ochagabia vs. Court of Appeals, 304 SCRA 587
[17]
(1999).
[18]
RTC Decision, p. 7; Rollo, pp. 20-36, see p. 35.
Article 1144 of the Civil Code provides as follows: Art. 1144. The following actions must be brought within
[19]
ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation
created by law; (3) Upon a judgment.
[20]
Tolention, supra, see note 16, p. 44.
[21]
Agra vs. Philippine National Bank, 309 SCRA 509 (1999).
[22]
Ibid.
[23]
Moomba Mining Exploration Company vs. Court of Appeals, , 317 SCRA 388 (1999).
[24]
247 SCRA 291 (1995).
[25]
Barzaga vs. Court of Appeals, 268 SCRA 105 (1997).
[26]
Jose C. Vitug, Compendium of Civil Law and Jurisprudence, p. 841, 1993 Ed.
[27]
Art. 2208, Civil Code of the Philippines.
FIRST DIVISION
[G.R. No. 138945. August 19, 2003]
FELIX GOCHAN AND SONS REALTY CORPORATION and STA. LUCIA

REALTY AND DEVELOPMENT CORPORATION, petitioners, vs.
HEIRS OF RAYMUNDO BABA, namely, BESTRA BABA, MARICEL
BABA, CRESENCIA BABA, ANTONIO BABA, and PETRONILA
BABA, represented by Attorney-in-fact VIRGINIA
SUMALINOG, respondents.
DECISION
YNARES-SANTIAGO, J.:
The purpose of an action or suit and the law to govern it, including the period of
prescription, is to be determined by the complaint itself, its allegations and prayer for
relief.[1] Thus, while the issues of possession and fraud are material to the prescriptibility
of suits captioned as reconveyance and quieting of title,[2] it would not be so where, from
the allegations of the complaint, the action is in reality one for declaration of nullity of
contracts on the ground of absence of the essential requisites thereof. These contracts
are void ad initio and actions to declare their inexistence do not prescribe.[3]
This is a petition for review on certiorari seeking to set aside the February 12, 1999
Decision[4] of the Court of Appeals in CA-G.R. CV No. 57080, which reversed the May 3,
1997 Order[5] of the Regional Trial Court of Lapu-Lapu City, Branch 54, in Civil Case No.
4494-L.
The facts show that Lot No. 3537, a conjugal property of spouses Raymundo Baba
and Dorotea Inot, was originally titled under Original Certificate of Title No. RO-0820,[6] in
the name of Dorotea. After Raymundos demise in 1947, an extrajudicial settlement of his
estate, including Lot No. 3537, was executed on December 8, 1966,[7] among the heirs of
Raymundo, namely, Dorotea Inot and his 2 children, Victoriano Baba and Gregorio
Baba. One-half undivided portion of the 6,326 square meter lot was adjudicated in favor
of Dorotea, and the other half divided between Victoriano and Gregorio. On December
28, 1966, Dorotea, Victoriano and Gregorio, in consideration of the amount of P2,346.70,
sold Lot No. 3537 to petitioner Felix Gochan and Sons Realty Corporation (Gochan
Realty).[8] Consequently, OCT No. RO-0820 was cancelled and in lieu thereof, Transfer
Certificate of Title No. T-1842, dated February 23, 1968 was issued in favor of Gochan
Realty.[9] Sometime in 1995, the latter entered into a joint venture agreement with Sta.
Lucia Realty and Development Corporation Inc. for the development, among others, of
Lot No. 3537, into a subdivision.[10]
On June 13, 1996, respondents Bestra, Maricel, Crecencia, Antonio and Petronila,
all surnamed Baba, filed a complaint for quieting of title and reconveyance with damages
against petitioners with the RTC of Lapu-Lapu City, Branch 54, docketed as Civil Case
No. 4494-L. They alleged that they are among the 7 children of Dorotea Inot and
Raymundo Baba; that petitioners connived with Dorotea Inot, Victoriano and Gregorio
Baba in executing the extrajudicial settlement and deed of sale which fraudulently
deprived them of their hereditary share in Lot No. 3537; and that said transactions are
void insofar as their respective shares are concerned because they never consented to
the said sale and extrajudicial settlement, which came to their knowledge barely a year
prior to the filing of the complaint.[11]
In its answer,[12] petitioner Gochan Realty averred that respondents have no
personality to sue because they are not children of Dorotea Inot and Raymundo Baba;
that even assuming they are lawful heirs of the spouses, their action is barred by estoppel,
laches and prescription for having been filed more than 28 years after the issuance of the
transfer certificate of title in its name; and that any defect in the transactions leading to its
acquisition of Lot No. 3537 will not affect its title because it is a purchaser in good faith
and for value.
Meanwhile, petitioner Sta. Lucia Realty and Development Corporation Inc. was
declared in default for failure to file an answer within the reglementary period. [13]
On May 3, 1997, the complaint for quieting of title and reconveyance with damages
filed against petitioner was dismissed on the ground of prescription and laches. The trial
court ruled that respondents action is one for enforcement of implied or constructive trust
based on fraud which prescribes in 10 years from the issuance of title over the
property. Hence, respondents action was barred by prescription and laches for having
been filed after 28 years from the time Gochan Realty obtained title to the property.
Respondents appealed to the Court of Appeals which reversed the decision of the
trial court and reinstated the complaint of respondents. While it also found that
respondents action is a suit to enforce an implied or constructive trust based on fraud, it
ruled that since respondents are in possession of the disputed property, their action
cannot be barred by prescription and laches, being in the nature of a suit for quieting of
title. Petitioners motion for reconsideration was denied on May 25, 1999.
Hence, the instant petition where the sole issue raised for resolution is whether or not
respondents complaint is dismissible on the ground of prescription and laches.
In determining whether the complaint is barred by the statute of limitations, both
courts held that respondents action is grounded on fraud, and applied the rule that the
fraudulent conveyance of the property creates an implied trust, an obligation created by
law, which prescribes in ten years from the date of the issuance of the certificate of
title.[14] However, the Court of Appeals held that such an action does not prescribe when
the disputed property is in the possession of the plaintiff seeking reconveyance.[15] The
issue of possession, however, is not material in the case at bar. A circumspect scrutiny
of the complaint reveals that although the respondents describe the extrajudicial
settlement and deed of sale as fraudulent insofar as their shares are concerned, their
action in reality seeks to declare said deeds as inexistent for lack of consent, an essential
element for the existence of a contract. The settled rule is that the purpose of an action
or suit and the law to govern it, including the period of prescription, is to be determined
by the complaint itself, its allegations and prayer for relief.[16]
In the case at bar, the allegations of the complaint unmistakably assail the
extrajudicial settlement and deed of sale with respect to their share on the ground of
absence of consent.Thus, respondents alleged in their complaint
2.2 Dorotea Inot, Gregorio Baba, Victoriano Baba and defendant Felix Gochan and
Realty Corporation, conniving and confederating with each other, with the evil motive
and bad intent of getting the corresponding hereditary share of the plaintiffs caused
the [issuance of a] Transfer Certificate of Title covering the entire lot in the name of
defendant Felix Gochan and Realty Corporation They have made to appear in a
document denominated as Extrajudicial Settlement dated 8 February 1966 and Deed
of Absolute Sale dated 28 December 1966 in favor of defendant Felix Gochan and
Realty Corporation, that they have validly executed the same free from legal infirmity
and element of perjury, notwithstanding clear and full knowledge about plaintiffs real
right and interest thereto, machine copies of the said document are hereto attached as
Annex C and D respectively;
2.3 To all legal intents and purposes, plaintiffs herein never disposed of their share to
anybody much less to the defendant Felix Gochan and Realty Corporation.
2.4 Subsequently, other defendant Sta. Lucia Realty Corporation, despite its
knowledge about the defect in the title entered into a Joint Venture Agreement with
other defendant Felix Gochan Realty Corporation and the same being annotated in
TCT No. T-1824 as Entry Nos. 9371-XIII-D.B,9372 and 9373;
2.5 Complainants, upon knowledge about the said humiliating situation, did not waste
time in exhausting all its recovering mode and legal remedies thru seeking relief unto
this Honorable Court.
2.6 The assessed value of the lot is P38,220.00;
xxxxxxxxx
3.0 Consequently, the fraudulent acts of the defendant Felix Gochan and Realty
Corporation and the eventual participation of the defendant Sta. Lucia Realty
Corporation shall have no legal and valid effect insofar as the corresponding and
respective share of each plaintiff is concerned which is Three Hundred Fifty Five
(355) Square meters, more or less, each or a total area of One Thousand Nine
Hundred Seventy-Five (1,975) square meters, more or less. The deed of conveyance
aforestated shall not therefore bind the plaintiffs;
[17]
Hence, for purposes of determining whether respondents action has prescribed, fraud
in the conveyance of the disputed lot and the possession thereof by the respondents are
not material. The fact that the conveyance of a property was fraudulent, either because it
was procured without the knowledge of some of the co-owners or by virtue of the owners
forged signature or by a fictitious deed of sale, does not automatically make fraud the
basis for reconveyance of the disputed property. The real question in the instant case
(without, however, prejudging the validity or invalidity of the sale to Gochan Realty), is
whether or not from the allegations of the complaint, there exists a cause of action to
declare the inexistence of the contract of sale with respect to the shares of respondents
in Lot No. 3537 on the ground of absence of any of the essential requisites of a valid
contract. If the answer is in the negative, then the dismissal of the complaint must be
upheld, otherwise, the dismissal on the ground of prescription is erroneous because
actions for the declaration of inexistence of contracts on the ground of absence of any of
the essential requisites thereof do not prescribe.
Under Article 1318 of the Civil Code, there is no contract unless the following
requisites concur: (1) consent of the contracting parties; (2) object certain which is the
subject matter of the contract; and (3) cause of the obligation. The absence of any of
these essential requisites renders the contract inexistent and an action or defense to
declare said contract void ab initiodoes not prescribe, pursuant to Article 1410 of the
same Code. In Delos Reyes v. Court of Appeals,[18] it was held that one of the requisites
of a valid contract under Article 1318 of the Civil Code, namely, the consent and the
capacity to give consent of the parties to the contract, is an indispensable condition for
the existence of consent. There is no effective consent in law without the capacity to give
such consent. In other words, legal consent presupposes capacity. Thus, there is said to
be no consent, and consequently, no contract when the agreement is entered into by one
in behalf of another who has never given him authorization therefor unless he has by law
a right to represent the latter. [19]
In Heirs of Romana Ingjug-Tiro v. Casals,[20] the Court, applying Article 1410 of the
Civil Code declared that a claim of prescription is unavailing where the assailed
conveyance is void ab initio with respect to those who had no knowledge of the
transaction. The case involved a fraudulent sale and extrajudicial settlement of a lot
executed without the knowledge and consent of some of the co-owners. It was held that
the sale of the realty is void in so far as it prejudiced the shares of said co-owners and
that the issuance of a certificate of title over the whole property in favor of the vendee
does not divest the other co-owners of the shares that rightfully belonged to them. The
nullity of the said sale proceeds from the absence of legal capacity and consent to dispose
of the property. Thus
Article 1458 of the New Civil Code provides: By the contract of sale one of the
contracting parties obligates himself to transfer the ownership of and to deliver a
determinate thing, and the other to pay therefor a price certain in money or its
equivalent. It is essential that the vendors be the owners of the property sold otherwise
they cannot dispose that which does not belong to them. As the Romans put it: Nemo
dat quod non habet. No one can give more than what he has. The sale of the realty to
respondents is null and void insofar as it prejudiced petitioners interests and
participation therein. At best, only the ownership of the shares of Luisa, Maria and
Guillerma in the disputed property could have been transferred to respondents.
Consequently, respondents could not have acquired ownership over the land to the
extent of the shares of petitioners. The issuance of a certificate of title in their favor
could not vest upon them ownership of the entire property; neither could it validate
the purchase thereof which is null and void. Registration does not vest title; it is
merely the evidence of such title. Our land registration laws do not give the holder any
better title than what he actually has. Being null and void, the sale to respondents of
petitioners shares produced no legal effects whatsoever.
Similarly, the claim that Francisco Ingjug died in 1963 but appeared to be a party to
the Extrajudicial Settlement and Confirmation of Sale executed in 1967 would be fatal
to the validity of the contract, if proved by clear and convincing evidence. Contracting
parties must be juristic entities at the time of the consummation of the contract. Stated
otherwise, to form a valid and legal agreement it is necessary that there be a party
capable of contracting and a party capable of being contracted with. Hence, if any one
party to a supposed contract was already dead at the time of its execution, such
contract is undoubtedly simulated and false and therefore null and void by reason of
its having been made after the death of the party who appears as one of the contracting
parties therein. The death of a person terminates contractual capacity.
In actions for reconveyance of property predicated on the fact that the conveyance
complained of was null and void ab initio, a claim of prescription of action would be
unavailing. The action or defense for the declaration of the inexistence of a contract
does not prescribe [21]
Likewise, in the cases of Solomon v. Intermediate Appellate Court, [22] Vda. De

Portugal v. Intermediate Appellate Court,[23] Garanciang v. Garanciang,[24] and Lacsamana
v. Court of Appeals,[25] the Court ruled that conveyances by virtue of a forged signature or
a fictitious deed of sale are void ab initio. The absence of the essential requites of consent
and cause or consideration in these cases rendered the contract inexistent and the action
to declare their nullity is imprescriptible.
Nemo dat quod non habet No one can give more than what he has. [26] Assuming that
the allegations in respondents complaint are true, their claim that the execution of the
extrajudicial settlement and the deed of sale involving Lot No. 3537, which led to the
issuance of a certificate of title in the name of Gochan Realty, was without their knowledge
or consent, gives rise to an imprescriptible cause of action to declare said transactions
inexistent on the ground of absence of legal capacity and consent. Hence, the dismissal
of respondents complaint on the ground of prescription was erroneous.
On the other hand, laches is defined as 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 presumption that the party entitled to assert it has abandoned it or has
declined to assert it.[27]Its elements are: (1) conduct on the part of the defendant, or of one
under whom he claims, giving rise to the situation which the complaint seeks a remedy;
(2) delay in asserting the complainants rights, the complainant having had knowledge or
notice of the defendants conduct as having been afforded an opportunity to institute a
suit; (3) lack of knowledge or notice on the part of the defendant that the complainant
would assert the right in which he bases his suit; and (4) injury or prejudice to the
defendant in the event relief is accorded to the complainant, or the suit is not held barred. [28]
Though laches applies even to imprescriptible actions,[29] its elements must be proved
positively.[30] Laches is evidentiary in nature which could not be established by mere
allegations in the pleadings and can not be resolved in a motion to dismiss.[31] At this stage
therefore, the dismissal of the complaint on the ground of laches is premature.
It is but fair, without prejudging the issues, that the parties be allowed to substantiate
their respective claims and defenses in a full-blown trial, and obtain a ruling on all the
issues presented in their pleadings.[32] Indeed, while the averments in the complaint show
that respondents action is imprescriptible, Gochan Realty is not precluded from
presenting evidence that it is a purchaser in good faith or that respondents have no
personality to sue for reconveyance or, even assuming that they are lawful heirs of
Dorotea Inot and Raymundo Baba, that they are guilty of laches or are estopped from
questioning the validity of the extrajudicial partition and deed of sale of Lot No. 3537 with
respect to their shares.
The trial court thus erred in dismissing respondents complaint on the ground of
prescription and laches, and while the Court of Appeals is correct in ordering the
reinstatement of the complaint, its decision is sustained on a different ground.
WHEREFORE, in view of all the foregoing, the petition is DENIED. The Decision of
the Court of Appeals in CA-G.R. CV No. 57080, which ordered that the instant case be
REMANDED to the Regional Trial Court of Lapu-Lapu City, Branch 54, for trial and
judgment on the merits is AFFIRMED.
SO ORDERED.
Vitug, Carpio, and Azcuna, JJ., concur.
Davide, Jr., C.J., abroad, on official business.
[1] Tavera v. Philippine Tuberculosis Society, Inc., 197 Phil. 919, 926 (1982); citing Rone, et al. v. Claro, et
al., 91 Phil. 250 (1952).
[2] Del Campo v. Court of Appeals, G.R. No. 108228, 1 February 2001, 351 SCRA 1, 10-11; citing David, et
al. v. Malay, et al., G.R. No. 132644, 19 November 1999, 318 SCRA 711; Armamento v. Guerrero,
G.R. No. L-34228, 21 February 1980, 96 SCRA 178; Javier v. Court of Appeals, G.R. No. 101177,
28 March 1994, 231 SCRA 498; Alzona, et al. v. Capunitan & Reyes, 114 Phil. 377 (1962);
Gonzales v. Jimenez, Sr., 121 Phil. 84 (1965); Cuaycong, et al. v. Cuaycong, et al., 129 Phil. 439
(1967); Faja v. Court of Appeals, G.R. No. L-45045, 28 February 1977, 75 SCRA 441; Heirs of
Jose Olviga v. Court of Appeals, G.R. No. 104813, 21 October 1993, 227 SCRA 330.
[3] Civil Code, Article 1318 in relation to Article 1410.
[4] Penned by Associate Justice Eugenio J. Labitoria and concurred in by Associate Justices Jesus M.
Elbinias and Marina L. Buzon.
[5] Penned by Judge Rumoldo R. Fernandez.
[6] Records, p. 7.
[7] Id., p. 9.
[8] Id., p. 10.
[9] Id., p. 8.
[10] Joint Venture Agreement, Rollo, p. 35.
[11] Complaint, Records, p. 1; Reply, Records, p. 27.
[12] Records, p. 21.
[13] Order dated October 30, 1996, Records, p. 51.
[14] Amerol v. Bagumbayan, G.R. No. L-30212, 30 September 1987, 154 SCRA 388, 406-407; citing the
Civil Code, Articles 1456 and 1144.
ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.
Article 1144. The following actions must be brought within ten years from the time the right of action accrues:
(3) Upon a judgment.
xxxxxxxxx
[15] Del Campo v. Court of Appeals, supra, note 2.
[16] Tavera v. Philippine Tuberculosis Society, Inc., supra, note 1.
[17] Complaint, Records, pp. 2-4.
[18] 372 Phil. 522, 534-535 (1999).
[19] Id., citing Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, Vol. IV, p.
445; citing 8 Manresa 646; Bumanlag v. Alzate, G.R. No. L-39119, 14 September 1986, 144 SCRA
480; Mindanao Academy v. Yap, 121 Phil. 204 (1965); Estoque v. Pajimula, 133 Phil. 55 (1968);
Segura v. Segura, G.R. No. L-29320, 19 September 1988, 165 SCRA 368; Frias v. Esquive, G.R.
No. L-24679, 30 October 1975, 167 SCRA 487; Civil Code, Articles 1317 and 1453.
[20] G.R. No. 134718, 20 August 2001, 363 SCRA 435.
[21] Id., pp. 441-442.
[22] G.R. No. 70263, 14 May 1990, 185 SCRA 352, 363-364.
[23] G.R. No. L-73564, 25 March 1988, 159 SCRA 178, 183.
[24] 138 Phil. 237, 239 (1969).
[25] 351 Phil. 526, 533-534 (1998).
[26] Heirs of Romana Ingjug-Tiro v. Casals, supra.
[27] Abrazaldo v. Court of Appeals, G.R. No. 144817, March 7, 2002.
[28] Santos v. Santos, G.R. No. 133895, 2 October 2001, 366 SCRA 395, 405-406; citing Maneclang v. Court
of Appeals, G.R. No. 27876, 22 April 1992, 208 SCRA 179.
[29] Buenaventura v. Court of Appeals, G.R. No. 50837, December 28, 1992, 216 SCRA 818, 823; citing
Rafols v. Barba, G.R. No. L-28446, 13 December 1982, 119 SCRA 146.
[30] Santos v. Santos, supra.
[31] National Irrigation Administration v. Court of Appeals, 376 Phil. 362, 376 (1999); Espao, Sr. v. Court of
Appeals, 335 Phil. 983, 987 (1997).
[32] Heirs of Romana Ingjug-Tiro v. Casals, supra.
THIRD DIVISION
[G.R. No. 143377. February 20, 2001]
SHIPSIDE INCORPORATED, petitioner, vs. THE HON. COURT OF

APPEALS [Special Former Twelfth Division], HON. REGIONAL
TRIAL COURT, BRANCH 26 (San Fernando City, La Union) & The
REPUBLIC OF THE PHILIPPINES, respondents.
DECISION
MELO, J.:
Before the Court is a petition for certiorari filed by Shipside Incorporated under Rule 65 of
the 1997 Rules on Civil Procedure against the resolutions of the Court of Appeals promulgated on
November 4, 1999 and May 23, 2000, which respectively, dismissed a petition for certiorari and
prohibition and thereafter denied a motion for reconsideration.
The antecedent facts are undisputed:
On October 29, 1958, Original Certificate of Title No. 0-381 was issued in favor of Rafael
Galvez, over four parcels of land Lot 1 with 6,571 square meters; Lot 2, with 16,777 square meters;
Lot 3 with 1,583 square meters; and Lot 4, with 508 square meters.
On April 11, 1960, Lots No. 1 and 4 were conveyed by Rafael Galvez in favor of Filipina
Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda Balatbat in a deed of sale which was
inscribed as Entry No. 9115 OCT No. 0-381 on August 10, 1960. Consequently, Transfer
Certificate No. T-4304 was issued in favor of the buyers covering Lots No. 1 and 4.
Lot No. 1 is described as:
A parcel of land (Lot 1, Plan PSU-159621, L. R. Case No. N-361; L. R. C. Record

No. N-14012, situated in the Barrio of Poro, Municipality of San Fernando, Province
of La Union, bounded on the NE, by the Foreshore; on the SE, by Public Land and
property of the Benguet Consolidated Mining Company; on the SW, by properties of
Rafael Galvez (US Military Reservation Camp Wallace) and Policarpio Munar; and
on the NW, by an old Barrio Road. Beginning at a point marked 1 on plan, being S. 74
deg. 11W. , 2670. 36 from B. L. L. M. 1, San Fernando, thence
S. 66 deg. 19E., 134.95 m. to point 2; S. 14 deg. 57W., 11.79 m. to point 3;
S. 12 deg. 45W., 27.00 m. to point 4; S. 12 deg. 45W, 6.90 m. to point 5;
N. 69 deg., 32W., 106.00 m. to point 6; N. 52 deg., 21W., 36. 85 m. to point 7;
N. 21 deg. 31E., 42. 01 m. to the point of beginning; containing an area of SIX

THOUSAND FIVE HUNDRED AND SEVENTY-ONE (6,571) SQUARE METERS,
more or less. All points referred to are indicated on the plan; and marked on the
ground; bearings true, date of survey, February 421, 1957.
Lot No. 4 has the following technical description:
A parcel of land (Lot 4, Plan PSU-159621, L. R. Case No. N-361 L. R. C. Record No.
N-14012), situated in the Barrio of Poro, Municipality of San Fernando, La
Union. Bounded on the SE by the property of the Benguet Consolidated Mining
Company; on the S. by property of Pelagia Carino; and on the NW by the property of
Rafael Galvez (US Military Reservation, Camp Wallace). Beginning at a point
marked 1 on plan, being S. deg. 24W. 2591. 69 m. from B. L. L. M. 1, San Fernando,
thence S. 12 deg. 45W., 73. 03 m. to point 2; N. 79 deg. 59W., 13.92 m. to point 3;
N. 23 deg. 26E. , 75.00 m. to the point of beginning; containing an area of FIVE
HUNDED AND EIGHT (508) SQUARE METERS, more or less. All points referred
to are indicated in the plan and marked on the ground; bearings true, date of survey,
February 4-21, 1957.
On August 16, 1960, Mamaril, et al. sold Lots No. 1 and 4 to Lepanto Consolidated Mining
Company. The deed of sale covering the aforesaid property was inscribed as Entry No. 9173 on
TCT No. T-4304. Subsequently, Transfer Certificate No. T-4314 was issued in the name of
Lepanto Consolidated Mining Company as owner of Lots No. 1 and 4.
On February 1, 1963, unknown to Lepanto Consolidated Mining Company, the Court of First
Instance of La Union, Second Judicial District, issued an Order in Land Registration Case No. N-
361 (LRC Record No. N-14012) entitled Rafael Galvez, Applicant, Eliza Bustos, et al., Parties-In-
Interest; Republic of the Philippines, Movant declaring OCT No. 0-381 of the Registry of Deeds
for the Province of La Union issued in the name of Rafael Galvez, null and void, and ordered the
cancellation thereof.
The Order pertinently provided:
Accordingly, with the foregoing, and without prejudice on the rights of incidental
parties concerned herein to institute their respective appropriate actions compatible
with whatever cause they may have, it is hereby declared and this court so holds that
both proceedings in Land Registration Case No. N-361 and Original Certificate No. 0-
381 of the Registry of Deeds for the province of La Union issued in virtue thereof and
registered in the name of Rafael Galvez, are null and void; the Register of Deeds for
the Province of La Union is hereby ordered to cancel the said original certificate and /
or such other certificates of title issued subsequent thereto having reference to the
same parcels of land; without pronouncement as to costs.
On October 28, 1963, Lepanto Consolidated Mining Company sold to herein petitioner Lots
No. 1 and 4, with the deed being entered in TCT NO. 4314 as entry No. 12381. Transfer Certificate
of Title No. T-5710 was thus issued in favor of the petitioner which starting since then exercised
proprietary rights over Lots No. 1 and 4.
In the meantime, Rafael Galvez filed his motion for reconsideration against the order issued
by the trial court declaring OCT No. 0-381 null and void. The motion was denied on January 25,
1965. On appeal, the Court of Appeals ruled in favor of the Republic of the Philippines in a
Resolution promulgated on August 14, 1973 in CA-G. R. No. 36061-R.
Thereafter, the Court of Appeals issued an Entry of Judgment, certifying that its decision dated
August 14, 1973 became final and executory on October 23, 1973.
On April 22, 1974, the trial court in L. R. C. Case No. N-361 issued a writ of execution of the
judgment which was served on the Register of Deeds, San Fernando, La Union on April 29, 1974.
Twenty four long years thereafter, on January 14, 1999, the Office of the Solicitor General
received a letter dated January 11, 1999 from Mr. Victor G. Floresca, Vice-President, John Hay
Poro Point Development Corporation, stating that the aforementioned orders and decision of the
trial court in L. R. C. No. N-361 have not been executed by the Register of Deeds, San Fernando,
La Union despite receipt of the writ of execution.
On April 21, 1999, the Office of the Solicitor General filed a complaint for revival of judgment
and cancellation of titles before the Regional Trial Court of the First Judicial Region (Branch 26,
San Fernando, La Union) docketed therein as Civil Case No. 6346 entitled, Republic of the
Philippines, Plaintiff, versus Heirs of Rafael Galvez, represented by Teresita Tan, Reynaldo
Mamaril, Elisa Bustos, Erlinda Balatbat, Regina Bustos, Shipside Incorporated and the Register of
Deeds of La Union, Defendants.
The evidence shows that the impleaded defendants (except the Register of Deeds of the
province of La Union) are the successors-in-interest of Rafael Galvez (not Reynaldo Galvez as
alleged by the Solicitor General) over the property covered by OCT No. 0-381, namely: (a)
Shipside Inc. which is presently the registered owner in fee simple of Lots No. 1 and 4 covered by
TCT No. T-5710, with a total area of 7,079 square meters; (b) Elisa Bustos, Jesusito Galvez, and
Teresita Tan who are the registered owners of Lot No. 2 of OCT No. 0-381;and (c) Elisa Bustos,
Filipina Mamaril, Regina Bustos and Erlinda Balatbat who are the registered owners of Lot No. 3
of OCT No. 0-381, now covered by TCT No. T-4916, with an area of 1,583 square meters.
In its complaint in Civil Case No. 6346, the Solicitor General argued that since the trial court
in LRC Case No. 361 had ruled and declared OCT No. 0-381 to be null and void, which ruling
was subsequently affirmed by the Court of Appeals, the defendants-successors-in-interest of
Rafael Galvez have no valid title over the property covered by OCT No. 0-381, and the subsequent
Torrens titles issued in their names should be consequently cancelled.
On July 22, 1999, petitioner Shipside, Inc. filed its Motion to Dismiss, based on the following
grounds: (1) the complaint stated no cause of action because only final and executory judgments
may be subject of an action for revival of judgment; (2) the plaintiff is not the real party-in-interest
because the real property covered by the Torrens titles sought to be cancelled, allegedly part of
Camp Wallace (Wallace Air Station), were under the ownership and administration of the Bases
Conversion Development Authority (BCDA) under Republic Act No. 7227; (3) plaintiffs cause of
action is barred by prescription; (4) twenty-five years having lapsed since the issuance of the writ
of execution, no action for revival of judgment may be instituted because under Paragraph 3 of
Article 1144 of the Civil Code, such action may be brought only within ten (10) years from the
time the judgment had been rendered.
An opposition to the motion to dismiss was filed by the Solicitor General on August 23, 1999,
alleging among others, that: (1) the real party-in-interest is the Republic of the Philippines;and (2)
prescription does not run against the State.
On August 31, 1999, the trial court denied petitioners motion to dismiss and on October 14,
1999, its motion for reconsideration was likewise turned down.
On October 21, 1999, petitioner instituted a petition for certiorari and prohibition with the
Court of Appeals, docketed therein as CA-G.R. SP No. 55535, on the ground that the orders of the
trial court denying its motion to dismiss and its subsequent motion for reconsideration were issued
in excess of jurisdiction.
On November 4, 1999, the Court of Appeals dismissed the petition in CA-G.R. SP No. 55535
on the ground that the verification and certification in the petition, under the signature of Lorenzo
Balbin, Jr., was made without authority, there being no proof therein that Balbin was authorized
to institute the petition for and in behalf and of petitioner.
On May 23, 2000, the Court of Appeals denied petitioners motion for reconsideration on the
grounds that: (1) a complaint filed on behalf of a corporation can be made only if authorized by its
Board of Directors, and in the absence thereof, the petition cannot prosper and be granted due
course;and (2) petitioner was unable to show that it had substantially complied with the rule
requiring proof of authority to institute an action or proceeding.
Hence, the instant petition.
In support of its petition, Shipside, Inc. asseverates that:
1. The Honorable Court of Appeals gravely abused its discretion in dismissing the petition when
it made a conclusive legal presumption that Mr. Balbin had no authority to sign the petition
despite the clarity of laws, jurisprudence and Secretarys certificate to the contrary;
2. The Honorable Court of Appeals abused its discretion when it dismissed the petition, in effect
affirming the grave abuse of discretion committed by the lower court when it refused to
dismiss the 1999 Complaint for Revival of a 1973 judgment, in violation of clear laws and
jurisprudence.
Petitioner likewise adopted the arguments it raised in the petition and comment/reply it filed
with the Court of Appeals, attached to its petition as Exhibit L and N, respectively.
In his Comment, the Solicitor General moved for the dismissal of the instant petition based
on the following considerations: (1) Lorenzo Balbin, who signed for and in behalf of petitioner in
the verification and certification of non-forum shopping portion of the petition, failed to show
proof of his authorization to institute the petition for certiorari and prohibition with the Court of
Appeals, thus the latter court acted correctly in dismissing the same; (2) the real party-in-interest
in the case at bar being the Republic of the Philippines, its claims are imprescriptible.
In order to preserve the rights of herein parties, the Court issued a temporary restraining order
on June 26, 2000 enjoining the trial court from conducting further proceedings in Civil Case No.
6346.
The issues posited in this case are: (1) whether or not an authorization from petitioners Board
of Directors is still required in order for its resident manager to institute or commence a legal action
for and in behalf of the corporation; and (2) whether or not the Republic of the Philippines can
maintain the action for revival of judgment herein.
We find for petitioner.
Anent the first issue:
The Court of Appeals dismissed the petition for certiorari on the ground that Lorenzo Balbin,
the resident manager for petitioner, who was the signatory in the verification and certification on
non-forum shopping, failed to show proof that he was authorized by petitioners board of directors
to file such a petition.
A corporation, such as petitioner, has no power except those expressly conferred on it by the
Corporation Code and those that are implied or incidental to its existence. In turn, a corporation
exercises said powers through its board of directors and / or its duly authorized officers and
agents. Thus, it has been observed that the power of a corporation to sue and be sued in any court
is lodged with the board of directors that exercises its corporate powers (Premium Marble
Resources, Inc. v. CA, 264 SCRA 11 [1996]). In turn, physical acts of the corporation, like the
signing of documents, can be performed only by natural persons duly authorized for the purpose
by corporate by-laws or by a specific act of the board of directors.
It is undisputed that on October 21, 1999, the time petitioners Resident Manager Balbin filed
the petition, there was no proof attached thereto that Balbin was authorized to sign the verification
and non-forum shopping certification therein, as a consequence of which the petition was
dismissed by the Court of Appeals. However, subsequent to such dismissal, petitioner filed a
motion for reconsideration, attaching to said motion a certificate issued by its board secretary
stating that on October 11, 1999, or ten days prior to the filing of the petition, Balbin had been
authorized by petitioners board of directors to file said petition.
The Court has consistently held that the requirement regarding verification of a pleading is
formal, not jurisdictional (Uy v. LandBank, G.R. No. 136100, July 24, 2000). Such requirement is
simply a condition affecting the form of the pleading, non-compliance with which does not
necessarily render the pleading fatally defective. Verification is simply intended to secure an
assurance that the allegations in the pleading are true and correct and not the product of the
imagination or a matter of speculation, and that the pleading is filed in good faith. The court may
order the correction of the pleading if verification is lacking or act on the pleading although it is
not verified, if the attending circumstances are such that strict compliance with the rules may be
dispensed with in order that the ends of justice may thereby be served.
On the other hand, the lack of certification against forum shopping is generally not curable by
the submission thereof after the filing of the petition. Section 5, Rule 45 of the 1997 Rules of Civil
Procedure provides that the failure of the petitioner to submit the required documents that should
accompany the petition, including the certification against forum shopping, shall be sufficient
ground for the dismissal thereof. The same rule applies to certifications against forum shopping
signed by a person on behalf of a corporation which are unaccompanied by proof that said
signatory is authorized to file a petition on behalf of the corporation.
In certain exceptional circumstances, however, the Court has allowed the belated filing of the
certification. In Loyola v. Court of Appeals, et. al. (245 SCRA 477 [1995]), the Court considered
the filing of the certification one day after the filing of an election protest as substantial compliance
with the requirement. In Roadway Express, Inc. v. Court of Appeals, et. al. (264 SCRA 696
[1996]), the Court allowed the filing of the certification 14 days before the dismissal of the
petition. In Uy v. LandBank, supra, the Court had dismissed Uys petition for lack of verification
and certification against non-forum shopping.However, it subsequently reinstated the petition after
Uy submitted a motion to admit certification and non-forum shopping certification. In all these
cases, there were special circumstances or compelling reasons that justified the relaxation of the
rule requiring verification and certification on non-forum shopping.
In the instant case, the merits of petitioners case should be considered special circumstances
or compelling reasons that justify tempering the requirement in regard to the certificate of non-
forum shopping. Moreover, in Loyola, Roadway, and Uy, the Court excused non-compliance with
the requirement as to the certificate of non-forum shopping. With more reason should we allow
the instant petition since petitioner herein did submit a certification on non-forum shopping, failing
only to show proof that the signatory was authorized to do so. That petitioner subsequently
submitted a secretarys certificate attesting that Balbin was authorized to file an action on behalf of
petitioner likewise mitigates this oversight.
It must also be kept in mind that while the requirement of the certificate of non-forum
shopping is mandatory, nonetheless the requirements must not be interpreted too literally and thus
defeat the objective of preventing the undesirable practice of forum-shopping (Bernardo v. NLRC,
255 SCRA 108 [1996]). Lastly, technical rules of procedure should be used to promote, not
frustrate justice. While the swift unclogging of court dockets is a laudable objective, the granting
of substantial justice is an even more urgent ideal.
Now to the second issue:
The action instituted by the Solicitor General in the trial court is one for revival of judgment
which is governed by Article 1144(3) of the Civil Code and Section 6, Rule 39 of the 1997 Rules
on Civil Procedure. Article 1144(3) provides that an action upon a judgment must be brought
within 10 years from the time the right of action accrues." On the other hand, Section 6, Rule 39
provides that a final and executory judgment or order may be executed on motion within five (5)
years from the date of its entry, but that after the lapse of such time, and before it is barred by the
statute of limitations, a judgment may be enforced by action. Taking these two provisions into
consideration, it is plain that an action for revival of judgment must be brought within ten years
from the time said judgment becomes final.
From the records of this case, it is clear that the judgment sought to be revived became final
on October 23, 1973. On the other hand, the action for revival of judgment was instituted only in
1999, or more than twenty-five (25) years after the judgment had become final. Hence, the action
is barred by extinctive prescription considering that such an action can be instituted only within
ten (10) years from the time the cause of action accrues.
The Solicitor General, nonetheless, argues that the States cause of action in the cancellation
of the land title issued to petitioners predecessor-in-interest is imprescriptible because it is included
in Camp Wallace, which belongs to the government.
The argument is misleading.
While it is true that prescription does not run against the State, the same may not be invoked
by the government in this case since it is no longer interested in the subject matter. While Camp
Wallace may have belonged to the government at the time Rafael Galvezs title was ordered
cancelled in Land Registration Case No. N-361, the same no longer holds true today.
Republic Act No. 7227, otherwise known as the Bases Conversion and Development Act of
1992, created the Bases Conversion and Development Authority. Section 4 pertinently provides:
Section 4. Purposes of the Conversion Authority. The Conversion Authority shall

have the following purposes:
(a) To own, hold and/or administer the military reservations of John Hay Air Station, Wallace Air
Station, ODonnell Transmitter Station, San Miguel Naval Communications Station, Mt. Sta.
Rita Station (Hermosa, Bataan) and those portions of Metro Manila military camps which may
be transferred to it by the President;
Section 2 of Proclamation No. 216, issued on July 27, 1993, also provides:
Section 2. Transfer of Wallace Air Station Areas to the Bases Conversion and
Development Authority. All areas covered by the Wallace Air Station as embraced and
defined by the 1947 Military Bases Agreement between the Philippines and the
United States of America, as amended, excluding those covered by Presidential
Proclamations and some 25-hectare area for the radar and communication station of
the Philippine Air Force, are hereby transferred to the Bases Conversion Development
Authority
With the transfer of Camp Wallace to the BCDA, the government no longer has a right or
interest to protect. Consequently, the Republic is not a real party in interest and it may not institute
the instant action. Nor may it raise the defense of imprescriptibility, the same being applicable
only in cases where the government is a party in interest. Under Section 2 of Rule 3 of the 1997
Rules of Civil Procedure, every action must be prosecuted or defended in the name of the real
party in interest. To qualify a person to be a real party in interest in whose name an action must be
prosecuted, he must appear to be the present real owner of the right sought to enforced (Pioneer
Insurance v. CA, 175 SCRA 668 [1989]). A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. And
by real interest is meant a present substantial interest, as distinguished from a mere expectancy, or
a future, contingent, subordinate or consequential interest (Ibonilla v. Province of Cebu, 210 SCRA
526 [1992]). Being the owner of the areas covered by Camp Wallace, it is the Bases Conversion
and Development Authority, not the Government, which stands to be benefited if the land covered
by TCT No. T-5710 issued in the name of petitioner is cancelled.
Nonetheless, it has been posited that the transfer of military reservations and their extensions
to the BCDA is basically for the purpose of accelerating the sound and balanced conversion of
these military reservations into alternative productive uses and to enhance the benefits to be
derived from such property as a measure of promoting the economic and social development,
particularly of Central Luzon and, in general, the countrys goal for enhancement (Section 2,
Republic Act No. 7227). It is contended that the transfer of these military reservations to the
Conversion Authority does not amount to an abdication on the part of the Republic of its interests,
but simply a recognition of the need to create a body corporate which will act as its agent for the
realization of its program. It is consequently asserted that the Republic remains to be the real party
in interest and the Conversion Authority merely its agent.
We, however, must not lose sight of the fact that the BCDA is an entity invested with a
personality separate and distinct from the government. Section 3 of Republic Act No. 7227 reads:
Section 3. Creation of the Bases Conversion and Development Authority. There is

hereby created a body corporate to be known as the Conversion Authority which shall
have the attribute of perpetual succession and shall be vested with the powers of a
corporation.
It may not be amiss to state at this point that the functions of government have been classified
into governmental or constituent and proprietary or ministrant. While public benefit and public
welfare, particularly, the promotion of the economic and social development of Central Luzon,
may be attributable to the operation of the BCDA, yet it is certain that the functions performed by
the BCDA are basically proprietary in nature. The promotion of economic and social development
of Central Luzon, in particular, and the countrys goal for enhancement, in general, do not make
the BCDA equivalent to the Government. Other corporations have been created by government to
act as its agents for the realization of its programs, the SSS, GSIS, NAWASA and the NIA, to
count a few, and yet, the Court has ruled that these entities, although performing functions aimed
at promoting public interest and public welfare, are not government-function corporations invested
with governmental attributes. It may thus be said that the BCDA is not a mere agency of the
Government but a corporate body performing proprietary functions.
Moreover, Section 5 of Republic Act No. 7227 provides:
Section 5. Powers of the Conversion Authority. To carry out its objectives under this
Act, the Conversion Authority is hereby vested with the following powers:
(a) To succeed in its corporate name, to sue and be sued in such corporate name and to adopt,
alter and use a corporate seal which shall be judicially noticed;
Having the capacity to sue or be sued, it should thus be the BCDA which may file an action
to cancel petitioners title, not the Republic, the former being the real party in interest. One having
no right or interest to protect cannot invoke the jurisdiction of the court as a party plaintiff in an
action (Ralla v. Ralla, 199 SCRA 495 [1991]). A suit may be dismissed if the plaintiff or the
defendant is not a real party in interest. If the suit is not brought in the name of the real party in
interest, a motion to dismiss may be filed, as was done by petitioner in this case, on the ground
that the complaint states no cause of action (Tanpingco v. IAC, 207 SCRA 652 [1992]).
However, E. B. Marcha Transport Co. , Inc. v. IAC (147 SCRA 276 [1987]) is cited as
authority that the Republic is the proper party to sue for the recovery of possession of property
which at the time of the institution of the suit was no longer held by the national government but
by the Philippine Ports Authority. In E. B. Marcha, the Court ruled:
It can be said that in suing for the recovery of the rentals, the Republic of the
Philippines, acted as principal of the Philippine Ports Authority, directly exercising
the commission it had earlier conferred on the latter as its agent. We may presume
that, by doing so, the Republic of the Philippines did not intend to retain the said
rentals for its own use, considering that by its voluntary act it had transferred the land
in question to the Philippine Ports Authority effective July 11, 1974. The Republic of
the Philippines had simply sought to assist, not supplant, the Philippine Ports
Authority, whose title to the disputed property it continues to recognize. We may
expect then that the said rentals, once collected by the Republic of the Philippines,
shall be turned over by it to the Philippine Ports Authority conformably to the
purposes of P. D. No. 857.
E. B. Marcha is, however, not on all fours with the case at bar. In the former, the Court
considered the Republic a proper party to sue since the claims of the Republic and the Philippine
Ports Authority against the petitioner therein were the same. To dismiss the complaint in E. B.
Marcha would have brought needless delay in the settlement of the matter since the PPA would
have to refile the case on the same claim already litigated upon. Such is not the case here since to
allow the government to sue herein enables it to raise the issue of imprescriptibility, a claim which
is not available to the BCDA. The rule that prescription does not run against the State does not
apply to corporations or artificial bodies created by the State for special purposes, it being said that
when the title of the Republic has been divested, its grantees, although artificial bodies of its own
creation, are in the same category as ordinary persons (Kingston v. LeHigh Valley Coal Co., 241
Pa 469). By raising the claim of imprescriptibility, a claim which cannot be raised by the BCDA,
the Government not only assists the BCDA, as it did in E. B. Marcha, it even supplants the latter,
a course of action proscribed by said case.
Moreover, to recognize the Government as a proper party to sue in this case would set a bad
precedent as it would allow the Republic to prosecute, on behalf of government-owned or
controlled corporations, causes of action which have already prescribed, on the pretext that the
Government is the real party in interest against whom prescription does not run, said corporations
having been created merely as agents for the realization of government programs.
Parenthetically, petitioner was not a party to the original suit for cancellation of title
commenced by the Republic twenty-seven years for which it is now being made to answer, nay,
being made to suffer financial losses.
It should also be noted that petitioner is unquestionably a buyer in good faith and for value,
having acquired the property in 1963, or 5 years after the issuance of the original certificate of
title, as a third transferee. If only not to do violence and to give some measure of respect to the
Torrens System, petitioner must be afforded some measure of protection.
One more point.
Since the portion in dispute now forms part of the property owned and administered by the
Bases Conversion and Development Authority, it is alienable and registerable real property.
We find it unnecessary to rule on the other matters raised by the herein parties.
WHEREFORE, the petition is hereby granted and the orders dated August 31, 1999 and
October 4, 1999 of the Regional Trial Court of the First National Judicial Region (Branch 26, San
Fernando, La Union) in Civil Case No. 6346 entitled Republic of the Philippines, Plaintiff, versus
Heirs of Rafael Galvez, et. al., Defendants as well as the resolutions promulgated on November 4,
1999 and May 23, 2000 by the Court of Appeals (Twelfth Division) in CA-G. R. SP No. 55535
entitled Shipside, Inc., Petitioner versus Hon. Alfredo Cajigal, as Judge, RTC, San Fernando, La
Union, Branch 26, and the Republic of the Philippines, Respondents are hereby reversed and set
aside. The complaint in Civil Case No. 6346, Regional Trial Court, Branch 26, San Fernando City,
La Union entitled Republic of the Philippines, Plaintiff, versus Heirs of Rafael Galvez, et al." is
ordered dismissed, without prejudice to the filing of an appropriate action by the Bases
Development and Conversion Authority.
SO ORDERED.
Panganiban, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ. , concur.
Vitug, J. , Please see separate opinion.
SEPARATE OPINION
VITUG, J.:
I find no doctrinal difficulty in adhering to the draft ponencia written by our esteemed
Chairman. Mr. Justice JARM, insofar as it declares that an action for revival of judgment is barred
by extinctive prescription, if not brought within ten (10) years from the time the right of action
accrues, pursuant to Article 1144(3) of the New Civil Code. It appears that the judgment in the
instant case has become final on 23 October 1973 or well more than two decades prior to the action
for its revival instituted only in 1999.
With due respect, however, I still am unable to subscribe to the idea that prescription may not
be invoked by the government in this case upon the thesis that the transfer of Camp Wallace to the
Bases Conversion Development authority renders the Republic with no right or interest to protect
and thus unqualified under the rules of procedure to be the real party-in-interest. While it is true
that Republic Act 7227, otherwise known as the Bases Conversion and Development Act of 1992,
authorizes the transfer of the military reservations and their extensions to the conversion Authority,
the same, however, is basically for the purpose of accelerating the sound and balanced conversion
of these military reservations into alternative productive uses and to enhance the benefits to be
derived from such property as a measure of promoting the economic and social development,
particularly, of Central Luzon and, in general, the countrys goal for enhancement.[1] The transfer
of these military reservations to the Conversion Authority does not amount to an abdication on the
part of the Republic of its interests but simply a recognition of the need to create a body corporate
which will act as its agent for the realization of its program specified in the Act. It ought to follow
that the Republic remains to be the real party-in-interest and the Conversion authority being merely
its agent.
In E. B. Marcha Transport Co. , Inc. vs. Intermediate Appellate Court,[2] the Court succinctly
resolved the issue of whether or not the Republic of the Philippines would be a proper party to sue
for the recovery of possession of property which at time of the institution of the suit was no longer
being held by the national government but by the Philippine Ports Authority. The Court ruled:
More importantly, as we see it, dismissing the complaint on the ground that the
Republic of the Philippines is not the proper party would result in needless delay in
the settlement of this matter and also in derogation of the policy against multiplicity of
suits. Such a decision would require the Philippine Ports Authority to refile the very
same complaint already proved by the Republic of the Philippines and bring back the
parties as it were to square one.
It can be said that in suing for the recovery of the rentals, the Republic of the
Philippines, acted as principal of the Philippine Ports Authority, directly exercising
the commission it had earlier conferred on the latter as its agent. We may presume
that, by doing so, the republic of the Philippines did not intend to retain the said
rentals for its own use, considering that by its voluntary act it had transferred the land
in question to the Philippine Ports authority effective July 11, 1974. The Republic of
the Philippines had simply sought to assist, not supplant, the Philippine Ports
Authority, whose title to the disputed property it continues to recognize. We may
expect then that the said rentals, once collected by the Republic of the Philippines,
shall be turned over by it to the Philippine Ports Authority conformably to the
purposes of P. D. No. 857."
There would seem to be no cogent reason for ignoring that rationale specially when taken in
light of the fact that the original suit for cancellation of title of petitioners predecessor-in-interest
was commenced by the Republic itself, and it was only in 1992 that the subject military camp was
transferred to the Conversion Authority.
[1]
Section 2, Republic Act 7227.
[2]
147 SCRA 276.
THIRD DIVISION
[G.R. Nos. 145156-57. July 29, 2005]
SOLID HOMES, INC., petitioner, vs. SPOUSES ANCHETA K. TAN and

CORAZON DE JESUS TAN, respondents.
DECISION
GARCIA, J.:
In this appeal by way of a petition for review on certiorari under Rule 45 of the Rules
of Court, petitioner Solid Homes, Inc. urges us to nullify and set aside the following
issuances of the Court of Appeals in CA-G.R. SP No. 53443 and 55324, to wit:
1. Decision dated May 23, 2000, setting aside an earlier decision of the Office
[1]
of the President in a complaint for breach of obligation filed by the herein

respondents against the petitioner in connection with the sale of a
subdivision lot; and
2. Resolution dated September 12, 2000, denying petitioners motion for

[2]
reconsideration.
The material facts, undisputed by the parties, may be briefly stated, as follows:
On April 7, 1980, petitioner Solid Homes, Inc., sold to the spouses Joe Uy and Myrna
Uy a subdivision lot with an area of 1,069 square meters, more particularly identified as
Lot 18, Block 2, located at petitioners Loyola Grand Villas Subdivision, Quezon City.
Thereafter, the lot was registered in the name of the Uys under Transfer Certificate of
Title (TCT) No. 280963/T-1409 of the Register of Deeds of Quezon City.
Sometime in February, 1985, the spouses Uy sold the same lot to herein
respondents, the spouses Ancheta K. Tan and Corazon de Jesus-Tan, by reason of which
the former title covering the lot was cancelled and replaced by TCT No. RT-14465
(327754) in respondents name.
From then on, respondents visited their property a number of times, only to find out
the sad state of development thereat. There was no infrastructure and utility systems for
water, sewerage, electricity and telephone, as announced in the approved plans and
advertisements of the subdivision. Worse, squatters occupy their lot and its surrounding
areas. In short, there has been no development at all.
Accordingly, in a letter dated December 18, 1995, respondents demanded on
petitioner to provide the needed utility systems and clear the area of squatters and other
obstructions by the end of January, 1996 to enable them to start the construction of their
house thereon and to allow other lot owners in the area a full access to and peaceful
possession of their respective lots, conformably with P.D. No. 957 which requires an
owner or developer of a subdivision project to develop the same within one year from the
issuance of its license.
Having received no reply from petitioner, respondents filed with the Field Office of the
Housing and Land Use Regulatory Board (HLURB), NCR a complaint for specific
performance and damages therein praying, inter alia, that petitioner be ordered to provide
the needed facilities in the premises and rid the same of squatters; or, in the alternative,
for petitioner to replace respondents property with another lot in the same subdivision
where there are facilities and sans squatters.
After due proceedings, the Housing and Land Use Arbiter, in a decision dated
September 17, 1996,[3] rendered judgment for the respondents by directing petitioner:
a. to perform its obligation to provide subdivision facilities in the subject

premises and to rid the premises of squatters. In the alternative, at the option
of complainants xxx to replace subject lot with a lot of similar size and with
available facilities, located in the subject subdivision.
b. to pay complainants P20,000.00 as and by way of attorneys fees.
In the same decision, the Arbiter dismissed the complaint against petitioners co-
defendant, Purita Soliven.
Dissatisfied, petitioner went on appeal to the HLURB Board of Commissioners, which,
in a decision dated April 16, 1997,[4] affirmed that of the Arbiter.
From there, petitioner elevated the case to the Office of the President (O.P.).
In a decision[5] dated June 3, 1999, the O.P., thru then Executive Secretary Ronaldo
B. Zamora, affirmed with modification the appealed decision of the HLURB Board of
Commissioners, thus:
WHEREFORE, premises considered, the first paragraph of the decision appealed
from is hereby AFFIRMED with the modification that in case Solid Homes, Inc. fails
to replace subject lot with a lot of similar size and with available facilities located in
the subdivision, because it had already sold or transferred all of its properties in the
subdivision, it shall pay spouses Ancheta Tan and Corazon Tan the total amount
received from them as purchase price, with legal rate of interest from February 1985,
until fully paid. Save for this modification, the decision appealed from is
hereby AFFIRMED.
SO ORDERED (Italics, ours).
On June 25, 1999, respondents filed a motion for partial reconsideration of the
aforementioned decision, praying for the deletion of that portion thereof giving petitioner
the option of merely paying them the purchase price with interest in the event
petitioner fails to replace subject lot with a lot of similar size and with available facilities
located in the subdivision, because it had already sold or transferred all of its properties
in the subdivision. Respondents argued that it would be more in accord with equity and
fair play if they will be paid the fair market valueof the lot in question and not merely its
purchase price, should there be no available lot with facilities in the area.
However, in a resolution dated September 22, 1999,[6] O.P. denied respondents
motion.
Both parties then went to the Court of Appeals via their respective petitions for review,
thereat separately docketed as CA- G.R. SP No. 53443 (for petitioners) and CA-G.R. SP
No. 55324 (for respondent). Pursuant to Section 1, Rule 31 of the Rules of the Court, the
appellate court ordered the consolidation of the two (2) petitions.
As stated at the threshold hereof, the Court of Appeals, in its consolidated decision
dated May 23, 2000,[7] set aside that of the O.P. and affirmed the earlier decision dated
April 16, 1997 of the HLURB Board of Commissioners, but subject to the modification that
petitioner shall pay respondents the current market value of the lot, not merely its
purchase price, should there be no more available lots with facilities in petitioners Loyola
Grand Villas Subdivision. We quote the decretal portion of the appellate courts decision:
WHEREFORE, Premises Considered, the assailed Decision dated 03 June 1999 is

hereby SET ASIDE and the Decision of the HLURB dated 16 April 1997 is
hereby AFFIRMED subject to the modification that if there is no more available lot
in Loyola Grand Villas to replace subject lot, Solid Homes, Inc. should pay the
spouses Tan the current market value of their lot.
SO ORDERED.
This time, petitioner moved for reconsideration but its motion was denied by the same
court in its resolution of September 12, 2000.[8]
Hence, petitioners present recourse, contending that the Court of Appeals erred
1. XXX IN RULING THAT PRESCRIPTION HAS NOT SET-IN;
2. XXX IN APPLYING THE PRINCIPLE ON EQUITY AS AGAINST

POSITIVE LAW TO THE PREJUDICE OF HEREIN PETITIONER; AND
3. XXX IN RULING THAT PETITIONER SHOULD PAY RESPONDENTS

THE CURRENT MARKET VALUE OF THE LOT IN QUESTION.
We DENY.
The errors assigned actually simmered down to only two (2) issues,
namely: (1) whether or not respondents right to bring the instant case against petitioner
has already prescribed; and (2) in the event respondents opt to rescind the contract,
should petitioner pay them merely the price they paid for the lot plus interest or the current
market value thereof.
In the matter of prescription, it is petitioners posture that respondents right to bring
the action against it has already prescribed, arguing that the 10-year prescriptive period
therefor should be reckoned from April 7, 1980 when petitioner originally sold the lot in
question to the spouses Joe Uy and Myrna Uy, or, at the latest from February, 1985, when
respondents acquired the same lot from the Uy spouses. Hence, and as respondents
action was filed with the HLURB Field Office only on April 1, 1996 or after more than ten
(10) years, it follows that the same was filed out of time and, therefore, ought to have
been dismissed.
We disagree.
There can be no debate at all on the legal postulate that the prescriptive period for
bringing action for specific performance, as here, prescribes in ten (10) years. This is so
provided in Article 1144 of the Civil Code. What we cannot agree on with the petitioner,
and about which petitioner is in serious error, is its submission that the 10-year
prescriptive period should commence either on April 7, 1980, when petitioner originally
sold the lot to spouses Uy; or in February, 1985, when the respondents thereafter bought
the same lot from the Uy couple. Obviously, petitioner misread Article 1144 which
specifically provides that the 10-year period therein referred to commences to run only
from the time the right of action accrues. We quote in full the codal provision relied upon
by petitioner:
Article 1144. The following actions must be brought within ten years from the time
the right of action accrues:

(3) Upon a judgment (Emphasis supplied).
If not on a written contract, petitioners obligation to introduce improvements on the

area in question arises from law, more specifically P.D. 957, as amended by P.D. 1216,
Section 31 of which pertinently reads:
SECTION 31. Roads, Alleys, Sidewalks and Open Spaces. The owner as developer of
a subdivision shall provide adequate roads, alleys and sidewalks. For subdivision
projects one (1) hectare or more, the owner or developer shall reserve thirty percent
(30%) of the gross area for open space.
The next inquiry, then, is when the respondents cause of action accrued. Our earlier
ruling in Banco Filipino Savings and Mortgage Bank vs. CA[9] provides the answer:
Thus, the period of prescription of any action is reckoned only from the date the cause
of action accrued. And a cause of action arises when that which should have been
done is not done, or that which should not have been done is done. The period
should not be made to retroact to the date of execution of the contract on January 15,
1975 as claimed by the petitioner for at that time, there would be no way for the
respondents to know of the violation of their rights. The Court of Appeals therefore
correctly found that respondents cause of action accrued on October 30, 1978, the date
they received the statement of account showing the increased rate of interest, for it
was only from that moment that they discovered the petitioners unilateral increase
thereof. We quote with approval the pertinent portions of the Court of Appeals
decision as follows:
It is the legal possibility of bringing the action that determines the starting point for
the computation of the period of prescription. In fine, the ten-year prescriptive
[10]
period is to be reckoned from the accrual of the Appellees right of action, not
necessarily on the very date of the execution of the contracts subject of the
action (Emphasis supplied)
[11]
In law, a cause of action exists when the following requisites concur, to wit: (1) a right
in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part on the defendant to respect such right; and (3) an
act or omission on the part of such defendant violative of the right of the plaintiff.[12]
Time and again, we have emphasized that it is only upon the happening of the last
element when it can be said that a cause of action has arisen. In short, it is from the time
an act is performed or an omission incurred which is violative of the plaintiffs right, that
signals the accrual of a cause of action. And it is from that time that the 10-year
prescriptive period commences to run.
Here, it was only on December 18, 1995 when respondents made a written demand
upon petitioner to construct subdivision roads, put up utility facilities and rid the premises
of squatters, obligations which are unquestionably in the nature of an obligation to do.
And under Article 1169[13] of the Code, a party who is under obligation to do something
incurs delay only from the time that the obligee demands, either judicially or
extrajudicially, for the fulfillment of the obligation.
Parenthetically, and as we have said in Social Security System vs. Moonwalk
Development and Housing Corporation, et al.,[14] an obligor violates his obligation to the
obligee from the time the latter made a demand for performance, which demand also
marks the point of time when the former incurs mora or delay:
The debtor, therefore, violates the obligation in point of time if there is mora or delay.
Now, there is no mora or delay unless there is a demand. It is noteworthy that in the
present case during all the period when the principal obligation was still subsisting,
although there were late amortizations there was no demand made by the creditor,
plaintiff-appellant for the payment of the penalty. Therefore up to the time of the letter
of plaintiff-appellant there was no demand for the payment of the penalty, hence the
debtor was not in mora in the payment of the penalty.
Hence, absent any demand from the obligee, the obligor does not incur delay. And
so long as the obligor does not incur in delay, he cannot be said to be guilty of some
omission violative of the obligees rights. Consequently, as long as the obligor is not guilty
of some omission violative of the obligees rights, the latter has no cause of action against
the former. As a result, the prescriptive period within which the obligee may bring an
action against the obligor does not commence to run until a demand is made.
With the reality that in this case, respondents made their written demand upon
petitioner to perform what is incumbent upon it only on December 18, 1995, it was only
from that date when the 10-year prescriptive period under Article 1144 commenced to
run. And since respondents complaint for specific performance was filed with the Field
Office of the HLURB only on April 1, 1996, or less than four (4) months after the date of
their demand, petitioners reliance on prescription of action is simply without any leg to
stand on.
This brings us to the second question.
Petitioner submits as erroneous the appellate courts ruling that [e]quity and justice
dictate that the injured party should be paid the market value of the lot, otherwise,
respondents Solid Homes, Inc. & Purita Soliven would enrich themselves at the expense
of herein lot owners when they sell the same lot at the present market value. To petitioner,
equity may be availed of only in the absence of and never against statutory law or judicial
rules of procedure. It then invokes Article 1385 of the New Civil Code, which provides:
Article 1385. Rescission creates the obligation to return the things which were the
object of the contract, together with their fruits, and the price with its interests;
consequently, it can be carried out only when he who demands rescission can return
whatever he may be obliged to restore.
On surface, petitioners argument appears infallible. However, a closer look at our
laws and the reason and spirit behind their enactment, as well as established
jurisprudence, negates petitioners thesis.
It is true that this Court have, in the past, applied the provision of Article 1385 to cases
of rescission due to breach of obligation under Article 1191.[15] But this notwithstanding,
the Court finds no reason to alter the ruling of the Court of Appeals.
In many instances, this Court has refused to apply the literal import of a particular
provision of law when to do so would lead to unjust, unfair and absurd results. After all, it
is the function of courts to see to it that justice is dispensed, fairness is observed and
absurdity prevented. So it is that in Commissioner of Internal Revenue vs. Solidbank
Corporation,[16] we made the following pronouncement:
A literal application of any part of a statute is to be rejected if it will operate

unjustly, lead to absurd results, or contradict the evident meaning of the statute
taken as a whole. Unlike the CA, we find that the literal application of the aforesaid
sections of the Tax Code and its implementing regulations does not operate unjustly
or contradict the evident meaning of the statute taken as a whole. Neither does it lead
to absurd results. Indeed, our courts are not to give words meanings that would lead to
absurd or unreasonable consequences. We have repeatedly held thus:
xxx [Statutes should receive a sensible construction, such as will give effect to the
legislative intention and so as to avoid an unjust or an absurd conclusion.
(Emphasis supplied.)
Were we to follow the letter of Article 1385, we will in effect be paving the way to an
absurd situation whereby subdivision developers who have reneged on their contractual
and legal obligation to provide utility systems and facilities for the use of subdivision lot
owners may themselves profit from their very own wrongs and shortcomings. In the curt
language of the Court of Appeals, to which we are in full accord:
Indeed, there would be unjust enrichment if respondents Solid Homes, Inc. & Purita
Soliven are made to pay only the purchase price plus interest. It is definite that the
value of the subject property already escalated after almost two decades from the time
the petitioner paid for it. Equity and justice dictate that the injured party should be
paid the market value of the lot, otherwise, respondents Solid Homes, Inc. & Purita
Soliven would enrich themselves at the expense of herein lot owners when they sell
the same lot at the present market value. Surely, such a situation should not be
countenanced for to do so would be contrary to reason and therefore, unconscionable.
Over time, courts have recognized with almost pedantic adherence that what is
inconvenient or contrary to reason is not allowed in law.
The foregoing scenario becomes even more intolerable when it is considered that
P.D. 959 was issued precisely as a measure against subdivision owners, developers,
operators and/or sellers who reneged on their obligation to provide the needed utility
systems and facilities in their subdivisions. As expressed in one of the decrees whereas
clauses:
WHEREAS, numerous reports reveal that many real estate subdivision owners,
developers, operators and/or sellers have reneged on their representations and
obligations to provide and maintain properly subdivision roads, drainage, sewerage,
water systems, lighting systems, and other similar basic requirements, thus
endangering the health and safety of home and lot buyers.
WHEREFORE, the instant petition is DENIED and the assailed decision and
resolution of the Court of Appeals AFFIRMED.
Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.
Corona, J., on official leave.
[1]
Penned by then (now retired) Associate Justice Ramon A. Barcelona with Associate Justices Marina L.
Buzon and Edgardo P. Cruz, concurring.
[2]
Rollo, pp. 121-122.
[3]
Rollo, pp. 38-44.
[4]
Rollo, pp. 45-52.
[5]
Rollo, pp. 53-58.
[6]
Rollo, pp. 59-61.
[7]
Rollo, pp. 88-102.
[8]
Supra.
[9]
388 Phils. 27, 39-40 [2000].
[10]
Citing Constancia C. Telentino vs. Court of Appeals, et al., 162 SCRA 66.
[11]
Citing Naga Telephone Co. Inc. vs. Court of Appeals, et al., 230 SCRA 351.
[12]
Lee, et al. vs. CA, 419 Phils. 392, 419 [2001].
[13]
Article 1169. Those obliged to deliver or to do something incur in delay from the time the obligee judicially
or extrajudicially demands from them the fulfillment of their obligation.
[14]
221 SCRA 119, 124 [1993].
[15]
E.g., Palay, Inc. vs. Clave, 124 SCRA 638 [1983] and Velarde vs. Court of Appeals, 361 SCRA 56 [2001].
[16]
416 SCRA 436, 460 [2003].

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Property Cases 2

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Today is Saturday, December 09, 2017

Republic of the Philippines

G.R. No. L-37409 May 23, 1988

NICOLAS VALISNO, plaintiff-appellant,

FELIPE ADRIANO, defendant-appellee.

Honorio Valisno Garcia I for plaintiff-appelant.

Felipe K Medina for defendant-appellee.

The Lawphil Project - Arellano Law Foundation

Today is Saturday, December 09, 2017

Republic of the Philippines

G.R. No. L-10619 February 28, 1958

LEOGARIO RONQUILLO, ET AL., plaintiffs-appellants,

JOSE ROCO, as Administrator of VICENTE, ROCO Y. DOMINGUEZ ET AL., defendants-appellees.

Moises B. Cruz for appellants.

Vicente Roco, Jr. for appellees.

Padilla, J., concurs in the result.

REYES, J.B.L., J., concurring:

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Republic of the Philippines

G.R. No. L-66520 August 30, 1988

EDUARDO C. TAÑEDO, petitioner,

Numeriano F. Capangpangan for petitioner.

Meinrado P. Parades for private respondents.

The facts, in brief, are as follows:

Hence, the present recourse by petitioner Tanedo.

Art. 631. Easements are extinguished:

(5) By the renunciation of the owner of the dominant estate;

1 Amended Complaint, par. 2, Original Record, p. 7.

2 Original Record, p. 32.

3 Rollo, pp, 28-29.

6 Original Record, p. 19.

9 Id., p. 87, 91.

17 Art. 629, Civil Code.

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Republic of the Philippines

G.R. No. 80511 January 25, 1991

COSTABELLA CORPORATION, petitioner,

Roco, Bunag, Kapunan & Migallos for petitioner.

Zosa & Quijano Law Offices for respondents.

The petition is meritorious.

It is already well-established that an easement of right of way, as is involved here, is discontinuous15

It is based on these settled principles that we have resolved this case.

Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.

3 Penned by Judge Teodoro K. Risos; Rollo, Id., 44-50.

4 Rollo, id., 11.

18 Rollo, id., 61.

23 II FRANCISCO, CIVIL CODE OF THE PHILIPPINES, 787.

29 TOLENTINO, id., 373.

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Republic of the Philippines

G.R. No. 77628 March 11, 1991

TOMAS ENCARNACION, petitioner,

Esteban M. Mendoza for petitioner.

Oscar Gozos for private respondents.

The facts are undisputed.

xxx xxx xxx

Gutierrez, Jr., Feliciano, Bidin and Davide, Jr., JJ., concur.

1 TSN, August 9, 1985, pp. 17-19; July 19, 1985, p. 30.

5 See Original Record, pp. 44-45.

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