Articles 1106-115

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Cases 1106-1155: Obligations and Contracts –

Estrellado 2014

FIRST DIVISION

[G.R. No. 128991. April 12, 2000]

YOLANDA ROSELLO-BENTIR, SAMUEL PORMIDA and CHARITOPORMIDA, petitioners, vs. HONORABLE MATEO M. LEANDA, in his capacityas Presiding Judge of RTC, Tacloban City, Branch 8, and LEYTE GULFTRADERS, INC.,respondents.

KAPUNAN, J .:

Reformation of an instrument is that remedy in equity by means of which a writteninstrument is made or construed so as to express or conform to the real intention ofthe parties when some error or mistake has been committed .[1] It is predicated onthe equitable maxim that equity treats as done that which ought to bedone.[2] The rationale of the doctrine is that it would be unjust and unequitable toallow the enforcement of a written instrument which does not reflect or disclose thereal meeting of the minds of the parties.[3] However, an action for reformation mustbe brought within the period prescribed by law, otherwise, it will be barred by themere lapse of time. The issue in this case is whether or not the complaint forreformation filed by respondent Leyte Gulf Traders, Inc. has prescribed and in thenegative, whether or not it is entitled to the remedy of reformation sought. Oldmiso

On May 15, 1992, respondent Leyte Gulf Traders, Inc. (herein referred to asrespondent corporation) filed a complaint for reformation of instrument, specificperformance, annulment of conditional sale and damages with prayer for writ ofinjunction against petitioners Yolanda Rosello-Bentir and the spouses Samuel andCharito Pormida. The case was docketed as Civil Case No. 92-05-88 and raffled toJudge Pedro S. Espina, RTC, Tacloban City, Branch 7. Respondent corporationalleged that it entered into a contract of lease of a parcel of land with petitionerBentir for a period of twenty (20) years starting May 5, 1968. According torespondent corporation, the lease was extended for another four (4) years or untilMay 31, 1992. On May 5, 1989, petitioner Bentir sold the leased premises topetitioner spouses Samuel Pormada and Charito Pormada. Respondent corporationquestioned the sale alleging that it had a right of first refusal. Rebuffed, it filed CivilCase No. 92-05-88 seeking the reformation of the expired contract of lease on theground that its lawyer inadvertently omitted to incorporate in the contract of leaseexecuted in 1968, the verbal agreement or understanding between the parties thatin the event petitioner Bentir leases or sells the lot after the expiration of the lease,respondent corporation has the right to equal the highest offer. Ncm

In due time, petitioners filed their answer alleging that the inadvertence of thelawyer who prepared the lease contract is not a ground for reformation. Theyfurther contended that respondent corporation is guilty of laches for not bringing thecase for reformation of the lease contract within the prescriptive period of ten (10)years from its execution.

Respondent corporation then filed its reply and on November 18, 1992, filed amotion to admit amended complaint. Said motion was granted by the lower court.[4]

Thereafter, petitioners filed a motion to dismiss reiterating that the complaintshould be dismissed on the ground of prescription.

On December 15, 1995, the trial court through Judge Pedro S. Espina issued anorder dismissing the complaint premised on its finding that the action forreformation had already prescribed. The order reads: Scjuris

ORDER

Resolved here is the defendants’ MOTION TO DISMISS PLAINTIFF’Scomplaint on ground of prescription of action.

It is claimed by plaintiff that he and defendant Bentir entered into a

contract of lease of a parcel of land on May 5, 1968 for a period of 20 years(and renewed for an additional 4 years thereafter) with the verbalagreement that in case the lessor decides to sell the property after thelease, she shall give the plaintiff the right to equal the offers of otherprospective buyers. It was claimed that the lessor violated this right of firstrefusal of the plaintiff when she sureptitiously (sic) sold the land to co-defendant Pormida on May 5, 1989 under a Deed of Conditional Sale.Plaintiff’s right was further violated when after discovery of the final sale,plaintiff ordered to equal the price of co-defendant Pormida was refusedand again defendant Bentir surreptitiously executed a final deed of sale infavor of co-defendant Pormida in December 11, 1991.

The defendant Bentir denies that she bound herself to give the plaintiff theright of first refusal in case she sells the property. But assuming for thesake of argument that such right of first refusal was made, it is now

contended that plaintiff’s cause of action to reform the contract to reflectsuch right of first refusal, has already prescribed after 10 years, countedfrom May 5, 1988 when the contract of lease incepted. Counsel fordefendant cited Conde vs. Malaga, L-9405 July 31, 1956 and Ramos vs.Court of Appeals, 180 SCRA 635, where the Supreme Court held that theprescriptive period for reformation of a written contract is ten (10) yearsunder Article 1144 of the Civil Code.

This Court sustains the position of the defendants that this action forreformation of contract has prescribed and hereby orders the dismissal ofthe case.

SO ORDERED.[5]

On December 29, 1995, respondent corporation filed a motion for reconsideration ofthe order dismissing the complaint. Juris

On January 11, 1996, respondent corporation filed an urgent ex-parte motion forissuance of an order directing the petitioners, or their representatives or agents torefrain from taking possession of the land in question.

Considering that Judge Pedro S. Espina, to whom the case was raffled forresolution, was assigned to the RTC, Malolos, Bulacan, Branch 19, Judge Roberto A.Navidad was designated in his place. Manikan

On March 28, 1996, upon motion of herein petitioners, Judge Navidad inhibitedhimself from hearing the case. Consequently, the case was re-raffled and assignedto RTC, Tacloban City, Branch 8, presided by herein respondent judge Mateo M.Leanda.

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On May 10, 1996, respondent judge issued an order reversing the order of dismissalon the grounds that the action for reformation had not yet prescribed and thedismissal was "premature and precipitate", denying respondent corporation of itsright to procedural due process. The order reads: Suprema

O R D E R

Stated briefly, the principal objectives of the twin motions submitted by theplaintiffs, for resolution are:

(1) for the reconsideration of the Order of 15 December 1995 of the Court(RTC, Br. 7), dismissing this case, on the sole ground of prescription of one(1) of the five (5) causes of action of plaintiff in its complaint for"reformation" of a contract of lease; and,

(2) for issuance by this Court of an Order prohibiting the defendants andtheir privies-in-interest, from taking possession of the leased premises,until a final court order issues for their exercise of dominical or possessoryright thereto.

The records of this case reveal that co-defendant BENTER (Yolanda) andplaintiff Leyte Gulf Traders Incorporation, represented by Chairman BenitoAng, entered into a contract of lease of a parcel of land, denominated asLot No. 878-D, located at Sagkahan District, Tacloban City, on 05 May1968, for a period of twenty (20) years, (later renewed for an additionaltwo (2) years). Included in said covenant of lease is the verbalunderstanding and agreement between the contracting parties, that whenthe defendant (as lessor) will sell the subject property, the plaintiff as(lessee) has the "right of first refusal", that is, the right to equal the offerof any other prospective third-party buyer. This agreement (sic) is madeapparent by paragraph 4 of the lease agreement stating:

"4. IMPROVEMENT. The lessee shall have the right toerect on the leased premises any building or structurethat it may desire without the consent or approval of theLessor x x x provided that any improvements existing atthe termination of the lease shall remain as the propertyof the Lessor without right to reimbursement to theLessee of the cost or value thereof."

That the foregoing provision has been included in the lease

agreement if only to convince the defendant-lessor that plaintiffdesired a priority right to acquire the property (ibid) by purchase,upon expiration of the effectivity of the deed of lease.

In the course of the interplay of several procedural moves of theparties herein, the defendants filed their motion to admit theiramended answer to plaintiff’s amended complaint.Correspondingly, the plaintiff filed its opposition to said motion.The former court branch admitted the amended answer, to whichorder of admission, the plaintiff seasonably filed its motion forreconsideration. But, before the said motion for reconsiderationwas acted upon by the court, the latter issued an Order on 15December 1995, DISMISSING this case on the lone ground ofprescription of the cause of action of plaintiff’s complaint on

"reformation" of the lease contract, without anymore consideringthe remaining cause of action, viz.: (a) on Specific Performance;(b) an Annulment of Sale and Title; (c) on Issuance of a Writ ofInjunction, and (d) on Damages.

With due respect to the judicial opinion of the Honorable Presiding

Judge of Branch 7 of this Court, the undersigned, to whom thiscase was raffled to after the inhibition of Judge Roberto Navidad,as acting magistrate of Branch 7, feels not necessary any more to

discuss at length that even the cause of action for "reformation"has not, as yet, prescribed.

To the mind of this Court, the dismissal order adverted to above,was obviously premature and precipitate, thus resulting denialupon the right of plaintiff that procedural due process. The otherremaining four (4) causes of action of the complaint must havebeen deliberated upon before that court acted hastily in dismissingthis case.

WHEREFORE, in the interest of substantial justice, the Order ofthe court, (Branch 7, RTC) dismissing this case, is hereby orderedRECONSIDERED and SET ASIDE.

Let, therefore, the motion of plaintiff to reconsider the Orderadmitting the amended answer and the Motion to Dismiss this

case (ibid), be set for hearing on May 24, 1996, at 8:30 o’clock inthe morning. Service of notices must be effected upon parties andcounsel as early as possible before said scheduled date.

Concomitantly, the defendants and their privies-in-interest oragents, are hereby STERNLY WARNED not to enter, in themeantime, the litigated premises, before a final court order issuesgranting them dominical as well as possessory right thereto.

To the motion or petition for contempt, filed by plaintiff, thru Atty.Bartolome C. Lawsin, the defendants may, if they so desire, filetheir answer or rejoinder thereto, before the said petition will beset for hearing. The latter are given ten (10) days to do so, fromthe date of their receipt of a copy of this Order.

SO ORDERED.[6]

On June 10, 1996, respondent judge issued an order for status quo ante, enjoiningpetitioners to desist from occupying the property.[7]

Aggrieved, petitioners herein filed a petition for certiorari to the Court of Appealsseeking the annulment of the order of respondent court with prayer for issuance ofa writ of preliminary injunction and temporary restraining order to restrainrespondent judge from further hearing the case and to direct respondentcorporation to desist from further possessing the litigated premises and to turn overpossession to petitioners.

On January 17, 1997, the Court of Appeals, after finding no error in the questionedorder nor grave abuse of discretion on the part of the trial court that would amountto lack, or in excess of jurisdiction, denied the petition and affirmed the questionedorder.[8] A reconsideration of said decision was, likewise, denied on April 16, 1997.[9]

















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Thus, the instant petition for review based on the following assigned errors, viz :

6.01 THE COURT OF APPEALS ERRED IN HOLDING THAT ANACTION FOR REFORMATION IS PROPER AND JUSTIFIED UNDERTHE CIRCUMSTANCES OF THE PRESENT CASE;

6.02 THE COURT OF APPEALS ERRED IN HOLDING THAT THEACTION FOR REFORMATION HAS NOT YET PRESCRIBED;

6.03 THE COURT OF APPEALS ERRED IN HOLDING THAT AN

OPTION TO BUY IN A CONTRACT OF LEASE IS REVIVED FROM THEIMPLIED RENEWAL OF SUCH LEASE; AND,

6.04 THE COURT OF APPEALS ERRED IN HOLDING THAT ASTATUS QUO ANTE ORDER IS NOT AN INJUNCTIVE RELIEF THATSHOULD COMPLY WITH THE PROVISIONS OF RULE 58 OF THERULES OF COURT.[10]

The petition has merit. Scsdaad

The core issue that merits our consideration is whether the complaint forreformation of instrument has prescribed. Sdaad

The remedy of reformation of an instrument is grounded on the principle of equitywhere, in order to express the true intention of the contracting parties, aninstrument already executed is allowed by law to be reformed. The right ofreformation is necessarily an invasion or limitation of the parol evidence rule since,when a writing is reformed, the result is that an oral agreement is by court decree

made legally effective.[11] Consequently, the courts, as the agencies authorized bylaw to exercise the power to reform an instrument, must necessarily exercise thatpower sparingly and with great caution and zealous care. Moreover, the remedy,being an extraordinary one, must be subject to limitations as may be provided bylaw. Our law and jurisprudence set such limitations, among which is laches. A suitfor reformation of an instrument may be barred by lapse of time. The prescriptiveperiod for actions based upon a written contract and for reformation of aninstrument is ten (10) years under Article 1144 of the Civil Code.[12] Prescription isintended to suppress stale and fraudulent claims arising from transactions like theone at bar which facts had become so obscure from the lapse of time or defectivememory.[13] In the case at bar, respondent corporation had ten (10) years from1968, the time when the contract of lease was executed, to file an action forreformation. Sadly, it did so only on May 15, 1992 or twenty-four (24) years after

the cause of action accrued, hence, its cause of action has become stale, hence,time-barred. Sdaamiso

In holding that the action for reformation has not prescribed, the Court of Appealsupheld the ruling of the Regional Trial Court that the 10-year prescriptive periodshould be reckoned not from the execution of the contract of lease in 1968, butfrom the date of the alleged 4-year extension of the lease contract after it expired in1988. Consequently, when the action for reformation of instrument was filed in1992 it was within ten (10) years from the extended period of the lease. Privaterespondent theorized, and the Court of Appeals agreed, that the extended period oflease was an "implied new lease" within the contemplation of Article 1670 of theCivil Code,[14] under which provision, the other terms of the original contract weredeemed revived in the implied new lease.

We do not agree. First, if, according to respondent corporation, there was anagreement between the parties to extend the lease contract for four (4) years afterthe original contract expired in 1988, then Art. 1670 would not apply as thisprovision speaks of an implied new lease (tacita reconduccion) where at the end ofthe contract, the lessee continues to enjoy the thing leased "with the acquiescenceof the lessor", so that the duration of the lease is "not for the period of the originalcontract, but for the time established in Article 1682 and 1687." In other words, ifthe extended period of lease was expressly agreed upon by the parties, then theterm should be exactly what the parties stipulated, not more, not less. Second,

even if the supposed 4-year extended lease be considered as an implied new leaseunder Art. 1670, "the other terms of the original contract" contemplated in saidprovision are only those terms which are germane to the lessee’s right of continued

enjoyment of the property leased.[15] The prescriptive period of ten (10) years

provided for in Art. 1144[16] applies by operation of law, not by the will of theparties. Therefore, the right of action for reformation accrued from the date ofexecution of the contract of lease in 1968.

Even if we were to assume for the sake of argument that the instant action forreformation is not time-barred, respondent corporation’s action will still not prosper.Under Section 1, Rule 64 of the New Rules of Court,[17] an action for the reformationof an instrument is instituted as a special civil action for declaratory relief. Since thepurpose of an action for declaratory relief is to secure an authoritative statement ofthe rights and obligations of the parties for their guidance in the enforcementthereof, or compliance therewith, and not to settle issues arising from an allegedbreach thereof, it may be entertained only before the breach or violation of the lawor contract to which it refers.[18]Here, respondent corporation brought the presentaction for reformation after an alleged breach or violation of the contract wasalready committed by petitioner Bentir. Consequently, the remedy of reformation nolonger lies. Ncmmis

We no longer find it necessary to discuss the other issues raised considering thatthe same are predicated upon our affirmative resolution on the issue of theprescription of the action for reformation.

WHEREFORE, the petition is hereby GRANTED. The Decision of the Court ofAppeals dated January 17, 1997 is REVERSED and SET ASIDE. The Order of the

Regional Trial Court of Tacloban City, Branch 7, dated December 15, 1995dismissing the action for reformation is REINSTATED. Scncm

SO ORDERED. FIRST DIVISION

[G.R. No. 165420. June 30, 2005]

CONCEPCION R. AINZA, substituted by her legal heirs, DR. NATIVIDAD A.TULIAO, CORAZON A. JALECO and LILIA A. OLAYON, petitioners, vs.SPOUSES ANTONIO PADUA and EUGENIA PADUA, respondents.

YNARES-SANTIAGO, J .:

This petition for review on certiorari assails the February 24, 2004 decision ofthe Court of Appeals in CA-G.R. CV No. 70239,[1] and its September 28, 2004resolution, denying reconsideration thereof .[2]



























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In her complaint for partition of real property, annulment of titles withdamages,[3] Concepcion Ainza (Concepcion) alleged that respondent-spousesEugenia (Eugenia) and Antonio Padua (Antonio) owned a 216.40 sq. m. lot with anunfinished residential house located at No. 85-A Durian corner Pajo Sts., BarangayQuirino 2-C, Project 2, Quezon City, covered by Transfer Certificate of Title No.271935. Sometime in April 1987, she bought one-half of an undivided portion ofthe property from her daughter, Eugenia and the latter’s husband, Antonio, for OneHundred Thousand Pesos (P100,000.00).

No Deed of Absolute Sale was executed to evidence the transaction, but cashpayment was received by the respondents, and ownership was transferred toConcepcion through physical delivery to her attorney-in-fact and daughter,Natividad Tuliao (Natividad). Concepcion authorized Natividad and the latter’shusband, Ceferino Tuliao (Ceferino) to occupy the premises, and makeimprovements on the unfinished building.

Thereafter, Concepcion alleged that without her consent, respondents causedthe subdivision of the property into three portions and registered it in their namesunder TCT Nos. N-155122, N-155123 and N-155124 in violation of the restrictionsannotated at the back of the title.

On the other hand, Antonio averred that he bought the property in 1980 andintroduced improvements thereon. Between 1989 and 1990, he and his wife,Eugenia, allowed Natividad and Ceferino to occupy the premises temporarily. In1994, they caused the subdivision of the property and three (3) separate titles wereissued.

Thereafter, Antonio requested Natividad to vacate the premises but the latterrefused and claimed that Concepcion owned the property. Antonio thus filed anejectment suit on April 1, 1999. Concepcion, represented by Natividad, also filed onMay 4, 1999 a civil case for partition of real property and annulment of titles withdamages.

Antonio claimed that his wife, Eugenia, admitted that Concepcion offered tobuy one third (1/3) of the property who gave her small amounts over several yearswhich totaled P100,000.00 by 1987 and for which she signed a receipt.

On January 9, 2001, the Regional Trial Court of Quezon City, Branch 85,rendered judgment[4] in favor of Concepcion, the dispositive portion of which states:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

plaintiff and against the defendants and ordering:

1. the subdivision of the subject property between the said plaintiff anddefendants in equal shares with one-half of the property, includingthe portion occupied by the spouses Severino and Natividad Tuliao tobe awarded to the plaintiff;

2. the cancellation of Transfer Certificates of Title Nos. N-155122, N-155123, N-155124 of the Registry of Deeds of Quezon City;

3. the defendants to pay to the plaintiff P50,000.00 as attorney’s fees.

SO ORDERED.[5]

The trial court upheld the sale between Eugenia and Concepcion. It ruled thatthe sale was consummated when both contracting parties complied with their

respective obligations. Eugenia transferred possession by delivering the property toConcepcion who in turn paid the purchase price. It also declared that the transferof the property did not violate the Statute of Frauds because a fully executedcontract does not fall within its coverage.

On appeal by the respondents, the Court of Appeals reversed the decision of

the trial court, and declared the sale null and void. Applying Article 124 of theFamily Code, the Court of Appeals ruled that since the subject property is conjugal,the written consent of Antonio must be obtained for the sale to be valid. It also

ordered the spouses Padua to return the amount of P100,000.00 to petitioners plusinterest.[6]

The sole issue for resolution in this petition for review is whether there was avalid contract of sale between Eugenia and Concepcion.

A contract of sale is perfected by mere consent, upon a meeting of theminds on the offer and the acceptance thereof based on subject matter, price andterms of payment.[7]

In this case, there was a perfected contract of sale between Eugenia andConcepcion. The records show that Eugenia offered to sell a portion of the propertyto Concepcion, who accepted the offer and agreed to pay P100,000.00 asconsideration. The contract of sale was consummated when both parties fullycomplied with their respective obligations. Eugenia delivered the property toConcepcion, who in turn, paid Eugenia the price of One Hundred Thousand Pesos

(P100,000.00), as evidenced by the receipt which reads:

R E C E I P T

Received the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00) aspayment for the lot on 85-A Durian St., Project 2, Quezon City, from Mrs.Concepcion R. Ainza, on April, 1987.

_______(Sgd.)______

Mrs.. Eugenia A. Padua[8]

The verbal contract of sale between Eugenia and Concepcion did not violatethe provisions of the Statute of Frauds that a contract for the sale of real propertyshall be unenforceable unless the contract or some note or memorandum of the saleis in writing and subscribed by the party charged or his agent .[9] When a verbalcontract has been completed, executed or partially consummated, as in this case,

its enforceability will not be barred by the Statute of Frauds, which applies only toan executory agreement.[10] Thus, where one party has performed his obligation,oral evidence will be admitted to prove the agreement.[11]

In the instant case, the oral contract of sale between Eugenia and Concepcionwas evidenced by a receipt signed by Eugenia. Antonio also stated that his wifeadmitted to him that she sold the property to Concepcion.

It is undisputed that the subject property was conjugal and sold by Eugenia inApril 1987 or prior to the effectivity of the Family Code on August 3, 1988, Article254 of which repealed Title V, Book I of the Civil Code provisions on the propertyrelations between husband and wife. However, Article 256 thereof limited itsretroactive effect only to cases where it would not prejudice or impair vested oracquired rights in accordance with the Civil Code or other laws. In the case at bar,





































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vested rights of Concepcion will be impaired or prejudiced by the application of theFamily Code; hence, the provisions of the Civil Code should be applied.

In Felipe v. Heirs of Aldon, et al.,[12] the legal effect of a sale of conjugalproperties by the wife without the consent of the husband was clarified, to wit:

The legal ground which deserves attention is the legal effect of a sale of landsbelonging to the conjugal partnership made by the wife without the consent of thehusband.

It is useful at this point to re-state some elementary rules: The husband is theadministrator of the conjugal partnership. (Art. 165, Civil Code) Subject to certainexceptions, the husband cannot alienate or encumber any real property of theconjugal partnership without the wife’s consent. (Art. 166, Idem.) And the wifecannot bind the conjugal partnership without the husband’s consent, except in casesprovided by law. (Art. 172, Idem.).

In the instant case, Gimena, the wife, sold lands belonging to the conjugalpartnership without the consent of the husband and the sale is not covered by thephrase “except in cases provided by law.” The Court of Appeals described the saleas “invalid” – a term which is imprecise when used in relation to contracts becausethe Civil Code uses specific names in designating defective contracts,namely: rescissible (Arts. 1380 et seq.), voidable (Arts. 1390 etseq.), unenforceable (Arts. 1403, et seq.), and void or inexistent (Arts. 1409 etseq.).

The sale made by Gimena is certainly a defective contract but of whatcategory? The answer: it is a voidable contract.

According to Art. 1390 of the Civil Code, among the voidable contracts are “[T]hosewhere one of the parties is incapable of giving consent to the contract.” (Par. 1.) Inthe instant case Gimena had no capacity to give consent to the contract of sale. Thecapacity to give consent belonged not even to the husband alone but to bothspouses.

The view that the contract made by Gimena is a voidable contract issupported by the legal provision that contracts entered by the husbandwithout the consent of the wife when such consent is required, areannullable at her instance during the marriage and within ten years fromthe transaction questioned. (Art. 173, Civil Code).

Gimena’s contract is not rescissible for in such a contract all the essential elementsare untainted but Gimena’s consent was tainted. Neither can the contract beclassified as unenforceable because it does not fit any of those described in Art.1403 of the Civil Code. And finally, the contract cannot be void or inexistentbecause it is not one of those mentioned in Art. 1409 of the Civil Code. By processof elimination, it must perforce be a voidable contract.

The voidable contract of Gimena was subject to annulment by her husband onlyduring the marriage because he was the victim who had an interest in the contract.Gimena, who was the party responsible for the defect, could not ask for itsannulment. Their children could not likewise seek the annulment of the contractwhile the marriage subsisted because they merely had an inchoate right to thelands sold. (Emphasis supplied)

The consent of both Eugenia and Antonio is necessary for the sale of theconjugal property to be valid. Antonio’s consent cannot be presumed.[13] Except forthe self-serving testimony of petitioner Natividad, there is no evidence that Antonioparticipated or consented to the sale of the conjugal property. Eugenia alone isincapable of giving consent to the contract. Therefore, in the absence of Antonio’sconsent, the disposition made by Eugenia is voidable.[14]

The contract of sale between Eugenia and Concepcion being an oral contract,the action to annul the same must be commenced within six years from the time

the right of action accrued.[15]

Eugenia sold the property in April 1987 hence Antonioshould have asked the courts to annul the sale on or before April 1993. No actionwas commenced by Antonio to annul the sale, hence his right to seek its annulmentwas extinguished by prescription.

Even assuming that the ten (10)-year prescriptive period under Art. 173should apply, Antonio is still barred from instituting an action to annul the salebecause since April 1987, more than ten (10) years had already lapsed without anysuch action being filed.

In sum, the sale of the conjugal property by Eugenia without the consent ofher husband is voidable. It is binding unless annulled. Antonio failed to exercise hisright to ask for the annulment within the prescribed period, hence, he is now barredfrom questioning the validity of the sale between his wife and Concepcion.

WHEREFORE, the petition is GRANTED. The decision dated February 24,

2004 of the Court of Appeals in CA-G.R. CV No. 70239 and its resolution datedSeptember 28, 2004 are REVERSED and SET ASIDE. The decision dated January 9,2001 of the Regional Trial Court of Quezon City, Branch 85, in Civil Case No. Q-99-37529, is REINSTATED.

SO ORDERED.

THIRD DIVISION

JAIME ABALOS and SPOUSES FELIX SALAZAR andCONSUELO SALAZAR, GLICERIO ABALOS, HEIRS OFAQUILINO ABALOS, namely: SEGUNDA BAUTISTA,ROGELIO ABALOS, DOLORES A. ROSARIO, FELICIDADABALOS, ROBERTO ABALOS, JUANITO ABALOS, TITAABALOS, LITA A. DELA CRUZ AND HEIRS OF

AQUILINA ABALOS, namely: ARTURO BRAVO, PURITAB. MENDOZA, LOURDES B. AGANON, CONSUELO B.SALAZAR, PRIMA B. DELOS SANTOS, THELMAAPOSTOL and GLECERIO ABALOS, vs

HEIRS OF VICENTE TORIO, namely: PUBLIO TORIO,LIBORIO TORIO, VICTORINA TORIO, ANGEL TORIO,LADISLAO TORIO, PRIMO TORIO and NORBERTOTORIO,

G.R. No. 175444

Promulgated:

December 14, 2011

PERALTA, J .:

Before the Court is a petition for review on certiorari seeking to set aside theDecision1 dated June 30, 2006 and Resolution2 dated November 13, 2006 by theCourt of Appeals (CA) in CA-G.R. SP No. 91887. The assailed Decision reversed and













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set aside the Decision3dated June 14, 2005 of the Regional Trial Court (RTC) ofLingayen, Pangasinan, Branch 69, while the questioned Resolution deniedpetitioners' Motion for Reconsideration.

The factual and procedural antecedents of the case are as follows:

On July 24, 1996, herein respondents filed a Complaint for Recovery of Possessionand Damages with the Municipal Trial Court (MTC) of Binmaley, Pangasinan againstJaime Abalos (Jaime) and the spouses Felix and Consuelo Salazar. Respondentscontended that: they are the children and heirs of one Vicente Torio (Vicente) who

died intestate on September 11, 1973; at the time of the death of Vicente, he leftbehind a parcel of land measuring 2,950 square meters, more or less, which islocated at San Isidro Norte, Binmaley, Pangasinan; during the lifetime of Vicenteand through his tolerance, Jaime and the Spouses Salazar were allowed to stay andbuild their respective houses on the subject parcel of land; even after the death ofVicente, herein respondents allowed Jaime and the Spouses Salazar to remain onthe disputed lot; however, in 1985, respondents asked Jaime and the SpousesSalazar to vacate the subject lot, but they refused to heed the demand ofrespondents forcing respondents to file the complaint.4

Jaime and the Spouses Salazar filed their Answer with Counterclaim, denying thematerial allegations in the Complaint and asserting in their Special and AffirmativeDefenses that: respondents' cause of action is barred by acquisitive prescription;the court a quo has no jurisdiction over the nature of the action and the persons ofthe defendants; the absolute and exclusive owners and possessors of the disputedlot are the deceased predecessors of defendants; defendants and theirpredecessors-in-interest had been in actual, continuous and peaceful possession ofthe subject lot as owners since time immemorial; defendants are faithfully andreligiously paying real property taxes on the disputed lot as evidenced by RealProperty Tax Receipts; they have continuously introduced improvements on the saidland, such as houses, trees and other kinds of ornamental plants which are inexistence up to the time of the filing of their Answer.5

On the same date as the filing of defendants' Answer with Counterclaim, hereinpetitioners filed their Answer in Intervention with Counterclaim. Like thedefendants, herein petitioners claimed that their predecessors-in-interest were theabsolute and exclusive owners of the land in question; that petitioners and theirpredecessors had been in possession of the subject lot since time immemorial up tothe present; they have paid real property taxes and introduced improvements

thereon.

6

After the issues were joined, trial ensued.

On December 10, 2003, the MTC issued a Decision, the dispositive portion of whichreads as follows:

WHEREFORE, in view of the foregoing consideration[s], the Courtadjudged the case in favor of the plaintiffs and against thedefendants and defendants-intervenors are ordered to turn overthe land in question to the plaintiffs (Lot Nos. 869 and 870, Cad.467-D. Binmaley Cadastre located in Brgy. San Isidro Norte,Binmaley, Pangasinan with an area of 2,950 sq. m., more or less,bounded and described in paragraph 3 of the Complaint[)];ordering the defendants and defendants-intervenors to remove

their respective houses standing on the land in dispute; furtherordering the defendants and defendants-intervenors, either singlyor jointly to pay the plaintiffs land rent in the amountof P12,000.00 per year to be reckoned starting the year 1996 untildefendants and defendants-intervenors will finally vacate thepremises; furthermore, defendants and defendants-intervenorsare also ordered to pay, either singly or jointly, the amountof P10,000.00 as and by way of attorney's fees and costs of suit.

SO ORDERED.7

Jaime and the Spouses Salazar appealed the Decision of the MTC with the RTC ofLingayen, Pangasinan.8 Herein petitioners, who were intervenors, did not file anappeal.

In its Decision dated June 14, 2005, the RTC ruled in favor of Jaime and theSpouses Salazar, holding that they have acquired the subject property throughprescription. Accordingly, the RTC dismissed herein respondents' complaint.

Aggrieved, herein respondents filed a petition for review with the CA assailing theDecision of the RTC.

On June 30, 2006, the CA promulgated its questioned Decision, the dispositiveportion of which reads, thus:

WHEREFORE, the petition is GRANTED. The Decision dated June

14, 2005 of the Regional Trial Court, Branch 69, Lingayen,Pangasinan is hereby REVERSED and SET ASIDE. In its stead, anew one is entered reinstating the Decision dated December 10,2003 of the Municipal Trial Court of Binmaley, Pangasinan.

SO ORDERED.9

Jaime and the Spouses Salazar filed a Motion for Reconsideration, but the same wasdenied by the CA in its Resolution dated November 13, 2006.

Hence, the instant petition based on a sole assignment of error, to wit:

THE COURT OF APPEALS ERRED IN NOT APPRECIATING THAT THEPETITIONERS HEREIN ARE NOW THE ABSOLUTE AND EXCLUSIVEOWNERS OF THE LAND IN QUESTION BY VIRTUE OF ACQUISITIVEPRESCRIPTION.10

The main issue raised by petitioners is whether they and their predecessors-in-interest possessed the disputed lot in the concept of an owner, or whether theirpossession is by mere tolerance of respondents and their predecessors-in-interest.Corollarily, petitioners claim that the due execution and authenticity of the deed ofsale upon which respondents' predecessors-in-interest derived their ownership werenot proven during trial.

The petition lacks merit.

Preliminarily, the Court agrees with the observation of respondents that some of thepetitioners in the instant petition were the intervenors11 when the case was filedwith the MTC. Records would show that they did not appeal the Decision of theMTC.12 The settled rule is that failure to perfect an appeal renders the judgment









































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final and executory.13 Hence, insofar as the intervenors in the MTC are concerned,the judgment of the MTC had already become final and executory.

It also bears to point out that the main issue raised in the instant petition, which isthe character or nature of petitioners' possession of the subject parcel of land, isfactual in nature.

Settled is the rule that questions of fact are not reviewable in petitions for reviewon certiorari under Rule 45 of the Rules of Court.14Section 1 of Rule 45 states thatpetitions for review on certiorari “shall raise only questions of law which must be

distinctly set forth.”

Doubtless, the issue of whether petitioners possess the subject property as owners,or whether they occupy the same by mere tolerance of respondents, is a question offact. Thus, it is not reviewable.

Nonetheless, the Court has, at times, allowed exceptions from the abovementionedrestriction. Among the recognized exceptions are the following:

(a) When the findings are grounded entirely on speculation,

surmises, or conjectures;

(b) When the inference made is manifestly mistaken, absurd, orimpossible;

(c ) When there is grave abuse of discretion;

(d ) When the judgment is based on a misapprehension of facts;(e) When the findings of facts are conflicting;

(f ) When in making its findings the CA went beyond the issues ofthe case, or its findings are contrary to the admissions ofboth the appellant and the appellee;

(g) When the CA’s findings are contrary to those by the trial court;

(h) When the findings are conclusions without citation of specificevidence on which they are based;

(i ) When the facts set forth in the petition as well as in thepetitioner’s main and reply briefs are not disputed by therespondent;

( j ) When the findings of fact are premised on the supposed

absence of evidence and contradicted by the evidence onrecord; or

(k ) When the CA manifestly overlooked certain relevant facts notdisputed by the parties, which, if properly considered, would

justify a different conclusion.15

In the present case, the findings of fact of the MTC and the CA are in conflict with

those of the RTC.

After a review of the records, however, the Court finds that the petition must fail asit finds no error in the findings of fact and conclusions of law of the CA and the MTC.

Petitioners claim that they have acquired ownership over the disputed lot throughordinary acquisitive prescription.

Acquisitive prescription of dominion and other real rights may be ordinary orextraordinary.16 Ordinary acquisitive prescription requires possession in good faithand with just title for ten (10) years.17 Without good faith and just title, acquisitiveprescription can only be extraordinary in character which requires uninterruptedadverse possession for thirty (30) years.18

Possession “in good faith” consists in the reasonable belief that the person fromwhom the thing is received has been the owner thereof, and could transmit hisownership.19 There is “just title” when the adverse claimant came into possession of

the property through one of the modes recognized by law for the acquisition ofownership or other real rights, but the grantor was not the owner or could nottransmit any right.20

In the instant case, it is clear that during their possession of the property inquestion, petitioners acknowledged ownership thereof by the immediatepredecessor-in-interest of respondents. This is clearly shown by the Tax Declarationin the name of Jaime for the year 1984 wherein it contains a statement admittingthat Jaime's house was built on the land of Vicente, respondents' immediatepredecessor-in-interest.21 Petitioners never disputed such an acknowledgment.Thus, having knowledge that they nor their predecessors-in-interest are not theowners of the disputed lot, petitioners' possession could not be deemed aspossession in good faith as to enable them to acquire the subject land by ordinaryprescription. In this respect, the Court agrees with the CA that petitioners'possession of the lot in question was by mere tolerance of respondents and their

predecessors-in-interest. Acts of possessory character executed due to license or bymere tolerance of the owner are inadequate for purposes of acquisitiveprescription.22 Possession, to constitute the foundation of a prescriptive right, mustbe en concepto de dueño, or, to use the common law equivalent of the term, thatpossession should be adverse, if not, such possessory acts, no matter how long, donot start the running of the period of prescription .23

Moreover, the CA correctly held that even if the character of petitioners' possessionof the subject property had become adverse, as evidenced by their declaration ofthe same for tax purposes under the names of their predecessors-in-interest, theirpossession still falls short of the required period of thirty (30) years in cases ofextraordinary acquisitive prescription. Records show that the earliest Tax

Declaration in the name of petitioners was in 1974. Reckoned from such date, thethirty-year period was completed in 2004. However, herein respondents' complaintwas filed in 1996, effectively interrupting petitioners' possession upon service of

summons on them.24Thus, petitioners’ possession also did not ripen into ownership,because they failed to meet the required statutory period of extraordinaryprescription.

This Court has held that the evidence relative to the possession upon which thealleged prescription is based, must be clear, complete and conclusive in order toestablish the prescription.25 In the present case, the Court finds no error on the partof the CA in holding that petitioners failed to present competent evidence to prove

their alleged good faith in neither possessing the subject lot nor their adverse claimthereon. Instead, the records would show that petitioners' possession was by meretolerance of respondents and their predecessors-in-interest.

Finally, as to the issue of whether the due execution and authenticity of the deed ofsale upon which respondents anchor their ownership were not proven, the Court





















































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notes that petitioners did not raise this matter in their Answer as well as in theirPre-Trial Brief. It was only in their Comment to respondents' Petition for Review filedwith the CA that they raised this issue. Settled is the rule that points of law,theories, issues, and arguments not adequately brought to the attention of the trialcourt need not be, and ordinarily will not be, considered by a reviewingcourt.26 They cannot be raised for the first time on appeal. To allow this would beoffensive to the basic rules of fair play, justice and due process .27

Even granting that the issue of due execution and authenticity was properly raised,

the Court finds no cogent reason to depart from the findings of the CA, to wit:x x x x

Based on the foregoing, respondents [Jaime Abalos and theSpouses Felix and Consuelo Salazar] have not inherited thedisputed land because the same was shown to have already beenvalidly sold to Marcos Torio, who, thereupon, assigned the sameto his son Vicente, the father of petitioners [herein respondents].A valid sale was amply established and the said validity subsistsbecause the deed evidencing the same was duly notarized.

There is no doubt that the deed of sale was duly acknowledgedbefore a notary public. As a notarized document, it has in its favorthe presumption of regularity and it carries the evidentiary weightconferred upon it with respect to its due execution. It is admissible

in evidence without further proof of its authenticity and is entitledto full faith and credit upon its face.28

Indeed, settled is the rule in our jurisdiction that a notarized document has in itsfavor the presumption of regularity, and to overcome the same, there must beevidence that is clear, convincing and more than merely preponderant; otherwise,the document should be upheld.29In the instant case, petitioners' bare denials willnot suffice to overcome the presumption of regularity of the assailed deed of sale.

WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of theCourt of Appeals in CA-G.R. SP No. 91887 are AFFIRMED.

SO ORDERED.

FIRST DIVISION [G.R. No. 184109 : February 01, 2012]

CELERINO E. MERCADO, PETITIONER, VS. BELEN*

ESPINOCILLA**

ANDFERDINAND ESPINOCILLA, RESPONDENTS.VILLARAMA, JR., J.:

The case

Petitioner Celerino E. Mercado appeals the Decision[1] dated April 28, 2008 andResolution[2] dated July 22, 2008 of the Court of Appeals (CA) in CA-G.R. CV No.87480. The CA dismissed petitioner's complaint[3] for recovery of possession,quieting of title, partial declaration of nullity of deeds and documents, and damages,on the ground of prescription.cralaw

The antecedent facts

Doroteo Espinocilla owned a parcel of land, Lot No. 552, with an area of 570 sq. m.,located at Magsaysay Avenue, Zone 5, Bulan, Sorsogon. After he died, his fivechildren, Salvacion, Aspren, Isabel, Macario, and Dionisia divided Lot No. 552equally among themselves. Later, Dionisia died without issue ahead of her foursiblings, and Macario took possession of Dionisia's share. In an affidavit of transferof real property[4] dated November 1, 1948, Macario claimed that Dionisia haddonated her share to him in May 1945.

Thereafter, on August 9, 1977, Macario and his daughters Betty Gullaba and Saida

Gabelo sold[5] 225 sq. m. to his son Roger Espinocilla, husband of respondent BelenEspinocilla and father of respondent Ferdinand Espinocilla. On March 8, 1985,Roger Espinocilla sold[6] 114 sq. m. to Caridad Atienza. Per actual survey of Lot No.552, respondent Belen Espinocilla occupies 109 sq. m., Caridad Atienza occupies120 sq. m., Caroline Yu occupies 209 sq. m., and petitioner, Salvacion's son,occupies 132 sq. m.[7]

The case for petitioner

Petitioner sued the respondents to recover two portions: an area of 28.5[8] sq. m.which he bought from Aspren and another 28.5 sq. m. which allegedly belonged tohim but was occupied by Macario's house. [9] His claim has since been modified toan alleged encroachment of only 39 sq. m. that he claims must be returned to him.He avers that he is entitled to own and possess 171 sq. m. of Lot No. 552, havinginherited 142.5 sq. m. from his mother Salvacion and bought 28.5 sq. m. from his

aunt Aspren. According to him, his mother's inheritance is 142.5 sq. m., that is,114 sq. m. from Doroteo plus 28.5 sq. m. from Dionisia. Since the area he occupiesis only 132 sq. m.,[10] he claims that respondents encroach on his share by 39 sq.m.[11]

The case for respondents

Respondents agree that Doroteo's five children each inherited 114 sq. m. of Lot No.552. However, Macario's share increased when he received Dionisia's share.Macario's increased share was then sold to his son Roger, respondents' husband andfather. Respondents claim that they rightfully possess the land they occupy byvirtue of acquisitive prescription and that there is no basis for petitioner's claim ofencroachment.[12]

The trial court's decision On May 15, 2006, the Regional Trial Court (RTC) ruled in favor of petitioner and

held that he is entitled to 171 sq. m. The RTC found that petitioner inherited 142.5sq. m. from his mother Salvacion and bought 28.5 sq. m. from his aunt Aspren.The RTC computed that Salvacion, Aspren, Isabel and Macario each inherited 142.5sq. m. of Lot No. 552. Each inherited 114 sq. m. from Doroteo and 28.5 sq. m.from Dionisia. The RTC further ruled that Macario was not entitled to 228 sq. m.Thus, respondents must return 39 sq. m. to petitioner who occupies only 132 sq.m.[13] There being no public document to prove Dionisia's donation, the RTC also held thatMacario's 1948 affidavit is void and is an invalid repudiation of the shares of hissisters Salvacion, Aspren, and Isabel in Dionisia's share. Accordingly, Macariocannot acquire said shares by prescription. The RTC further held that the oralpartition of Lot No. 552 by Doroteo's heirs did not include Dionisia's share and thatpartition should have been the main action. Thus, the RTC ordered partition and

















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deferred the transfer of possession of the 39 sq. m. pending partition. [14] Thedispositive portion of the RTC decision reads:

WHEREFORE, in view of the foregoing premises, the court issues the followingORDER, thus -

a) Partially declaring the nullity of the Deed of Absolute Sale of Property datedAugust 9, 1977 x x x executed by Macario Espinocilla, Betty E. Gullaba andSaida E. Gabelo in favor of Roger Espinocilla, insofar as it affects the portion orthe share belonging to Salvacion Espinocilla, mother of [petitioner,] relative to

the property left by Dionisia Espinocilla, including [Tax Declaration] No. 13667and other documents of the same nature and character which emanated fromthe said sale;

b) To leave as is the Deeds of Absolute Sale of May 11, 1983 and March 8, 1985, ithaving been determined that they did not involve the portion belonging to[petitioner] x x x.

c) To effect an effective and real partition among the heirs for purposes ofdetermining the exact location of the share (114 sq. m.) of the late DionisiaEspinocilla together with the 28.5 sq. m. belonging to [petitioner's] motherSalvacion, as well as, the exact location of the 39 sq. m. portion belonging tothe [petitioner] being encroached by the [respondents], with the assistance ofthe Commissioner (Engr. Fundano) appointed by this court.

d) To hold in abeyance the transfer of possession of the 39 sq. m. portion to the[petitioner] pending the completion of the real partition above-mentioned.[15]

The CA decision

On appeal, the CA reversed the RTC decision and dismissed petitioner's complainton the ground that extraordinary acquisitive prescription has already set in in favorof respondents. The CA found that Doroteo's four remaining children made an oralpartition of Lot No. 552 after Dionisia's death in 1945 and occupied specificportions. The oral partition terminated the co-ownership of Lot No. 552 in 1945.Said partition also included Dionisia's share because the lot was divided into fourparts only. And since petitioner's complaint was filed only on July 13, 2000, the CAconcluded that prescription has set in.[16] The CA disposed the appeal as follows:WHEREFORE, the appeal is GRANTED. The assailed May 15, 2006 Decision of theRegional Trial Court (RTC) of Bulan, Sorsogon is hereby REVERSED and SET ASIDE.The Complaint of the [petitioner] is hereby DISMISSED. No costs.[17]

The instant petition

The core issue to be resolved is whether petitioner's action to recover the subjectportion is barred by prescription.Petitioner confirms oral partition of Lot No. 552 by Doroteo's heirs, but claims thathis share increased from 114 sq. m. to 171 sq. m. and that respondents encroachedon his share by 39 sq. m. Since an oral partition is valid, the corresponding surveyordered by the RTC to identify the 39 sq. m. that must be returned to him could bemade.[18] Petitioner also alleges that Macario committed fraud in acquiring hisshare; hence, any evidence adduced by him to justify such acquisition isinadmissible. Petitioner concludes that if a person obtains legal title to property byfraud or concealment, courts of equity will impress upon the title a so-calledconstructive trust in favor of the defrauded party. [19]

The Court's ruling We affirm the CA ruling dismissing petitioner's complaint on the ground ofprescription.Prescription, as a mode of acquiring ownership and other real rights over immovableproperty, is concerned with lapse of time in the manner and under conditions laiddown by law, namely, that the possession should be in the concept of an owner,public, peaceful, uninterrupted, and adverse. Acquisitive prescription of real rightsmay be ordinary or extraordinary. Ordinary acquisitive prescription requirespossession in good faith and with just title for 10 years. In extraordinary

prescription, ownership and other real rights over immovable property are acquiredthrough uninterrupted adverse possession for 30 years without need of title or ofgood faith.[20] Here, petitioner himself admits the adverse nature of respondents' possession withhis assertion that Macario's fraudulent acquisition of Dionisia's share created aconstructive trust. In a constructive trust, there is neither a promise nor anyfiduciary relation to speak of and the so-called trustee (Macario) neither accepts anytrust nor intends holding the property for the beneficiary (Salvacion, Aspren,

Isabel). The relation of trustee and cestui que trust does not in fact exist, and theholding of a constructive trust is for the trustee himself, and therefore, at all timesadverse.[21] Prescription may supervene even if the trustee does not repudiate therelationship.[22] Then, too, respondents' uninterrupted adverse possession for 55 years of 109 sq.m. of Lot No. 552 was established. Macario occupied Dionisia's share in 1945

although his claim that Dionisia donated it to him in 1945 was only made in a 1948affidavit. We also agree with the CA that Macario's possession of Dionisia's share

was public and adverse since his other co-owners, his three other sisters, alsooccupied portions of Lot No. 552. Indeed, the 1977 sale made by Macario and histwo daughters in favor of his son Roger confirms the adverse nature of Macario'spossession because said sale of 225 sq. m.[23] was an act of ownership overMacario's original share and Dionisia's share. In 1985, Roger also exercised an actof ownership when he sold 114 sq. m. to Caridad Atienza. It was only in the year2000, upon receipt of the summons to answer petitioner's complaint, thatrespondents' peaceful possession of the remaining portion (109 sq. m.) was

interrupted. By then, however, extraordinary acquisitive prescription has alreadyset in in favor of respondents. That the RTC found Macario's 1948 affidavit void isof no moment. Extraordinary prescription is unconcerned with Macario's title orgood faith. Accordingly, the RTC erred in ruling that Macario cannot acquire by

prescription the shares of Salvacion, Aspren, and Isabel, in Dionisia's 114-sq. m.share from Lot No. 552.

Moreover, the CA correctly dismissed petitioner's complaint as an action forreconveyance based on an implied or constructive trust prescribes in 10 years fromthe time the right of action accrues.[24] This is the other kind of prescription underthe Civil Code, called extinctive prescription, where rights and actions are lost bythe lapse of time.[25] Petitioner's action for recovery of possession having been filed55 years after Macario occupied Dionisia's share, it is also barred by extinctiveprescription. The CA while condemning Macario's fraudulent act of depriving histhree sisters of their shares in Dionisia's share, equally emphasized the fact thatMacario's sisters wasted their opportunity to question his acts.cralawWHEREFORE, we DENY the petition for review on certiorari for lack of meritand AFFIRM the assailed Decision dated April 28, 2008 and Resolution dated July

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22, 2008 of the Court of Appeals in CA-G.R. CV No. 87480.No pronouncement as to costs. SO ORDERED.

THIRD DIVISION

G.R. No. 187451 August 29, 2012

JESUS VIRTUCIO, represented by ABDON VIRTUCIO, Petitioner, vs.JOSE ALEGARBES, Respondent.

MENDOZA, J.:

This petition for review on certiorari under Rule 45 seeks to reverse and set asidethe February 25, 2009 Decision1 of the Court of Appeals (CA), in CA-G.R. CV No.72613, reversing and setting aside the February 19, 2001 Decision2 of the RegionalTrial Court, Branch 1, Isabela, Basi Ian (RTC), in Civil Case No. 685-627, an actionfor "Recovery of Possession and Ownership with Preliminary Injunction."

The Facts

Respondent Jose Alegarbes (Alegarbes) filed Homestead Application No. V-33203(E-V-49150) for a 24-hectare tract of unsurveyed land situated in Bañas, Lantawan,Basilan in 1949. His application was approved on January 23, 1952 .3 In 1955,however, the land was subdivided into three (3) lots – Lot Nos. 138,139 and 140,Pls-19 - as a consequence of a public land subdivision. Lot 139 was allocated to

Ulpiano Custodio (Custodio), who filed Homestead Application No. 18-4493 (E-18-2958). Lot 140 was allocated to petitioner Jesus Virtucio (Virtucio), who filedHomestead Application No. 18-4421 (E-18-2924).4

Alegarbes opposed the homestead applications filed by Custodio and Virtucio,claiming that his approved application covered the whole area, including Lot Nos.139 and 140.5

On October 30, 1961, the Director of Lands rendered a decision denying Alegarbes'protest and amending the latter's application to exclude Lots 139 and 140. Only Lot138 was given due course. The applications of Custodio and Virtucio for Lots 139and 140, respectively, were likewise given due course.6

Alegarbes then appealed to the Secretary of Agriculture and Natural Resources, whodismissed his appeal on July 28, 1967. He then sought relief from the Office of thePresident (OP), which, however, affirmed the dismissal order of the Secretary of

Agriculture and Natural Resources in a decision, dated October 25, 1974. Alegarbesmoved for a reconsideration, but the motion was subsequently denied.7

On May 11, 1989, an order of execution8 was issued by the Lands ManagementBureau of the Department of Environment and Natural Resources to enforce thedecision of the OP. It ordered Alegarbes and all those acting in his behalf to vacatethe subject lot, but he refused.

On September 26, 1997, Virtucio then filed a complaint9 for "Recovery of Possessionand Ownership with Preliminary Injunction" before the RTC.

In his Answer,10 Alegarbes claimed that the decision of the Bureau of Lands wasvoid ab initio considering that the Acting Director of Lands acted without jurisdictionand in violation of the provisions of the Public Land Act. Alegarbes argued that thesaid decision conferred no rights and imposed no duties and left the parties in the

same position as they were before its issuance. He further alleged that the patentissued in favor of Virtucio was procured through fraud and deceit, thus, void abinitio.

Alegarbes further argued, by way of special and/or affirmative defenses, that theapproval of his homestead application on January 23, 1952 by the Bureau of Lands

had already attained finality and could not be reversed, modified or set aside. Hispossession of Lot Nos. 138, 139 and 140 had been open, continuous, peaceful anduninterrupted in the concept of an owner for more than 30 years and had acquired

such lots by acquisitive prescription.In his Amended and Supplemental Answer,11 Alegarbes also averred that his nowdeceased brother, Alejandro Alegarbes, and the latter's family helped him developLot 140 in 1955. Alejandro and his family, as well as Alegarbes' wife and children,had been permanently occupying the said lot and, introducing permanentimprovements thereon since 1960.

The RTC Ruling

The RTC rendered its decision on February 19, 2001, favoring Virtucio. The decretalportion of which reads:

WHEREFORE, upon the merit of this case, this court finds for the plaintiff andagainst the defendant by:

1. Ordering the defendant and all those acting in his behalf to vacate Lot No. 140,

Pls-19, located at Lower Bañas, Lantawan, Basilan and surrender the possessionand ownership thereof to plaintiff;

2. Ordering the defendant to pay the plaintiff the amount of Fifteen Thousand Pesos(P 15,000.00) as attorney's fees and another Ten Thousand Pesos (P 10,000.00) asexpenses for litigation; and

3. To pay the cost of the suit in the amount of Five Hundred Pesos (₱500.00).

SO ORDERED.12

Not in conformity, Alegarbes appealed his case before the CA.

The CA Ruling

On February 25, 2009, the CA promulgated its decision declaring Alegarbes as theowner of Lot No. 140, Pls-19, thereby reversing and setting aside the decision of theRTC. The CA ruled that Alegarbes became ipso jure owner of Lot 140 and, therefore,entitled to retain possession of it.

Consequently, the awards of attorney's fees, litigation expenses and costs of suitwere deleted.

In so ruling, the CA explained that even if the decision to approve Virtucio'shomestead application over Lot 140 had become final, Alegarbes could still acquirethe said lot by acquisitive prescription. The decisions on the issues of the approvalof Virtucio's homestead application and its validity were impertinent as Alegarbeshad earlier put in issue the matter of ownership of Lot 140 which he claimed byvirtue of adverse possession.

The CA also found reversible error on the part of the RTC in disregarding theevidence before it and relying entirely upon the decisions of the administrative

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bodies, none of which touched upon the issue of Alegarbes' open, continuous andexclusive possession of over thirty (30) years of an alienable land. The CA held thatthe Director of Lands, the Secretary of Agriculture and Natural Resources and theOP did not determine whether Alegarbes' possession of the subject property hadipso jure segregated Lot 140 from the mass of public land and, thus, was beyondtheir jurisdiction. Aggrieved, Virtucio filed this petition.

ISSUES

Virtucio assigned the following errors in seeking the reversal of the assailed decision

of the CA, to wit:

1. The Court of Appeals erred in setting aside the judgment of the trialcourt, which awarded the lot in question to the respondent by virtue ofacquisitive prescription and ordered herein petitioner to surrender theownership and possession of the same to them.13

2. The Court of Appeals gravely erred in disregarding the decision in CA-G.R. CV-26286 for Recovery of Possession and Ownership, Custodio vs.Alegarbes which contains same factual circumstances as in this case andruled against JOSE ALEGARBES.14

3. The Court of Appeals erred in deleting the award of attorney's fees to thepetitioner.15

The lone issue in this case is whether or not Alegarbes acquired ownership over the

subject property by acquisitive prescription.Ruling of the Court

The petition must fail.

Indeed, it is fundamental that questions of fact are not reviewable in petitions forreview on certiorari under Rule 45 of the Rules of Court. Only questions of lawdistinctly set forth shall be raised in the petition.16

Here, the main issue is the alleged acquisition of ownership by Alegarbes throughacquisitive prescription and the character and length of possession of a party over aparcel of land subject of controversy is a factual issue.17 The Court, however, is notprecluded from reviewing facts when the case falls within the recognized exceptions,to wit:

(a) When the findings are grounded entirely on speculation, surmises, or

conjectures;

(b) When the inference made is manifestly mistaken, absurd, or impossible;

(c) When there is grave abuse of discretion;

(d) When the judgment is based on a misapprehension of facts;

(e) When the findings of facts are conflicting;

(f) When in making its findings the CA went beyond the issues of the case, or itsfindings are contrary to the admissions of both the appellant and the appellee;

(g) When the CA’s findings are contrary to those by the trial court;

(h) When the findings are conclusions without citation of specific evidence on whichthey are based;

(i) When the facts set forth in the petition as well as in the petitioner’s main andreply briefs are not disputed by the respondent;

(j) When the findings of fact are premised on the supposed absence of evidence andcontradicted by the evidence on record; or

(k) When the CA manifestly overlooked certain relevant facts not disputed by theparties, which, if properly considered, would justify a differentconclusion.18 [Emphasis supplied]

In the case at bench, the findings and conclusions of the CA are apparently contraryto those of the RTC, hence, the need to review the facts in order to arrive at theproper conclusion.

On Acquisitive Prescription

Virtucio insists that the period of acquisitive prescription was interrupted on October30, 1961 (or in 1954 when Alegarbes filed the protest) when the Director of Landsrendered a decision giving due course to his homestead application and that ofUlpiano Custodio. Virtucio further claims that since 1954, several extrajudicial

demands were also made upon Alegarbes demanding that he vacate said lot. Thosedemands constitute the "extrajudicial demand" contemplated in Article 1155, thus,tolling the period of acquisitive prescription.19

Article 1106 of the New Civil Code, in relation to its Article 712, provides thatprescription is a mode of acquiring ownership through the lapse of time in the

manner and under the conditions laid down by law. Under the same law, it statesthat acquisitive prescription may either be ordinary or extraordinary.20 Ordinaryacquisitive prescription requires possession of things in good faith and with just titlefor a period of ten years,21 while extraordinary acquisitive prescription requiresuninterrupted adverse possession of thirty years, without need of title or of goodfaith.22

There are two kinds of prescription provided in the Civil Code. One is acquisitive,that is, the acquisition of a right by the lapse of time as expounded in par. 1, Article1106. Other names for acquisitive prescription are adverse possession andusucapcion. The other kind is extinctive prescription whereby rights and actions arelost by the lapse of time as defined in Article 1106 and par. 2, Article 1139. Anothername for extinctive prescription is litigation of action.23 These two kinds ofprescription should not be interchanged.

Article 1155 of the New Civil Code refers to the interruption of prescription ofactions. Interruption of acquisitive prescription, on the other hand, is found inArticles 1120-1125 of the same Code. Thus, Virtucio’s reliance on Article 1155 forpurposes of tolling the period of acquisitive prescription is misplaced. The only kindsof interruption that effectively toll the period of acquisitive prescription are naturaland civil interruption.24

Civil interruption takes place with the service of judicial summons to thepossessor.25 When no action is filed, then there is no occasion to issue a judicialsummons against the respondents. The period of acquisitive prescription continuesto run.

In this case, Virtucio claims that the protest filed by Alegarbes against hishomestead application interrupted the thirty (30)-year period of acquisitive





















































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prescription. The law, as well as jurisprudence, however, dictates that only a judicialsummons can effectively toll the said period.

In the case of Heirs of Marcelina Azardon-Crisologo v. Rañon ,26 the Court ruled thata mere Notice of Adverse Claim did not constitute an effective interruption ofpossession. In the case of Heirs of Bienvenido and Araceli Tanyag v. Gabriel,27 which

also cited the Rañon Case, the Court stated that the acts of declaring again theproperty for tax purposes and obtaining a Torrens certificate of title in one's namecannot defeat another's right of ownership acquired through acquisitive

prescription.

28

In the same vein, a protest filed before an administrative agency and even thedecision resulting from it cannot effectively toll the running of the period ofacquisitive prescription. In such an instance, no civil interruption can take place.Only in cases filed before the courts may judicial summons be issued and, thus,interrupt possession. Records show that it was only in 1997 when Virtucio filed acase before the RTC. The CA was, therefore, correct in ruling that Alegarbesbecameipso jure owner of Lot 140 entitling him to retain possession of it because he was inopen, continuous and exclusive possession for over thirty (30) years of alienablepublic land.Virtucio emphasizes that the CA erred in disregarding the decisions ofthe administrative agencies which amended Alegarbes' homestead applicationexcluding Lot 140 and gave due course to his own application for the said lot, whichdecisions were affirmed by the RTC.

Well-settled is the rule that factual findings of the lower courts are entitled to great

weight and respect on appeal and, in fact, are accorded finality when supported bysubstantial evidence on the record.29 It appears, however, that the conclusion madeby the RTC was not substantially supported. Even the RTC itself noted in itsdecision:

The approval of a Homestead Application merely authorizes the applicant to takepossession of the land so that he could comply with the requirements prescribed bylaw before a final patent could be issued in his favor – what divests the governmentof title to the land is the issuance of a patent and its subsequent registration withthe Register of Deeds.30

A perusal of the records would reveal that there was no issuance of any patent infavor of either parties. This simply means that the land subject of the controversyremains to be in the name of the State. Hence, neither Virtucio nor Alegarbes canclaim ownership. There was, therefore, no substantial and legal basis for the RTC to

declare that Virtucio was entitled to possession and ownership of Lot 140.

It can be argued that the lower court had the decisions of the administrativeagencies, which ultimately attained finality, as legal bases in ruling that Virtucio hadthe right of possession and ownership. In fact, the Department of Environment andNatural Resources (DENR) even issued the Order of Execution31 on May 11, 1989ordering Alegarbes to vacate Lot 140 and place Virtucio in peaceful possession of it.The CA, however, was correct in finding that:

But appellant had earlier put in issue the matter of ownership of Lot 140 which heclaims by virtue of adverse possession. On this issue, the cited decisions areimpertinent. Even if the decision to approve appellee's homestead application overLot 140 had become final, appellant could still acquire the said lot by acquisitiveprescription.32

In the case of Heirs of Gamos v. Heirs of Frando ,33 the Court ruled that the mereapplication for a patent, coupled with the fact of exclusive, open, continuous andnotorious possession for the required period, is sufficient to vest in the applicant thegrant applied for.34 It likewise cited the cases of Susi v. Razon35 and Pineda v.CA,36 where the Court ruled that the possession of a parcel of agricultural land ofthe public domain for the prescribed period of 30 years ipso jure converts the lotinto private property.37

In this case, Alegarbes had applied for homestead patent as early as 1949. He had

been in exclusive, open, continuous and notorious possession of Lot 140 for at least30 years. By the time the DENR issued its order of execution in 1989, Alegarbes hadLot 140 in his possession for more than 30 years. Even more so when Virtucio filedthe complaint before the RTC in 1997, Alegarbes was already in possession of thesubject property for forty-eight (48) years.

The CA correctly observed that the RTC erred in disregarding the evidence before itand relying entirely upon the decisions of the Director of Lands, the Secretary ofAgriculture and Natural Resources and the OP, which never touched the issue ofwhether Alegarbes’ open, continuous and exclusive possession of over thirty (30)years of alienable land had ipso jure segregated Lot 140 from the mass of publicland and beyond the jurisdiction of these agencies.38

When the CA ruled that the RTC was correct in relying on the abovementioneddecisions, it merely recognized the primary jurisdiction of these administrativeagencies. It was of the view that the RTC was not correct in the other aspects of the

case. Thus, it declared Alegarbes as owner ipso jure of Lot 140 and entitled to retainpossession of it. There is no reason for the Court to disturb these findings of the CAas they were supported by substantial evidence, hence, are conclusive and bindingupon this Court.39

On the CA Decision involving a similar case

Virtucio insists that the CA gravely erred in disregarding its decision in Custodio v. Alegarbes, CA-G.R. CV 26286, for Recovery of Possession and Ownership, whichinvolved the same factual circumstances and ruled against Alegarbes.

It must be noted that the subject property in the said case was Lot 139 allocated toCustodio and that Virtucio was not a party to that case. The latter cannot enjoywhatever benefits said favorable judgment may have had just because it involved

similar factual circumstances. The Court also found from the records that the periodof acquisitive prescription in that case was effectively interrupted by Custodio's filingof a complaint, which is wanting in this case.

Moreover, it is settled that a decision of the CA does not establish judicialprecedent.40 "The principle of stare decisis enjoins adherence by lower courts todoctrinal rules established by this Court in its final decisions. It is based on theprinciple that once a question of law has been examined and decided, it should bedeemed settled and closed to further argument. "41

The Court agrees with the position of Alegarbes that by Virtucio's insistence that itwas erroneous for the CA to disregard its earlier decision in CA-G.R. CV 26286, he,in effect, calls upon this Court to adhere to that decision by invoking the staredecisis principle, which is not legally possible because only final decisions of thisCourt are considered precedents.42




































































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In view of the foregoing, the Court need not dwell on the complaint of Virtucio withregard to the deletion of the award of attorney's fees in his favor. It is ludicrous forthe CA to order Alegarbes to pay attorney's fees, as a measure of damages, andcosts, after finding him to have acquired ownership over the property by acquisitiveprescription.

WHEREFORE, the petition is DENIED.

SO ORDERED.

FIRST DIVISIONG.R. No. 159508 August 29, 2012

JUAN B. BANEZ, JR., Petitioner, vs. HON. CRISANTO C. CONCEPCION, IN HISCAPACITY AS THE PRESIDING JUDGE OF THE RTC-BULACAN, MALOLOSCITY, AND THE ESTATE OF THE LATE RODRIGO GOMEZ, REPRESENTED BYITS ADMINISTRATRIX, TSUI YUK YING, Respondents.

BERSAMIN, J.:

The petitioner has directly come to the Court via petition for certiorar i 1 filed onSeptember 4, 2003 to assail the orders dated March 24, 2003 (reversing an earlierorder issued on February 18, 2003 granting his motion to dismiss on the ground ofthe action being already barred by prescription, and reinstating the action),2 April21, 2003 (denying his motion for reconsideration),3and August 19, 2003 (denyinghis second motion for reconsideration and ordering him to file his answer within 10days from notice despite the principal defendant not having been yet validly servedwith summons and copy of the complaint),4 all issued by the Regional Trial Court(RTC), Branch 12, in Malolos City in Civil Case No. 722-M-2002,5 an action for therecovery of ownership and possession. He alleges that respondent Presiding Judgethereby acted with grave abuse of discretion amounting to lack or excess of

jurisdiction.

Antecedents

The present controversy started almost four decades ago when Leodegario B.Ramos (Ramos), one of the defendants in Civil Case No. 722-M-2002, discoveredthat a parcel of land with an area of 1,233 square meters, more or less, which wasa portion of a bigger tract of land with an area of 3,054 square meters, more orless, located in Meycauayan, Bulacan that he had adjudicated solely to himself upon

his mother’s death on November 16, 1982 had been earlier transferred by his

mother to one Ricardo Asuncion, who had, in turn, sold it to the late RodrigoGomez.

On February 1, 1990, Ramos, alleging that Gomez had induced him to sell the 1,233square meters to Gomez on the understanding that Gomez would settle Ramos’obligation to three other persons, commenced in the RTC in Valenzuela an actionagainst Gomez, also known as Domingo Ng Lim, seeking the rescission of theircontract of sale and the payment of damages, docketed as Civil Case No. 3287-V-90entitled Leodegario B. Ramos v. Rodrigo Gomez, a.k.a. Domingo Ng Lim .6

On October 9, 1990, before the Valenzuela RTC could decide Civil Case No. 3287-V-90 on the merits, Ramos and Gomez entered into a compromise agreement.7 TheRTC approved their compromise agreement through its decision rendered on thesame date.8

The petitioner, being then the counsel of Ramos in Civil Case No. 3287-V-90,assisted Ramos in entering into the compromise agreement "to finally terminate thiscase." The terms and conditions of the compromise agreement were as follows:

COME NOW, the Parties, assisted by their respective counsels, and before thisHonorable Court, most respectfully submit this COMPROMISE AGREEMENT for

approval, as to finally terminate this case, the terms and conditions of which beingas follows:

1. That out of the total area of Three Thousand and Fifty Four (3,054) sq.

m., more or less, covered by formerly O.C.T. No. P-2492 (M), Registry ofDeeds of Bulacan, known as Lot No. 6821, Cad-337 Lot 4020-E, Csd-04-001618-D, and now by the Reconstituted Transfer Certificate of Title No. T-10179-P (M) defendant shall cause survey of said property, at its ownexpense, to segregate the area of One Thousand Two Hundred Thirty-Three, (1,233) sq. m. more or less, to take along lines two (2) to three (3),then to four (4) and up to five (5) of said plan, Csd-04-001618-D;

2. That upon completion of the technical survey and plan, defendant shallcause the registration of the Deed of Absolute Sale executed by plaintiffover the 1,233 sq. m. in his favor and that defendant shall deliver thesurvey and plan pertaining to the 1,821 sq, m. to the plaintiff with bothparties defraying the cost of registration and titling over their respectiveshares;

3. That to carry out the foregoing, plaintiff shall entrust the Owner’sDuplicate of said TCT No. T-10179-P (M), Registry of Deeds ofMeycauayan, Bulacan, to the defendant, upon approval of thisCOMPROMISE AGREEMENT by the Court;

4. That upon the approval of this Compromise Agreement plaintiff shallexecute a Deed of Absolute Sale in favor of defendant over the 1,233 sq.m. surveyed and segregated from the 1,821 sq. m. which should remainwith the plaintiff and to be titled in his name;

5. That plaintiff obligates himself to return his loan obligation to thedefendant, in the principal sum of P 80,000.00 plus P 20,000.00 for the usethereof, and an additional sum of P 10,000.00 in the concept of attorney’sfees, which sums shall be guaranteed by a post-dated check, in the

amount of P 110,000.00 in plaintiff’ s name with his prior endorsement,drawn and issued by plaintiff’s counsel, for a period of Sixty (60) days fromOctober 9, 1990;

6. That in the event the check issued pursuant to paragraph 5 hereof, isdishonored for any reason whatsoever, upon presentment for payment,then this Compromise Agreement, shall be considered null and void and ofno effect whatsoever;

7. That upon faithful compliance with the terms and conditions of thisCOMPROMISE AGREEMENT and the Decision based thereon, the partieshereto shall have respectively waived, conceded and abandoned all claimsand rights of action of whatever kind or nature, against each other over thesubject property.

































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WHEREFORE, premises considered, the parties hereto hereby jointly and severallypray before this Honorable Court to approve this COMPROMISE AGREEMENT andthereupon render its Decision based thereon terminating the case.

One of the stipulations of the compromise agreement was for Ramos to execute adeed of absolute sale in favor of Gomez respecting the parcel of land with an area of

1,233 square meters, and covered by Transfer Certificate of Title (TCT) No. T-13005P(M) in the name of Ramos.9 Another stipulation was for the petitioner to issuepost-dated checks totaling P 110,000.00 to guarantee the payment by Ramos of his

monetary obligations towards Gomez as stated in the compromise agreementbroken down as follows: (a) P 80,000.00 as Ramos’ loan obligation to Gomez;(b) P 20,000.00 for the use of the loan; and (c) P 10,000.00 as attorney’s fees. Ofthese amounts, only P 80,000.00 was ultimately paid to Gomez, because thepetitioner’s check dated April 23, 1991 for the balance of P 30,000.00 wasdishonored for insufficiency of funds.

Gomez meanwhile died on November 7, 1990. He was survived by his wife Tsui YukYing and their minor children (collectively to be referred to as the Estate of Gomez).The Estate of Gomez sued Ramos and the petitioner for specific performance in theRTC in Caloocan City to recover the balance of P 30,000.00 (Civil Case No. C-15750). On February 28, 1994, however, Civil Case No. C-15750 was amicablysettled through a compromise agreement, whereby the petitioner directly boundhimself to pay to the Estate of Gomez P 10,000.00 on or before March 15,1994; P 10,000.00 on or before April 15, 1994; and P 10,000.00 on or before May

15, 1994.The Estate of Gomez performed the obligations of Gomez under the first paragraphof the compromise agreement of October 9, 1990 by causing the survey of thebigger tract of land containing an area of 3,054 square meters, more or less, inorder to segregate the area of 1,233 square meters that should be transferred byRamos to Gomez in accordance with Ramos’ undertaking under the secondparagraph of the compromise agreement of October 9, 1990. But Ramos failed tocause the registration of the deed of absolute sale pursuant to the secondparagraph of the compromise agreement of October 9, 1990 despite the Estate ofGomez having already complied with Gomez’s undertaking to deliver the approvedsurvey plan and to shoulder the expenses for that purpose. Nor did Ramos deliver

to the Estate of Gomez the owner’s duplicate copy of TCT No. T -10179 P(M) of theRegistry of Deeds of Meycauayan, Bulacan, as stipulated under the third paragraphof the compromise agreement of October 9, 1990. Instead, Ramos and the

petitioner caused to be registered the 1,233 square meter portion in Ramos’s nameunder TCT No. T-13005-P(M) of the Registry of Deeds of Meycauayan, Bulacan.

Accordingly, on July 6, 1995, the Estate of Gomez brought a complaint for specificperformance against Ramos and the petitioner in the RTC in Valenzuela (Civil CaseNo. 4679-V-95)10 in order to recover the 1,233 square meter lot. However, theValenzuela RTC dismissed the complaint on April 1, 1996 upon the motion of Ramosand the petitioner on the ground of improper venue because the objective was to

recover the ownership and possession of realty situated in Meycauayan, Bulacan,and because the proper recourse was to enforce the judgment by compromiseAgreement rendered on October 9, 1990 through a motion for execution.

The Estate of Gomez appealed the order of dismissal to the Court of Appeals (CA),which ruled on July 24, 2001 to affirm the Valenzuela RTC and to dismiss the appeal(CA-G.R. CV No. 54231).

On September 20, 2002, the Estate of Gomez commenced Civil Case No. 722-M-2002 in the Valenzuela RTC, ostensibly to revive the judgment by compromise

rendered on October 9, 1990 in Civil Case No. 3287-V-90, praying that Ramos beordered to execute the deed of absolute sale covering the 1,233 square meter lotpursuant to the fourth stipulation of the compromise agreement of October 9, 1990.

The petitioner was impleaded as a party-defendant because of his havingguaranteed the performance by Ramos of his obligation and for having activelyparticipated in the transaction.

On January 8, 2003, the petitioner moved for the dismissal of Civil Case No. 722-M-2002, alleging that the action was already barred by res judicata and byprescription; that he was not a real party-in-interest; and that the amount he hadguaranteed with his personal check had already been paid by Ramos with his ownmoney.11

Initially, on February 18, 2003,12 the RTC granted the petitioner’s motion to dismiss,finding that the right of action had already prescribed due to more than 12 yearshaving elapsed from the approval of the compromise agreement on October 9,1990, citing Article 1143 (3) of the Civil Code (which provides a 10-year periodwithin which a right of action based upon a judgment must be brought from).

On March 24, 2003,13

however, the RTC reversed itself upon motion of the Estate ofGomez and set aside its order of February 18, 2003. The RTC reinstated Civil CaseNo. 722-M-2002, holding that the filing of the complaint for specific performance onJuly 6, 1995 in the Valenzuela RTC (Civil Case No. 4679-V-95) had interrupted theprescriptive period pursuant to Article 1155 of the Civil Code.

The petitioner sought reconsideration, but the RTC denied his motion for thatpurpose on April 21, 2003.

On May 12, 2003, the petitioner filed a second motion for reconsideration,maintaining that the Estate of Gomez’s right of action had already prescribed; andthat the judgment by compromise of October 9, 1990 had already settled the entirecontroversy between the parties.

On August 19, 2003,14 the RTC denied the second motion for reconsideration forlack of merit.

Hence, this special civil action for certiorari commenced on September 4, 2003directly in this Court.

Issues

The petitioner insists that:

xxx the lower court acted with grave abuse of discretion, amounting to lack of, or in

excess of jurisdiction, when, after having correctly ordered the dismissal of the casebelow, on the ground of prescription under Art. 1144, par. 3, of the Civil Code, itreconsidered and set aside the same, on the factually baseless and legally untenableMotion for Reconsideration of Private Respondent, insisting, with grave abuse ofdiscretion, if not bordering on ignorance of law, and too afraid to face reality, that itis Art. 1155 of the same code, as invoked by Private Respondents, that applies, and

























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required herein petitioner to file his answer, despite petitioner’s first Motion forReconsideration, which it treated as a mere scrap of paper, yet, at the same [sic]again it insisted that Article 1155 of the Civil Code should apply, and, thereafterwhen, with like, if not greater grave abuse of discretion, amounting to lack, or inexcess of jurisdiction, it again denied petitioner’s Second Motion for Reconsiderationfor lack of merit, and giving petitioner a non-extendible period of ten 10 days fromnotice, to file his answer.15

In his reply to the Estate of Gomez’s comment,16 the petitioner elucidated as

follows:1) Whether or not, the Honorable public respondent Judge gravely abused hisdiscretion, amounting to lack of, or in excess of jurisdiction, when, after ordered thedismissal of Civil Case No. 722-M-2002, as prescription has set in, under Art. 1143of the Civil Code, he set aside and reconsidered his said Order, on motion ofplaintiff, by thereafter denied petitioner’s Motion for Reconsideration, and SecondMotion for Reconsideration, insisting, despite his being presumed to know the law,that the said action is not barred by prescription, under Art. 1145 of the Civil Code;

2) Whether or not, the present pending action, Civil Case No. 722-M-2002, beforeBranch 12 of the Regional Trial Court of Malolos, Bulacan, is barred, and should beordered be dismissed, on the ground of prescription, under the law and the rules,and applicable jurisprudence.

3) Whether or not, the same action may be dismissed on other valid grounds .17

The petitioner submits that Civil Case No. 722-M-2002 was one for the revival of the judgment upon a compromise agreement rendered in Civil Case No. 3287-V-90 thatattained finality on October 9, 1990; that considering that an action for revival mustbe filed within 10 years from the date of finality, pursuant to Article 1144 of theCivil Code,18 in relation to Section 6, Rule 39 of the Rules of Court ,19 Civil Case No.722-M-2002 was already barred by prescription, having been filed beyond the 10-year prescriptive period; that the RTC gravely abused its discretion in reinstatingthe complaint despite prescription having already set in; that the dismissal of CivilCase No. 722-M-2002 was proper also because the judgment had already been fullysatisfied; that the claim relative to the 1,233 square meter lot under thecompromise agreement had been waived, abandoned, or otherwise extinguished onaccount of the failure of the Estate of Gomez’s counsel to move for the issuance of awrit of execution; and that the Estate of Gomez could not rely upon the pendencyand effects of the appeal from the action for specific performance after its dismissal

had been affirmed by the CA on grounds of improper venue, the plaintiff’s lack ofpersonality, and improper remedy (due to the proper remedy being by execution ofthe judgment).

The Estate of Gomez countered that the filing on July 6, 1995 of the action forspecific performance in the RTC in Valenzuela stopped the running of theprescriptive period; that the period commenced to run again after the CA dismissedthat action on July 24, 2001; that the total elapsed period was only five years and11 months; and that the action for the revival of judgment filed on September 20,2002 was within the period of 10 years to enforce a final and executory judgmentby action.

Ruling

We dismiss the petition for certiorari .

The orders that the petitioner seeks to challenge and to annul are the ordersdenying his motion to dismiss. It is settled, however, that an order denying amotion to dismiss, being merely interlocutory, cannot be the basis of a petitionfor certiorari . An interlocutory order is not the proper subject ofa certiorari challenge by virtue of its not terminating the proceedings in which it isissued. To allow such order to be the subject of review by certiorari not only delaysthe administration of justice, but also unduly burdens the courts.20

But a petition for certiorari may be filed to assail an interlocutory order if it is issued

without jurisdiction, or with excess of jurisdiction, or in grave abuse of discretionamounting to lack or excess of jurisdiction. This is because as to such order there isno appeal, or any plain, speedy, and adequate remedy in the ordinary course of law.Rule 65 of the Rules of Court expressly recognizes the exception by providing asfollows:

Section 1. Petition for certiorari . — When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without o r in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy inthe ordinary course of law, a person aggrieved thereby may file a verified petition inthe proper court, alleging the facts with certainty and praying that judgment berendered annulling or modifying the proceedings of such tribunal, board or officer,and granting such incidental reliefs as law and justice may require.

The petition shall be accompanied by a certified true copy of the judgment, order or

resolution subject thereof, copies of all pleadings and documents relevant andpertinent thereto, and a sworn certification of non-forum shopping as provided inthe third paragraph of section 3, Rule 46. (1a)

The exception does not apply to this challenge. The petitioner has not demonstratedhow the assailed orders could have been issued without jurisdiction, or with excessof jurisdiction, or in grave abuse of discretion amounting to lack or excess of

jurisdiction. Nor has he convinced us that he had no plain, speedy, and adequateremedy in the ordinary course of law. In fact and in law, he has, like filing hisanswer and going to pre-trial and trial. In the end, should he still have the need toseek the review of the decision of the RTC, he could also even appeal the denial ofthe motion to dismiss. That, in reality, was his proper remedy in the ordinary courseof law.

Yet another reason to dismiss the petition for certiorari exists. Although the Court,

the CA and the RTC have concurrence of jurisdiction to issue writs of certiorari , thepetitioner had no unrestrained freedom to choose which among the several courtsmight his petition for certiorari be filed in. In other words, he must observe thehierarchy of courts, the policy in relation to which has been explicitly defined inSection 4 of Rule 65 concerning the petitions for the extraordinary writsof certiorari , prohibition and mandamus, to wit:

Section 4. When and where petition filed. - The petition shall be filed not later thansixty (60) days from notice of the judgment, order or resolution. In case a motionfor reconsideration or new trial is timely filed, whether such motion is required ornot, the sixty (60) day period shall be counted from notice of the denial of the saidmotion.





























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The petition shall be filed in the Supreme Court or, if it relates to the acts oromissions of a lower court or of a corporation, board, officer or person, in theRegional Trial Court exercising jurisdiction over the territorial area as defined by theSupreme Court. It may also be filed in the Court of Appeals whether or not thesame is in the aid of its appellate jurisdiction, or in the Sandiganbayan if it is in aidof its appellate jurisdiction. If it involves the acts or omissions of a quasi-judicialagency, unless otherwise provided by law or these rules, the petition shall be filed inand cognizable only by the Court of Appeals.

No extension of time to file the petition shall be granted except for compellingreason and in no case exceeding fifteen (15) days. (4a )21 (Emphasis supplied)

Accordingly, his direct filing of the petition for certiorari in this Court instead of inthe CA should be disallowed considering that he did not present in the petition anyspecial and compelling reasons to support his choice of this Court as the forum.

The Court must enjoin the observance of the policy on the hierarchy of courts, andnow affirms that the policy is not to be ignored without serious consequences. Thestrictness of the policy is designed to shield the Court from having to deal withcauses that are also well within the competence of the lower courts, and thus leavetime to the Court to deal with the more fundamental and more essential tasks thatthe Constitution has assigned to it. The Court may act on petitions for theextraordinary writs of certiorari , prohibition and mandamus only when absolutelynecessary or when serious and important reasons exist to justify an exception to thepolicy. This was why the Court stressed in Vergara, Sr. v. Suelto :22

xxx. The Supreme Court is a court of last resort, and must so remain if it is tosatisfactorily perform the functions assigned to it by the fundamental charter andimmemorial tradition. It cannot and should not be burdened with the task of dealingwith causes in the first instance. Its original jurisdiction to issue the so-calledextraordinary writs should be exercised only where absolutely necessary or whereserious and important reasons exist therefor. Hence, that jurisdiction shouldgenerally be exercised relative to actions or proceedings before the Court ofAppeals, or before constitutional or other tribunals, bodies or agencies whose actsfor some reason or another are not controllable by the Court of Appeals. Where theissuance of an extraordinary writ is also within the competence of the Court ofAppeals or a Regional Trial Court, it is in either of these courts that the specificaction for the writ’s procurement must be presented. This is and should continue tobe the policy in this regard, a policy that courts and lawyers must strictly observe.(Emphasis supplied)

In People v. Cuaresma ,23 the Court has also amplified the need for strict adherenceto the policy of hierarchy of courts. There, noting "a growing tendency on the partof litigants and lawyers to have their applications for the so-called extraordinarywrits, and sometimes even their appeals, passed upon and adjudicated directly andimmediately by the highest tribunal of the land," the Court has cautioned lawyersand litigants against taking a direct resort to the highest tribunal, viz:

xxx. This Court’s original jurisdiction to issue writs of certiorari (as well asprohibition, mandamus, quo warranto, habeas corpus and injunction) is notexclusive. It is shared by this Court with Regional Trial Courts x x x, which mayissue the writ, enforceable in any part of their respective regions. It is also sharedby this Court, and by the Regional Trial Court, with the Court of Appeals x x x,although prior to the effectivity of Batas Pambansa Bilang 129 on August 14, 1981,

the latter's competence to issue the extraordinary writs was restricted to those "inaid of its appellate jurisdiction." This concurrence of jurisdiction is not, however, tobe taken as according to parties seeking any of the writs an absolute, unrestrainedfreedom of choice of the court to which application therefor will be directed. There isafter all a hierarchy of courts. That hierarchy is determinative of the venue ofappeals, and should also serve as a general determinant of the appropriate forumfor petitions for the extraordinary writs. A becoming regard for that judicialhierarchy most certainly indicates that petitions for the issuance of extraordinarywrits against first level ("inferior") courts should be filed with the Regional Trial

Court, and those against the latter, with the Court of Appeals. A direct invocation ofthe Supreme Court's original jurisdiction to issue these writs should be allowed onlywhen there are special and important reasons therefor, clearly and specifically setout in the petition. This is established policy. It is a policy that is necessary toprevent inordinate demands upon the Court’s time and at tention which are betterdevoted to those matters within its exclusive jurisdiction, and to prevent furtherover-crowding of the Court's docket. Indeed, the removal of the restriction on the

jurisdiction of the Court of Appeals in this regard, supra— resulting from the

deletion of the qualifying phrase, "in aid of its appellate jurisdiction" — wasevidently intended precisely to relieve this Court pro tanto of the burden of dealingwith applications for the extraordinary writs which, but for the expansion of theAppellate Court corresponding jurisdiction, would have had to be filed with it.

xxxx

The Court therefore closes this decision with the declaration for the information andevidence of all concerned, that it will not only continue to enforce the policy, but willrequire a more strict observance thereof. (Emphasis supplied)

There being no special, important or compelling reason that justified the direct filingof the petition for certiorari in this Court in violation of the policy on hierarchy ofcourts, its outright dismissal is unavoidable.

Still, even granting that the petition for certiorari might be directly filed in thisCourt, its dismissal must also follow because its consideration and resolution wouldunavoidably demand the consideration and evaluation of evidentiary matters. TheCourt is not a trier of facts, and cannot accept the petition for certiorari for thatreason.

Although commenced ostensibly for the recovery of possession and ownership ofreal property, Civil Case No. 722-M-2002 was really an action to revive the

judgment by compromise dated October 9, 1990 because the ultimate outcomewould be no other than to order the execution of the judgment by compromise.Indeed, it has been held that "there is no substantial difference between an actionexpressly called one for revival of judgment and an action for recovery of propertyunder a right adjudged under and evidenced by a final judgment."24 In addition, theparties themselves have treated the complaint in Civil Case No. 722-M-2002 as onefor revival. Accordingly, the parties should be fully heard on their respective claimslike in any other independent action.1âwphi1

The petitioner’s defense of prescription to bar Civil Case No. 722-M-2002 presentsanother evidentiary concern. Article 1144 of the Civil Code requires, indeed, that anaction to revive a judgment must be brought before it is barred by prescription,which was ten years from the accrual of the right of action.25 It is clear, however,that such a defense could not be determined in the hearing of the petitioner’s





















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motion to dismiss considering that the complaint did not show on its face that theperiod to bring the action to revive had already lapsed. An allegation of prescription,as the Court put it in Pineda v. Heirs of Eliseo Guevara ,26 "can effectively be used ina motion to dismiss only when the complaint on its face shows that indeed theaction has already prescribed, [o]therwise, the issue of prescription is one involvingevidentiary matters requiring a full blown trial on the merits and cannot bedetermined in a mere motion to dismiss."

At any rate, the mere lapse of the period per se did not render the judgment stalewithin the context of the law on prescription, for events that effectively suspendedthe running of the period of limitation might have intervened. In other words, theEstate of Gomez was not precluded from showing such events, if any. The Courtrecognized this possibility of suspension in Lancita v. Magbanua :27

In computing the time limited for suing out of an execution, although there isauthority to the contrary, the general rule is that there should not be included thetime when execution is stayed, either by agreement of the parties for a definitetime, by injunction, by the taking of an appeal or writ of error so as to operate as asupersedeas, by the death of a party or otherwise. Any interruption or delayoccasioned by the debtor will extend the time within which the writ may be issuedwithout scire facias.

Verily, the need to prove the existence or non-existence of significant matters, likesupervening events, in order to show either that Civil Case No. 722-M-2002 wasbatTed by prescription or not was present and undeniable. Moreover, the petitioner

himself raised factual issues in his motion to dismiss, like his averment of fullpayment or discharge of the obligation of Ramos and the waiver or abandonment ofrights under the compromise agreement. The proof thereon cannot be receivedin certiorari proceedings before the Court, but should be established in the RTC.

WHEREFORE, the Court DISMISSES the petition for certiorari ; and DIRECTS thepetitioner to pay the cost of suit.

SO ORDERED

THIRD DIVISION

[G.R. No. 133317. June 29, 1999]

ANTONIO R. AGRA, CAYETANO FERRERIA, NAPOLEON M. GAMO andVICENTE O. NOVALES, petitioners, vs.PHILIPPINE NATIONAL

BANK, respondent .PANGANIBAN, J .:

Laches is a recourse in equity. Equity, however, is applied only in theabsence, never in contravention, of statutory law. Thus, laches cannot, as a rule,abate a collection suit filed within the prescriptive period mandated by the CivilCode.

The Case

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules ofCourt, assailing the November 26, 1997 Decision of the Court of Appeals ,[1] whichdisposed as follows:

“IN VIEW OF THE FOREGOING, the decision of the lower court is hereby AFFIRMED,with the modification that the award of attorney’s fees is hereby DELETED and thetwelve percent (12%) interest on the P2,500,000.00 the defendant-appellants areto pay PNB should start from August 30, 1976, the date when the complaint wasfiled.” [2]

The decretal portion of the aforementioned trial court ruling reads:

“WHEREFORE, in view of the foregoing, in the interest of justice, judgment isrendered in favor of the plaintiff ordering all the sureties jointly and severally, to

pay PNB as follows:

a) the amount of P2,500,000.00 plus twelve per centum (12%) accrued interestfrom August 1, 1976;

b) ten percent (10%) of the total amount due as attorney’s fees and cost of thesuit.

SO ORDERED.”

Also assailed by petitioners is the April 2, 1998 Resolution of the Court ofAppeals, which denied their Motion for Reconsideration.[3]

The Facts

The facts are summarized by the Court of Appeals (CA) in this wise:[4]

“On August 30, 1976, an action for collection of a sum of money was filed by the

Philippine National Bank (PNB, for brevity) against Fil-Eastern Wood Industries, Inc.(Fil-Eastern, for short) in its capacity as principal debtor and against CayetanoFerreria, Pedro Atienza, Vicente O. Novales, Antonio R. Agra, and Napoleon M.Gamo in their capacity as sureties.

“In its complaint, plaintiff PNB al leged that on July 17, 1967 Fil-Eastern was granteda loan in the amount of [t]wo [m]illion [f]ive [h]undred [t]housand [p]esos(P2,500,000.00) with interest at twelve percent (12%) per annum. Drawings fromsaid demand loan were made on different dates as evidenced by several promissorynotes and were credited to the account of Fil-Eastern. To secure the payment of thesaid loan Fil-Eastern as principal and sureties Ferreria, Atienza, Novales, Agra, andGamo executed a Surety Agreement whereby the sureties, jointly and severally withthe principal, guaranteed and warranted to PNB, its successors or assigns, promptpayment of subject obligation including notes, drafts, bills of exchange, overdraftsand other obligations of every kind, on which Fil-Eastern was indebted or maythereafter become indebted to PNB. It was further alleged that as of May 31, 1976the total indebtedness of Fil-Eastern and its sureties on subject loan amounted to[f]ive [m]illion [t]wo [h]undred [n]inety-[s]even [t]housand, [n]ine [h]undred[s]eventy-[s]ix [p]esos and [s]eventeen [c]entavos (P5,297,976.17), excludingattorney’s fees. Notwithstanding repeated demands, the defendants refused andfailed to pay their loans.

“The defendants (herein sureties) filed separate answers (pp . 49, 68, 205, 208 and231). Collating these, We drew the following: All of them claimed that they onlysigned the Surety Agreement with the understanding that the same was a mereformality required of the officers of the corporation. They did not in any way ormanner receive a single cent from the proceeds of said loan and/or derive any profittherefrom. Neither did they receive any consideration valuable or otherwise, from







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defendant Fil-Eastern. They further claim that the loan in question was negotiatedand approved under highly irregular, anomalous and suspicious circumstances tothe point that the Surety Agreement executed thereafter is invalid, null and voidand without force and effect. The extension of time of payment of the loan inquestion released and discharged the answering defendants from any liability underthe Surety Agreement. The Surety Agreement is null and void from the beginningdue to a defect in the consent of the defendants and that their liabilities under theSurety Agreement, if any, has been extinguished by novation. The cause of actionof the complainant is barred by laches and estoppel in that the plaintiff with full

knowledge of the deteriorating financial condition of Fil-Eastern did not take steps tocollect from said defendant corporation while still solvent. They also maintained thatif anyone is liable for the payment of said loan, it is Felipe Ysmael, Jr. and not themor it is only Fil-Eastern and the controlling officers who profited and made use of theproceeds of the loan. Defendant Agra likewise said that he was made to sign theSurety Agreement and he did it because of the moral influence and pressureexerted upon him by Felipe Ysmael, Jr. (their employer at the time of signing),thereby arousing strong fears of losing a much needed employment to support his

family should he refuse to sign as Surety.

“In the order of the trial court dated October 30, 1978, defendant Fil-Eastern wasdeclared in default for its failure to answer the complaint within the reglementaryperiod and the case was scheduled for pre-trial conference. The individualdefendants with the court’s approval thereafter filed an amended third-partycomplaint against Felipe Ysmael, Jr.

“The amended third-party complaint alleged that at the time of execution of thealleged Surety Agreement subject matter of the principal complaint, third-partyplaintiffs were but employees of Ysmael Steel Manufacturing Co., owned by third-party-defendant. Third-party-plaintiffs were in no financial position to act assureties to a P2.5 million loan. They became incorporators of original defendant Fil-Eastern because of fear of losing their employment brought about by thetremendous pressure and moral influence exerted upon them by their employer-third-party-defendant. They signed the Surety Agreement upon the order of thethird-party-defendant. In signing the said document, the third-party-plaintiffs wereassured by the third-party-defendant that they had nothing to fear and worry aboutbecause the latter will assume all liabilities as well as profits therefrom and that theloan subject of the Surety Agreement was with the prior approval and blessing of ahigh government official. They were likewise assured that the surety agreementwas but a formality and that because of such pressure, influence as well asassurances, third-party-plaintiffs signed the Surety Agreement.

“Third-party-defendant Felipe Ysmael, Jr. in his answer alleged that the SuretyAgreement was freely and voluntarily signed and executed by third-party-plaintiffswithout any intimidation, undue, improper or fraudulent representations. Further,granting arguendo that the consent of third-party plaintiffs in signing said SuretyAgreement was vitiated with intimidation, undue influence or fraudulentrepresentation on the part of third-party-defendant, said Surety Agreement is onlyvoidable and therefore binding unless annulled by a proper action in court. Thethird-party-plaintiffs did not file the proper court action for the annulment of saidagreement. They are now barred from filing an action for annulment of saidagreement, the prescriptive period therefor being only four (4) years from the timethe defect of the consent had ceased, and from the discovery of the all[e]ged

fraud. In addition, third-party plaintiffs had ratified said agreement which theysigned in July 1967 by signing their names on and execution of several promissorythereafter.

“At the pre-trial conference held on March 21, 1980, the parties failed to agree on apossible amicable settlement hence the case was set for trial on the merits. On July

5, 1984, during the pendency of the trial, third-party defendant Felipe Ysmael, Jr.died. He was substituted by his legal heirs Patrick Ysmael and Jeanne Ysmael asthird-party defendants. Defendant Pedro Atienza died on January 4, 1987. Itappearing that he has no legal heirs, the case against him was dismiss ed.”

After trial, the regional trial court (RTC) ruled against herein petitioners. Onappeal, the CA modified the RTC ruling by deleting the award of attorney’sfees. Hence, this recourse to this Court.

Ruling of the Court of Appeals

In ruling that petitioners were liable under the surety agreement, the Court ofAppeals rejected their defense of laches. It held that “the lapse of seven years andeight months from December 31, 1968 until the judicial demand on August 30,1976 cannot be considered as unreasonable delay which would necessitate theapplication of laches. The action filed by the plaintiff has not yet prescribed. It iswell within the ten-year prescriptive period provided for by law wherein actionsbased on written contracts can be instituted.” [5]

The Court of Appeals also noted that the “prescriptive period did not begin to

run from December 31, 1968 as [herein petitioners] presupposed. It was only fromthe time of the judicial demand on August 30, 1976 that the cause of actionaccrued. Thus, [private respondent] was well within the prescriptive period of tenyears when it instituted the case in court.” The Court of Appeals further ruled that

“placing the blame on [PNB] for its failure to immediately pounce upon its debtorsthe moment the loan matured is grossly unfair for xxx demand upon the sureties topay is not necessary.”

The appellate court also held that petitioners proved only the first of thefollowing four essential elements of laches: “(1) conduct on the part of thedefendant, or one under whom he claims, giving rise to the situation of whichcomplaint is made and for which the complainant seeks a remedy; (2) delay inasserting the complainant’s rights, the complainant having had knowledge or notice

of the defendant’s conduct and having been afforded an opportunity to institute asuit; (3) lack of knowledge or notice on the part of the defendant that thecomplainant would assert the right on which he bases his suit; and (4) injury orprejudice to the defendant in the event relief is accorded to the complainant, or thesuit is not held barred.”

Issues

In their Memorandum, petitioners raise the following issues:[6]

“1. WHETHER OR NOT THE CLAIM OF THE PNB AGAINST THE PETITIONERS ISALREADY BARRED BY THE EQUITABLE DEFENSE OF LACHES?

“2. WHETHER OR NOT THE RESPECTIVE CONJUGAL PARTNERSHIPS OF THEPETITIONERS COULD BE HELD LIABLE FOR ANY LIABILITY OF THE PETITIONERSUNDER THE SURETY AGREEMENT IN FAVOR OF THE PNB?”









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Under the first issue, petitioners submit four other questions:

“1-a WHETHER OR NOT THE EQUITABLE DEFENSE OF LACHES APPLIESINDEPENDENTLY OF PRESCRIPTION?

“1-b WHETHER OR NOT THE CAUSE OF ACTION OF THE PNB AGAINST THEPETITIONERS ACCRUED ONLY FROM THE TIME OF THE JUDICIAL DEMAND ONAUGUST 30, 1976?

“1-c WHETHER OR NOT THE FOUR (4) WELL-SETTLED ELEMENTS OF LACHESARE PRESENT IN THIS CASE?

“1-d WHETHER OR NOT THE RULING IN THE CASE OF PHILIPPINE NATIONALBANK VS. COURT OF APPEALS, 217 SCRA 347, IS APPLICABLE IN THIS INSTANTCASE?”

In the main, the issue is whether petitioners may raise the defense of laches inorder to avoid their liability under the surety agreement. Preliminarily, we shall alsotake up the question of petitioners’ liability as sureties.

The Court’s Ruling

The appeal is not meritorious.

Preliminary Matter: Liability of Petitioners as Sureties

The present controversy began when the Philippine National Bank (PNB)sought to enforce the Surety Agreement. The pertinent provisions of said

Agreement are as follows:

“WHEREAS, FIL-EASTERN WOOD INDUSTRIES, INC. herein referred to as the

Principal, has obtained and/or desires to obtain certain credits, loans, overdrafts,discounts, etc., from the Creditor, for all of which the Creditor requires security; andthe Surety, on account of valuable consideration received from the Principal, hasagreed and undertake to assist the principal by becoming such Surety.

“NOW THEREFORE, for the purpose above mentioned, the Surety, jointly andseverally with the Principal, hereby guarantees and warrants to the Creditor, itssuccessors or assigns, the prompt payment at maturity of all the notes, drafts, billsof exchange, overdrafts and other obligations of every kind, on which the Principalmay now be indebted or may hereafter become indebted to the Creditor, but theliability of the Surety shall not at any time exceed the sum of TWO MILLION FIVEHUNDRED THOUSAND ONLY (P2,500,000.00) (demand loan of P2,500,000.00),

Philippine Currency, plus the interest thereon at the rate of (___%) per cent perannum, and the cost and expenses of the Creditor incurred in connection with thegranting of the credits, loans, overdrafts, etc., covered by this surety agreement,including those for the custody, maintenance and preservation of the securitiesgiven therefor and also for the collection thereof.

“Both the Principal and the Surety shall be considered in default when they fail topay the obligation upon maturity with or without demand and in such case theSurety agrees to pay to the creditor, its [successors] or assigns, all outstandingobligations of the Principal, whether due or not due and whether held by theCreditor as principal or agent, and it is agreed that a certified statement by theCreditor as to the amount due from the Principal shall be accepted as correct by theSurety without question.

“The Surety expressly waives all rights to demand for payment and notice of non-payment and protest, and agrees that the securities of every kind, that are now andmay hereafter be left with the Creditor, its successors, indorsees or assigns, ascollateral to any evidence of debt or obligations or upon which a lien may existthereon may be withdrawn or surrendered at any time, and the time of paymentthereof extended, without notice to, or consent by the Surety; and that the liabilityon this guaranty shall be solidary, direct and immediate and not contingent uponthe pursuit by the Creditor, its successors, indorsees or assigns, of whateverremedies it or they have against the Principal or the securities or liens it or they

may possess and the Surety will at any time, whether due or not due, pay to theCreditor with or without demand upon the Principal, any obligation or indebtednessof the Principal not in excess of the amount abovementioned.

“This instrument is intended to be a complete and perfect indemnity to the Creditorto the extent above stated, for any indebtedness or liability of any kind owing bythe Principal to the Creditor from time to time, and to be valid and continuouswithout further notice to the Surety, and may be revoked by the Surety at any time,but only after forty-eight hours notice in writing to the Creditor, and such revocationshall not operate to relieve the Surety from responsibility for obligations incurred bythe Principal prior to the termination of such period.” (Emphasis supplied.)

It must be stressed that petitioners, as sureties, boundthemselves solidarily for the obligation of Fil-Eastern to PNB. Petitioners admit thatthey signed the Surety Agreement, but they challenge their liability thereon on the

ground that they were allegedly coerced by their employer into signing thedeed. The argument is too late at best.

As pointed out by the Court of Appeals, petitioners failed to challenge theirconsent to the Agreement within the prescriptive period. Article 1391 of the CivilCode provides that the action to annul a contract vitiated by intimidation, violenceor undue influence shall be filed within four years from the cessation of suchdefects. In this case, Petitioners Agra, Gamo and Novales resigned from Fil-Easternin 1967, 1968 and 1969, respectively. It was only in 1976, when PNB sought toenforce the contract, that they alleged a defect in their consent. By their inaction,their alleged cause of action based on vitiated consent had precribed. There was noquestion that petitioners, in their capacity as sureties, were answerable for the

obligations of Fil-Eastern to PNB.

We shall now go to the main issue of this case: Whether petitioners mayinvoke the defense of laches, considering that PNB’s claim had not yet prescribed.

Main Issue: Laches

Petitioners admit that PNB’s claim, though filed more than seven years fromthe maturity of the obligation, fell within the ten-year prescriptive period. Theyargue, however, that the cause was already barred by laches, which is defined as

“the failure or neglect for an unreasonable or unexplained length of time to do thatwhich by exercising due diligence, could or should have been done earlierwarranting a presumption that he has abandoned his right or declined to assertit.” [7] In arguing that the appellate court erred in rejecting the defense of laches,petitioners cite four reasons: (1) the defense of laches applies independently ofprescription; (2) the cause of action against petitioners accrued from the maturityof the obligation, not from the time of judicial demand; (3) the four well-settled





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elements of laches were duly proven; and (4) PNB v. CA applies in the instantcase. As will be shown below, all these arguments are devoid of merit.

Application of Laches

Assailing the CA ruling that laches was inapplicable because the claim wasbrought within the ten-year prescriptive period, petitioners stress that the defenseof laches differs from and is applied independently of prescription. In support, theycite, among others, Nielson & Co., Inc. v. Lepanto Consolidated Mining Co. ,[8] inwhich the Supreme Court ruled:

“[T]he defense of laches applies independently of prescription. Laches is differentfrom the statute of limitations. Prescription is concerned with the fact of delay,whereas laches is concerned with the effect of delay. Prescription is a matter oftime; laches is principally a question of inequity of permitting a claim to beenforced, this inequity being founded on some change in the condition of theproperty or the relation of the parties. Prescription is statutory; laches isnot. Laches applies in equity; whereas prescription applies at law. Prescription isbased on fixed time, laches is not.”

True, prescription is different from laches, but petitioners’ relianceon Nielson is misplaced. As held in the aforecited case, laches is principally aquestion of equity. Necessarily, “there is no absolute rule as to what constituteslaches or staleness of demand; each case is to be determined according to itsparticular circumstances. The question of laches is addressed to the sound

discretion of the court and since laches is an equitable doctrine, its application iscontrolled by equitable considerations.” [9] Petitioners, however, failed to show thatthe collection suit against herein sureties was inequitable. Remedies in equityaddress only situations tainted with inequity, not those expressly governed bystatutes. Indeed, the petitioners failed to prove the presence of all the fourestablished requisites of laches, viz :

“(1) conduct on the part of the defendant or one under whom he claims, giving riseto the situation of which complaint is made and for which the complainant seeks aremedy;

(2) delay in asserting the complainant’s right, the complainant having ha dknowledge or notice of defendant’s conduct and having been afforded anopportunity to institute a suit;

(3) lack of knowledge or notice on the part of the defendant that the complainant

would assert the right on which he bases his claim; and(4) injury or prejudice to the defendant in the event relief is accorded to thecomplainant, or the suit is not held barred.” [10]

That the first element exists is undisputed. Neither Fil-Eastern nor thesureties, herein petitioners, paid the obligation under the Surety Agreement.

The second element cannot be deemed to exist. Although the collection suitwas filed more than seven years after the obligation of the sureties became due, thelapse was within the prescriptive period for filing an action. In this light, we findimmaterial petitioners’ insistence that the cause of action accrued on December 31,1968, when the obligation became due, and not on August 30, 1976, when the

judicial demand was made. In either case, both submissions fell within the ten-year

prescriptive period. In any event, “the fact of delay, standing alone, is insufficientto constitute laches.” [11]

Petitioners insist that the delay of seven years was unreasonable andunexplained, because demand was not necessary. Again we point that, unlessreasons of inequitable proportions are adduced, a delay within the prescriptive

period is sanctioned by law and is not considered to be a delay that would barrelief. In Chavez v. Bonto-Perez ,[12] the Court reiterated an earlier holding, viz :

“Laches is a doctrine in equity while prescription is based on law. Our courts are

basically courts of law and not courts of equity. Thus, laches cannot be invoked toresist the enforcement of an existing legal right. We have ruled in Arsenal v.Intermediate Appellate Court x x x that it is a long standing principle that equityfollows the law. Courts exercising equity jurisdiction are bound by rules of law andhave no arbitrary discretion to disregard them. In Zabat, Jr. v. Court of Appeals x xx, this Court was more emphatic in upholding the rules of procedure. We saidtherein:

“As for equity, which has been aptly described as ‘justice outside legality,’ this isapplied only in the absence of, and never against, statutory law or, as in this case,

judicial rules of procedure. Aequetas nunquam contravenit legis. This pertinentpositive rules being present here, they should preempt and prevail over all abstractarguments based only on equity.’

“Thus, where the claim was filed within the three-year statutory period, recovery

therefore cannot be barred by laches.” Petitioners also failed to prove the third element of laches. It is absurd to

maintain that petitioners did not know that PNB would assert its right under theSurety Agreement. It is unnatural, if not unheard of, for banks to condone debtswithout adequate recompense in some other form. Petitioners have not given usreason why they assumed that PNB would not enforce the Agreement against them.

Finally, petitioners maintain that the fourth element is present because theywould suffer damage or injury as a result of PNB’s claim. This is the crux of thecontroversy. In addition to the payment of the amount stipulated in the Agreement,other equitable grounds were enumerated by petitioners,viz :

“1. Petitioners acted as sureties under pressure from Felipe ‘Baby’ Ysmael, Jr., theheadman of the Ysmael Group of Companies where the petitioners were allemployed in various executive positions.

2. Petitioners did not receive a single centavo in consideration of their acting assureties.

3. The surety agreement was not really a requisite for the grant of the loan to FIL-EASTERN because the first release on the loan was made on July 17, 1967, or evenbefore the Surety Agreement was executed by petitioners on July 21, 1967.

4. Petitioners were assured that the Surety Agreement was merely a formality, andthey had reason to believe that assurance because the loan was principally securedby an assignment of 15% of the proceeds of the sale of logs of FIL-EASTERN to Iwai& Co., Ltd., and such assignment was clearly stated in PNB Board Resolution No.407. In fact, while it was expressly stated in all of the eight (8) promissory notescovering the releases of the loan that the said loan was secured by 15% of thecontract of sale with Iwai & Co., Ltd., only three (3) promissory notes stated that





















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the loan was also secured by the “joint and several signatures of the officers of thecorporation”. It is to be noted that no mention was even made of the joint andseveral signatures of petitioners as sureties. In other words, the principalsecurity was the assignment of 15% of the contract for the sale of logs to Iwai &Co., Ltd.

5. For reasons not explained by PNB, PNB did not collect the 15% of the proceedsof the sale of the logs to Iwai & Co., Ltd., and such failure resulted in the non-collection of the P2,500,000.00 demand loan, or at least a portion of it.

6. For reasons likewise unexplained by PNB, PNB did not make any demand uponpetitioners to pay the unpaid loan of FIL-EASTERN until after FIL-EASTERN hadbecome bankrupt, and PNB was aware of this fact because it foreclosed the chattelmortgages on the other loans of FIL-EASTERN which were secured by said chattelmortgages.” [13] (Emphasis found in the original.)

These circumstances do not justify the application of laches. Rather, theydisclose petitioners’ failure to understand the language and the nature of the SuretyArrangement. They cannot now argue that the Surety Agreement was merely aformality, secondary to the assignment of 15 percent of the proceeds of the sale ofFil-Eastern’s logs to Iwai and Co., Ltd. Neither can they rely on PNB’s failure tocollect the assigned share in the sale of the logs or to make a demand onpetitioners until after Fil-Eastern had become bankrupt. The Court stresses that theobligation of a surety is direct, primary and absolute. Thus, the Court has held:

“[A]lthough the contract of a surety is in essence secondary only to a valid principalobligation, his liability to the creditor or promisee of the principal is said tobe direct, primary, and absolute; in other words, he is directly and equally boundwith the principal. The surety therefore becomes liable for the debt or duty ofanother although he possesses no direct or personal interest over the obligationsnor does he receive any benefit therefrom.” [14]

When petitioners signed as sureties, they expressly and unequivocally agreedto the stipulation that “the liability on this guaranty shall be solidary, direct andimmediate and not contingent upon the pursuit by the creditor , its successors,indorsees or assigns, of whatever remedies it or they have against the principal orthe securities or liens it or they may possess.”

If they had mistaken the import of the Surety Agreement, they could have

easily asked for its revocation. The Agreement stipulates that it “may be revokedby the Surety at any time, but only after forty-eight hours notice in writing to the

Creditor, and such revocation shall not operate to relieve the Surety fromresponsibility for obligations incurred by the Principal prior to the termination ofsuch period.” This they did not do.

Equally unavailing is petitioners’ allegation that the Surety Agreement was nota requisite for the grant of the loan. Even if their assertion is true, the fact remainsthat they signed the contract and voluntarily bound themselves to be solidarily liablefor the loan amounting to P2,500,000.

The other “equitable” circumstances above enumerated fail to supportpetitioners’ cause. As earlier stated, petitioners are already barred from questioningthe voluntariness of their consent. Furthermore, this Court has categorically ruledthat a surety is liable for the debt of another, although he or she received no benefittherefrom.[15]

Clearly, aside from the fact that the collection suit was filed only after thelapse of seven years from the date the obligation became due and demandable,petitioners failed to adduce any showing of inequity. Hence, the rules on equitycannot protect them.

Applicability of PNB v. CA

Petitioners allege that the CA committed grave error in failing to apply PNB v.Court of Appeals ,[16] which they insist to be analogous to the present case. Thefacts in said case are as follows:

“Private Respondent B.P. Mata & Co. Inc. (Mata), is a private corporation engagedin providing goods and services to shipping companies. Since 1966, it has acted asa manning or crewing agent for several foreign firms, one of which is Star Kistfoods, Inc., USA (Star Kist). As part of their agreement, Mata makes advances forthe crew’s basic personal needs. Subsequently, Mata sends monthly billings to itsforeign principal Star Kist, which in turn reimburses Mata by sending a telegraphictransfer through banks for credit to the latter’s account.

“Against this background, on February 21, 1975, Security Pacific National Bank(SEPAC) of Los Angeles which had an agency arrangement with Philippine NationalBank (PNB), transmitted a cable message to the International Department of PNB topay the amount of US$14,000 to Mata by crediting the latter’s account with theInsular Bank of Asia and America (IBAA), per order of Star Kist. Upon receipt ofthis cabled message on February 24, 1975, PNB’s International Department noticed

an error and sent a service message to SEPAC Bank. The latter replied with theinstructions that the amount of US$14,000 should only be for US$1,400.

“On the basis of the cable message dated February 24, 1975, Cashier’s Check No.269522 in the amount of US$1,400 (P9,772.96) representing reimbursement fromStar Kist, was issued by the Star Kist for the account of Mata on February 25, 1975through the Insular Bank of Asia and America (IBAA).

“However, fourteen days after or on March 11, 1975, PNB effected another paymentthrough Cashier’s Check No. 270271 in the amount of US$14,000 (P97,878.60)purporting to be another transmittal of reimbursement from Star Kist, privaterespondent’s foreign principal.

“Six years later, or more specifically, on May 13, 1981, PNB requested Mata forrefund of US$14,000 (P97,878.60) after it discovered its error in effecting thesecond payment.

“On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000against Mata arguing that based on a constructive trust under Article 1456 of theCivil Code, it has a right to recover the said amount it erroneously credited torespondent Mata.” [17]

On the ground of laches, the Court decided against the claim of PNB, statingthat:

“[i]t is amazing that it took petitioner almost seven years before it discovered that ithad erroneously paid private respondent. Petitioner would attribute its mistake tothe heavy volume of international transactions handled by the Cable and RemittanceDivision of the International Department of PNB. Such specious reasoning is notpersuasive. It is unbelievable for a bank, and a government bank at that, whichregularly publishes its balanced financial statements annually or more frequently, by





















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the quarter, to notice its error only seven years later. As a universal bank withworldwide operations, PNB cannot afford to commit such costlymistakes. Moreover, as between parties where negligence is imputable to one andnot to the other, the former must perforce bear the consequences of itsneglect. Hence, petitioner should bear the cost of its own negligence.”

Petitioners maintain that the delay in PNB v. CA was even shorter than that inthe present case. If the bank in the aforesaid case was negligent in not discoveringthe overpayment, herein petitioners assert that the negligence was even moreculpable in the present case. They add that, given the standard practice of banks toflag delinquent accounts, the inaction for almost seven years of herein respondentbank was gross and inexcusable.

We are not persuaded. There are no absolute rules in the application ofequity, and each case must be examined in the light of its peculiar facts. InPNB v.CA, there was a mistake, an inexcusable one, on the part of petitioner bank inmaking an overpayment and repeating the same error fourteen days later. If thebank could not immediately discover the mistake despite all its agents andemployees, the beneficiary of the amount could not be expected to do so. It is,thus, inequitable to allow PNB to collect the amount, after such a long delay, fromthe beneficiary who had assumed, after all those years, that the amount reallybelonged to it.

In the present case, there is no showing of any mistake or any inequity. Thefact alone that seven years had lapsed before PNB filed the collection suit does not

mean that it discovered the obligation of the sureties only then. There was a SuretyArrangement, and the law says that the said contract can be enforced by actionwithin ten years. The bank and the sureties all knew that the action to enforce thecontract did not have to be filed immediately. In other words, the bank committedno mistake or inequitable conduct that needed correction, and the sureties had nomisconception about their liabilities under the contract.

Clearly, petitioners have no recourse in equity, because they failed to showany inequity on the part of PNB.

Additional Issue: Liability of Conjugal Assets

In their Memorandum, petitioners belatedly ask the Court to rule that, in caseof a court ruling adverse to them, the conjugal properties would not be liable for the

husbands’ debts that did not redound to the benefit of the conjugal partnership.[18]

This issue cannot be allowed, for it is being raised for the first time only inpetitioners’ Memorandum. Issues, arguments, theories and causes of action notraised below may no longer be posed on appeal.[19] Furthermore, petitioners areasking the Court to issue a ruling on a hypothetical situation. In effect, they areasking the Court to render an advisory opinion, a task which is beyond itsconstitutional mandate.

WHEREFORE, the petition is hereby DENIED and the assailed Decision of theCourt of Appeals is AFFIRMED. Costs against petitioners. SO ORDERED.

EN BANC

G.R. No. L-23072 November 29, 1968

SIMEON B. MIGUEL, ET AL., plaintiffs-appellants, vs FLORENDOCATALINO, defendant-appellee.

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

Direct appeal from the judgment in Civil Case No. 1090 of the Court of FirstInstance of Baguio, dismissing the plaintiffs' complaint for recovery of possession ofa parcel of land, registered under Act 496, in the name of one Bacaquio, 1 a long-deceased illiterate non-Christian resident of Mountain Province, and declaring thedefendant to be the true owner thereof.

On January 22, 1962, appellants Simeon, Emilia and Marcelina Miguel, andappellant Grace Ventura brought suit in the Court below against Florendo Catalinofor the recovery of the land above-described, plaintiffs claiming to be the childrenand heirs of the original registered owner, and averred that defendant, without theirknowledge or consent, had unlawfully taken possession of the land, gathered itsproduce and unlawfully excluded plaintiffs therefrom. Defendant answered pleadingownership and adverse possession for 30 years, and counterclaimed for attorney'sfees. After trial the Court dismissed the complaint, declared defendant to be therightful owner, and ordered the Register of Deeds to issue a transfer certificate inlieu of the original. Plaintiffs appealed directly to this Court, assailing the trialCourt's findings of fact and law.

As found by the trial Court, the land in dispute is situated in the Barrio of SanPascual, Municipality of Tuba, Benguet, Mountain Province and contains an area of

39,446 square meters, more or less. It is covered by Original Certificate of Title No.31, which was issued on 28 December 1927 in the name of Bacaquio (or Bakakew),a widower. No encumbrance or sale has ever been annotated in the certificate oftitle.

The plaintiff-appellant Grace Ventura2 is the only child of Bacaquio by his first wife,Debsay, and the other plaintiffs-appellants, Simeon, Emilia and Marcelina, allsurnamed "Miguel", are his children by his third wife, Cosamang. He begot no issuewith his second wife, Dobaney. The three successive wives have all died.

Bacaquio, who died in 1943, acquired the land when his second wife died and sold itto Catalino Agyapao, father of the defendant Florendo Catalino, for P300.00 in1928. Of the purchase price P100.00 was paid and receipted for when the land wassurveyed, but the receipt was lost; the balance was paid after the certificate of title

was issued. No formal deed of sale was executed, but since the sale in 1928, or formore than 30 years, vendee Catalino Agyapao and his son, defendant-appellee

Florendo Catalino, had been in possession of the land, in the concept of owner,paying the taxes thereon and introducing improvements.

On 1 February 1949, Grace Ventura, by herself alone, "sold" (as per herTransferor's Affidavit, Exhibit "6") anew the same land for P300.00 to defendantFlorendo Catalino.

In 1961, Catalino Agyapao in turn sold the land to his son, the defendant FlorendoCatalino.

This being a direct appeal from the trial court, where the value of the propertyinvolved does not exceed P200,000.00, only the issues of law are reviewable by theSupreme Court, the findings of fact of the court a quobeing deemed conceded bythe appellant (Jacinto v. Jacinto, 105 Phil. 1218; Del Castillo v. Guerro, L-11994, 25









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July 1960; Abuyo, et al. v. De Suazo, L-21202, 29 Oct. 1966; 18 SCRA 600, 601).We are thus constrained to discard appellant's second and third assignments oferror.

In their first assignment, appellants assail the admission in evidence over theobjection of the appellant of Exhibit "3". This exhibit is a decision in favor of the

defendant-appellee against herein plaintiff-appellant Grace Ventura, by the councilof Barrio of San Pascual, Tuba, Benguet, in its Administrative Case No. 4, for thesettlement of ownership and possession of the land. The decision is ultravires because barrio councils, which are not courts, have no judicial powers (Sec. 1,Art. VIII, Constitution; see Sec. 12, Rep. Act 2370, otherwise known as the BarrioCharter). Therefore, as contended by appellants, the exhibit is not admissible in a

judicial proceeding as evidence for ascertaining the truth respecting the fact ofownership and possession (Sec. 1, Rule 128, Rules of Court).

Appellants are likewise correct in claiming that the sale of the land in 1928 byBacaquio to Catalino Agyapao, defendant's father, is null and void ab initio, for lackof executive approval (Mangayao et al. vs. Lasud, et al., L-19252, 29 May 1964).However, it is not the provisions of the Public Land Act (particularly Section 118 ofAct 2874 and Section 120 of Commonwealth Act 141) that nullify the transaction,for the reason that there is no finding, and the contending parties have not shown,that the land titled in the name of Bacaquio was acquired from the public domain(Palad vs. Saito, 55 Phil. 831). The laws applicable to the said sale are: Section145(b) of the Administrative Code of Mindanao and Sulu, providing that no

conveyance or encumbrance of real property shall be made in that department byany non-christian inhabitant of the same, unless, among other requirements, thedeed shall bear indorsed upon it the approval of the provincial governor or hisrepresentative duly authorized in writing for the purpose; Section 146 of the sameCode, declaring that every contract or agreement made in violation of Section 145"shall be null and void"; and Act 2798, as amended by Act 2913, extending theapplication of the above provisions to Mountain Province and Nueva Vizcaya.

Since the 1928 sale is technically invalid, Bacaquio remained, in law, the owner ofthe land until his death in 1943, when his title passed on, by the law on succession,to his heirs, the plaintiffs-appellants.

Notwithstanding the errors aforementioned in the appealed decision, we are of theopinion that the judgment in favor of defendant-appellee Florendo Catalino must besustained. For despite the invalidity of his sale to Catalino Agyapao, father ofdefendant-appellee, the vendor Bacaquio suffered the latter to enter, possess and

enjoy the land in question without protest, from 1928 to 1943, when the seller died;and the appellants, in turn, while succeeding the deceased, also remained inactive,without taking any step to reivindicate the lot from 1944 to 1962, when the presentsuit was commenced in court. Even granting appellants' proposition that noprescription lies against their father's recorded title, their passivity and inaction formore than 34 years (1928-1962) justifies the defendant-appellee in setting up theequitable defense of laches in his own behalf. As a result, the action of plaintiffs-

appellants must be considered barred and the Court below correctly so held. Courtscan not look with favor at parties who, by their silence, delay and inaction,knowingly induce another to spend time, effort and expense in cultivating the land,paying taxes and making improvements thereon for 30 long years, only to springfrom ambush and claim title when the possessor's efforts and the rise of land valuesoffer an opportunity to make easy profit at his expense. In Mejia de Lucas vs.

Gamponia, 100 Phil. 277, 281, this Court laid down a rule that is here squarelyapplicable:

Upon a careful consideration of the facts and circumstances, we areconstrained to find, however, that while no legal defense to the action lies,an equitable one lies in favor of the defendant and that is, the equitable

defense of laches. We hold that the defense of prescription or adversepossession in derogation of the title of the registered owner Domingo Mejiadoes not lie, but that of the equitable defense of laches. Otherwise stated,we hold that while defendant may not be considered as having acquiredtitle by virtue of his and his predecessors' long continued possession for 37years, the original owner's right to recover back the possession of theproperty and title thereto from the defendant has, by the long period of 37years and by patentee's inaction and neglect, been converted into a staledemand.

As in the Gamponia case, the four elements of laches are present in the case at bar,namely: (a) conduct on the part of the defendant, or of one under whom he claims,giving rise to the situation of which complaint is made and for which the complaintseeks a remedy; (b) delay in asserting the complainant's rights, the complainanthaving had knowledge or notice, of the defendant's conduct and having beenafforded an opportunity to institute a suit; (c) lack of knowledge or notice on thepart of the defendant that the complainant would assert the right on which he baseshis suit; and (d) injury or prejudice to the defendant in the event relief is accorded

to the complainant, or the suit is not held to be barred. In the case at bar, Bacaquiosold the land in 1928 but the sale is void for lack of the governor's approval. Thevendor, and also his heirs after him, could have instituted an action to annul thesale from that time, since they knew of the invalidity of the sale, which is a matterof law; they did not have to wait for 34 years to institute suit. The defendant wasmade to feel secure in the belief that no action would be filed against him by suchpassivity, and also because he "bought" again the land in 1949 from Grace Venturawho alone tried to question his ownership; so that the defendant will be plainlyprejudiced in the event the present action is not held to be barred.

The difference between prescription and laches was elaborated in Nielsen & Co., Inc.vs. Lepanto Consolidated Mining Co., L-21601, 17 December 1966, 18 SCRA p.

1040, as follows:

Appellee is correct in its contention that the defense of laches appliesindependently of prescription. Laches is different from the statute of

limitations. Prescription is concerned with the fact of delay, whereas lachesis concerned with the effect of delay. Prescription is a matter of time;laches is principally a question of inequity of permitting a claim to beenforced, this inequity being founded on some change in the condition ofthe property or the relation of the parties. Prescription is statutory; lachesis not. Laches applies in equity, whereas prescription applies at law.Prescription is based on fixed time laches is not, (30 C.J.S., p. 522. Seealso Pomeroy's Equity Jurisprudence, Vol. 2, 5th ed., p. 177) (18 SCRA1053).

With reference to appellant Grace Ventura, it is well to remark that her situation iseven worse than that of her co-heirs and co-plaintiffs, in view of her executing anaffidavit of transfer (Exh. 6) attesting under oath to her having sold the land in

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controversy to herein defendant-appellee, and the lower Court's finding that in 1949she was paid P300.00 for it, because she, "being a smart woman of enterprise,threatened to cause trouble if the defendant failed to give her P300.00 more,because her stand (of being the owner of the land) was buttressed by the fact thatOriginal Certificate of Title No. 31 is still in the name of her father, Bacaquio"(Decision, Record on Appeal, p. 24). This sale, that was in fact a quitclaim, may notbe contested as needing executive approval; for it has not been shown that GraceVentura is a non-christian inhabitant like her father, an essential fact that cannot beassumed (Sale de Porkan vs. Yatco, 70 Phil. 161, 175).

Since the plaintiffs-appellants are barred from recovery, their divestiture of all theelements of ownership in the land is complete; and the Court a quo was justified inordering that Bacaquio's original certificate be cancelled, and a new transfercertificate in the name of Florendo Catalino be issued in lieu thereof by the Registerof Deeds.

FOR THE FOREGOING REASONS, the appealed decision is hereby affirmed, withcosts against the plaintiffs-appellants.

THIRD DIVISION

HEIRS OF MARCELINAARZADON-CRISOLOGO,represented by Leticia C. delRosario, MAURICIA ARZADON

and BERNARDO ARZADON, Vs.

AGRIFINA RAÑON, substitutedby SUZIMA RAÑON-DUTERTEand OTHELO RAÑON,

G.R. No. 171068

Promulgated:

September 5, 2007

CHICO-NAZARIO, J .:

This is a Petition for Certiorari under Rule 45 of the Rules of Court of theDecision[1] and Resolution[2] of the Court of Appeals in CA-G.R. SP No. 72552, dated10 November 2005 and 12 January 2006, respectively, which affirmed in toto theDecision[3] dated 8 August 2002 of the Regional Trial Court (RTC) of Batac, IlocosNorte, Branch 18, in Civil Case No. 3875-18. The RTC reversed the 11 December2001 Decision[4] of the Municipal Circuit Trial Court (MCTC) of Badoc-Pinili, Badoc,Ilocos Norte, in Civil Case No. 141-B.

Records show that on 18 October 1995, Agrifina Rañon [5] filed aComplaint[6] against spouses Conrado and Mila Montemayor (spouses Montemayor)with the MCTC of Badoc, Ilocos Norte, claiming ownership over an unregisteredresidential lot (subject property) situated at Brgy. No. 2 Badoc, Ilocos Norte,covered by Tax Declaration No. 420809, more particularly described as follows:

“RESIDENTIAL with an area of 472 sq. ms. (sic) Bounded on theNorth by Ladera St.; on the East by Dionisio Ladera; on the Southby Buenaventura Arzadon; and on the West by Rafael Ladera;Assessed at P1700.00 under Tax Dec. No. 420809.” [7]

According to Agrifina Rañon, her family had enjoyed continuous, peacefuland uninterrupted possession and ownership over the subject property since 1962,

and had religiously paid the taxes thereon. They had built a house on the subjectproperty where she and her family had resided. Unfortunately, in 1986, when herfamily was already residing in Metro Manila, fire razed and destroyed the saidhouse. Nonetheless, they continued to visit the subject property, as well as pay thereal estate taxes thereon. However, in August of 1986, her daughter, Zosie Rañon,discovered that the subject property was already in the name of the spousesMontemayor under Tax Declaration No. 0010563 which was purportedly issued intheir favor by virtue of an Affidavit of Ownership and Possession which the spousesMontemayor executed themselves. The Affidavit was alleged to have created a cloud

of doubt over Rañon’s title and ownership over the subject property.

Hence, Agrifina Rañon sought a Writ of Preliminary Injunction[8] against thespouses Montemayor commanding them to cease and desist from further exercisingany right of ownership or possession over the subject property. She further prayedthat she be finally declared the true and lawful owner of the subject property.

The spouses Montemayor, for their part, alleged that they acquired thesubject lot by purchase from Leticia del Rosario and Bernardo Arzadon who are theheirs of its previous owners for a consideration of P100,000.00.[9]

On 22 July 1996, the Heirs of Marcelina Arzadon-Crisologo, (represented byLeticia A. Crisologo del Rosario), Mauricia Arzadon, and Bernardo Arzadon(petitioners) filed an Answer in Intervention[10] claiming, inter alia, that they arethe rightful owners of the subject property, having acquired the same from theirpredecessors-in-interest. They averred that there existed no liens or encumbrances

on the subject property in favor of Agrifina Rañon; and that no person, other thanthey and the spouses Montemayor, has an interest in the property as owner orotherwise.

Per petitioners’ allegations, their predecessors-in-interest, spouses Timoteoand Modesta Alcantara (spouses Alcantara) bought the subject property from itsowner, Rafael Ladera, on 2 May 1936. The spouses Alcantara then built a house ofstrong materials on the subject property which served as their conjugalhome. Residing with them was Timoteo Alcantara’s sister, Augustina Alcantara -Arzadon. As the spouses Alcantara died without issue, their properties were left toTimoteo Alcantara’s nearest of kin, Augustina Alcantara -Arzadon and TiburcioAlcantara, sister and brother, respectively, of Timoteo Alcantara. Tiburcio Alcantaraalso died without any known heir; thus, leaving the subject property in AugustinaAlcantara-Arzadon’s sole favor. Augustina Alcantara-Arzadon is the mother ofpetitioners Marcelina Arzadon-Crisologo (now deceased and whose heirs are

represented by Leticia del Rosario) and Mauricia Arzadon. Bernardo Arzadon is theson of Mauricia Arzadon.

Petitioners asseverated further that Bernardo Arzadon had lived in thehouse constructed on the subject property until 1985 when it was gutted by fire. Tofurther support their claims, petitioners averred that they had religiously paid thereal estate taxes on the subject property. Finally, by way of a counterclaim,petitioners sought compensation for the damages which they allegedly suffered byreason of the baseless filing of the instant suit.

On 22 October 1999, the MCTC issued an Order[11] dropping the name ofthe spouses Montemayor from the caption of the case on the ground that sometimein 1996, Leticia del Rosario and Bernardo Arzadon had repurchased the subjectproperty from the spouses Montemayor for the consideration of P100,000.00. As a

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result, the spouses Montemayor had no more interest or claim whatsoever on theproperty in litigation.

On 11 December 2001, the MCTC rendered a Decision in favor of thepetitioners. The decretal portion thereof reads, thus:

WHEREFORE, in view of all the foregoing, judgment is herebyrendered:

1. Declaring the [petitioners] to be the true and lawfulowners of one-half (1/2) portion of the undivided wholeof the lot-in-suit by mode of succession pursuant to[A]rticle 1001 of the [C]ivil [C]ode of the Philippines;

2. Declaring the [petitioners] to have the better rightover the other half of the undivided whole of the lot-in-suit by mode of prescription pursuant to [A]rticle 1137 ofthe Civil Code of the Philippines;

3. Dismissing the counter-claim of the [petitioners]

against the [respondents];

4. Ordering [petitioners] to pay the cost of the suit. [12]

First, the MCTC ruled that while the adverse claims of Agrifina Rañon onthe subject lot against the spouses Alcantara may have started in 1962, thisadverse possession was interrupted in the year 1977 due to the filing of an adverse

claim by petitioner Marcelina Arzadon-Crisologo with the Office of the Assessor. In1977, the tax declaration in the name of Valentin Rañon, Agrifina Rañon’s husband,was cancelled and a new tax declaration was issued in Marcelina Arzadon-Crisologo’s name. The MCTC said that the period of possession of the spousesRañon in the concept of an owner from 1962 to 1977 did not ripen into ownershipbecause their occupation was in bad faith. The Civil Code requires, for acquisitiveprescription of real property, 30 years of uninterrupted possession if the same iswanting in good faith and without a just title.

Second, the MCTC held that by virtue of succession, petitioners are entitledto one-half of the subject property. This is because according to Article 1001[13] ofthe Civil Code, should brothers and sisters or their children survive with the widowor the widower (who are without issue), the latter shall be entitled to one-half of theinheritance and the brothers and sisters or their children to the other half. Thespouses Alcantara died without issue. As between Timoteo Alcantara and Modesta

Alcantara, the former predeceased the latter. Timoteo Alcantara was survived by(1) his brother Tiburcio Alcantara, who also died without any known heir; and (2)his sister Augustina Alcantara. Thus, following the death of the spouses Alcantara,only the children of Augustina Alcantara, namely Marcelina Arzadon-Crisologo andMauricia Arzadon, stand to inherit Timoteo Alcantara’s share in the subject property.

Moreover, the MCTC declared that for the part of Modesta Alcantara, therewas no legal heir who claimed the other half of the property which she [14] inheritedfrom her husband, Timoteo Alcantara who predeceased her. On this portion, theMCTC held that petitioners exercised rights of ownership and dominion over thesame by periodically visiting the lot and cleaning it.[15] It also held that from 31August 1977, when petitioners’ predecessor-in-interest Marcelina Arzadon-Crisologofiled an adverse claim for herself and for her brothers and sisters which led to the

issuance of Tax Declaration No. 44120 in her name, to 11 December 2001,[16] thereis a total of 33 years, three months and 10 days which is sufficient to claimownership over the subject property by adverse possession under Article 1137[17] ofthe Civil Code.

On appeal, the RTC reversed and set aside the Decision of the MCTC.

The RTC declared that the respondent Rañons who are heirs of the originalplaintiff had acquired the subject property by virtue of acquisitive prescription, andtherefore adjudged respondents to be the absolute owners thereof; thus, in the 8

August 2002Decision of the RTC, it held:

WHEREFORE, in view of the foregoing, the Decision of thetrial [c]ourt is hereby REVERSED and SET ASIDE, and judgment ishereby rendered:

1) Declaring the [respondents] as the absolute owners of theparcel of land in suit, having acquired the same throughextraordinary acquisitive prescription.

No costs.[18]

In its findings, the RTC declared that a more circumspect scrutiny of theevidence showed that for a long time from the death of the spouses Alcantara, noone adjudicated the subject property unto themselves. Although petitioners andtheir predecessors-in-interest claimed to have successional rights over the subject

property, they did not take action to have the same adjudicated to themselves or,at least, to have the same declared for taxation purposes. The RTC ruled thatpetitioners had slept on their rights. On the part of the respondent Rañons, in1962, Valentin Rañon, respondents’ father, declared the subject propert y in hisname for taxation purposes and paid the corresponding taxes thereon. In the yearsthat followed, his wife, Agrifina Rañon, declared the same in her name for taxationpurposes, as well as paid the real estate taxes on the subject property. In 1977,the latter even mortgaged the subject property with the Philippine National Bank. Itwas only in 1977 when petitioners’ predecessor-in-interest Marcelina Arzadon-Crisologo executed an Adverse Claim and Notice of Ownership and declared thesubject property in her name and paid its taxes.

The RTC elucidated in this wise, to wit:

It bears to note that since the death of Timoteo Alcantarauntil the year 1977, [petitioners], as well as their predecessors-in-

interests (sic) had not taken any concrete step in exercising theirsupposed successional rights over the parcel of land in suit, or atleast, the Intervenors should have always [stayed] on their guardor especially vigilant against anyone who would secure a claim tothe said parcel of land, more so that Valentin Rañon and plaintiffAgrifina Rañon were then living with them. It is very unfortunatethat it was only in 1977 that the Intervenors made known toothers of their supposed successional rights over the parcel ofland in suit. Relief is denied to a claimant whose right hasbecome stale for a long time, considering that some other personslike [respondents] had wayback (sic) taken the necessary actionin claiming the parcel of land in suit. It is the vigilant and not the























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sleepy that is being assisted by the laws. (Ledita Burce Jacob v.Court of Appeals, et al ., G.R. No. 92159, July 1, 1993).

It stands to reason, therefore, to hold that because of theclaim of the [respondents] to have acquired the parcel of land insuit by acquisitive prescription, the Intervenors who belatedly

claimed to be the legal and compulsory heirs of the late TimoteoAlcantara, as ruled by the trial court, had regrettably forfeitedtheir such (sic) successional rights, simply due to their inactionfor a long period of time. Hence, contrary to the findings of thetrial court, the [petitioners] are not entitled to the one-half (1/2)portion of the parcel of land in suit .[19]

Likewise, the RTC reasoned that the Notice of Adverse Claim executed bypetitioners’ predecessor-in-interest Marcelina Arzadon-Crisologo against the Rañonsin 1977 implied that respondents have been in possession of the subjectproperty. On this matter, the RTC said, viz :

Evidently, the trial court considered by implication that theexecution by Marcelina Arzadon Crisologo of said Adverse Claimand Notice of Ownership in 1977 to have interrupted the runningof the prescriptive period on the possession by the [respondents]of the parcel of land in suit. It bears to stress on (sic) this point,that the Adverse Claim and Notice of Ownership executed byMarcelina Arzadon Crisologo is nothing but a notice of a claim

adverse to the [respondents]. By its nature, its implication is thatthe [respondents] have been in possession of the parcel of land insuit in some concept. But definitely, said Adverse Claim does not,upon its execution, operate to toll or interrupt the running of theprescriptive period because there is a necessity to determine thevalidity of the same. And this could only be done by the filing ofthe necessary action in court such [as] contemplated in theprovisions of Article 1123 of the Civil Code. It is only on (sic) suchinstance that the prescriptive period should be deemedinterrupted. And undisputedly, nothing had been done by theIntervenors after the execution of said Adverse Claim by Marcelina

Crisologo, except of course as they claimed, and as held by thetrial court, they started to possess the parcel of land insuit. Regretably (sic), however, such possession by the

Intervenors of the parcel of land in suit does not benefit them forpurposes of prescription.[20]

The RTC also declared that the Rañons have been in possession of the parcelof land in the concept of an owner since 1962. Even as they had gone to livein Manila following the burning of the house on the subject property, they continuedto exercise acts of dominion over the same by visiting and looking after theproperty. The RTC also considered in favor of the respondents, the admission of

petitioner Bernardo Arzadon and the petitioners’ witnesses that Valentin Rañon andAgrifina Rañon had been staying in the house on the subject lot since 1947, whichshows that they had been in possession of the subject property for a period of morethan 50 years.

On review before the Court of Appeals, the Decision of the RTC wasaffirmed in toto.

The Court of Appeals held that when Valentin Rañon executed the affidavitdeclaring himself to be the true and lawful owner of the subject property in 1962,the same was a repudiation of petitioners’ legal title over it. The repudiation,

coupled with the payment of realty taxes, was made with the knowledge ofpetitioners, who failed to act against it. Thus, from 1962 up to the filing of theaction in 1995, respondents continued to adversely occupy the property. In theassailed 10 November 2005 Decision of the Court of Appeals, it ruled:

Moreover, respondents’ payment of realty taxes madewith the knowledge and consent of petitioners and wentunchallenged for a number of years, indubitably show theirpositive claim as owners of the property. While it is true that bythemselves tax receipts and declarations of ownership for taxationpurposes are not incontrovertible evidence of ownership, theybecome strong evidence of ownership acquired by prescriptionwhen accompanied by proof of actual possession of theproperty. It is only where payment of taxes is accompanied byactual possession of the land covered by the tax declaration thatsuch circumstance may be material in supporting a claim ofownership.

Needless to state, from 1962 onwards, prescription begun

to run against petitioners and was not in any way interrupted fromtheir mere execution of the Notice of Adverse Claim since thenotice of adverse claim cannot take the place of judicial summonswhich produces the civil interruption provided for under thelaw. And even if We are to eliminate the question of good faith indetermining the prescriptive period, evidence are (sic) stillabundant to substantiate respondents’ thirty years of possessionin the concept of owner commencing from 1962 until 1995 whenthe complaint below was filed.[21]

Petitioners filed a Motion for Reconsideration thereon which was denied bythe Court of Appeals in the following manner, to wit:

After a careful study of the grounds relied upon bypetitioners We find no new matters raised to justify a modification

much less, a reversal of the Decision sought to bereconsidered. To reiterate, even assuming ex gratiaargumenti that petitioner merely tolerated the Rañons (sic)occupancy of the subject property, it must be stressed that theexecution in 1962 of Valentin Rañon’s Affidavit, the correspondingpayment of realty taxes and other acts of dominion which wentunchallenged by the petitioners, had effectively severed theiralleged juridical relation. Suffice it to state that these acts, takenas a whole, vest upon the Rañons the right to claim ownershipover the subject property irrespective of whether the nature oftheir occupation was rooted from the mere tolerance of theArzadons or from a bona fide sale between Agrifina Rañon andRafael Ladera.[22]

















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Hence, the instant Petition.

The primordial issue in the case at bar is whether the Court of Appealserred in declaring that respondents had acquired ownership over the subjectproperty through uninterrupted and adverse possession thereof for thirty years,without need of title or of good faith. Petitioners dispute the findings of the Court of

Appeals and the RTC in declaring that acquisitive prescription has set in againstthem and in favor of the respondents. They claim that the evidence does notsupport respondents’ contention that they have been in public, notorious, anduninterrupted possession over the subject property in the concept of an owner since1962 as alleged in their Complaint. Instead, petitioners rely on the finding of theMCTC that respondents were not able to prove their adverse claim for anuninterrupted period of thirty years.

At this juncture, we take an opportune look at the applicable rules on theacquisition of ownership through prescription.

Prescription is another mode of acquiring ownership and other real rightsover immovable property.[23] It is concerned with lapse of time in the manner andunder conditions laid down by law, namely, that the possession should be in theconcept of an owner, public, peaceful, uninterrupted and adverse.[24] Possession isopen when it is patent, visible, apparent, notorious and not clandestine .[25] It iscontinuous when uninterrupted, unbroken and not intermittent oroccasional;[26] exclusive when the adverse possessor can show exclusive dominionover the land and an appropriation of it to his own use and benefit ;[27] and notorious

when it is so conspicuous that it is generally known and talked of by the public orthe people in the neighborhood.[28] The party who asserts ownership by adversepossession must prove the presence of the essential elements of acquisitiveprescription.

Article 1117 of the Civil Code is instructive:

Art. 1117. Acquisitive prescription of dominion and otherreal rights may be ordinary or extraordinary.

Articles 1134 and 1137 of the Civil Code fix the periods ofpossession,[29] which provide:

Art. 1134. Ownership and other real rights overimmovable property are acquired by ordinary prescription throughpossession of ten years.

Art. 1137. Ownership and other real rights overimmovables also prescribe through uninterrupted adversepossession thereof for thirty years, without need of title or of goodfaith.

From the foregoing, it can be gleaned that acquisitive prescription of realrights may be ordinary or extraordinary.[30] Ordinary acquisitive prescriptionrequires possession of things in good faith and with just title for the time fixed bylaw; without good faith and just title, acquisitive prescription can only beextraordinary in character.[31] Regarding real or immovable property, ordinaryacquisitive prescription requires a period of possession of ten years, whileextraordinary acquisitive prescription requires an uninterrupted adverse possessionof thirty years.[32]

Were respondents able to sufficiently satisfy the legal requirements to proveprescription?

To recapitulate, respondents traced their claim of ownership from the year1962 until the filing of their Complaint for Ownership before the MCTC on 18October 1995. To support their possession, they rely on an Affidavit executed on 19

October 1962 by Valentin Rañon claiming ownership over the subject property byvirtue of an alleged sale. The MCTC, the RTC and the Court of Appeals wereunanimous in declaring that the execution by Valentin Rañon of the Affidavit in 1962was an express repudiation of petitioners’ claim over the property. By virtue ofsuch Affidavit, respondents were able to cancel Tax Declaration No. 02853 in thename of petitioners’ predecessor-in-interest Timoteo Alcantara who was shown tohave paid taxes on the subject property in 1950. Hence, in 1962, Tax DeclarationNo. 033062 was issued in the name of Valentin Rañon. The same was subsequentlycancelled by Tax Declaration No. 033106, which was in the name of his wife,Agrifina Rañon. The same was likewise cancelled in 1967 by Tax Declaration No.420809, similarly under the name of Agrifina Rañon. In 1977, however, petitioners’predecessor-in-interest Marcelina Arzadon-Crisologo filed an Adverse Claim and aNotice of Ownership claiming that the subject property which is not yet registered inthe Office of the Register of Deeds of Laoag City is declared under Tax DeclarationNo. 420809 in the name of Valentin Rañon for taxation purposes only; but that theyhave been in possession of the said land publicly, peacefully and continuouslywithout any intervention or interruption for more than 15 years.

However, a question must be asked: did the Notice of Adverse Claim filedby petitioners constitute an effective interruption since 1962 of respondents’possession of the subject property?

The answer is in the negative.

Article 1123[33] of the Civil Code is categorical. Civil interruption is producedby judicial summons to the possessor. Moreover, even with the presence of judicialsummons, Article 1124[34] sets limitations as to when such summons shall not bedeemed to have been issued and shall not give rise to interruption, to wit: 1) if itshould be void for lack of legal solemnities; 2) if the plaintiff should desist from thecomplaint or should allow the proceedings to lapse; or 3) if the possessor should beabsolved from the complaint.

Both Article 1123 and Article 1124 of the Civil Code underscore the judicialcharacter of civil interruption. For civil interruption to take place, the possessor

must have received judicial summons. None appears in the case at bar. The Noticeof Adverse Claim which was filed by petitioners in 1977 is nothing more than anotice of claim which did not effectively interrupt respondents’ possession. Such anotice could not have produced civil interruption. We agree in the conclusion of theRTC, which was affirmed by the Court of Appeals, that the execution of the Notice ofAdverse Claim in 1977 did not toll or interrupt the running of the prescriptive periodbecause there remains, as yet, a necessity for a judicial determination of its judicialvalidity. What existed was merely a notice. There was no compliance with Article1123 of the Civil Code. What is striking is that no action was, in fact, filed bypetitioners against respondents. As a consequence, no judicial summons wasreceived by respondents. As aptly held by the Court of Appeals in its affirmance ofthe RTC’s ruling, the Notice of Adverse Claim cannot take the place of judicialsummons which produces the civil interruption provided for under the law.[35] In the





















































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instant case, petitioners were not able to interrupt respondents’ adverse posses sionsince 1962. The period of acquisitive prescription from 1962 continued to run inrespondents’ favor despite the Notice of Adverse Claim.

From another angle, we find that, quite clearly, questions of fact existbefore us. There is a question of fact when the doubt or difference arises as to the

truth or falsehood of facts or when the query invites calibration of the wholeevidence considering mainly the credibility of the witnesses, the existence andrelevancy of specific surrounding circumstances as well as their relation to eachother and to the whole, and the probability of the situation .[36]

Thus, we find proper the application of the doctrine that findings of facts ofthe Court of Appeals upholding those of the trial court are binding upon thisCourt.[37] Even though the rule is subject to exceptions,[38] we do not find themapplicable in the instant case.

As found by the RTC and affirmed by the Court of Appeals, nothing wasdone by petitioners to claim possession over the subject property from the timetheir predecessors-in-interest had lost possession of the property due to theirdeaths. Plainly, petitioners slept on their rights. Vigilantibus sed non dormientibus jura subveniunt. The law comes to the succor only to aid the vigilant, not thosewho slumber on their rights. It was only in 1977 when they attempted to call theattention of respondents, which as earlier discussed, did not even operate as aninterruption on the latter’s possession. The RTC and the Court of Appeals held thatfrom 1962 to the time they filed their Complaint before the MCTC and until the

present time, respondents occupied without interruption the subject property in theconcept of an owner, thereby acquiring ownership via extraordinary acquisitiveprescription. To reiterate, the RTC’s factual findings based on the evidence onrecord were manifestly in favor of respondents, to wit:

Thus, by preponderance of evidence, it has beenestablished preponderantly that the [respondents] have been inpossession of the parcel of land in suit continuously, peacefully,publicly, notoriously, uninterrupted and in the concept of an ownersince 1962 to the present. The fact that the [respondents] havegone to live in Manila right after the house built in the parcel ofland in suit was burned in 1988, they, however, then andthereafter intermittently come to Badoc, Ilocos Norte purposely tolook after and to visit the parcel of land in suit. Actual possessionof land consists in the manifestation of acts of dominion over it of

such a nature as a party would naturally exercise over his ownproperty. One needs (sic) not to (sic) stay on it. The actsexercised by the [respondents] over the parcel of land in suit areconsistent with ownership. Possession in the eyes of the law doesnot mean that a man has to have his feet on every square meterof the ground before it can be said that he is in possession[thereof]. (Ramos v. Director of Lands, 39 Phil. 175, cited in the

case of Somodio v. Court of Appeals, et al ., 235 SCRA 307). It issufficient that the [respondents] were able to subject the parcel ofland to the action of their will.

Furthermore, the Court finds it (sic) significant thetestimonies of [petitioner] Bernardo Arzadon and his witnesses

Leonila Arzadon and Elpidio Evangelista who categorically testifiedto the effect that Valentin Rañon and [respondent] Agrifina Rañonhad been staying in the house standing on the parcel of land insuit since 1947. Basically, the defendants are bound by theiradmissions and also bound by the testimonies of the witnessesthey presented. And going along with their respectivetestimonies, from 1947 to 1977 or for [a] period of thirty (30)years the [respondents] have been in possession of the parcel ofland in suit enough to invoke extraordinary acquisitive

prescription, pursuant to the provisions of Article 1134[39]

(sic) ofthe New (sic) Civil Code. However, as earlier stated, the[respondents], contrary to the claim of the [petitioners] andfindings of the trial court, have been in possession of the parcel ofland in suit continuously and uninterrupted from 1962 to thepresent but because of the admissions of the [petitioners], the[respondents] have been in possession of the same from 1947 tothe present or for more than fifty (50) years now.[40]

The open, continuous, exclusive and notorious possession by respondentsof the subject property for a period of more than 30 years in repudiation ofpetitioners’ ownership had been established. During such length of time,respondents had exercised acts of dominion over the subject property, and paidtaxes in their name. Jurisprudence is clear that although tax declarations or realtytax payments of property are not conclusive evidence of ownership, nevertheless,

they are good indicia of possession in the concept of owner for no one in his rightmind would be paying taxes for a property that is not in his actual or at leastconstructive possession.[41] They constitute at least proof that the holder has aclaim of title over the property.[42] As is well known, the payment of taxes coupledwith actual possession of the land covered by the tax declaration strongly supportsa claim of ownership.[43] The Court of Appeals did not err in affirming the factualfindings of the RTC that respondents had validly established their claim of ownershipover the subject property through acquisitive prescription.

WHEREFORE, the Petition is DENIED. The Decision of the Court ofAppeals dated 10 November 2005 and the Resolution dated 12 January 2006 in CA-G.R. SP No. 72552 are AFFIRMED. No costs.

SO ORDERED.

SECOND DIVISION

[G.R. No. 144103. August 31, 2005]

AGUEDA DE VERA-CRUZ, MARIO, EVANGELINE, EDRONEL, ANGELITO,TEODORO JR. and FERNANDO, all surnamed DELA CRUZ, petitioners, vs.SABINA MIGUEL, respondent .

CHICO-NAZARIO, J .:

Assailed in a Petition for Review on Certiorari under Rule 45 of the Rules ofCourt is the decision[1] of the Court of Appeals dated 12 July 2000 that reversed andset aside the decision of the Regional Trial Court (RTC) of Cauayay, Isabela, Branch20, in Civil Case No. 20-235, for Recovery of Possession with Damages, orderingrespondent Sabina Miguel to vacate the land, subject matter of this case, to remove
























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her house and/or whatever improvements she introduced thereon, to pay rent, andto pay costs of suit.

Petitioners Agueda de Vera-Cruz, Mario, Evangeline, Edronel, Angelito,Teodoro, Jr., and Fernando, all surnamed Dela Cruz, are the registered owners of aparcel of land situated at the Municipality of San Mateo, Isabela, described as Lot

7035-A-8-B-5 containing an area of 17,796 square meters covered by TransferCertificate of Title (TCT) No. T-70778 of the Registry of Deeds of Isabela which wasissued on 17 January 1974.[2]

The origin[3]

of Lot 7035-A-8-B-5 is as follows:Lot 7035-A-8-B-5 is a subdivided portion of Lot 7035-A which was formerly

part of a homestead applied for in 1921 by Angel Madrid over lands situated inSantiago, Isabela. The application was approved in 1935. On 08 August 1947, theBureau of Lands found him to be in exclusive occupation of the lands subject of thehomestead. On 11 July 1950, an order for the issuance of the patent was entered,and Patent V-5993 was issued on 27 September 1950. Pursuant thereto, theRegister of Deeds issued Original Certificate of Title (OCT) No. P-1267 on 2 October1950. Since the homestead consisted of three lots, upon petition of Madrid, theOCT was substituted with TCTs No. T-2385 for Lot 7035-A, No. T-2386 for Lot 7036-B and No. T-2387 for Lot 7036-A.

After the death of Angel Madrid on 23 April 1955, his widow, Cipriana Madrid,and his children extrajudicially partitioned his estate wherein Lot 7035-A and aportion of Lot 7036-B were adjudicated to the widow, while Lot 7036-A and theremainder of Lot 7036-B were given to the children. On 30 September 1955,Cipriana Madrid sold the entire Lot 7035-A to spouses Teodoro Dela Cruz andAgueda de Vera for P18,000.00. On 04 January 1956 and 21 April 1956, CiprianaMadrid and the other heirs sold two portions of Lot 7036-B with an aggregate areaof 10,200 square meters to Teodoro Dela Cruz. New TCTs were issued in the namesof the vendees.

On 01 June 1956, Teodoro Dela Cruz commenced an accion publiciana docketed as Civil Case No. BR. II-79 (CA-31309-R) in the Court of FirstInstance (CFI) of Isabela against Silverio Corpus and twenty-three (23) others foralleged illegal occupation of Lot 7035-A.

On 18 January 1957, the Republic of the Philippines, through the Office of the

Solicitor General, filed Civil Case No. BR. II-141 (CA-31252) in the CFI of Isabela forreversion of homestead consisting of Lots 7035-A, 7036-A and 7036-B of the

Santiago, Isabela Cadastre, against the widow and heirs of homesteader AngelMadrid, Agueda de Vera, Teodoro Dela Cruz and others.

Teodoro Dela Cruz likewise filed an accion publiciana (BR. II-79) with the CFIof Isabela and forcible entry and detainer cases with the Justice of the Peace Courtof San Mateo, Isabela (110 and 111) against other occupants of the lots he bought.Some of the defendants in said cases and the defendants in BR. II-79, totaling 38,filed a complaint-in-intervention in the reversion case (BR. II-141).

In the reversion case, the CFI dismissed the amended complaint and amendedcomplaint-in-intervention and, among other things, ordered the thirty-eightintervenors to surrender the material and peaceful possession of the portions theyare occupying, together with their buildings and improvements within Lot 7035-A,to Teodoro Dela Cruz.

As to BR. II-79, the CFI rendered judgment declaring Teodoro Dela Cruz theabsolute owner of Lot 7035-A. It forfeited in favor of Teodoro Dela Cruz all thebuildings and improvements of the defendants and ordered the latter to vacate andsurrender the material and peaceful possession of the portions they are occupyingto the former, and to pay rentals or damages.

Only BR. II-141 and BR. II-79 were appealed to the Court of Appeals whichpromulgated its decision on 23 July 1965, affirming in all respects the judgments ofthe CFI. The decision was appealed to the Supreme Court in a petitionfor certiorari which was denied for lack of merit.

Subsequently, the Municipality of San Mateo, Isabela, filed an action for thedeclaration of nullity of contracts of sale, annulment of TCT and reconveyance ofproperty described as Lot 7035-A before Branch 3 of the CFI of Isabela which wasdocketed as Civil Case No. 1913.[4] Said court dismissed the complaint on 28September 1967.

On 30 June 1987, petitioners filed a complaint before the RTC of Cauayay,Isabela, for Recovery of Possession with Damages against respondent for allegedlyoccupying two hundred (200) square meters, more or less, of Lot 7035-A-8-B-5without any legal right to do so, much less their consent or permission, and hasfailed and refused to vacate the premises despite repeated demands. They prayedthat respondent be ordered to vacate the land, and to pay them P10,000.00 asattorney’s fees, P500.00 a month as rental, and moral and exemplary damages asthe court may find just and reasonable.[5] The case was raffled to Branch 20 and

was docketed as Civil Case No. 20-235.

On 04 August 1987, respondent filed her answer with counterclaim allegingthat the land being claimed by petitioners is different from the land where her houseis standing and that the land was given or awarded to her by the MunicipalGovernment of San Mateo, Isabela. She added that she has been occupying theland since February 1946 and no one molested her in her actual possession and usethereof except the claims of petitioners which she came to know only on 04 July1987 when she received the summons.[6]

In their answer to counterclaim dated 14 August 1987, petitioners denied theallegations in the counterclaim and asserted that respondent’s claim is an utter andgross falsity because the land is part of a registered land duly titled in their namesand, previously, in their predecessors-in-interest.[7]

On 29 January 1988, the court terminated the pre-trial and set the case for

hearing after counsel, instead of moving that respondent be declared as in default,moved for its termination due to the latter’s absence despite notice .[8]

Before the case can be heard, petitioners filed a Motion for SummaryJudgment on the ground that respondent has not raised any genuine issue exceptas to the question of damages. They said that in a decision rendered by the CFI ofIsabela in Civil Case No. 1913[9]entitled, “The Municipality of San Mateo v. TeodoroDela Cruz, et al.,” it was adjudged that the land occupied by respondent belongedexclusively to Teodoro Dela Cruz , their predecessor, and that said decision has longbecome final and is res judicata as to the ownership of the land in question. Theysaid that since their predecessor-in-interest was declared as the true and legalowner, the municipality had no power or authority to dispose or award any portionof the land in favor of third parties.[10]




































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On 29 February 1988, respondent filed her opposition to the Motion forSummary Judgment on the ground that the pre-trial was terminated without theissues being simplified, nor stipulations or admissions being made on facts anddocuments.[11] Petitioners filed a rejoinder dated 17 March 1988.[12]

On 27 April 1988, the RTC rendered a summary judgment declaring petitioners

the owners of the land in question and ordered respondent to vacate the same andto remove whatever improvement she has introduced on the lot. The court set thecase for hearing with respect to petitioners’ claim for damages.[13]

On 12 May 1988, respondent filed a notice of appeal from the summary judgment.[14]

On 25 May 1988, petitioners filed an Omnibus Motion for Execution PendingAppeal and to Set for Reception of Evidence on the Damages[15] which respondentopposed.[16]

In an order dated 07 June 1988, the court denied the motion to execute thedecision pending appeal, but granted the motion to set the case for hearing for thereception of the evidence on damages. To avoid multiplicity of appeal, it held inabeyance the transmittal of the records to the Court of Appeals until after therendition of the decision on the issue of damages.[17]

Petitioners filed a Motion for Reconsideration [18] which respondentopposed.[19] On 24 June 1988, the court denied the motion.

On 22 July 1988, the court rendered its decision on petitioners’ claim fordamages,[20] ordering respondent to pay petitioners P146.66 a month beginning July1987, and every month thereafter until the former shall have vacated thepremises. On 05 August 1988, respondent filed a Notice of Appeal.[21] Petitioners,on the other hand, filed a Motion for Reconsideration praying that the decision bereconsidered, amended or modified to include the award of attorney’s fees,expenses of litigation and exemplary damages in their favor.[22] The court deniedthe motion on 11 August 1988. Thus, petitioners filed a Notice of Appeal.[23]

On 16 February 1990, the Court of Appeals rendered a decision ,[24] settingaside the summary judgment dated 27 April 1988 and the judgment on the rentalvalue dated 22 July 1988. The dispositive portion reads:

WHEREFORE, the summary judgment of April 27, 1988 and the judgment on rentalvalue dated July 22, 1988 are SET ASIDE and the trial court is directed to conductfurther proceedings in accordance with the guidelines set forth above, and

thereafter to render the proper decision.

On 22 June 1990, pre-trial was conducted and terminated with the partiesmanifesting that they cannot settle the case and that they failed to enter into astipulation of facts. The parties agreed to litigate the case on only one issue – whether or not respondent Sabina Miguel is inside or outside the land of thepetitioners which is covered by TCT No. T-70778.[25]

After trial, on 08 January 1991, the court rendered a decisio n[26] in this wise:

The court resolves the issue in favor of the plaintiffs. The evidence is overwhelmingthat defendant is occupying an area within the titled land of the plaintiffs. This isestablished by the testimony of Angelito dela Cruz and the Sketch Plan marked asExhibit “D” and “D-1” showing that the land occupied by the defendant is inside the

titled land of the plaintiffs. Furthermore, defendant admitted that the area she isoccupying is a part of the land bounded on the North by Mabini St., East byMagsaysay St., West by Quezon St., and South by Bonifacio St. This is thedescription of the entire land, consisting of one block, owned and titled in the nameof the plaintiffs.

. . .

WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against thedefendant Sabina Miguel ordering said defendant to vacate the premises of the land

in question described in paragraph 2 of the complaint and covered by TransferCertificate of Title No. T-70778 and to remove her house and/or whateverimprovements she introduced on the land, and to pay the plaintiffs P15,000.00representing the rental value of the land occupied by her at the rate of P500.00from the time the complaint was filed on July 30, 1987. Costs against thedefendant.

Respondent appealed the decision to the Court of Appeals.[27] On 12 July 2000,the latter reversed and set aside the decision of the RTC. The decision[28] partlyreads as follows:

After a thorough and careful evaluation of the records hereof and the evidencesubmitted by the parties, the Court finds that the parcel of land which is registeredin the name of plaintiffs-appellees includes the land being occupied by defendant-appellant. However, as the Court go deeper into the peculiar circumstances hereof,one important question surfaces: Can plaintiffs-appellees recover the said landfrom defendant-appellant who has been in peaceful possession thereof for morethan 40 years and has performed all acts consistent with her claim of ownership?

. . .

The Court rules that plaintiffs-appellees are guilty of laches for their unexplainedand unreasonable delay in asserting their right to the subject land and institutingaction to recover the same from defendant-appellant who has been in possessionthereof for more than forty years (40). The records show that the complaint forrecovery of possession was filed only on June 30, 1987 despite the fact thatdefendant-appellant has occupied the subject land since February 14, 1946 up tothe present.

. . .

There is no doubt that the plaintiffs-appellees’ long inaction in asserting their right

to the subject land bar them from recovering the same from defendant-appellantunder the equitable principle of laches. The law serves those who are vigilant anddiligent and not those who sleep when the law requires them to act.

The Court further notes that plaintiffs-appellants did not object to nor complained ofthe acts of ownership being exercised by defendant-appellant over the subjectland. It is apparent from the records that in 1946, the latter, together with herhusband (who was already deceased at the time the instant case was initiated), hasbuilt a hut on the subject land to serve as their dwelling. In 1954, another one ofstrong material was constructed, which defendant-appellant still occupies to date.Defendant-Appellant has never been asked to vacate. Neither was she evictedtherefrom despite the fact that plaintiffs-appellees were also residing in the samemunicipality where the subject land is located. Much to this, as early as September








































































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30, 1955, when the parcel of land now covered by TCT No. T-70778 was purchasedby plaintiff-appellee Agueda de Vera-Cruz and her husband, from Cipriano Gamino,they knew that some other persons, like defendant-appellant, were in possession ofthe other parts thereof.

. . .

Thus, the Court cannot look with favor at plaintiffs-appellees who, by their delayand inaction, knowingly induce defendant-appellant to spend time and effort overthe subject land, and thereafter, claim title after more than 40 years of silence.

. . .

WHEREFORE, in view of the foregoing, the decision, dated February 8, 1991, of thecourt a quo is hereby REVERSED and SET ASIDE and a new one is entered orderingplaintiffs-appellees to cause the segregation of the 600 square meters parcel ofland, forming part of Lot 7035-A-8-B-5, LRC-Psd 60052, under TCT No. T-70778,presently occupied by defendant-appellant Sabrina Miguel, and to convey the sameto said defendant-appellant. After the segregation shall have been accomplished,the Register of Deeds of Isabela is hereby ordered to issue a new certificate of titlecovering the portion of the land pertaining to plaintiffs-appellees and anothercertificate of title in favor of defendant-appellant Sabrina Miguel covering the 600square meters which she occupies.

Petitioners now assail the decision before this Court via a Petition for Reviewon Certiorari advancing the following arguments:

I THE COURT OF APPEALS ERRED IN NOT RECOGNIZING THE ESTABLISHEDPRINCIPLE IN LAW THAT A TORRENS TITLE IS INDEFEASIBLE

II THE COURT OF APPEALS ERRED IN FINDING THAT THE EQUITABLE DOCTRINE OFLACHES APPLIES TO THE PRESENT CASE

A) THE DOCTRINE OF LACHES IS A REMEDY WHICH IS GROUNDED INEQUITY AND IT IS TO BE APPLIED IF AND ONLY IF THECIRCUMSTANCES OF A PARTICULAR CASE WARRANT IT [29]

Petitioners contend that when the Court of Appeals ruled that they were guiltyof laches because they supposedly did not protest respondent’s long and continuousoccupancy of the lot in question, it was in effect saying that the land subject of thepresent controversy has been acquired by acquisitive prescription which is contraryto law and jurisprudence that the owner of a land registered under the Torrens

system cannot lose it by prescription.A reading of the decision of the Court of Appeals clearly shows that

prescription was not the basis of the decision. Nowhere in said decision did it saythat respondent acquired the property occupied by her through prescription. Infact, the Court of Appeals was fully aware that adverse, notorious and continuouspossession under claim of ownership for the period fixed by law is ineffectiveagainst a Torrens title, and that title to a registered land in derogation of that of theregistered owner may not be acquired by prescription or adverse possessionbecause the efficacy and integrity of the Torrens system must be protected. What itused in reaching its conclusion was the exception – LACHES.

The law[30] provides that no title to registered land in derogation of that of theregistered owner can be acquired by prescription or adverse possession.

Nonetheless, while it is true that a Torrens Title is indefeasible and imprescriptible,the registered landowner may lose his right to recover the possession of hisregistered property by reason of laches.[31]

Laches has been defined as such neglect or omission to assert a right, taken inconjunction with lapse of time and other circumstances causing prejudice to an

adverse party, as will operate as a bar in equity. It is a delay in the assertion of aright which works disadvantage to another because of the inequity founded on somechange in the condition or relations of the property or parties. It is based on publicpolicy which, for the peace of society, ordains that relief will be denied to a stale

demand which otherwise could be a valid claim. It is different from and appliesindependently of prescription. While prescription is concerned with the fact ofdelay, laches is concerned with the effect of delay. Prescription is a matter of time;laches is principally a question of inequity of permitting a claim to be enforced, thisinequity being founded on some change in the condition of the property or therelation of the parties. Prescription is statutory; laches is not. Laches applies inequity, whereas prescription applies at law. Prescription is based on a fixed time,laches is not.[32] Laches means the failure or neglect for an unreasonable andunexplained length of time, to do that which, by exercising due diligence, could orshould have been done earlier; it is negligence or omission to assert a right within areasonable time, warranting the presumption that the party entitled to assert iteither has abandoned or declined to assert it .[33]

Petitioners maintain that the Court of Appeals erred in applying the equitabledoctrine of laches in the case at bar. They argue that they and their predecessor-in-interest, Teodoro Dela Cruz, were never remiss, and have not delayed, inasserting their ownership over the property subject of the present case becausethey have been litigating this issue as far back as 1956 and lasting over ten years,and successfully warding off the respective claims of the illegal occupants, theRepublic of the Philippines and the Municipality of San Mateo, Isabela .[34]

Now, the question is: Should laches be applied in the case before us knowingthat petitioners after purchasing Lot 7035-A on 30 September 1955 engaged incourt battles against illegal occupants thereof, the Republic of the Philippines andthe Municipality of San Mateo, Isabela, for more than ten years resulting in theupholding by the courts of their ownership over the land in question?

There is no absolute rule as to what constitutes laches or staleness of demand;each case is to be determined according to its particular circumstances. Thequestion of laches is addressed to the sound discretion of the court, and since

laches is an equitable doctrine, its application is controlled by equitableconsiderations. It cannot work to defeat justice or to perpetrate fraud andinjustice.[35]

Having filed accion publiciana and forcible entry and detainer cases in the1950s against the illegal occupants of Lot 7035-A, though not against respondent,and having successfully overcome the reversion case filed by the Republic and theReconveyance case filed by the Municipality of San Mateo, Isabela, it cannot be saidthat petitioners slept on their rights in asserting their ownership over Lot 7035-A.How then can petitioners be said to have failed or neglected to assert their right onthe land when they have been judicially fighting to be recognized as the legal ownerof Lot 7035-A?



























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The Court of Appeals ruled that since respondent has been in peaceful andunmolested possession of the subject land since 1946, petitioners are barred fromrecovering the same under the principle of laches. In support thereof, it cited thecases of Ching v. Court of Appeals,[36] Caragay-Layno v. Court of Appeals,[37] Heirsof Batiog Lacamen v. Heirs of Laruan ,[38] Tambot v. Court of Appeals,[39]Wright, Jr.v. Lepanto Consolidated Mining Co.[40] and Vda. de Delima v. Tio.[41]

From the records, it appears that respondent cannot have entered andpossessed the land under litigation in 1946. The Court of Appeals in its decision inthe consolidated cases of Republic of the Philippines v. Marita Madrid, et

al. and Teodoro de la Cruz v. Silverio Corpuz, et al .[42] made a factual finding thatthe land was in the exclusive possession of Angel Madrid, the homestead applicantin 1947. This notwithstanding, and regardless of whether respondent entered thelot in 1946 or in 1954, the application of laches, as stated above, should bedetermined in accordance with the circumstances present in a particular case.

The cases cited by the Court of Appeals are not on all fours with the case onhand. The case of Ching v. Court of Appeals involves a landowner’s property whichwas wrongfully or erroneously registered in another’s name. In Caragay-Layno v.Court of Appeals, the issue was the fraudulent or mistaken inclusion of property in acertificate of title. In Heirs of Batiog Lacamen v. Heirs of Laruan, the subject matterwas the sale of land without the required approval of the executive authority. Thecase of Tambot v. Court of Appeals likewise involves a conveyance of land via adeed of sale. In Wright, Jr. v. Lepanto Consolidated Mining Co., what wasquestioned was the acquisition and ownership of mining claims which were coveredby reconstituted certificates of title. In Vda. de Delima v. Tio, what was questionedwas the selling by a husband of the wife’s paraphernal property without the latter’sconsent.

In all these cases, the parties in possession of the properties under litigationhad titles thereto or had documents showing that the ownership over theseproperties was transferred to them. In the case before us, respondent is not theregistered owner of the lot she is occupying and she has failed to adduce evidenceshowing that the property has been conveyed to her by the petitioners or by theoriginal owner thereof. Respondent has no evidence of her ownership over the lotwhere her house is erected. Her allegation[43] that the lot was awarded or given

through a resolution by the Municipal Government of San Mateo, Isabela, cannot begiven credence. She did not even produce a copy of said resolution. Even ifrespondent were able to produce a copy thereof, the same will be of no use since it

has been judicially nullified. Furthermore, as admitted by respondent, she and herhusband tried to procure ownership papers over the land, but to noavail.[44] Petitioners, on the other hand, have shown that the courts have upheldtheir ownership over Lot 7035-A, and have ruled in their favor and against thereversion case[45] filed by the Republic and on the case for reconveyance [46] of Lot7035-A filed by the Municipality of San Mateo, Isabela.

We are not unmindful of the Tax Declarations[47] held by respondent but same

are not proofs of ownership. A tax declaration does not prove ownership. It ismerely an indicium of a claim of ownership.[48] Payment of taxes is not proof ofownership, it is, at best, an indicium of possession in the concept ofownership.[49] Neither tax receipts nor declaration of ownership for taxationpurposes are evidence of ownership or of the right to possess realty when notsupported by other effective proofs.[50]

An examination of the tax declarations reveals that the property covered is noteven specified and described with particularity -- the exact location and borderswere not mentioned. Respondent utterly failed to show her ownership of the land inquestion. In fact, the RTC and the Court of Appeals have declared that the landbeing occupied by respondent is within the land registered in the names ofpetitioners.[51] With this finding, respondent’s claim that the land she is occupying isdifferent from the land being claimed by petitioners completely crumbles. Thus, it isclear that respondent, without any authority or right, is occupying petitioners’ land.

Having no title or document to overcome petitioners’ ownership over the land

in question, respondent is therefore an intruder or squatter whose occupation of theland is merely being tolerated. A squatter has no possessory rights over the landintruded upon.[52] As such, her occupancy of the land is only at the owners’sufferance, her acts are merely tolerated and cannot affect the owners’ possession. She is necessarily bound to an implied promise that she will vacate upondemand.[53]

Respondent argues that petitioners, despite all the opportunity they had toimplead respondent in the cases they filed in 1956 against those occupying Lot7035-A, deliberately ignored and failed to do so. In doing so, petitioners slept ontheir rights and practically allowed laches to set in.

We find this feeble. Assuming for the sake of argument that respondentalready occupied the lot in question in 1956, we cannot put all the blame onpetitioners if respondent and her husband were not impleaded. It must be

remembered that there were many people who occupied the subject land. Ifpetitioners committed an oversight in not impleading respondent, she, having aninterest on the land, should have intervened in the cases just like what the otheroccupants did. This, she did not do. It is simply impossible for her not to know thatthere were on-going court cases involving the land she is occupying. She testifiedthat the lot she is occupying is bounded on the east by the lot of one WenceslaoUrmaneta.[54] As can be gleaned from the decision of the Court of Appeals in theconsolidated cases[55] of Republic of the Philippines v. Marita Madrid, et al.,and Teodoro de la Cruz v. Silverio Corpuz, et al., this Urmaneta was one of thedefendants in the accion publiciana case and was an intervenor in the reversioncase filed by the Republic. Contrary to the posture of an adjacent neighbor,

respondent exhibited a lethargic stance. Her failure to join and to get involved inthe proceedings in order to protect her rights, if there were any, over the landshows her apathy on the matter. This lack of concern and inaction on her part show

that she failed to protect any right she had on the land. The laches of one nullifiesthe laches of the other. One who seeks equity must himself be deserving ofequity.[56] While all the people around her were fighting tooth and nail over Lot7035-A, respondent simply watched on the sidelines, oblivious of what the courtswill pronounce on the matter. Acting the way she did, she does not deserve equity.

This Court has ruled that unless there are intervening rights of third personswhich may be affected or prejudiced by a decision directing the return of the lot to

petitioners, the equitable defense of laches will not apply as against the registeredowners.[57] In the case at bar, there being no intervening third persons whose rightswill be affected or prejudiced if possession of the subject lot is restored to thepetitioners, the return of the same is in order.























































































8/10/2019 Articles 1106-115


Cases 1106-1155: Obligations and Contracts – Estrellado 2014

Under the circumstances obtaining in this case, the equitable doctrine of lachesshall not apply.

WHEREFORE, the petition for review is GRANTED. The decision of the Courtof Appeals dated 12 July 2000 is REVERSED and SET ASIDE, and the decision of theRegional Trial Court dated 08 January 1991 is REINSTATED. Costs against the

respondent.

SO ORDERED.

Documents

Articles 1106-115