Sta Maria Obligation Contracts Text and Cases

iOBLIGATIONS AND CONTRACTS

Text and Cases

By

MELENCIO S. STA. MARIA, JR.

Ll.B. with Honors Ateneo de Manila School of Law; Ll.M.Boston University; Professor of Law in Obligations andContracts Law, Persons and Family Relations Law, andPublic International Law at the Ateneo De Manila Schoolof Law; Bar Reviewer at the Ateneo De Manila School ofLaw; Holder: 1994, 1996, 1997, 1998, 1999, 2000 AteneoLaw Alumni Foundation Professorial Chair in Civil Lawand the 1992 Sasakawa Professorial Chair in InternationalLaw; 1993 United Nations Fellow at the United NationsInternational Law Commission, Palais de Nation, Geneva,Switzerland; Law Practitioner.

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No portion of this book may be copied orreproduced in books, pamphlets, outlines, notes,whether printed, mimeographed, typewritten, copiedin different electronic devices or in any other form, fordistribution or sale, without the written permission ofthe author except brief passages in articles, reviews,legal paper, and judicial or other official proceedings.

Any copy of this book without the correspondingnumber and the signature of the author on this pageeither proceeds from an illegitimate source or is inpossession of one who has no authority to dispose ofthe same.

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No. _______________

iii

NOT TO US, O LORD, NOT TO US, BUT TOTHY NAME GIVE GLORY, FOR THE SAKEOF THY STEADFAST LOVE AND THYFAITHFULNESS!

PSALMS 115.1

THIS BOOK IS LOVINGLY DEDICATED TO MY MOTHER,FLORENCIA STA. MARIA AND MY FAMILY: AMPARITA,

JOSEPH EMMANUEL, PATRICIA ANNE ANDTHERESE MARIAN

vACKNOWLEDGMENT

This edition is my project for the Ateneo de Manila Law AlumniFoundation Professorial Chair in Civil Law awarded to me for theyears 1999 and 2000. This second edition was indeed long in coming.However, I have incorporated the significant jurisprudence inObligations and Contracts which have affected the laws on the subjectsince 1997. I tried to maintain the simplicity of this book withoutnecessarily sacrificing its value as a research material. The style isstill the same as the first edition.

I wish to thank Fr. Joaquin G. Bernas of the Society of Jesus(SJ) for his continued support of my professorship at the Ateneo deManila College of Law. Also, my gratitude goes to Dean CynthiaRoxas-Del Castillo who was principally the one who encouraged meto take a more serious and scholarly approach to this complex fieldof law. I would not have even thought of coming out with the firstedition had it not for her confidence in making me teach Obligationsand Contracts in 1995. Likewise, to my former esteemed professor,Dean Eduardo De Los Angeles, I extend my sincerest gratitude forinviting me, way back in 1986, to teach at the Ateneo de ManilaCollege of Law. I did not realize then that his invitation would havea profound effect on my life today. Aside from practicing law, teachingthe law has indeed become a vocation.

For volunteering to assist me, I am grateful also to a group oftalented law students, namely:

1) Ribonnette Rodriguez and Maricris Ang, who, when Ilearned of the unavailability of the encoded master file ofthe first edition, painstakingly and continuously went overthe original unedited version of the first edition and madethe necessary encodings to tally with the finished versionof that first edition. Their assistance made theincorporations of the new matters in this second editionmuch easier;

2) Evelyn Kho, Thelma Mundin, Eugene Kaw, Ma. MargaritaMallari, Vanessa Valdez, and Cristina Salvatierra whoassisted me in the proofreading of this work.

vi

Finally, last but not the least, to my wife, Professor AmparitaSta. Maria also of the Ateneo De Manila College of Law, who hascontinued to be my principal critic in all my works, Iextend mydearest appreciation.


November 18, 2002Quezon City

vii

PREFACE

For the First Edition

The objective of this volume is to give the reader a basicunderstanding of the law on prescription, civil obligations, contracts,natural obligations, estoppel, trusts, and quasi-contracts. Inexplaining them, I heavily relied on the rulings of the Supreme Court.I chose cases for their value in exemplifying the area of law underdiscussion, citing verbatim the relevant portions clarifying particulararticles. For me, there can be no better source of enlightenment otherthan the opinions of the Supreme Court deciding actual relevantdisputes on the said subject matters. Excerpts from the report of the1947 Code Commission pointing out the reason for the modificationor incorporation of certain provisions have also been quoted. I alsorelied on some treatises of foreign authorities as our law has beengenerally adopted from both the American and Spanish systems.Whenever necessary, I made hypothetical illustrations of theapplication of the law. I believe that a better understanding of thestatute can be achieved by simple examples devoid of any legalisticlanguage.

The articles are discussed and explained continuously, whetherlengthily or briefly, without any heading and sub-heading. Thus,the only guides in this book are the articles themselves. My purposein doing this is twofold: first, to provide the reader with an undividedview of the explanation of the particular provision, and, second, forhim to remember an important principle or rule, not because of anyheading or sub-heading, but precisely on the basis of the particularprovision dealing with it. Certainly, I am critically aware of thelimitations of this approach. Thus, I have been very careful inpresenting the discussions in the simplest form possible withoutsacrificing their exegetical content. Important rules requiringimportant explanations have been given proper emphasis at suitablelength. I believe that this over-all style appropriately serves theobjective of this edition.

If there is any law designed to significantly unify and stabilizebusiness, commercial and legal concerns, it is the law on obligations

viii

and contracts. For if one is to transact business with other people,he definitely has to make and observe binding promises, predictablecommitments, documentary formalities, important conditions,limited periods and prompt payments. Breaches and defaults alsooccur. All these entail legal consequences. There is, therefore, a needfor a basic understanding of the legal principles of obligations andcontracts. This work offers a helpful and fundamental starting pointin searching for the right solutions.

I wish to acknowledge, with my sincerest appreciation, thefollowing for the valuable assistance extended to me in thepreparation of this book:

1) my alma mater, the ATENEO DE MANILA UNIVERSITY,for awarding to me the Ateneo Law Alumni FoundationProfessorial Chair in Civil Law for school-years 1996-1997and 1997-1998. This volume is my project for theprofessorial chair;

2) my talented student, DOMINIQUE P. GALLEGO (AteneoLaw Class of 98), for patiently proofreading the part ofthis text dealing with the law on obligations; and

3) my secretary, MATILDE DOLINA, for partly assisting mein the encoding and typing of this work.

Finally, I cannot end without expressing my profound gratitudeto my wife, ATTY. AMPARITA S. STA. MARIA, who is teachingLegal Research and is currently the Thesis Director of the JurisDoctor (JD) Program at the Ateneo de Manila University School ofLaw. She assisted me in my research and patiently showed mehow to maximize the use of my computer. Moreover, her enduringsupport and perceptive suggestions have always been a source ofencouragement.


August 23, 1997Quezon City, Metro Manila

ix

CONTENTS

Title V. Prescription

Chapter 1. General Provisions ........................................... 1Chapter 2. Prescription of Ownership and Other

Real Rights ....................................................... 18Chapter 3. Prescription of Actions ..................................... 44

BOOK IV. OBLIGATIONS AND CONTRACTS

Title I. Obligations

Chapter 1. General Provisions ........................................... 68Chapter 2. Nature and Effect of Obligations .................... 75Chapter 3. Different Kinds of Obligations ........................ 103

Section 1. Pure and Conditional Obligations ............. 103Section 2. Obligations with a Period .......................... 132Section 3. Alternative Obligations .............................. 141Section 4. Joint and Solidary Obligations .................. 148Section 5. Divisible and Indivisible Obligations ........ 167Section 6. Obligations with a Penal Clause ............... 170

Chapter 4. Extinguishment of Obligations ....................... 176

General Provisions ........................................... 176

Section 1. Payment or Performance ........................... 179Subsection 1. Application of Payments .......... 207Subsection 2. Payment By Cession ................. 212Subsection 3. Tender of Payment and Consignation ............................. 214

Section 2. Loss of the Thing Due ................................ 223Section 3. Condonation or Remission of the Debt ..... 234Section 4. Confusion or Merger of Rights .................. 239Section 5. Compensation ............................................. 241Section 6. Novation ...................................................... 262

xTitle II. Contracts

Chapter 1. General Provisions ........................................... 282Chapter 2. Essential Requisites of Contracts ................... 322

General Provisions ........................................... 322

Section 1. Consent ....................................................... 323Section 2. Object of Contracts ..................................... 360Section 3. Cause of Contracts ..................................... 363

Chapter 3. Forms of Contracts .......................................... 372Chapter 4. Reformation of Instruments ............................ 379Chapter 5. Interpretation of Contracts ............................. 388Chapter 6. Rescissible Contracts ....................................... 417Chapter 7. Voidable Contracts ........................................... 432Chapter 8. Unenforceable Contracts ................................. 448Chapter 9. Void and Inexistent Contracts ........................ 471

Title III. Natural Obligations

Title IV. Estoppel

Title V. Trusts

Chapter 1. General Provisions ........................................... 501Chapter 2. Express Trusts ................................................. 505Chapter 3. Implied Trusts .................................................. 507

Title XVII. Extra-Contractual Obligations

Chapter 1. Quasi-Contracts ............................................... 515Section 1. Negotiorum Gestio ..................................... 517Section 2. Solutio Indebiti ........................................... 527Section 3. Other Quasi-Contracts ............................... 539

1PRESCRIPTION

Chapter 1

GENERAL PROVISIONS

Article 1106. By prescription, one acquires ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law.

In the same way, rights and actions are lost by pres-cription. (1930a)

In Sinaon vs. Sorongon1 where the Supreme Court ruled that, in certain cases, an implied trust is subject to prescription, it stated that:

prescription is rightly regarded as a statute of repose whose object is to suppress fraudulent and stale claims from springing up at great distances of time and surprising the parties or their representatives when the facts have become obscure from the lapse of time or the defective memory or death or removal of witnesses.

In Morales vs. Court of First Instance of Misamis Occidental2 where prescription was not allowed to apply to obtain ownership over a particular property due to the fact that the statutory period was not complied with, the Supreme Court discussed the difference between acquisitive and extinctive prescriptions, thus:

There are two kinds of prescription provided in the Civil Code. One is acquisitive, i.e., the acquisition of a right by the lapse of time (Art. 1106, par. 1). Other names for acquisitive prescription are adverse possession and usucapcion. The other kind is extinctive prescription whereby rights and actions are lost by the lapse of time (Arts. 1106, par. 2 and 1139). Another name for extinctive prescription is limitation of action.

1

1G.R. No. L-59879, May 13, 1985, 136 SCRA 407. 2G.R. No. L-52278, May 29, 1980, 97 SCRA 872.

ObligatiOns and COntraCtsText and Cases

2

The differences between acquisitive and extinctive prescriptions are well-settled as follows:

Prescription was a statute of limitations. Whereas, usucapcion expressly vests the property and raised a new title in the occupant, prescription did nothing more than bar the right of action. The concept most fundamental to a system of title by possession is that the relationship between the occupant and the land in terms of possession is capable of producing legal consequences. In other words, it is the possessor who is the actor. Under statute of limitations, however, one does not look at the act of the possessor but at the neglect of the owner. In the former, the important feature is the claimant in possession, and in the latter it is the owner out of possession which controls. (Mont-gomery, Prescriptive Acquisition of Land Titles, XXVI, Philippine Law Journal, 353, 356-357 [1951])

Prescription however must be differentiated from the concept of laches which is known as the doctrine of stale demands which is based upon grounds of public policy which requires, for the peace of society, and the discouragement of stale claims.3 The following are the requisites of laches:

(1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation of which com-plaint is made and for which the complaint seeks a remedy; (2) delay in asserting the complainants rights, the com-plainant having had knowledge or notice of the defendants conduct and having been afforded an opportunity to institute a suit; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant, or the suit is not held barred.4

Laches is different from 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 of time; laches is principally a question of inequity of permitting a claim to be enforced, this inequity being founded on some change in the condition of the property or the relation of the parties. Prescription is statutory; laches is not. Laches is equity, whereas prescription applies at law. Prescription is based on fixed time, laches is not.5

3Tijam vs. Sibonghanoy, G.R. No. L-21450, April 15, 1968, 32 SCRA 29. 4Abraham vs. Recto-Kasten, G.R. No. L-16741, January 31, 1962, 4 SCRA 298; Vergara vs. Vergara, G.R. No. L-17524, May 18, 1962, 5 SCRA 53; Custodio vs. Casiano, G.R. No. L-18977, December 27, 1963, 9 SCRA 841; Go Chi Gun, et al. vs. Go Cho, et al., 96 Phil. 622. 5Nielson & Co., Inc. vs. Lepanto Consolidated Mining Co., G.R. No. L-21601,

art. 1106

3 Laches applies independently of prescription, so that laches has been successfully interposed even if a shorter time had elapsed6 and the prescriptive period has not yet expired. Laches can also bar the filing or prosecution of a suit. In Z.E. Lotho, Inc. vs. Ice and Cold Storage,7 where plaintiff made no genuine efforts to stop the defendant from selling ice within his (plaintiffs) franchise-area despite plaintiffs knowledge since 1948 of the said violative practice, and where all of plaintiffs material records were already lost by the time he filed the suit in 1957, thereby causing prejudice to the defen-dant as such loss made it more difficult for defendant to controvert the correctness of the damages sought by plaintiff, and where delay in the filing of the case only in 1957 and the failure of the plaintiff to forewarn the defendant as early as 1948 prevented the defendant from guarding against further liability for damages or at least minimize the same. The Supreme Court allowed the dismissal of the case on the ground of laches notwithstanding the fact that the practices of the defendant might, if proven, have been an invasion of plaintiffs rights. The Supreme Court decided this case on the issue of laches, despite complainants contention that the complaint was within the prescriptive period of 10 years from 1948. The issue of prescription was corollarily and independently touched by the Supreme Court which also ruled that the action had prescribed as it should have been brought within four years from 1948 as the cause of action dealt with an injury to the rights of the plaintiff.

Likewise in the case of Catholic Bishop of Balanga vs. Court of Appeals,8 where the alleged landowner questioned the donation of its representative to the donee who, after such donation, possessed the property peacefully and adversely for 49 years, the Supreme Court ruled that, although prescription does not apply to registered property, a registered landowner may lose his right to recover the possession of his registered property by reason of laches.9

Article 1107. Persons who are capable of acquiring property or rights by the other legal modes may acquire the same by means of prescription.December 17, 1966, 18 SCRA 1040. 6Z.E. Lotho, Inc. vs. Ice and Cold Storage Industries, G.R. No. L-16563, December 28, 1961, 3 SCRA 744. 7Id. 8G.R. No. 112549, November 14, 1996, 76 SCAD 148. 9See also the following cases: Victoriano vs. Court of Appeals, 194 SCRA 19 (1991); Lola vs. Court of Appeals, 145 SCRA 439 (1986); Golloy vs. Court of Appeals, 173 SCRA 26; Bergado vs. Court of Appeals, 173 SCRA 500 (1989); Republic vs. Court of Appeals, 204 SCRA 160 (1991); Marcelino vs. Court of Appeals, 210 SCRA 444 (1992); De La Calzada-Cierras vs. Court of Appeals, 212 SCRA 390 (1992); Claverias vs. Quingco, 207 SCRA 66 (1992).

PresCriPtiOnGeneral Provisions

art. 1106


4

Minors and other incapacitated persons may acquire property or rights by prescription, either personally or through their parents, guardians or legal representatives. (1931a)

Prescription is a mode of acquiring property or rights. A person who is of majority age and who is qualified to do all acts of civil life may acquire property by prescription. The acquisition of a minor who personally acquires property or rights without the assistance of his parents or guardian is annullable or voidable. However, when such minor comes of age, he may ratify the acquisition. If the acquisition of the minor is through his parents or guardian, the acquisition is completely valid.

Emancipation takes place by the attainment of majority. Majority age commences at the age of eighteen years.10 Emancipation shall terminate parental authority over the person and property of the child who shall then be qualified and responsible for all acts of civil life, save the exceptions established by existing laws in special cases.11

Article 1108. Prescription, both acquisitive and extinctive, runs against:

(1) Minors and other incapacitated persons who have parents, guardians or other legal representatives;

(2) Absentees who have administrators, either appointed by them before their disappearance, or appointed by the courts;

(3) Persons living abroad, who have managers or administrators;

(4) Juridical persons, except the State and its subdivisions.

Personswhoaredisqualifiedfromadministeringtheirproperty have a right to claim damages from their legal representatives whose negligence has been the cause of prescription. (1932a)

Prescription may run against minors and incapacitated persons who have parents, guardians or other legal representatives. Thus, if A 10Family Code of the Philippines, Executive Order No. 209, August 3, 1988, as amended by Republic Act 6809, Article 234. 11Id., Article 236. 12G.R. No. 29759, May 18, 1989, 173 SCRA 436. 13Republic vs. Hernaez, G.R. No. L-24137, January 1970, 31 SCRA 219;

arts. 1107-1108

5is insane, prescription does not run against him. However, if he has a legal representative or a guardian who, under the law, is supposed to take care of his affairs during his insanity, prescription will apply. In Vda. De Alberto vs. Court of Appeals,12 an alleged illegitimate child, represented by his natural mother, filed an action for acknowledgment and partition more than four years after the agreement of partition of the surviving legitimate heirs was duly approved by the court. The Supreme Court ruled that the action filed by the illegitimate child should be dismissed on the ground of prescription considering that the prescriptive period for assailing a partition made by heirs of a deceased prescribes after four years from the time the partition was made. The Supreme Court likewise said that under Article 1108(1) of the Civil Code, the illegitimate child can not claim exemption from the effects of prescription. The illegitimate child still has a living parent, his mother, who in fact filed the complaint in the lower court for him, falls squarely under the said article.

Prescription does not run against absentees. A person who is absent cannot manage his affairs as he can not go back to his domicile. However, if he leaves an administrator or the court appoints an administrator for him, prescription will run against him. If the absentee can go back to his domicile but he intentionally does not want to return, prescription will lie against him. Relevantly, according to Article 381 of the Civil Code:

Article 381. When a person disappears from his domicile, his whereabouts being unknown, and without leaving an agent to administer his property, the judge, at the instance of an interested party, a relative, or a friend, may appoint a person to represent him in all that may be necessary.

This same rule shall be observed when under similar circumstances the power conferred by the absentee has expired.

Prescription run against persons living abroad who have managers or administrators. If they do not have any manager or administrator, prescription will not run against them. However, it must be shown that they can not return to their domicile within the period when prescription should have run.

Juridical persons are those endowed by law of the attributes of a natural person and hence can acquire and lose properties and rights. The State and its subdivisions however, acting in their sovereign capacity, cannot be the subject of prescription.13 Hence, in

Republic vs. Grijaldo, G.R. No. L-20240, December 31, 1965, 15 SCRA 681; Republic


art. 1108


6

Republic vs. Philippine National Bank,14 where the Armed Forces of the Philippines as plaintiff filed a case for recovery of a sum of money which the defendant-bank negligently paid to unauthorized persons. The lower court dismissed the suit on the ground that the action had already prescribed. The Supreme Court ruled that:

since the statute of limitations does not run against the State and it is neither alleged nor shown that plaintiff, in making the deposit of its funds in question with the defendant, did so other than an instrumentality of the Republic, the pleas of prescription cannot be maintained.

However, if the political subdivision is acting in its proprietary character, prescription will lie against it. Likewise, if the instru-mentality of the government is not acting in a sovereign capacity, prescription will apply to such entity. In National Development Company vs. Tobia,15 where the plaintiff National Development Corporation, a government-owned and controlled corporation, filed a collection case which was dismissed on the ground that the claim had prescribed, the Supreme Court upheld the applicability of the rules on prescription by stating:

x x x Plaintiff herein is neither the Government of the Republic nor a branch or subdivision thereof. It is true that the plaintiff is an instrumentality of such Government, but as this Court has held in the case of Associacion Cooperative de Credito Agricola de Miagao vs. Monteclaro (74 Phil. 281), even the Agricultural and Industrial Bank, which is a government-owned and controlled corporation and which has been created to promote agriculture and industry on a larger scale than agricultural credit cooperative associations, cannot be said to exercise a sovereign function. It is, like all other corporations capitalized by the Government, a business corporation, and, as such, its causes of action are subject to the statute of limitation. x x x

Article 1109. Prescription does not run between husband and wife, even though there be a separation of property agreed upon in the marriage settlements or by judicial decree.

Neither does prescription run between parents and

vs. Rodriguez, G.R. No. L-18967, January 31, 1966, 16 SCRA 53. 14G.R. No. L-16485, January 30, 1965, 13 SCRA 24. 15G.R. No. L-17467, April 23, 1963, 7 SCRA 692. 16G.R. No. L-15088, January 31, 1961, 1 SCRA 384. 17Executive Order No. 209 which took effect on August 3, 1988. 18Id., Article 57.

art. 1108

7children, during the minority or insanity of the latter, and between guardian and ward during the continuance of the guardianship. (n)

Marriage is a special contract of permanent union between a man and a woman. Generally, prescription does not apply to husband and wife unless the law otherwise provides. This is true even though there be a separation of property agreed upon in the marriage settlement or by judicial decree. Thus in Pacio vs. Billion,16 where a husband made a donation to his first wife and that, in order to resist the claim of the children of the said husband from his second wife, the children of the first wife contended that, though the donation was invalid, the first wife nevertheless acquired the same through acquisitive prescription considering that the void donation constituted a title and that the first wife possessed the property for about 29 years. The Supreme Court rejected such contention on the ground that there was no proof of an adverse possession on the part of the first wife. Moreover, under Article 1109 of the 1950 Civil Code prescription by adverse possession cannot exist between husband and wife.

However, notwithstanding the provisions of the Civil Code, a law may validly provide that prescription applies between husband and wife. Thus, the Family Code of the Philippines17 provides that a case of legal separation between husband and wife must be filed within 5 years from the occurrence of the cause.18 For annulment, it is generally 5 years from the particular starting point provided by law, such as from the marriage ceremony if the ground is im-potency.19

No prescription lies between parent and child during the latters insanity or minority. The natural bond of filiation is the basis of this rule. Moreover, while the child is a minor, the parents are his natural guardians without the need of a court appointment. If the daughter or son has attained the age of majority and is not insane, prescription will apply. However, in special cases, the law may provide for a prescriptive period between parent and child. Thus, the Family Code of the Philippines provides that a husband may impugn the legitimacy of the child of her wife on grounds provided by law within one year, two years or three years from his knowledge of the birth of the child or its recording in the civil registry, depending on the residence of the husband and the place of birth of the child.20

19Id., Article 47(5). 20Id., Article 170. 21Article 484 of the 1950 Civil Code. 22G.R. No. L-48889, May 11, 1989, 161 SCRA 307.


art. 1109


8

Due to the fiduciary relationship between the guardian and the ward, prescription will not lie during the period of guardianship. This is to give adequate remedy to the ward for the abuses of the guardian.

Article 1110. Prescription, acquisitive and extinctive, runs in favor of, or against a married woman. (n)

Whether married or unmarried, prescription runs in favor of or against a married woman.

Article 1111. Prescription obtained by a co-proprietor or aco-ownershallbenefittheothers.(1933)

There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons.21 Prescription obtained by a co-proprietor or a co-owner shall benefit the others. For example, A, B and C co-own a particular land and, by virtue of such co-ownership they all reside in the same. If B occupies, as a co-owner with A and C, a portion of land adjoining the co-owned property, and he adversely and publicly holds such adjacent portion of land continuously to the exclusion of all others who are not in the co-ownership for the required period of time, there can be a valid acquisition not only in his favor but also in favor of A and C even though they do not actually possess the said portion.

Article 1112. Persons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the future.

Prescription is deemed to have been tacitly renounced when the renunciation results from acts which imply the abandonment of the right acquired. (1935)

The case of Development Bank of the Philippines vs. Adil22 is an illustrative case where the Supreme Court based its decision on, among others, Article 1112. The pertinent portions of the decision are as follows:

On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural loan from the Agricultural and Industrial Bank (AIB), now the Development Bank of the Philippines (DBP), in the sum of P2,000.00, Philippine Currency,

23G.R. No. L-36827, December 10, 1990, 192 SCRA 121. 24G.R. No. L-17821, November 29, 1963, 9 SCRA 557; Mateo vs. Moreno, G.R.

arts. 1110-1112

9as evidenced by a promissory note of said date whereby they bound themselves jointly and severally to pay the account in ten (10) equal yearly amortizations. As the obligation remained outstanding and unpaid even after the lapse of the aforesaid ten-year period, Confesor, who was by then a member of the Congress of the Philippines, executed a second promissory note on April 11, 1961 expressly acknowledging said loan and promising to pay the same on or before June 15, 1961. The new promissory note reads as follows

I hereby promise to pay the amount covered by my promissory note on or before June 15, 1961. Upon my failure to do so, I hereby agree to the foreclosure of my mortgage. It is understood that if I can secure a certificate of indebtedness from the government of my back pay I will be allowed to pay the amount out of it.

Said spouses not having paid the obligation on the specified date, the DBP filed a complaint dated September 11, 1970 in the City Court of Iloilo City against the spouses for the payment of the loan.

The right to prescription may be waived or renounced. Article 1112 of Civil Code provides:

Art. 1112. Persons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the future.

Prescription is deemed to have been tacitly renounced when the renunciation results from acts which imply the abandonment of the right acquired.

There is no doubt that prescription has set in as to the first promissory note of February 10, 1940. However, when respondent Confesor executed the second promissory note on April 11, 1961 whereby he promised to pay the amount covered by the previous promissory note on or before June 15, 1961, and upon failure to do so, agreed to the foreclosure of the mortgage, said respondent thereby effectively and expressly renounced and waived his right to the prescription of the action covering the first promissory note.

This Court had ruled in a similar case that

x x x when a debt is already barred by prescription, it cannot be enforced by the creditor. But a new contract recognizing and assuming the prescribed debt would be valid and enforceable x x x.

No. L-21024, July 28, 1969, 28 SCRA 796.


art. 1112


10

Thus, it has been held that

Where, therefore, a party acknowledges the correctness of a debt and promises to pay it after the same has prescribed and with full knowledge of the prescription he thereby waives the benefit of prescription.

This is not a mere case of acknowledgment of a debt that has prescribed but a new promise to pay the debt. The consideration of the new promissory note is the pre-existing obligation under the first promissory note. The statutory limitation bars the remedy but does not discharge the debt.

A new express promise to pay a debt barred x x x take the case from the operation of the statute of limitations as this proceeds upon the ground that as a statutory limitation merely bars the remedy and does not discharge the debt, there is something more than a mere moral obligation to support a promise, to wit a pre-existing debt which is a sufficient consideration constitutes, in fact, a new cause of action.

x x x It is this new promise, either made in express terms or deduced from an acknowledgment as a legal implication, which is to be regarded as reanimating the old promise, or as imparting vitality to the remedy (which by lapse of time had become extinct) and thus enabling the creditor to recover upon his original contract.

Article 1113. All things which are within the commerce of men are susceptible of prescription, unless otherwise provided. Property of the State or any of its subdivisions not patrimonial in character shall not be the object of prescription. (1936a) In Director of Forest Administration vs. Fernandez,23 where an application was filed for the registration of a particular forest and timber on the ground of prescription, the Supreme Court rejected such claim and stated that:

it is axiomatic that forest lands of the public domain cannot be acquired by prescription, its possession however long cannot ripen into private ownership (Amunategui vs. Director of Forestry, 126 SCRA 69 [1983]; Bureau of Forestry vs. Court of Appeals, 153 SCRA 351 [1987]; Republic vs. Court of Appeals, 154 SCRA 476 [1987]). Forest land cannot be owned by private persons. It is not registerable whether the title is a Spanish title or a torrens title (Director of Lands vs. Court of Appeals, 133 SCRA 701 [1984]; Republic vs. Court of Appeals, 135 SCRA 156 [1985]; Vallanta vs. IAC, 151 SCRA 679 [1987]). A tax declaration secured over a land that is forested does not vest ownership to the declarant (Republic vs. Court of Appeals, 116 SCRA 505 [1982]).

art. 1113

11

In Lovina vs. Moreno,24 it was likewise held that the ownership of a navigable stream or of its bed is not acquired by prescription. However in Republic vs. Court of Appeals,25 where a particular area adjacent to a bay, was at times covered by water due to rain and not due to the rising of the tide, the Supreme Court said that such area can be registered and can be subject to prescription, thus:

Property, which includes parcels of land found in Philippine territory, is either of public dominion or of private ownership. Public lands, or those of public dominion, have been described as those which, under existing legislation are not the subject of private ownership, and are reserved for public purposes. The New Civil Code enumerates properties of public dominion in Articles 420 and 502 thereof.

Article 240 provides:

The following things are property of public dominion:

(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by the State, banks, shores, roadsteads, and others of similar character;

(2) Those which belong to the State without being for public use, and are intended for some public service or for the development of the national wealth.

Article 502 adds to the above enumeration, the following:

(1) Rivers and their natural beds;

(2) Continuous or intermittent waters of springs and brooks running in their natural beds and the beds themselves;

(3) Waters rising continuously or intermittently on lands of public dominion;

(4) Lakes and lagoons formed by Nature on public lands and their beds;

x x x x x x x x x

The Director of Lands would like Us to believe that since a portion of the land sought to be registered is covered with water four to five months a year, the same is part of the lake bed of Laguna de Bay, or is at least, a foreshore land, which brings it within the enumeration in Art. 502 of the New Civil Code quoted above and therefore it cannot be the subject of registration.

25G.R. No. L-43105, August 31, 1984, 131 SCRA 532. 26G.R. No. L-70615, October 28, 1986, 145 SCRA 268. 27See Development Bank of the Philippines vs. Ozarraga, G.R. No. L-16631, September 20, 1965. 28See also Alvero vs. Reas, G.R. No. L-28337, September 30, 1970, 35 SCRA 210;


art. 1113


12

The extent of a lake bed is defined in Art. 74 of the Law of Waters of 1866, as follows:

The natural bed or basin of lakes, ponds, or pools, is the ground covered by their waters when at their highest ordinary depth.

The phrase highest ordinary depth in the above definition has been interpreted in the case of Government of P.I. vs. Colegio de San Jose, as the highest depth of the waters of Laguna de Bay during the dry season, such depth being the regular, common, natural, which occurs always or most of the time during the year. The foregoing interpretation was the focal point in the Court of Appeals decision sought to be reviewed. We see no reason to disturb the same.

Laguna de Bay is a lake. While the waters of a lake are also subject to the same gravitational forces that cause the formation of tides in seas and oceans, this phenomenon is not a regular daily occurrence in the case of lakes. Thus, the alternation of high tides and low tides, which is an ordinary occurrence, could hardly account for the rise in the water level of the Laguna de Bay as observed four to five months a year during the rainy season. Rather, it is the rains which bring about the inundation of a portion of the land in question. Since the rise in the water level which causes the submersion of the land occurs during a shorter period (four to five months a year) than the level of the water at which the land is completely dry, the latter should be considered as the highest ordinary depth of Laguna de Bay. Therefore, the land sought to be registered is not part of the bed or basin of Laguna de Bay. Neither can it be considered as foreshore land. The Brief for the Petitioner Director of Lands cites an accurate definition of a foreshore land, to wit:

. . . that part of (the land) which is between high and low water and left dry by the flux and reflux of the tides x x x

The strip of land that lies between the high and low water marks and that is alternately wet and dry according to the flow of the tide.

As aptly found by the Court a quo, the submersion in water of a portion of the land in question is due to the rains falling directly on or flowing into Laguna de Bay from different sources. Since the inundation of a portion of the land is not due to flux and reflux of tides it cannot be considered a foreshore land within the meaning of the authorities cited by petitioner Director of Lands. The land sought to be registered not being part of the bed or basin of Laguna de Bay, nor a foreshore land as claimed by the Director of Lands, is not a property of public dominion. However, the applicant must prove that he has a registerable

art. 1113

13

title. This brings us to the second issue, which is whether or not applicant-private respondent has registerable title to the land.

The purpose of land registration under the Torrens System is not the acquisition of lands but only the registration of title which applicant already possesses over the land. Registration under the Torrens Law was never intended to be a means of acquiring ownership. Applicant in this case asserts ownership over the parcel of land he seeks to register and traces the roots of his title to a public instrument of sale (Exh. G) in favor of his father from whom he inherited said land. In addition to this muniment of title, he presents a tax declaration (Exhs. F, G, H, I) covering the land since 1918 and as well as tax receipts (Exhs. J, J-1, J-2, J-3, J-4, K, K-1, K-2, K-3) dating back to 1948. While it is true that tax receipts are declarations of ownership, they become strong evidence of ownership acquired by prescription when accompanied by proof of actual possession of the property. The Court of Appeals found that the applicant and his father, have been in open, continuous, public, peaceful, exclusive and adverse possession of the disputed land for more than thirty (30) years, which began on April 19, 1909, when the land was acquired from a third person by purchase. The record does not show any circumstance to note which is sufficient enough to overthrow said findings of facts which is binding upon Us. Since applicant has been in possession of the subject parcel of the land in the concept of owner with just title and in good faith, his possession need only last for ten years in order for ordinary acquisitive prescription to set in. Applicant has more than satisfied this legal requirement. Hence, even if the land sought to be registered is public land as claimed by the petitioners, applicant remains to be entitled to a judicial confirmation of his imperfect title, since he has also satisfied the requirements of the Public Land Act (Commonwealth Act No. 141 as amended by Republic Act No. 1942). Sec. 48 of said Act enumerates as among the persons entitled to judicial confirmation of imperfect title, the following:

(a) x x x

(b) Those who, by themselves or through their predecessors-in-interest, have been in the open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under bona fide claim of ownership, for at least thirty years immediately preceding the filing of the application for confirmation of title. x x x

The claim of private oppositors, petitioners in G.R. No. L-43190, that they have reclaimed the land from the waters of Laguna de Bay and that they have possessed the same for more than twenty (20) years does not improve their position. In the first place, private persons cannot, by themselves reclaim land


art. 1113


14

from water bodies belonging to the public domain without proper permission from government authorities. Moreover, even if such reclamation had been authorized, the reclaimed land does not automatically belong to the party reclaiming the same, as they may still be subject to the terms of the authority earlier granted. Private oppositors-petitioners failed to show proper authority for the alleged reclamation, therefore their claimed title to the litigated parcel must fail. In addition to that, their alleged possession can never ripen into ownership. This is due to the fact that only possession acquired and enjoyed in the concept of owner can serve as the root of a title acquired by prescription. As correctly found by the appellate court, the private oppositors-petitioners entered into possession of the land with the permission of, and as tenants of, the applicant del Rio. The fact that some of them at one time or another, did not pay rent cannot be considered in their favor. Their use of the land and their non-payment of rentals thereon, were merely tolerated by the applicant and they cannot affect the character of the latters possession which has already ripened into ownership at the time of the filing of this application for registration.

The applicant private-respondent having satisfactorily established his registerable title over the parcel of land described in his application, he is clearly entitled to register the said land in his favor.

Article 1114. Creditors and all other persons interested in making the prescription effective may avail themselves thereof notwithstanding the express or tacit renunciation by the debtor or proprietor. (1937)

An illustration of this article is as follows: A is indebted to B in the amount of P50,000. C guarantees the said indebtedness and waives his benefit of excussion. This means that should A fail to pay B, B need not exhaust all remedies against A for collection before he could demand payment from C, the guarantor. In the event that the time within which to pay has already prescribed but A nevertheless waives the prescription such that B can still collect from him, and should A again fail to pay, thereby prompting B to demand payment from C, the guarantor, the latter can resist payment by invoking that the collection of the debt of A has already prescribed. C will not be prejudiced by the act of A in waiving the prescription.

Article 1115. The provisions of the present Title are understood to be without prejudice to what in this Code or inspeciallawsisestablishedwithrespecttospecificcasesofprescription. (1938)

art. 1113

15

There are other provisions in the Civil Code which provide for prescriptive periods in specific cases. For example, Article 1391 provides that the prescriptive period for annulling a contract in case it is defective due to fraud perpetuated by one of the parties is four years from the time the fraud is discovered. This is true whether the contract is written or oral. Chapter Three of the present Title however, provides that an action on a written contract prescribes in 10 years and on an oral contract in 6 years. In this case, the prescriptive period in Article 1391 will apply. Article 1391 provides for a specific case on fraud. Other statutes likewise provide for certain prescriptive periods. In case of conflict between the period provided in this Title and the period provided in another portion of the Civil Code, the more specific provision will prevail. However, if different statutes are involved providing for different prescriptive periods, as well as the types of cause of action contemplated by them are apparently conflicting, they do not exclude each other from being availed of by the aggrieved parties. Thus, in Callanta vs. Carnation Philippines, Inc.,26 the Supreme Court ruled that, while a claim for money in labor cases prescribes in three years under the Labor Code, it will not bar the aggrieved party from availing of the four-year prescriptive period for injury to the plaintiff provided, under Article 1146 of the Civil Code, that the claim also arises from illegal dismissal which results to an injury to the plaintiff.

Article 1116. Prescription already running before the effectivity of this Code shall be governed by laws previously in force; but if since the time this Code took effect the entire period herein required for prescription should elapse, the present Code shall be applicable, even though by the former laws a longer period might be required. (1939)

The 1950 Civil Code took effect on August 30, 1950. Article 1116 is a transitory provision and the rules are as follows:

1) If the prescriptive period provided under the old law has already lapsed before the effectivity of the 1950 Civil Code, such prescriptive period shall apply;27

2) If the prescriptive period under the old law is still running upon the effectivity of the 1950 Civil Code which however provides for a different period for the same situation, the 1950 Civil Code shall prevail provided that such period counted from the effectivity of the 1950 Civil Code has already lapsed, although

Ongsiaco vs. Dallo, G.R. No. L-27451, February 28, 1969, 27 SCRA 161; Joaquin vs. Cojuangco, G.R. No. L-18060, July 25, 1967, 20 SCRA 769; Laurel-Manila vs. Galvan,


arts. 1114-115


16

under the old law the period has not yet lapsed. Thus, if under an old law previous to the effectivity of the Civil Code in 1950, X has thirty years within which to file a particular suit and by the time the 1950 Civil Code takes effect his remaining time, pursuant to the period provided by the old law, is only 12 years, he cannot file the case on the 12th or even on the 11th year if the 1950 Civil Code provides only 10 years as prescriptive period for exactly the same kind of case. This is so because by the 11th year or 12th year, the prescriptive period of 10 years counted from the effectivity of the 1950 Civil Code has already lapsed;

3) If the prescriptive period under the old law is still running upon the effectivity of the 1950 Civil Code and the remaining balance of such period since the effectivity of the 1950 Civil Code is shorter than that provided in the 1950 Civil Code for exactly the same situation, the old prescriptive period will apply. Thus, in the example given in No. 2, if the balance of the period which started under the old law is 12 years counted from the time of the effectivity of the 1950 Civil Code and the latter provides for 15 years as the prescriptive period for exactly the same case, the prescriptive period under the old law will prevail.28

G.R. No. L-23507, May 24, 1967, 20 SCRA 198; Carillo vs. De Paz, L-22601, October 28, 1966, 18 SCRA 467.

art. 1116

17PresCriPtiOnGeneral Provisions

art. 1116


18

Chapter 2

PRESCRIPTION OF OWNERSHIP AND OTHER REAL RIGHTS

Article 1117. Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary.

Ordinary acquisitive prescription requires possession of thingsingoodfaithandwithjusttitleforthetimefixedbylaw. (1940a)

Acquisitive prescription may be ordinary or extraordinary. Ordinary prescription requires uninterrupted possession for the required statutory period of years in good faith and with a just title. Extraordinary prescription likewise requires an uninterrupted possession for the statutory period of years but without need of just title and good faith on the part of the possessor. Godinez vs. Court of Appeals1 is an example of the application of acquisitive prescription, thus:

This case is about the acquisition of land by prescription. Felix Bergado owned Lot 655 with an area of 11,001 square meters. It is located in Punta Rizal, Barrio Gunob, Opon, now Lapu-lapu City. It was inherited by his seven children named Tomas, Teodora, Ambrosia, Florencia, Aniceto, Macario and Vicente.

Cadastral Judge Guillermo F. Pablo on January 31, 1929 ordered the registration of Lot 655 in the names of the seven sets of transferees, to each of whom he adjudicated a 1/6 share instead of 1/7. Because of that error and other clerical errors, no decree was issued nor did the adjudicatees obtain any Torrens title. The land remained unregistered.

Two-sevenths of Lot 655, pertaining to Macario Bergado and Vicente Bergado, were transferred to Maximo Patalinhug

18

1G.R. No. L-46768, March 18, 1985, 135 SCRA 351.

19

while the 5/7 share of the other five children were transferred in 1929 and 1930 to the spouses Domingo Magsumbol and Susana Magsumbol.

Lot 655 was subdivided on January 30, 1934 with the approval of the Director of Lands, into Lot 655-A (5/7) and Lot 655-B (2/7). The Bergado heirs ceased to have possession of any portion of Lot 655 which was occupied by the Magsumbol spouses and Patalinhug.

In the guardianship proceeding for the children of Miguel Magsumbol, who inherited Lot 655-A from Domingo, Sr., Judge Jose M. Mendoza adjudicated to Domingo, Jr. on October 30, 1962 said lot with an area of 7,344 square meters. Domingo, Jr. then sold Lot 655-A on November 2, 1962, to the brothers Mamerto and Lorenzo Igot for P10,000 (Exh. D or 2). The Igots continued the Magsumbols possession of Lot No. 655-A.

On May 10, 1967, or 38 years after Judge Pablo rendered his decision, Judge Mendoza, the same judge who granted Lot 655-A to Domingo Magsambol, Jr., at the instance of some Bergado heirs, corrected the clerical errors in Judge Pablos decision. As a result, a decree was issued regarding this matter. Finally on December 19, 1967, OCT No. 8 was issued for Lot 655. The land became registered land at last.

In 1970 the Igot brothers sued some Bergado heirs for the reconveyance of Lot 655-A or 5/7 portion of Lot 655 which is covered by OCT No. 8. The trial court upheld their claim. The appellate Court, through Justice Gatmaitan, affirmed said decision.

In its decision, the court ruled that the Magsumbols had acquired Lot 655-A by prescription under section 41 of the Code of Civil Procedure. The right was in turn, transmitted to the Igots. The petitioners herein, or defendants Godinez and Jayme, had only acquired a paper title in 1967 when they obtained OCT No. 8.

The petitioners filed an appeal contending that the Appellate Court erred by not recognizing OCT No. 8 as indefeasible and by not considering the action of the Igots as barred by res judicata.

The Supreme Court in its decision, held that the Appellate Court did not err in dismissing the claim of the petitioners for Lot 655-A which has been in the adverse, continuous, uninterrupted and notorious possession of the Magsumbols and the Igots, in the concept of owner for more than half a century. The laws as well as the canons of common sense favored the Igots.

Thus, OCT No. 8 did not nullify the sales made by the five Bergado children to the Magsumbol spouses in 1929 and 1930.

PresCriPtiOnPrescription of Ownership and Other

Real Rights

art. 1117


20

Article 1118. Possession has to be in the concept of an owner, public, peaceful and uninterrupted. (1941)

Possession must be in the concept of an owner. This means that the possessor asserts dominion on the property to the exclusion of all others. It must be an adverse possession.2 Thus, a mere lessee or a mere mortgagee does not hold the property in the concept of an owner. Also, possession of cash dividends by an agent on behalf of the owner, cannot be the subject of prescription, as there is no holding of the property in concepto de dueo.3

Thus, mere possession with a juridical title, such as, to exemplify, by a usufructuary, a trustee, a lessee, an agent or a pledgee, not being in the concept of an owner, cannot ripen into ownership by acquisitive prescription, unless the juridical relation is first expressly repudiated and such repudiation has been communicated to the other party. Acts of possessory character executed due to license or by mere tolerance of the owner would likewise be inadequate. Possession, to constitute a foundation of a prescriptive right, must be en concepto dueno, or, to use the common law equivalent of the term, that possession should be adverse, if not, such possessory acts, no matter how long, do not start the running of the period of prescription.4

In Ramirez vs. Court of Appeals5 where it was proven that the possessor of the property held the property by virtue of a contract of antichresis, the Supreme Court ruled thus:

This court has on several occasions held that the anti-chretic creditor cannot ordinarily acquire by prescription the land surrendered to him by the debtor (Trillana vs. Manansala, et al., 96 Phil. 865; Valencia vs. Acala, 42 Phil. 177; Barreto vs. Barreto, 3 Phil. 234). The petitioners are not possessors in the concept of owners. Thus, their possession cannot serve as a title for acquiring dominion (See Art. 540, Civil Code).

In Republic vs. Court of Appeals,6 involving the possession of the United States Navy of a particular property for recreational purposes only, the Supreme Court rejected any contention for prescription to

2Cuayong vs. Benedicto, G.R. No. 9989, March 13, 1918, 37 Phil. 781. 3Harden vs. Harden, G.R. No. L-22174, July 21, 1967, 20 SCRA 706. 4Marcelo, et al. vs. Court of Appeals, G.R. No. 131803, April 14, 1999, 105 SCAD 561, 305 SCRA 800. 5G.R. No. L-38185, September 24, 1986, 144 SCRA 292.

art. 1118

21

apply. The pertinent portions of the decision are as follows:

The finding of respondent court revealed that, during the interim of 57 years from November 26, 1902 to December 17, 1959 (when the U.S. Navy possessed the area), the possessory rights of Baloy or his heirs were merely suspended and not lost by prescription, is supported by Exhibit U, a communication or letter No. 1108-63, dated June 24, 1963, which contains an official statement regarding the position of the Republic of the Philippines with regard to the status of the land in question. Said letter recognizes the fact that Domingo Baloy and/or his heirs, have been in continuous possession of said land since 1894 as attested by an Informacion Possessoria Title, which was granted by the Spanish Government. Hence, the disputed property is private land and this possession was only interrupted only by the occupation of the land by the U.S. Navy in 1945 for recreational purposes. However, the U.S. Navy eventually abandoned the premises. The heirs of the late Domingo P. Baloy, are presently in actual possession, and has been in possession since the abandonment by the U.S. Navy. A new recreation area is presently being used by the U.S. Navy personnel and such place is remote from the land in question.

Clearly, the occupancy of the U.S. Navy was not in the concept of owner. It partakes of the character of commodatum. It cannot therefore militate against the title of Domingo Baloy and his successors-in-interest. Ones ownership of a thing may be lost through prescription by reason of anothers possession, provided that such possession is under a claim of ownership, and not where the possession is only intended to be transient, as in the case of the U.S. Navys occupation of the land concerned, in which case the owner is not divested of his title, however, it cannot be exercised in the meantime.

In Ramos vs. Court of Appeals,7 the Supreme Court likewise ruled that acquisitive prescription has set in especially when the claimant has undertaken acts clearly showing his claim of ownership, thus:

Even from the standpoint of acquisitive prescription, which seems to be more decisive, it appears too clear that private respondents have acquired title to the land in suit by virtue of possession in the concept of an owner. It is of record that private respondents have been in continuous possession of the litigated parcel of land since they bought the same in 1934. In addition to that they have been paying the real estate taxes due thereon and have declared said property in their name for taxation

6G.R. No. L-46145, November 26, 1986, 146 SCRA 15. 7G.R. No. L-52741, March 15, 1982, 112 SCRA 542.


Real Rights

art. 1118


22

purposes. As correctly ruled by the Appellate Court, that while tax declaration and tax receipts are not necessarily evidence of title, they are considered as a strong evidence of possession for no one in his right mind would be paying taxes year after year for a property that is not in his actual possession.

The records of the case further disclose that petitioners complaint for reconveyance was filed in the lower court only on March 13, 1973, 39 years after the registration of the deed of absolute sale in favor of private respondents. The issuance of a certificate of title in their name exclusively on May 12, 1934, from which latter date petitioners cause of action, if any, is deemed to have commenced, since the registration of the aforesaid deed of sale in the Office of the Registry of Deeds constitutes a constructive notice to the whole world of its contents and all interests, legal and equitable, included therein.

Since the prescriptive period in this case had already run since May 12, 1934 prior to the effectivity of the new Civil Code on August 30, 1950, there can be no doubt that the former laws on prescription applies, pursuant to Article 1116 of the Civil Code. Under Section 40 of the Code of Civil Procedure formerly in force, adverse possession ripened into ownership after the lapse of ten (10) years, good or bad faith of the possessor being immaterial for purposes of acquisitive prescription. In the like manner, an action to recover title or the possession of immovable property, prescribe in the same period of 10 years. The instant case, not having been filed within 10 years from the time the cause of action accrued on May 12, 1934, have already prescribed in 1944 because the complaint was filed only on March 13, 1973, about 39 years later. Consequently, the possession by the private respondents over the litigated property ripened into full ownership in 1944, ten years after May 12, 1934, when their possession which was actual, open, public and continuous, under a claim of title exclusive of any other right and adverse to all other claims, commenced.

Possession must be public. This means that there must be a notorious holding of the property known to the community. It must not be of a surreptitious character because it must be in the concept of an owner. It must likewise be peaceful in that, for the period of years required by law for acquisitive prescription to apply, there must be no valid interference from others claiming or asserting their rights to the property. It must likewise be uninterrupted. This is defined in the subsequent sections.

Article 1119. Acts of possessory character executed in virtue of license or by mere tolerance of the owner shall not be

art. 1118

23

available for the purposes of possession. (1942)

The fact that the possessor holds the property by virtue of the consent of the owner shows that such possessor acknowledges that somebody else owns the property. Possession by tolerance therefore does not imply an assertion of ownership,8 and thus produces no effect with respect to possession or prescription.9 In Coronado vs. Court of Appeals,10 where the statutory period for ordinary acquisitive prescription passed, the Supreme Court rejected the application of prescription because the possession was merely one of tolerance. Pertinently, the Supreme Court said:

As found by the respondent appellate court, Monterola never claimed ownership over the property in question. As a matter of fact, one of the deeds of donation executed by Monterola in favor of Leonida Coronado acknowledged that the boundary owner of the property conveyed to her is JUANA. This is precisely the reason why during the lifetime of the late Dalmacio Monterola, JUANA had always been allowed to enter and reap the benefits or the produce of the said property. It was only after the death of said Monterola in 1970 that Leonida Coronado prohibited JUANA from entering it (Ibid., p. 18).

Even assuming arguendo that Monterola was indeed in continuous possession of the said property for over ten years since 1934, said possession is insufficient to constitute the fundamental basis of the prescription. Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be possession under claim of title (en concepto de dueo), or through the use of common law equivalent to the term, it must be adverse. Acts of possessory character performed by one who holds by mere tolerance of the owner are clearly not en concepto de dueo, and such possessory acts, no matter how long so continued, do not start the running of the period of pres-cription (Manila Electric Company v. Intermediate Appellate Court, G.R. No. 71393, June 28, 1989).

In this case, Monterola, as found by the respondent appellate court as well as the lower court, never categorically claimed ownership over the property in question, much less his possession thereof en concepto de dueo. Accordingly, he could not have acquired said property by acquisitive prescription.

Article 1120. Possession is interrupted for the purposes of 8Ordoez vs. Court of Appeals, G.R. No. 84046, July 30, 1990, 188 SCRA 109. 9Manila Electric Company vs. Intermediate Appellate Court, G.R. No. L-71393, June 28, 1989, 174 SCRA 313. 10G.R. No. L-78778, December 3, 1990, 191 SCRA 814.


Real Rights

art. 1119


24

prescription, naturally or civilly. (1943)

Possession must be uninterrupted. This means that there must be continuity in the holding of the property. An uninterrupted possession strengthens the adverse right of the possessor. Possession can however be interrupted naturally or civilly.

Article 1121. Possession is naturally interrupted when through any cause it should cease for more than one year.

The old possession is not revived if a new possession should be exercised by the same adverse claimant. (1944a)

Article 1122. If the natural interruption is for only one year or less, the time elapsed shall be counted in favor of the prescription. (n)

For example, A is in possession of an unregistered property in the concept of an owner in good faith and with a just title. The land is formerly owned by B. The property is sold in a public auction to satisfy Bs indebtedness from the government. A is the successful bidder. The document evidencing the title has not yet been finished and registered with the Government. A however is already in possession for a period of 4 years. Z appears and claims that the property is his. Z requests A to vacate the premises so that he will not be entangled in a possible suit. To avoid complications, A left the place. It turns out however, that Z is a defrauder, and it is M who has previously bought the property from B before A made his purchase. Upon learning that Z is a defrauder, A returns to the property after two years. He stays there for another 7 years. M now claims the property and requests A to leave the place. A cannot invoke acquisitive prescription. While he may have possession of the property for a total period of 11 years, it is interrupted. When he left the property for two years, his subsequent possession of seven years cannot be added to his previous four years. In effect, the period which is material for purposes of prescription is the subsequent 7 years. Obviously, said seven-year period have not yet complied with the 10-year period required by law for ordinary acquisitive prescription. However, if the interruption is not two years but only one year or less, acquisitive prescription will have already set in, in favor of A because the law clearly provides that if the natural interruption is for only one year or less, the time elapsed shall be counted in favor of the prescription.

Article 1123. Civil interruption is produced by judicial

arts. 1120-1122

25

summons to the possessor. (1945a)

Article 1124. Judicial summons shall be deemed not to have been issued and shall not give rise to interruption:

(1) If it should be void for lack of legal solemnities;

(2) If the plaintiff should desist from the complaint or should allow the proceedings to lapse;

(3) If the possessor should be absolved from the complaint.

In all these cases, the period of the interruption shall be counted for the prescription. (1946a)

It is not the filing of the complaint in court which interrupts the possession. It is interrupted upon receipt of the possessor of the judicial summons after the filing of the complaint. When the possessor receives the judicial summons and the copy of the complaint, it is only during that time that jurisdiction is acquired by the court of the person of the possessor and it is at that time that possession is interrupted.

However there are instances provided by law that judicial summons shall be deemed not to have been issued, thereby not giving rise to interruption. The first case is when the judicial summons is void for lack of legal solemnities. Hence, if the judicial summons as well as the copy of the complaint have been served by a person not authorized by the court, it shall be deemed as not issued, thereby allowing the possession to run uninterrupted.

Second is when the plaintiff should desist from the complaint or should allow the proceedings to lapse. Desistance from the complaint by the plaintiff means voluntarily having the case dismissed, while allowing the proceeding to lapse clearly manifests the lack of interest to prosecute the case. In both cases, the possessor should not be prejudiced. There will be no interruption.

Third is when the possessor is absolved from the complaint. Absolution means that the complaint have not been fully substantiated to support any adverse claim by the complainant and therefore this should not prejudice the possessor who must always be presumed to be in good faith.

Article 1125. Any express or tacit recognition which the possessor may make of the owners right also interrupts possession. (1948)


Real Rights

arts. 1123-1124


26

Express or tacit recognition interrupts the possession because possession must always be in the concept of an owner to the exclusion of all others. Hence, one cannot consider himself possessing a property adversely in the concept of an owner if he recognizes somebody else as having a superior right as an owner. Thus in Corpus vs. Padilla,11 the Supreme Court ruled that

one cannot recognize the right of another and at the same time claim adverse possession which can ripen to ownership, thru acquisitive prescription. For prescription to set in, the possession must be adverse, continuous, public and to the exclusion of all.

Similarly, in Dioso vs. Court of Appeals,12 where the seller and the buyer executed a contract of sale in April 6, 1940 giving the seller the right to repurchase the property on or before April 6, 1950 and where the buyer immediately took possession of the property, the Supreme Court, in resolving the issue of whether or not acquisitive prescription can be availed of by the buyer, agreed with the Court of Appeals decision stating:

that the possession of petitioner Dinoso under the sale a retro did not actually become hostile or adverse until the expiration of the redemption period, since until then he recognized the superior right of the vendor to oust him, and his claim of ownership was not absolute. Authorities are to the effect that

Where the sale is subject to the owners right of redemption, the purchasers possession has been held in subordination to the title of the owner prior to the expiration of the redemption period, although it may become hostile thereafter. (2 C.J.S. P. 664, Sec. 113; Morse vs. Seibold, 35 N.W. 471).

It was incumbent upon the petitioner to show when his vendors right of redemption expired, and that he had held adversely for ten years thereafter. In truth, his own deed (Exhibit 1) recites that Ferias right of repurchase would expire only on 6 April 1950, so that the present suit for recovery have begun, in 1952, well within the prescriptive period.

Article 1126. Against a title recorded in the Registry of Property, ordinary prescription of ownership or real rights shall not take place to the prejudice of a third person, except in virtue of another title also recorded; and the time shall begin 11G.R. Nos. L-18099 and L-18136, July 31, 1962, 5 SCRA 814. 12G.R. No. L-17738, April 22, 1963, 7 SCRA 666.

art. 1125

27

to run from the recording of the latter.

As to lands registered under the Land Registration Act, the provisions of that special law shall govern. (1949a)

In Dimayuga vs. Court of Appeals,13 where the deceased spouses acquired a thirteen-hectare homestead, registered under the Torrens System in 1928. The illegitimate children claimed one-half of the same on the ground that they acquired it by acquisitive prescription having been in the property since 1948, the Supreme Court rejected such contention by stating:

That contention is devoid of merit. It may be morally plausible but it is legally indefensible. No portion of the homestead, a registered land, may be acquired by prescription. No title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession. (Sec. 46, Act No. 496; Sec. 47, Property Registration Decree, P.D. No. 1529; Art. 1126, Civil Code)

In Reyes vs. Court of Appeals,14 where the registered property was acquired through a forged document by the petitioner, and where such petitioner claimed acquisitive prescription against the heirs of the original owners, the Supreme Court said:

Moreover, this Court agrees with the private respondents that there can be no acquisitive prescription considering that the parcel of land in dispute is titled property, i.e., titled in the name of the late Bernardino Reyes, the father of both the petitioner Florentino and the private respondents. This fact, petitioners do not deny. Hence, even if they allege adverse possession that would ripen into ownership due to acquisitive prescription, their title cannot defeat the real rights of private respondents who stepped into the shoes, as it were, of their father as successors-in-interest. As it is, petitioners cannot even claim adverse possession as they admit that the private respondents likewise resided and continue to reside on the subject property.

However, although prescription will not apply to registered property, the doctrine of laches is applicable. Laches is the rule of in effectivity of stale demands. In Catholic Bishop of Balanga vs. Court of Appeals,15 where the petitioner donated registered property to a person who, including his successors-in-interest, took possession of the same adversely, continuously, publicly and peacefully for forty-

13G.R. No. L-148433, April 30, 1984, 129 SCRA 110. 14G.R. No. L-110207, July 11, 1996, 72 SCAD 126, 258 SCRA 651.


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nine (49) years, and where, thereafter, the petitioner filed a case to recover the property contending that the donation is invalid, the Supreme Court, despite the fact the property was registered, rejected the assertion of imprescriptibility of registered property and decided against the petitioner on the ground that it was guilty of laches. The Supreme Court pertinently ruled:

The time honored rule (on laches) anchored on public policy is that relief will be denied to a litigant whose claim or demand has become stale or who has acquiesced for an unreasonable length of time, or who has not been vigilant or who has slept on his right either by negligence, folly or inattention. In other words, public policy requires, for the peace of society, the discourage-ment of claims grown stale for non-assertion; thus laches is an impediment to the assertion or enforcement of a right which has become, under the circumstances, inequitable or unfair to permit.

xxx xxx xxx

In this case, the petitioner filed its complaint in court only after forty-nine (49) years had lapsed since the donation in its behalf of the subject property to private respondents prede-cessor-in-interest. There is nary an explanation for the long delay in the filing by petitioner of the complaint in the case at bench, and that inaction for an unreasonable and unexplained length of time constitutes laches. As such, petitioner cannot claim nullity of the donation as an excuse to avoid the consequences of its own unjustified inaction and as a basis for the assertion of a right on which they had slept for so long.

xxx xxx xxx

Finally, we agree with the respondent Court of Appeals that, while petitioner is admittedly still the registered owner of the donated property, and jurisprudence is settled as to the imprescriptibility and indefeasibility of a Torrens Title, there is equally an abundance of cases in the annals of our jurisprudence where we categorically ruled that a registered landowner may lose his right to recover the possession of his registered property by reason of laches.

Article 1127. The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership. (1950a)

art. 1126

15G.R. No. 112549, November 14, 1996, 76 SCAD 148.

29

Article 1128. The conditions of good faith required for possession in Articles 526, 527, 528 and 529 of this Code are likewise necessary for the determination of good faith in the prescription of ownership and other real rights. (1951)

The following provisions of the 1950 Civil Code on possession shall likewise be necessary in determining good faith on matters of prescription:

Article 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing.

Mistake upon a doubtful or difficult question of law may be the basis of good faith.

Article 527. Good faith is always presumed, and upon him who alleges bad faith on the part of a possessor rests the burden of proof.

Article 528. Possession acquired in good faith does not lose this character except in the case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully.

Article 529. It is presumed that possession continues to be enjoyed in the same character in which it was acquired, until the contrary is proved.

In Negrete vs. Court of First Instance of Marinduque,16 where a person claimed a particular property by virtue of ordinary acquisitive prescription of ten years based on a deed of sale which he knew involved a different property, the Supreme Court rejected the same on the ground that, aside from the period required by law, there must also be good faith and just title in the possession which was not present in the case, thus:

The crucial issue therefore is whether the deed of sale executed by Tito Oriendo on August 30, 1954 in favor of the late Igmedio Maderazo could be considered as a valid basis for good faith and as a just title, in order to justify the acquisition of the disputed parcel of about 9 hectares by ordinary prescription thru adverse possession of only 10 years.

The law defines a possessor in good faith as one who is

16G.R. No. L-31267, November 24, 1972, 48 SCRA 113.


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not aware of any flaw in his title or mode of acquisition; and conversely, one who is aware of such flaw is a possessor in bad faith (Art. 526, Civil Code of the Philippines).

WE ruled that the essence of the bona fides or good faith, therefore, lies in the honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another.

A deed of sale, to constitute a just title and to generate good faith for the ordinary acquisitive prescription of ten (10) years, should refer to the same parcel of land, which is adversely possessed. In the case at bar, the deed of sale in favor of the deceased Igmedio Maderazo covers a parcel of land patently different from the disputed land owned by plaintiff-appellant as to area, location, and boundary owners.

xxx xxx xxx

Hence, defendant-appellee Catalino Maderazo, along with his late father Igmedio Maderazo, could not claim good faith in occupying said land of plaintiff-appellant on the basis of the said instrument of sale. If said appellees position were to be sustained, it would be easy for anyone to acquire ownership of an untitled land belonging to another person by adverse possession of only ten (10) years on the basis of a document of sale covering a distinct parcel executed by a person who is a stranger to the land. This could not have been intended by the legislature; because forged deeds of conveyance could be conveniently interposed to oust the true owner from a land by adverse possession of only ten (10) years. To spawn such a monstrosity in the law was never contemplated by the statute, which is designed to engender social quietude.

In Reyes vs. Court of Appeals (Ninth Division),17 the Supreme

Court ruled that knowingly using a forged document to base ones just title for purposes of acquisitive prescription is an act of bad faith, thus:

With respect to the second assignment of error, petitioners contend that even assuming that there was forgery, they have become absolute owners of the subject property by virtue of acquisitive prescription citing Articles 1117 and 1134 of the Civil Code as follows:

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

Ordinary acquisitive prescription requires possession of things in good faith and with just title for the time fixed by law.

17G.R. No. L-110207, July 11, 1996, 72 SCAD 126, 258 SCRA 651.

arts. 1127-1128

31

x x x x x x x x x

Art. 1134. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years.

By virtue of said articles, they claim that they have been possessors of the contested parcel of land in good faith, for ten years and with a just title for the period required by law.

This Court is not impressed with this argument. Petitioners cannot justify their ownership and possession of the subject parcel of land since they could not meet the requisites provided by the provisions they have cited. Regarding the requirement of good faith, the first paragraph of Article 526 states, thus:

He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it.

From the above-cited provision, petitioners could not have been possessors in good faith of the subject parcel of land considering the finding that at the very inception they forged the Deed of Extrajudicial Partition and Settlement which they claim to be the basis for their just title.

Having forged the Deed and simulated the signatures of private respondents, petitioners, in fact, are in bad faith. The forged Deed containing private respondents simulated signatures is a nullity and cannot serve as a just title.

Moreover, this Court agrees with the private respondents that there can be no acquisitive prescription considering that the parcel of land in dispute is titled property, i.e., titled in the name of the late Bernardino Reyes, the father of both petitioner Florentino and the private respondents. This fact, the petitioners do not deny. Hence, even if they allege adverse possession that should ripen into ownership due to acquisitive prescription, their title cannot defeat the real rights of the private respondents who stepped into the shoes, as it were, of their father as successors-in-interest. As it is, petitioners cannot even claim adverse possession as they have admitted that the private respondents likewise resided and continue to reside on the subject property.

Good faith cannot likewise be invoked if the claimant has actual or constructive notice of the legal and valid rights of possession of another during the prescriptive period. Thus in Magtira vs. Court of Appeals,18 the Supreme Court allowed prescription because the claimant had constructive notice of the possession of another, thus:

Additionally, acquisitive prescription operates to bar any


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action by SOFIA. From the date of the filing of the Affidavit for Consolidation of Ownership by ZACARIAS with the Register of Deeds on August 23, 1945 up to the date of the filing of the complaint by SOFIA on June 18, 1956, or for almost eleven (11) years, ZACARIAS enjoyed an uninterrupted, adverse, public and peaceful possession of the litigated property in the concept of owner, which under Article 1134 of the Civil Code ripened into ownership by ordinary prescription through possession of at least ten years. Contrary to SOFIAs claim, the period of prescription should be reckoned not merely from the time when she allegedly came to know of the claim of ownership of ZACARIAS during the cadastral survey in 1955, but from the date of registration of the Affidavit for Consolidation with the Register of Deeds because registration of an instrument in the Office of the Register of Deeds constitutes constructive notice to the whole world.

Article 1129. For the purposes of prescription, 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 of ownership or other real rights, but the grantor was not the owner or could not transmit any right. (n)

Article 1130. The title for prescription must be true and valid. (1953)

Article 1131. For the purposes of prescription, just title must be proved; it is never presumed. (1954a) In Doliendo vs. Biarnesa,19 where a person bought property in a valid public auction , took and continued possession of the property thereafter for more than ten years, and where, prior to the sale made in the public auction, there was a first purchaser of the property previous to the death of the original owner, the Supreme Court ruled that the person who bought the property at the public auction already acquired the property by acquisitive prescription as he was able to show by concrete evidence the holding of such public auction from which he based his just title. Pertinently, the Supreme Court said:

Counsel for the plaintiff contended that since he had purchased the land in question prior to the alleged sale at public auction, the commissioner had no lawful authority to include it in the list of property of the vendor which could be subjected to the payment of his debts, and that the sale, therefore, was invalid and of no effect; also insisted that a prescriptive title could not

18G.R. No. L-27547, March 31, 1980, 96 SCRA 680.

arts. 1129-1131

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be based on such transaction because the title for prescription must be valid and true.

We think that this contention is based on a misconception of the scope and effect of the provisions of the code as applied to ordinary prescription. It is evident that by a t

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