Civil 1

LEONCIO C. OLIVEROS,represented by his heirs,*MOISESDE LA CRUZ,** and the HEIRS OFLUCIO DELA CRUZ, representedby FELIX DELA CRUZ,

G.R. No. 173531 Present:

- versus - LEONARDO-DE CASTRO,

SAN MIGUEL CORPORATION,THE REGISTER OF DEEDS OFCALOOCAN CITY, and THEREGISTER OF DEEDS OFVALENZUELA, METROMANILA,

DEL CASTILLO, andVILLARAMA, JR., JJ. Promulgated:

Respondents. February 1, 2012

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DEL CASTILLO, J.: Only holders of valid titles can invoke the principle of indefeasibility of Torrens titles. Before the Court is a Petition for Review[1] of the April 21, 2006 Decision of the Court of Appeals (CA) in CA-G.R. CV No. 59704, as well as its July 7, 2006 Resolution, denying reconsideration of the assailed Decision. The dispositive portion of the April 21, 2006 Decision reads: WHEREFORE, the appealed Decision dated August 12, 1997 is affirmed, subject to the modification that the award of attorney’s fees is reduced to P100,000.00. SO ORDERED.[2] The CA affirmed the trial court’s judgment, which dismissed petitioners’ complaint for the nullification of the title of San Miguel Corporation’s (SMC) predecessor-in-interest, Ramie Textile (Ramitex), Inc., over Lot 1131 of the Malinta Estate and granted Ramitex’ prayer for the cancellation of petitioner Leoncio C. Oliveros’ (Oliveros) title over the subject property. Factual Antecedents This case involves a parcel of land known as Lot 1131 (subject property) of the Malinta Estate located in Barrio Bagbaguin of Valenzuela, Metro Manila. Ramitex bought the subject property from co-owners Tomas Soriano (Soriano) and Concepcion Lozada (Lozada) in 1957. On the basis of such sale, the Register of Deeds of Bulacan (Bulacan RD) cancelled the vendors’ Transfer Certificate of Title (TCT) No. 29334[3] and issued TCT No. T-18460 on March 6, 1957 in favor of Ramitex. Lot 1131 is just one of the 17 lots owned by Ramitex within the Malinta Estate. In 1986, Ramitex consolidated and subdivided its 17 lots within the Malinta Estate into six lots only under Consolidation Subdivision Plan Pcs-13-000535.[4] Lot 1131, which contains 8,950 square meters, was consolidated with portions of Lots 1127-A and 1128-B to become consolidated Lot No. 4 (consolidated Lot 4). The consolidated area of Lot 4 is 16,958 square meters. By virtue of this consolidation, the Register of Deeds of Caloocan City (Caloocan RD) cancelled Ramitex’ individual title to Lot 1131 (TCT No. T-18460) and issued a new title, TCT No. T-137261, for the consolidated Lot 4. Troubles began for Ramitex on February 22, 1989, when Oliveros filed a petition[5] in Branch 172 of the Regional Trial Court of Valenzuela (Valenzuela RTC) for the reconstitution of TCT No. T-17186, his alleged title over Lot 1131 of the Malinta Estate (reconstitution case).[6] He claimed that the original copy was destroyed in the fire that gutted the office of the Bulacan RD on March 7, 1987.[7] Ramitex filed its opposition to Oliveros’ petition[8] asserting that TCT No. T-17186 never existed in the records of the Bulacan RD and cannot therefore be reconstituted.[9] The State, through the provincial prosecutor, also opposed on the basis that Oliveros’ TCT No. T-17186, which is embodied on a judicial form with Serial Number (Serial No.) 124604, does not come from official sources. The State submitted a certification from the Land Registration Authority (LRA) that its Property Section issued the form with Serial No. 124604 to the Register of Deeds of Davao City (Davao RD), and not to the Bulacan RD, as claimed in Oliveros’ alleged title.[10] In light of Ramitex’ opposition and ownership claims over Lot 1131, Oliveros filed a complaint for the declaration of nullity of Ramitex’ title over Lot 1131 on November 16, 1990 (nullity case).[11] This complaint was docketed as Civil Case No. 3232-V-89 and raffled to Branch 172 of the Valenzuela RTC. Oliveros claimed that he bought the subject property sometime in November 1956 from the spouses Domingo De Leon and Modesta Molina, and pursuant to such sale, the Bulacan RD issued TCT No. T-17186 in his favor on November 14, 1956. He was joined in the suit by his alleged overseers to Lot 1131, petitioners Moises and Felix Dela Cruz, who were judicially ejected by Ramitex from Lot 1127 two years before.[12] Oliveros and his co-petitioners alleged that Ramitex did not own Lot 1131 and that its individual title to Lot 1131, TCT No. 18460, was fake and was used by Ramitex to consolidate Lot 1131 with its other properties in the Malinta Estate. They further claimed that the resulting consolidated Lot 4 is not actually a consolidation of several lots but only contains Lot 1131, which belongs to Oliveros. Thus, they asked for the nullification as well of Ramitex’ title to consolidated Lot 4,[13] insofar as it unlawfully included Lot 1131. Given the prejudicial nature of the nullity case on the reconstitution case, the latter was held in abeyance until the resolution of the former. Ramitex answered that its title over Lot 1131 is valid and claimed continuous possession and ownership of the subject property. It prayed for the dismissal of petitioners’ complaint against it for lack of merit.[14] Ramitex counterclaimed that it is Oliveros’ title, TCT No. T-17186, that should be cancelled for being spurious and non-existent. During trial, [15] Oliveros testified that the Bulacan RD lost the original of his alleged title when its office and records were destroyed by fire on March 7, 1987. He presented a certification from the Bulacan RD to the effect that all its records, titles and documents were burned.[16] He also presented a certification from the Caloocan RD to the effect that it did not receive the original certificate of title bearing TCT No. T-17186 from the Bulacan RD, after Presidential Decree No. 824[17]removed jurisdiction over the Municipality of Valenzuela from the Province of Bulacan to Caloocan.[18] The Valenzuela RD likewise certified that it has no record of the original of TCT No. T-17186.[19]

http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/173531.htm#_ftn21





















When questioned why the original of his title was not transmitted to the Caloocan RD and the Valenzuela RD when the jurisdiction over the properties of the Malinta Estate was transferred to these offices, Oliveros explained that it was only the titles with new transactions that were transferred. Since his title was dormant, meaning he did not make any transaction on it, it was never trasmitted to the Caloocan or Valenzuela RD. Notably, Oliveros failed to present his owner’s duplicate of TCT No. T-17186 during the entire trial but only presented a machine copy thereof. He claimed that he had already sold Lot 1131 to a certain Nelson Go of DNG Realty and Development Corporation (DNG Realty) in June of 1991,[20] and that the vendee has possession of the owner’s duplicate. Oliveros explained that Go would not lend to him the owner’s duplicate for presentation to the court because of a pending case for rescission of sale between them.[21] The complaint for rescission alleged that Oliveros deceived and defrauded Nelson Go and DNG Realty by misrepresenting ownership and actual possession of Lot 1131, which turned out to be owned and possessed by Ramitex.[22] Instead of his owner’s duplicate, Oliveros presented a lot data computation[23] from the Land Management Bureau (LMB) as proof that Lot 1131 exists in the public records as comprising 16,958 square meters, not 8,950 as claimed by SMC and Ramitex. [24] He also showed an undated and unapproved survey plan[25] to prove that Lot 1131 was surveyed to contain the said area.[26] As further proof of his ownership, Oliveros presented his tax declarations covering Lot 1131. With respect to his allegation that Ramitex’ title to Lot 1131 is void, Oliveros pointed out that the title does not contain the property’s technical description; it was issued on March 6, 1957, the same date that 13 other titles over other lots within the Malinta Estate were issued in favor of Ramitex; and the signatures of the registrar, Soledad B. De Jesus, on the said titles were dubious.[27] On the other hand, SMC (having substituted[28] Ramitex as party-defendant after buying Ramitex’ interests over the subject property[29]) presented officials from various government offices to prove that Oliveros’ purported title to Lot 1131 does not actually exist in the official records. Fortunato T. Pascual (Pascual),[30] who heads the Property Section of the Land Registration Authority,[31] explained that his office supplies all the RDs throughout the country with the blank title forms, called Judicial Form No. 109-D. Starting in 1954, Judicial Forms No. 109-D became accountable forms bearingunique serial numbers.[32] Once a form is used by a registrar for issuing a land title, the registrar has to account for such forms by submitting a report of consumption (of the title forms) to the LRA.[33] The Property Section of the LRA maintains a record of all the title forms already used by the different registers of deeds. [34] Pascual then testified that, based on the LRA’s Record of Consumption of Judical Forms,[35] the LRA issued Judicial Form No. 109-D with Serial No. 124604 to the Davao RD on February 21, 1957, and not to the Bulacan RD sometime in 1956, as stated on Oliveros’ purported title.[36] As further proof that the Bulacan RD has not been issued a Judicial Form No. 109-D with Serial No. 124604 in November 1956 (as stated in Oliveros’ title), Pascual presented the record of consumption that was submitted by the Bulacan RD for the said month and year. The record states that the Bulacan RD consumed or issued 52 pieces of Judicial Form No. 109-D, with serial numbers starting from 113292 up to 113343 only.[37] Atty. Aludia P. Gadia (Gadia), the Registrar of Davao RD, confirmed Pascual’s testimony. She personally conducted the research and verifications from her office records that Judicial Form No. 109-D bearing Serial No. 124604 was used for issuing TCT No. T-7522 on August 8, 1957 in the name of a certain Consuelo Javellana, married to Angel Javellana. She presented the cancelled copy of TCT No. T-7522 to the court.[38] Gadia likewise attested to the fact that the serial numbers close to Serial No. 124604 (e.g. 124599, 124600, 124601, etc.) are all accounted for in Book No. 38 of the Davao RD.[39] SMC then assailed Oliveros’ Tax Declaration (TD) No. B-027-01995 over Lot 1131. It presented Cesar Marquez (Marquez), the municipal assessor of the Municipality of Valenzuela. Marquez testified that TD No. B-027-01995, which on its face states that it covers Lot 1131 with TCT No. T-17186,[40] is actually a revision of TD No. B-027-01170,[41] which covers Lot 1134 of the Malinta Estate with TCT No. T-193116.[42] Bartolome Garcia, the acting chief of the Realty Tax Division of the Officeof the Municipal Treasurer of Valenzuela,[43] corroborated Marquez’ testimony that it was only on September 12, 1983[44] that Oliveros started paying real estate taxes, but the said payments were for Lot 1134,[45] not Lot 1131. Per the records of his office, Oliveros began paying taxes for Lot 1131 only on March 12, 1990. On the other hand, Ramitex had been paying realty taxes for Lot 1131 since 1967.[46] Engineer Ernesto Erive (Engineer Erive), chief of the Surveys Division of the Land Management Sector, testified that the lot data computation and unapproved survey plan presented by Oliveros are used by geodetic engineers for reference purposes only, not for registration purposes.[47] Engineer Erive also pointed out that Oliveros’ title, which describes Lot 1131 as containing 16,958 square meters, is clearly erroneous. According to their office records, Lot 1131 of the Malinta Estate contains 8,950 square meters only. He presented as proof the approved survey plan for Lot 1131, Plan SP-2906. Engineer Erive explained that it was only after the consolidation made by Ramitex that Lot 1131 became a part of consolidated Lot 4 with the consolidated area of 16,958 square meters.[48] Thus, Oliveros’ title, unapproved survey plan and lot data computation all contain technical descriptions of the consolidated Lot 4 of Ramitex’ Pcs-13-000-535, and not of Lot 1131 of the Malinta Estate.[49] Engineer Erive dispelled doubts regarding the absence of a technical description on TCT No. (T-18460) T-64433, Ramitex’ title over Lot 1131. He explained that such was the usual practice with respect to lots within the Malinta Estate; that titles there usually include only the lot number and the case number.[50] SMC also debunked the alleged parent title, from which Oliveros’ title wasderived, TCT No. T-16921. For this purpose, SMC presented Christian Bautista (Bautista), the land registration examiner from the Valenzuela RD, who testified that the only record it has of TCT No. T-16921 pertains to Lot 20-D of the Lolomboy Estate in the name of Beatriz Dela Cruz. It does not pertain to Lot 1131 of the Malinta Estate and is not in the name of Oliveros’ alleged transferors, Domingo De Leon and Modesta Molina.[51] In stark contrast, SMC established its claim to Lot 1131. Bautista presented the original copies of Ramitex’ individual titles over the 16 parcels of land within the Malinta Estate, as well as the original titles of the consolidated lots, [52] which are all properly recorded in the Valenzuela RD.[53] Bautista also brought to court TCT No. (T-29334) T-63790, which is the title of Ramitex’s alleged predecessors-in-interest to Lot 1131, Soriano and Lozada.[54] For his rebuttal, Oliveros presented Ramon Vasquez (Vasquez), a record custodian of the LMB assigned to the Escolta Branch.[55] Vasquez testified that their office has a record of an unsigned and undated lot data computation for Lot 1131 of the Malinta Estate in the name of Domingo De Leon.[56] Upon cross examination, however, Vasquez admitted that the Escolta branch had no record of survey plans for the Malinta Estate[57] and that a lot data computation is not used as basis for the registration of land.[58] Ruling of the Regional Trial Court[59]









































The trial court found sufficient evidence to support the conclusion that Oliveros’ TCT No. T-17186 does not exist. It gave due credence to the certification of the LRA that Bulacan RD never possessed, hence could never have issued, Judicial Form No. 109-D with Serial No. 124604.[60] It observed that the certification from the Bulacan RD only proved that its records and documents were destroyed in the fire of March 1987. It did not, in the least, prove that TCT No. T-17186 existed prior to the fire.[61] Further, Oliveros failed to explain why the parent title of TCT No. T-17186 refers to a lot in the Lolomboy Estate. [62] He did not present the deed of sale allegedly executed in his favor by his vendors Domingo de Leon and Modesta Molina; nor could he produce the correct title, from which his TCT No. T-17186 was derived.[63] On the other hand, the trial court found overwhelming evidence supporting SMC’s claim as to the validity of its title to the subject property. The title from which SMC’s predecessor-in-interest Ramitex derived its own title, TCT No. (T-63790) 29334, was in the name of Ramitex’ vendors Soriano and Lozada, and was still in existence in the Bulacan RD. Moreover, Entry No. 39069 can be found on the dorsal portion thereof, which corroborates Ramitex’ claim that it bought Lot 1131 from the said vendors.[64] The trial court ruled in favor of SMC, thus: WHEREFORE, judgment is hereby rendered as follows: 1). Declaring TCT No. T-17186 of Oliveros as not genuine and dismissing the above-entitled case for lack of merit; and 2). Ordering the plaintiffs, jointly and severally, to pay defendant SMC the amount of P700,000.00 as attorney’s fees, plus the costs of suit. SO ORDERED.[65] Ruling of the Court of Appeals[66] Petitioners appealed to the CA. They asked for the reversal of the finding that Oliveros’ title over Lot 1131 is spurious and non-existent.[67] Petitioners averred that TCT No. T-17186 was issued earlier than Ramitex’ title, contains the technical description for Lot 1131 and is signed by Soledad B. De Jesus, the registrar of the Bulacan RD. Thus, TCT No. T-17186 enjoys the presumption of regularity accorded to every public instrument and thus, cannot be collaterally attacked.[68] Petitioners relied heavily on the alleged conclusiveness of Oliveros’ title based on its earlier issuance.[69] The appellate court affirmed the trial court’s Decision. After reviewing the factual findings of the trial court, the CA agreed that there is no evidence that Oliveros’ title came from official sources. On the other hand, SMC adequately established the existence and validity of its title (TCT No. T-18460), as well as those of its predecessors’ titles – those of Ramitex (TCT No. T-137261) and Soriano and Lozada (TCT No. 29334).[70] Given that these titles exist in official sources, they are indefeasible unless and until credible evidence is presented to obtain their annulment on grounds of fraud. In this instance, the CA found that Oliveros failed to present such evidence and thus, sustained the validity of SMC’s title. The CA however found the trial court’s award of P700,000.00 as attorney’s fees excessive, and thus reduced the same to P100,000.00.[71]Petitioners filed a Motion for Reconsideration,[72] which was denied for lack of merit in the appellate court’s July 7, 2006 Resolution.[73] Hence, this petition. Petitioners’ Arguments[74] Petitioners insist that the mere existence of Oliveros’ earlier title negates the conclusiveness of Ramitex’ title. [75] Oliveros’ TCT No. T-17186, as the older title, should enjoy presumptive conclusiveness of ownership and indefeasibility of title. Corollarily, Ramitex’s title being a later title should have the presumption of invalidity. Thus, SMC has the burden of overcoming this presumption. [76] Oliveros argues that SMC failed to prove the validity of its title, which should be cancelled accordingly. Petitioners then assail the CA Decision for allowing a collateral attack on Oliveros’ title. Since the complaint filed below was for the declaration of nullity ofRamitex’s title, not Oliveros’ title, what occurred below when the trial and appellate courts nullified Oliveros’ title was a collateral attack.[77] Petitioners pray that Oliveros’ title over Lot 1131 be declared valid; while that of SMC be declared null and void. Respondents’ Arguments[78] Respondent SMC argues that the principle of indefeasibility of titles applies only to an existing valid title to the litigated property. In the instant case, SMC showed that Oliveros’ title, while claiming priority, is actually spurious; thus, between SMC and Oliveros, it is only SMC which has a valid title and in whose favor the doctrine of indefeasibility of title applies. SMC further stresses that Oliveros cannot assert a right by virtue of a title, the existence of which Oliveros cannot establish. By the best evidence rule, the contents of a title can only be proved by presenting the original document. Secondary evidence, such as the ones presented by Oliveros (photocopy of TCT No. T-17186, tax declaration, and unapproved land surveys), are inadmissible until the offeror has laid the predicate for the presentation of secondary evidence. In the instant case, Oliveros failed to lay the predicate for the presentation of secondary evidence. The certifications he presented from the various RDs attest only that their offices do not have a record of TCT No. T-17186. They did not certify that TCT No. T-17186 existed in their records but was destroyed or transferred to another office. Moreover, Oliveros admits that his owner’s duplicate of TCT No. T-17186 is in the possession of his vendee, DNG Realty. Since it is not lost or destroyed, Oliveros is not justified in not presenting it in court. Oliveros’ explanation that DNG Realty will not lend him the title is unacceptable because there is legal recourse for such recalcitrance, which is to compel DNG Realty to present the duplicate copy in the instant case through a subpoena duces tecum. Lastly, SMC argues against the validity of Oliveros’ title by reiterating the evidence they presented during trial. Issues Petitioners present the following issues for this Court’s resolution:[79] 1. Whether the CA erred in applying the doctrines of indefeasibility and conclusiveness of title in favor of respondent SMC; 2. Whether the decisions of the CA and the trial court allowed a collateral attack on Oliveros’ certificate of title. Our Ruling





















Petitioners contend that the CA erred in holding that it was their burden to prove the invalidity of SMC’s title and that they failed to discharge such burden. They maintain that the mere existence of a prior title in Oliveros’ name suffices to create the presumption that SMC’s title, being the later title, is void.[80] With that presumption, it was incumbent upon SMC to prove the validity of its alleged title. Petitioners are oversimplifying the rule. The principle that the earlier title prevails over a subsequent one applies when there are two apparently valid titles over a single property. The existence of the earlier valid title renders the subsequent title void because a single property cannot be registered twice. As stated in Metropolitan Waterworks and Sewerage Systems v. Court of Appeals,[81] which petitioners themselves cite, “a certificate is not conclusive evidence of title if it is shown that the same land had already been registered and an earlier certificate for the same is in existence.” Clearly, a mere allegation of an earlier title will not suffice. It is elementary that parties have the burden of proving their respective allegations.[82] Since petitioners allege that they have a title which was issued earlier than SMC’s title, it was their burden to prove the alleged existence and priority of their title. The trial and appellate courts’ shared conclusion that petitioners’ TCT No. T-17186 does not exist in the official records is a finding of fact that is binding on this Court. Petitioners have not offered a reason or pointed to evidence that would justify overturning this finding. Neither did they assert that this factual finding is unsubstantiated by the records. Without a title, petitioners cannot assert priority or presumptive conclusiveness.[83] In contrast to petitioners, SMC adequately proved its title to Lot 1131. SMC proved that its and its predecessors’ titles to Lot 1131 all exist in the official records, and petitioners failed to present any convincing evidence to cast doubt on such titles. Thus, the CA correctly ruled that SMC’s title enjoys presumptive conclusiveness and indefeasibility under the Torrens system.[84] Petitioners’ argument that the ruling of the trial and appellate courts allowed a collateral attack on his title is clearly unmeritorious and easily disposed of. In the first place, the prohibition against collateral attack does not apply to spurious or non-existent titles, since such titles do not enjoy indefeasibility. “Well-settled is the rule that the indefeasibility of a title does not attach to titles secured by fraud and misrepresentation. In view of these circumstances, it was as if no title was ever issued in this case to the petitioner and therefore this is hardly the occasion to talk of collateral attack against a title.”[85] Moreover, the attack on Oliveros’ title was not a collateral attack. “An action or proceeding is deemed an attack on a title when the object of the action is to nullify the title, and thus challenge the judgment pursuant to which the title was decreed. The attack is direct when the object of the action is to annul or set aside such judgment, or to enjoin its enforcement. On the other hand, it is indirect or collateral when, in an action or proceeding to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.”[86] Here, SMC/Ramitex assailed the validity of Oliveros’ title as part of its counterclaim in an action to declare SMC/Ramitex’s title a nullity. A counterclaim is essentially a complaint filed by the defendant against the plaintiff and stands on the same footing as an independent action.[87] Thus, Ramitex’s counterclaim can be considered a direct attack on Oliveros’ title. WHEREFORE, premises considered, the petition is DENIED. The April 21, 2006 Decision and the July 7, 2006 Resolution of the Court of Appeals in CA-G.R. CV No. 59704 are AFFIRMED. SO ORDERED.

REPUBLIC vs. ROSILA ROCHEG.R. No. 175846; July 6, 2010x --------------------------------------------------------------------------------------- x ABAD, J.: This case is about the need for applicant for original registration of title to prove that the land applied for is alienable or disposable land of the public domain. The Facts and the Case On December 5, 1996 Rosila Roche applied for registration of title[1] of her 15,353-square-meter land in Barrio Napindan, Taguig, Metro Manila,[2] denominated as Lot 8698, before the Regional Trial Court (RTC) of Pasig City, Branch 155. Roche alleged that she inherited the land in 1960 from her father, Miguel, who in turn had held the land in the concept of an owner when Roche was only about six years old. She was born on that land on January 10, 1938 and had helped her father cultivate it.[3] Roche had also paid the realty taxes on the land, which had an assessed value of P490,000.00. To support her application for registration, Roche presented, among others, a certified true copy of the survey plan of the land,[4] its technical description,[5] a Certification from the Department of Environment and Natural Resources (DENR) in lieu of the Geodetic Engineer’s Certificate,[6] tax declarations,[7] and real property tax receipts.[8] She also presented certifications that the Land Registration Authority (LRA) and the National Printing Office issued to show compliance with requirements of service of notice to adjoining owners and publication of notice of initial hearing.[9] As proof of her open, continuous, and uninterrupted possession of the land, Roche presented Manuel Adriano, a former resident of Napindan who owned an unregistered property adjoining Lot 8698. Adriano testified that he had been a resident of the place where the land was located from 1949 to 1996 when he moved to Pampanga.[10] He drew a sketch showing the location of Lot 8698 in relation to his own and identified the owners of the other adjoining lots.[11] He claimed to have known Roche’s father since the latter had been cultivating vegetables and rice on the land.[12] The Republic of the Philippines (the Government), through the Office of the Solicitor General (OSG), opposed the application on the grounds a) that neither Roche nor her predecessor-in-interest had occupied the land for the required period; and b) that the land belonged to the State and is not subject to private acquisition.[13] The Laguna Lake Development Authority (LLDA) also opposed[14] Roche’s application on the ground that, based on technical descriptions, her land was located below the reglementary lake elevation of 12.50 meters and, therefore, may be deemed part of the Laguna Lake bed under Section 41[15] of Republic Act (R.A.) 4850. On September 7, 1999 the OSG filed a manifestation that, since Roche failed to prove that the land was part of the alienable land of the public domain, the Government did not need to present evidence in the case. It also adopted LLDA’s opposition.[16] On September 30, 1999 the RTC rendered judgment,[17] granting Roche’s application. The RTC held that Roche had proved continued adverse possession of the land in the concept of an owner since June 12, 1945 or earlier, pursuant to Presidential Decree (P.D.) 1959. Assuming that the land was part of the public domain, Roche and her predecessor’s occupation and cultivation of more than 30









years vested title on her, effectively segregating it from the mass of public land.[18] Moreover, the LLDA did not prove by substantial evidence that the land was inalienable and part of the Laguna Lake bed. On appeal by the Government,[19] the Court of Appeals (CA) affirmed the decision of the RTC.[20] The OSG filed a motion for reconsideration but the CA denied the same, prompting the Government to file the present petition. The Issue Presented The sole issue the petition presents is whether or not the land subject of Roche’s application is alienable or disposable land of the public domain. The Ruling of the Court The Government insists that the subject land forms part of the lake bed and that it has not been released into the mass of alienable and disposable land of the public domain. As such, Roche cannot register title to it in her name.[21] Roche points out, on the other hand, that the lot could not possibly be part of the Laguna Lake’s bed since it has always been planted to crops and is not covered by water. R.A. 4850 provides that the Lake is that area covered with water when it is at the average maximum lake level of 12.50 meters. This presupposed that the lake extends only to lakeshore lands. The land in this case does not adjoin the Laguna Lake.[22] An application for registration of title must, under Section 14(1), P.D. 1529, meet three requirements: a) that the property is alienable and disposable land of the public domain; b) that the applicants by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the land; and c) that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier.[23] Under the Regalian doctrine, all lands of the public domain belong to the State and the latter is the source of any asserted right to ownership in land. Thus, the State presumably owns all lands not otherwise appearing to be clearly within private ownership. To overcome such presumption, incontrovertible evidence must be shown by the applicant that the land subject of registration is alienable and disposable.[24] Respecting the third requirement, the applicant bears the burden of proving the status of the land.[25] In this connection, the Court has held that he must present a certificate of land classification status issued by the Community Environment and Natural Resources Office (CENRO)[26] or the Provincial Environment and Natural Resources Office (PENRO)[27] of the DENR. He must also prove that the DENR Secretary had approved the land classification and released the land as alienable and disposable, and that it is within the approved area per verification through survey by the CENRO or PENRO. Further, the applicant must present a copy of the original classification approved by the DENR Secretary and certified as true copy by the legal custodian of the official records. These facts must be established by the applicant to prove that the land is alienable and disposable.[28] Here, Roche did not present evidence that the land she applied for has been classified as alienable or disposable land of the public domain. She submitted only the survey map and technical description of the land which bears no information regarding the land’s classification. She did not bother to establish the status of the land by any certification from the appropriate government agency. Thus, it cannot be said that she complied with all requisites for registration of title under Section 14(1) of P.D. 1529.[29] Since Roche was unable to overcome the presumption that the land she applied for is inalienable land that belongs to the State, the Government did not have to adduce evidence to prove it. WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals dated August 31, 2006 in CA-G.R. CV 65567 as well as the decision of the Regional Trial Court of Pasig City in LRC N-11330 dated September 30, 1999 and DENIES respondent Rosila Roche’s application for registration of title over Lot 8698 located in Barrio Napindan, Taguig, Metro Manila, without prejudice to her proving by appropriate evidence her right to registration of the same at a future time. SO ORDERED.

REPUBLIC OF THE PHILIPPINES vs. RUBY LEE TSAI, June 22, 2009; G.R. No. 168184 x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x D E C I S I O N CARPIO, J.:The Case Before the Court is a petition for review[1] assailing the 30 January 2004 Decision[2] and 12 May 2005 Resolution[3] of the Court of Appeals in CA G.R. CV No. 70006. The 30 January 2004 Decision affirmed the 21 September 1998 Decision[4] of the Regional Trial Court of Tagaytay City, Branch 18 (trial court) in LRC Case No. TG-788[5] which approved the application of respondent Ruby Lee Tsai for the confirmation and registration of Lot No. 7062, described in plan Ap-04-010084, Cad-355, Tagaytay Cadastre, with an area of 888 square meters (subject property). The 12 May 2005 Resolution denied the motion for reconsideration of petitioner Republic of the Philippines (Republic). The Facts On 3 December 1996, respondent filed an application[6] for the confirmation and registration of the subject property under Presidential Decree No. 1529 (PD 1529).[7] Respondent alleged that she is the owner of the subject property and the improvements thereon. Respondent stated that on 31 May 1993, she purchased the subject property from Manolita Gonzales Vda. de Carungcong (Carungcong), through Wendy Mitsuko Sato, Carungcong’s daughter and attorney in fact.[8] Respondent declared that she and her predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the subject property for more than 30 years. Except for the Republic, there were no other oppositors to the application. The Republic opposed respondent’s application on the following grounds: (1) that respondent and her predecessors-in-interest failed to present sufficient evidence to show that they have been in open, continuous, exclusive and notorious possession and occupation of the subject property since 12 June 1945 or earlier as required by Section 48(b)[9] of Commonwealth Act No. 141 (CA 141),[10] as amended by Presidential Decree No. 1073 (PD 1073);[11] (2) that the tax

declarations and tax receipt payments attached to the application do not constitute competent and sufficient evidence of a bona fide acquisition of the land applied for or of respondent’s open, continuous, exclusive and notorious possession and occupation of the subject property in the concept of an owner since 12 June 1945 or earlier; and (3) that the subject property forms part of the public domain and is not subject to private appropriation.[12] After establishing the jurisdictional facts, respondent presented the following documents to support her application: 1. Deed of Absolute Sale dated 31 May 1993 between respondent and Carungcong;2. Tax Declarations corresponding to different years showing that the subject property has been declared under the name of Carungcong for tax purposes: Tax Declaration No. 02226-A for the year 1948, Tax Declaration No. 010158-A for the year 1960, Tax Declaration No. 013976-A for the year 1965, Tax Declaration No. 07209-B for the year 1974, Tax Declaration No. 016-0635 for the year 1980, Tax Declaration No. GR-016-0735 for the year 1985 and Tax Declaration No. GR-016-1610 for the year 1992;[13] 3. Tax Declaration Nos. GR-016-1776-R and 016-1084 for the year 1994 showing that the subject property has been declared under the name of respondent for tax purposes;[14]4. Official Receipts corresponding to different years showing the payment of real property taxes under the name of Carungcong: Official Receipt No. 4641772 dated 27 May 1991, Official Receipt No. 2326477 dated 10 December 1992, Official Receipt No. 0535585 dated 10 June 1992, Official Receipt No. 4879666 dated 28 May 1993 and Official Receipt No. 4879620 dated 3 June 1993;[15]5. Official Receipts corresponding to different years showing the payment of real property taxes under the name of respondent: Official Receipt No. 4997840 dated 10 January 1994, Official Receipt No. 7304615 dated 15 February 1995 and Official Receipt No. 9115050 dated 31 March 1997;[16] and6. Certification of the City Treasurer of Tagaytay City stating that the real property taxes for the years 1994 to 1997 were paid.[17] On 21 September 1998, the trial court granted respondent’s application for registration. The dispositive portion states: WHEREFORE, this court hereby approves this application for registration and thus places under the operation of Act 141, Act 496 and/or P.D. 1529, otherwise known as Property Registration Law, the land, Lot 7062 described in plan Ap-04-010084, Cad-355, Tagaytay Cadastre, situated in the Brgy. of San Jose, City of Tagaytay, containing an area of Eight Hundred Eighty Eight (888) Square Meters in the name of RUBY LEE TSAI, married to Tsai Yu Lung, both of legal age and residents of Sun Valley Subdivision, Sta. Ana Drive, Parañaque, Metro Manila. Once this Decision becomes final and executory, the corresponding decree of registration shall forthwith issue. SO ORDERED.[18] The Republic appealed to the Court of Appeals on the ground that the trial court erred in granting the application for registration despite respondent’s failure to prove open, continuous, exclusive and notorious possession of the subject property since 12 June 1945 or earlier. According to the Republic, it is not sufficient that respondent proved possession of the subject property for more than 30 years. In the assailed 30 January 2004 Decision, the Court of Appeals affirmed the trial court’s decision. The Republic filed a motion for reconsideration. The Court of Appeals denied Republic’s motion. Hence, this petition. The Ruling of the Regional Trial Court According to the trial court, respondent was able to establish her title and interest over the subject property. The trial court found that respondent and her predecessors-in-interest have been in actual possession of the subject property for more than 30 years. The trial court also declared that the subject property was residential and not within any forest zone or the public domain. The Ruling of the Court of Appeals The Court of Appeals affirmed the trial court’s finding that respondent and her predecessors-in-interest have been in open, continuous, exclusive and notorious possession of the subject property in the concept of an owner for more than 30 years. According to the Court of Appeals, respondent need not prove that she and her predecessors-in-interest have been in possession of the subject property since 12 June 1945 or earlier because Section 48(b) of CA 141 was already superseded by Republic Act No. 1942 (RA 1942),[19] which provides for a simple 30 year prescriptive period of occupation by an applicant for judicial confirmation of title. The Issue The Republic raises the sole issue of whether the trial court can grant the application for registration despite the lack of proof of respondent’s open, continuous, exclusive and notorious possession of the subject property since 12 June 1945 or earlier. The Court’s Ruling The petition has merit. The Republic argues that respondent failed to present sufficient evidence to show that she and her predecessors-in-interest have been in open, continuous, exclusive and notorious possession of the subject property in the concept of an owner since 12 June 1945 or earlier. According to the Republic, respondent only proved possession since 1948, which is in violation of Section 48(b) of CA 141, as amended by PD 1073.[20] On the other hand, respondent insists that it is sufficient that she proved that she and her predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the subject property under a bona fide claim of ownership for more than 30 years. The Court notes that in respondent’s original application before the trial court, she claimed that she was entitled to the confirmation and registration of her title to the subject property under PD 1529. However, respondent did not specify under what paragraph of Section 14 of PD 1529 she was filing the application. But going over respondent’s application and the evidence she presented before the trial court, it appears that respondent filed her application under Section 14(1) of PD 1529, which states: SEC. 14. Who may apply. - The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives:

(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.(Emphasis supplied) Thus, there are three requisites for the filing of an application for registration of title under Section 14(1) of PD 1529: (1) that the property in question is alienable and disposable land of the public domain; (2) that the applicant by himself or through his predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation; and (3) that such possession is under a bona fide claim of ownership since 12 June 1945 or earlier. The right to file the application for registration derives from a bona fide claim of ownership going back to 12 June 1945 or earlier, by reason of the claimant’s open, continuous, exclusive and notorious possession of alienable and disposable land of the public domain. A similar right is given under Section 48(b) of CA 141, as amended by PD 1073, which provides: Sec. 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such land or an interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance of the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land Registration Act, to wit: x x x (b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945, or earlier, immediately preceding the filing of the application for confirmation of title, except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter. (Emphasis supplied) According to the Court of Appeals, respondent need not prove possession of the subject property since 12 June 1945 or earlier because Section 48(b) of CA 141 was amended by RA 1942, which provided for a simple 30-year prescriptive period. The Court of Appeals appears to have an erroneous interpretation of Section 48(b) of CA 141. Through the years, Section 48(b) of the CA 141 has been amended several times.[21] The Court of Appeals failed to consider the amendment introduced by PD 1073. In Republic v. Doldol,[22] the Court provided a summary of these amendments: The original Section 48(b) of C.A. No.141 provided for possession and occupation of lands of the public domain since July 26, 1894. This was superseded by R.A. No. 1942, which provided for a simple thirty-year prescriptive period of occupation by an applicant for judicial confirmation of imperfect title. The same, however, has already been amended by Presidential Decree No. 1073, approved on January 25, 1977. As amended, Section 48(b) now reads: (b) Those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945, or earlier, immediately preceding the filing of the application for confirmation of title, except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.[23] (Emphasis supplied) As the law now stands, a mere showing of possession and occupation for 30 years or more is not sufficient. Therefore, since the effectivity of PD 1073 on 25 January 1977, it must now be shown that possession and occupation of the piece of land by the applicant, by himself or through his predecessors-in-interest, started on 12 June 1945 or earlier. This provision is in total conformity with Section 14(1) of PD 1529.[24] In this case, respondent failed to comply with the period of possession and occupation of the subject property, as required by both PD 1529 and CA 141. We agree with the Republic that respondent’s evidence was not enough to prove that her possession of the subject property started since 12 June 1945 or earlier because respondent’s earliest evidence can be traced back to a tax declaration issued in the name of her predecessors-in-interest only in the year 1948. In view of the lack of sufficient showing that respondent and her predecessors-in-interest possessed the subject property under a bona fide claim of ownership since 12 June 1945 or earlier, respondent’s application for confirmation and registration of the subject property under PD 1529 and CA 141 should be denied. Finally, we note that respondent also failed to prove that the subject property has been declared alienable and disposable by the President or the Secretary of the Department of Environment and Natural Resources. In Republic v. T.A.N. Properties, Inc.,[25] the Court said: [T]he applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. These facts must be established to prove that the land is alienable and disposable.[26] WHEREFORE, we GRANT the petition. We SET ASIDE the 30 January 2004 Decision of the Court of Appeals in CA G.R. CV No. 70006 and the 21 September 1998 Decision of the Regional Trial Court of Tagaytay City, Branch 18, in LRC Case No. TG-788. We DENY respondent Ruby Lee Tsai’s application for confirmation and registration of Lot No. 7062 described in plan Ap-04-010084, Cad-355, Tagaytay Cadastre. SO ORDERED.

G. R. No. 177790 January 17, 2011

REPUBLIC OF THE PHILIPPINES, Petitioner, vs.CARLOS R. VEGA, MARCOS R. VEGA, ROGELIO R. VEGA, LUBIN R. VEGA, HEIRS OF GLORIA R. VEGA, NAMELY: FRACISCO L. YAP, MA. WINONA Y. RODRIGUEZ, MA. WENDELYN V. YAP and FRANCISCO V. YAP, JR., Respondents,

ROMEA G. BUHAY-OCAMPO, FRANCISCO G. BUHAY, ARCELI G. BUHAY-RODRIGUEZ, ORLANDO G. BUHAY, SOLEDAD G. BUHAY-VASQUEZ, LOIDA G. BUHAY-SENADOSA, FLORENDO G. BUHAY, OSCAR G. BUHAY, ERLYN BUHAY-GINORGA, EVELYN BUHAY-GRANETA, and EMILIE BUHAY-DALLAS, Respondents-Intervenors.

SERENO, J.:

This is a Rule 45 Petition filed by the Republic of the Philippines (petitioner Republic), through the Office of the Solicitor General (OSG), questioning the Decision of the Court of Appeals,1 which affirmed a lower court’s grant of an application for original registration of title covering a parcel of land located in Los Baños, Laguna.

The facts of the case as culled from the records of the trial court and the appellate court are straightforward and without much contention from the parties.

On 26 May 1995, respondents Carlos R. Vega, Marcos R. Vega, Rogelio R. Vega, Lubin R. Vega and Heirs of Gloria R. Vega – namely, Francisco L. Yap, Ma. Winona Y. Rodriguez, Ma. Wendelyn V. Yap and Francisco V. Yap, Jr. (respondents Vegas) – filed an application for registration of title. The application covered a parcel of land, identified as Lot No. 6191, Cadastre 450 of Los Baños, Laguna, with a total area of six thousand nine hundred two (6,902) square meters (the subject land). The case was docketed as Land Registration Case No. 103-95-C and raffled to the Regional Trial Court of Calamba, Laguna, Branch 92.

Respondents Vegas alleged that they inherited the subject land from their mother, Maria Revilleza Vda. de Vega, who in turn inherited it from her father, Lorenzo Revilleza. Their mother’s siblings (two brothers and a sister) died intestate, all without leaving any offspring.

On 21 June 1995, petitioner Republic filed an opposition to respondents Vegas’ application for registration on the ground, inter alia, that the subject land or portions thereof were lands of the public domain and, as such, not subject to private appropriation.

During the trial court hearing on the application for registration, respondents Vegas presented several exhibits in compliance with the jurisdictional requirements, as well as witnesses to prove respondents Vegas’ ownership, occupation and possession of the land subject of the registration. Significant was the testimony of Mr. Rodolfo Gonzales, a Special Investigator of the Community Environment and Natural Resources Office (CENRO) of Los Baños, Laguna, under the Department of Environment and Natural Resources (DENR). He attested to having conducted an inspection of the subject land2 and identified the corresponding Report dated 13 January 1997, which he had submitted to the Regional Executive Director, Region IV. The report stated that the area subject of the investigation was entirely within the alienable and disposable zone, and that there was no public land application filed for the same land by the applicant or by any other person.3

During the trial, respondents-intervenors Romea G. Buhay-Ocampo, Francisco G. Buhay, Arceli G. Buhay-Rodriguez, Orlando G. Buhay, Soledad G. Buhay-Vasquez, Loida G. Buhay-Senadosa, Florendo G. Buhay, Oscar G. Buhay, Erlyn Buhay-Ginorga, Evelyn Buhay-Grantea and Emilie Buhay-Dallas (respondents-intervenors Buhays) entered their appearance and moved to intervene in respondents Vegas’ application for registration.4 Respondents-intervenors Buhays claimed a portion of the subject land consisting of eight hundred twenty-six (826) square meters, purportedly sold by respondents Vegas’ mother (Maria Revilleza Vda. de Vega) to the former’s predecessors-in-interest - the sisters Gabriela Gilvero and Isabel Gilverio - by virtue of a "Bilihan ng Isang Bahagi ng Lupang Katihan" dated 14 January 1951.5 They likewise formally offered in evidence Subdivision Plan Csd-04-024336-D, which indicated the portion of the subject land, which they claimed was sold to their predecessors-in-interest.6

In a Decision dated 18 November 2003, the trial court granted respondents Vegas’ application and directed the Land Registration Authority (LRA) to issue the corresponding decree of registration in the name of respondents Vegas and respondents-intervenors Buhays’ predecessors, in proportion to their claims over the subject land.

Petitioner Republic appealed the Decision of the trial court, arguing that respondents Vegas failed to prove that the subject land was alienable and disposable, since the testimony of Mr. Gonzales did not contain the date when the land was declared as such. Unpersuaded by petitioner Republic’s arguments, the Court of Appeals affirmed in toto the earlier Decision of the trial court. Aggrieved by the ruling, petitioner filed the instant Rule 45 Petition with this Court.

Respondents Vegas, who are joined by respondents-intervenors Buhays (collectively, respondents), raise procedural issues concerning the filing of the instant Petition, which the Court shall resolve first. Briefly, respondents found, in the instant Petition, procedural deficiencies that ought to warrant its outright dismissal. These deficiencies are as follows: (a) petitioner Republic failed to include the pertinent portions of the record that would support its arguments under Rule 45, Section 4 (d) of the Rules of Court, specifically the Appellee’s Brief of respondents Vegas in the appellate proceedings; and (b) it raised questions of fact, which are beyond the purview of a Rule 45 Petition.7

The Court is not persuaded by respondents’ arguments concerning the purported defects of the Petition.

First, petitioner Republic’s failure to attach a copy of respondents Vegas’ Appellee’s Brief to the instant Petition is not a fatal mistake, which merits the immediate dismissal of a Rule 45 Petition. The requirement that a petition for review on certiorari should be accompanied by "such material portions of the record as would support the petition" is left to the discretion of the party filing the petition.8 Except for the duplicate original or certified true copy of the judgment sought to be appealed from,9 there are no other records from the court a quo that must perforce be attached before the Court can take cognizance of a Rule 45 petition.

Respondents cannot fault petitioner Republic for excluding pleadings, documents or records in the lower court, which to their mind would assist this Court in deciding whether the Decision appealed from is sound. Petitioner Republic is left to its own estimation of the case in deciding which records would support its Petition and should thus be attached thereto. In any event, respondents are not prevented from attaching to their pleadings pertinent portions of the records that they deem necessary for the Court’s evaluation of the case, as was done by respondents Vegas in this case when they attached their Appellee’s Brief to their Comment. In the end, it is the Court, in finally resolving the merits of the suit that will ultimately decide whether the material portions of the records attached are sufficient to support the Petition.

Second, the Petition raises a question of law, and not a question of fact. Petitioner Republic simply takes issue against the conclusions made by the trial and the appellate courts regarding the nature and character of the subject parcel of land, based on the evidence presented. When petitioner asks for a review of the decisions made by a lower court based on the evidence presented, without delving into their probative value but simply on their sufficiency to support the legal conclusions made, then a question of law is raised.

In New Rural Bank of Guimba (N.E.) Inc. v. Fermina S. Abad and Rafael Susan,10 the Court reiterated the distinction between a question of law and a question of fact in this wise:

We reiterate the distinction between a question of law and a question of fact. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented, the truth or falsehood of the facts being admitted. A question of fact exists when a doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation. (Emphasis supplied)

Petitioner Republic is not calling for an examination of the probative value or truthfulness of the evidence presented, specifically the testimony of Mr. Gonzales. It, however, questions whether the evidence on record is sufficient to support the lower court’s conclusion that the subject land is alienable and disposable. Otherwise stated, considering the evidence presented by respondents Vegas in the proceedings below, were the trial and the appellate courts justified under the law and jurisprudence in their findings on the nature and character of the subject land? Undoubtedly, this is a pure question of law, which calls for a resolution of what is the correct and applicable law to a given set of facts.

Going now to the substantial merits, petitioner Republic places before the Court the question of whether, based on the evidence on record, respondents Vegas have sufficiently established that the subject land is alienable and disposable. Was it erroneous for the Court of Appeals to have affirmed the trial court’s grant of registration applied for by respondents Vegas over the subject land? We find no reversible error on the part of either the trial court or the Court of Appeals.

Presidential Decree No. 1529, otherwise known as the Property Registration Decree, provides for the instances when a person may file for an application for registration of title over a parcel of land:

Section 14. Who May Apply. — The following persons may file in the proper Court of First Instance an application for registration of title to land, whether personally or through their duly authorized representatives:

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

Thus, pursuant to the afore-quoted provision of law, applicants for registration of title must prove the following: (1) that the subject land forms part of the disposable and alienable lands of the public domain; and (2) that they have been in open, continuous, exclusive and notorious possession and occupation of the land under a bona fide claim of ownership since 12 June 1945 or earlier.11 Section 14 (1) of the law requires that the property sought to be registered is already alienable and disposable at the time the application for registration is filed.12

Raising no issue with respect to respondents Vegas’ open, continuous, exclusive and notorious possession of the subject land in the present Petition, the Court will limit its focus on the first requisite: specifically, whether it has sufficiently been demonstrated that the subject land is alienable and disposable.

Unless a land is reclassified and declared alienable and disposable, occupation of the same in the concept of an owner - no matter how long -cannot ripen into ownership and result in a title; public lands not shown to have been classified as alienable and disposable lands remain part of the inalienable domain and cannot confer ownership or possessory rights.13

Matters of land classification or reclassification cannot be assumed; they call for proof.14 To prove that the land subject of an application for registration is alienable, an applicant must conclusively establish the existence of a positive act of the government, such as any of the following: a presidential proclamation or an executive order; other administrative actions; investigation reports of the Bureau of Lands investigator; or a legislative act or statute.15 The applicant may also secure a certification from the government that the lands applied for are alienable and disposable.16

Previously, a certification from the DENR that a lot was alienable and disposable was sufficient to establish the true nature and character of the property and enjoyed the presumption of regularity in the absence of contradictory evidence.17

However, in Republic v. T.A.N. Properties, Inc.,18 the Supreme Court overturned the grant by the lower courts of an original application for registration over a parcel of land in Batangas and ruled that a CENRO certification is not enough to certify that a land is alienable and disposable:

Further, it is not enough for the PENRO or CENRO to certify that a land is alienable and disposable. The applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records. These facts must be established to prove that the land is alienable and disposable. Respondent failed to do so because the certifications presented by respondent do not, by themselves, prove that the land is alienable and disposable. (Emphasis supplied)

Thus, as it now stands, aside from a CENRO certification, an application for original registration of title over a parcel of land must be accompanied by a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records in order to establish that the land indeed is alienable and disposable.19

To comply with the first requisite for an application for original registration of title under the Property Registration Decree, respondents Vegas should have submitted a CENRO certification and a certified true copy of the original classification by the DENR Secretary that the land is alienable and disposable, together with their application. However, as pointed out by the Court of Appeals, respondents Vegas failed to submit a CENRO certification -- much less an original classification by the DENR Secretary -- to prove that the land is classified as alienable and disposable land of the public domain.20 If the stringent rule imposed in Republic v. T.A.N. Properties, Inc., is to be followed, the absence of these twin certifications justifies a denial of an application for registration. Significantly, however, the Court’s pronouncement in Republic v. T.A.N. Properties, Inc., was issued after the decisions of the trial court21 and the appellate court22 in this case.

Recently, however, in Republic v. Serrano,23 the Court affirmed the findings of the trial and the appellate courts that the parcel of land subject of registration was alienable and disposable. The Court held that a DENR Regional Technical Director’s certification, which is annotated on the subdivision plan submitted in evidence, constitutes substantial compliance with the legal requirement:

While Cayetano failed to submit any certification which would formally attest to the alienable and disposable character of the land applied for, the Certification by DENR Regional Technical Director Celso V. Loriega, Jr., as annotated on the subdivision plan submitted in evidence

by Paulita, constitutes substantial compliance with the legal requirement. It clearly indicates that Lot 249 had been verified as belonging to the alienable and disposable area as early as July 18, 1925.

The DENR certification enjoys the presumption of regularity absent any evidence to the contrary. It bears noting that no opposition was filed or registered by the Land Registration Authority or the DENR to contest respondents' applications on the ground that their respective shares of the lot are inalienable. There being no substantive rights which stand to be prejudiced, the benefit of the Certification may thus be equitably extended in favor of respondents. (Emphasis supplied)

Indeed, the best proofs in registration proceedings that a land is alienable and disposable are a certification from the CENRO or Provincial Environment and Natural Resources Office (PENRO) and a certified true copy of the DENR’s original classification of the land. The Court, however, has nonetheless recognized and affirmed applications for land registration on other substantial and convincing evidence duly presented without any opposition from the LRA or the DENR on the ground of substantial compliance.

Applying these precedents, the Court finds that despite the absence of a certification by the CENRO and a certified true copy of the original classification by the DENR Secretary, there has been substantial compliance with the requirement to show that the subject land is indeed alienable and disposable based on the evidence on record.

First, respondents Vegas were able to present Mr. Gonzales of the CENRO who testified that the subject land is alienable and disposable, and who identified his written report on his inspection of the subject land.

In the Report,24 Mr. Gonzales attested under oath that (1) the "area is entirely within the alienable and disposable zone" as classified under Project No. 15, L.C. Map No. 582, certified on 31 December 1925;25 (2) the land has never been forfeited in favor of the government for non-payment of taxes; (3) the land is not within a previously patented/decreed/titled property;26 (4) there are no public land application/s filed by the applicant for the same land;27 and (5) the land is residential/commercial.28 That Mr. Gonzales appeared and testified before an open court only added to the reliability of the Report, which classified the subject land as alienable and disposable public land. The Court affirms the Court of Appeals’ conclusion that Mr. Gonzales’ testimony and written report under oath constituted substantial evidence to support their claim as to the nature of the subject land.

Second, Subdivision Plan Csd-04-02433-6, formally offered as evidence by respondents-intervenors Buhays,29 expressly indicates that the land is alienable and disposable. Similar to Republic v. Serrano, Mr. Samson G. de Leon, the officer-in-charge of the Office of the Assistant Regional Executive Director for Operations of the DENR, approved the said subdivision plan, which was annotated with the following proviso: "[T]his survey is inside alienable and disposable area as per Project No. 15, L.C. Map No. 582, certified on Dec. 31, 1925." Notably, Mr. De Leon’s annotation pertaining to the identification of the land as alienable and disposable coincides with the investigation report of Mr. Gonzales.

Finally, upon being informed of respondents Vegas’ application for original registration, the LRA never raised the issue that the land subject of registration was not alienable and disposable. In the Supplementary Report submitted during the trial court proceedings,30 the LRA did not interpose any objection to the application on the basis of the nature of the land. It simply noted that the subject subdivision plan (Psu-51460) had also been applied for in Case No. 1469, GLRO Record No. 32505, but that there was no decree of registration issued therefor. Thus, the LRA recommended that "should the instant case be given due course, the application in Case No. 1469, GLRO Record No. 32505 with respect to plan Psu-51460 be dismissed." In addition, not only did the government fail to cross-examine Mr. Gonzales, it likewise chose not to present any countervailing evidence to support its opposition. In contrast to the other cases brought before this Court,31 no opposition was raised by any interested government body, aside from the pro forma opposition filed by the OSG.

The onus in proving that the land is alienable and disposable still remains with the applicant in an original registration proceeding; and the government, in opposing the purported nature of the land, need not adduce evidence to prove otherwise.32 In this case though, there was no effective opposition, except the pro forma opposition of the OSG, to contradict the applicant’s claim as to the character of the public land as alienable and disposable. The absence of any effective opposition from the government, when coupled with respondents’ other pieces of evidence on record persuades this Court to rule in favor of respondents.

In the instant Petition, petitioner Republic also assails the failure of Mr. Gonzales to testify as to when the land was declared as alienable and disposable. Indeed, his testimony in open court is bereft of any detail as to when the land was classified as alienable and disposable public land, as well as the date when he conducted the investigation. However, these matters could have been dealt with extensively during cross-examination, which petitioner Republic waived because of its repeated absences and failure to present counter evidence.33 In any event, the Report, as well as the Subdivision Plan, readily reveals that the subject land was certified as alienable and disposable as early as 31 December 1925 and was even classified as residential and commercial in nature.

Thus, the Court finds that the evidence presented by respondents Vegas, coupled with the absence of any countervailing evidence by petitioner Republic, substantially establishes that the land applied for is alienable and disposable and is the subject of original registration proceedings under the Property Registration Decree. There was no reversible error on the part of either the trial court or the appellate court in granting the registration.

Respondents-intervenors Buhays’ title to that portion of the subject land is likewise affirmed, considering that the joint claim of respondents-intervenors Buhays over the land draws its life from the same title of respondents Vegas, who in turn failed to effectively oppose the claimed sale of that portion of the land to the former’s predecessors-in-interest.

It must be emphasized that the present ruling on substantial compliance applies pro hac vice. It does not in any way detract from our rulings in Republic v. T.A.N. Properties, Inc., and similar cases which impose a strict requirement to prove that the public land is alienable and disposable, especially in this case when the Decisions of the lower court and the Court of Appeals were rendered prior to these rulings.34 To establish that the land subject of the application is alienable and disposable public land, the general rule remains: all applications for original registration under the Property Registration Decree must include both (1) a CENRO or PENRO certification and (2) a certified true copy of the original classification made by the DENR Secretary.

As an exception, however, the courts - in their sound discretion and based solely on the evidence presented on record - may approve the application, pro hac vice, on the ground of substantial compliance showing that there has been a positive act of government to show the nature and character of the land and an absence of effective opposition from the government. This exception shall only apply to applications for registration currently pending before the trial court prior to this Decision and shall be inapplicable to all future applications.

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals’ Decision dated 30 April 2007 and the trial court’s Decision dated 18 November 2003 are hereby AFFIRMED.

SO ORDERED.

G.R. No. 171631 November 15, 2010

REPUBLIC OF THE PHILIPPINES, Petitioner, vs. AVELINO R. DELA PAZ, ARSENIO R. DELA PAZ, JOSE R. DELA PAZ, and GLICERIO R. DELA PAZ, represented by JOSE R. DELA PAZ, Respondents.

PERALTA, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision1 of the Court of Appeals (CA), dated February 15, 2006, in CA-G.R. CV No. 84206, which affirmed the Decision2 of the Regional Trial Court (RTC) of Pasig City, Branch 167, in LRC Case No. N-11514, granting respondents’ application for registration and confirmation of title over a parcel of land located in Barangay Ibayo, Napindan, Taguig, Metro Manila.

The factual milieu of this case is as follows:

On November 13, 2003, respondents Avelino R. dela Paz, Arsenio R. dela Paz, Jose R. dela Paz, and Glicerio R. dela Paz, represented by Jose R. dela Paz (Jose), filed with the RTC of Pasig City an application for registration of land3 under Presidential Decree No. 1529 (PD 1529) otherwise known as the Property Registration Decree. The application covered a parcel of land with an area of 25,825 square meters, situated at Ibayo, Napindan, Taguig, Metro Manila, described under survey Plan Ccn-00-000084, (Conversion Consolidated plan of Lot Nos. 3212 and 3234, MCADM 590-D, Taguig Cadastral Mapping). Together with their application for registration, respondents submitted the following documents: (1) Special power of attorney showing that the respondents authorized Jose dela Paz to file the application; (2) Conversion Consolidated plan of Lot Nos. 3212 and 3234, MCADM 590-D, Taguig Cadastral Mapping (Ccn-00-000084) with the annotation that the survey is inside L.C. Map No. 2623 Proj. No. 27-B classified as alienable/disposable by the Bureau of Forest Development, Quezon City on January 03, 1968; (3) Technical Descriptions of Ccn-00-000084; (4) Geodetic Engineer's Certificate; (5) Tax Declaration No. FL-018-01466; (6) Salaysay ng Pagkakaloob dated June 18, 1987; (7) Sinumpaang Pahayag sa Paglilipat sa Sarili ng mga Pagaari ng Namatay dated March 10, 1979; (8) Certification that the subject lots are not covered by any land patent or any public land appilcation; and (9) Certification by the Office of the Treasurer, Municipality of Taguig, Metro Manila, that the tax on the real property for the year 2003 has been paid.

Respondents alleged that they acquired the subject property, which is an agricultural land, by virtue of Salaysay ng Pagkakaloob4 dated June 18, 1987, executed by their parents Zosimo dela Paz and Ester dela Paz (Zosimo and Ester), who earlier acquired the said property from their deceased parent Alejandro dela Paz (Alejandro) by virtue of a "Sinumpaang Pahayag sa Paglilipat sa Sarili ng mga Pag-aari ng Namatay5 dated March 10, 1979. In their application, respondents claimed that they are co-owners of the subject parcel of land and they have been in continuous, uninterrupted, open, public, adverse possession of the same, in the concept of owner since they acquired it in 1987. Respondents further averred that by way of tacking of possession, they, through their predecessors-in-interest have been in open, public, adverse, continuous, and uninterrupted possession of the same, in the concept of an owner even before June 12, 1945, or for a period of more than fifty (50) years since the filing of the application of registration with the trial court. They maintained that the subject property is classified as alienable and disposable land of the public domain.

The case was set for initial hearing on April 30, 2004. On said date, respondents presented documentary evidence to prove compliance with the jurisdictional requirements of the law.

Petitioner Republic of the Philippines (Republic), through the Office of the Solicitor General (OSG), opposed the application for registration on the following grounds, among others: (1) that neither the applicants nor their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the land in question for a period of not less than thirty (30) years; (2) that the muniments of title, and/or the tax declarations and tax payments receipts of applicants, if any, attached to or alleged in the application, do not constitute competent and sufficient evidence of bona fide acquisition of the land applied for; and (3) that the parcel of land applied for is a portion of public domain belonging to the Republic not subject to private appropriation. Except for the Republic, there was no other oppositor to the application.

On May 5, 2004, the trial court issued an Order of General Default6 against the whole world except as against the Republic. Thereafter, respondents presented their evidence in support of their application.

In its Decision dated November 17, 2004, the RTC granted respondents' application for registration of the subject property. The dispositive portion of the decision states:

WHEREFORE, affirming the order of general default hereto entered, judgment is hereby rendered AFFIRMING and CONFIRMING the title of AVELINO R. DELA PAZ, Arsenio R. dela Paz, Jose R. dela Paz and Glicerio R. dela Paz, all married and residents of and with postal address at No. 65 Ibayo, Napindan, Taguig, Metro Manila, over a parcel of land described and bounded under Plan Ccn-00-000084 (consolidation of Lots No. 3212 and 3234, Mcadm-590-D, Taguig, Cadastral Mapping, containing Twenty-Five Thousand Eight Hundred Twenty-Five (25,825) Square Meters, more or less, situated at Barangay Ibayo, Napindan, Taguig, Metro Manila, under the operation of P.D. 1529, otherwise known as the Property Registration Decree.

After the decision shall have been become final and executory and, upon payment of all taxes and other charges due on the land, the order for the issuance of a decree of registration shall be accordingly undertaken.

SO ORDERED.7

Aggrieved by the Decision, petitioner filed a Notice of Appeal.8 The CA, in its Decision dated February 15, 2006, dismissed the appeal and affirmed the decision of the RTC. The CA ruled that respondents were able to show that they have been in continuous, open, exclusive and notorious possession of the subject property through themselves and their predecessors-in-interest. The CA found that respondents acquired the subject land from their predecessors-in-interest, who have been in actual, continuous, uninterrupted, public and adverse possession in the concept of an owner since time immemorial. The CA, likewise, held that respondents were able to present sufficient evidence to establish that the subject property is part of the alienable and disposable lands of the public domain. Hence, the instant petition raising the following grounds:

I

THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT'S ORDER GRANTING RESPONDENTS' APPLICATION FOR REGISTRATION OF THE SUBJECT LOT CONSIDERING THAT THE EVIDENCE ON RECORD FAILED TO ESTABLISH THAT RESPONDENTS HAVE BEEN IN OPEN, CONTINUOUS, EXCLUSIVE AND NOTORIOUS POSSESSION OF THE SUBJECT LOT IN THE CONCEPT OF AN OWNER.

II

THE COURT OF APPEALS ERRED IN ORDERING THE REGISTRATION OF THE SUBJECT LOT IN RESPONDENTS' NAME CONSIDERING THAT NO EVIDENCE WAS FORMALLY OFFERED TO PROVE THAT THE SAME IS WITHIN THE ALIENABLE AND DISPOSABLE AREA OF THE PUBLIC DOMAIN.9

In its Memorandum, petitioner claims that the CA's findings that respondents and their predecessors-in-interest have been in open, uninterrupted, public, and adverse possession in the concept of owners, for more than fifty years or even before June 12, 1945, was unsubstantiated. Respondents failed to show actual or constructive possession and occupation over the subject land in the concept of an owner. Respondents also failed to establish that the subject property is within the alienable and disposable portion of the public domain. The subject property remained to be owned by the State under the Regalian Doctrine.

In their Memorandum, respondents alleged that they were able to present evidence of specific acts of ownership showing open, notorious, continuous and adverse possession and occupation in the concept of an owner of the subject land. To prove their continuous and uninterrupted possession of the subject land, they presented several tax declarations, dated 1949, 1966, 1974, 1979, 1980, 1985, 1991, 1994 and 2000, issued in the name of their predecessors-in-interest. In addition, respondents presented a tax clearance issued by the Treasurer's Office of the City of Taguig to show that they are up to date in their payment of real property taxes. Respondents maintain that the annotations appearing on the survey plan of the subject land serves as sufficient proof that the land is within the alienable and disposable portion of the public domain. Finally, respondents assert that the issues raised by the petitioner are questions of fact which the Court should not consider in a petition for review under Rule 45.

The petition is meritorious.

In petitions for review on certiorari under Rule 45 of the Revised Rules of Court, this Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support by the evidence on record, or the assailed judgment is based on a misapprehension of facts.10 It is not the function of this Court to analyze or weigh evidence all over again, unless there is a showing that the findings of the lower court are totally devoid of support or are glaringly erroneous as to constitute palpable error or grave abuse of discretion.11

In the present case, the records do not support the findings made by the CA that the subject land is part of the alienable and disposable portion of the public domain.

Section 14 (1) of PD 1529, otherwise known as the Property Registration Decree provides:

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

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

From the foregoing, respondents need to prove that (1) the land forms part of the alienable and disposable land of the public domain; and (2) they, by themselves or through their predecessors-in-interest, have been in open, continuous, exclusive, and notorious possession and occupation of the subject land under a bona fide claim of ownership from June 12, 1945 or earlier.12 These the respondents must prove by no less than clear, positive and convincing evidence.13

Under the Regalian doctrine, which is embodied in our Constitution, all lands of the public domain belong to the State, which is the source of any asserted right to any ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Accordingly, public lands not shown to have been reclassified or released as alienable agricultural land, or alienated to a private person by the State, remain part of the inalienable public domain.14 The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on the person applying for registration (or claiming ownership), who must prove that the land subject of the application is alienable or disposable. To overcome this presumption, incontrovertible evidence must be established that the land subject of the application (or claim) is alienable or disposable.15

To support its contention that the land subject of the application for registration is alienable, respondents presented survey Plan Ccn-00-00008416 (Conversion Consolidated plan of Lot Nos. 3212 & 3234, MCADM 590-D, Taguig Cadastral Mapping) prepared by Geodetic Engineer Arnaldo C. Torres with the following annotation:

This survey is inside L.C. Map No. 2623 Proj. No. 27-B clasified as alienable/disposable by the Bureau of Forest Development, Quezon City on Jan. 03, 1968.

Respondents' reliance on the afore-mentioned annotation is misplaced.

In Republic v. Sarmiento,17 the Court ruled that the notation of the surveyor-geodetic engineer on the blue print copy of the conversion and subdivision plan approved by the Department of Environment and Natural Resources (DENR) Center, that "this survey is inside the alienable and disposable area, Project No. 27-B. L.C. Map No. 2623, certified on January 3, 1968 by the Bureau of Forestry," is insufficient and does not constitute incontrovertible evidence to overcome the presumption that the land remains part of the inalienable public domain.

Further, in Republic v. Tri-plus Corporation,18 the Court held that:

In the present case, the only evidence to prove the character of the subject lands as required by law is the notation appearing in the Advance Plan stating in effect that the said properties are alienable and disposable. However, this is hardly the kind of proof required by law. To prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the government, such as a presidential proclamation or an executive order, an administrative action, investigation reports of Bureau of Lands investigators, and a legislative act or statute. The applicant may also secure a certification from the Government that the lands applied for are alienable and disposable. In the case at bar, while the Advance Plan bearing the notation was certified by the Lands Management Services of the DENR, the certification refers only to the technical correctness of the survey plotted in the said plan and has nothing to do whatsoever with the nature and character of the property surveyed. Respondents failed to submit a certification from the proper government agency to prove that the lands subject for registration are indeed alienable and disposable.

Furthermore, in Republic of the Philippines v. Rosila Roche,19 the Court held that the applicant bears the burden of proving the status of the land. In this connection, the Court has held that he must present a certificate of land classification status issued by the Community Environment and Natural Resources Office (CENRO), or the Provincial Environment and Natural Resources Office (PENRO) of the DENR. He must also prove that the DENR Secretary had approved the land classification and released the land as alienable and disposable, and that it is within the approved area per verification through survey by the CENRO or PENRO. Further, the applicant must present a copy of the original classification approved by the DENR Secretary and certified as true copy by the legal custodian of the official records. These facts must be established by the applicant to prove that the land is alienable and disposable.

Clearly, the surveyor's annotation presented by respondents is not the kind of proof required by law to prove that the subject land falls within the alienable and disposable zone. Respondents failed to submit a certification from the proper government agency to establish that the subject land are part of the alienable and disposable portion of the public domain. In the absence of incontrovertible evidence to prove that the subject property is already classified as alienable and disposable, we must consider the same as still inalienable public domain.20

Anent respondents’ possession and occupation of the subject property, a reading of the records failed to show that the respondents by themselves or through their predecessors-in-interest possessed and occupied the subject land since June 12, 1945 or earlier.1avvphil

The evidence submitted by respondents to prove their possession and occupation over the subject property consists of the testimonies of Jose and Amado Geronimo (Amado), the tenant of the adjacent lot. However, their testimonies failed to establish respondents’ predecessors-in-interest' possession and occupation of subject property since June 12, 1945 or earlier. Jose, who was born on March 19, 1939,21 testified that since he attained the age of reason he already knew that the land subject of this case belonged to them.22 Amado testified that he was a tenant of the land adjacent to the subject property since 1950,23 and on about the same year, he knew that the respondents were occupying the subject land.24

Jose and Amado's testimonies consist merely of general statements with no specific details as to when respondents' predecessors-in-interest began actual occupancy of the land subject of this case. While Jose testified that the subject land was previously owned by their parents Zosimo and Ester, who earlier inherited the property from their parent Alejandro, no clear evidence was presented to show Alejandro's mode of acquisition of ownership and that he had been in possession of the same on or before June 12, 1945, the period of possession required by law. It is a rule that general statements that are mere conclusions of law and not factual proof of possession are unavailing and cannot suffice.25 An applicant in a land registration case cannot just harp on mere conclusions of law to embellish the application but must impress thereto the facts and circumstances evidencing the alleged ownership and possession of the land.26

Respondents’ earliest evidence can be traced back to a tax declaration issued in the name of their predecessors-in-interest only in the year 1949. At best, respondents can only prove possession since said date. What is required is open, exclusive, continuous and notorious possession by respondents and their predecessors-in-interest, under a bona fide claim of ownership, since June 12, 1945 or earlier.27 Respondents failed to explain why, despite their claim that their predecessors-in interest have possessed the subject properties in the concept of an owner even before June 12, 1945, it was only in 1949 that their predecessors-in-interest started to declare the same for purposes of taxation. Well settled is the rule that tax declarations and receipts are not conclusive evidence of ownership or of the right to possess land when not supported by any other evidence. The fact that the disputed property may have been declared for taxation purposes in the names of the applicants for registration or of their predecessors-in-interest does not necessarily prove ownership. They are merely indicia of a claim of ownership.28

The foregoing pieces of evidence, taken together, failed to paint a clear picture that respondents by themselves or through their predecessors-in-interest have been in open, exclusive, continuous and notorious possession and occupation of the subject land, under a bona fide claim of ownership since June 12, 1945 or earlier.

Evidently, since respondents failed to prove that (1) the subject property was classified as part of the disposable and alienable land of the public domain; and (2) they and their predecessors-in-interest have been in open, continuous, exclusive, and notorious possession and occupation thereof under a bonafide claim of ownership since June 12, 1945 or earlier, their application for confirmation and registration of the subject property under PD 1529 should be denied.

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated February 15, 2006, in CA-G.R. CV No. 84206, affirming the Decision of the Regional Trial Court of Pasig City, Branch 167, in LRC Case No. N-11514, is REVERSED and SET ASIDE. The application for registration and confirmation of title filed by respondents Avelino R. dela Paz, Arsenio R. dela Paz, Jose R. dela Paz, and Glicerio R. dela Paz, as represented by Jose R. dela Paz, over a parcel of land, with a total area of twenty-five thousand eight hundred twenty-five (25,825) square meters situated at Barangay Ibayo, Napindan, Taguig, Metro Manila, is DENIED.

SO ORDERED.

G.R. No. 175746 March 12, 2008

CHARLES L. ONG, Petitioner, vs. REPUBLIC OF THE PHILIPPINES, Respondent.

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the April 25, 2006 Decision1 of the Court of Appeals in CA-G.R. CV No. 76085, which reversed and set aside the January 16, 2002 Decision2 of the Municipal Trial Court of Mangaldan, Pangasinan in Land Registration Case No. 99-023, and the November 20, 2006 Resolution3 which denied petitioner’s motion for reconsideration.

The antecedent facts are as follows.

On July 1, 1999, petitioner Charles L. Ong (petitioner) in his behalf and as duly authorized representative of his brothers, namely, Roberto, Alberto and Cesar, filed an Application for Registration of Title4 over Lot 15911 (subject lot) situated in Barangay Anolid, Mangaldan, Pangasinan with an area of five hundred seventy four (574) square meters, more or less. They alleged that they are the co-owners of the subject lot; that the subject lot is their exclusive property having acquired the same by purchase from spouses Tony Bautista and Alicia Villamil on August 24, 1998; that the subject lot is presently unoccupied; and that they and their predecessors-in-interest have been in open, continuous and peaceful possession of the subject lot in the concept of owners for more than thirty (30) years.

After due notice and publication, only respondent Republic of the Philippines (respondent), represented by the Office of the Solicitor General, opposed the application for registration of title. Respondent asserted that neither applicants nor their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the subject lot since June 12, 1945 or earlier as required by Section 48(b) of Commonwealth Act No. 141, as amended by Presidential Decree (P.D.) No. 1073; that applicants failed to adduce any muniment of title to prove their claims; that the tax declaration appended to the application does not appear genuine and merely shows pretended possession of recent vintage; that the application was filed beyond the period allowed under P.D. No. 892; and that the subject lot is part of the public domain which cannot be the subject of private appropriation.

On January 16, 2002, the trial court rendered a Decision in favor of petitioner and his brothers, viz:

The foregoing evidences presented by the applicant indubitably established sufficient basis to grant the applicant (sic) for registration. Originally, the whole parcel of land was owned by spouses Teofilo Abellara and Abella Charmine who acquired the same by virtue of a Deed of Sale from Cynthia Cacho, Agustin Cacho, Jr., Jasmin Cacho, Jover Cacho and Lauro Cacho. Later, they sold the same parcel of land to spouses Tony C. Villamil and Alicia Bautista, who in turn sold the same land to herein applicants.

The same parcel of land has been declared in the name of the applicant and her predecessors-in-interest and its taxes has (sic) been religiously paid.

The said circumstances further show that the possession and ownership of the applicant and her (sic) predecessors-in-interest over the same parcel of land has (sic) been continuous and peaceful under bona fide claim of ownership before the filing of the instant application for registration on [July 1, 1999].

WHEREFORE, after confirming the Order of General Default, the Court hereby orders and decrees the registration of a parcel of land as shown on plan ap-01-004897 approved by the Bureau of Land(s) situated in Barangay Anolid, Mangaldan, Pangasinan, containing an area of Five Hundred Seventy Four (574) square meters, subject of the application for registration of title, in accordance with Presidential Decree No. 1529, in favor of CHARLIE L. ONG in his behalf and as representative of his brothers namely, ROBERTO L. ONG, ALBERTO L. ONG and CESAR L. ONG.

Furnish copies of this Decision to the Office of the Solicitor General, Makati City, Metro Manila, the Office of the Provincial Prosecutor, Dagupan City, Atty. Celestino Domingo Jr., the Office of the Land Registration Authority, Quezon City, as well as the applicant.

SO ORDERED.5

Aggrieved, respondent appealed to the Court of Appeals which rendered the assailed Decision, the dispositive portion of which reads:

WHEREFORE, the instant appeal is GRANTED. Accordingly, the decision of the court a quo granting the application for registration of title of applicants-appellees is REVERSED and SET ASIDE. No pronouncement as to costs.

SO ORDERED.6

In reversing the decision of the trial court, the Court of Appeals found that the subject lot is part of the alienable and disposable lands of the public domain. Thus, it was incumbent upon petitioner to prove that they possessed the subject lot in the nature and for the duration required by law. However, petitioner failed to prove that he or his predecessors-in-interest have been in adverse possession of the subject lot in the concept of owner since June 12, 1945 or earlier as mandated by Section 14(1) of P.D. 1529. It noted that the earliest tax declaration which petitioner presented is dated 1971. Consequently, petitioner could not fairly claim possession of the land prior to 1971. Neither was petitioner able to prove that he or his predecessors-in-interest actually occupied the subject lot prior to the filing of the application. Thus, the trial court erred in granting the application for registration of title over the subject lot.

Hence, this petition raising the following issues:

1. WHETHER OR NOT PETITIONER, TOGETHER WITH HIS BROTHERS, NAMELY, ROBERTO L. ONG, ALBERTO L. ONG AND CEZAR L. ONG, HAVE REGISTRABLE OWNERSHIP OVER THE REAL PROPERTY SUBJECT MATTER OF LAND REGISTRATION CASE NO. 99-023, AND

2. WHETHER OR NOT THE FINDINGS AND CONCLUSION OF THE FORMER SPECIAL FOURTH DIVISION OF THE COURT OF APPEALS THAT THE SUBJECT REAL PROPERTY IS A PUBLIC LAND IS CORRECT.7

The petition lacks merit.

Section 14(1) of P.D. 1529 ("Property Registration Decree"), as amended, provides —

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

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

Thus, pursuant to the aforequoted provision of law, applicants for registration of title must prove: (1) that the subject land forms part of the disposable and alienable lands of the public domain, and (2) that they have been in open, continuous, exclusive and notorious possession and occupation of the same under a bona fide claim of ownership since June 12, 1945, or earlier.8 These requisites involve questions of fact which are not proper in a petition for review on certiorari. Factual findings of the court a quo are generally binding on this Court except for certain recognized exceptions, as is the case here, where the trial court and the Court of Appeals arrived at conflicting findings.9 After a careful review of the records, we sustain the findings and conclusions of the Court of Appeals.

There is no dispute that the subject lot is classified as alienable and disposable land of the public domain. The Report10 dated January 17, 2000 of the Bureau of Lands stated that the subject lot is "within the alienable and disposable zone as classified under Project 50 L.C. Map No. 698 and released and classified as such on November 21, 1927."11 This finding is, likewise, embodied in the Report12 dated January 7, 1999 of the Department of Environment and Natural Resources Community Environment and Natural Resources Office (DENR-CENRO) and the blue print Copy13 of the plan covering the subject lot. However, petitioner failed to prove that he or his predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation of the subject lot since June 12, 1945 or earlier.

The records show that petitioner and his brothers bought the subject lot from spouses Tony Bautista and Alicia Villamil on August 24, 1998,14 who in turn purchased the same from spouses Teofilo Abellera and Abella Sarmen on January 16, 1997.15 The latter bought the subject lot from Cynthia, Agustin Jr., Jasmin, Omir and Lauro, all surnamed Cacho, on July 10, 1979.16 The earliest tax declaration which was submitted in evidence was Tax Declaration No. 2560617 issued in 1971 in the names of spouses Agustin Cacho and Eufrosinia Baustista. While tax declarations are not conclusive proof of ownership, they constitute good indicia of possession in the concept of owner and a claim of title over the subject property.18 Even if we were to tack petitioner’s claim of ownership over the subject lot to that of their alleged predecessors-in-interest, spouses Agustin Cacho and Eufrosinia Baustista in 1971, still this would fall short of the required possession from June 12, 1945 or earlier.1avvphi1

Further, as correctly pointed by the Court of Appeals, possession alone is not sufficient to acquire title to alienable lands of the public domain because the law requires possession and occupation. As held in Republic v. Alconaba:19

The law speaks of possession and occupation. Since these words are separated by the conjunction and, the clear intention of the law is not to make one synonymous with the other. Possession is broader than occupation because it includes constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit the all encompassing effect of constructive possession. Taken together with the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his possession must not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property.20

Petitioner admitted that after he and his brothers bought the subject lot from spouses Tony Bautista and Alicia Villamil in 1998, neither he nor his brothers actually occupied the subject lot.21 No improvements were made thereon and the most that they did was to visit the lot on several occasions.22 Petitioner’s predecessor-in-interest, Tony Bautista testified that he and his wife never actually occupied the subject lot from the time they bought the same from spouses Teofilo Abellera and Abella Sarmen in 1997.23 Aside from these two testimonies, no other evidence was presented to establish the character of the possession of the subject lot by petitioner’s other alleged predecessors-in-interest. Clearly, petitioner’s evidence failed to establish specific acts of ownership to substantiate the claim that he and his predecessors-in-interest possessed and occupied the subject lot in the nature and duration required by law.

The burden of proof in land registration cases rests on the applicant who must show by clear, positive and convincing evidence that his alleged possession and occupation of the land is of the nature and duration required by law.24 Unfortunately, petitioner’s evidence do not constitute the "well-nigh incontrovertible" evidence necessary in cases of this nature.25 Accordingly, the Court of Appeals did not err in reversing the Decision of the trial court and in denying his application for registration of title over the subject lot.

WHEREFORE, in view of the foregoing, the petition is DENIED. The April 25, 2006 Decision of the Court of Appeals in CA-G.R. CV No. 76085 which reversed and set aside the January 16, 2002 Decision of the Municipal Trial Court of Mangaldan, Pangasinan in Land Registration Case No. 99-023, and the November 20, 2006 Resolution denying the motion for reconsideration, are AFFIRMED.

Costs against petitioner.

SO ORDERED.

G.R. No. 115814 May 26, 1995

PEDRO P. PECSON, petitioner, vs.COURT OF APPEALS, SPOUSES JUAN NUGUID and ERLINDA NUGUID, respondents.

DAVIDE, JR., J.:

This petition for review on certiorari seeks to set aside the decision 1 of the Court of Appeals in CA-G.R. SP No. 32679 affirming in part the order 2 of the Regional Trial Court (RTC) of Quezon City, Branch 101, in Civil Case No. Q-41470.

The factual and procedural antecedents of this case as gathered from the record are as follows:

Petitioner Pedro P. Pecson was the owner of a commercial lot located in Kamias Street, Quezon City, on which he built a four-door two-storey apartment building. For his failure to pay realty taxes amounting to twelve thousand pesos (P12,000.00), the lot was sold at public auction by the city Treasurer of Quezon City to Mamerto Nepomuceno who in turn sold it on 12 October 1983 to the private respondents, the spouses Juan Nuguid and Erlinda Tan-Nuguid, for one hundred three thousand pesos (P103,000.00).

The petitioner challenged the validity of the auction sale in Civil Case No. Q-41470 before the RTC of Quezon City. In its decision of 8 February 1989, the RTC dismissed the complaint, but as to the private respondents' claim that the sale included the apartment building, it held that the issue concerning it was "not a subject of the . . . litigation." In resolving the private respondents' motion to reconsider this issue, the trial court held that there was no legal basis for the contention that the apartment building was included in the sale. 3

Both parties then appealed the decision to the Court of Appeals. The case was docketed as CA-G.R. CV No. 2931. In its decision of 30 April 1992, 4 the Court of Appeals affirmed in toto the assailed decision. It also agreed with the trial court that the apartment building was not included in the auction sale of the commercial lot. Thus:

Indeed, examining the record we are fully convinced that it was only the land — without the apartment building — which was sold at the auction sale, for plaintiff's failure to pay the taxes due thereon. Thus, in the Certificate of Sale of Delinquent Property To Purchaser (Exh. K, p. 352, Record) the property subject of the auction sale at which Mamerto Nepomuceno was the purchaser is referred to as Lot No. 21-A, Block No. K-34, at Kamias, Barangay Piñahan, with an area of 256.3 sq. m., with no mention whatsoever, of the building thereon. The same description of the subject property appears in the Final Notice To Exercise The Right of Redemption (over subject property) dated September 14, 1981 (Exh. L, p. 353, Record) and in the Final Bill of Sale over the same property dated April 19, 1982 (Exh. P, p. 357, Record). Needless to say, as it was only the land without any building which Nepomuceno had acquired at the auction sale, it was also only that land without any building which he could have legally sold to the Nuguids. Verily, in the Deed of Absolute Sale of Registered Land executed by Mamerto Nepomuceno in favor of the Nuguids on October 25, 1983 (Exh. U, p. 366, Record) it clearly appears that the property subject of the sale for P103,000.00 was only the parcel of land, Lot 21-A, Blk. K-34 containing an area of 256.3 sq. meters, without any mention of any improvement, much less any building thereon. (emphases supplied)

The petition to review the said decision was subsequently denied by this Court. 5 Entry of judgment was made on 23 June 1993. 6

On November 1993, the private respondents filed with the trial court a motion for delivery of possession of the lot and the apartment building, citing article 546 of the Civil Code. 7 Acting thereon, the trial court issued on 15 November 1993 the challenged order 8 which reads as follows:

Submitted for resolution before this Court is an uncontroverted [sic] for the Delivery of Possession filed by defendants Erlinda Tan, Juan Nuguid, et al. considering that despite personal service of the Order for plaintiff to file within five (5) days his opposition to said motion, he did not file any.

In support of defendant's motion, movant cites the law in point as Article 546 of the Civil Code . . .

Movant agrees to comply with the provisions of the law considering that plaintiff is a builder in good faith and he has in fact, opted to pay the cost of the construction spent by plaintiff. From the complaint itself the plaintiff stated that the construction cost of the apartment is much more than the lot, which apartment he constructed at a cost of P53,000.00 in 1965 (par. 8 complaint). This amount of P53,000.00 is what the movant is supposed to pay under the law before a writ of possession placing him in possession of both the lot and apartment would be issued.

However, the complaint alleges in paragraph 9 that three doors of the apartment are being leased. This is further confirmed by the affidavit of the movant presented in support of the motion that said three doors are being leased at a rental of P7,000.00 a month each. The movant further alleges in his said affidavit that the present commercial value of the lot is P10,000.00 per square meter or P2,500,000.00 and the reasonable rental value of said lot is no less than P21,000.00 per month.

The decision having become final as per Entry of Judgment dated June 23, 1993 and from this date on, being the uncontested owner of the property, the rents should be paid to him instead of the plaintiff collecting them. From June 23, 1993, the rents collected by plaintiff amounting to more than P53,000.00 from tenants should be offset from the rents due to the lot which according to movant's affidavit is more than P21,000.00 a month.

WHEREFORE, finding merit in the Motion, the Court hereby grants the following prayer that:

1. The movant shall reimburse plaintiff the construction cost of P53,000.00.

2. The payment of P53,000.00 as reimbursement for the construction cost, movant Juan Nuguid is hereby entitled to immediate issuance of a writ of possession over the Lot and improvements thereon.

3. The movant having been declared as the uncontested owner of the Lot in question as per Entry of Judgment of the Supreme Court dated June 23, 1993, the plaintiff should pay rent to the movant of no less than P21,000.00 per month from said date as this is the very same amount paid monthly by the tenants occupying the lot.

4. The amount of P53,000.00 due from the movant is hereby offset against the amount of rents collected by the plaintiff from June 23, 1993, to September 23, 1993.

SO ORDERED.

The petitioner moved for the reconsideration of the order but it was not acted upon by the trial court. Instead, on 18 November 1993, it issued a writ of possession directing the deputy sheriff "to place said movant Juan Nuguid in possession of subject property located at No. 79 Kamias Road, Quezon City, with all the improvements thereon and to eject therefrom all occupants therein, their agents, assignees, heirs and representatives." 9

The petitioner then filed with the Court of Appeals a special civil action for certiorari and prohibition assailing the order of 15 November 1993, which was docketed as CA-G.R. SP No. 32679. 10 In its decision of 7 June 1994, the Court of Appeals affirmed in part the order of the trial court citing Article 448 of the Civil Code. In disposing of the issues, it stated:

As earlier pointed out, private respondent opted to appropriate the improvement introduced by petitioner on the subject lot, giving rise to the right of petitioner to be reimbursed of the cost of constructing said apartment building, in accordance with Article 546 of the . . . Civil Code, and of the right to retain the improvements until he is reimbursed of the cost of the improvements, because, basically, the right to retain the improvement while the corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which they are built . . . [2 TOLENTINO, CIVIL CODE OF THE PHILIPPINES (1992) p. 112]. With the facts extant and the settled principle as guides, we agree with petitioner that respondent judge erred in ordering that "the movant having been declared as the uncontested owner of the lot in question as per Entry of Judgment of the Supreme Court dated June 23, 1993, the plaintiff should pay rent to the movant of no less than P21,000 per month from said date as this is the very same amount paid monthly by the tenants occupying the lot.

We, however, agree with the finding of respondent judge that the amount of P53,000.00 earlier admitted as the cost of constructing the apartment building can be offset from the amount of rents collected by petitioner from June 23, 1993 up to September 23, 1993 which was fixed at P7,000.00 per month for each of the three doors. Our underlying reason is that during the period of retention, petitioner as such possessor and receiving the fruits from the property, is obliged to account for such fruits, so that the amount thereof may be deducted from the amount of indemnity to be paid to him by the owner of the land, in line with Mendoza vs. De Guzman, 52 Phil. 164 . . . .

The Court of Appeals then ruled as follows:

WHEREFORE, while it appears that private respondents have not yet indemnified petitioner with the cost of the improvements, since Annex I shows that the Deputy Sheriff has enforced the Writ of Possession and the premises have been turned over to the possession of private respondents, the quest of petitioner that he be restored in possession of the premises is rendered moot and academic, although it is but fair and just that private respondents pay petitioner the construction cost of P53,000.00; and that petitioner be ordered to account for any and all fruits of the improvements received by him starting on June 23, 1993, with the amount of P53,000.00 to be offset therefrom.

IT IS SO ORDERED. 11

Aggrieved by the Court of Appeals' decision, the petitioner filed the instant petition.

The parties agree that the petitioner was a builder in good faith of the apartment building on the theory that he constructed it at the time when he was still the owner of the lot, and that the key issue in this case is the application of Articles 448 and 456 of the Civil Code.

The trial court and the Court of Appeals, as well as the parties, concerned themselves with the application of Articles 448 and 546 of the Civil Code. These articles read as follows:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (361a)

xxx xxx xxx

Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. (453a)

By its clear language, Article 448 refers to a land whose ownership is claimed by two or more parties, one of whom has built some works, or sown or planted something. The building, sowing or planting may have been made in good faith or in bad faith. The rule on good faith laid down in Article 526 of the Civil Code shall be applied in determining whether a builder, sower or planter had acted in good faith. 12

Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by sale or donation. This Court said so in Coleongco vs. Regalado: 13

Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed the house on his own land before he sold said land to Coleongco. Article 361 applies only in cases where a person constructs a building on the land of another in good or in bad faith, as the case may be. It does not apply to a case where a person constructs a building on his own land, for then there can be no question as to good or bad faith on the part of the builder.

Elsewise stated, where the true owner himself is the builder of works on his own land, the issue of good faith or bad faith is entirely irrelevant.

Thus in strict point of law, Article 448 is not apposite to the case at bar. Nevertheless, we believe that the provision therein on indemnity may be applied by analogy considering that the primary intent of Article 448 is to avoid a state of forced co-ownership and that the parties, including the two courts below, in the main agree that Articles 448 and 546 of the Civil Code are applicable and indemnity for the improvements may be paid although they differ as to the basis of the indemnity.

Article 546 does not specifically state how the value of the useful improvements should be determined. The respondent court and the private respondents espouse the belief that the cost of construction of the apartment building in 1965, and not its current market value, is sufficient reimbursement for necessary and useful improvements made by the petitioner. This position is, however, not in consonance with previous rulings of this Court in similar cases. In Javier vs. Concepcion, Jr., 14 this Court pegged the value of the useful improvements consisting of various fruits, bamboos, a house and camarin made of strong material based on the market value of the said improvements. In Sarmiento vs. Agana, 15 despite the finding that the useful improvement, a residential house, was built in 1967 at a cost of between eight thousand pesos (P8,000.00) to ten thousand pesos(P10,000.00), the landowner was ordered to reimburse the builder in the amount of forty thousand pesos (P40,000.00), the value of the house at the time of the trial. In the same way, the landowner was required to pay the "present value" of the house, a useful improvement, in the case of De Guzman vs. De la Fuente, 16 cited by the petitioner.

The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila 17 that the said provision was formulated in trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a way as neither one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise be allowed to acquire a highly valued income-yielding four-unit apartment building for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial court should base its finding as to the amount of reimbursement to be paid by the landowner.

The trial court also erred in ordering the petitioner to pay monthly rentals equal to the aggregate rentals paid by the lessees of the apartment building. Since the private respondents have opted to appropriate the apartment building, the petitioner is thus entitled to the possession and enjoyment of the apartment building, until he is paid the proper indemnity, as well as of the portion of the lot where the building has been constructed. This is so because the right to retain the improvements while the corresponding indemnity is not paid implies the tenancy or possession in fact of the land on which it is built, planted or sown. 18 The petitioner not having been so paid, he was entitled to retain ownership of the building and, necessarily, the income therefrom.

It follows, too, that the Court of Appeals erred not only in upholding the trial court's determination of the indemnity, but also in ordering the petitioner to account for the rentals of the apartment building from 23 June 1993 to 23 September 1993.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. SP No. 32679 and the Order of 15 November 1993 of the Regional Trial Court, Branch 101, Quezon City in Civil Case No. Q-41470 are hereby SET ASIDE.

The case is hereby remanded to the trial court for it to determine the current market value of the apartment building on the lot. For this purpose, the parties shall be allowed to adduce evidence on the current market value of the apartment building. The value so determined shall be forthwith paid by the private respondents to the petitioner otherwise the petitioner shall be restored to the possession of the apartment building until payment of the required indemnity.

No costs.

SO ORDERED.

G.R. No. 165907 July 27, 2009

SPS. DOMINADOR R. NARVAEZ and LILIA W. NARVAEZ, Petitioners, vs.SPS. ROSE OGAS ALCISO and ANTONIO ALCISO, Respondents.

CARPIO, J.:

The Case

This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 29 October 2004 Decision2 of the Court of Appeals in CA-G.R. CV No. 63757. The Court of Appeals affirmed with modification the 6 April 1998 Decision3 of the Regional Trial Court (RTC), Judicial Region 1, Branch 8, La Trinidad, Benguet, in Civil Case No. 84-CV-0094.

The Facts

Larry A. Ogas (Ogas) owned a 1,329-square meter parcel of land situated in Pico, La Trinidad, Benguet. The property was covered by Transfer Certificate of Title (TCT) No. T-1068, and a portion was subject to a 30-year lease agreement4 with Esso Standard Eastern, Inc. Ogas sold the property to his daughter Rose O. Alciso (Alciso). TCT No. T-1068 was cancelled and TCT No. T-124225 was issued in the name of Alciso.

On 25 August 1979, Alciso entered into a Deed of Sale with Right to Repurchase,6 selling the property to Jaime Sansano (Sansano) for P10,000. Alciso later repurchased the property from Sansano and, on 28 March 1980, she entered into another Deed of Absolute Sale,7 this time selling the property to Celso S. Bate (Bate) for P50,000. The Deed stated that:

The SELLER warrants that her title to and ownership of the property herein conveyed are free from all liens and encumbrances except those as appear on the face of the title, specifically, that lease over the said property in favor of ESSO STANDARD EASTERN, INC., the rights over which as a lessor the SELLER likewise hereby transfers in full to the buyer.8

TCT No. T-12422 was cancelled and TCT No. T-160669 was issued in the name of Bate. On 14 August 1981, Bate entered into a Deed of Sale of Realty,10 selling the property to the spouses Dominador R. Narvaez and Lilia W. Narvaez (Spouses Narvaez) for P80,000. TCT No. T-16066 was cancelled and TCT No. T-1652811 was issued in the name of the Spouses Narvaez. In 1982, the Spouses Narvaez built a commercial building on the property amounting to P300,000.

Alciso demanded that a stipulation be included in the 14 August 1981 Deed of Sale of Realty allowing her to repurchase the property from the Spouses Narvaez. In compliance with Alciso’s demand, the Deed stated that, "The SELLER (Bate) carries over the manifested intent of the original SELLER of the property (Alciso) to buy back the same at a price under such conditions as the present BUYERS (Spouses Narvaez) may impose." The Spouses Narvaez furnished Alciso with a copy of the Deed.

Alciso alleged that she informed the Spouses Narvaez that she wanted to repurchase the property. The Spouses Narvaez demanded P300,000, but Alciso was willing to pay only P150,000. Alciso and the Spouses Narvaez failed to reach an agreement on the repurchase price.

In a Complaint12 dated 15 June 1984 and filed with the RTC, Alciso prayed that (1) the 25 August 1979 Deed of Sale with Right to Repurchase, the 28 March 1980 Deed of Absolute Sale, and the 14 August 1981 Deed of Sale of Realty be annulled; (2) the Register of Deeds be ordered to cancel TCT Nos. T-16066 and T-16528; (3) the Spouses Narvaez be ordered to reconvey the property; and (4) Sansano, Bate, and the Spouses Narvaez be ordered to pay damages, attorney’s fees and expenses of litigation. Alciso claimed that the intention of the parties was to enter into a contract of real estate mortgage and not a contract of sale with right of repurchase. She stated that:

[C]ontrary to the clear intention and agreement of the parties, particularly the plaintiffs herein, defendant JAIME SANSANO, taking advantage of the good faith and financial predicament and difficulties of plaintiffs at the time, caused to be prepared and induced with insidous [sic] words and machinations, prevailed upon plaintiff to sign a contract denominated as "Sale With Right to Repurchase", instead of Deed of Real Estate Mortgage as was the clear intention and agreement of the parties.

x x x x

Defendant JAIME SANSANO caused to be prepared a contract denominated as DEED OF ABSOLUTE SALE, covering the lot in question, contrary to the clear intention and understanding of plaintiff who was inveigled into signing said contract under the impression that what she was executing was a real estate mortgage.13

The RTC’s Ruling

In its 6 April 1998 Decision, the RTC held that (1) the 25 August 1979 Deed of Sale with Right to Repurchase became functus officio when Alciso repurchased the property; (2) the action to annul the 28 March 1980 Deed of Absolute Sale had prescribed; (3) Alciso had no legal personality to annul the 14 August 1981 Deed of Sale of Realty; (4) the 14 August 1981 Deed of Sale of Realty contained a stipulation pour autrui in favor of Alciso — Alciso could repurchase the property; (5) Alciso communicated to the Spouses Narvaez her acceptance of the favor contained in the stipulation pour autrui; (6) the repurchase price was P80,000; (7) Alciso could either appropriate the commercial building after payment of the indemnity equivalent to one-half of its market value when constructed or sell the land to the Spouses Narvaez; and (8) Alciso was entitled to P100,000 attorney’s fees and P20,000 nominal damages.

The Spouses Narvaez appealed to the Court of Appeals. In their Appellants Brief14 dated 21 November 2000, the Spouses Narvaez claimed that (1) the 14 August 1981 Deed of Sale of Realty did not contain a stipulation pour autrui — not all requisites were present; (2) the RTC erred in setting the repurchase price at P80,000; (3) they were purchasers for value and in good faith; and (4) they were builders in good faith.

The Court of Appeals’ Ruling

In its 29 October 2004 Decision, the Court of Appeals held that (1) the 14 August 1981 Deed of Sale of Realty contained a stipulation pour autrui; (2) Alciso accepted the favor contained in the stipulation pour autrui; (3) the RTC erred in setting the repurchase price at P80,000; (4) the 14 August 1981 Deed of Sale of Realty involved a contract of sale with right of repurchase and not real estate mortgage; (5) the Spouses Narvaez were builders in good faith; and (6) Alciso could either appropriate the commercial building after payment of the indemnity or oblige the Spouses Narvaez to pay the price of the land, unless the price was considerably more than that of the building. The Court of Appeals remanded the case to the RTC for determination of the property’s reasonable repurchase price.

The Issue

The Spouses Narvaez elevated the case to the Court. In their Petition dated 15 December 2004, the Spouses Narvaez claimed that Alciso did not communicate her acceptance of the favor contained in the stipulation pour autrui; thus, she could not repurchase the property.

The Court’s Ruling

The petition is unmeritorious.

Article 1311, paragraph 2, of the Civil Code states the rule on stipulations pour autrui:

If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person.

In Limitless Potentials, Inc. v. Quilala,15 the Court laid down the requisites of a stipulation pour autrui: (1) there is a stipulation in favor of a third person; (2) the stipulation is a part, not the whole, of the contract; (3) the contracting parties clearly and deliberately conferred a favor to the third person — the favor is not an incidental benefit; (4) the favor is unconditional and uncompensated; (5) the third person communicated his or her acceptance of the favor before its revocation; and (6) the contracting parties do not represent, or are not authorized by, the third party.

All the requisites are present in the instant case: (1) there is a stipulation in favor of Alciso; (2) the stipulation is a part, not the whole, of the contract; (3) Bate and the Spouses Narvaez clearly and deliberately conferred a favor to Alciso; (4) the favor is unconditional and uncompensated; (5) Alciso communicated her acceptance of the favor before its revocation — she demanded that a stipulation be included in the 14 August 1981 Deed of Sale of Realty allowing her to repurchase the property from the Spouses Narvaez, and she informed the Spouses Narvaez that she wanted to repurchase the property; and (6) Bate and the Spouses Narvaez did not represent, and were not authorized by, Alciso.

The Spouses Narvaez claim that Alciso did not communicate her acceptance of the favor. They state that:

A perusal of the provision of the Deed of Sale of Realty between Celso Bate and the spouses Dominador R. Narvaez and Lilia W. Narvaez (Annex "B") which clearly provides that "the third person" (Rose O. Alciso) must have communicated her acceptance to the obligors (spouses Dominador R. Narvaez and Lilia W. Narvaez) before its revocation was not complied with. The acceptance is at best by mere inference.

x x x x

Petitioner Narvaez clearly stated that while the contract (Deed of Sale of Realty, Annex "D") contained an [sic] stipulation in favor of a third person (Rose O. Alciso), she did not demand its fulfillment and communicate her acceptance to the obligors before its revocation.

x x x x

We maintain that the stipulation aforequoted is not a stipulation pour autrui. Let the following be emphasized:

1.While the contract contained a stipulation in favor of a third person (Rose Alciso) she did not demand its fulfillment and she never communicated her acceptance to the obligors (Spouses Narvaez) before its revocation (Uy Tam vs. Leonard, 30 Phil. 471; Coquia vs. Fieldmen’s Insurance Co., Inc., 26 SCRA 178)

2.Granting arguendo that the stipulation is a pour autrui yet in the three meetings Rose Alciso had with Mrs. Narvaez she never demanded fulfillment of the alleged stipulation pour autrui and, what is worse, she did not communicate her acceptance to the obligors before it is revoked.16

A petition for review on certiorari under Rule 45 of the Rules of Court should include only questions of law — questions of fact are not reviewable. A question of law exists when the doubt centers on what the law is on a certain set of facts, while a question of fact exists when the doubt centers on the truth or falsity of the alleged facts. There is a question of law if the issue raised is capable of being resolved without need of reviewing the probative value of the evidence. Once the issue invites a review of the evidence, the question is one of fact.17

Whether Alciso communicated to the Spouses Narvaez her acceptance of the favor contained in the stipulation pour autrui is a question of fact. It is not reviewable.

The factual findings of the trial court, especially when affirmed by the Court of Appeals, are binding on the Court.18 In its 6 April 1998 Decision, the RTC found that Alciso communicated to the Spouses Narvaez her acceptance of the favor contained in the stipulation pour autrui. The RTC stated that:

Rose Alciso communicated her acceptance of such favorable stipulation when she went to see defendant Lillia [sic] Narvaez in their house. Under the foregoing circumstances, there is no question that plaintiff Rose Alciso can maintain her instant action for the enforcement and/or fulfillment of the aforestated stipulation in her favor to by [sic] back the property in question.19 (Emphasis supplied)

In Florentino v. Encarnacion, Sr.,20 the Court held that the acceptance may be made at any time before the favorable stipulation is revoked and that the acceptance may be in any form — it does not have to be formal or express but may be implied. During the trial, Alciso testified that she informed the Spouses Narvaez that she wanted to repurchase the property:

q – What was your proposal to Mrs. Narvaez by way of settlement?

a – I tried to go to her and asked her if I could redeem the property and Mrs. Narvaez told me why not, you could redeem the property but not our price.

x x x x

q – Now, when you went back to her, what if any did you propose to her or tell her, Madam witness?

a – I just asked for the redemption for the property, sir and she just told me wa [sic] the price that I could only redeem the property.

q – Three Hundred thousand pesos?

a – Yes, sir.

q – Did you make any counter proposal?

a – Yes, for the third time I want [sic] back again your Honor...21

The exceptions to the rule that the factual findings of the trial court are binding on the Court are (1) when there is grave abuse of discretion; (2) when the findings are grounded on speculations; (3) when the inference made is manifestly mistaken; (4) when the judgment of the Court of Appeals is based on a misapprehension of facts; (5) when the factual findings are conflicting; (6) when the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of the parties; (7) when the Court of Appeals overlooked undisputed facts which, if properly considered, would justify a different conclusion; (8) when the findings of the Court of Appeals are contrary to those of the trial court; (9) when the facts set forth by the petitioners are not disputed by the respondents; and (10) when the findings of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.22 The Spouses Narvaez did not show that the instant case falls under any of the exceptions.

In its 29 October 2004 Decision, the Court of Appeals held that Bate and the Spouses Narvaez entered into a sale with right of repurchase and that, applying Article 448 of the Civil Code, Alciso could either appropriate the commercial building after payment of the indemnity or oblige the Spouses Narvaez to pay the price of the land, unless the price was considerably more than that of the building. Article 448 states:

Art. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or the trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

The Court of Appeals stated that:

[T]he contract between defendants-appellants Bate and Narvaez spouses is a contract of sale with a stipulation granting plaintiffs-appellees the right to repurchase the property at a reasonable price. Being the absolute owners of the property in question, defendants-appellants Narvaez spouses have the undisputed right to use, enjoy and build thereon.

Having built the improvement on the land they own and registered in their names, they are likened to builders in good faith and their rights over the improvement shall be governed by Article 448 of the Civil Code which provides:

ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or tress. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

Applying said Article, plaintiffs-appellees, after repurchasing the land, will have the following options:

(1) to appropriate for themselves the building upon payment of its value to defendants-appellants Narvaez spouses; OR

(2) to compel the defendants-appellants Narvaez spouses to buy the land, unless the value of thereof [sic] be considerably more than that of the building, in which case, said spouses may lease the land instead. The parties shall agree upon the terms of the lease and in case of disagreement, the courts shall fix the terms thereof.23

The Court disagrees.

The rule is that only errors specifically assigned and properly argued in the appellant’s brief will be considered, except jurisdictional and clerical errors.24 However, the Court is clothed with ample authority to review matters not assigned as errors if their consideration is necessary in arriving at a just decision.25

Article 448 is inapplicable in cases involving contracts of sale with right of repurchase — it is inapplicable when the owner of the land is the builder, sower, or planter. In Pecson v. Court of Appeals,26 the Court held that:

Article 448 does not apply to a case where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by sale or donation. This Court said so in Coleongco v. Regalado:

Article 361 of the old Civil Code is not applicable in this case, for Regalado constructed the house on his own land before he sold said land to Coleongco. Article 361 applies only in cases where a person constructs a building on the land of another in good or in bad faith, as the case may be. It does not apply to a case where a person constructs a building on his own land, for then there can be no question as to good or bad faith on the part of the builder.

Elsewise stated, where the true owner himself is the builder of the works on his own land, the issue of good faith or bad faith is entirely irrelevant. (Emphasis supplied)

Article 448 is inapplicable in the present case because the Spouses Narvaez built the commercial building on the land that they own. Besides, to compel them to buy the land, which they own, would be absurd.

As the Court of Appeals correctly observed, the terms of the 14 August 1981 Deed of Sale of Realty show that Bate and the Spouses Narvaez entered into a sale with right of repurchase, where Bate transferred his right of repurchase to Alciso. The Deed states that, "The SELLER (Bate) carries over the manifested intent of the original SELLER of the property (Alciso) to buy back the same at a price under such conditions as the present BUYERS (Spouses Narvaez) may impose." Article 1601 of the Civil Code states that, "Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and other stipulations which may have been agreed upon." In Gallar v. Husain,27 the Court held that "the right of repurchase may be exercised only by the vendor in whom the right is recognized by contract or by any person to whom the right may have been transferred."

In a sale with right of repurchase, the applicable provisions are Articles 1606 and 1616 of the Civil Code, not Article 448. Articles 1606 and 1616 state:

Art. 1606. The right referred to in Article 1601, in the absence of an express agreement, shall last four years from the date of the contract.lawph!l

Should there be an agreement, the period cannot exceed ten years.

However, the vendor may still exercise the right to repurchase within thirty days from the time final judgment was rendered in a civil action on the basis that the contract was a true sale with right to repurchase.

Art. 1616. The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale, and in addition:

(1) The expenses of the contract, and any other legitimate payments made by reason of the sale;

(2) The necessary and useful expenses made on the thing sold.

Under Article 1616, Alciso may exercise her right of redemption by paying the Spouses Narvaez (1) the price of the sale, (2) the expenses of the contract, (3) legitimate payments made by reason of the sale, and (4) the necessary and useful expenses made on the thing sold. In the present case, the cost of the building constitutes a useful expense. Useful expenses include improvements which augment the value of the land.28

Under the first paragraph of Article 1606, Alciso had four years from 14 August 1981 to repurchase the property since there was no express agreement as to the period when the right can be exercised. Tender of payment of the repurchase price is necessary in the exercise of the right of redemption. Tender of payment is the seller’s manifestation of his or her desire to repurchase the property with the offer of immediate performance.29

Alciso’s intimation to the Spouses Narvaez that she wanted to repurchase the property was insufficient. To have effectively exercised her right of repurchase, Alciso should have tendered payment. In Lee v. Court of Appeals,30 the Court held that:

The rule that tender of payment of the repurchase price is necessary to exercise the right of redemption finds support in civil law. Article 1616 of the Civil Code of the Philippines x x x furnishes the guide, to wit: "The vendor cannot avail himself of the right of repurchase without returning to the vendee the price of the sale..."1avvphi1

Thus, in the case of Angao vs. Clavano, 17 Phil. 152, it was held that "it is not sufficient for the vendor to intimate or to state to the vendee that the former desires to redeem the thing sold, but he must immediately thereupon offer to repay the price..." Likewise, in several other cases decided by the Supreme Court (Fructo vs. Fuentes, 15 Phil. 362; Retes vs. Suelto, 20 Phil. 394; Rosales vs. Reyes, et al., 25 Phil. 495; Canuto vs. Mariano, 37 Phil. 840; De la Cruz, et al. vs. Resurreccion, et al., 98 Phil. 975; and other cases) where the right to repurchase was held to have been properly exercised, there was a definite finding of tender of payment having been made by the vendor. (Emphasis supplied)

Nevertheless, under the third paragraph of Article 1606, Alciso has 30 days from the finality of this Decision to exercise her right of repurchase. In Laserna v. Javier,31 the Court held that:

The new Civil Code in Article 1606, thereof gives the vendors a retro "the right to repurchase within thirty days from the time final judgment was rendered in a civil action, on the basis that the contract was a true sale with the right to repurchase." This provision has been construed to mean that "after the courts have decided by a final or executory judgment that the contract was a pacto de retro and not a mortgage, the vendor (whose claim as mortgagor had definitely been rejected) may still have the privilege of repurchasing within 30 days." (Perez, et al. vs. Zulueta, 106 Phil., 264.)

The third paragraph of Article 1606 allows sellers, who considered the transaction they entered into as mortgage, to repurchase the property within 30 days from the time they are bound by the judgment finding the transaction to be one of sale with right of repurchase.

WHEREFORE, the Court DENIES the petition. The Court AFFIRMS the 29 October 2004 Decision of the Court of Appeals in CA-G.R. CV No. 63757 with MODIFICATION. Respondent Rose O. Alciso may exercise her right of redemption by paying the petitioners Spouses Dominador R. Narvaez and Lilia W. Narvaez (1) the price of the sale, (2) the expenses of the contract, (3) legitimate payments made by reason of the sale, and (4) the necessary and useful expenses made on the subject property. The Court DIRECTS the Regional Trial Court, Judicial Region 1, Branch 8, La Trinidad, Benguet, to determine the amounts of the expenses of the contract, the legitimate expenses made by reason of the sale, and the necessary and useful expenses made on the subject property.

After such determination, respondent Rose O. Alciso shall have 30 days to pay the amounts to petitioners Spouses Dominador R. Narvaez and Lilia W. Narvaez.

SO ORDERED.

G.R. No. 167017 June 22, 2009

SERAFIN CHENG, Petitioner, vs.SPOUSES VITTORIO and MA. HELEN DONINI, Respondents.

CORONA,J.:

The subject of this petition is an oral lease agreement that went sour. Petitioner Serafin Cheng agreed to lease his property located at 479 Shaw Blvd., Mandaluyong City to respondents, Spouses Vittorio and Ma. Helen Donini, who intended to put up a restaurant thereon. They agreed to a monthly rental of P17,000, to commence in December 1990.

Bearing an Interim Grant of Authority executed by petitioner, respondents proceeded to introduce improvements in the premises. The authority read:

I, Serafin Cheng, of legal age and with office address at Room 310 Federation Center Building Muelle de Binondo, Manila, owner of the building/structure located at 479 Shaw Boulevard, Mandaluyong, Metro Manila, pursuant to a lease agreement now being finalized and to take effect December 1, 1990, hereby grants VITTORIO DONINI (Prospective Lessee) and all those acting under his orders to make all the necessary improvements on the prospective leased premises located at 479 Shaw Blvd., Mandaluyong, Metro Manila, and for this purpose, to enter said premises and perform, all such works and activities to make the leased premises operational as a restaurant or similar purpose.

Manila, 31 October 1990.1

However, before respondents’ business could take off and before any final lease agreement could be drafted and signed, the parties began to have serious disagreements regarding its terms and conditions. Petitioner thus wrote respondents on January 28, 1991, demanding payment of the deposit and rentals, and signifying that he had no intention to continue with the agreement should respondents fail to pay. Respondents, however, ignoring petitioner’s demand, continued to occupy the premises until April 17, 1991 when their caretaker voluntarily surrendered the property to petitioner.

Respondents then filed an action for specific performance and damages with a prayer for the issuance of a writ of preliminary injunction in the Regional Trial Court (RTC) of Pasig City, Branch 67, docketed as Civil Case No. 60769. Respondents prayed that petitioner be ordered to execute a written lease contract for five years, deducting from the deposit and rent the cost of repairs in the amount of P445,000, or to order petitioner to return their investment in the amount of P964,000 and compensate for their unearned net income of P200,000 with interest, plus attorney’s fees.2

Petitioner, in his answer, denied respondents’ claims and sought the award of moral and exemplary damages, and attorney’s fees.3

After trial, the RTC rendered its decision in favor of petitioner, the dispositive portion of which provided:

WHEREFORE, in view of all the foregoing, this Court finds the preponderance of evidence in favor of the [petitioner] and hereby renders judgment as follows:

1. The Complaint is dismissed.

2. On the counterclaim, [respondents] are ordered, jointly and severally, to pay the [petitioner] P500,000.00 as moral damages; P100,000.00 as exemplary damages; and P50,000.00 as attorney’s fees.

3. [Respondents] are likewise ordered to pay the costs.

SO ORDERED.4

Respondents appealed to the Court of Appeals (CA) which, in its decision5 dated March 31, 2004, recalled and set aside the RTC decision, and entered a new one ordering petitioner to pay respondents the amount of P964,000 representing the latter’s expenses incurred for the repairs and improvements of the premises.6

Petitioner filed a motion for reconsideration on the ground that the award of reimbursement had no factual and legal bases,7 but this was denied by the CA in its resolution dated February 21, 2005.8

Hence, this petition for certiorari under Rule 45 of the Rules of Court, with petitioner arguing that:

THE COURT OF APPEALS DECIDED THIS CASE NOT IN ACCORD WITH LAW AND WITH APPLICABLE DECISIONS OF THIS HONORABLE COURT. PUT OTHERWISE:

A. BY ORDERING PETITIONER TO REIMBURSE RESPONDENTS THE FULL VALUE OF EXPENSES FOR THEIR ALLEGED REPAIRS AND IMPROVEMENTS OF THE LEASED PREMISES, THE COURT OF APPEALS ERRONEOUSLY CONSIDERED RESPONDENTS NOT AS MERE LESSEES BUT POSSESSORS IN GOOD FAITH UNDER ARTICLES 448 AND 546 OF THE CIVIL CODE.

B. THE COURT OF APPEALS DECIDED THIS CASE NOT IN ACCORD WITH ARTICLE 1678 OF THE CIVIL CODE WHICH GIVES THE LESSOR THE OPTION TO REIMBURSE THE LESSEE ONE-HALF OF THE VALUE OF USEFUL IMPROVEMENTS OR, IF HE DOES NOT WANT TO, ALLOW THE LESSEE TO REMOVE THE IMPROVEMENTS.

C. LIKEWISE, BY ORDERING PETITIONER TO REIMBURSE THE VALUE OF ORNAMENTAL EXPENSES, THE COURT OF APPEALS CONTRAVENED THE SECOND PARAGRAPH OF ARTICLE 1678.

D. THE COURT OF APPEALS ERRED IN APPLYING THE PRINCIPLE OF EQUITY IN FAVOR OF THE RESPONDENTS.

E. THE COURT OF APPEALS ERRED IN NOT AFFIRMING THE DECISION OF THE TRIAL COURT AWARDING DAMAGES TO PETITIONER.

F. THE COURT OF APPEALS SERIOUSLY ERRED AND/OR GRAVELY ABUSED ITS DISCRETION IN FIXING THE AMOUNT OF P961,000.009 CONTRARY TO RESPONDENTS’ OWN REPRESENTATION AND EVIDENCE.10

Respondents were required to file their comment on the petition but their counsel manifested that he could not file one since his clients’ whereabouts were unknown to him.11 Counsel also urged the Court to render a decision on the basis of the available records and documents.12 Per resolution dated August 30, 2006, copies of the resolutions requiring respondents to file their comment were sent to their last known address and were deemed served. The order requiring respondents’ counsel to file a comment in their behalf was reiterated.13

In their comment, respondents argued that they were possessors in good faith, hence, Articles 448 and 546 of the Civil Code applied and they should be indemnified for the improvements introduced on the leased premises. Respondents bewailed the fact that petitioner was going to benefit from these improvements, the cost of which amounted to P1.409 million, in contrast to respondents’ rental/deposit obligation amounting to only P34,000. Respondents also contended that petitioner’s rescission of the agreement was in bad faith and they were thus entitled to a refund.14

In settling the appeal before it, the CA made the following findings and conclusions:

1. there was no agreement that the deposit and rentals accruing to petitioner would be deducted from the costs of repairs and renovation incurred by respondents;

2. respondents committed a breach in the terms and conditions of the agreement when they failed to pay the rentals;

3. there was no valid rescission on the part of petitioner;

4. respondents were entitled to reimbursement for the cost of improvements under the principle of equity and unjust enrichment; and

5. the award of damages in favor of petitioner had no basis in fact and law.15

As the correctness of the CA’s ruling regarding (1) the lack of agreement on the deposit and rentals; (2) respondents’ breach of the terms of the verbal agreement and (3) the lack of valid rescission by petitioner was never put in issue, this decision will be confined only to the issues raised by petitioner, that is, the award of reimbursement and the deletion of the award of damages. It need not be stressed that an appellate court will not review errors that are not assigned before it, save in certain exceptional circumstances and those affecting jurisdiction over the subject matter as well as plain and clerical errors, none of which is present in this case.16

Remarkably, in ruling that respondents were entitled to reimbursement, the CA did not provide any statutory basis therefor and instead applied the principles of equity and unjust enrichment, stating:

It would be inequitable to allow the defendant-appellee, as owner of the property to enjoy perpetually the improvements introduced by the plaintiffs-appellants without reimbursing them for the value of the said improvements. Well-settled is the rule that no one shall be unjustly enriched or benefitted at the expense of another.17

Petitioner, however, correctly argued that the principle of equity did not apply in this case. Equity, which has been aptly described as "justice outside legality," is applied only in the absence of, and never against, statutory law or judicial rules of procedure.18 Positive rules prevail over all abstract arguments based on equity contra legem.19 Neither is the principle of unjust enrichment applicable since petitioner (who was to benefit from it) had a valid claim.20

The relationship between petitioner and respondents was explicitly governed by the Civil Code provisions on lease, which clearly provide for the rule on reimbursement of useful improvements and ornamental expenses after termination of a lease agreement. Article 1678 states:

If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary.

With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.

Article 1678 modified the (old) Civil Code provision on reimbursement where the lessee had no right at all to be reimbursed for the improvements introduced on the leased property, he being entitled merely to the rights of a usufructuary – the right of removal and set-off but not to reimbursement.21

Contrary to respondents’ position, Articles 448 and 546 of the Civil Code did not apply. Under these provisions, to be entitled to reimbursement for useful improvements introduced on the property, respondents must be considered builders in good faith. Articles 448 and 546, which allow full reimbursement of useful improvements and retention of the premises until reimbursement is made, apply only to a possessor in good faith or one who builds on land in the belief that he is the owner thereof. A builder in good faith is one who is unaware of any flaw in his title to the land at the time he builds on it. 22

But respondents cannot be considered possessors or builders in good faith. As early as 1956, in Lopez v. Philippine & Eastern Trading Co., Inc.,23 the Court clarified that a lessee is neither a builder nor a possessor in good faith –

x x x This principle of possessor in good faith naturally cannot apply to a lessee because as such lessee he knows that he is not the owner of the leased property. Neither can he deny the ownership or title of his lessor. Knowing that his occupation of the premises continues only during the life of the lease contract and that he must vacate the property upon termination of the lease or upon the violation by him of any of its terms, he introduces improvements on said property at his own risk in the sense that he cannot recover their value from the lessor, much less retain the premises until such reimbursement. (Emphasis supplied)

Being mere lessees, respondents knew that their right to occupy the premises existed only for the duration of the lease.24 Cortez v. Manimbo25 went further to state that:

If the rule were otherwise, ‘it would always be in the power of the tenant to improve his landlord out of his property.

These principles have been consistently adhered to and applied by the Court in many cases.26

Under Article 1678 of the Civil Code, the lessor has the primary right (or the first move) to reimburse the lessee for 50% of the value of the improvements at the end of the lease. If the lessor refuses to make the reimbursement, the subsidiary right of the lessee to remove the improvements, even though the principal thing suffers damage, arises. Consequently, on petitioner rests the primary option to pay for one-half of the value of the useful improvements. It is only when petitioner as lessor refuses to make the reimbursement that respondents, as lessees, may remove the improvements. Should petitioner refuse to exercise the option of paying for one-half of the value of the improvements, he cannot be compelled to do so. It then lies on respondents to insist on their subsidiary right to remove the improvements even though the principal thing suffers damage but without causing any more impairment on the property leased than is necessary.

As regards the ornamental expenses, respondents are not entitled to reimbursement. Article 1678 gives respondents the right to remove the ornaments without damage to the principal thing. But if petitioner appropriates and retains said ornaments, he shall pay for their value upon the termination of the lease.

The fact that petitioner will benefit from the improvements introduced by respondents is beside the point. In the first place, respondents introduced these improvements at their own risk as lessees. Respondents were not forced or obliged to splurge on the leased premises as it was a matter of necessity as well as a business strategy.27 In fact, had respondents only complied with their obligation to pay the deposit/rent, there would have been no dispute to begin with. If they were able to shell out more than a million pesos to improve the property, the measly P34,000 deposit demanded by petitioner was a mere "drop in the bucket," so to speak. More importantly, the unequivocal terms of Article 1678 of the Civil Code should be the foremost consideration.

The Court notes that the CA pegged the total value of the improvements made on the leased premises at P964,000, which was apparently based on the allegation in respondents’ complaint that it was their total investment cost.28 The CA lumped together all of respondents’ expenses, which was a blatant error. A qualification should have been made as to how much was spent for useful improvements (or those which were suitable to the use for which the lease was intended) and how much was for ornamental expenses. Respondent Vittorio Donini testified that he spent P450,000 for necessary repairs, while P500,000 was spent for adornments.29 The evidence on record, however, showed respondents’ expenses for useful improvements to be as follows:

ExpenseAmount Electrical P31,893.65Exh. "F", et seq. 30

Roofing P14,856.00Exhibit "O"31

Labor P19,909.75Exh. "P", et seq.32

Ceiling P65,712.00Exh. "Q", et seq.33

Labor P38,689.20Exh. "R", et seq.34

Electrical (phase 2) P76,539.10Exh. "S", et seq.35

Door P41,371.75Exh. "T", et seq.36

Labor P25,126.00Exh. "U", et seq.37

Water P 8,031.00Exhs. "W" & "W-1"38

Gutters P 35,550.05Exhs. "X" & "X-1"39

Outside Wall P 24,744.00Exh. "X-2"40

Inside Wall P 22,186.10Exh. "X-3"41

Electrical (phase 3) P 88,698.30Exhs. "X-8" to "X-11"42

Labor P 19,995.00Exhibit "Y"43

Total P513,301.90 Accordingly, the 50% value of the useful improvements to be reimbursed by petitioner, if he chose to do so, should be based on P513,301.90. Since petitioner did not exercise his option to retain these useful improvements, then respondents could have removed the same. This was the legal consequence of the application of Article 1678 under ordinary circumstances.

The reality on the ground ought to be recognized. For one, as disclosed by respondents’ counsel, he no longer knows the exact whereabouts of his clients, only that they are now in Europe and he has no communication with them at all.44 For another, it appears that as soon as respondents vacated the premises, petitioner immediately reclaimed the property and barred respondents from entering it. Respondents also alleged, and petitioner did not deny, that the property subject of this case had already been leased to another entity since 1991.45 This is where considerations of equity should come into play. It is obviously no longer feasible for respondents to remove the improvements from the property, if they still exist. The only equitable alternative then, given the circumstances, is to order petitioner to pay respondents one-half of the value of the useful improvements (50% of P513,301.90) introduced on the property, or P256,650.95. To be off-set against this amount are respondents’ unpaid P17,000 monthly rentals for the period of December 1990 to April 1991,46 or P85,000. Petitioner should, therefore, indemnify respondents the amount of P171,650.95. This is in accord with the law’s intent of preventing unjust enrichment of a lessor who now has to pay one-half of the value of the useful improvements at the end of the lease because the lessee has already enjoyed the same, whereas the lessor can enjoy them indefinitely thereafter.47

Respondents are not entitled to reimbursement for the ornamental expenses under the express provision of Article 1678. Moreover, since they failed to remove these ornaments despite the opportunity to do so when they vacated the property, then they were deemed to have waived or abandoned their right of removal.

The CA also erred when it deleted the awards of moral and exemplary damages and attorney’s fees.

Petitioner is entitled to moral damages but not in the amount of P500,000 awarded by the RTC, which the Court finds to be excessive. While trial courts are given discretion to determine` the amount of moral damages, it "should not be palpably and scandalously excessive."48 Moral damages are not meant to enrich a person at the expense of the other but are awarded only to allow the former to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone due to the other person’s culpable action.49 It must always reasonably approximate the extent of injury and be proportional to the wrong committed.50 The award of P100,000 as moral damages is sufficient and reasonable under the circumstances.

The award of P100,000 as exemplary damages is likewise excessive. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions.51 We think P50,000 is reasonable in this case.1avvphi1

Finally, Article 2208 of the Civil Code allows recovery of attorney's fees when exemplary damages are awarded or when the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.52 Petitioner is entitled to it since exemplary damages were awarded in this case and respondents’ act in filing Civil Case No. 60769 compelled him to litigate. The amount of P25,000 is in accord with prevailing jurisprudence.53

WHEREFORE, the petition is PARTIALLY GRANTED. The decision dated March 31, 2004 rendered by the Court of Appeals in CA-G.R. CV No. 54430 is hereby MODIFIED in that –

(1) petitioner Serafin Cheng is ORDERED to pay respondents, spouses Vittorio and Ma. Helen Donini, the amount of P171,650.95 as indemnity for the useful improvements; and

(2) respondents, spouses Vittorio and Ma. Helen Donini, are ORDERED to pay petitioner Serafin Cheng the following sums:

a) P100,000.00 moral damages;

b) P50,000.00 exemplary damages and

c) P25,000.00 attorney’s fees.

Let copies of this decision be furnished respondents, spouses Vittorio and Ma. Helen Donini, at their last known address, and their counsel of record.

SO ORDERED.

G.R. No. 175399 October 27, 2009

OPHELIA L. TUATIS, Petitioner, vs.SPOUSES ELISEO ESCOL and VISMINDA ESCOL; HONORABLE COURT OF APPEALS, 22nd DIVISION, CAGAYAN DE ORO CITY; REGIONAL TRIAL COURT, BRANCH 11, SINDANGAN, ZAMBOANGA DEL NORTE; and THE SHERIFF OF RTC, BRANCH 11, SINDANGAN, ZAMBOANGA DEL NORTE, Respondents.

CHICO-NAZARIO, J.:

This Petition for Certiorari and Mandamus1 under Rule 65 of the Rules of Court seeks the annulment of the following Resolutions of the Court of Appeals in CA-G.R. SP No. 00737-MIN: (a) Resolution2 dated 10 February 2006 dismissing the Petition for Certiorari, Prohibition and Mandamus with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction of herein petitioner Ophelia L. Tuatis (Tuatis); (b) Resolution3 dated 25 July 2006 denying Tuatis’ Motion for Reconsideration of the Resolution dated 10 February 2006; and (c) Resolution4 dated 9 October 2006 denying Tuatis’ Motion for Leave to File a Second Motion for Reconsideration. The instant Petition further prays for the annulment of the Order5 dated 26 September 2005 of the Regional Trial Court (RTC) of

Sindangan, Zamboanga del Norte, Branch 11, in Civil Case No. S-618, ordering the Sheriff to immediately serve the Writ of Execution issued on 7 March 2002.

The dispute arose from the following factual and procedural antecedents:

On 18 June 1996, Tuatis filed a Complaint for Specific Performance with Damages6 against herein respondent Visminda Escol (Visminda) before the RTC, docketed as Civil Case No. S-618.

Tuatis alleged in her Complaint that sometime in November 1989, Visminda, as seller, and Tuatis, as buyer, entered into a Deed of Sale of a Part of a Registered Land by Installment7 (Deed of Sale by Installment). The subject matter of said Deed was a piece of real property situated in Poblacion, Sindangan, Zamboanga del Norte and more particularly described as "[a] part of a registered land being known as Lot No. 251, Pls-66 covered under OCT [Original Certificate of Title] No. P-5421; x x x with an area of THREE HUNDRED (300) square meters, more or less" (subject property).

The significant portions of the Deed of Sale by Installment stated:

That for and in consideration of the sum of TEN THOUSAND PESOS (P10,000.00), Philippine currency, the SELLER [Visminda8] hereby SELLS to the BUYER [Tuatis], the above-described parcel of land under the following terms and conditions:

1. That the BUYER [Tuatis] shall pay to the SELLER [Visminda] the amount of THREE THOUSAND PESOS (P3,000.00), as downpayment;

2. That the BUYER [Tuatis] shall pay to the SELLER [Visminda] the amount of FOUR THOUSAND PESOS (P4,000.00), on or before December 31, 1989;

3. That the remaining balance of THREE THOUSAND PESOS (P3,000.00) shall be paid by the BUYER [Tuatis] to the SELLER [Visminda] on or before January 31, 1990;

4. That failure of the BUYER [Tuatis] to pay the remaining balance within the period of three months from the period stipulated above, then the BUYER [Tuatis] shall return the land subject of this contract to the SELLER [Visminda] and the SELLER [Visminda] [shall] likewise return all the amount paid by the BUYER [Tuatis].9

Tuatis claimed that of the entire purchase price of P10,000.00, she had paid Visminda P3,000.00 as downpayment. The exact date of said payment was not, however, specified. Subsequently, Tuatis paid P3,000.00 as installment on 19 December 1989, and another P1,000.00 installment on 17 February 1990. Tuatis averred that she paid Visminda the remaining P3,000.00 on 27 February 1990 in the presence of Eric Selda (Eric), a clerk in the law office of one Atty. Alanixon Selda. In support of this averment, Tuatis attached to her Complaint a certification10 executed by Eric on 27 May 1996.

In the meantime, Tuatis already took possession of the subject property and constructed a residential building thereon.

In 1996, Tuatis requested Visminda to sign a prepared absolute deed of sale covering the subject property, but the latter refused, contending that the purchase price had not yet been fully paid. The parties tried to amicably settle the case before the Lupon Barangay, to no avail.11

Tuatis contended that Visminda failed and refused to sign the absolute deed of sale without any valid reason. Thus, Tuatis prayed that the RTC order Visminda to do all acts for the consummation of the contract sale, sign the absolute deed of sale and pay damages, as well as attorney’s fees.

In her Answer,12 Visminda countered that, except for the P3,000.00 downpayment and P1,000.00 installment paid by Tuatis on 19 December 1989 and 17 February 1990,13 respectively, Tuatis made no other payment to Visminda. Despite repeated verbal demands, Tuatis failed to comply with the conditions that she and Visminda agreed upon in the Deed of Sale by Installment for the payment of the balance of the purchase price for the subject property. Visminda asked that the RTC dismiss Tuatis’ Complaint, or in the alternative, order Tuatis to return the subject property to Visminda after Visminda’s reimbursement of the P4,000.00 she had received from Tuatis.

After trial, the RTC rendered a Decision14 on 29 April 1999 in Civil Case No. S-618 in Visminda’s favor. The RTC concluded:

Under the facts and circumstances, the evidence for [Tuatis] has not established by satisfactory proof as to (sic) her compliance with the terms and conditions setforth (sic) in [the Deed of Sale by Installment] x x x.

x x x x

In contracts to sell, where ownership is retained by the seller and is not to pass until the full payment, such payment, as we said, is a positive suspensive condition, the failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force x x x.

x x x x

As the contract x x x is clear and unmistakable and the terms employed therein have not been shown to belie or otherwise fail to express the true intention of the parties, and that the deed has not been assailed on the ground of mutual mistake which would require its reformation, [the] same should be given its full force and effect.

EVIDENCE (sic) at hand points of no full payment of the price, hence No. 4 of the stipulation applies[,] which provides:

"That failure (sic) of the Buyer [Tuatis] to pay the remaining balance within the period of three months from the period stipulated above, then the Buyer [Tuatis] shall return the land subject of this Contract to the Seller [Visminda] and the Seller [Visminda] [shall] likewise return all the (sic) amount paid by the Buyer [Tuatis]."

This stipulation is the law between the [Buyer] and [Seller], and should be complied with in good faith x x x.

[Tuatis] constructed the building x x x in bad faith for, (sic) she had knowledge of the fact that the Seller [Visminda] is still the absolute owner of the subject land. There was bad faith also on the part of [Visminda] in accordance with the express provisions of Article 454 [of the New Civil Code]15 since [she] allowed [Tuatis] to construct the building x x x without any opposition on [her] part and so occupy it. The rights of the parties must, therefore, be determined as if they both had acted in bad faith. Their rights in such cases are governed by Article 448 of the New Civil Code of the Philippines.16

The RTC decreed the dismissal of Tuatis’ Complaint for lack of merit, the return by Tuatis of physical possession of the subject property to Visminda, and the return by Visminda of the P4,000.00 she received from Tuatis.

Tuatis filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 65037. In a Resolution17 dated 29 August 2000, however, the appellate court dismissed the appeal for failure of Tuatis to serve and file her appellant’s brief within the second extended period for the same. An Entry of Judgment18 was made in CA-G.R. CV No. 65037 on 29 September 2000, as a result of which, the appealed RTC Decision dated 29 April 1999 in Civil Case No. S-618 became final and executory.

Visminda filed a Motion for Issuance of a Writ of Execution19 before the RTC on 14 January 2002. The RTC granted Visminda’s Motion in a Resolution dated 21 February 2002, and issued the Writ of Execution20 on 7 March 2002.

Tuatis thereafter filed before the RTC on 22 April 2002 a Motion to Exercise Right under Article 448 of the Civil Code of the Philippines.21 Tuatis moved that the RTC issue an order allowing her to buy the subject property from Visminda. While Tuatis indeed had the obligation to pay the price of the subject property, she opined that such should not be imposed if the value of the said property was considerably more than the value of the building constructed thereon by Tuatis. Tuatis alleged that the building she constructed was valued at P502,073.00,22 but the market value of the entire piece of land measuring 4.0144 hectares, of which the subject property measuring 300 square meters formed a part, was only about P27,000.00.23 Tuatis maintained that she then had the right to choose between being indemnified for the value of her residential building or buying from Visminda the parcel of land subject of the case. Tuatis stated that she was opting to exercise the second option.

On 20 December 2004, Visminda deposited the amount of P4,000.00 to the office of the Clerk of Court of the RTC, pursuant to the Decision of the trial court dated 29 April 1999.24

In the intervening time, the Writ of Execution issued on 7 March 2002 was yet to be served or implemented by the Sheriff. This prompted Visminda to write a letter to the Office of the Court Administrator (OCA) to complain about the said delay. The OCA endorsed the letter to the RTC.

On 26 September 2005, the RTC issued an Order25 directing the Sheriff to immediately serve or enforce the Writ of Execution previously issued in Civil Case No. S-618, and to make a report and/or return on the action taken thereon within a period of fifteen (15) days from receipt of the order.

On 10 October 2005, Tuatis filed before the RTC a Motion for Reconsideration26 of the Order dated 26 September 2005, praying that the same be set aside in view of the pendency of her previous Motion to Exercise Right under Article 448 of the Civil Code of the Philippines. However, before the RTC could rule upon Tuatis’ Motion for Reconsideration, the Sheriff enforced the Writ of Execution on 27 October 2005 and submitted his Return to the RTC on 2 November 2005, reporting that the subject writ was fully satisfied.

Tuatis immediately filed with the Court of Appeals a Petition for Certiorari, Prohibition and Mandamus with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction,27 which was docketed as CA-G.R. No. 00737-MIN. Tuatis sought in said Petition the annulment of the RTC Order dated 26 September 2005, as well as the issuance of an order commanding the RTC and the Sheriff to desist from undertaking any further proceedings in Civil Case No. S-618, and an order directing the RTC to determine the rights of the parties under Article 448 of the Civil Code.

In a Resolution28 dated 10 February 2006, the Court of Appeals dismissed outright Tuatis’ Petition for failure to completely pay the required docket fees, to attach a certified true or authenticated copy of the assailed RTC Order dated 26 September 2005, and to indicate the place of issue of her counsel’s IBP and PTR Official Receipts.

Tuatis filed a Motion for Reconsideration29 of the Resolution dated 10 February 2006, but said Motion was denied by the appellate court in another Resolution dated 25 July 2006 on the ground that Tuatis had not taken any action to rectify the infirmities of her Petition.

Tuatis subsequently filed a Motion for Leave to File a Second Motion for Reconsideration,30 but it was similarly denied by the Court of Appeals in a Resolution dated 9 October 2006, as Section 2, Rule 5231 of the Rules of Court proscribes the filing of a second motion for reconsideration.

Hence, Tuatis filed the instant Petition, principally arguing that Article 448 of the Civil Code must be applied to the situation between her and Visminda.

According to Tuatis, grave abuse of discretion, amounting to lack or excess of their jurisdiction, was committed by the RTC in issuing the Order dated 26 September 2005, and by the Sheriff in enforcing the Writ of Execution on 27 October 2005. Tuatis insists that the Motion for Reconsideration of the Order dated 26 September 2005 that she filed on 10 October 2005 legally prevented the execution of the RTC Decision dated 29 April 1999, since the rights of the parties to the case had yet to be determined pursuant to Article 448 of the Civil Code.32 Tuatis reiterates that the building she constructed is valued at P502,073.00, per assessment of the Municipal Assessor of Sindangan, Zamboanga del Norte; while the entire piece of land, which includes the subject property, has a market value of only about P27,000.00, based on Tax Declaration No. 12464 issued in the year 2000.33 Such being the case, Tuatis posits that she is entitled to buy the land at a price to be determined by the Court or, alternatively, she is willing to sell her house to Visminda in the amount of P502,073.00.

In addition, Tuatis attributes grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Court of Appeals for dismissing outright her Petition for Certiorari, Prohibition and Mandamus with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction, and subsequently denying her Motion for Reconsideration and Motion for Leave to File a Second Motion for Reconsideration.

The Court grants the present Petition but for reasons other than those proffered by Tuatis.

Procedural deficiencies of Tuatis’ Petition before the Court of Appeals

It is true that Tuatis committed several procedural faux pas that would have, ordinarily, warranted the dismissal of her Petition in CA-G.R. No. 00737-MIN before the Court of Appeals.

In its Resolution dated 10 February 2006, the Court of Appeals dismissed outright the Petition for Certiorari, Prohibition and Mandamus with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction filed by Tuatis for failure to comply with the following requirements for such a petition: (a) to completely pay the required docket fees, (b) to attach a certified true or authenticated copy of the assailed RTC Order dated 26 September 2005, and (c) to indicate the place of issue of her counsel’s IBP and PTR Official Receipts.

Section 3, Rule 46 of the Rules of Court lays down the requirements for original cases filed before the Court of Appeals and the effect of non-compliance therewith, relevant portions of which are reproduced below:

SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. – x x x.

x x x x

It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the respondent with the original copy intended for the court indicated as such by the petitioner, and shall be accompanied by a clearly legible duplicate original or certified true copy of the judgment, order, resolution, or ruling subject thereof, such material portions of the record as are referred to therein, and other documents relevant or pertinent thereto. The certification shall be accomplished by the proper clerk of court or by his duly authorized representative, or by the proper officer of the court, tribunal, agency or office involved or by his duly authorized representative. The other requisite number of copies of the petition shall be accompanied by clearly legible plain copies of all documents attached to the original.

x x x x

The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court and deposit the amount of P500.00 for costs at the time of the filing of the petition.

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition. (Emphases ours.)

The sound reason behind the policy of the Court in requiring the attachment to the petition for certiorari, prohibition, mandamus, or quo warranto of a clearly legible duplicate original or certified true copy of the assailed judgment or order, is to ensure that the said copy submitted for review is a faithful reproduction of the original, so that the reviewing court would have a definitive basis in its determination of whether the court, body, or tribunal which rendered the assailed judgment or order committed grave abuse of discretion.34 Also, the Court has consistently held that payment of docket fees within the prescribed period is jurisdictional and is necessary for the perfection of an appeal.35

Indeed, the last paragraph of Section 3, Rule 46 states that non-compliance with any of the requirements stated therein shall constitute sufficient ground for the dismissal of the petition. However, the Court, in several cases,36 also declared that said provision must not be taken to mean that the petition shall be automatically dismissed in every instance of non-compliance. The power conferred upon the Court of Appeals to dismiss an appeal, or even an original action, as in this case, is discretionary and not merely ministerial. With that affirmation comes the caution that such discretion must be a sound one, to be exercised in accordance with the tenets of justice and fair play, having in mind the circumstances obtaining in each case.37

It must be borne in mind that the rules of procedure are intended to promote, rather than frustrate, the ends of justice, and while the swift unclogging of court dockets is a laudable objective, it, nevertheless, must not be met at the expense of substantial justice. Technical and procedural rules are intended to help secure, not suppress, the cause of justice; and a deviation from the rigid enforcement of the rules may be allowed to attain that prime objective for, after all, the dispensation of justice is the core reason for the existence of courts.38

Hence, technicalities must be avoided. The law abhors technicalities that impede the cause of justice. The court's primary duty is to render or dispense justice. A litigation is not a game of technicalities. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from courts. Litigations must be decided on their merits and not on technicality. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the unacceptable plea of technicalities. Thus, dismissal of appeals purely on technical grounds is frowned upon where the policy of the court is to encourage hearings of appeals on their merits and the rules of procedure ought not to be applied in a very rigid, technical sense; rules of procedure are used only to help secure, not override, substantial justice. It is a far better and more prudent course of action for the court to excuse a technical lapse and afford the parties a review of the case on appeal to attain the ends of justice rather than dispose of the case on technicality and cause a grave injustice to the parties, giving a false impression of speedy disposal of cases while actually resulting in more delay, if not a miscarriage, of justice.39

In this case, the Court finds that the Court of Appeals committed grave abuse of discretion in focusing on the procedural deficiencies of Tuatis’ Petition and completely turning a blind eye to the merits of the same. The peculiar circumstances of the present case and the interest of substantial justice justify the setting aside, pro hac vice, of the procedural defects of Tuatis’ Petition in CA-G.R. No. 00737-MIN.

Perusal of the RTC Decision dated 29 April 1999

The RTC, in the body of its Decision dated 29 April 1999 in Civil Case No. S-618, found that Tuatis breached the conditions stipulated in the Deed of Sale by Installment between her and Visminda; but since both Tuatis and Visminda were guilty of bad faith, "[t]heir rights in such cases are governed by Article 448 of the New Civil Code of the Philippines."40

Article 448 of the Civil Code, referred to by the RTC, provides:

ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. (Emphases supplied.)

According to the aforequoted provision, the landowner can choose between appropriating the building by paying the proper indemnity for the same, as provided for in Articles 54641 and 54842 of the Civil Code; or obliging the builder to pay the price of the land, unless its value is considerably more than that of the structures, in which case the builder in good faith shall pay reasonable rent.43

The Court notes, however, that the RTC, in the dispositive portion of its 29 April 1999 Decision, which exactly reads –

WHEREFORE, premises studiedly considered, judgment is hereby rendered as follows:

(1) DISMISSING the Complaint for lack of merit;

(2) ORDERING [Tuatis] to return the physical possession of the land in question to [Visminda]; and,

(3) ORDERING [Visminda] to return the P4,000.00 she received as evidenced by Exhibit "B" and Exhibit "C" 44 to [Tuatis].45

utterly failed to make an adjudication on the rights of Tuatis and Visminda under Article 448 of the Civil Code. It would seem that the decretal part of said RTC judgment was limited to implementing the following paragraph in the Deed of Sale by Installment:

4. That failure of the BUYER [Tuatis] to pay the remaining balance within the period of three months from the period stipulated above, then the BUYER [Tuatis] shall return the land subject of this contract to the SELLER [Visminda] and the SELLER [Visminda] [shall] likewise return all the amount paid by the BUYER [Tuatis].46

without considering the effects of Article 448 of the Civil Code.

It was this apparent incompleteness of the fallo of the RTC Decision dated 29 April 1999 that resulted in the present controversy, and that this Court is compelled to address for a just and complete settlement of the rights of the parties herein.

Finality of the RTC Decision dated 19 April 1999

The Court has not lost sight of the fact that the RTC Decision dated 29 April 1999 in Civil Case No. S-618 already became final and executory in view of the dismissal by the appellate court of Tuatis’ appeal in CA-G.R. CV No. 650307 and the entry of judgment made on 29 September 2000.

Nothing is more settled in law than that when a final judgment is executory, it thereby becomes immutable and unalterable. The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court rendering it or by the highest Court of the land. The doctrine is founded on considerations of public policy and sound practice that, at the risk of occasional errors, judgments must become final at some definite point in time. The only recognized exceptions are the corrections of clerical errors or the making of the so-called nunc pro tunc entries, in which case there is no prejudice to any party, and, of course, where the judgment is void.47

Equally well-settled is the rule that the operative part in every decision is the dispositive portion or the fallo, and where there is conflict between the fallo and the body of the decision, the fallo controls. This rule rests on the theory that the fallo is the final order, while the opinion in the body is merely a statement, ordering nothing.48

Jurisprudence also provides, however, that where there is an ambiguity caused by an omission or a mistake in the dispositive portion of the decision, the Court may clarify such an ambiguity by an amendment even after the judgment has become final. In doing so, the Court may resort to the pleadings filed by the parties and the findings of fact and the conclusions of law expressed in the text or body of the decision.49 Therefore, even after the RTC Decision dated 29 April 1999 had already become final and executory, this Court cannot be precluded from making the necessary amendment thereof, so that the fallo will conform to the body of the said decision.

If the Court does not act upon the instant Petition, Tuatis loses ownership over the building she constructed, and in which she has been residing, allegedly worth P502,073.00, without any recompense therefor whatsoever; while Visminda, by returning Tuatis’ previous payments totaling P4,000.00, not just recovers the subject property, but gains the entire building without paying indemnity for the same. Hence, the decision of the Court to give due course to the Petition at bar, despite the finality of the RTC Decision dated 29 April 1999, should not be viewed as a denigration of the doctrine of immutability of final judgments, but a recognition of the equally sacrosanct doctrine that a person should not be allowed to profit or enrich himself inequitably at another's expense.

Furthermore, the Court emphasizes that it is not even changing or reversing any of the findings of fact and law of the RTC in its Decision dated 29 April 1999. This Court is still bound by said RTC judgment insofar as it found that Tuatis failed to fully pay for the price of the subject property; but since both Tuatis and Visminda were in bad faith, Article 448 of the Civil Code would govern their rights. The Court herein is simply clarifying or completing the obviously deficient decretal portion of the decision, so that said portion could effectively order the implementation of the actual ruling of the RTC, as clearly laid down in the rationale of the same decision.

Applying Article 448 and other related provisions of the Civil Code

Taking into consideration the provisions of the Deed of Sale by Installment and Article 448 of the Civil Code, Visminda has the following options:

Under the first option, Visminda may appropriate for herself the building on the subject property after indemnifying Tuatis for the necessary50 and useful expenses51 the latter incurred for said building, as provided in Article 546 of the Civil Code.

It is worthy to mention that in Pecson v. Court of Appeals,52 the Court pronounced that the amount to be refunded to the builder under Article 546 of the Civil Code should be the current market value of the improvement, thus:

The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila [40 Phil. 717 (1920)] that the said provision was formulated in trying to adjust the rights of the owner and possessor in good faith of a piece of land, to administer complete justice to both of them in such a way as neither one nor the other may enrich himself of that which does not belong to him. Guided by this precept, it is therefore the current market value of the improvements which should be made the basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who would otherwise be allowed to acquire a highly valued income-yielding four-unit apartment building for a measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the present market value of the apartment building upon which the trial court should base its finding as to the amount of reimbursement to be paid by the landowner. (Emphasis ours.)

Until Visminda appropriately indemnifies Tuatis for the building constructed by the latter, Tuatis may retain possession of the building and the subject property.

Under the second option, Visminda may choose not to appropriate the building and, instead, oblige Tuatis to pay the present or current fair value of the land.53 The P10,000.00 price of the subject property, as stated in the Deed of Sale on Installment executed in November 1989, shall no longer apply, since Visminda will be obliging Tuatis to pay for the price of the land in the exercise of Visminda’s rights under Article 448 of the Civil Code, and not under the said Deed. Tuatis’ obligation will then be statutory, and not contractual, arising only when Visminda has chosen her option under Article 448 of the Civil Code.1avvphi1

Still under the second option, if the present or current value of the land, the subject property herein, turns out to be considerably more than that of the building built thereon, Tuatis cannot be obliged to pay for the subject property, but she must pay Visminda reasonable rent for the same. Visminda and Tuatis must agree on the terms of the lease; otherwise, the court will fix the terms.

Necessarily, the RTC should conduct additional proceedings before ordering the execution of the judgment in Civil Case No. S-618. Initially, the RTC should determine which of the aforementioned options Visminda will choose. Subsequently, the RTC should ascertain: (a) under the first option, the amount of indemnification Visminda must pay Tuatis; or (b) under the second option, the value of the subject property vis-à-vis that of the building, and depending thereon, the price of, or the reasonable rent for, the subject property, which Tuatis must pay Visminda.

The Court highlights that the options under Article 448 are available to Visminda, as the owner of the subject property. There is no basis for Tuatis’ demand that, since the value of the building she constructed is considerably higher than the subject property, she may choose between buying the subject property from Visminda and selling the building to Visminda for P502,073.00. Again, the choice of options is for Visminda, not Tuatis, to make. And, depending on Visminda’s choice, Tuatis’ rights as a builder under Article 448 are limited to the following: (a) under the first option, a right to retain the building and subject property until Visminda pays proper indemnity; and (b) under

the second option, a right not to be obliged to pay for the price of the subject property, if it is considerably higher than the value of the building, in which case, she can only be obliged to pay reasonable rent for the same.

The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive.54 The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land.55

The raison d’etre for this provision has been enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the option, because his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing.56

Visminda’s Motion for Issuance of Writ of Execution cannot be deemed as an expression of her choice to recover possession of the subject property under the first option, since the options under Article 448 of the Civil Code and their respective consequences were also not clearly presented to her by the 19 April 1999 Decision of the RTC. She must then be given the opportunity to make a choice between the options available to her after being duly informed herein of her rights and obligations under both.

As a final note, the directives given by the Court to the trial court in Depra v. Dumlao57 may prove useful as guidelines to the RTC herein in ensuring that the additional proceedings for the final settlement of the rights of the parties under Article 448 of the Civil Code shall be conducted as thoroughly and promptly as possible.

WHEREFORE, premises considered, the Court:

(1) GRANTS the instant Petition;

(2) ANNULS AND SETS ASIDE (a) the Resolution dated 21 February 2002 of the Regional Trial Court of Sindangan, Zamboanga del Norte, Branch 11, ordering the issuance of a writ for the execution of the Decision dated 19 April 1999 of the said trial court in Civil Case No. S-618; (b) the Writ of Execution issued on 7 March 2002; and (c) the actions undertaken by the Sheriff to enforce the said Writ of Execution;

(3) DIRECTS the Regional Trial Court of Sindangan, Zamboanga del Norte, Branch 11, to conduct further proceedings to determine with deliberate dispatch: (a) the facts essential to the proper application of Article 448 of the Civil Code, and (b) respondent Visminda Escol’s choice of option under the same provision; and

(4) Further DIRECTS the Regional Trial Court of Sindangan, Zamboanga del Norte, Branch 11, to undertake the implementation of respondent Visminda Escol’s choice of option under Article 448 of the Civil Code, as soon as possible.

No costs.

SO ORDERED.

G.R. No. 82220 July 14, 1995

PABLITO MENESES and LORENZO MENESES, petitioners, vs.THE HONORABLE COURT OF APPEALS, EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all surnamed Quisumbing), HEIRS OF FERNANDO QUISUMBING (Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing) and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Luisa, Norberto, Jimmy, Ma. Victoria, Elsa and Oscar, all surnamed Quisumbing), all represented by Atty. Galileo Brion, respondents.

QUIASON, J.:

For review in these consolidated petitions is the Decision dated August 31, 1987 of the Court of Appeals in CA-G.R. CV No. 07049 affirming the Decision dated March 26, 1984 of the Regional Trial Court, Branch 37, Calamba, Laguna, in Civil Case No. 474-83-C which declared as null and void the original certificates of title and free patents issued to Pablito Meneses over lots found by the court to be accretion lands forming parts of the bigger accretion land owned by Ciriaca Arguelles Vda. de Quisumbing.

I

On March 1, 1977, Braulio C. Darum, then the District Land Officer of Los Baños, Laguna, issued to Pablito Meneses Free Patent No. (IV-5) P-12807 and Original Certificate of Title No. P-1268 covering Lot 1585 with an area of 417 square meters, and Free Patent No (IV-5) 12808 and Original Certificate of Title No P-1269 for Lot 190 with an area of 515 square meters. Both lots are located in Los Baños, Laguna.

Pablito Meneses acquired said property from Silverio Bautista through a Deed of Waiver and Transfer of Rights executed on May 5, 1975 in consideration of Bautista's "love and affection" for and "some monetary obligations" in favor of Pablito Meneses (Rollo, p. 45). After the execution of said document, Pablito Meneses took possession of the land, introduced improvements thereon, declared the land as his own for tax purposes and paid the corresponding realty taxes. In turn, Bautista acquired the 900-square-meter land from his aunt, Sergia (Gliceria) M. Almeda. He had been occupying the land since 1956.

On the other hand, the Quisumbing family traces ownership of the land as far back as September 6, 1919 when their matriarch, Ciriaca Arguelles Vda. de Quisumbing was issued Original Certificate of Title No. 989 covering a lot with an area of 859 square meters located in Los Baños, Laguna with the Laguna de Bay as its northwestern boundary. The same parcel of land was registered on August 14, 1973 under Transfer Certificate of Title No. T-33393 in the names of Ciriaca's heirs: Emilio, Manuel, Eduardo, Norberto, Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed Quisumbing.

In 1962, the Quisumbing instituted and accion publiciana in the then Court of First Instance of Biñan, Laguna to recover possession over a portion of the property from Dominga Villamor and Lorenzo Lanuzo docketed as Civil Case No. B-350. On January 3, 1966, the case was decided in favor of the Quisumbings. On appeal, the Court of Appeals sustained the Quisumbings' right over the property.

In LRC Case No. B-327, the Quisumbings applied for registration and confirmation of title over an additional area of 2,387 square meters which had gradually accrued to their property by the natural action of the waters of Laguna de Bay. In its Decision of September 28, 1978, the Court of First Instance of Biñan confirmed the Quisumbings' title thereto which, after it was duly surveyed, was identified as Psu-208327. The additional area was divided into two lots in the survey plan approved by the Director of Lands on November 16, 1964. In ordering the confirmation and registration of title on favor of the Quisumbings, the land registration court said:

. . . There is no doubt that the applicants' right to the property was bolstered by the unappealed decision of the Court of Appeals in Civil Case No. B-350 of this Court when the properties applied for were classified as accretions made by the waters of the Laguna Lake. . . . (G.R. No. 82229, Rollo, p. 20).

On April 17, 1979, the Quisumbings filed Civil Case No. 07049 before the Court of First Instance of Laguna, Branch VI, Calamba against Lorenzo and Pablito Meneses, Braulio C. Darum and Cesar B. Almendral for nullification of the free patents and titles issued to Pablito Meneses. They alleged that Lorenzo Menesis, then the Mayor of Los Baños, using his brother Pablito as a "tool and dummy," illegally occupied their "private accretion land" an August 6, 1976, and, confederating with District Land Officer Darum and Land Inspector Cesar Almendral, obtained free patents and original certificates of title to the land.

On March 26, 1984, the trial court rendered the decision finding that the lands registered by the Meneses brothers are accretion lands to which the Quisumbings have a valid right as owners of the riparian land to which nature had gradually deposited the disputed lots. In so holding, the trial court relied heavily on the decision of the Court of Appeals in Civil Case No. B-350, and quoted the following portions of the appellate court's decision:

Plaintiffs-appellees are titled owners of a (sic) 859 square meters of land under TCT No. 25978 of the Laguna Land Registry, the northwest boundary of which is the Laguna de Bay.

It is ascertained that the northwest portion of Quisumbing's lot is bounded by the Laguna de Bay. The nature of the Laguna de Bay has long been settled in the case of Government of the Philippines v. Colegio de San Jose (55 Phil. 423) when it held that:

Laguna de Bay is a body of water formed in depression of the earth; it contains fresh water coming from rivers and brooks and springs, and is connected with Manila Bay by the Pasig River. According to the definition first quoted, Laguna de Bay is a lake.

Consequently, since Laguna de Bay is a lake, the authorities cited by the appellants referring to seashore would not apply. The provision of the law on waters will govern in determining the natural bed or basin of the lake. And accordingly, to Art. 84 of the Law of Waters of August 3, 1866:

Accretions deposited gradually upon land contiguous to creeks, streams, rivers and lakes by accessions or sediments from the waters thereof, belong to the owners of such lands.

Since the title indicate(s) that the northwest portion of the property is bounded by Laguna de Bay, which is a lake, even if the area where Lanuza's house and Villamor's house for that matter is located is not included within the title, it must necessarily be an accretion upon appellees' land by accessions or sediments from the waters thereof which should belong to the owner of the adjacent land. The authorities cited by the appellants treat of the ownership of accretions by water of the sea under Title I. Lakewaters being terrestrial waters, their ownership is governed by Title II of the Law of Waters. As held in the Colegio de San Jose case, the provisions of the Law of Waters regulating the ownership and use of sea water are not applicable to the ownership and use of lakes which are governed by different provisions. As pointed out by the lower court, no act of appropriation is necessary in order to acquire ownership of the alluvial formation as the law does not require the same (Ignacio Grande, et al. vs. Hon. Court of Appeals, et al., G.R. No. L-17652, June 30, 1962 citing Roxas vs. Tuazon, 9 Phil. 408; Cortez vs. City of Manila, 10 Phil. 567 and 3 Manresa, C.C. pp. 321-326, pp. 4-5) (Records, pp. 80-84).

The trial court also found that the free patents issued to Pablito Meneses had been procured through fraud, deceit and bad faith, citing the following facts as bases for its conclusion: (1) The Deed of Waiver and Transfer of Rights allegedly executed by Silverio Bautista in favor of Pablito Meneses was a simulated contract for lack of consideration; (2) The said instrument was sworn to before Mayor Lorenzo Meneses who had no authority to notarize deeds of conveyances; (3) Although the lots subject of the deed of conveyance were placed in his brother's name, Mayor Meneses actually exercised rights of ownership thereto; (4) Land Inspector Cesar Almendral admitted having anomalously prepared the documents to support the free patent applications of Pablito Meneses and, having personally filled up the blank forms, signed them in the absence of the persons concerned; (5) Almendral kept the documents in his possession from 1979 to 1980 despite orders from the Director of Lands to produce and surrender the same; (6) District Land Officer Braulio Darum approved the free patent applications and issued the questioned titles without the required cadastral survey duly approved by the Director of Lands and despite the pendency of LRC Case No. B-327 involving the contested lots; (7) Darum represented the Bureau of Lands in LRC Case No. B-327 without authority from the Director of Lands and after he had withdrawn his appearance in said case, persisted in filing a motion to set aside the order for the issuance of a decree in favor of the Quisumbings; (8) Darum and Almendral in bad faith, refused to produce the missing original records of the free patent applications and their supporting documents; and (9) When Darum was not yet an oppositor in LRC Case No. B-327, he admitted in his letter to the Land Registration Commission that the contested lots are portions of the land being claimed by the Quisumbings contrary to his later representation in the joint answer to the petition that the subject lots are not portions of Lots 1 and 2, Psu-208327 owned by the Quisumbings. Accordingly, the trial court disposed of the case as follows:

WHEREFORE, judgment is hereby rendered:

1. Declaring that the lands covered by Pablito Meneses' Original Certificate of Title No. P-1268/Free Patent No. 12807 (Exh. "J"), covering Lot No. 1585, consisting of 417 square meters and Original Certificate of Title No. P-1269/Free Patent No. 12808 (Exh. "H"), covering Lot No. 190, consisting of 515 square meters, both located at Los Baños, Laguna, as accretion lands forming parts of a bigger accretion land owned by plaintiffs as declared in a final judgment (Exh. "A"), rendered by the Court of First Instance of Biñan, Laguna, in LRC Case No. B-327, which bigger accretion land is directly adjacent to or at the back of plaintiffs' riparian land, and consequently, declaring as null and void and cancelled Original Certificate of Title No. P-1268/Free Patent No. 12807 and Original Certificate of Title No. P-1269/Free Patent No. 12808;

2. Directing that the Register of Deeds of Laguna or his Deputy at Calamba, Laguna, to make the corresponding entries of cancellation in his Registry of the above mentioned Original Certificate of Titles/Free Patents;

3. Directing defendants Lorenzo Meneses and Pablito Meneses and all persons acting in their behalves to vacate the subject lands and surrender the possession thereof to the plaintiffs immediately; and

4. Directing the defendants to pay jointly and severally, the plaintiffs the sums of:

a) P20,000.00, plus P500.00 per month from January, 1977, until the subject property is completely vacated, as actual and compensatory damages;

b) P350,000.00, as moral damages;

c) P70,000.00 as exemplary damages;

d) P40,000.00, as attorney's fees; and

e) the costs (Rollo, pp. 41-42).

Thereafter, the Quisumbings filed a motion for execution pending appeal which the trial court granted in its Order of September 7, 1984 subject to the posting by the Quisumbings of a bond in the amount of P500,000.00. The defendants unsuccessfully moved for the reconsideration of said order.

The Quisumbings also filed before the Sandiganbayan a complaint against Pablito Meneses, Silverio Bautista, Pablo Silva, Virgilio Cruz and Cesar Almendral for violation of paragraphs (e) and (j), Section 3 of Republic Act No. 3019, for conspiring in the approval and grant of the free patents over portions of Lots 1 & 2 of Psu-208327 owned by the heirs of Ciriaca Arguelles Vda. de Quisumbing. In due course, the Sandiganbayan rendered a decision finding the defendants guilty as charged. The case was elevated to this Court but on August 27, 1987, the judgment of conviction was affirmed (Meneses v. People, 153 SCRA 303 [1987]).

Meanwhile, the Meneses brothers and Darum appealed the decision in Civil Case No. 07049 to the Court of Appeals. On August 31, 1987, the Court of Appeals found the appeal to be without merit and affirmed in toto the lower court's decision.

The defendants-appellants filed two motions for the reconsideration of the appellate court's decision but it was denied in the Resolution of February 23, 1988 which in pertinent part stated:

However, for humanitarian considerations, and considering the appeal of the defendants-appellants for a reduction of the moral and exemplary damages, We favor the reduction of the moral damages from P350,000.00 to P50,000.00 and the exemplary damages from P70,000.00 to P5,000.00. In all other respects, We find no justification for modifying the dispositive portion of the decision of the lower court (G.R. No. 82220, Rollo, p. 67).

Pablito and Lorenzo Meneses filed the instant petition for review on certiorari, which was docketed as G.R. No. 82220. Cesar Almendral filed a motion in G.R. No. 82251 for a 45-day extension within which to file a petition for review on certiorari. After this Court had granted them a 30-day extension, Almendral still failed to file any petition. The Quisumbings also filed a petition for review on certiorari, docketed as G.R. No. 83059, solely on the issue of the propriety of the reduction of the amount of damages in the Court of Appeals' Resolution of February 23, 1988. Upon motion of petitioners in G.R. No. 83059, the three petitions were consolidated in the Resolution of August 1, 1988.

Petitioners in G.R. No. 82220 retell the same errors they had raised before the Court of Appeals, contending in the main: (1) that the lands in question were not accretion lands but lands of the public domain; (2) that no conspiracy to commit fraud, deceit and bad faith attended the issuance of the free patent and titles to Pablito Meneses; and (3) that the Deed of Waiver and Transfer of Rights was founded on a valid consideration.

As regards the issue of whether the lands in question are accretion lands, petitioners relied on the Decision of the Court of Appeals in Republic of the Philippines v. Braga, CA-G.R. No. 55390-R, October 23, 1980, holding that the property involved therein was part of the natural bed of the Laguna de Bay and therefore what had to be determined was whether said property was covered by water when the lake was at its highest depth.

Petitioners' assigned errors in G.R. No. 82220 are evidently factual issues which have been thoroughly passed upon and settled both by the trial court and the appellate court. Factual findings of the Court of Appeals are conclusive on the parties and not reviewable by this Court (Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, 229 SCRA 533 [1994]) and they carry even more weight when the Court of Appeals affirms the factual findings of the trial court (Binalay v. Manalo, 195 SCRA 374 [1991]). The jurisdiction of this Court is thus limited to reviewing errors of law unless there is a showing that the findings complained of are totally devoid of support in the record or that they are so glaringly erroneous as to constitute serious abuse of discretion (BA Finance Corporation v. Court of Appeals, 229 SCRA 566 [1941]). We find no such showing in this case.

Petitioners' protestations notwithstanding the final decision of the Court of Appeals in Civil Case No. B-350 has a bearing in the resolution of this case for while the lots occupied by Villamor and Lanuzo may not be the very same lots petitioners are claiming here, the two cases refer to the same accretion lands northwest of the original land owned by the Quisumbings.

In the same vein, the decision of the land registration court in LRC Case No. B-327 ordering the confirmation and registration of title in favor of the Quisumbings over 2,387 square meters of accretion land is binding on petitioners in G.R. No. 82220. As correctly pointed out by the Court of Appeals, said decision, being the result of a proceeding in rem, binds the whole world, more so because it became final and executory upon the Bureau of Lands' failure to interpose an appeal.

Since petitioners in G.R. No. 82220 claim that "the foreshore land known as Lots 190 and 1585 are part of Laguna de Bay" and therefore the Quisumbings "have no legal right to claim the same as accretion land," we quote the following pertinent portions of the decision in Republic v. Court of Appeals, 131 SCRA 532 (1984) which, although the case deals with the registration of a reclaimed land along the Laguna de Bay, is nonetheless enlightening:

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.

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, it is not a public land and therefore capable of registration as private property provided that the applicant proves that he has a registerable title (at pp. 538-539).

Accretion as a mode of acquiring property under Article 457 of the Civil Code requires the concurrence of these requisites: (1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3) that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast). While the trial court mainly relied on the findings in Civil Case No. B-350 that the lands in controversy are accretion lands and it has not determined on its own the presence of said requisites, it is too late now for petitioners in G.R. No. 82220 to claim otherwise. Consequently, the lands held to be accretion lands could only benefit the Quisumbings, who own the property adjacent to the lands in controversy (Cruz v. Court of Appeals, 216 SCRA 350 [1992]).

Petitioners in G.R. No. 82220 also assert that the principle of indefeasibility of title should favor them as the one-year period provided for by law to impugn their title had elapsed. They also urged that, having been granted by the state, their title is superior to that of the Quisumbings. We hold, however, that in the light of the fraud attending the issuance of the free patents and titles of Pablito Meneses, said assertions crumble. Such fraud was confirmed by this Court in Meneses v. People, 153 SCRA 303 (1987) which held the petitioners therein liable for violation of the Anti-Graft and Corrupt Practices Act in the issuance of the same free patents and titles.

Unlike the petition in G.R. No. 82220, the petition in G.R. No. 83059 (questioning the reduction of the damages awarded to the Quisumbings by the Court of Appeals in the Resolution of February 23, 1988) is meritorious. The task of fixing the amount of damages is primarily with the trial court (Air France v. Carrascoso, 18 SCRA 155 [1966]). While it is the appellate court's duty to review the same, a reduction of the award of damages must pass the test of reasonableness. The Court of Appeals can only modify or change the amount awarded as damages when they are palpably or scandalously and reasonably excessive (Philippine Airlines, Inc. v. Court of Appeals, 226 SCRA 423 [1993]; Prudenciano v. Alliance Transport System, Inc., 148 SCRA 440 [1987]).

There is no justification for the radical reduction by the Court of Appeals of the damages awarded by the trial court. Its action was premise merely on "humanitarian considerations" and the plea of the defendants-appellants. We may agree with the Court of Appeals in reducing the award after scrutinizing its factual findings only if such findings are diametrically opposed to that of the trial court (Prudenciado v. Alliance Transport System, Inc., supra). But as it is, the Court of Appeals affirmed point by point the factual findings if the lower court upon which the award of damages had been based.

We, therefore, see no reason to modify the award of damages made by the trial court. Respondent Braulio C. Darum in G.R. No. 83059 must also be solidarily liable for said damages in his capacity as a public officer. A public official is by law not immune from damages in his personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity for official actions (Vidad v. RTC of Negros, Br. 42, 227 SCRA 271 [1993]).

WHEREFORE, the petition in G.R. No. 82220 is DENIED while the petition in G.R. No. 83059 is GRANTED. The Decision dated August 31, 1987 of the Court of Appeals is AFFIRMED while its Resolution of February 23, 1988 insofar as it reduces the amount of damages awarded to the Quisumbing family is SET ASIDE. Costs against petitioners in G.R. No. 82220 and respondent Braulio Darum in G.R. No. 83059.

SO ORDERED.

G.R. No. 178411 June 23, 2010

OFFICE OF THE CITY MAYOR OF PARAÑAQUE CITY, OFFICE OF THE CITY ADMINISTRATOR OF PARAÑAQUE CITY, OFFICE OF THE CITY ENGINEER OF PARAÑAQUE CITY, OFFICE OF THE CITY PLANNING AND DEVELOPMENT COORDINATOR, OFFICE OF THE BARANGAY CAPTAIN AND SANGGUNIANG PAMBARANGAY OF BARANGAY VITALEZ, PARAÑAQUE CITY, TERESITA A. GATCHALIAN, ENRICO R. ESGUERRA, ERNESTO T. PRACALE, JR., MANUEL M. ARGOTE, CONRADO M. CANLAS, JOSEPHINE S. DAUIGOY, ALLAN L. GONZALES, ESTER C. ASEHAN, MANUEL A. FUENTES, and MYRNA P. ROSALES, Petitioners, vs.MARIO D. EBIO AND HIS CHILDREN/HEIRS namely, ARTURO V. EBIO, EDUARDO V. EBIO, RENATO V. EBIO, LOURDES E. MAGTANGOB, MILA V. EBIO, and ARNEL V. EBIO, Respondents.

D E C I S I O N

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the January 31, 2007 Decision1 and June 8, 2007 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 91350 allegedly for being contrary to law and jurisprudence. The CA had reversed the Order3 of the Regional Trial Court (RTC) of Parañaque City, Branch 196, issued on April 29, 2005 in Civil Case No. 05-0155.

Below are the facts.

Respondents claim that they are the absolute owners of a parcel of land consisting of 406 square meters, more or less, located at 9781 Vitalez Compound in Barangay Vitalez, Parañaque City and covered by Tax Declaration Nos. 01027 and 01472 in the name of respondent Mario D. Ebio. Said land was an accretion of Cut-cut creek. Respondents assert that the original occupant and possessor of the said parcel of land was their great grandfather, Jose Vitalez. Sometime in 1930, Jose gave the land to his son, Pedro Vitalez. From then on, Pedro continuously and exclusively occupied and possessed the said lot. In 1966, after executing an affidavit declaring possession and occupancy,4 Pedro was able to obtain a tax declaration over the said property in his name.5 Since then, respondents have been religiously paying real property taxes for the said property.6

Meanwhile, in 1961, respondent Mario Ebio married Pedro’s daughter, Zenaida. Upon Pedro’s advice, the couple established their home on the said lot. In April 1964 and in October 1971, Mario Ebio secured building permits from the Parañaque municipal office for the construction of their house within the said compound.7 On April 21, 1987, Pedro executed a notarized Transfer of Rights8 ceding his claim over the entire parcel of land in favor of Mario Ebio. Subsequently, the tax declarations under Pedro’s name were cancelled and new ones were issued in Mario Ebio’s name.9

On March 30, 1999, the Office of the Sangguniang Barangay of Vitalez passed Resolution No. 08, series of 199910 seeking assistance from the City Government of Parañaque for the construction of an access road along Cut-cut Creek located in the said barangay. The proposed road, projected to be eight (8) meters wide and sixty (60) meters long, will run from Urma Drive to the main road of Vitalez Compound11 traversing the lot occupied by the respondents. When the city government advised all the affected residents to vacate the said area, respondents immediately registered their opposition thereto. As a result, the road project was temporarily suspended.12

In January 2003, however, respondents were surprised when several officials from the barangay and the city planning office proceeded to cut eight (8) coconut trees planted on the said lot. Respondents filed letter-complaints before the Regional Director of the Bureau of Lands, the Department of Interior and Local Government and the Office of the Vice Mayor.13 On June 29, 2003, the Sangguniang Barangay of

Vitalez held a meeting to discuss the construction of the proposed road. In the said meeting, respondents asserted their opposition to the proposed project and their claim of ownership over the affected property.14 On November 14, 2003, respondents attended another meeting with officials from the city government, but no definite agreement was reached by and among the parties.15

On March 28, 2005, City Administrator Noli Aldip sent a letter to the respondents ordering them to vacate the area within the next thirty (30) days, or be physically evicted from the said property.16 Respondents sent a letter to the Office of the City Administrator asserting, in sum, their claim over the subject property and expressing intent for a further dialogue.17 The request remained unheeded.1avvphi1

Threatened of being evicted, respondents went to the RTC of Parañaque City on April 21, 2005 and applied for a writ of preliminary injunction against petitioners.18 In the course of the proceedings, respondents admitted before the trial court that they have a pending application for the issuance of a sales patent before the Department of Environment and Natural Resources (DENR).19

On April 29, 2005, the RTC issued an Order20 denying the petition for lack of merit. The trial court reasoned that respondents were not able to prove successfully that they have an established right to the property since they have not instituted an action for confirmation of title and their application for sales patent has not yet been granted. Additionally, they failed to implead the Republic of the Philippines, which is an indispensable party.

Respondents moved for reconsideration, but the same was denied.21

Aggrieved, respondents elevated the matter to the Court of Appeals. On January 31, 2007, the Court of Appeals issued its Decision in favor of the respondents. According to the Court of Appeals--

The issue ultimately boils down to the question of ownership of the lands adjoining Cutcut Creek particularly Road Lot No. 8 (hereinafter RL 8) and the accreted portion beside RL 8.

The evidentiary records of the instant case, shows that RL 8 containing an area of 291 square meters is owned by Guaranteed Homes, Inc. covered by TCT No. S-62176. The same RL 8 appears to have been donated by the Guaranteed Homes to the City Government of Parañaque on 22 March 1966 and which was accepted by the then Mayor FLORENCIO BERNABE on 5 April 1966. There is no evidence however, when RL 8 has been intended as a road lot.

On the other hand, the evidentiary records reveal that PEDRO VITALEZ possessed the accreted property since 1930 per his Affidavit dated 21 March 1966 for the purpose of declaring the said property for taxation purposes. The property then became the subject of Tax Declaration No. 20134 beginning the year 1967 and the real property taxes therefor had been paid for the years 1966, 1967, 1968, 1969, 1970, 1972, 1973, 1974, 1978, 1980, 1995, 1996, 1997, 1998, 1999, 2000, 2001, 2002, 2003, and 2004. Sometime in 1964 and 1971, construction permits were issued in favor of Appellant MARIO EBIO for the subject property. On 21 April 1987, PEDRO VITALEZ transferred his rights in the accreted property to MARIO EBIO and his successors-in-interest.

Applying [Article 457 of the Civil Code considering] the foregoing documentary evidence, it could be concluded that Guaranteed Homes is the owner of the accreted property considering its ownership of the adjoining RL 8 to which the accretion attached. However, this is without the application of the provisions of the Civil Code on acquisitive prescription which is likewise applicable in the instant case.

x x x x

The subject of acquisitive prescription in the instant case is the accreted portion which [was] duly proven by the Appellants. It is clear that since 1930, Appellants together with their predecessor-in-interest, PEDRO VITALEZ[,] have been in exclusive possession of the subject property and starting 1964 had introduced improvements thereon as evidenced by their construction permits. Thus, even by extraordinary acquisitive prescription[,] Appellants have acquired ownership of the property in question since 1930 even if the adjoining RL 8 was subsequently registered in the name of Guaranteed Homes. x x x.

x x x xFurther, it was only in 1978 that Guaranteed Homes was able to have RL 8 registered in its name, which is almost fifty years from the time PEDRO VITALEZ occupied the adjoining accreted property in 1930. x x x.x x x x

We likewise note the continuous payment of real property taxes of Appellants which bolster their right over the subject property. x x x.

x x x x

In sum, We are fully convinced and so hold that the Appellants [have] amply proven their right over the property in question.

WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The challenged Order of the court a quo is REVERSED and SET ASIDE.

SO ORDERED.22

On June 8, 2007, the appellate court denied petitioners’ motion for reconsideration. Hence, this petition raising the following assignment of errors:

I. WHETHER OR NOT THE DECISION AND RESOLUTION OF THE HONORABLE COURT OF APPEALS THAT RESPONDENTS HAVE A RIGHT IN ESSE IS IN ACCORD WITH THE LAW AND ESTABLISHED JURISPRUDENCE[;]

II. WHETHER OR NOT THE DECISION AND RESOLUTION OF THE HONORABLE COURT OF APPEALS THAT THE SUBJECT LOT IS AVAILABLE FOR ACQUISITIVE PRESCRIPTION IS IN ACCORD WITH THE LAW AND ESTABLISHED JURISPRUDENCE[;] AND

III. WHETHER OR NOT THE STATE IS AN INDISPENSABLE PARTY TO THE COMPLAINT … FILED BY RESPONDENTS IN THE LOWER COURT.23

The issues may be narrowed down into two (2): procedurally, whether the State is an indispensable party to respondents’ action for prohibitory injunction; and substantively, whether the character of respondents’ possession and occupation of the subject property entitles them to avail of the relief of prohibitory injunction.

The petition is without merit.

An action for injunction is brought specifically to restrain or command the performance of an act.24 It is distinct from the ancillary remedy of preliminary injunction, which cannot exist except only as part or as an incident to an independent action or proceeding. Moreover, in an action for injunction, the auxiliary remedy of a preliminary prohibitory or mandatory injunction may issue.25

In the case at bar, respondents filed an action for injunction to prevent the local government of Parañaque City from proceeding with the construction of an access road that will traverse through a parcel of land which they claim is owned by them by virtue of acquisitive prescription.

Petitioners, however, argue that since the creek, being a tributary of the river, is classified as part of the public domain, any land that may have formed along its banks through time should also be considered as part of the public domain. And respondents should have included the State as it is an indispensable party to the action.

We do not agree.

It is an uncontested fact that the subject land was formed from the alluvial deposits that have gradually settled along the banks of Cut-cut creek. This being the case, the law that governs ownership over the accreted portion is Article 84 of the Spanish Law of Waters of 1866, which remains in effect,26 in relation to Article 457 of the Civil Code.

Article 84 of the Spanish Law of Waters of 1866 specifically covers ownership over alluvial deposits along the banks of a creek. It reads:

ART. 84. Accretions deposited gradually upon lands contiguous to creeks, streams, rivers, and lakes, by accessions or sediments from the waters thereof, belong to the owners of such lands.27

Interestingly, Article 457 of the Civil Code states:

Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters.

It is therefore explicit from the foregoing provisions that alluvial deposits along the banks of a creek do not form part of the public domain as the alluvial property automatically belongs to the owner of the estate to which it may have been added. The only restriction provided for by law is that the owner of the adjoining property must register the same under the Torrens system; otherwise, the alluvial property may be subject to acquisition through prescription by third persons.28

In contrast, properties of public dominion cannot be acquired by prescription. No matter how long the possession of the properties has been, there can be no prescription against the State regarding property of public domain.29 Even a city or municipality cannot acquire them by prescription as against the State.30

Hence, while it is true that a creek is a property of public dominion,31 the land which is formed by the gradual and imperceptible accumulation of sediments along its banks does not form part of the public domain by clear provision of law.

Moreover, an indispensable party is one whose interest in the controversy is such that a final decree would necessarily affect his/her right, so that the court cannot proceed without their presence.32 In contrast, a necessary party is one whose presence in the proceedings is necessary to adjudicate the whole controversy but whose interest is separable such that a final decree can be made in their absence without affecting them.33

In the instant case, the action for prohibition seeks to enjoin the city government of Parañaque from proceeding with its implementation of the road construction project. The State is neither a necessary nor an indispensable party to an action where no positive act shall be required from it or where no obligation shall be imposed upon it, such as in the case at bar. Neither would it be an indispensable party if none of its properties shall be divested nor any of its rights infringed.

We also find that the character of possession and ownership by the respondents over the contested land entitles them to the avails of the action.

A right in esse means a clear and unmistakable right.34 A party seeking to avail of an injunctive relief must prove that he or she possesses a right in esse or one that is actual or existing.35 It should not be contingent, abstract, or future rights, or one which may never arise.36

In the case at bar, respondents assert that their predecessor-in-interest, Pedro Vitalez, had occupied and possessed the subject lot as early as 1930. In 1964, respondent Mario Ebio secured a permit from the local government of Parañaque for the construction of their family dwelling on the said lot. In 1966, Pedro executed an affidavit of possession and occupancy allowing him to declare the property in his name for taxation purposes. Curiously, it was also in 1966 when Guaranteed Homes, Inc., the registered owner of Road Lot No. 8 (RL 8) which adjoins the land occupied by the respondents, donated RL 8 to the local government of Parañaque.

From these findings of fact by both the trial court and the Court of Appeals, only one conclusion can be made: that for more than thirty (30) years, neither Guaranteed Homes, Inc. nor the local government of Parañaque in its corporate or private capacity sought to register the accreted portion. Undoubtedly, respondents are deemed to have acquired ownership over the subject property through prescription. Respondents can assert such right despite the fact that they have yet to register their title over the said lot. It must be remembered that the purpose of land registration is not the acquisition of lands, but only the registration of title which the applicant already possessed over the land. Registration was never intended as a means of acquiring ownership.37 A decree of registration merely confirms, but does not confer, ownership.38

Did the filing of a sales patent application by the respondents, which remains pending before the DENR, estop them from filing an injunction suit?

We answer in the negative.

Confirmation of an imperfect title over a parcel of land may be done either through judicial proceedings or through administrative process. In the instant case, respondents admitted that they opted to confirm their title over the property administratively by filing an application for sales patent.

Respondents’ application for sales patent, however, should not be used to prejudice or derogate what may be deemed as their vested right over the subject property. The sales patent application should instead be considered as a mere superfluity particularly since ownership over the land, which they seek to buy from the State, is already vested upon them by virtue of acquisitive prescription. Moreover, the State does not have any authority to convey a property through the issuance of a grant or a patent if the land is no longer a public land.39

Nemo dat quod dat non habet. No one can give what he does not have. Such principle is equally applicable even against a sovereign entity that is the State.

WHEREFORE, the petition is DENIED for lack of merit. The January 31, 2007 Decision, as well as the July 8, 2007 Resolution, of the Court of Appeals in CA-G.R. SP No. 91350 are hereby AFFIRMED.With costs against petitioners.SO ORDERED.

G.R. No. 168800 April 16, 2009

NEW REGENT SOURCES, INC., Petitioner, vs.TEOFILO VICTOR TANJUATCO, JR., and VICENTE CUEVAS,* Respondents.

DECISION

QUISUMBING, J.:

Petitioner through counsel prays for the reversal of the Orders dated February 12, 20051 and July 1, 20052 of the Regional Trial Court (RTC) of Calamba City, Branch 37, in Civil Case No. 2662-98-C. The RTC had granted the demurrer to evidence filed by respondent Tanjuatco, and then denied petitioner’s motion for reconsideration.

The facts, as culled from the records, are as follows:

Petitioner New Regent Sources, Inc. (NRSI) filed a Complaint3 for Rescission/Declaration of Nullity of Contract, Reconveyance and Damages against respondent Tanjuatco and the Register of Deeds of Calamba before the RTC of Calamba, Laguna, Branch 37. NRSI alleged that in 1994, it authorized Vicente P. Cuevas III, its Chairman and President, to apply on its behalf, for the acquisition of two parcels of land by virtue of its right of accretion. Cuevas purportedly applied for the lots in his name by paying P82,400.38 to the Bureau of Lands. On January 2, 1995, Cuevas and his wife executed a Voting Trust Agreement4 over their shares of stock in the corporation. Then, pending approval of the application with the Bureau of Lands, Cuevas assigned his right to Tanjuatco for the sum of P85,000.5 On March 12, 1996, the Director of Lands released an Order,6 which approved the transfer of rights from Cuevas to Tanjuatco. Transfer Certificates of Title Nos. T-3694067 and T-3694078 were then issued in the name of Tanjuatco.

In his Answer with Counterclaim,9 Tanjuatco advanced the affirmative defense that the complaint stated no cause of action against him. According to Tanjuatco, it was Cuevas who was alleged to have defrauded the corporation. He averred further that the complaint did not charge him with knowledge of the agreement between Cuevas and NRSI.

Upon Tanjuatco’s motion, the trial court conducted a preliminary hearing on the affirmative defense, but denied the motion to dismiss, and ordered petitioner to amend its complaint and implead Cuevas as a defendant.10

Summons was served on respondent Cuevas through publication,11 but he was later declared in default for failure to file an answer.12

After NRSI completed presenting evidence, Tanjuatco filed a Demurrer to Evidence,13 which the RTC granted in an Order dated February 12, 2005. In dismissing NRSI’s complaint,14 the RTC cited the Order of the Director of Lands and certain insufficiencies in the allegations in the complaint. The trial court further held that Tanjuatco is an innocent purchaser for value.

NRSI moved for reconsideration, but it was denied by the trial court in an Order dated July 1, 2005, thus:

WHEREFORE, the Motion for Reconsideration filed by the plaintiff on May 3, 2005 is DENIED for lack of merit.

SO ORDERED.15

Hence, NRSI filed the instant petition for review on certiorari, raising the following issues:

I.

WHETHER OR NOT THE ALLEGED INSUFFICIENCY OF THE ALLEGATIONS IN THE COMPLAINT MAY BE USED AS A BASIS TO DISMISS THE SAME BY WAY OF A DEMURRER TO EVIDENCE;

II.

WHETHER OR NOT A COMPLAINT MAY BE DISMISSED ON DEMURRER TO EVIDENCE BASED ON A DOCUMENT NOT PROPERLY IDENTIFIED, MARKED AND OFFERED IN EVIDENCE.16

In a nutshell, the issue for our determination is whether the trial court erred in dismissing the case on demurrer to evidence.

NRSI argues that the supposed insufficiency of allegations in the complaint did not justify its dismissal on demurrer to evidence. It contends that a dismissal on demurrer to evidence should be grounded on insufficiency of evidence presented at trial. NRSI contends that the sufficiency of its allegations was affirmed when the trial court denied the motion to dismiss. It likewise asserts that the RTC erred in declaring Tanjuatco a buyer in good faith. It stressed that the Order of the Director of Lands, as the basis for such finding, was not formally offered in evidence. Hence, it should not have been considered by the trial court in accordance with Section 34,17 Rule 132 of the Rules of Court.

Tanjuatco, for his part, maintains that NRSI failed to make a case for reconveyance against him. He insists that the complaint stated no cause of action, and the evidence presented established, rather than refuted, that he was an innocent purchaser. Tanjuatco adds that the RTC’s denial of the motion to dismiss, and admission of evidence negated NRSI’s claim that it relied on the complaint alone to decide the case. Lastly, Tanjuatco argues that the Order of the Director of Lands was a matter of judicial notice. Thus, under Section 1,18 Rule 129 of the Rules of Court, there was no need to identify, mark, and offer it in evidence.

After serious consideration, we find the instant petition utterly without merit.

In its petition, NRSI questions the trial court’s dismissal of its complaint upon a demurrer to evidence and invites a calibration of the evidence on record to determine the sufficiency of the factual basis for the trial court’s order. This factual analysis, however, would involve questions of fact which are improper in a petition for review under Rule 45 of the Rules of Court. It is well established that in an appeal by certiorari, only questions of law may be reviewed.19 A question of law exists when there is doubt or difference as to what the law is on a certain state of facts. A question of fact exists if the doubt centers on the truth or falsity of the alleged facts.20 There is a question of law when the issue does not call for an examination of the probative value of evidence presented, the truth or falsehood of facts being admitted, and the doubt concerns the correct application of law and jurisprudence on the matter.21 Otherwise, there is a question of fact. Since it raises essentially questions of fact, the instant petition must be denied.

In any event, we find that based on the examination of the evidence at hand, we are in agreement that the trial court correctly dismissed NRSI’s complaint on demurrer to evidence.

Petitioner filed a complaint for rescission/declaration of nullity of contract, reconveyance and damages against respondents. An action for reconveyance is one that seeks to transfer property, wrongfully registered by another, to its rightful and legal owner.22 In an action for reconveyance, the certificate of title is respected as incontrovertible. What is sought instead is the transfer of the property, specifically the title thereof, which has been wrongfully or erroneously registered in another person’s name, to its rightful and legal owner, or to one with a better right.23

To warrant a reconveyance of the land, the following requisites must concur: (1) the action must be brought in the name of a person claiming ownership or dominical right over the land registered in the name of the defendant; (2) the registration of the land in the name of the defendant was procured through fraud24 or other illegal means;25 (3) the property has not yet passed to an innocent purchaser for value;26 and (4) the action is filed after the certificate of title had already become final and incontrovertible27 but within four years from the discovery of the fraud,28 or not later than 10 years in the case of an implied trust.29 Petitioner failed to show the presence of these requisites.

Primarily, NRSI anchors its claim over the lands subjects of this case on the right of accretion. It submitted in evidence, titles30 to four parcels of land, which allegedly adjoin the lots in the name of Tanjuatco.

But it must be stressed that accretion as a mode of acquiring property under Article 45731 of the Civil Code requires the concurrence of the following requisites: (1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river; and (3) that the land where accretion takes place is adjacent to the banks of rivers.32 Thus, it is not enough to be a riparian owner in order to enjoy the benefits of accretion. One who claims the right of accretion must show by preponderant evidence that he has met all the conditions provided by law. Petitioner has notably failed in this regard as it did not offer any evidence to prove that it has satisfied the foregoing requisites.

Further, it is undisputed that Tanjuatco derived his title to the lands from Original Certificate of Title (OCT) No. 245 registered in the name of the Republic of the Philippines. Said parcels of land formed part of the Dried San Juan River Bed,33 which under Article 502 (1)34 of the Civil Code rightly pertains to the public dominion. The Certification35 issued by Forester III Emiliano S. Leviste confirms that said lands were verified to be within the Alienable and Disposable Project No. 11-B of Calamba, Laguna per BFD LC Map No. 3004, certified and declared as such on September 28, 1981. Clearly, the Republic is the entity which had every right to transfer ownership thereof to respondent.

Next, petitioner sought to establish fraudulent registration of the land in the name of Tanjuatco. NRSI presented before the trial court a copy of the Voting Trust Agreement which the spouses Cuevas executed in favor of Pauline Co. However, nothing in said agreement indicates that NRSI empowered Cuevas to apply for the registration of the subject lots on its behalf.

Neither did petitioner adduce evidence to prove that Cuevas was its President and Chairman. Even assuming that Cuevas was the president of NRSI, his powers are confined only to those vested upon him by the board of directors or fixed in the by-laws.36 In truth, petitioner could have easily presented its by-laws or a corporate resolution37 to show Cuevas’s authority to buy the lands on its behalf. But it did not.

Petitioner disagrees with the trial court’s finding that Tanjuatco was a buyer in good faith. It contends that the March 12, 1996 Order of the Director of Lands which declared that the lots covered by TCT Nos. T-369406 and T-369407 were free from claims and conflicts when Cuevas assigned his rights thereon to Tanjuatco. But petitioner’s claim is untenable because respondents did not formally offer said order in evidence. Lastly, petitioner makes an issue regarding the "below-fair market value" consideration which Tanjuatco paid Cuevas for the assignment of his rights to the lots. But it draws unconvincing conclusions therefrom that do not serve to persuade us of its claims.

We note that Tanjuatco filed a demurrer to evidence before the RTC. By its nature, a demurrer to evidence is filed after the plaintiff has completed the presentation of his evidence but before the defendant offers evidence in his defense. Thus, the Rules provide that if the defendant’s motion is denied, he shall have the right to present evidence. However, if the defendant’s motion is granted but on appeal the order of dismissal is reversed, he shall be deemed to have waived the right to present evidence.38 It is understandable, therefore, why the respondent was unable to formally offer in evidence the Order of the Director of Lands, or any evidence for that matter.1avvphil.zw+

More importantly, petitioner introduced in evidence TCT Nos. T-369406 and T-369407 in the name of respondent Tanjuatco. These titles bear a certification that Tanjuatco’s titles were derived from OCT No. 245 in the name of no less than the Republic of the Philippines. Hence, we cannot validly and fairly rule that in relying upon said title, Tanjuatco acted in bad faith. A person dealing with registered land may safely rely upon the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.39 This applies even more particularly when the seller happens to be the Republic, against which, no improper motive can be ascribed. The law, no doubt, considers Tanjuatco an innocent purchaser for value. An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right or interest in such property and pays the full price for the same, at the time of such purchase or before he has notice of the claims or interest of some other person in the property.40

As regards the consideration which Tanjuatco paid Cuevas for the assignment of rights to the lands, suffice it to state that the assignment merely vested upon Tanjuatco all of Cuevas’s intangible claims, rights and interests over the properties and not the properties themselves. At the time of the assignment, the lots were still the subjects of a pending sales application before the Bureau of Lands. For, it was not until May 24, 1996, that titles were issued in Tanjuatco’s name. The assignment not being a sale of real property, it was not surprising that Cuevas demanded from Tanjuatco only P85,000 for the transfer of rights.

From all the foregoing, it is plain and apparent that NRSI failed to substantiate its claim of entitlement to ownership of the lands in Tanjuatco’s name. The trial court, therefore, correctly dismissed petitioner’s complaint for reconveyance.

WHEREFORE, the petition is DENIED. The Orders dated February 12, 2005 and July 1, 2005 of the Regional Trial Court of Calamba City, Branch 37, in Civil Case No. 2662-98-C are AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 161030 September 14, 2011

JOSE FERNANDO, JR., ZOILO FERNANDO, NORMA FERNANDO BANARES, ROSARIO FERNANDO TANGKENCGO, HEIRS OF TOMAS FERNANDO, represented by ALFREDO V. FERNANDO, HEIRS OF GUILLERMO FERNANDO, represented by Ronnie H. Fernando, HEIRS OF ILUMINADA FERNANDO, represented by Benjamin Estrella and HEIRS OF GERMOGENA FERNANDO, Petitioners, vs.LEON ACUNA, HERMOGENES FERNANDO, HEIRS OF SPOUSES ANTONIO FERNANDO AND FELISA CAMACHO, represented by HERMOGENES FERNANDO, Respondents.

D E C I S I O N

LEONARDO-DE CASTRO, J.:

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking to reverse and set aside the Decision1 dated November 24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773, entitled "Jose Fernando, Jr., et al. v. Heirs of Germogena Fernando, et al.," which reversed and set aside the Decision2 dated May 16, 2002 of Branch 84, Regional Trial Court (RTC) of Malolos, Bulacan in Civil Case No. 256-M-97.

At the heart of this controversy is a parcel of land covered by Original Certificate of Title (OCT) No. RO-487 (997)3 registered in the names of Jose A. Fernando, married to Lucila Tinio, and Antonia A. Fernando, married to Felipe Galvez, and located in San Jose, Baliuag, Bulacan. When they died intestate, the property remained undivided. Petitioners herein – namely, Jose Fernando, Jr., Zoilo Fernando, Norma Fernando Banares, Rosario Fernando Tangkencgo, the heirs of Tomas Fernando, the heirs of Guillermo Fernando, the heirs of Iluminada Fernando and the heirs of Germogena Fernando – are the heirs and successors-in-interest of the deceased registered owners. However, petitioners failed to agree on the division of the subject property amongst themselves, even after compulsory conciliation before the Barangay Lupon.

Thus, petitioners, except for the heirs of Germogena Fernando, filed a Complaint4 for partition on April 17, 1997 against the heirs of Germogena Fernando. In the Complaint, plaintiffs alleged, among others, that they and defendants are common descendants and compulsory heirs of the late spouses Jose A. Fernando and Lucila Tinio, and the late spouses Antonia A. Fernando and Felipe Galvez. They further claimed that their predecessors-in-interest died intestate and without instructions as to the disposition of the property left by them covered by OCT No. RO-487 (997). There being no settlement, the heirs are asking for their rightful and lawful share because they wish to build up their homes or set up their business in the respective portions that will be allotted to them. In sum, they prayed that the subject property be partitioned into eight equal parts, corresponding to the hereditary interest of each group of heirs.

In their Answer5 filed on May 20, 1997, defendants essentially admitted all of the allegations in the complaint. They alleged further that they are not opposing the partition and even offered to share in the expenses that will be incurred in the course of the proceedings.

In his Complaint in Intervention6 filed on January 12, 1998, respondent Leon Acuna (Acuna) averred that in the Decision7 dated November 29, 1929 of the Cadastral Court of Baliuag, Bulacan, the portion of the property identified as Lot 1303 was already adjudicated to: (a) Antonio Fernando, married to Felisa Camacho; (b) spouses Jose Martinez and Gregoria Sison; (c) spouses Ignacio de la Cruz and Salud Wisco; and (d) Jose Fernando, married to Lucila Tinio, the petitioners’ predecessor-in-interest. He likewise claimed that in a 1930 Decision of the Cadastral Court, the portion identified as Lot 1302 was also already adjudicated to other people as well.

Respondent Acuna further alleged that Salud Wisco, through her authorized attorney-in-fact, Amador W. Cruz, sold her lawful share denominated as Lot 1303-D with an area of 3,818 square meters to Simeon P. Cunanan,8 who in turn sold the same piece of land to him as evidenced by a Deed of Sale.9 He also belied petitioners’ assertion that the subject property has not been settled by the parties after the death of the original owners in view of the Decision10 dated July 30, 1980 of the Court of First Instance (CFI) of Baliuag, Bulacan, in LRC Case No. 80-389 which ordered the Register of Deeds of Bulacan to issue the corresponding certificates of title to the claimants of the portion of the subject property designated as Lot 1302.11 Norma Fernando, one of the petitioners in the instant case, even testified in LRC Case No. 80-389. According to respondent Acuna, this circumstance betrayed bad faith on the part of petitioners in filing the present case for partition.

Respondent Acuna likewise averred that the action for partition cannot prosper since the heirs of the original owners of the subject property, namely Rosario, Jose Jr., Norma, Tomas, Guillermo, Leopoldo, Hermogena, Illuminada and Zoilo, all surnamed Fernando, and Lucila Tinio, purportedly had already sold their respective one-tenth (1/10) share each in the subject property to Ruperta Sto. Domingo Villasenor for the amount of P35,000.00 on January 25, 1978 as evidenced by a "Kasulatan sa Bilihang Patuluyan."12 He added that he was in possession of the original copy of OCT No. RO-487 (997) and that he had not commenced the issuance of new titles to the subdivided lots because he was waiting for the owners of the other portions of the subject property to bear their respective shares in the cost of titling.

Subsequently, a Motion for Intervention13 was filed on June 23, 1998 by respondent Hermogenes Fernando (Hermogenes), for himself and on behalf of the heirs of the late spouses, Antonio A. Fernando and Felisa Camacho. According to him, in the July 30, 1980 Decision of the CFI of Bulacan, their predecessors-in-interest had already been adjudged owners of Lots 1302-A, 1302-F, 1302-G,14 1302-H and 1302-J of OCT No. RO-487 (997) and any adverse distribution of the properties would cause respondents damage and prejudice. He would also later claim, in his Answer-in-Intervention,15 that the instant case is already barred by res judicata and, should be dismissed.

In the interest of substantial justice, the trial court allowed the respondents to intervene in the case.

The plaintiffs and defendants jointly moved to have the case submitted for judgment on the pleadings on May 7, 1999.16 However, the trial court denied said motion in a Resolution17 dated August 23, 1999 primarily due to the question regarding the ownership of the property to be partitioned, in light of the intervention of respondents Acuna and Hermogenes who were claiming legal right thereto.

In their Manifestation18 filed on April 12, 2000, petitioners affirmed their execution of a Deed of Sale in favor of Ruperta Sto. Domingo Villasenor in 1978, wherein they sold to her 1,000 square meters from Lot 1303 for the sum of P 35,000.00.

After the pre-trial conference, trial ensued. On September 19, 2000, petitioner Elizabeth Alarcon testified that they (plaintiffs) are not claiming the entire property covered by OCT No. RO-487 (997) but only the area referred to as Lot 1303 and Sapang Bayan. She also admitted that Lot 1302 had already been divided into ten (10) sublots and allocated to various owners pursuant to the July 30, 1980 Decision of the CFI of Baliuag, Bulacan and these owners already have their own titles. She likewise claimed that the entire area consisting of Lot 1303 and Sapang Bayan is based on the subdivision plan of Lot 1303. She admitted that plaintiffs’ predecessor-in-interest was only allocated a portion of Lot 1303 based on the said plan. However, she claimed that the November 29, 1929 Decision subdividing Lot 1303 was never implemented nor executed by the parties.19

Petitioner Norma Fernando testified on October 3, 2000 that she is one of the children of Jose A. Fernando and Lucila Tinio. She affirmed that plaintiffs were only claiming Lot 1303 and Sapang Bayan. She also testified that Sapang Bayan was supposedly included in Lot 1302 and was previously a river until it dried up. Unlike Lot 1302, the rest of the property was purportedly not distributed. She likewise averred that she is aware of a November 29, 1929 Decision concerning the distribution of Lot 1303 issued by the cadastral court but insisted that the basis of the claims of the petitioners over Lot 1303 is the title in the name of her ascendants and not said Decision.20

On November 16, 2000, as previously directed by the trial court and agreed to by the parties, counsel for respondent Hermogenes prepared and submitted an English translation of the November 29, 1929 Decision. The same was admitted and marked in evidence as Exhibit "X"21 as a common exhibit of the parties. The petitioners also presented Alfredo Borja, the Geodetic Engineer who conducted a relocation survey of the subject property.

After plaintiffs rested their case, respondent Hermogenes testified on December 7, 2000. In his testimony, he claimed to know the plaintiffs and defendants as they were allegedly his relatives and neighbors. He confirmed that according to the November 29, 1929 Decision, portions of Lot 1303 was designated as Lots 1303-A, 1303-B, 1303-C and 1303-D which were adjudicated to certain persons, including Jose Fernando, while the rest of Lot 1303 was adjudicated to his parents, Antonio A. Fernando married to Felisa Camacho. According to respondent Hermogenes, his family’s tenant and the latter’s children occupied the portion of Lot 1303 allotted to his (Hermogenes) parents while the rest of Lot 1303 was occupied by the persons named in the said November 29, 1929 Decision. He admitted, however, that nobody among the purported possessors of Lot 1303 registered the lots assigned to them in the Decision.22

On January 18, 2001, respondent Hermogenes presented a witness, Engineer Camilo Vergara who testified that the subject land is divided into Lots 1302 and 1303 with a creek dividing the two lots known as Sapang Bayan. He also identified a Sketch Plan numbered as PSD-45657 and approved on November 11, 1955.23 During the hearing on January 30, 2001, respondent Hermogenes made an oral offer of his evidence and rested his case. On the same date, respondent Acuna, in lieu of his testimony, offered for the parties to simply stipulate on the due execution and authenticity of the Deeds of Sale dated April 6, 1979 and December 28, 1980, showing the transfer of Lot 1303-D from Salud Wisco to Simeon Cunanan and subsequently to respondent Acuna. When counsel for plaintiffs and defendants agreed to the stipulation, albeit objecting to the purpose for which the deeds of sale were offered, the trial court admitted Acuna’s exhibits and Acuna rested his case.24

On February 15, 2001, plaintiffs recalled Norma Fernando as a rebuttal witness. In her rebuttal testimony, she identified the tax declaration25 over the said property in the name of Jose A. Fernando; an official receipt26 dated October 3, 1997 issued by the Office of the Treasurer of the Municipality of Baliuag, Bulacan for payment of real property taxes from 1991 to 1997; and a real property tax clearance27 dated October 6, 1997, to show that plaintiffs have allegedly been paying the real property taxes on the entire property covered by OCT No. RO-487 (997). However, she further testified that they were now willing to pay taxes only over the portion with an area of 44,234 square meters, which is included in their claim.28

In a Decision dated May 16, 2002, the trial court ruled that plaintiffs and defendants (petitioners herein) were indeed the descendants and successors-in-interest of the registered owners, Jose A. Fernando (married to Lucila Tinio) and Antonia Fernando (married to Felipe Galvez), of the property covered by OCT No. RO-487 (997). After finding that the parties admitted that Lot 1302 was already distributed and titled in the names of third persons per the July 30, 1980 Decision of the CFI of Baliuag, Bulacan the trial court proceeded to rule on the allocation of Lot 1303 and Sapang Bayan.

With respect to Lot 1303, the trial court found that the November 29, 1929 Decision of the Cadastral Court, adjudicating said lot to different persons and limiting Jose Fernando’s share to Lot 1303-C, was never implemented nor executed despite the lapse of more than thirty years. Thus, the said decision has already prescribed and can no longer be executed. The trial court ordered the reversion of Lot 1303 to the ownership of spouses Jose A. Fernando and Lucila Tinio and spouses Antonia A. Fernando and Felipe Galvez under OCT No. RO-487 (997) and allowed the partition of Lot 1303 among petitioners as successors-in-interest of said registered owners. Excluded from the partition, however, were the portions of the property which petitioners admitted had been sold or transferred to Ruperta Sto. Domingo Villasenor and respondent Acuna.

As for the ownership of Sapang Bayan, the trial court found that the same had not been alleged in the pleadings nor raised as an issue during the pre-trial conference. Also, according to the trial court, the parties failed to clearly show whether Sapang Bayan was previously a dry portion of either Lot 1302 or Lot 1303. Neither was there any proof that Sapang Bayan was a river that just dried up or that it was an accretion which the adjoining lots gradually received from the effects of the current of water. It was likewise not established who were the owners of the lots adjoining Sapang Bayan. The trial court concluded that none of the parties had clearly and sufficiently established their claims over Sapang Bayan.

The dispositive portion of the May 16, 2002 Decision of the trial court reads:

WHEREFORE, all the foregoing considered, judgment is hereby rendered ordering the reversion of Lot 1303, except the portions allotted to Acuna and Ruperta Sto. Domingo Villasenor, to the ownership of Jose Fernando and Lucia Tinio and Antonia Fernando and Felipe Galvez under OCT No. 997 and thereafter allowing the partition of said Lot 1303 among the plaintiffs and the defendants as successors-in-interest of Jose and Lucia as well as Antonia and Felipe after the settlement of any inheritance tax, fees, dues and/or obligation chargeable against their estate.29

All the parties, with the exception of respondent Acuna, elevated this case to the Court of Appeals which rendered the assailed November 24, 2003 Decision, the dispositive portion of which reads:

WHEREFORE, premises considered, the decision dated May 16, 2002, of the Regional Trial Court of Malolos, Bulacan, Third Judicial Region, Branch 84, in Civil Case No. 256-M-97, is hereby REVERSED and SET ASIDE and the complaint dated April 17, 1997 filed by plaintiffs-appellants is dismissed. Costs against plaintiffs-appellants.30

Hence, plaintiffs and defendants in the court a quo elevated the matter for our review through the instant petition.

Petitioner raises the following issues for consideration:

1. Whether or not the ownership of Lot 1303 and the Sapang Bayan portion of the piece of land covered by O.C.T. No. RO-487 (997) or Plan Psu-39080 should revert to the descendants and heirs of the late spouses Jose Fernando and Lucila Tinio and Antonia Fernando, married to Felipe Galvez;

2. Whether or not a title registered under the Torrens system, as the subject original certificate of title is the best evidence of ownership of land and is a notice against the world.31

The petition is without merit.

Petitioners based their claims to the disputed areas designated as Lot 1303 and Sapang Bayan on their ascendants’ title, OCT No. RO-487 (997), which was issued on February 26, 1927 in the name of Jose A. Fernando married to Lucila Tinio and Antonia A. Fernando married to Felipe Galvez. The Court now rules on these claims in seriatim.

Petitioners’ claim with respect to Lot 1303

As the records show, in the November 29, 1929 Decision of the Cadastral Court of Baliuag, Bulacan (in Cadastral Record No. 14, GLRO Cad. Record No. 781) which was written in Spanish, Lot 1303 had already been divided and adjudicated to spouses Jose A. Fernando and Lucila Tinio; spouses Antonia A. Fernando and Felipe Galvez; spouses Antonio A. Fernando and Felisa Camacho; spouses Jose Martinez and Gregoria Sison; and spouses Ignacio de la Cruz and Salud Wisco from whom respondent Acuna derived his title. The English translation of the said November 29, 1929 Decision was provided by respondent Hermogenes and was adopted by all the parties as a common exhibit designated as Exhibit "X." The agreed English translation of said Decision reads:

Lot No. 1303 – This lot is decreed in record No. 448, G.L.R.O. Record No. 25414 and actually with Original Certificate No. 997 (exhibited today) in the name of Jose A. Fernando and Antonia A. Fernando, who now pray that said lot be subdivided in accordance with the answers recorded in the instant cadastral record, and the sketch, Exh. "A", which is attached to the records.

A part or portion of the lot has been claimed by Antonio A. Fernando, of legal age, married to Felisa Camacho; another portion by the spouses Jose Martinez and Gregoria Sison; another portion by Antonia A. Fernando, of legal age, married to Felipe Galvez; another portion by Jose A. Fernando, of legal age, married to Lucila Tinio; and another portion by the spouses Ignacio de la Cruz and Salud Wisco, both of legal age. The part claimed by the spouses Jose A. Martinez and Gregoria Sison is Lot 1303-A of Exh. A; the part claimed by Antonia A. Fernando is Lot 1303-B of said exhibit; the part claimed by Jose A. Fernando is Lot 1303-C of said exhibit, and the part claimed by the spouses Ignacio de la Cruz and Salud Wisco is Lot 1303-D of the aforementioned Exhibit.

The subdivision of said lot is hereby ordered, separating from the same the portions that correspond to each of the claimants, which portions are known as Lots 1303-A, 1303-B, 1303-C, and 1303-D in the sketch, Exh. "A", and once subdivided, are adjudicated in favor of the spouses, Jose Martinez and Gregoria Sison, of legal age, Lot No. 1303-A, in favor of Antonia A. Fernando, of legal age, married to Felipe Galvez, Lot No. 1303-B; in favor of Jose A. Fernando, of legal age, married to Lucila Tinio, Lot 1303-C; in favor of the spouses Ignacio de la Cruz and Salud Wisco, of legal age, Lot 1303-D; and the rest of Lot 1303 is adjudged in favor of Antonio A. Fernando married to Felisa Camacho. It is likewise ordered that once the subdivision plan is approved, the same be forwarded by the Director of Lands to this Court for its final decision.

It is ordered that the expense for mentioned subdivision, shall be for the account of the spouses Jose Martinez and Gregoria Sison, Antonia A. Fernando, Jose A. Fernando, the spouses Ignacio de la Cruz and Salud Wisco, and Antonio A. Fernando.32

From the foregoing, it would appear that petitioners’ ascendants themselves petitioned for the cadastral court to divide Lot 1303 among the parties to the 1929 case and they were only allocated Lots 1303-B and 1303-C. Still, as the trial court noted, the November 29, 1929 Decision was never fully implemented in the sense that the persons named therein merely proceeded to occupy the lots assigned to them without having complied with the other directives of the cadastral court which would have led to the titling of the properties in their names. Nonetheless, it is undisputed that the persons named in the said November 29, 1929 Decision and, subsequently, their heirs and assigns have since been in peaceful and uncontested possession of their respective lots for more than seventy (70) years until the filing of the suit for partition on April 17, 1997 by petitioners which is the subject matter of this case. Respondent Hermogenes, who testified that petitioners were his relatives and neighbors, further affirmed before the trial court that the persons named in the November 29, 1929 Decision took possession of their respective lots:

It is noteworthy that petitioners do not dispute that the November 29, 1929 Decision of the cadastral court already adjudicated the ownership of Lot 1303 to persons other than the registered owners thereof. Petitioners would, nonetheless, claim that respondents’ purported failure to execute the November 29, 1929 Decision over Lot 1303 (i.e., their failure to secure their own titles) meant that the entire Lot 1303 being still registered in the name of their ascendants rightfully belongs to them. This is on the theory that respondents’ right to have the said property titled in their names have long prescribed.

On this point, we agree with the appellate court.

Section 47 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, states that "[n]o title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession." Thus, the Court has held that the right to recover possession of registered land is imprescriptible because possession is a mere consequence of ownership.34

However, in Heirs of Anacleto B. Nieto v. Municipality of Meycauayan, Bulacan,35 the Court had recognized the jurisprudential thread regarding the exception to the foregoing doctrine that while it is true that a Torrens title is indefeasible and imprescriptible, the registered landowner may lose his right to recover possession of his registered property by reason of laches.

Thus, in Heirs of Batiog Lacamen v. Heirs of Laruan,36 the Court had held that while a person may not acquire title to the registered property through continuous adverse possession, in derogation of the title of the original registered owner, the heir of the latter, however, may lose his right to recover back the possession of such property and the title thereto, by reason of laches.

In the more recent case of Bartola M. Vda. De Tirona v. Encarnacion,37 we similarly held that while jurisprudence is settled on the imprescriptibility and indefeasibility of a Torrens title, there is equally an abundance of cases where we unequivocally ruled that registered owners may lose their right to recover possession of property through the equitable principle of laches.

Laches means the failure or neglect for an unreasonable and unexplained length of time to do that which, by observance of due diligence, could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert his right either has abandoned or declined to assert it. Laches thus operates as a bar in equity.38 The essential elements of laches are: (a) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (b) delay in asserting complainant’s rights after he had knowledge of defendant’s acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit; and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant.39

In view of respondents’ decades long possession and/or ownership of their respective lots by virtue of a court judgment and the erstwhile registered owners’ inaction and neglect for an unreasonable and unexplained length of time in pursuing the recovery of the land, assuming they retained any right to recover the same, it is clear that respondents’ possession may no longer be disturbed. The right of the registered owners as well as their successors-in-interest to recover possession of the property is already a stale demand and, thus, is barred by laches.

In the same vein, we uphold the finding of the Court of Appeals that the title of petitioners’ ascendants wrongfully included lots belonging to third persons.40 Indeed, petitioners’ ascendants appeared to have acknowledged this fact as they were even the ones that prayed for the cadastral court to subdivide Lot 1303 as evident in the November 29, 1929 Decision. We concur with the Court of Appeals that petitioners’ ascendants held the property erroneously titled in their names under an implied trust for the benefit of the true owners. Article 1456 of the Civil Code provides:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

As aptly observed by the appellate court, the party thus aggrieved has the right to recover his or their title over the property by way of reconveyance while the same has not yet passed to an innocent purchaser for value.41 As we held in Medizabel v. Apao,42 the essence of an action for reconveyance is that the certificate of title is respected as incontrovertible. What is sought is the transfer of the property, in this case its title, which has been wrongfully or erroneously registered in another person's name, to its rightful owner or to one with a better right. It is settled in jurisprudence that mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate of title.43

We cannot subscribe to petitioners’ argument that whatever rights or claims respondents may have under the November 29, 1929 Decision has prescribed for their purported failure to fully execute the same. We again concur with the Court of Appeals in this regard. An action for reconveyance of registered land based on implied trust prescribes in ten (10) years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property. However, this Court has ruled that the ten-year prescriptive period applies only when the person enforcing the trust is not in possession of the property. If a person claiming to be its owner is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The reason is that the one who is in actual possession of the land claiming to be its owner may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right.44

Petitioners’ claim with respect to Sapang Bayan

As for the issue of the ownership of Sapang Bayan, we sustain the appellate court insofar as it ruled that petitioners failed to substantiate their ownership over said area. However, we find that the Court of Appeals erred in ruling that the principle of accretion is applicable. The said principle is embodied in Article 457 of the Civil Code which states that "[t]o the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters." We have held that for Article 457 to apply the following requisites must concur: (1) that the deposit be gradual and imperceptible; (2) that it be made through the effects of the current of the water; and (3) that the land where accretion takes place is adjacent to the banks of rivers.45 The character of the Sapang Bayan property was not shown to be of the nature that is being referred to in the provision which is an accretion known as alluvion as no evidence had been presented to support this assertion.

In fact from the transcripts of the proceedings, the parties could not agree how Sapang Bayan came about. Whether it was a gradual deposit received from the river current or a dried-up creek bed connected to the main river could not be ascertained.

Even assuming that Sapang Bayan was a dried-up creek bed, under Article 420, paragraph 146 and Article 502, paragraph 147 of the Civil Code, rivers and their natural beds are property of public dominion. In the absence of any provision of law vesting ownership of the dried-up river bed in some other person, it must continue to belong to the State.

We ruled on this issue in Republic v. Court of Appeals,48 to wit:

The lower court cannot validly order the registration of Lots 1 and 2 in the names of the private respondents. These lots were portions of the bed of the Meycauayan river and are therefore classified as property of the public domain under Article 420 paragraph 1 and Article 502, paragraph 1 of the Civil Code of the Philippines. They are not open to registration under the Land Registration act. The adjudication of the lands in question as private property in the names of the private respondents is null and void.491avvphi1

Furthermore, in Celestial v. Cachopero,50 we similarly ruled that a dried-up creek bed is property of public dominion:

A creek, like the Salunayan Creek, is a recess or arm extending from a river and participating in the ebb and flow of the sea. As such, under Articles 420(1) and 502(1) of the Civil Code, the Salunayan Creek, including its natural bed, is property of the public domain which is not susceptible to private appropriation and acquisitive prescription. And, absent any declaration by the government, that a portion of the creek has dried-up does not, by itself, alter its inalienable character.51

Therefore, on the basis of the law and jurisprudence on the matter, Sapang Bayan cannot be adjudged to any of the parties in this case.

WHEREFORE, premises considered, the petition is hereby DENIED. The assailed Decision dated November 24, 2003 of the Court of Appeals in CA-G.R. CV No. 75773 is hereby AFFIRMED. Costs against petitioners.

SO ORDERED.

G.R. No. 157150 September 21, 2011

PEDRO ANGELES , Represented by ADELINA T. ANGELES, Attorney-in Fact, Petitioner, vs.ESTELITA B. PASCUAL, MARIA THERESA PASCUAL, NERISSA PASCUAL, IMELDA PASCUAL, MA. LAARNI PASCUAL and EDWIN PASCUAL, Respondents.

BERSAMIN, J.:

Under appeal is the decision promulgated on January 31, 2002 in CA- G.R. CV No. 61600,1 which involved a dispute about the true location of the respective lots of the parties, with the respondents claiming that the petitioner had encroached on their lot but the latter denying the encroachment.

Antecedents

Neighbors Regidor Pascual (Pascual) and Pedro Angeles (Angeles) were registered owners of adjacent parcels of land located in Cabanatuan City. Pascual owned Lot 4, Block 2 (Lot 4) of the consolidation-subdivision plan (LRC) Psd-951, a portion of the consolidation of Lots 1419-B-2B-3, 1419-B-2-B-4 and 1419-B-2-B-5, Psd- 9016, LGC (GLRO) Cadastral Record No. 94 covered by Transfer Certificate Title No. T-43707 of the Registry of Deeds of Nueva Ecija;2 Angeles owned Lot 5, Block 2 (Lot 5) of the same consolidation-subdivision plan covered by TCT No. T-9459 of the Registry of Deeds of Nueva Ecija.3 Each of them built a house on his respective lot, believing all the while that his respective lot was properly delineated. It was not until Metropolitan Bank and Trust Company (Metrobank), as the highest bidder in the foreclosure sale of the adjacent Lot 3, Block 2 (Lot 3), caused the relocation survey of Lot 3 that the geodetic engineer discovered that Pascual’s house had encroached on Lot 3. As a consequence, Metrobank successfully ejected Pascual.

In turn, Pascual caused the relocation survey of his own Lot 4 and discovered that Angeles’ house also encroached on his lot. Of the 318 square meters comprising Lot 4, Angeles occupied 252 square meters, leaving Pascual with only about 66 square meters. Pascual demanded rentals for the use of the encroached area of Lot 4 from Angeles, or the removal of Angeles’ house. Angeles refused the demand. Accordingly, Pascual sued Angeles for recovery of possession and damages in the Regional Trial Court (RTC) in Cabanatuan City.

In the course of the trial, Pascual presented Clarito Fajardo, the geodetic engineer who had conducted the relocation survey and had made the relocation plan of Lot 4.4 Fajardo testified that Angeles’ house was erected on Lot 4. On the other hand, Angeles presented Juan Fernandez, the geodetic engineer who had prepared the sketch plan relied upon by Angeles to support his claim that there had been no encroachment.5 However, Fernandez explained that he had performed only a "table work," that is, he did not actually go to the site but

based the sketch plan on the descriptions and bearings appearing on the TCTs of Lot 4, Lot 5 and Lot 6; and recommended the conduct of a relocation survey.6

In its decision of November 3, 1998,7 the RTC held that there was no dispute that Pascual and Angeles were the respective registered owners of Lot 4 and Lot 5; that what was disputed between them was the location of their respective lots; that Pascual proved Angeles’ encroachment on Lot 4 by preponderant evidence; and that Pascual was entitled to relief. The RTC thus disposed:

WHEREFORE, premises considered, judgment is rendered in favor of the plaintiff and against the defendant as follows:

1) ordering the defendant or persons claiming right through him to cause the removal of his house insofar as the same occupies the portion of Lot 4, Block 2 (TCT No. T-43707), of an area of 252 square meters, as particularly indicated in the Sketch Plan (Exhibit C-1); and

2) and without pronouncement to damages in both the complainant and counterclaim.

With Costs.

SO ORDERED.8

Angeles appealed to the CA.

On January 31, 2002, the CA affirmed the RTC,9 and held that as between the findings of the geodetic engineer (Fajardo) who had actually gone to the site and those of the other (Fernandez) who had based his findings on the TCTs of the owners of the three lots, those of the former should prevail. However, the CA, modifying the RTC’s ruling, applied Article 448 of the Civil Code (which defined the rights of a builder, sower and planter in good faith). The decision decreed thus:10

WHEREFORE, the decision appealed from is MODIFIED. Plaintiffs-appellees are ordered to exercise within thirty (30) days from the finality of this decision their option to either buy the portion of defendant-appellant’s house on their Lot. No. 4, or to sell to defendant-appellant the portion of their land on which his house stands. If plaintiffs-appellees elect to sell the land or buy the improvement, the purchase price must be at the prevailing market price at the time of payment. If buying the improvement will render the defendant-appellant’s house useless, then plaintiffs-appellees should sell the encroached portion of their land to defendant-appellant. If plaintiffs-appellees choose to sell the land but defendant-appellant is unwilling or unable to buy, then the latter must vacate the subject portion and pay reasonable rent from the time plaintiffs-appellees made their choice up to the time they actually vacate the premises. But if the value of the land is considerably more than the value of the improvement, then defendant-appellant may elect to lease the land, in which case the parties shall agree upon the terms of the lease. Should they fail to agree on said terms, the court of origin is directed to fix the terms of the lease. From the moment plaintiffs-appellees shall have exercised their option, defendant-appellant shall pay reasonable monthly rent up to the time the parties agree on the terms of the lease or until the court fixes such terms. This is without prejudice to any future compromise which may be agreed upon by the parties.

SO ORDERED.

Angeles expectedly sought reconsideration, but the CA denied his motion on February 13, 2003.

Issues

Hence, Angeles appeals, assailing: (a) the credence the CA accorded to the testimony and relocation plan of Fajardo as opposed to the survey plan prepared by Fernandez; and (b) the options laid down by the CA, i.e., for Pascual either to buy the portion of Angeles’ house or to sell to Angeles the portion of his land occupied by Angeles were contrary to its finding of good faith.

Ruling

The petition lacks merit.

I

The Court, not being a trier of facts,

cannot review factual issues

Section 1, Rule 45 of the Rules of Court explicitly states that the petition for review on certiorari "shall raise only questions of law, which must be distinctly set forth." In appeal by certiorari, therefore, only questions of law may be raised, because the Supreme Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during the trial. The resolution of factual issues is the function of lower courts, whose findings thereon are received with respect and are binding on the Supreme Court subject to certain exceptions.11 A question, to be one of law, must not involve an examination of the probative value of the evidence presented by the litigants or any of them. There is a question of law in a given case when the doubt or difference arises as to what the law is on certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or falsehood of alleged facts.12

Whether certain items of evidence should be accorded probative value or weight, or should be rejected as feeble or spurious; or whether or not the proofs on one side or the other are clear and convincing and adequate to establish a proposition in issue; whether or not the body of proofs presented by a party, weighed and analyzed in relation to contrary evidence submitted by adverse party, may be said to be strong, clear and convincing; whether or not certain documents presented by one side should be accorded full faith and credit in the face of protests as to their spurious character by the other side; whether or not inconsistencies in the body of proofs of a party are of such gravity as to justify refusing to give said proofs weight – all these are issues of fact. Questions like these are not reviewable by the Supreme Court whose review of cases decided by the CA is confined only to questions of law raised in the petition and therein distinctly set forth.13

Nonetheless, the Court has recognized several exceptions to the rule, including: (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 Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (g) when the findings are contrary to those of the trial court; (h) when the findings are conclusions without citation of specific evidence on which they are based; (i) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondent; (j) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; and (k) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.14 The circumstances of this case indicate that none of such exceptions is attendant herein.

The credence given by the RTC to the testimony and relocation plan of Fajardo was conclusive upon this Court especially by virtue of the affirmance by the CA of the RTC. Resultantly, the fact of Angeles’ encroachment on Pascual’s Lot 4 was proved by preponderant evidence.

It is noteworthy to point out, too, that the argument of Angeles based on the indefeasibility and incontrovertibility of Torrens titles pursuant to Presidential Decree No. 1529 (The Property Registration Decree) is inapplicable considering that the ownership of Lot 4 and Lot 5 was not the issue. Nor were the metes and bounds of the lots as indicated in the respective TCTs being assailed, for the only issue concerned the exact and actual location of Lot 4 and Lot 5.

II

Angeles was a builder in good faith

To be next determined is whether the CA’s application of Article 448 of the Civil Code was correct and proper.

Article 448 of the Civil Code provides thusly:

Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.

The provision contemplates a person building, or sowing, or planting in good faith on land owned by another. The law presupposes that the land and the building or plants are owned by different persons, like here. The RTC and CA found and declared Angeles to be a builder in good faith. We cannot veer away from their unanimous conclusion, which can easily be drawn from the fact that Angeles insists until now that he built his house entirely on his own lot. Good faith consists in the belief of the builder that the land he is building on is his and in his ignorance of a defect or flaw in his title.15

With the unassailable finding that Angeles’ house straddled the lot of Pascual, and that Angeles had built his house in good faith, Article 448 of the Civil Code, which spells out the rights and obligations of the owner of the land as well as of the builder, is unquestionably applicable. Consequently, the land being the principal and the building the accessory, preference is given to Pascual as the owner of the land to make the choice as between appropriating the building or obliging Angeles as the builder to pay the value of the land. Contrary to the insistence of Angeles, therefore, no inconsistency exists between the finding of good faith in his favor and the grant of the reliefs set forth in Article 448 of the Civil Code.

WHEREFORE, the Court DENIES the petition for review on certiorari; and AFFIRMS the decision promulgated on January 31, 2002 by the Court of Appeals in C.A.-G.R. CV No. 61600. No pronouncement on costs of suit.

SO ORDERED.

G.R. No. 159328 October 5, 2011

Heirs of ANTONIO FERAREN, represented by ANTONIO FERAREN, JR., JUSTINA FERAREN-TABORA, LEAH FERAREN-HONASAN, ELIZABETH MARIE CLAIRE FERAREN-ARRASTIA, MA. TERESA FERAREN-GONZALES, JOHANNA MICHELYNNE FERAREN YABUT, SCHELMA ANTONETTE FERAREN-MENDOZA and JUAN MIGUEL FERAREN YABUT, Petitioners, vs.COURT OF APPEALS (Former 12th Division) and CECILIA TADIAR, Respondents.

D E C I S I O N

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal and setting aside of the May 21, 2003 Decision1 and the July 17, 2003 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 71372. The assailed CA Decision reversed and set aside the Decisions of the Municipal Trial Court (MTC) of San Fernando City, La Union, Branch 2 in Civil Case No. 34633 and the Regional Trial Court (RTC) of San Fernando City, La Union, Branch 26 in Civil Case No. 6617,4 while the questioned CA Resolution denied petitioners' Motion for Reconsideration.

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

On May 25, 1999, herein private respondent Celia Tadiar (Celia) filed with the MTC of San Fernando, La Union a Complaint for Unlawful Detainer against herein petitioners Heirs of Antonio Feraren. In said Complaint, Celia alleged that she and her three brothers are co-owners of a 1,200 square meter parcel of land located in the poblacion of San Fernando City in La Union; that on September 21, 1960, the said lot was sold by their father to the spouses Antonio and Justina Feraren (Spouses Feraren) on pacto de retro; it was stipulated that the right to repurchase may be exercised within ten years; on August 31, 1970, Celia and her co-heirs re-acquired the subject property; thereafter, the lot was leased on a month-to-month basis to the Spouses Feraren who have constructed a residential house thereon; that sometime in March 1992, Celia and her co-heirs informed the Spouses Feraren of their intention to terminate their lease contract; the Spouses Feraren, in turn, offered to sell them their house or buy the subject lot, which offers were declined by Celia and her co-heirs and, instead, allowed the Spouses Feraren to continue renting the property; after the death of Antonio in 1995, herein petitioners requested Celia and her co-heirs to extend the lease until June 30, 1997 and even volunteered to temporarily vacate the said property; Celia and her co-heirs agreed and they did not even increase the rentals; nonetheless, petitioners failed to comply with their commitment to temporarily vacate; they continued to stay within the premises of the subject property and refused to vacate the same notwithstanding repeated demands from Celia and her co-heirs.5

In their Answer, herein petitioners contended that a 128-square-meter portion of the lot being claimed by private respondent is their property; even before the Spouses Feraren entered into a contract of sale with pacto de retro with the father of Celia, the former were already in possession of the remaining portion of the subject property on the strength of a lease contract executed in their favor by the latter in 1949; their construction of a residential house on the subject property was by virtue of a right granted under the said contract of lease; petitioners were very much willing to vacate the disputed lot but only upon payment of the value of all the improvements that they have legally introduced as builders in good faith on the said lot, which includes the house presently standing thereon as well as the concrete fence surrounding the said house; in the alternative, they offered to buy the parcel of land subject of the complaint.6

For failure of the parties to arrive at an amicable settlement, the MTC, in its Order7 dated November 3, 2000, directed them to submit their position papers and other evidence within ten (10) days from receipt of a copy of the said Order.

Private respondent did not file a position paper.

On the other hand, petitioners filed their Position Paper8 on March 15, 2001. Petitioners alleged therein that their parents are builders in good faith having built their house on the lot in question during the time that they were the owners of the disputed lot.

On June 15, 2001, the MTC rendered its Decision dismissing the complaint for unlawful detainer. The trial court gave credence to petitioners' contention that their parents built the house in controversy on the subject lot while they were the owners of the said lot. As such, the MTC held that as long as private respondent refuses to reimburse petitioners of the value of the improvements they have introduced on the lot in question, they (petitioners) may not be compelled to vacate the same.

On appeal, the RTC of San Fernando City, La Union, in its Decision dated January 28, 2002, affirmed in toto the judgment of the MTC.

Private respondent then filed a petition for review with the CA.

On May 21, 2003, the CA promulgated its presently assailed Decision, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the judgment rendered by the Municipal Trial Court of San Fernando City, La Union in Civil Case No. 3463 and the Decision rendered by the Regional Trial Court of La Union in the same case are both REVERSED and SET ASIDE. A new judgment is hereby rendered:

1. Declaring the respondents not entitled to reimbursement for the cost of their residential house built on the land owned by the petitioner; and

2. Directing the respondents to vacate the premises and restore possession thereof to the petitioner.

SO ORDERED.9

The CA based its Decision on its finding that the subject residential house was built during the time petitioners' parents were lessees of the lot in question.

Petitioners filed a Motion for Reconsideration, but the same was denied by the CA via its Resolution dated July 17, 2003.

Hence, the present petition with the following assignment of errors:

I

THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONERS ADMITTED IN THEIR ANSWER THAT THEIR RESIDENTIAL HOUSE WAS CONSTRUCTED DURING THE LIFETIME OF THE LEASE CONTRACT AND NOT DURING THE 10-YEAR PERIOD WHEN THE LOT WHERE IT STOOD WAS SOLD UNDER PACTO DE RETRO TO THE PETITIONERS' PARENTS AS SHOWN BY UNREBUTTED EVIDENCE.

II

THE RESPONDENT COURT ERRED IN REVERSING THE D E C I S I O NS OF THE REGIONAL TRIAL COURT AND THE MUNICIPAL TRIAL COURT OF SAN FERNANDO CITY, LA UNION.10

Petitioners allege in the instant petition that the house presently standing on the subject parcel of land is different from the house built on the same lot in 1949. Petitioners insist on their claim that the house built at the time that their parents were lessees of the subject property in 1949 was demolished to give way to the construction of the present house which was erected sometime in the late 1960's when the said lot was then owned by their parents by virtue of the pacto de retro sale executed in the latter's favor on September 21, 1960.

The Court finds the petition unmeritorious.

At the outset, the Court notes that the issues raised in the present petition are essentially questions of fact. It is fundamental that a petition for review on certiorari filed with this Court under Rule 45 of the Rules of Court shall, as a general rule, raise only questions of law and that this Court is not duty-bound to analyze again and weigh the evidence introduced in and considered by the tribunals below.11 However, there are recognized exceptions to this rule, 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 its findings 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 which they are based;

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

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

(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion.12

In the present case, the findings of the MTC and the RTC are contrary to those made by the CA. The RTC affirmed the findings of the MTC that the subject house which is presently standing on the disputed parcel of land was built at the time that the ownership of the said lot was in the name of petitioners' parents. The CA, on the other hand, ruled that the abovementioned house was constructed when petitioners' parents were in possession of the lot in question as lessees. Thus, this Court's review of such findings is warranted.

A careful review of the records and the evidence presented in the instant case shows that the CA did not commit error in finding that the house in question was built at the time petitioners' parents possessed the subject lot as lessees.

Firstly, the Court agrees with the CA that petitioners' Position Paper and the affidavits of its witnesses should not have been considered by the trial courts since these were filed beyond the 10-day reglementary period required under Section 10, Rule 70 of the Rules of Court and Section 9 of the Revised Rule on Summary Procedure.13 Petitioners do not dispute the appellate court's finding that they submitted their position paper and affidavits more than three months after the deadline set by the abovementioned rules. In this regard, this Court, in Teraña v. De Sagun,14 held as follows:

x x x By its express terms, the purpose of the RSP [Revised Rule on Summary Procedure] is to "achieve an expeditious and inexpensive determination" of the cases they cover, among them, forcible entry and unlawful detainer cases. To achieve this objective, the RSP expressly prohibit[s] certain motions and pleadings that could cause delay, among them, a motion for extension of time to file pleadings, affidavits or any other paper. If the extension for the filing of these submissions cannot be allowed, we believe it illogical and incongruous to admit a pleading that is already filed late. Effectively, we would then allow indirectly what we prohibit to be done directly. It is for this reason that in Don Tino Realty Development Corporation v. Florentino [G.R. No. 134222, September 10, 1999, 314 SCRA 197], albeit on the issue of late filing of an answer in a summary proceeding, we stated that "[t]o admit a late answer is to put a premium on dilatory measures, the very mischief that the rules seek to redress."

The strict adherence to the reglementary period prescribed by the RSP is due to the essence and purpose of these rules. The law looks with compassion upon a party who has been illegally dispossessed of his property. Due to the urgency presented by this situation, the RSP provides for an expeditious and inexpensive means of reinstating the rightful possessor to the enjoyment of the subject property. This fulfills the need to resolve the ejectment case quickly. x x x15

As noted by the CA, petitioners did not even bother to file a motion asking the trial court to admit their position paper which was belatedly filed. Indeed, the record is barren of any evidence to show that petitioners, at least, tried to offer any explanation or justification for such delay. They simply ignored the Rules. This Court has previously held that technical rules may be relaxed only for the furtherance of justice and to benefit the deserving.16 Moreover, rules of procedure do not exist for the convenience of the litigants.17 These rules are established to provide order to and enhance the efficiency of our judicial system.18 They are not to be trifled with lightly or overlooked by the mere expedience of invoking "substantial justice."19 In a long line of decisions, this Court has repeatedly held that, while the rules of procedure are liberally construed, the provisions on reglementary periods are strictly applied, indispensable as they are to the prevention of needless delays, and are necessary to the orderly and speedy discharge of judicial business.20 In the instant case, petitioners' complete disregard of the Rules of Court and of the Revised Rule on Summary Procedure only shows that they are not deserving of their relaxation. Hence, the MTC erred in admitting petitioners' position paper and taking the same into consideration in rendering its judgment.

In any case, the Court finds no error in the ruling of the CA that petitioners' statement in their Answer, that their parents built the subject residential house as lessees under the authority given to them by private respondent's father in their contract of lease executed in 1949, is a judicial admission. Under Section 4, Rule 129 of the Rules of Court,21 petitioners may not contradict this judicial admission unless they are able to show that it was made through palpable mistake or that no such admission was made. In the instant case, petitioners' subsequent claim in their Position Paper that their house was built during the time that their parents were the owners of the disputed lot is a direct contradiction of their judicial admission in their Answer. However, petitioners failed to prove that such admission was made through palpable mistake or that no such admission was made. Hence, they may not contradict the same.

Aside from the abovementioned admission made by petitioners in their Answer, there is nothing in the said Answer which claims that the subject house was constructed when petitioners' parents were the owners of the disputed lot. Neither was there any allegation nor even a hint that a house was first built on the lot in question in 1949 and that the same was demolished in the late 1960s to give way to the construction of the house which is presently standing on the disputed lot.1avvphi1

Thus, it appears from all indications that petitioners' claims and allegations in their Position Paper contradicting their admission in their Answer are mere afterthought subsequent to realizing that they could not recover the full value of the house based on their acknowledgment that the same was erected at the time that their parents were lessees of the disputed parcel of land.

At this juncture, it would not be amiss to reiterate that the rights of a lessee, like petitioners in the present case, are governed by Article 1678 of the Civil Code, which reads:

Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased than is necessary.

With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them by paying their value at the time the lease is extinguished.

Hence, under Article 1678, the lessor has the option of paying one-half of the value of the improvements that the lessee made in good faith, which are suitable to the use for which the lease is intended, and which have not altered the form and substance of the land. On the other hand, the lessee may remove the improvements should the lessor refuse to reimburse.22

It appears, nonetheless, that in her Complaint, private respondent prayed for the demolition of petitioners' residential house constructed on the subject lot. It is, thus, clear that private respondent does not want to appropriate the improvements. As such, petitioners cannot compel her to reimburse to them one-half of the value of their house. The sole right of petitioners under Article 1678 then is to remove the improvements without causing any more damage upon the property leased than is necessary.

WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.

SO ORDERED.

Civil 1

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