Property Set 7.docx

PROPERTY Cases Set 7

USUFRUCT

1) HEMEDES vs. CA

2) ALUNAN vs. VELOSO

3) Bachrach vs. SEIFERT

4) FABIE vs. DAVID

5) SEIFERT vs. BACHRACH

6) The Board of Assessment Appeals of Zamboanga del Sur v. Samar Mining Company

7) THE CITY OF MANILA vs. EL MONTE DE PIEDAD

8) ESQUIVEL vs. REYES

G.R. No. 107132.  October 8, 1999MAXIMA HEMEDES, petitioner, vs. THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND CONSTRUCTION

CORPORATION, ENRIQUE D. HEMEDES, and R & B INSURANCE CORPORATION,respondents.

G.R. No. 108472.  October 8, 1999R & B INSURANCE CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS DOMINIUM REALTY AND

CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and MAXIMA HEMEDES,respondents.

GONZAGA_REYES, J.:

Assailed in these petitions for review on certiorari is the decision[1] of the eleventh division of the Court of Appeals in CA-G.R. CV No. 22010 promulgated on September 11, 1992 affirming in toto the decision of Branch 24 of the Regional Trial Court of Laguna in Civil Case No. B-1766 dated February 22, 1989,[2]and the resolution dated December 29, 1992 denying petitioner R & B Insurance Corporation’s (R & B Insurance) motion for reconsideration.  As the factual antecedents and issues are the same, we shall decide the petitions jointly.

The instant controversy involves a question of ownership over an unregistered parcel of land, identified as Lot No. 6, plan Psu-111331, with an area of 21,773 square meters, situated in Sala, Cabuyao, Laguna.  It was originally owned by the late Jose Hemedes, father of Maxima Hemedes and Enrique D. Hemedes.  On March 22, 1947 Jose Hemedes executed a document entitled “Donation Inter Vivos With Resolutory Conditions”[3] whereby he conveyed ownership over the subject land, together with all its improvements, in favor of his third wife, Justa Kauapin, subject to the following resolutory conditions:

(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to any of the children, or their heirs, of the DONOR expressly designated by the DONEE in a public document conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE before her death or remarriage contained in a public instrument as above provided, the title to the property shall automatically revert to the legal heirs of the DONOR in common.

Pursuant to the first condition abovementioned, Justa Kausapin executed on September 27, 1960 a “Deed of Conveyance of Unregistered Real Property by Reversion”[4] conveying to Maxima Hemedes the subject property under the following terms -

That the said parcel of land was donated unto me by the said Jose Hemedes, my deceased husband, in a deed of “DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS” executed by the donor in my favor, and duly accepted by me on March 22, 1947, before Notary Public Luis Bella in Cabuyao, Laguna;

That the donation is subject to the resolutory conditions appearing in the said deed of “DONATION INTER VIVOS WITH RESOLUTORY CONDITIONS,” as follows:

“(a) Upon the death or remarriage of the DONEE, the title to the property donated shall revert to any of the children, or their heirs, of the DONOR expressly designated by the DONEE in a public document conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE before her death or remarriage contained in a public instrument as above provided, the title to the property shall automatically revert to the legal heirs of the DONOR in common.”

That, wherefore, in virtue of the deed of donation above mentioned and in the exercise of my right and privilege under the terms of the first resolutory condition therein contained and hereinabove reproduced, and for and in consideration of my love and affection, I do hereby by these presents convey, transfer, and deed unto my designee, MAXIMA HEMEDES, of legal age, married to RAUL RODRIGUEZ, Filipino and resident of No. 15 Acacia Road, Quezon City, who is one of the children and heirs of my donor, JOSE HEMEDES, the ownership of, and title to the property hereinabove described, and all rights and interests therein by reversion under the first resolutory condition in the above deed of donation; Except the possession and enjoyment of the said property which shall remain vested in me during my lifetime, or widowhood and which upon my death or remarriage shall also automatically revert to, and be transferred to my designee, Maxima Hemedes.

Maxima Hemedes, through her counsel, filed an application for registration and confirmation of title over the subject unregistered land.  Subsequently, Original Certificate of Title (OCT) No. (0-941) 0-198 [5] was issued in the name of Maxima Hemedes married to Raul Rodriguez by the Registry of Deeds of Laguna on June 8, 1962, with the annotation that “Justa Kausapin shall have the usufructuary rights over the parcel of land herein described during her lifetime or widowhood.”

It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her husband Raul Rodriguez constituted a real estate mortgage over the subject property in its favor to serve as security for a loan which they obtained in the amount of P6,000.00.  On February 22, 1968, R & B Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes failed to pay the loan even after it became due on August 2, 1964.  The land was sold at a public auction on May 3, 1968 with R & B Insurance as the highest bidder and a certificate of sale was issued by the sheriff in its favor.  Since Maxima Hemedes failed to redeem the property within the redemption period, R & B Insurance executed an Affidavit of Consolidation dated March 29, 1974 and on May 21, 1975 the

Register of Deeds of Laguna cancelled OCT No. (0-941) 0-198 and issued Transfer Certificate of Title (TCT) No. 41985 in the name of R & B Insurance.  The annotation of usufruct in favor of Justa Kausapin was maintained in the new title.[6]

Despite the earlier conveyance of the subject land in favor of Maxima Hemedes, Justa Kausapin executed a “Kasunduan” on May 27, 1971 whereby she transferred the same land to her stepson Enrique D. Hemedes, pursuant to the resolutory condition in the deed of donation executed in her favor by her late husband Jose Hemedes.  Enrique D. Hemedes obtained two declarations of real property - in 1972, and again, in 1974, when the assessed value of the property was raised. Also, he has been paying the realty taxes on the property from the time Justa Kausapin conveyed the property to him in 1971 until 1979.  In the cadastral survey of Cabuyao, Laguna conducted from September 8, 1974 to October 10, 1974, the property was assigned Cadastral No. 2990, Cad. 455-D, Cabuyao Cadastre, in the name of Enrique Hemedes.  Enrique Hemedes is also the named owner of the property in the records of the Ministry of Agrarian Reform office at Calamba, Laguna.

On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty and Construction Corporation (Dominium).  On April 10, 1981, Justa Kausapin executed an affidavit affirming the conveyance of the subject property in favor of Enrique D. Hemedes as embodied in the “Kasunduan” dated May 27, 1971, and at the same time denying the conveyance made to Maxima Hemedes.

On May 14, 1981, Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia Brewery) who, even before the signing of the contract of lease, constructed two warehouses made of steel and asbestos costing about P10,000,000.00 each.  Upon learning of Asia Brewery’s constructions upon the subject property, R & B Insurance sent it a letter on March 16, 1981 informing the former of its ownership of the property as evidenced by TCT No. 41985 issued in its favor and of its right to appropriate the constructions since Asia Brewery is a builder in bad faith.  On March 27, 1981, a conference was held between R & B Insurance and Asia Brewery but they failed to arrive at an amicable settlement.

On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery wherein she asserted that she is the rightful owner of the subject property by virtue of OCT No. (0-941) 0-198 and that, as such, she has the right to appropriate Asia Brewery’s constructions, to demand its demolition, or to compel Asia Brewery to purchase the land.  In another letter of the same date addressed to R & B Insurance, Maxima Hemedes denied the execution of any real estate mortgage in favor of the latter.

On August 27, 1981, Dominium and Enrique D. Hemedes filed a complaint [7] with the Court of First Instance of Binan, Laguna for the annulment of TCT No. 41985 issued in favor of R & B Insurance and/or the reconveyance to Dominium of the subject property.  Specifically, the complaint alleged that Dominium was the absolute owner of the subject property by virtue of the February 28, 1979 deed of sale executed by Enrique D. Hemedes, who in turn obtained ownership of the land from Justa Kausapin, as evidenced by the “Kasunduan” dated May 27, 1971.  The plaintiffs asserted that Justa Kausapin never transferred the land to Maxima Hemedes and that Enrique D. Hemedes had no knowledge of the registration proceedings initiated by Maxima Hemedes.

After considering the merits of the case, the trial court rendered judgment on February 22, 1989 in favor of plaintiffs Dominium and Enrique D. Hemedes, the dispositive portion of which states –

WHEREFORE, judgment is hereby rendered:

(a) Declaring Transfer Certificate of Title No. 41985 of the Register of Deeds of Laguna null and void and ineffective;

(b) Declaring Dominium Realty and Construction Corporation the absolute owner and possessor of the parcel of land described in paragraph 3 of the complaint;

(c) Ordering the defendants and all persons acting for and/or under them to respect such ownership and possession of Dominium Realty and Construction Corporation and to forever desist from asserting adverse claims thereon nor disturbing such ownership and possession; and

(d) Directing the Register of Deeds of Laguna to cancel said Transfer Certificate of Title No. 41985 in the name of R & B Insurance Corporation, and in lieu thereof, issue a new transfer certificate of title in the name of Dominium Realty and Construction Corporation.  No pronouncement as to costs and attorney’s fees.[8]

Both R & B Insurance and Maxima Hemedes appealed from the trial court’s decision.  On September 11, 1992 the Court of Appeals affirmed the assailed decision in toto and on December 29, 1992, it denied R & B Insurance’s motion for reconsideration.  Thus, Maxima Hemedes and R & B Insurance filed their respective petitions for review with this Court on November 3, 1992 and February 22, 1993, respectively.

In G.R. No. 107132[9], petitioner Maxima Hemedes makes the following assignment of errors as regards public respondent’s ruling –

I. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN APPLYING ARTICLE 1332 OF THE NEW CIVIL CODE IN DECLARING AS SPURIOUS THE DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION EXECUTED BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER MAXIMA HEMEDES.

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

III. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT FINDING RESPONDENTS ENRIQUE AND DOMINIUM IN BAD FAITH.

IV. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 ISSUED IN THE NAME OF PETITIONER MAXIMA HEMEDES NULL AND VOID.

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

VI. RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT NO REAL ESTATE MORTGAGE OVER THE SUBJECT PROPERTY WAS EXECUTED BY PETITIONER MAXIMA HEMEDES IN FAVOR OF RESPONDENT R & B INSURANCE CORPORATION.

VII. RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE VALID TITLE COVERING THE SUBJECT PROPERTY IS THE ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 IN THE NAME OF PETITIONER MAXIMA HEMEDES AND NOT THE TRANSFER CERTIFICATE OF TITLE (TCT) NO. 41985 IN THE NAME OF R & B INSURANCE CORPORATION. [10]

Meanwhile, in G.R. No. 108472[11], petitioner R & B Insurance assigns almost the same errors, except with regards to the real estate mortgage allegedly executed by Maxima Hemedes in its favor.  Specifically, R & B Insurance alleges that:

I. RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING ARTICLE 1332 OF THE CIVIL CODE.

II. RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE KASUNDUAN BY AND BETWEEN JUSTA KAUSAPIN AND ENRIQUE NOTWITHSTANDING THE FACT THAT JUSTA KAUSAPIN BY WAY OF A DEED OF CONVEYANCE OF UNREGISTERED REAL PROPERTY BY REVERSION CEDED THE SUBJECT PROPERTY TO MAXIMA SOME ELEVEN (11) YEARS EARLIER.

III. RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE ON (sic) THE AFFIDAVIT OF REPUDIATION OF JUSTA KAUSAPIN NOTWITHSTANDING THE FACT THAT SHE IS A BIAS (sic) WITNESS AND EXECUTED THE SAME SOME TWENTY-ONE (21) YEARS AFTER THE EXECUTION OF THE DEED OF CONVEYANCE IN FAVOR OF MAXIMA.

IV. RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT THE COMPLAINT OF ENRIQUE AND DOMINIUM HAS PRESCRIBED AND/OR THAT ENRIQUE AND DOMINIUM WERE GUILTY OF LACHES.

V. RESPONDENT COURT SERIOUSLY ERRED IN FINDING R & B AS A MORTGAGEE NOT IN GOOD FAITH.

VI. RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING THE DAMAGES PRAYED FOR BY R & B IN ITS COUNTERCLAIM AND CROSSCLAIM.[12]

The primary issue to be resolved in these consolidated petitions is which of the two conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the second in favor of Enrique D. Hemedes, effectively transferred ownership over the subject land.

The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima Hemedes on the strength of the “Deed of Conveyance of Unregistered Real Property by Reversion” executed by Justa Kausapin.  Public respondent upheld the trial court’s finding that such deed is sham and spurious and has “no evidentiary value under the law upon which claimant Maxima Hemedes may anchor a valid claim of ownership over the property.” In ruling thus, it gave credence to the April 10, 1981 affidavit executed by Justa Kausapin repudiating such deed of conveyance in favor of Maxima Hemedes and affirming the authenticity of the “Kasunduan” in favor of Enrique D. Hemedes.  Also, it considered as pivotal the fact that the deed of conveyance in favor of Maxima Hemedes was in English and that it was not explained to Justa Kausapin, although she could not read nor understand English; thus, Maxima Hemedes failed to discharge her burden, pursuant to Article 1332 of the Civil Code, to show that the terms thereof were fully explained to Justa Kausapin.  Public respondent concluded by holding that the registration of the property on the strength of the spurious deed of conveyance is null and void and does not confer any right of ownership upon Maxima Hemedes. [13]

Maxima Hemedes argues that Justa Kausapin’s affidavit should not be given any credence since she is obviously a biased witness as it has been shown that she is dependent upon Enrique D. Hemedes for her daily subsistence, and she was most probably influenced by Enrique D. Hemedes to execute the “Kasunduan” in his favor.  She also refutes the applicability of article 1332.  It is her contention that for such a provision to be applicable, there must be a party seeking to enforce a contract; however, she is not enforcing the “Deed of Conveyance of Unregistered Real Property by Reversion” as her basis in claiming ownership, but rather her claim is anchored upon OCT No. (0-941) 0-198 issued in her name, which document can stand independently from the deed of conveyance.  Also, there exist various circumstances which show that Justa Kausapin did in fact execute and understand the deed of conveyance in favor of Maxima Hemedes.  First, the “Donation Intervivos With Resolutory Conditions” executed by Jose Hemedes in favor of Justa Kausapin was also in English, but she never alleged that she did not understand such document.  Secondly, Justa Kausapin failed to prove that it was not her thumbmark on the deed of conveyance in favor of Maxima Hemedes and in fact, both Enrique D. Hemedes and Dominium objected to the request of Maxima Hemedes’ counsel to obtain a specimen thumbmark of Justa Kausapin.[14]

Public respondent’s finding that the “Deed of Conveyance of Unregistered Real Property By Reversion” executed by Justa Kausapin in favor of Maxima Hemedes is spurious is not supported by the factual findings in this case..  It is grounded upon the mere denial of the same by Justa Kausapin.  A party to a contract cannot just evade compliance with his contractual obligations by the simple expedient of denying the execution of such contract.  If, after a perfect and binding contract has been executed between the parties, it occurs to one of them to allege some defect therein as a reason for annulling it, the alleged defect must be conclusively proven, since the validity and fulfillment of contracts cannot be left to the will of one of the contracting parties. [15]

Although a comparison of Justa Kausapin’s thumbmark with the thumbmark affixed upon the deed of conveyance would have easily cleared any doubts as to whether or not the deed was forged, the records do not show that such evidence was introduced by private respondents and the lower court decisions do not make mention of any comparison having been made. [16] It is a legal presumption that evidence willfully suppressed would be adverse if produced. [17] The failure of private respondents to refute the due

execution of the deed of conveyance by making a comparison with Justa Kausapin’s thumbmark necessarily leads one to conclude that she did in fact affix her thumbmark upon the deed of donation in favor of her stepdaughter.

Moreover, public respondent’s reliance upon Justa Kausapin’s repudiation of the deed of conveyance is misplaced for there are strong indications that she is a biased witness.  The trial court found that Justa Kausapin was dependent upon Enrique D. Hemedes for financial assistance.[18] Justa Kausapin’s own testimony attests to this fact -

Atty. Conchu:

Q:  Aling Justa, can you tell the Honorable Court why you donated this particular property to Enrique Hemedes?

A:  Because I was in serious condition and he was the one supporting me financially.

Q:  As of today, Aling Justa are you continuing to receive any assistance from Enrique Hemedes?

A:  Yes Sir.

(TSN pp. 19 and 23, November 17, 1981)[19]

Even Enrique Hemedes admitted that Justa Kausapin was dependent upon him for financial support.  The transcripts state as follows:

Atty. Mora:

Now you said that Justa Kausapin has been receiving from you advances for food, medicine & other personal or family needs?

E. Hemedes:

A:  Yes.

Q:  Was this already the practice at the time this “Kasunduan” was executed?

A:  No that was increased, no, no, after this document.

xxx  xx                                     xxx

Q:  And because of these accommodations that you have given to Justa Kausapin; Justa Kausapin has in turn treated you very well because she’s very grateful for that, is it not?

A:  I think that’s human nature.

Q:  Answer me categorically, Mr. Hemedes she’s very grateful?

A:  Yes she might be grateful but not very grateful.

(TSN, p. 34, June 15, 1984)[20]

A witness is said to be biased when his relation to the cause or to the parties is such that he has an incentive to exaggerate or give false color to his statements, or to suppress or to pervert the truth, or to state what is false. [21] At the time the present case was filed in the trial court in 1981, Justa Kausapin was already 80 years old, suffering from worsening physical infirmities and completely dependent upon her stepson Enrique D. Hemedes for support.  It is apparent that Enrique D. Hemedes could easily have influenced his aging stepmother to donate the subject property to him.  Public respondent should not have given credence to a witness that was obviously biased and partial to the cause of private respondents.  Although it is a well-established rule that the matter of credibility lies within the province of the trial court, such rule does not apply when the witness’ credibility has been put in serious doubt, such as when there appears on the record some fact or circumstance of weight and influence, which has been overlooked or the significance of which has been misinterpreted.[22]

Finally, public respondent was in error when it sustained the trial court’s decision to nullify the “Deed of Conveyance of Unregistered Real Property by Reversion” for failure of Maxima Hemedes to comply with article 1332 of the Civil Code, which states:

When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the person enforcing the contract must show that the terms thereof have been fully explained to the former.

Article 1332 was intended for the protection of a party to a contract who is at a disadvantage due to his illiteracy, ignorance, mental weakness or other handicap.[23] This article contemplates a situation wherein a contract has been entered into, but the consent of one of the parties is vitiated by mistake or fraud committed by the other contracting party. [24] This is apparent from the ordering of the provisions under Book IV, Title II, Chapter 2, section 1 of the Civil Code, from which article 1332 is taken.  Article 1330 states that -

A contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable.

This is immediately followed by provisions explaining what constitutes mistake, violence, intimidation, undue influence, or fraud sufficient to vitiate consent.[25] In order that mistake may invalidate consent, it should refer to the substance of the thing which is the object of the contract, or to those conditions which have principally moved one or both parties to enter into the contract. [26] Fraud, on the other hand, is present when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. [27] Clearly, article 1332 assumes that the consent of the contracting party

imputing the mistake or fraud was given, although vitiated, and does not cover a situation where there is a complete absence of consent.

In this case, Justa Kausapin disclaims any knowledge of the “Deed of Conveyance of Unregistered Real Property by Reversion” in favor of Maxima Hemedes. In fact, she asserts that it was only during the hearing conducted on December 7, 1981 before the trial court that she first caught a glimpse of the deed of conveyance and thus, she could not have possibly affixed her thumbmark thereto. [28] It is private respondents’ own allegations which render article 1332 inapplicable for it is useless to determine whether or not Justa Kausapin was induced to execute said deed of conveyance by means of fraud employed by Maxima Hemedes, who allegedly took advantage of the fact that the former could not understand English, when Justa Kausapin denies even having seen the document before the present case was initiated in 1981.

It has been held by this Court that “… mere preponderance of evidence is not sufficient to overthrow a certificate of a notary public to the effect that the grantor executed a certain document and acknowledged the fact of its execution before him.  To accomplish this result, the evidence must be so clear, strong and convincing as to exclude all reasonable controversy as to the falsity of the certificate, and when the evidence is conflicting, the certificate will be upheld.” [29] In the present case, we hold that private respondents have failed to produce clear, strong, and convincing evidence to overcome the positive value of the “Deed of Conveyance of Unregistered Real Property by Reversion” – a notarized document.  The mere denial of its execution by the donor will not suffice for the purpose.

In upholding the deed of conveyance in favor of Maxima Hemedes, we must concomitantly rule that Enrique D. Hemedes and his transferee, Dominium, did not acquire any rights over the subject property.  Justa Kausapin sought to transfer to her stepson exactly what she had earlier transferred to Maxima Hemedes – the ownership of the subject property pursuant to the first condition stipulated in the deed of donation executed by her husband.  Thus, the donation in favor of Enrique D. Hemedes is null and void for the purported object thereof did not exist at the time of the transfer, having already been transferred to his sister. [30] Similarly, the sale of the subject property by Enrique D. Hemedes to Dominium is also a nullity for the latter cannot acquire more rights than its predecessor-in-interest and is definitely not an innocent purchaser for value since Enrique D. Hemedes did not present any certificate of title upon which it relied.

The declarations of real property by Enrique D. Hemedes, his payment of realty taxes, and his being designated as owner of the subject property in the cadastral survey of Cabuyao, Laguna and in the records of the Ministry of Agrarian Reform office in Calamba, Laguna cannot defeat a certificate of title, which is an absolute and indefeasible evidence of ownership of the property in favor of the person whose name appears therein.[31] Particularly, with regard to tax declarations and tax receipts, this Court has held on several occasions that the same do not by themselves conclusively prove title to land.[32]

We come now to the question of whether or not R & B Insurance should be considered an innocent purchaser of the land in question.  At the outset, we note that both the trial court and appellate court found that Maxima Hemedes did in fact execute a mortgage over the subject property in favor of R & B Insurance.  This finding shall not be disturbed because, as we stated earlier, it is a rule that the factual findings of the trial court, especially when affirmed by the Court of Appeals, are entitled to respect, and should not be disturbed on appeal.[33]

In holding that R & B Insurance is not a mortgagee in good faith, public respondent stated that the fact that the certificate of title of the subject property indicates upon its face that the same is subject to an encumbrance, i.e. usufructuary rights in favor of Justa Kausapin during her lifetime or widowhood, should have prompted R & B Insurance to “...investigate further the circumstances behind this encumbrance on the land in dispute,” but which it failed to do.  Also, public respondent considered against R & B Insurance the fact that it made it appear in the mortgage contract that the land was free from all liens, charges, taxes and encumbrances. [34]

R & B Insurance alleges that, contrary to public respondent’s ruling, the presence of an encumbrance on the certificate of title is not reason for the purchaser or a prospective mortgagee to look beyond the face of the certificate of title.  The owner of a parcel of land may still sell the same even though such land is subject to a usufruct; the buyer’s title over the property will simply be restricted by the rights of the usufructuary.  Thus, R & B Insurance accepted the mortgage subject to the usufructuary rights of Justa Kausapin.  Furthermore, even assuming that R & B Insurance was legally obliged to go beyond the title and search for any hidden defect or inchoate right which could defeat its right thereto, it would not have discovered anything since the mortgage was entered into in 1964, while the “Kasunduan” conveying the land to Enrique D. Hemedes was only entered into in 1971 and the affidavit repudiating the deed of conveyance in favor of Maxima Hemedes was executed by Justa Kausapin in 1981.[35]

We sustain petitioner R & B Insurance’s claim that it is entitled to the protection of a mortgagee in good faith.

It is a well-established principle that every person dealing with registered land may safely rely on the correctness of the certificate of title issued and the law will in no way oblige him to go behind the certificate to determine the condition of the property. [36] An innocent purchaser for value[37] is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person.[38]

The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima Hemedes’ OCT dose not impose upon R & B Insurance the obligation to investigate the validity of its mortgagor’s title.  Usufruct gives a right to enjoy the property of another with the obligation of preserving its form and substance. [39] The usufructuary is entitled to all the natural, industrial and civil fruits of the property[40] and may personally enjoy the thing in usufruct, lease it to another, or alienate his right of usufruct, even by a gratuitous title, but all the contracts he may enter into as such usufructuary shall terminate upon the expiration of the usufruct. [41]

Clearly, only the jus utendi and jus fruendi over the property is transferred to the usufructuary. [42] The owner of the property maintains the jus disponendi or the power to alienate, encumber, transform, and even destroy the same. [43] This right is embodied in the Civil Code, which provides that the owner of property the usufruct of which is held by another, may alienate it, although he cannot alter the property’s form or substance, or do anything which may be prejudicial to the usufructuary.[44]

There is no doubt that the owner may validly mortgage the property in favor of a third person and the law provides that, in such a case, the usufructuary shall not be obliged to pay the debt of the mortgagor, and should the immovable be attached or sold judicially for the payment of the debt, the owner shall be liable to the usufructuary for whatever the latter may lose by reason thereof. [45]

Based on the foregoing, the annotation of usufructuary rights in favor of Justa Kausapin is not sufficient cause to require R & B Insurance to investigate Maxima Hemedes’ title, contrary to public respondent’s ruling, for the reason that Maxima Hemedes’ ownership over the property remained unimpaired despite such encumbrance.  R & B Insurance had a right to rely on the certificate of title and was not in bad faith in accepting the property as a security for the loan it extended to Maxima Hemedes.

Even assuming in gratia argumenti that R & B Insurance was obligated to look beyond the certificate of title and investigate the title of its mortgagor, still, it would not have discovered any better rights in favor of private respondents.  Enrique D. Hemedes and Dominium base their claims to the property upon the “Kasunduan” allegedly executed by Justa Kausapin in favor of Enrique Hemedes.  As we have already stated earlier, such contract is a nullity as its subject matter was inexistent.  Also, the land was mortgaged to R & B Insurance as early as 1964, while the “Kasunduan” was executed only in 1971 and the affidavit of Justa Kausapin affirming the conveyance in favor of Enrique D. Hemedes was executed in 1981.  Thus, even if R & B Insurance investigated the title of Maxima Hemedes, it would not have discovered any adverse claim to the land in derogation of its mortgagor’s title.   We reiterate that at no point in time could private respondents establish any rights or maintain any claim over the land.

It is a well-settled principle that where innocent third persons rely upon the correctness of a certificate of title and acquire rights over the property, the court cannot just disregard such rights.  Otherwise, public confidence in the certificate of title, and ultimately, the Torrens system, would be impaired for everyone dealing with registered property would still have to inquire at every instance whether the title has been regularly or irregularly issued. [46] Being an innocent mortgagee for value, R & B Insurance validly acquired ownership over the property, subject only to the usufructuary rights of Justa Kausapin thereto, as this encumbrance was properly annotated upon its certificate of title.

The factual findings of the trial court, particularly when affirmed by the appellate court, carry great weight and are entitled to respect on appeal, except under certain circumstances. [47] One such circumstance that would compel the Court to review the factual findings of the lower courts is where the lower courts manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion.[48] Also, it is axiomatic that the drawing of the proper legal conclusions from such factual findings are within the peculiar province of this Court.[49]

As regards R & B Insurance’s prayer that Dominium be ordered to demolish the warehouses or that it be declared the owner thereof since the same were built in bad faith, we note that such warehouses were constructed by Asia Brewery, not by Dominium.  However, despite its being a necessary party in the present case, the lower courts never acquired jurisdiction over Asia Brewery, whether as a plaintiff or defendant, and their respective decisions did not pass upon the constructions made upon the subject property.  Courts acquire jurisdiction over a party plaintiff upon the filing of the complaint, while jurisdiction over the person of a party defendant is acquired upon the service of summons in the manner required by law or by his voluntary appearance.   As a rule, if a defendant has not been summoned, the court acquires no jurisdiction over his person, and any personal judgment rendered against such defendant is null and void.[50] In the present case, since Asia Brewery is a necessary party that was not joined in the action, any judgment rendered in this case shall be without prejudice to its rights.[51]

As to its claim for moral damages, we hold that R & B Insurance is not entitled to the same for it has not alleged nor proven the factual basis for the same. Neither is it entitled to exemplary damages, which may only be awarded if the claimant is entitled to moral, temperate, liquidated or compensatory damages.[52] R & B Insurance’s claim for attorney’s fees must also fail.  The award of attorney’s fees is the exception rather than the rule and counsel’s fees are not to be awarded every time a party wins a suit.   Its award pursuant to article 2208 of the Civil Code demands factual, legal and equitable justification and cannot be left to speculation and conjecture.[53] Under the circumstances prevailing in the instant case, there is no factual or legal basis for an award of attorney’s fees.

WHEREFORE, the assailed decision of public respondent and its resolution dated February 22, 1989 are REVERSED.   We uphold petitioner R & B Insurance’s assertion of ownership over the property in dispute, as evidenced by TCT No. 41985, subject to the usufructuary rights of Justa Kausapin, which encumbrance has been properly annotated upon the said certificate of title.  No pronouncement as to costs.

SO ORDERED.

G.R. No. L-29158          December 29, 1928

Estate of the deceased Rosendo Hernaez. RAFAEL R. ALUNAN, administrator-appellee, vs.ELEUTERIA CH. VELOSO, opponent-appellant.

AVANCEÑA, C. J.:

This case deals with an account filed in these intestate proceedings for the settlement of the estate of the deceased Rosendo Hernaez by his judicial administrator, Rafael Alunan, and approved by the court below. Jose Hernaez, one of the heirs interested in this proceedings, assigned the whole of his portion to Eleuteria Ch. Veloso, and the latter objects to some of the items of the account filed, assigning four errors to the resolution of the court below.

In the first place, it is alleged that the lower court erred in imposing a preferred lien of P12,683.83 upon thePanaogao Hacienda, adjudicated to the appellant Eleuteria Ch. Veloso. Before the partition, Jose Hernaez leased said Panaogao Hacienda for two harvests the stipulated rent being 12 per cent of all the sugar to be produced thereon, provided, however, that he should pay at least 12 per cent of 8,000, even if the production should fall below this amount. During the two years Jose Hernaez produced less than 8,000 piculs, and only 12 per cent of what he did produce was collected from him as rent, thus leaving him indebted in an amount equal to the difference between 12 per cent of the sugar he produced, and 12 per cent of 8,000 piculs which he had to pay at least. The P12,683.83 to which the first error refers is the value of this difference and is therefore a legal debt of Jose Hernaez's transmitted to the appellant, and affecting here participation in the intestate estate. According to an agreement previously entered into by and between the heirs, the share belonging or which may belong to each heir shall be liable and subject to a lien in favor of all the heirs for any account or debt pending which the heirs may owe to the intestate estate.

This first error then is not well grounded.

As to the second error, which is made to consist in the lower court having held that the sum of P20,000 is another lien upon the said Panaogao Hacienda, in favor of the administrator Rafael Alunan, should the latter be ordered to pay that sum in civil case No. 6391 of the Court of First Instance of Iloilo, Mr. Alunan is agreeable that this holding be eliminated from the judgment appealed from.

The third error refers to the sum of P24,991.42 as attorney's fees and compensation of the administrators who took part in this proceeding. This amount, it is alleged, is excessive. It appears that a great part of these fees were paid to Jose Hernaez himself, the appellant's predecessor in interest, and most of these fees, as well as of the attorney's fees, have already been approved by the court below. At all events, since it has been found necessary to employ several lawyers and more than one administrator in this proceeding, and taking into account the unusual amount of the interests involved, we find no merit in the objection to this item of the account.

The fourt error is made to consist in the lower court having admitted the partition proposed by the administrator in his account. According to this account, the total amount to be partitioned among the heirs is P88,979.08, which the administrator distributed equally among all the heirs, including the widow's each one receiving P11,122.38.

This partition is object to with respect to the widow. It is alleged that the distributed amount is in money, and since the widow's right is only a usufruct, and as there can be no usufruct of money, since it is a fungible thing, the adjudication made to the widow was erroneous. It is incorrect to say that there can be no usufruct of money, because it is a fungible thing (art. 482, Civil Code).

It is likewise alleged, that, at any rate, this amount which should go to the widow should be offset by the P55,000 which she has already received as a pension. Neither do we find any ground for this error, since, according to the agreement of the heirs already referred to, her portion in the inheritance either wholly or in part.

Lastly, it is alleged, that the portion given to the widow is not in accordance with law. We find the objection with respect to this point to be correct. The widow, according to the law, only has a right to a portion of the estate equal to that of the legitime of each of the children without betterment. In the instant case none of the children received a betterment. Consequently, the widow should receive a portion equal to the share of each in the two-thirds of the distributable amount making up the legitime, to be taken from the one-third forming the betterment. Then, the other free third, which the decedent failed to dispose of, must be partitioned among the heirs to the exclusion of the widow, as an addition to their legitime. Working out the computations on this basis, the widow should receive only P8,474.19.

Therefore, it being understood that there be eliminated from the decision the holding that the  Panaogao Hacienda, which was adjudged to the appellant, should answer for the amount of P20,000 as a lien in favor of Rafael Alunan should the latter be ordered to pay it in civil case No. 6391 of the Court of First Instance of Iloilo, and it being further understood that the widow's portion is only P8,474.19, the remainder of the P88,979.08 which is distributable, pertaining to the heirs, share and share alike, excluding the widow, the judgment appealed from is affirmed, without special pronouncement as to costs. So ordered.

G.R. No. L-2659             October 12, 1950

In the matter of the testate estate of Emil Maurice Bachrach, deceased. MARY McDONALD BACHRACH,petitioner-appellee, vs.SOPHIE SEIFERT and ELISA ELIANOFF, oppositors-appellants.

OZAETA, J.:

Is a stock dividend fruit or income, which belongs to the usufructuary, or is it capital or part of the corpus of the estate, which pertains to the remainderman? That is the question raised in the appeal.

The deceased E. M. Bachrach, who left no forced heir except his widow Mary McDonald Bachrach, in his last will and testament made various legacies in cash and willed the remainder of his estate as follows:

Sixth: It is my will and do herewith bequeath and devise to my beloved wife Mary McDonald Bachrach for life all the fruits and usufruct of the remainder of all my estate after payment of the legacies, bequests, and gifts provided for above; and she may enjoy said usufruct and use or spend such fruits as she may in any manner wish.

The will further provided that upon the death of Mary McDonald Bachrach, one-half of the all his estate "shall be divided share and share alike by and between my legal heirs, to the exclusion of my brothers."

The estate of E. M. Bachrach, as owner of 108,000 shares of stock of the Atok-Big Wedge Mining Co., Inc., received from the latter 54,000 shares representing 50 per cent stock dividend on the said 108,000 shares. On June 10, 1948, Mary McDonald Bachrach, as usufructuary or life tenant of the estate, petitioned the lower court to authorize the Peoples Bank and Trust Company as administrator of the estate of E. M. Bachrach, to her the said 54,000 share of stock dividend by endorsing and delivering to her the corresponding certificate of stock, claiming that said dividend, although paid out in the form of stock, is fruit or income and therefore belonged to her as usufructuary or life tenant. Sophie Siefert and Elisa Elianoff, legal heirs of the deceased, opposed said petition on the ground that the stock dividend in question was not income but formed part of the capital and therefore belonged not to the usufructuary but to the remainderman. And they have appealed from the order granting the petition and overruling their objection.

While appellants admits that a cash dividend is an income, they contend that a stock dividend is not, but merely represents an addition to the invested capital. The so-called Massachusetts rule, which prevails in certain jurisdictions in the United States, supports appellants' contention . It regards cash dividends, however large, as income, and stock dividends, however made, as capital. (Minot vs. Paine, 99 Mass., 101; 96 Am. Dec., 705.) It holds that a stock dividend is not in any true sense any true sense any dividend at all since it involves no division or severance from the corporate assets of the dividend; that it does not distribute property but simply dilutes the shares as they existed before; and that it takes nothing from the property of the corporation, and nothing to the interests of the shareholders.

On the other hand, so called Pennsylvania rule, which prevails in various other jurisdictions in the United States, supports appellee's contention. This rule declares that all earnings of the corporation made prior to the death of the testator stockholder belong to the corpus of the estate, and that all earnings, when declared as dividends in whatever form, made during the lifetime of the usufructuary or life tenant. (Earp's Appeal, 28 Pa., 368.)

          . . . It is clear that testator intent the remaindermen should have only the corpus of the estate he left in trust, and that all dividends should go the life tenants. It is true that profits realized are not dividends until declared by the proper officials of the corporation, but distribution of profits, however made, in dividends, and the form of the distribution is immaterial. ( In re Thompson's Estate, 262 Pa., 278; 105 Atl. 273, 274.)

          In Hite vs. Hite (93 Ky., 257; 20 S. W., 778, 780), the Court of Appeals of Kentucky, speaking thru its Chief Justice, said:

          . . . Where a dividend, although declared in stock, is based upon the earnings of the company, it is in reality, whether called by one name or another, the income of the capital invested in it. It is but a mode of distributing the profit. If it be not income, what is it? If it is, then it is rightfully and equitably the property of the life tenant. If it be really profit, then he should have it, whether paid in stock or money. A stock dividend proper is the issue of new shares paid for by the transfer of a sum equal to their par value from the profits and loss account to that representing capital stock; and really a corporation has no right to a dividend, either in cash or stock, except from its earnings; and a singular state of case — it seems to us, an unreasonable one — is presented if the company, although it rests with it whether it will declare a dividend, can bind the courts as to the proper ownership of it, and by the mode of payment substitute its will for that of that of the testator, and favor the life tenants or the remainder-men, as it may desire. It cannot, in reason, be considered that the testator contemplated such a result. The law regards substance, and not form, and such a rule might result not only in a violation of the testator's intention, but it would give the power to the corporation to beggar the life tenants, who, in this case, are the wife and children of the testator, for the benefit of the remainder-men, who may perhaps be unknown to the testator, being unborn when the will was executed. We are unwilling to adopt a rule which to us seems so arbitrary, and devoid of reason and justice. If the dividend be

in fact a profit, although declared in stock, it should be held to be income. It has been so held in Pennsylvania and many other states, and we think it the correct rule. Earp's Appeal, 28 Pa. St. 368; Cook, Stocks & S. sec. 554. . . .

          We think the Pennsylvania rule is more in accord with our statutory laws than the Massachusetts rule. Under section 16 of our Corporation Law, no corporation may make or declare any dividend except from the surplus profits arising from its business. Any dividend, therefore, whether cash or stock, represents surplus profits. Article 471 of the Civil Code provides that the usufructuary shall be entitled to receive all the natural, industrial, and civil fruits of the property in usufruct. And articles 474 and 475 provide as follows:

          ART. 474. Civil fruits are deemed to accrue day by day, and belong to the usufructuary in proportion to the time the usufruct may last.

          ART. 475. When a usufruct is created on the right to receive an income or periodical revenue, either in money or fruits, or the interest on bonds or securities payable to bearer, each matured payment shall be considered as the proceeds or fruits such right.

          When it consists of the enjoyment of the benefits arising from an interest in an industrial or commercial enterprise, the profits of which are not distributed at fixed periods, such profits shall have the same consideration.lawphil.net

          In either case they shall be distributed as civil fruits, and shall be applied in accordance with the rules prescribed by the next preceding article.

          The 108,000 shares of stock are part of the property in usufruct. The 54,000 shares of stock dividend are civil fruits of the original investment. They represent profits, and the delivery of the certificate of stock covering said dividend is equivalent to the payment of said profits. Said shares may be sold independently of the original shares, just as the offspring of a domestic animal may be sold independently of its mother.

          The order appealed from, being in accordance with the above-quoted provisions of the Civil Code, his hereby affirmed, with costs against the appellants.

G.R. No. L-123              December 12, 1945

JOSEFA FABIE, petitioner, vs.JOSE GUTIERREZ DAVID, Judge of First Instance of Manila, NGO BOO SOO and JUAN GREY,respondents.

OZAETA, J.:

The petitioner Josefa Fabie is the usufructuary of the income of certain houses located at 372-376 Santo Cristo, Binondo, and 950-956 Ongpin, Santa Cruz, Manila, under the ninth clause of the will of the deceased Rosario Fabie y Grey, which textually reads as follows:

NOVENO. — Lego a mi ahijada menor de edad, Maria Josefa de la Paz Fabie, en usufructo vitalicio las rentas de las fincas situadas en la Calle Santo Cristo Numeros 372 al 376 del Disrito de Binondo, de esta Ciudad de Manila, descrita en el Certificado Original de Titulo No. 3824; y en la Calle Ongpin, Numeros 950 al 956 del Distrito de Santa Cruz, Manila descrita en el Certificado Original de Titulo No. 5030, expedidos por el Registrador de Titulos de Manila, y prohibo enajene, hipoteque, permute o transfiera de algun modo mientras que ella sea menor de edad. Nombro a Serafin Fabie Macario, mi primo por linea paterna tutor de la persona y bienes de mi ahijada menor, Maria Josefa de la Paz Fabie.

The owner of Santo Cristo property abovementioned is the respondent Juan Grey, while those of the Ongpin property are other person not concern herein. Previous to September 1944 litigation arose between Josefa Fabie as plaintiff and Juan Grey as defendant and the owner of the Ongpin property as intervenors, involving the administration of the houses mentioned in clause 9 of the will above quoted (civil case No. 1659 of the Court of First Instance of Manila). That suit was decided by the court on September 2, 1944, upon a stipulation in writing submitted by the parties to and approved by the court. The pertinent portions of said stipulation read as follows:

(4) Heretofore, the rent of said properties have been collected at times by the respective owners of the properties, at other times by the usufructuary, and lastly by the defendant Juan Grey as agent under a written agreement dated March 31, 1942, between the owners of both properties and the usufructuary.

(5) When the rents were collected by the owners, the net amounts thereof were duly paid to the usufructuary after the expenses for real estate taxes, repairs and insurance premiums, including the documentary stamps, on the properties and the expenses of collecting the rents had been deducted, and certain amount set aside as a reserve for contingent liabilities. When the rents were collected by the usufructuary, she herself paid the expenses aforesaid. When the rents are collected by the defendant Juan Grey under the agreement of March 31, 1942, the net amounts thereof were duly paid to the usufructuary, after deducting and setting aside the items aforesaid, monthly, until the month of October 1943, when the usufructuary refused to continue with the agreement of March 31, 1942.

II. The parties hereto jointly petition the Court to render judgment adopting the foregoing as finding of facts and disposing that:

(8) Beginning with the month of September 1944, the usufructuary shall collect all the rents of the both the Sto. Cristo and the Ongpin properties.

(9) The usufructuary shall, at her own cost and expense, pay all the real estate taxes, special assessments, and insurance premiums, including the documentary stamps, and make all the necessary repairs on each of the properties, promptly when due or, in the case of repairs, when the necessary, giving immediate, written notice to the owner or owners of the property concerned after making such payment or repairs. In case of default on the part of the usufructuary, the respective owners of the properties shall have the right to make the necessary payment, including penalties and interest, if any, on the taxes and special assessments, and the repairs and in that event the owner or owners shall entitled to collect all subsequent rents of the property concerned until the amount paid by him or them and the expenses of collection are fully covered thereby, after which the usufructuary shall again collect the rents in accordance herewith.

(10) The foregoing shall be in effect during the term of the usufruct and shall be binding on the successors and assigns of each of the parties.

(11) Nothing herein shall be understood as affecting any right which the respective owners of the properties have or may have as such and which is not specifically the subject of this stipulation.

In June 1945 Josefa Fabie commenced an action of unlawful detainer against the herein respondent Ngo Boo Soo (who says that his correct name is Ngo Soo), alleging in her amended complaint that the defendant is occupying the premises located at 372-376 Santo Cristo on a month-to month rental payable in advance not latter than the 5th of each month; that she is the administratrix and usufructuary of said premises; "that the defendant offered to pay P300 monthly rent payable in advance not later than the 5th of every

month, beginning the month of April 1945, for the said of premises including the one door which said defendant, without plaintiff's consent and contrary to their agreement, had subleased to another Chinese, but plaintiff refused, based on the fact that the herein plaintiff very badly needs the said house to live in, as her house was burned by the Japanese on the occasion of the entry of the American liberators in the City and which was located then at No. 38 Flores, Dominga, Pasay; that defendant was duly notified on March 24 and April 14, 1945, to leave the said premises, but he refused"; and she prayed for judgment of eviction and for unpaid rentals.

The defendant answered alleging that he was and since 1908 had been a tenant of the premises in question, which he was using and had always used principally as a store and secondarily for living quarters; that he was renting it from its owner and administrator Juan Grey; "that plaintiff is merely the usufructuary of the income therefrom, and by agreement between her and said owner, which is embodied in a final judgment of the Court of First Instance of Manila, her only right as usufructuary of the income is to receive the whole of such income; that she has no right or authority to eject tenants, such right being in the owner and administrator of the house, the aforesaid Juan Grey, who has heretofore petitioned this Court for permission to intervene in this action; that plaintiff herein has never had possession of said property; that defendant's lease contract with the owner of the house is for 5-year period, with renewal option at the end of each period, and that his present lease due to expire on December 31, 1945 . . .; that on June 1, 1945, defendant made a written offer to plaintiff to compromise and settle the question of the amount of rent to be paid by defendant . . . but said plaintiff rejected the same for no valid reason whatever and instituted the present action; that the reason plaintiff desires to eject defendant from the property is that she wishes to lease the same to other persons for a higher rent, ignoring the fact that as usufructuary of the income of the property she has no right to lease the property; that the defendant has subleased no part of the house to any person whomsoever.

Juan Grey intervened in the unlawful detainer suit, alleging in his complaint in intervention that he is the sole and absolute owner of the premises in question; that the plaintiff Josefa Fabie is the usufructuary of the income of said premises; by virtue of a contract between him and the intervenor which will expire on December 31, 1945, with the option to renew it for another period of five years from and after said date; that under the agreement between the intervenor and plaintiff Josefa Fabie in civil case No. 1659 of the Court of First Instance of Manila, which was approved by the court and incorporated in its decision of September 2, 1944, the only right recognized in favor of Josefa Fabie as usufructuary of the income of said premises is to receive the rents therefrom when due; and that as usufructuary she has no right nor authority to administer the said premises nor to lease them nor to evict tenants, which right and authority are vested in the intervenor as owner of the premises.

The municipal court (Judge Mariano Nable presiding) found that under paragraph 9 of the stipulation incorporated in the decision of the Court First Instance of Manila in civil; case No. 1659, the plaintiff usufructuary is the administratrix of the premises in question, and that the plaintiff had proved her cause. Judgment was accordingly rendered ordering the defendant Ngo Soo to vacate the premises and to pay the rents at the rate of P137.50 a month beginning April 1, 1945. The complaint in intervention was dismissed.

Upon appeal to the Court of First Instance of Manila the latter (thru Judge Arsenio P. Dizon) dismissed the case for the following reason: "The main issue *** is not a mere question of possession but precisely who is entitled to administer the property subject matter of this case and who should be the tenant, and the conditions of the lease. These issues were beyond the jurisdiction of the municipal court. This being case, this Court, as appellate court, is likewise without jurisdiction to take cognizance of the present case." A motion for reconsideration filed by the plaintiff was denied by Judge Jose Gutierrez David, who sustained the opinion of Judge Dizon.lawphi1.net

The present original action was instituted in this Court by Josefa Fabie to annul the order of the dismissal and to require to the Court of First Instance to try and decide the case on the merits. The petitioner further prays that the appeal of the intervenor Juan Grey be declared out of time on the ground that he receive copy of the decision on August 3 but did not file his notice of appeal until August 25, 1945.

1. The first question to determine is whether the action instituted by the petitioner Josefa Fabie in the municipal court is a purely possessory action and as such within the jurisdiction of said court, or an action founded on property right and therefore beyond the jurisdiction of the municipal court. In other words, is it an action of unlawful detainer within the purview of section 1 of Rule 72, or an action involving the title to or the respective interests of the parties in the property subject of the litigation?

Said section 1 of Rule 72 provides that "a landlord, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such landlord, vendor vendee, or other person, may, at any time within one year after such unlawful deprivation of withholding of possession, bring an action in the proper inferior court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with the damages and costs."

It is admitted by the parties that the petitioner Josefa Fabie is the usufructuary of the income of the property in question and that the respondent Juan Grey is the owner thereof. It is likewise admitted that by virtue of a final judgment entered in civil case No. 1659 of the Court of First Instance of Manila between the usufructuary and the owner, the former has the right to collect all the rents of said property for herself with the obligation on her part to pay all the real estate taxes, special assessments, and insurance premiums, and make all necessary repairs thereon, and in case default on her part the owner shall have the right to do all those things, in which event he shall be entitled to collect all subsequent rents of the property concerned until the amount paid by him and the expenses of collection are fully satisfied, after which the usufructuary shall again collect the rents. There is therefore no dispute as to the title to or the respective interests of the parties in the property in question. The naked title to the property is to admittedly in the respondent Juan

Grey, but the right to all the rents thereof, with the obligation to pay the taxes and insurance premiums and make the necessary repairs, is, also admittedly, vested in the usufructuary, the petitioner Josefa Fabie, during her lifetime. The only question between the plaintiff and the intervenor is: Who has the right to manage or administer the property — to select the tenant and to fix the amount of the rent? Whoever has that right has the right to the control and possession of the property in question, regardless of the title thereto. Therefore, the action is purely possessory and not one in any way involving the title to the property. Indeed, the averments and the prayer of the complaint filed in the municipal court so indicate, and as a matter of fact the defendant Ngo Soo does not pretend to be the owner of the property, but on the contrary admits to be a mere tenant thereof. We have repeatedly held that in determining whether an action of this kind is within the original jurisdiction of the municipal court or of the Court of First Instance, the averments of the complaint and the character of the relief sought are primarily to be consulted; that the defendant in such an action cannot defeat the jurisdiction of the justice of the peace or municipal court by setting up title in himself; and that the factor which defeats the jurisdiction of said court is the necessity to adjudicate the question of title. (Mediranvs. Villanueva, 37 Phil., 752, 759; Medel vs. Militante, 41 Phil., 526, 529; Sevilla vs. Tolentino, 51 Phil., 333; Supia and Batioco vs. Quintero and Ayala, 59 Phil., 312; Lizo vs. Carandang, G.R. No. 47833, 2 Off. Gaz., 302; Aguilarvs. Cabrera and Flameño, G.R. No. 49129.)

The Court of First Instance was evidently confused and led to misconstrue the real issue by the complaint in intervention of Juan Grey, who, allying himself with the defendant Ngo Soo, claimed that he is the administrator of the property with the right to select the tenant and dictate the conditions of the lease, thereby implying that it was he and not the plaintiff Josefa Fabie who had the right to bring the action and oust the tenant if necessary. For the guidance of that court and to obviate such confusion in its disposal of the case on the merits, we deem it necessary and proper to construe the judgment entered by the Court of First Instance of Manila in civil case No. 1659, entitled "Josefa Fabie and Jose Carandang, plaintiffs, vs. Juan Grey, defendant, and Nieves G. Vda. de Grey, et al., intervenors-defendants" which judgment was pleaded by the herein respondents Juan Grey and Ngo Soo in the municipal court. According the decision, copy of which was submitted to this Court as Appendix F of the petition and as Annex 1 of the answer, there was an agreement, dated March 31, 1942, between the usufructuary Josefa Fabie and the owner Juan Grey whereby the latter as agent collected the rents of the property in question and delivered the same to the usufructuary after deducting the expenses for taxes, repairs, insurance premiums and the expenses of collection; that in the month of October 1943 the usufructuary refused to continue with the said agreement of March 31, 1942, and thereafter the said case arose between the parties, which by stipulation approved by the court was settled among them in the following manner: Beginning with the month of September 1944 the usufructuary shall collect all the rents of the property in question; shall, at her own cost and expense, pay all the real estate taxes, special assessments, and insurance premiums, including the documentary stamps, and make all the necessary repairs on the property; and in case of default on her part the owner shall the right to do any or all of those things, in which event he shall be entitled to collect all subsequent rents until the amounts paid by him are fully satisfied, after which the usufructuary shall again collect the rents. It was further stipulated by the parties and decreed by the court that "the foregoing shall be in effect during the term of the usufruct and shall be binding on the successors and assigns of each of the parties."

Construing said judgment in the light of the ninth clause of the will of the deceased Rosario Fabie y Grey, which was quoted in the decision and by which Josefa Fabie was made by the usufructuary during her lifetime of the income of the property in question, we find that the said usufructuary has the right to administer the property in question. All the acts of administration — to collect the rents for herself, and to conserve the property by making all necessary repairs and paying all the taxes, special assessments, and insurance premiums thereon — were by said judgment vested in the usufructuary. The pretension of the respondent Juan Grey that he is the administrator of the property with the right to choose the tenants and to dictate the conditions of the lease is contrary to both the letter and the spirit of the said clause of the will, the stipulation of the parties, and the judgment of the court. He cannot manage or administer the property after all the acts of management and administration have been vested by the court, with his consent, in the usufructuary. He admitted that before said judgment he had been collecting the rents as agent of the usufructuary under an agreement with the latter. What legal justification or valid excuse could he have to claim the right to choose the tenant and fix the amount of the rent when under the will, the stipulation of the parties, and the final judgment of the court it is not he but the usufructuary who is entitled to said rents? As long as the property is properly conserved and insured he can have no cause for complaint, and his right in that regard is fully protected by the terms of the stipulation and the judgment of the court above mentioned. To permit him to arrogate to himself the privilege to choose the tenant, to dictate the conditions of the lease, and to sue when the lessee fails to comply therewith, would be to place the usufructuary entirely at his mercy. It would place her in the absurd situation of having a certain indisputable right without the power to protect, enforce, and fully enjoy it.

One more detail needs clarification. In her complaint for desahucio Josefa Fabie alleges that she needs the premises in question to live in, as her former residence was burned. Has she the right under the will and the judgment in question to occupy said premises herself? We think that, as a corollary to her right to all the rent, to choose the tenant, and to fix the amount of the rent, she necessarily has the right to choose herself as the tenant thereof, if she wishes to; and, as she fulfills her obligation to pay the taxes and insure and conserve the property properly, the owner has no legitimate cause to complain. As Judge Nable of the municipal court said in his decision, "the pretension that the plaintiff, being a mere usufructuary of the rents, cannot occupy the property, is illogical if it be taken into account that that could not have been the intention of the testatrix."

We find that upon the pleadings, the undisputed facts, and the law the action instituted in the municipal court by the petitioner Josefa Fabie against the respondent Ngo Soo is one of unlawful detainer, within the original jurisdiction of said court, and that therefore Judges Dizon and Gutierrez David of the Court of First Instance erred in holding otherwise and in quashing the case upon appeal.

2. The next question to determine is the propriety of the remedy availed of by the petitioner in this Court. Judging from the allegations and the prayer of the petition, it is in the nature of certiorari and mandamus, to annul the order of dismissal and to require the Court of First Instance to try and decide the appeal on the merits. Under section 3 of Rule 67, when any tribunal unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, and there is no other plain, speedy, and

adequate remedy in the ordinary course of law, it may be compelled by mandamus to do the act required to be done to protect the rights of the petitioner. If, as we find, the case before the respondent judge is one of unlawful detainer, the law specifically requires him to hear and decide that case on the merits, and his refusal to do so would constitute an unlawful neglect in the performance of that duty within section 3 of Rule 67. Taking into consideration that the law requires that an unlawful detainer case be promptly decided (sections 5 and 8, Rule 72),it is evident that an appeal from the order of dismissal would not be a speedy and adequate remedy; and under the authority of Cecilio vs. Belmonte (48 Phil., 243, 255), and Aguilar vs. Cabrera and Flameño (G.R. No. 49129), we hold that mandamuslies in this case.

3. The contention of the petitioner that the appeal of the intervenor Juan Grey was filed out of time is not well founded. Although said respondent received copy of the decision of the municipal court on August 3, 1945, according to the petitioner (on August 6, 1945, according to the said respondent), it appears from the sworn answer of the respondent Ngo Soo in this case that on August 8 he filed a motion for reconsideration, which was granted in part on August 18. Thus, if the judgment was modified on August 18, the time for the intervenor Juan Grey to appeal therefrom did not run until he was notified of said judgment as modified, and since he filed his notice of appeal on August 23, it would appear that his appeal was filed on time. However, we observe in this connection that said appeal of the intervenor Juan Grey, who chose not to answer the petition herein, would be academic in view of the conclusions we have reached above that the rights between him as owner and Josefa Fabie as usufructuary of the property in question have been definitely settled by final judgment in civil case No. 1659 of the Court of First Instance of Manila in the sense that the usufructuary has the right to administer and possess the property in question, subject to certain specified obligations on her part.

The orders of dismissal of the respondent Court of First Instance, dated September 22 and October 31, 1945, in the  desahucio case (No. 71149) are set aside that court is directed to try and decide the said case on the merits; with the costs hereof against the respondent Ngo Soo.

G.R. No. L-1379                  December 19, 1947

SOPHIE M. SEIFERT and ELISA ELIANOFF, petitioners, vs.MARY MCDONALD BACHRACH, in her capacity as administratix of the estate of the deceased E. M. Bachrach, and CONRADO BARRIOS, Judge of First Instance of Manila, respondents.

PERFECTO, J.:

Petitioners, sisters and heirs of the late E. M. Bachrach, who died in Manila on September 28, 1937, pray for a command from this Court calculated to compel the lower court to execute its order of October 2, 1940, which reads as follows:

Upon consideration of the petition of Sophie M. Seifert, Ginda M. Skundina, Elisa Elianoff and Annie Bachrach Levine, of September 16, 1940, wherein they pray that the administratix and usufructuary of the properties left by the deceased E. M. Bachrach be authorized to pay them, beginning July 1, 1940, and until they receive their share of the estate left by the deceased E. M. Bachrach upon the death of his widow, a monthly allowance of P500; P250; P250; and P250, respectively, and the additional sum of P3,000 to the said Sophie M. Seifert, who is in poor health, the said allowances to be deducted from their shares of the estate of the deceased E. M. Bachrach upon the death of his widow, Mary Mcdonald Bachrach;

All the parties interested in the estate left by the deceased E. M. Bachrach having expressed their conformity to the said petition, and there existing no reason why the same should not be granted.lawphil.net

Petition granted; and the administratix and usufructuary Mary Mcdonald Bachrach is hereby authorized and instructed forthwith to pay to the said Sophie M. Seifert, Ginda M. Skundina, Elisa Elianoff and Annie Bachrach Levine a monthly allowance of five hundred (P500) pesos; two hundred fifty (P250) pesos, two hundred fifty (P250) pesos; and two hundred fifty (P250) pesos, respectively, beginning July 1, 1940, and until the said heirs receive their share of the estate left by the deceased E. M. Bachrach upon the death of his widow, and the additional sum of three thousand (P3,000) pesos to the heir Sophie M. Seifert.

The payment of the monthly allowances herein granted to the said heirs Sophie M. Seifert, Ginda M. Skundina, Elisa Elianoff and Annie Bachrach Levine other than those corresponding to the months of July, August and September, shall be made on or before the 5th day of each month, beginning October, 1940; shall be taken from the properties to be turned over to the heirs of the deceased E. M. Bachrach and the usufruct of which will belong to his widow, Mary McDonald during her life; and shall be deducted from the share of the said heirs of the estate of the deceased E. M. Bachrach upon the death of his widow.

Upon verbal petition of Attorney Carrascoso, and it appearing from the record that two of the clients whom his law firm represents reside outside of the Philippines, the administratix and usufructuary, Mary McDonald Bachrach, is hereby and instructed to pay directly to Attorney Ross, Selph & Carrascoso the monthly allowances corresponding to the heirs Sophie M. Seifert, Ginda M. Skundina, and Elisa Elianoff.

No opposition having been filed to the amended report, rendition of accounts, and liquidation of the community property of the conjugal partnership of E. M. Bachrach, deceased, and Mary McDonald Bachrach as surviving spouse presented by the administratix under date of September 17, 1940, the same are hereby approved and granted. It is so ordered.

QUIRICO ABETOJudge

The petition of virtue of which the above order was issued and to which all the interested parties in the estate have expressed their conformity, as stated in the order, reads as follows:

Comes now Sophie M. Seifert, Ginda M. Skundina, Elisa Elianoff, and Annie Bachrach, and to this Honorable Court respectfully state;

1. That paragraph sixth and eight of the will of the deceased E. M. Bachrach provide as follows:

"Sixth: It is my will and do herewith bequeath and devise to my beloved wife Mary McDonald Bachrach for life all the fruits and usufruct of the remainder of all my estate after payment; of the legacies, bequests and gifts provided for above; and she may enjoy such usufruct and use or spend such fruits as she may in any manner wish."

"Eight: It is my wish that upon the death of my beloved wife, Mary McDonald Bachrach, all my estate, personal, real and otherwise, and all the fruits and usufruct thereof which during her life pertained to her, shall be divided as follows:

"One-half (1/2) thereof shall be given to such charitable hospitals in the Philippines as she may designate; in case she fails to designate, then said sum shall be given to the Chief Executive of these Islands who shall distribute it, share and share alike to all charitable hospitals in the Philippines excluding those belonging to the governments of the Philippines or of the United States:

"One-half (1/2) thereof shall be divided, share and share alike by and between my legal heirs, to the exclusion of my brothers."

2. That on July 22, 1940, this court entered the following order:

"It appearing from the report filed by the commissioner, the Acting Assistant Clerk of the Court, that the only heirs of the deceased E. M. Bachrach, according to the evidence presented, are his widow Mary McDonald Bachrach and his sisters Sophie M. Seifert, Annie Bachrach, Ginda Skundina and Elisa Elianoff, the Court hereby declares said Mary McDonald Bachrach, Sophie M. Seifert, Annie Bachrach, Ginda Skundina and Elisa Elianoff as the only legal heirs of said deceased, all of whom are of legal age. "So ordered."

Your petitioners who are the legal heirs of the deceased E. M. Bachrach beside his widow, Mary McDonald Bachrach, respectfully request that she, as administratix and usufructuary of her deceased husband's properties, be authorized to pay your petitioners from and after July 1, 1940, and until they receive their share of the estate left by the deceased E. M. Bachrach upon the death of his widow, a monthly allowance of P500, P250, P250, and P250, respectively, and the additional sum of P3,000 to the heir Sophie M. Seifert, who is in poor health, the said allowances to be deducted from your petitioners' share of the estate of the deceased E. M. Bachrach upon the death of the widow;

All parties interested in the estate left by the deceased E. M. Bachrach are agreeable to this petition.

Manila, September 16, 1940.

Ross, Selph, Carrascoso & Janda

By (Sgd.) ANTONIO T. CARRASCOSO, Jr.Attorneys for Ginda M. Skundina,Elisa Elianoff, and Sophie Seifert414 National City Bank Bldg., Manila

We agree:

(Sgd.) ANNIE BACHRACH

(Sgd.) MARY MCDONALD BACHRACHAdministratix and Usufructuary

(Sgd.) ROMAN OZAETASolicitor General

No appeal has been taken against the foregoing order by any party.

From July 1, 1940, to December 31, 1941, the administratix, respondent, Mary McDonald Bachrach, made the payments as ordered. According to respondents, the total amount paid amounted to P40,250. The monthly allowances or advances due from January 1, 1942, to July 31, 1945, were not paid. The total amount is P32, 500 or P21,500 for Sophie M. Seifert and P10,750 for Elisa Elianoff. Payments were resumed from August, 1945, to January, 1947. Petitioners have been demanding from respondent Mary McDonald Bachrach the payment of the monthly allowances from January 1, 1942, to July 31, 1945, but respondent refused to pay. As alleged in her memorandum, the executrix "decided to stop the payment", among several reasons, in view of the "inconsiderate, unappreciated and unkind attitude" of petitioners, the increasing burden on Mrs. Bachrach's usufruct, and improbability of reimbursement to the estate of the payments and of the return to the executrix of the usufructuary value of said allowances.

On February 18, 1947, petitioners filed with the lower court a petition for the issuance of a writ of execution ordering, on the authority of the order of October 2, 1940, the administratix to pay the allowances for February, 1947, and those in arrears for the period comprising January 1, 1942, to July 31, 1945, and that case the administratix should fail to pay the above amounts within 24 hours after receipt of notice, the Hongkong and China Banking Corporation be ordered to deliver to attorneys for petitioners the total sum of P33,000, to be withdrawn from the funds that the administratix has on deposit in said bank in the name of the estate of E. M. Bachrach.

The petition was denied on February 27, 1947. On March 4, 1947, petitioners filed a motion for the reconsideration of said order. On March 14, 1947, the motion for reconsideration was denied. Not satisfied with the orders of February 27, and March 14, 1947, of the lower court, petitioners filed with us the petition in this case.

For a proper understanding of the controversy we quote hereunder the text of the will of E. M. Bachrach:

I, E. M. Bachrach, a naturalized American citizen from the State of New York and resident of the City of Manila, Philippine Islands, being of sound and disposing mind and memory and not acting under duress, menace, fraud or undue influence of whatever nature, do hereby make, publish and declare the following to be my Last Will and Testament,  to-wit:

First: I hereby declare that I have no child or children, grandchild or grandchildren.

Second: My failure to make any provision in this Will for my brothers is intentional.

Third: I hereby revoke and cancel any and all Wills by me heretofore made.

Fourth: I hereby bind, obligate, and instruct my executors or administrators to make and pay the following bequests, legacies or gifts, to-wit:

(a) To Mary McDonald Bachrach, my beloved wife, I give one-half (½) of the proceeds of the house known as "Casa Blanca," my residence at 105 Manga Avenue, Sta. Mesa, Manila, and of the rights to the lease on the parcel of land wherein said house is built. As all the furniture, fixtures and silverware contained in the house were bought by my beloved wife Mary McDonald Bachrach out of her own personal funds, and furniture, fixtures and silverware, being her own property, I hereby order that the same be returned to her and disposed of by her as she may wish and for her own benefit.

(b) To Mary McDonald Bachrach, my beloved wife, I give an allowance of five hundred pesos (P500) each month as living expenses.

(c) To Mina Levine, daughter of Hyman Levine, the sum of ten thousand pesos (P10,000) to be paid to her upon my death.

(d) To Hyman Levine, the sum of one thousand pesos (P1,000) for each year of service he has given me or the Bachrach Motor Co., Inc., that is one thousand pesos (P1,000) for each year since January, 1917, when he entered the employment of the Bachrach Motor Co., Inc.

(e) To Martin Elianoff and his wife Luba Elianoff, the sum of Ten Thousand Pesos (P10,000) jointly.

(f) To Afna Elianoff, daughter of Martin Elianoff, the sum of Ten Thousand Pesos (P10,000) which amount is to be deposited in any bank her father may choose, and is to be used for her education and upon her becoming of age, she may withdraw and use the remainder thereof if any, as she may deem fit.

(g) To Temple Emil Congregation, the sum of ten thousand pesos (P10,000).

(h) To Sofie Seifert, wife of John Seifert, now residing at San Francisco, California, the sum of ten thousand pesos (P10,000).

(i) To Ginda Scundin, married to Henoch Scundin, now residing at Kiev, Russia, the sum of ten thousand pesos (P10,000).

(j) To Lisa Elianoff, widow of Abraham Elianoff, now residing at Moscow, Russia, the sum of ten thousand pesos (P10,000).

Fifth: I hereby choose and appoint my beloved wife, Mary McDonald Bachrach, as my administratix and executrix to hold, keep, possess and invest all my remaining properties for the benefit and advantage of the estate.

Sixth: It is my will and do herewith bequeath and devise to my beloved wife Mary McDonald Bachrach for life all the fruits and usufruct of the remainder of all my estate after payment of the legacies, bequests and gifts provided for above; and she may enjoy such usufruct and use or spend such fruits as she may in any manner wish.

Seventh: It is my express wish that the business of the Bachrach Motor Co., Inc., the controlling shares of which I hold and own, shall not be dissolved, disposed of, or discontinued for a period of at least FIVE years after my death, unless the company is conducted at a losing basis; and the payment of the bequests, legacies and gifts above mentioned shall be made from my income and estate as shall least disturb or disrupt the business of the Bachrach Motor Co., Inc., as a going concern;

Eight: It is my wish that upon the death of my beloved wife, Mary McDonald Bachrach, all my estate, personal, real and other wise, and all the fruits and usufruct thereof which during her life pertained to her, shall be divided as follows:

One-half (½) thereof shall be given to such charitable hospitals in the Philippines as she may designate; in case she fails to designate, then said sum shall be given to the Chief Executive of these Islands who shall distribute it, share

and share alike to all charitable hospitals in the Philippines excluding those belonging to the governments of the Philippines or of the United States;

One-half (½) thereof shall be divided, share and share alike by and between my legal heirs, to the exclusion of my brothers.

Before signing this Last Will and Testament, I hereby declare that I have read and understood each and every provision hereof, and hereby publish and declare the same as my Last Will and Testament.

Done in this City of Manila, this 3rd day of December, 1935.

(Sgd.) E. M. BACHRACH

The following facts can also be taken into consideration:

(1) A report filed by respondent Mary McDonald Bachrach on January 24, 1941, giving in detail a list of properties belonging to the heirs of Mary McDonald Bachrach, shows a total value of P1,069,494.34; (2) The administratix has in her possession the sum of P351,016.91; (3) The administratix has made "all the transfers or is proceeding with the transfers in the name of the estate of Mary McDonald Bachrach for the heirs of the said E. M. Bachrach," of the properties whose total value according to the last project of partition is P1,069,494.34; (4) Among the properties in the possession of the administratix is the sum of P351,061.91 which has already been adjudicated to, and belongs, although still pro indiviso, to the heirs of the deceased E. M. Bachrach, from which, according to petitioners, the monthly allowances due to petitioners should be paid in accordance with the order of October 2, 1940; (5) Petitioners allege that the monthly allowances due them shall not be taken from the one-half of the properties amounting to P1,069,494.34 which is the share of the charitable hospitals, but from their respective participations in said property; (6) The Solicitor General agreed to the payment of the monthly allowances as per his conformity signed at the bottom of the petition of September 15, 1940; (7) Respondent Mary McDonald Bachrach has made advance payments to charitable institutions amounting to P22,000 from the participation of the charitable hospitals without prior authority from the probate court; (8) On May 27, 1947, the Solicitor General filed a manifestation undoubtedly for the protection of one-half of each and every asset of the estate of the deceased E. M. Bachrach, belonging to the charitable hospitals, in accordance with the eight clause of the will; (9) On June 9, 1947, petitioners answer by stating that their monthly allowances shall not be taken from the shares or participation belonging to the charitable hospitals but from petitioner's participation or interest in the other one-half of the estate of E. M. Bachrach which belongs to the heirs of the deceased; (10) On June 11, 1947, the Solicitor General filed an additional manifestation in which it expresses its satisfaction over the statement made by petitioners on June 9, 1947.

There is no question that the monthly allowances provided in the order of October 2, 1940, were agreed upon by all the parties for the maintenance of the four sisters of the deceased E. M. Bachrach, including herein petitioners. In the order of February 27, 1947, Judge Conrado Barrios found that the heirs-petitioners Sophie M. Seifert and Elisa Elianoff "are in dire need of funds for support."

Several reasons are advanced by respondents in their opposition to the compliance with and execution of the order of Judge Abeto dated October 2, 1940. We shall pass upon the important ones.

They allege that the conformity given by Mary McDonald Bachrach to the petition of September 16, 1940, as well as the payments made by her of the monthly allowances under the order of October 2, 1940, "was an act of pure liberality on her part and, therefore, could not be construed as giving rise to any obligatory relations between said respondent executrix and the parties receiving said monthly allowances." The allegation is unacceptable. Conformity is consent. According to a universal law, recognized in our Civil Code, consent is the source of obligations. That respondent has given her conformity as an act "of pure liberality on her part" does not change the nature of the legal effect of the consent given. The commitment she made with her conformity cannot be dismissed upon the ground that it was given as "pure liberality" or for any other motive. Provided the consent was freely given, and regardless of the motive behind the act, it gives rise to all proper legal effects. The conformity or agreement of all the parties to the petition of September 16, 1940, gives it the nature of a contract. The contracting parties are bound to respect and to abide by the commitments in said contract. The contract cannot be lightly dismissed. Respondent's allegation that Mary McDonald Bachrach had given her conformity without any consideration, is belied by her own allegation to the affect that she gave said conformity as "an act of pure liberality on her part." Pure liberality is a consideration recognized by the Civil Code. No other consideration is entertained in donations. The contract in this case has the added force and solemnity of having been approved by the order of Judge Abeto of October 2, 1940. The contract has been elevated to the category of a judgment. Its enforceability depends not only on the good faith of the parties but on a legal and executory order issued by a competent court. While respondent Mary M. Bachrach cannot ignore her plighted word, she has absolutely no right to consider the order of October 2, 1940, as a mere scrap of paper. Otherwise, if their orders could be simply ignored, challenged or taken with scorn, there is no use for the existence of courts.

Respondents alleged that "there is no provision in the will of the deceased E. M. Bachrach or in any statute requiring" the payment of the monthly allowances provided in the order of October 2, 1940. But is there any prohibition for the parties to agree in the payment of said monthly allowances? Was there any reason for the lower court to withholds its approval to the agreement? The allegation seems to imply an argument based on the denial of the basic right of the parties to enter into any kind of agreement neither forbidden by law nor against public morals.

The respondents alleged that the order of October 2, 1940, "was not intended to be a judicial mandate but merely an authority for the respondent Mary McDonald Bachrach to do certain acts which she could not perform under the law or under the provisions of the will of the deceased E. M. Bachrach without judicial authority." The allegation finds no support in the order wherein Mary McDonald Bachrach is "authorized and instructed forthwith to pay" the monthly allowances in question. Instructed means commanded. The inclusion of the last word negatives respondent's allegation. Mary McDonald Bachrach did not appeal against the order. She cannot now deny validity to the command involved in the word "instructed." Besides, an "order", the title of the document, cannot be anything other than a mandate, compulsory by nature.

Impairment of her usufruct is also alleged by the administratix. How can she now complain of the alleged impairment after alleging that she gave her conformity to the agreement, the basis of the order of October 2, 1940, as "an act of pure liberality on her part?" Was she not the owner of her usufruct? Could she give away her usufruct or any part of it in favor of any person? If she disposed of a portion of said usufruct for the benefit of the sisters of her deceased husband, without being subject to compulsion, or fraud, or mistake, but freely and conscientiously, there is no reason for her to complain now. When she gave her conformity to the petition upon which the order of October 2, 1940, was issued, she did it undoubtedly in the same spirit of charity with which her deceased husband, E. M. Bachrach, had written his will. She deserves commendation for the beauty of her act in seconding the attitude of helpfulness of her husband towards the petitioners. Charity is the choicest flower of the human spirit. While the late E. M. Bachrach and his widow were concerned in helping charitable hospitals, they did not forget the needy sisters of the deceased, as charity must start at home. We are not willing to help respondent withdraw now what she has given to petitioners voluntarily and with noble spirit of liberality.

Because petitioners perfected an appeal against the order of the lower court granting the administratix the authority prayed for in her petition of February 19, 1947, to sell "the portion of the estate destined for charity," respondents complain that petitioners have improperly and against the principles of orderly procedure, split the order of October 2, 1940, and simultaneously perfected an ordinary appeal from a part of the order of February 27, 1947, and filed the present petition for a writ of mandamus in connection with the other part. The complaint is groundless. The present petition refers to the execution of the order of October 2, 1940, while the appeal in question has been filed against the order of February 27, 1947, granting the executrix's petition dated February 19, 1947, the basic pleading in the record on appeal of March 31, 1947.

The last important argument of respondents is that no execution can validly be issued in connection with the order of October 2, 1940, because of the moratorium provided in Executive Order Nos. 25 and 32, which is still in full force and effect. The allegation cannot be entertained. The monthly allowances provided in the order of October 2, 1940, are not among the money obligations for which a moratorium has been decreed. The allowances in question are advances of an inheritance. They have been paid and are to be paid to petitioners as advances of the respective shares in the estate of their deceased brother E. M. Bachrach. They are not debts. The moratoriumrefers to debts. It is enough to look at the title of the executive orders in question.

Section 1 of Rule 39 provides:

Execution as of right. — Execution shall issue upon a final judgment or order upon the expiration of the time to appeal when no appeal has been perfected.

The provisions is mandatory. There is no question that the order of October 2, 1940, has become final. Upon the facts in this case and the law applicable thereto, it is the ministerial duty of the lower court to order the execution of October 2, 1940. Failure to comply with said ministerial duty is a proper case for mandamus.

For all the foregoing, we grant the petition, and the respondent lower court is ordered to proceed with the execution of its order of October 2, 1940, and to issue the proper writs.

G. R. No. 1975 November 10, 1905

THE CITY OF MANILA, Plaintiff-Appellantvs.EL MONTE DE PIEDAD Y CAJA DE AHORROS DE MANILA, Defendant-Appellee

WILLARD, J :

It was admitted during the trial of this case that the City of Manila was, on and prior to the 6th day of July, 1887, the owner of the land in the Plaza de Goiti, on which the building of defendant now stands.

On the 1st day of July, 1887, the defendant presented a petition to the city of Manila, in which it asked that the city give to the defendant permission "editor en su terreno bajo la condicion de que si llega a abandonarse la edificacion o deja de estar destinada a Monte de Piedad y Caja de Ahorros, la propriedad del terreno revertira al Municipio, condicion con la que cedio hace años terreno de su propiedad en el campo de Arroceros para la edificacion del Teatro del Principe Alfonso."

On the 6th day of July, 1887, the City of Manila adopted the following Resolution:

"Information being received with reference to a communication from the most reverend archbishop of Manila, president of the administrative board of the 'Monte de Piedad y Caja de Ahorros' of the city, dated 1st instant (July 1887), stating that the officers of those charitable establishments are installed since the same were opened, in the insalubrious and small place occupied by them on the ground floor of the 'Santa Isabel College,' and the members of this board having acknowledged by unanimous vote the necessity of situating the above offices in a proper place of this city, by acquiring or erecting a building which, on account of its conditions, may meet the increasing requirements of the same, the above-mentioned board had decided to erect a building for its offices, with the independence and security required, among other reasons, by the fact that property of great value was to be kept in it, and to this effect the sad board applies to the municipal corporations, whose feelings of rectitude and Christian piety are well known, asking the above corporation to take an active part in these noble purposes and to grant gratuitously for said building the land occupied in the 'Plaza de Goiti' by the 'Paseo de Santa Cruz,' which is of no use to anybody, on condition that should the building be abandoned or cease to be devoted to the purpose for which it will be erected, the possession of the land will revert to the municipal corporation in the same form as a land was granted in Arroceros some years ago, in which the 'Principe Alfonso' theatre was situated.

"The corporation having been informed of the contends of the above communication, and wishing to cooperate, within the limit of its powers, with the charitable purpose intended by the board of administration of the 'Monte de Piedad,' decided by general consent to grant 'the gratuitous use of the land' asked for the erection of the above-mentioned building and with the stated condition, this resolution having to be submitted previously to the superior authority."

This Resolution was submitted to and approved by the Governor-General of these Islands, the superior authority therein mentioned. The defendant constructed its building upon the land in question, where it has since remained. From its construction until the present time the building has been and is now devoted to the purposes mentioned to the Petition and Resolution.

On the 14th of May 1901, the defendant presented to the Court of First Instance of Manila, a petition asking that its possession as owner of the land and building in question be inscribed in accordance with the provisions of Article 390 of the Mortgage Law. The proceedings usual in such cases were taken, the prayer of the petition was granted by the Court of First Instance, and on the 13th of June 1901, the inscription was made in the Registry of Property for the City of Manila.

On the 13th of October 1903, the plaintiff brought this action against the defendant, asking that the above-mentioned inscription be canceled, and that the judgment be entered in favor of the plaintiff for the possession of the property and the sum of $14,000, money of the United States, as damages. Judgment was entered in the court below in favor of the plaintiff so far as to order that the inscription be so modified as to show that the plaintiff was the owner of the land, and that the defendant had a right to occupy it gratuitously, so long as devoted the land to the purpose above mentioned. The judgment denied the plaintiff any other relief. Plaintiff has appealed from the judgment, but the defendant has not.

The appeal is based upon two grounds:

The appellant claims that the grant to the defendant was made upon the same terms as those found in the grant to the Teatro del Principe Alfonso, and that by terms of the latter grant the grantee was bound to vacate the premises whenever the grantor desired to use them. Evidence was introduced by the plaintiff to sustain its claim as to the terms of the grant to the theater. There is some doubt as to the exact conditions upon which that grant was made, but we will assume, for the purpose of this case, that they were as claimed by the appellant.

In the Petition presented by the defendant, the conditions upon which it desired to acquire the land are plainly and distinctly stated. It desired to obtain the right to bold the land so long as it should be devoted to the maintenance of the institution in question. The petition there after stated that this was the same condition upon which land had previously been granted to the theater. It is evident that the petitioner then believed that the grant to the theater was made upon the terms which had been before stated, and the evidence shows that the city of Manila did make the grant to the theater upon those precise terms, but that this action of the city was afterwards modified by the Governor-General to the effect claimed by the appellant. We do not think that this mistake made by the petitioner in regard to the terms on which the grant was made to the theater, had the effect of modifying or changing in any way the conditions stated by it as the ones upon which it desired to acquire the use of the land.

The Resolution of the city shows that it intended to grant the prayer of the Petition. It recites the condition in the same way as it is stated in the Petition. It adds also a statement in regard to the grant to the theater, but we do not think that by this reference it intended to cut down or limit the grant to the Monte de Piedad. If the city had intended to do this it would have said simply that it granted the land upon the same terms upon which it had previously granted land to the theater. It did not do that. It distinctly said that it granted the land upon the condition that if the building should be abandoned, or should cease to be devoted to a Monte de Piedad it should revert to the municipality. This distinct and positive statement as to what the condition was must prevail, even if it should be discovered that there was a difference between that condition upon which the grant had been previously made to the theater.

And We hold that the defendant has a right to occupy the land in question so long as the building is not abandoned, and so long as it devoted to the purposes of a Monte de Piedad y Caja de Aharros.

The appellant also bases its appeal upon the ground that the defendant, by claiming in the proceedings relating to the possessory information to be the absolute owner of the land and building, forfeited all the rights which it acquired by virtue of the cession of 1887; that by this claim it repudiated the relation which had theretofore existed between it and the appellant, and virtually said that it no longer occupied the land under the terms of the grant, but was the absolute owner thereof. At the trial below evidence was introduced by the defendant to show that this claim of ownership was made by the officers then in charge of the defendant institution under a mistake of fact; that the only documents which the then officers had before them at the time the proceeding was commenced, indicated that the city had conveyed in 1887 to the defendant an absolute title to the land. The evidence tended to show that the then managers of the Monte de Piedad were not informed of and did not see copies of the petition to which we have referred, nor of the resolution of the city of Manila making the cession, and the claim of the defendant is that there was no intention on its part in presenting the petition for the inscription, to make any claim which was not justified by the grant made to it by the city in 1887. We do not think it necessary to pass upon this question of good faith.

Did the laws in force in these lands, at the time this grant was made in 1887, impose the penalty of forfeiture upon a person in the condition of the defendant who asserted a claim to the ownership of the land? The appellant has cited no law which so provides. It has limited itself, so far as the laws in force in the Islands are concerned, to the citation of various Articles of the Civil Code. Even if the Civil Code could be considered as governing the rights which the defendant acquired in 1887, We do not think that any of the articles cited support the claim of the appellant. Its claim is that the defendant is to be considered as a usufructuary, and that by claiming to be the owner of the property it surrendered its rights as such usufructuary. The surrender mentioned in Paragraph 4 of Article 513 to our minds does not include such an act as this. It refers to a voluntary surrender of the very rights which the usufructuary has, made by him with the intent to so surrender them. It does not relate to a forfeiture which may be claimed to be the result of some act performed by the insufructuary inconsistent with the relation which exists between him and the owner of the property. The appellant, however, seems to rely chiefly upon the law in force in the United States upon this point. That law has never been extended to these Islands, is not in force here now, now was it in 1887?

The judgment, however, should, we think, be modified in one respect. The defendant has its possession registered on the ground that it was the owner. It was not the owner, and the inscription should be canceled in its entirety. The defendant has never asked to have its real interest registered. If it desires to have this done it can present a petition to that effect, and the question as to its right to such registry can then be decided.

The judgment of the court below is modified so that the disposing part shall read as follows:

"It is therefore ordered that possessory inscription, as above mentioned, be canceled in its entirety, and that a copy of this decision be sent to the register of deeds of Manila for its execution, and that the defendant institution pay the costs of this trial."

In other respects the judgment of the court below is affirmed. No costs will be allowed to either party in this court, and after the expiration of twenty days judgment should be entered in accordance herewith, and the case remanded to the court below for execution of said judgment. So ordered.

G.R. No. 152957.  September 8, 2003

FAUSTINO ESQUIVEL,[1] petitioner, vs. ATTY. EDUARDO REYES, herein substituted by his only daughter, JULIETA R. GONZALES, respondent.

PANGANIBAN, J.:Because of his utter failure to prove that he has personally cultivated the subject property, petitioner’s claim of being a tenant

collapses.  Not being a bona fide tenant, he is not entitled to the benefits granted by tenancy laws.

The Case

Before us is a Petition for Review[2] under Rule 45 of the Rules of Court, seeking to reverse the January 28, 2002 Decision [3] and the April 10, 2002 Resolution[4] of the Court of Appeals (CA) in CA-GR SP No. 63208.  The challenged Decision disposed as follows:“WHEREFORE, premises considered, the DARAB Decision dated December 18, 2000 is hereby REVERSED and SET ASIDE.  Accordingly, the PARAD Decision dated December 3, 1997 is ordered REINSTATED. ”[5]

The assailed Resolution, on the other hand, denied petitioner’s Motion for Reconsideration.

The Facts

The facts of the case are narrated by the CA as follows:

“[Respondent] Eduardo Reyes was the administrator of the landholdings previously owned by his parents, Spouses Leopoldo and Dolores Reyes.  The subject landholding, approximately four (4) hectares, situated in Bayate, Liliw, Laguna, was one of those he administered.  When the heirs of Sps. Reyes partitioned the landholdings, only 2.7 hectares was adjudicated to Atty. Reyes excluding the subject land.

“When [respondent] took over the administration of the subject land, a ‘patao’ named Juana Montalbo was staying therein who was specifically tasked to prevent the entry of intruders and thieves of coconuts.  As such ‘patao’, she received 20% share of the net harvest as compensation.  In 1971, Juana Montalbo who was then old and could no longer perform as ‘patao’, recommended [Petitioner] Faustino Esquibel.  [Respondent] acceded and gave him the same compensation that Juana Montalbo used to receive.   [Petitioner] was not, in any way, involved in the cultivation of the land, as the plucking of coconuts was done by ‘magkakawit’, the gathering of fallen nuts was done by ‘magsisimot’, the husking of the nuts was done by ‘magtatapas’, and the transportation of nuts on horseback or by carabao-drawn sleds was done by ‘maghahakot’ or ‘maghihila’, all separately paid for by the [respondent].

“In 1995, [petitioner] went to the Municipal Agrarian Reform Officer (MARO) of Nagcarlan, Laguna, and requested the execution of a leasehold contract including his share in the lanzones harvest.  [Respondent] Eduardo Reyes vehemently denied the existence of a tenancy relationship with [petitioner].

“In the meantime, [Respondent] Reyes learned that [petitioner] has abandoned the subject landholding as he and his family moved in Barangay Sta. Lucia, Nagcarlan, Laguna.  [Respondent] then stopped paying [petitioner] the usual 20% of the net proceeds of the coconut harvest.

“However, in one of the conferences with the MARO, [respondent] offered to sell the subject land to [petitioner] but the latter was adamant.

“On April 8, 1997, [petitioner] filed a complaint against [respondent] for ‘Illegal Withholding of Shares; Maintenance of Peaceful Possession and Execution of Leasehold Tenancy Contract’ with the Office of the Provincial Agrarian Reform Adjudicator (PARAD).  Accordingly, on December 3, 1997, the PARAD dismissed the said complaint in its Decision ‘1. (F)inding the contract between Complainant Faustino Esquibel and Defendant Eduardo Reyes not one Agricultural Share Tenancy but a contract for services paid on commission basis; 2.  Finding and declaring Complainant Faustino Esquibel not an agricultural share tenant de jure but a security services contractee paid on commission basis, hence, not entitled to security of tenure and shares in the produce of the subject landholding; x x x.’

“On appeal, the DARAB reversed the decision, the dispositive portion of which reads:

‘WHEREFORE, in the light of the foregoing premises, the appealed decision dated December 3, 1997 is hereby SET ASIDE and a new judgment is hereby rendered:‘1.  Declaring Appellant as a bonafide tenant on the subject landholding, thus entitled to security of tenure;‘2.  Ordering the Appellee to maintain the Appellant in the peaceful possession of the subject lot; and‘3.  Directing the Municipal Agrarian Reform Officer (MARO) of Nagcarlan, Laguna to assist the Plaintiff and Respondent in the execution of an agricultural leasehold contract between the parties.‘SO ORDERED.’”[6]

Ruling of the Court of Appeals

In reversing the Department of Agrarian Reform Adjudication Board (DARAB), the CA ruled that petitioner was not a tenant, but a merepatao engaged in providing security for the plantation rather than in undertaking agricultural production.  The appellate court noted

that the various phases of farm work -- gathering, piling, husking and hauling coconuts -- were done by outside labor.   Whenever petitioner took a hand in any phase of the work, he was aptly paid for his labor.

The CA also held that in transferring his residence to another municipality, he had abandoned the landholding.   Since he had ceased to provide security for the plantation, he was no longer entitled to any compensation.

Hence, this Petition.[7]

Issues

In his Petition[8] and Memorandum,[9] petitioner raises the following issues for our consideration:

“I. The Honorable Court of Appeals erred when it reversed the findings of the DARAB Central Office and declared that petitioner Faustino Esquivel is not a de juretenant but a mere 'patao.'

“II. The Honorable Court of Appeals erred when it reversed the findings of the DARAB Central [Office] and declared that petitioner Faustino Esquivel has abandoned the subject landholding."

The Court’s RulingThe Petition has no merit.

First Issue:Petitioner Not a   de Jure   Tenant

At the outset, we stress that whether a person is a tenant is a question of fact. [10] Substantial evidence must establish the concurrence[11] of all the essential requisites of a tenancy relationship as follows:

(1)     The parties are the landowner and the tenant or agricultural lessee.(2)     The subject of the relationship is agricultural land.(3)     There is consent between the parties to the relationship.(4)     The purpose of the relationship is to bring about agricultural production.(5)     There is personal cultivation on the part of the tenant or agricultural lessee.(6)     The harvest is shared between the landowner and the tenant or agricultural lessee. [12]

In this case, there are two sets of factual findings: one, by the CA and the Office of the Provincial Agrarian Reform Adjudicator (PARAD) which found that Esquivel was not a tenant; and the other, by the DARAB which ruled that he was.   The conflicting factual findings make this case an exception[13] to the general rule that only questions of law may be raised before this Court in a petition for review on certiorari under Rule 45. For this reason, we gave due course to this Petition.

The documentary exhibits of petitioner consist of (1) his Affidavit; [14] (2) receipts[15] showing the alleged sharing between him and private respondent of net proceeds from harvests; (3) a Certification [16] from the barangay captain of Bayate, Liliw, Laguna, that he was a resident thereof; (4) a Certification[17] from the Municipal Assessor's Office listing the landholdings over which private respondent was paying real estate taxes; and (5) the Mediator’s Report[18] (Katitikan) of the mediation conference between the parties.

Sadly for petitioner, his evidence fails to establish all the essential requisites for the existence of a tenancy relationship.   It is doctrinal that with respect to a parcel of land, the absence of one element does not make an occupant or a cultivator or a planter a  de jure tenant.[19] A careful examination of the evidence shows that only the receipts -- showing Reyes’ payments to him of a 20 percent share in net proceeds from the coconut produce -- have any direct and relevant evidentiary value to the alleged tenancy relationship.

The Certifications are inconclusive as far as the other requisites are concerned. The only thing that the municipal assessor’s Certification proves is that private respondent was paying real taxes on the properties listed therein.   Realty tax payment or the declaration of property for tax purposes alone is not a conclusive evidence of ownership.[20] In any event, petitioner could have very well established the status of private respondent as the legal possessor of the subject landholding.  The meaning of landholder in a tenancy relationship is not limited to the owner, as the term includes a lessee, a usufructuary or a legal possessor of land. [21]

The barangay captain’s Certification, on the other hand, merely shows that Esquivel was a resident of Barangay Bayate; it does not advance the claim that petitioner was a tenant. Obviously, the barangay captain -- or the mayor whose attestation appears on the document -- was not the proper authority to make such determination.  Even certifications issued by administrative agencies and/or officials concerning the presence or the absence of a tenancy relationship are merely preliminary or provisional and are not binding on the courts.[22]

More significantly, the exhibits presented by petitioner fail to show one essential element [23] in establishing the existence of a tenancy relationship: the personal cultivation of the land by him alone or with the aid of his immediate farm household. [24] The PARAD observed the dearth of evidence in this respect:

“It seems quite paradoxical, if not ironic, that Complainant Esquivel should be invoking the rulings of the Highest Tribunal hereinbefore cited in support of his claim for tenancy status when, in application and in effect, the same negate the existence of the relationship as concern[ing] him.  Unlike his case, the seekers in the cited cases had performed various acts of cultivation such as the periodical cleaning of the landholding, the fumigation, smudging or smoking of the plantation, the application of fertilizer and watering of the growing plants to enhance [their] productivity.

"Nothing of that kind obtains in Esquivel's case for while it is true that he had once planted coconut trees and lanzones on the landholding in question, he had been duly and [aptly] paid for his labor.  Neither has he tended the growing plants for [Reyes] had availed himself of hired labor the job.  And if ever Esquivel did participate in the harvests of coconuts, he did so for a fee.  These chores comprise the odd jobs Esquivel indulged in as sideline to his regular employ as a 'patao' for which he was compensated with the cash equivalent of 20% of the net proceeds from the sale of the produce."[25]

The DARAB’s pronouncement that Esquivel worked on the subject lot did not cite specific, concrete or factual evidence.   It was at best speculative, as the following excerpt indicates:

“x x x [Esquivel] has been living in the subject lot since 1968 when he was installed by [Reyes] thereon to take care of the coconuts and lanzones planted therein.  It is in effect putting the life of the plants into the hands of [Esquivel]. In the performance of his duties, the latter has to do some cultivation such as smudging or smoking the plantation, weeding, watering, applying fertilizers and cleaning the surroundings."[26] (Italics supplied)

The exhibits of private respondent, on the other hand, adequately controvert the alleged tenancy relationship.   The payrolls[27] he has presented show that he hired laborers to harvest, gather, pile, husk and transport the produce. Significantly, Exhibits 6 [28] and 7[29] -- both bearing the signature of Esquivel -- reveal the payments petitioner received for every coconut and lanzones tree he has planted on the subject lot.

Second Issue:Abandonment of Landholding

Since Esquivel failed to establish that he was a tenant of Reyes, the former’s alternative claim for security of tenure [30] or compensation[31]has no leg to stand on. It is settled that unless a person has established his status as a  de jure tenant, he is not entitled to the security of tenure or the other benefits provided by the Land Reform Program of the government under existing tenancy laws. [32]

WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED.  Costs against petitioner. SO ORDERED.