Serg's v. PCI Leasing

Serg’s Products, Inc. vs. PCI Leasing G.R. No. 137705. August 22, 2000

FACTS:

PCI Leasing and Finance filed a complaint for sum of money, with an application for a writ of replevin. 

Judge issued a writ of replevin directing its sheriff to seize and deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary expenses. 

The sheriff proceeded to petitioner's factory, seized one machinery, with word that he would return for other machineries. 

Petitioner (Serg’s Products) filed a motion for special protective order to defer enforcement of the writ of replevin. 

PCI Leasing opposed the motion on the ground that the properties were still personal and therefore can still be subjected to seizure and writ of replevin. 

Petitioner asserted that properties sought to be seized were immovable as defined in Article 415 of the Civil Code. 

Sheriff was still able to take possession of two more machineries 

In its decision on the original action for certiorari filed by the Petitioner, the appellate court, Citing the Agreement of the parties, held that the subject machines were personal property, and that they had only been leased, not owned, by petitioners; and ruled that the "words of the contract are clear and leave no doubt upon the true intention of the contracting parties."

ISSUE: Whether or not the machineries became real property by virtue of immobilization.

Ruling: Petitioners contend that the subject machines used in their factory were not proper subjects of the Writ issued by the RTC, because they were in fact real property.

Writ of Replevin: Rule 60 of the Rules of Court provides that writs of replevin are issued for the recovery of personal property only.

Article 415 (5) of the Civil Code provides that machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works

In the present case, the machines that were the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land.They were essential and principal elements of their chocolate-making industry.Hence, although each of them was movable or personal property on its own, all of them have become “immobilized by destination because they are essential and principal elements in the industry.”

However, contracting parties may validly stipulate that a real property be considered as personal. After agreeing to such stipulation, they are consequently estopped from claiming otherwise.Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any material fact found therein.

Section 12.1 of the Agreement between the parties provides “The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting upon, real property or any building thereon, or attached in any manner to what is permanent.”

The machines are personal property and they are proper subjects of the Writ of Replevin

Fels Energy, Inc. vs. Province of BatangasG.R. No. 168557. February 16, 2007.

Callejo Sr., J.

Doctrine: In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., a power company brought an action to review property tax assessment. On the city’s motion to dismiss, the Supreme Court of New York held that the barges on which were mounted gas turbine power plants designated to generate electrical power, the fuel oil barges which supplied fuel oil to the power plant barges, and the accessory equipment mounted on the barges were subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that “docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast” are considered immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work.

Facts: On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over 3×30 MW diesel engine power barges moored at Balayan Bay in Calaca, Batangas. The contract, denominated as an Energy Conversion Agreement, was for a period of five years. Article 10 states that NPC shall be responsible for the payment of taxes. (other than (i) taxes imposed or calculated on the basis of the net income of POLAR and Personal Income Taxes of its employees and (ii) construction permit fees, environmental permit fees and other similar fees and charges. Polar Energy then assigned its rights under the Agreement to Fels despite NPC’s initial opposition.

FELS received an assessment of real property taxes on the power barges from Provincial Assessor Lauro C. Andaya of Batangas City. FELS referred the matter to NPC, reminding it of its obligation under the Agreement to pay all real estate taxes. It then gave NPC the full power and authority to represent it in any conference regarding the real property assessment of the Provincial Assessor. NPC filed a petition with the LBAA. The LBAA ordered Fels to pay the real estate taxes. The LBAA ruled that the power plant facilities, while they may be classified as movable or personal property, are nevertheless considered real property for taxation purposes because they are installed at a specific location with a character of permanency. The LBAA also pointed out that the owner of the barges–FELS, a private corporation–is the one being taxed, not NPC. A mere agreement making NPC responsible for the payment of all real estate taxes and assessments will not justify the exemption of FELS; such a privilege can only be granted to NPC and cannot be extended to FELS. Finally, the LBAA also ruled that the petition was filed out of time.

Fels appealed to the CBAA. The CBAA reversed and ruled that the power barges belong to NPC; since they are actually, directly and exclusively used by it, the power barges are covered by the exemptions under Section 234(c) of R.A. No. 7160. As to the other jurisdictional issue, the CBAA ruled that prescription did not preclude the NPC from pursuing its claim for tax

exemption in accordance with Section 206 of R.A. No. 7160. Upon MR, the CBAA reversed itself.

Issue: Whether or not the petitioner may be assessed of real property taxes.

Held: YES. The CBAA and LBAA power barges are real property and are thus subject to real property tax. This is also the inevitable conclusion, considering that G.R. No. 165113 was dismissed for failure to sufficiently show any reversible error. Tax assessments by tax examiners are presumed correct and made in good faith, with the taxpayer having the burden of proving otherwise. Besides, factual findings of administrative bodies, which have acquired expertise in their field, are generally binding and conclusive upon the Court; we will not assume to interfere with the sensible exercise of the judgment of men especially trained in appraising property. Where the judicial mind is left in doubt, it is a sound policy to leave the assessment undisturbed. We find no reason to depart from this rule in this case.

In Consolidated Edison Company of New York, Inc., et al. v. The City of New York, et al., a power company brought an action to review property tax assessment. On the city’s motion to dismiss, the Supreme Court of New York held that the barges on which were mounted gas turbine power plants designated to generate electrical power, the fuel oil barges which supplied fuel oil to the power plant barges, and the accessory equipment mounted on the barges were subject to real property taxation.

Moreover, Article 415 (9) of the New Civil Code provides that “docks and structures which, though floating, are intended by their nature and object to remain at a fixed place on a river, lake, or coast” are considered immovable property. Thus, power barges are categorized as immovable property by destination, being in the nature of machinery and other implements intended by the owner for an industry or work which may be carried on in a building or on a piece of land and which tend directly to meet the needs of said industry or work.

Petitioners maintain nevertheless that the power barges are exempt from real estate tax under Section 234 (c) of R.A. No. 7160 because they are actually, directly and exclusively used by petitioner NPC, a government- owned and controlled corporation engaged in the supply, generation, and transmission of electric power.

We affirm the findings of the LBAA and CBAA that the owner of the taxable properties is petitioner FELS, which in fine, is the entity being taxed by the local government. As stipulated under Section 2.11, Article 2 of the Agreement:

“OWNERSHIP OF POWER BARGES. POLAR shall own the Power Barges and all the fixtures, fittings, machinery and equipment on the Site used in connection with the Power Barges which have been supplied by it at its own cost. POLAR shall operate, manage and maintain the Power Barges for the purpose of converting Fuel of NAPOCOR into electricity.”

It follows then that FELS cannot escape liability from the payment of realty taxes by invoking its exemption in Section 234 (c) of R.A. No. 7160. Indeed, the law states that the machinery must be actually, directly and exclusively used by the government owned or controlled corporation;

nevertheless, petitioner FELS still cannot find solace in this provision because Section 5.5, Article 5 of the Agreement provides:

“OPERATION. POLAR undertakes that until the end of the Lease Period, subject to the supply of the necessary Fuel pursuant to Article 6 and to the other provisions hereof, it will operate the Power Barges to convert such Fuel into electricity in accordance with Part A of Article 7.

It is a basic rule that obligations arising from a contract have the force of law between the parties. Not being contrary to law, morals, good customs, public order or public policy, the parties to the contract are bound by its terms and conditions.

Time and again, the Supreme Court has stated that taxation is the rule and exemption is the exception. The law does not look with favor on tax exemptions and the entity that would seek to be thus privileged must justify it by words too plain to be mistaken and too categorical to be misinterpreted. Thus, applying the rule of strict construction of laws granting tax exemptions, and the rule that doubts should be resolved in favor of provincial corporations, we hold that FELS is considered a taxable entity.

The mere undertaking of petitioner NPC under Section 10.1 of the Agreement, that it shall be responsible for the payment of all real estate taxes and assessments, does not justify the exemption. The privilege granted to petitioner NPC cannot be extended to FELS. The covenant is between FELS and NPC and does not bind a third person not privy thereto, in this case, the Province of Batangas.

It must be pointed out that the protracted and circuitous litigation has seriously resulted in the local government’s deprivation of revenues. The power to tax is an incident of sovereignty and is unlimited in its magnitude, acknowledging in its very nature no perimeter so that security against its abuse is to be found only in the responsibility of the legislature which imposes the tax on the constituency who are to pay for it. The right of local government units to collect taxes due must always be upheld to avoid severe tax erosion. This consideration is consistent with the State policy to guarantee the autonomy of local governments and the objective of the Local Government Code that they enjoy genuine and meaningful local autonomy to empower them to achieve their fullest development as self-reliant communities and make them effective partners in the attainment of national goals.

In conclusion, we reiterate that the power to tax is the most potent instrument to raise the needed revenues to finance and support myriad activities of the local government units for the delivery of basic services essential to the promotion of the general welfare and the enhancement of peace, progress, and prosperity of the people.

Davao Sawmill v. Castillo

DAVAO SAW MILL vs. APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC. G.R. No. L-40411 August 7, 1935

Facts: Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands. However, the land upon which the business was conducted belonged to another person. On the land the sawmill company erected a building which housed the machinery used by it. Some of the implements thus used were clearly personal property, the conflict concerning machines which were placed and mounted on foundations of cement. In the contract of lease between the sawmill company and the owner of the land there appeared the following provision: That on the expiration of the period agreed upon, all the improvements and buildings introduced and erected by the party of the second part shall pass to the exclusive ownership of the lessor without any obligation on its part to pay any amount for said improvements and buildings; which do not include the machineries and accessories in the improvements.

In another action wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the defendant; a writ of execution issued thereon, and the properties now in question were levied upon as personalty by the sheriff. No third party claim was filed for such properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein

It must be noted also that on number of occasion, Davao Sawmill treated the machinery as personal property by executing chattel mortgages in favor of third persons. One of such is the appellee by assignment from the original mortgages.

The lower court rendered decision in favor of the defendants herein. Hence, this instant appeal.

Issue: whether or not the machineries and equipments were personal in nature.

Ruling/ Rationale: Yes. The Supreme Court affirmed the decision of the lower court.

Machinery which is movable in its nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person acted as the agent of the owner.

LANZAR V. DIRECTOR OF LANDS

78 SCRA 130  

FACTS: Lanzar filed for application for registration of title over a parcel of land, to which the Director of Lands objected to as the land in question, according to  him,  was  part  of  the  foreshore  lands.    The  trial  court  adjudicated  the land  to  Lanzar  as  the  said  land  wasn’t  necessary  for  public  utility  or establishment of special industries.    The CA reversed the decision.  

HELD: Lands added to the shore by accretion and alluvial deposits caused by the action of the sea, form part of the public domain.  When they are no longer washed  by  the  water  of  the  sea  and  are  not  necessary  for  purposes  of public  utility,  or  for  the  establishment  of  special  industries,  or  for coastguard  services,  then  the  Government  shall  declare  them  to  be property  of  the  owners  of  the  estate  adjacent  thereto  and  as  increment thereof.

  Register of Deeds vs China Banking CorporationDate: April 28, 1962Petitioner –

Appellee: Register of Deeds of ManilaRespondent –Appellant: China Banking CorporationPonente: DizonFacts: Alfonso Pangilinan and one Guillermo Chua were charged with qualified theft of money worth P275,000. Pangilinan and hiswife, Belen Sta. Ana, executed a public instrument entitled Deed of Transfer whereby, after admitting his civil liability in favor of hisemployer, China Banking Corporation, he ceded and transferred to the latter a parcel of land located in Manila. The deed waspresented for registration to the Register of Deeds of the City of Manila, but because CBC was alien-owned and, as such, barredfrom acquiring lands in the Philippines, the officer submitted the matter of its registration to the Land Registration Commission forresolution. The LRC ruled that the land is unregistrable.Issue: WON CBC can acquire ownership of the lot by virtue of the deed of transferHeld: NoRatio: To support its view appellant relies particularly upon paragraphs (c) and (d), Section 25 of RA 337:"Sec. 25. Any commercial bank may purchase, hold, and convey real estate for the following purposes:(c)Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings;(d) Such as it shall purchase at sales under judgments, decrees, mortgages, or trust deeds held by it and such as it shall purchase to secure debts due to it.But no such bank shall hold the possession of any real estate under mortgage or trust deed, or the title and possession of any real estate purchased to secure anydebt due to it, for a longer period than five years."Assuming,, that under the provisions any commercial bank, whether alien-owned or controlled or not, may purchase andhold real estate for the specific purposes and in the particular cases enumerated in Section 25 thereof, we find that the case beforeUs does not fall under anyone of them.Par (c), Section 25 of RA 337 allows a commercial bank to purchase and hold such real estate as shall be conveyed to it in satisfactionof debts previously contracted in the course of its dealings. We deem it quite clear and free from doubt that the "debts" referred toin this provision are only those resulting from previous loans and other similar transactions made or entered into by a commercialbank in the ordinary course of its business as such. Obviously, whatever "civil liability"—arising from the criminal offense of qualified theft—was admitted in favor of appellant bank by its former employee, Alfonso Pangilinan, was not a debt resulting froma loan or a similar transaction had between the two parties in the ordinary course of banking business.Neither do the provisions of paragraph (d) of the same section apply to the case because the deed of transfer in questioncan in no sense be considered as a sale made by virtue of a judgment, decree, mortgage, or trust deed held by appellant bank. In thesame manner it can not be said that the real property in question was purchased by appellant "to secure debts due to it",considering that, as stated heretofore, the term debt employed in the pertinent legal provision can logically refer only to such debtsas may become payable to appellant bank as a result of a banking transaction.That the constitutional prohibition under consideration has for its purpose the preservation of the patrimony of the nationcan not be denied, but appellant and the amici curiae claim that it should be liberally construed so that the prohibition be limited tothe permanent acquisition of real estate by aliens—whether natural or juridical persons. This, of course, would make legal theownership acquired by appellant bank by virtue of the deed of transfer mentioned heretofore, subject to its obligation to dispose of it in accordance with law, within 5 years from the date of its acquisition. We can not give assent to this contention, in view of thefact that the constitutional prohibition in question is absolute in terms. We have so held in Ong Sui Si Temple vs. The Register of Deeds of Manila where we said, inter alia, the following:"We are of the opinion that the Court below has correctly held that in view of the absoluteterms of section 5, Title XIII, of the Constitution, the provisions of Act 271 of the old Philippine Commission must be deemed repealed since the Constitution wasenacted, in so far as incompatible therewith. In providing that. 'Save in cases of hereditary succession, no private agricultural land shall be transferred or assignedexcept

to individuals, corporations or associations qualified to acquire or hold lands of the public domain in the Philippines', the Constitution makes no exception infavor of religious associations. Neither is there any such saving found in Sections 1 and 2 of Article XIII, restricting the acquisition of public agricultural lands and othernatural resources to 'corporations or associations at least sixty per centum of the capital of which is owned by such citizens' (of the Philippines)."Even in the case of Smith Bell & Co. vs. Register of Deeds of Davao where a lease of a parcel of land for a total period of 50years in favor of an alien corporation was held to be registerable, the reason we gave for such ruling was that a lease—unlike a sale—does not involve the transfer of dominion over the land, the clear implication from this being that transfer of ownership overland, even for a limited period of time, is not permissible in view of the constitutional prohibition. The reason for this is manifestlythe desire and purpose of the Constitution to place and keep in the hands of the people the ownership over private lands in ordernot to endanger the integrity of the nation. Inasmuch as when an alien buys land he acquires and will naturally exercise ownershipover the same, either permanently or temporarily, to that extent his acquisition jeopardizes the purpose of the Constitution.

G.R. No. 82220 July 14, 1995

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

G.R. No. 82251 July 14, 1995

CESAR ALMENDRAL, petitioner, vs.EDUARDO QUISUMBING, respondent.

G.R. No. 83059 July 14, 1995

EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all surnamed Quisumbing), HEIRS OF FERNANDO QUISUMBING, (Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing) and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Victoria, Elsa and Oscar, all surnamed Quisumbing), petitioners, vs.HON. COURT OF APPEALS, PABLITO MENESES, LORENZO MENESES and BRAULIO C. DARUM, respondents.

 

QUIASON, J.:

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

I

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The trial court also found that the free patents issued to Pablito Meneses had been procured through fraud, deceit and bad faith, citing the following facts as bases for its conclusion: (1) The Deed of Waiver and Transfer of Rights allegedly executed by Silverio Bautista in favor of Pablito Meneses was a simulated contract for lack of consideration; (2) The said instrument was sworn to before Mayor Lorenzo Meneses who had no authority to notarize deeds of conveyances; (3) Although the lots subject of the deed of conveyance were placed in his brother's name, Mayor Meneses actually exercised rights of ownership thereto; (4) Land Inspector Cesar Almendral admitted having anomalously prepared the documents to support the free patent applications of Pablito Meneses and, having personally filled up the blank forms, signed them in the absence of the persons concerned; (5) Almendral kept the documents in his possession from 1979 to 1980

despite orders from the Director of Lands to produce and surrender the same; (6) District Land Officer Braulio Darum approved the free patent applications and issued the questioned titles without the required cadastral survey duly approved by the Director of Lands and despite the pendency of LRC Case No. B-327 involving the contested lots; (7) Darum represented the Bureau of Lands in LRC Case No. B-327 without authority from the Director of Lands and after he had withdrawn his appearance in said case, persisted in filing a motion to set aside the order for the issuance of a decree in favor of the Quisumbings; (8) Darum and Almendral in bad faith, refused to produce the missing original records of the free patent applications and their supporting documents; and (9) When Darum was not yet an oppositor in LRC Case No. B-327, he admitted in his letter to the Land Registration Commission that the contested lots are portions of the land being claimed by the Quisumbings contrary to his later representation in the joint answer to the petition that the subject lots are not portions of Lots 1 and 2, Psu-208327 owned by the Quisumbings. Accordingly, the trial court disposed of the case as follows:

WHEREFORE, judgment is hereby rendered:

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

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

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

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

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

b) P350,000.00, as moral damages;

c) P70,000.00 as exemplary damages;

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

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

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

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

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

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

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

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

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

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

Petitioners' assigned errors in G.R. No. 82220 are evidently factual issues which have been thoroughly passed upon and settled both by the trial court and the appellate court. Factual

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

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

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

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

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

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

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

As aptly found by the Court a quo, the submersion in water of a portion of the land in question is due to the rains "falling directly on or flowing into Laguna de

Bay from different sources." Since the inundation of a portion of the land is not due to "flux and reflux of tides" it cannot be considered a foreshore land within the meaning of the authorities cited by petitioner Director of Lands. The land sought to be registered not being part of the bed or basin of Laguna de Bay, nor a foreshore land as claimed by the Director of Lands, it is not a public land and therefore capable of registration as private property provided that the applicant proves that he has a registerable title (at pp. 538-539).

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

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

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

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

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

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

SO ORDERED.

RACAZA VS SUSANA REALTY

FACTS:

• Petitioner leased respondent’s land since 1952 on a month to month basis, he erected a house on it and live in it. On Dec., 1955, respondent demanded him to vacate the property and on Feb., 1956, respondent filed an unlawful detainer case against petitioner before the MTC. But such complaint was dismissed on Nov., 1956 for respondent’s failure to prosecute.

• On Dec., 1957, respondent demanded again for him to vacate the premises and on Feb., 1958, a new unlawful detainer case was filed against petitioner. But it did not allege the time when Petitioner failed to pay the rent. However, from respondent’s evidence, it appeared that petitioner failed to pay since July, 1955.

• MTC ordered petitioner to vacate the premises.

• Petitioner appealed the order to CFI praying for the dismissal of the complaint alleging that MTC has no jurisdiction because the complaint (2nd) was filed more than a year from Dec., 1955.

• CFI ruled that unlawful detainer started on Dec., 1957. Motion for reconsideration was denied so Petitioner appealed.

• CA ruled that the 1 year period should be counted from Dec., 1957.

• Hence, this petition.

RULING:

• This case was brought not on the theory that the lessee, failed to pay rents, but on the theory that the lease had expired. The lease was on a month-to-month basis and the lease expired at the end of every month. It is therefore immaterial that rents had not been paid since July, 1955, since what made petitioner liable for ejectment was the expiration of the lease. In this case, demand to vacate is not necessary. Where the action is to terminate the lease because of the expiration of its term, no such demand is necessary.

BALLATAN v. CA

-Land Owner in Good faith, Builder in Good faith scenario -The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner.

-If the option chosen is to sell the lot, the price must be fixed at the prevailing market value at the time of payment.

FACTS:

Eden Ballatan, together with other petitioners, is living in and registered owners of Lot No. 24. Respondent Winston Go is living in and registered owners of Lot No. 25 and 26. And Li Ching Yao is living in and the registered owner of Lot. 27. The Lots are adjacent to each other.

When Ballatan constructed her house in her lot, she noticed that the concrete fence and side pathway of the adjoining house of respondent Winston Go encroached on the entire length of the eastern side of her property. She was informed by her contractor of this discrepancy, who then told respondent Go of the same. Respondent, however, claims that his house was built within the parameters of his father’s lot; and that this lot was surveyed by engineer Jose Quedding, the authorized surveyor of Araneta Institute of Agriculture (AIA). Petitioner called the attention of AIA on the matter and so the latter authorized another survey of the land by Engineer Quedding. The latter then did the survey twice which led to the conclusion that Lots Nos 25, 26 (owned by respondent Go) and 27 (owned by Li Ching Yao) moved westward to the eastern boundary of Lot 24 (owned by petitioner Ballatan.) –(it was later on discovered by the courts that Go encroached 42 square meters from the property of Ballatan and Yao encroached 37 square meters on Go’s property, all of which were in GOOD FAITH) Ballatan made written demands to the respondent to dismantle and move their improvements and since the latter wasn’t answering the petitioner filed accion publiciana in court. Go’s filed their “Answer with Third-Party Complaint” impleading as third party defendants respondents Li Ching Yao, the AIA and Engineer Quedding.

RTC ruled in favor of the petitioner ordering respondent Go to demolish their improvements and pay damages to Petitioner but dismissing the third-party complaint. CA affirmed the dismissal of the third party-complaint as to AIA but reinstated the the complaint against Yao and the Engineer. CA also affirmed the demolition and damages awarded to petitioner and added that Yao should also pay respondent for his encroachment of respondent Go’s property. Jose Quedding was also ordered to pay attorney’s fees for his negligence which caused all this fuzz.

ISSUE: What is the proper remedy in this situation (everyone was in good faith)?

RULING:

Art 448 is the proper remedy (Lower Courts are wrong in awarding the damages). It was established in the case that the parties had no knowledge of the encroachment until Ballatan noticed it there all of them were builders in Good faith. In that scenario they have two options. 1st option is that the land owner will buy the improvements and the 2nd option is to oblige the builders to buy the land given that the value of the land is not considerably more than the buildings or tree; otherwise the owner may remove the improvements thereon.

The builder, planter or sower, however, is not obliged to purchase the land if its value is considerably more than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to the owner of the land. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof. The right to choose between appropriating the improvement or selling the land on which the improvement of the builder, planter or sower stands, is given to the owner. If the option chooses is to sell the lot, the price must be fixed at the prevailing market value at the time of payment.

Petitioner was given by SC 30 days to decide on what to do or which right to exercise. Likewise, Go was also given time to do the regarding Yao’s encroachment. Engineer Quedding was still asked to pay attorney’s fees.

GRANDE VS CA

FACTS:

The Grandes are owners of a parcel of land in Isabela, by inheritance from their deceased mother, Patricia Angui, who likewise, inherited it from her parents. In the early 1930’s, the Grandes decided to have their land surveyed for registration purposes. The land was described to have Cagayan River as the northeastern boundary, as stated in the title.

By 1958, a gradual accretion took place due to the action of the current of the river, and an alluvial deposit of almost 20,000 sq.m. was added to the registered area. The Grandes filed an action for quieting of title against the Calalungs, stating that they were in peaceful and continuous possession of the land created by the alluvial deposit until 1948, when the Calalungs allegedly trespassed into their property. The Calalungs, however, stated that they were the rightful owners since prior to 1933.

The CFI found for the Grandes and ordered the Calalungs to vacate the premises and pay for damages. Upon appeal to the CA, however, the decision was reversed.

ISSUE:

Whether or not the alluvium deposited land automatically belongs to the riparian owners?

HELD:

Art. 457 dictates that alluvium deposits on land belong to the owners of the adjacent land. However, this does not ipso jure become theirs merely believing that said land have become imprescriptible. The land of the Grandes only specifies a specific portion, of which the alluvial deposits are not included, and are thus, subject to acquisition by prescription. Since the Calalungs proved that they have been in possession of the land since 1934 via two credible witnesses, as opposed to the Grande’s single witness who claims that the Calalungs only entered the land in 1948, the Calalungs have been held to have acquired the land created by the alluvial deposits by prescription. This is because the possession took place in 1934, when the law to be followed was Act 190, and not the New Civil Code, which only took effect in 1950.

G.R. No. 157593             March 22, 2007

SPS. ALBERTO and JOCELYN AZANA, Petitioners, vs.CRISTOPHER LUMBO and ELIZABETH LUMBO-JIMENEZ, Respondents.

D E C I S I O N

CORONA, J.:

In this appeal by certiorari, spouses Alberto and Jocelyn Azana assail the decision1 dated September 17, 2002 and resolution2 dated March 12, 2003 of the Court of Appeals (CA) in CA-G.R. CV No. 60973. After a re-evaluation of the evidence on record, the appellate court held that the trial court’s factual findings were contrary to the evidence presented and, on that basis, reversed the latter’s ruling.

Originally, respondents filed an action for quieting of title3 in the Regional Trial Court (RTC) of Kalibo, Aklan. The subject matter of the action was a piece of real property located in the island

of Boracay, a prime tourist destination. It was designated as Lot 64 during the national reservation survey of Boracay on April 14, 1976.

Respondents alleged that they were the owners of Lot 64. They claimed that, in a deed of absolute sale dated December 1, 1996, the spouses Emilio and Estela Gregorio sold Lot 64 to petitioners. This cast a cloud over their title.

To support their claim of ownership, respondents stated that Lot 64 was originally part of the 8.0488-hectare land bought in a public auction by their parents, which they inherited entirely; that such sale in the public auction was evidenced by a final bill of sale dated September 18, 1939; that Lot 64 was separately designated during the national reservation survey only because it was also being claimed by the spouses Gregorio; and that, if Lots 63 and 64 were combined, the boundaries of the resulting lot coincided with the boundaries of the lot purchased under the final bill of sale.

For their part, petitioners claim that they purchased Lot 64 from the spouses Gregorio in good faith; that the spouses Gregorio became the lawful owners of Lot 64 by virtue of a deed of absolute sale dated March 25, 1976 executed by Ignacio Bandiola in favor of Estela Gregorio whereby Bandiola transferred to Gregorio a parcel of land with an area of 3.4768 hectares; and that Lot 64 was part of this 3.4768-hectare land.

According to the RTC of Kalibo, Aklan, respondents failed to establish the identity of the lot sold under the final bill of sale. Consequently, their claim of title over Lot 64 also had to fail. In the words of the court a quo:

Assaying the evidence presented by the parties in relation to their respective submissions, the Court noted that the land acquired by [respondents’] parents at the public auction is not solely bounded on the North and East by [the] Visayan Sea, but also by Anunciacion Gelito and Guillermo Sualog, respectively. Indeed, [respondents] own survey plan discloses that Lots 63 and 64 [are] bounded by Lot 62 and seashore.

Hence, it is not clear that the land acquired by [respondents’] parents at an auction sale includes Lot 64. The Court could probably sustain [respondents’] theory if the said land is solely bounded on the North and East by [the] Visayan Sea or seashore. There would be no space for any intervening lot.4 (citations omitted)

Finding equiponderance of evidence5, the trial court ruled in favor of petitioners and upheld the validity of the sale of Lot 64 to them.

On review, the CA arrived at a different conclusion. It declared respondents as owners of Lot 64 and nullified the sale by the spouses Gregorio to petitioners. The appellate court agreed with respondents that Lot 64 was part of the 8.0488-hectare property described in the final bill of sale. As opposed to the findings of the trial court, the appellate court was satisfied that the boundaries of the lot resulting from the merger of Lots 63 and 64 coincided with the boundaries of the 8.0488 hectare property. Moreover, the CA noted that the areas of Lots 63 and 64 were 7.0300 hectares and 1.2012 hectares respectively, meaning that the area resulting from the combination of the two lots was equivalent to "8.0000 hectares, more or less, which [was] the total area being claimed by the [respondents]".6

Aggrieved, the spouses Gregorio and the spouses Azana filed in this Court separate petitions for review on certiorari under Rule 45 of the Rules of Court. The petitions were separately docketed as G.R. No. 1576177 and G.R. No. 157593, respectively. The Court instantly denied both petitions for essentially raising questions of fact which are generally beyond our review.

Thereafter, both the Gregorios and petitioners filed their respective motions for reconsideration. The Court denied the MR8 of the spouses Gregorio, in effect denying G.R. No. 157617 with finality.

Meanwhile, the MR of the spouses Azana was granted. As a general rule, it is not the Supreme Court’s function to review, examine and evaluate or weigh the probative value of the evidence presented.9 The factual findings of the trial and appellate courts are binding on this Court and are given great weight and respect.10 However, the rule is not absolute. In instances where there is divergence in the findings and conclusions of the trial court, on one hand, and the appellate court, on the other, the Court may give the petition due course and re-examine the evidence on record.11 Satisfied that the foregoing exception applies to this case, the Court ordered the reinstatement of G.R. No. 157593 (this petition).

Respondents oppose the petition on the ground that it is already barred by prior judgment. They argue that the dismissal of the Gregorios’ petition (G.R. No. 157617) was a final judgment constituting a bar to the institution of a similar petition.

Respondents’ position is incorrect. Res judicata calls for the concurrence of the following requisites: (1) there is final judgment or order; (2) the court rendering it has jurisdiction over the subject matter and the parties; (3) the judgment or order is on the merits and (4) there is, between the two cases, identity of parties, subject matter and causes of action.12 Here, the first requisite is absent. The Court’s resolution denying the spouses Gregorio’s petition is not the final judgment contemplated by the first requisite. Rather, "final judgment" entails a decision which perpetually settles the controversy and lays to rest all questions raised. At that point, there was no final judgment because the spouses Azana’s appeal of the CA decision was still pending before us. Stated differently, there was yet no final judgment which could be entered and executed.

We now proceed to consider the documents relied upon by the parties.

To prove their claim, petitioners submitted a deed of absolute sale of real property13 dated March 25, 1976 to show that Ignacio Bandiola sold to Estela Gregorio 3.4768 hectares of land located in Manoc-Manoc, Malay, Aklan. The property was particularly described as follows:

THE PORTION SOLD CONSISTS of 3.4768 hectares, more or less, located at the southern side of the whole parcel and with the following pertinent boundaries: on the North by Visayan Sea and Ernesto Bandiola; on the East by Visayan Sea; on the South by Felicitas Lumbo, D. Pelayo, and D. Magapi; and on the West by Teodorica Bandiola.14

They also presented the corresponding tax declaration15 which reiterated the same property boundaries.

Petitioners point out that a portion of this property was separately declared for realty tax purposes under ARP/TD No. 93-011-1020/1021 as Lot 64 with an area of 1.48 hectares.16 The tax declaration indicated that the boundaries of Lot 64 were:

North: Visayan Sea South: Lot 63

West: lot 99-pt East: Visayan Sea

In the hope of strengthening their case, petitioners narrated the supposed origin of the disputed property. They claimed that the 3.4768-hectare property was taken from the consolidated lots owned by Ignacio Bandiola, i.e., three contiguous parcels of land with individual areas of 8.7766 hectares, 6550 square-meters and 4994 square-meters.17] From this land mass, Ignacio Bandiola carved out 3.4768 hectares and sold the same to Estela Gregorio. Allegedly, this portion included Lot 64 which Estela Gregorio, in turn, sold to petitioners.

Granting for the sake of argument that petitioners’ preceding allegations are true, it follows that Ignacio Bandiola’s lots, if taken as one, must have extended to the Visayan Sea in the east to have roped in Lot 64. It also follows that at least one of the lots should have the Visayan Sea as its eastern boundary. However, this conclusion is belied by the tax declarations petitioners themselves presented. Not one of the tax declarations stated that any of Bandiola’s lots was bound in the east by the Visayan Sea. On the contrary, all the tax declarations stated that each of the lots was bound in the east by a particular land mass:

Tax Declaration No. 3066

Land Area: 8.7766 hectares

Boundaries: North – Visayan Sea

East – Lorenzo Lumbo, Vanancio Maming

West – Conchita Tirol, Visayan Sea

South – Moises Pelayo, Paula Gelito18

Tax Declaration No. 3087

Land Area: 0.6550 hectare

Boundaries: North – Visayan Sea

East – Felicitas Alag de Lumbo

West – Felicitas Alag de Lumbo

South – Quirica Lumbo19

Tax Declaration No. 3068

Land Area: 0.4994 hectare

Boundaries: North – Ignacio Bandiola

East – Anunciacion Gelito and F.A. Lumbo

West – Ignacio Bandiola

South – Gertrudes Casimero & Salvador Magapi20

Petitioners strained to explain the discrepancy by pointing out that "Lot 64 was but a mere portion of the three parcels of land covered by the [three] tax declarations. xxx. It [was] therefore, quite unlikely that Lot 64 would have the exact same boundaries as any or all of these [three] parcels."21

We find their explanation wanting. If, indeed, Lot 64 was part of Ignacio Bandiola’s mass of properties it would have been in its south-east corner, occupying part of its southern and eastern perimeter. 22 Therefore, the parcels of land covered by the three tax declarations must reflect southern and/or eastern boundaries similar to those of Lot 64. But, as explained earlier, none of the lots was enclosed or partly enclosed in the east by the sea. It is highly unlikely that the corner

portion of the mother property would not have similar boundaries as those of the latter on at least two sides.

The Court is not inclined to pronounce which of the documents presented by petitioners is true and correct. It is enough to say that the evidence they presented cast doubt on the validity of their claim. Petitioners failed to establish, by preponderance of evidence, the exact perimeters of the land which they claim as their own.

On the other hand, respondents anchor their claim over Lot 64 on a final bill of sale23 dated September 18, 1939. Apparently, the document was executed in favor of Lorenzo and Felicitas Lumbo who bought an 8.0488-hectare property in a public auction. It stated:

That on September 30, 1937, the real property under Tax Declaration No. 6523 was forfeited to the Government in the manner and form prescribed by Act 3995 known as the Assessment Law, for non-payment of land taxes corresponding to the years 1931 to 1937, inclusive, the description of which follows:

A parcel of cocal land situated in the barrio of Manocmanoc, municipality of Buruanga, province of Capiz, Philippines, having an area of 80, 488 square meters more or less. Bounded on the North by Visayan Sea; on the East by the property of Guillermo Sualog and Visayan Sea; on the South by the property of Moises Pelayo; and on the West by the properties of Venancio Maming and Lucino Gelito, and assessed at P1040.00. x x x.24

The trial court discredited the final bill of sale by highlighting the fact that the property bought at the public auction was not solely bound on the north and east by the Visayan Sea but also by the properties of Anuncion Gelito and Guillermo Sualog, respectively. With this, the trial court deduced that there was an intervening space which should not have been there if the lot referred to in the document included Lot 64. Thus, the final bill of sale must pertain to a different parcel of land.

We find the trial court’s conclusion inaccurate. The Gelito and Sualog properties were not located between the Visayan Sea and the disputed property. Otherwise, the tax declarations and final bill of sale would have indicated that the Lumbo property was solely bound in the north by the Gelito property and in the east by the Sualog property. A cursory look at the survey map25 reveals that the perimeter of the Lumbo property ran along the Visayan Sea and Gelito’s property in the north, and the Visayan Sea and Sualog’s property in the east. Naturally, the tax declarations and final bill of sale included the two properties mentioned as part of the boundaries of the Lumbo property.

Petitioners underscore the seeming irregularities in the description of the property under the final bill of sale, a deed of sale dated May 20, 1939 and the tax declarations for the years 1991 and 1993 in the names of respondents. They posit that these irregularities negate respondents’ claim of legal or equitable title and ultimately justify the resolution of the case in their favor.

A deed of absolute sale26 was executed on May 20, 1939 between Pantaleon Maming and the respondents’ parents, stipulating the sale to the Lumbos of "an approximate area of [five

hectares], being a part of the land under Tax No. 6523 in the name of Pantaleon Maming…".27 Petitioners emphasize the fact that the property sold under the final bill of sale was the same lot under Tax Declaration No. 6523. This discrepancy supposedly blurred the identification of the property claimed by respondents.

We disagree.

The CA sufficiently reconciled the difference in the land areas in the two deeds:

xxx. It may be asked why there were two deeds of sale covering the same property. We find credence in [respondents’] explanation. The public auction was held on 13 September 1938 and therefore Pantaleon Maming had up to 13 September 1939 to redeem the property. Before the expiration of the period of redemption, Lorenzo Lumbo bought [five] hectares of the [eight]-hectare property in an attempt, as [respondents] put it, to persuade Maming not to redeem the property. This can be inferred from the price of P500.00 he paid for the [five] hectares while in the auction sale held, he bought the entire 8.0488 hectares for only P56.78. xxx.28

Next, petitioners highlight the tax declarations filed by respondents for the years 199129 and 199330 covering Lot 63 only. In the absence of contrary evidence, tax declarations, being official documents, enjoy a presumption of truth as to their contents. Petitioners contend that, unlike them, respondents never actually declared Lot 64 as theirs and cannot therefore claim ownership of the property.

Jurisprudence is consistent that tax declarations are not conclusive evidence of ownership of the properties stated therein.31 A disclaimer is even printed on their face that they are "issued only in connection with real property taxation [and] should not be considered as title to the property." At best, tax declarations are an indicia of possession in the concept of an owner.32 However, non-declaration of a property for tax purposes does not necessarily negate ownership.33

From the foregoing, the fact that both tax declarations in the names of respondents covered Lot 63 only did not necessarily mean they did not own Lot 64 as they were in fact able to present a document evidencing ownership of both properties ― the final bill of sale.

Clearly, respondents have been able to establish by preponderance of evidence that they are the rightful owners of Lot 64.

When an owner of real property is disturbed in any way in his rights over the property by the unfounded claim of others, he may bring an action for quieting of title. The purpose of the action is to remove the cloud on his title created by any instrument, record, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid and prejudicial to his title.34

Here, the deeds of sale executed in favor of petitioners and the spouses Gregorio were prima facie valid and enforceable. However, further scrutiny and investigation established that petitioners’ predecessor-in-interest, Ignacio Bandiola, could not have owned the disputed lot. Consequently, the subsequent conveyances of Lot 64 to the spouses Gregorio and thereafter, to

petitioners, were null and void. Therefore, respondents, as the adjudged owners of Lot 64, are entitled to have the aforementioned deeds of sale nullified to remove any doubt regarding their ownership of the lot.

While the appellate court adequately explained its decision, it failed to categorically declare the deeds of sale as null and void in its dispositive portion. Since it is the dispositive portion of the decision which shall be carried out, it is important that the status of the deeds of sale be clearly stated therein.

WHEREFORE, the petition is hereby DENIED. The decision dated September 17, 2002 and resolution dated March 12, 2003 of the Court of Appeals are AFFIRMED with the MODIFICATION that the deed of absolute sale dated March 25, 1976, in so far as it covers Lot 64, and the deed of absolute sale dated December 1, 1996 are hereby declared null and void.

Costs against petitioners.

RICARDO PARDELL Y CRUZ and VICENTA ORTIZ Y FELIN DE PARDELL, plaintiffs-appellees, vs. GASPAR DE BARTOLOME Y ESCRIBANO and MATILDE ORTIZ Y FELIN DE BARTOLOME, defendants-appellants. 1912 Nov 18 1st Division G.R. No. 4656Jul   23   

 

FACTS:

Appeal by bill of exceptions.

Spouses Miguel Ortiz and Calixta Felin died in Vigan, Ilocos Sur, in 1875 and 1882, respectively. Prior to her death, Calixta, executed, on August 17, 1876, a nuncupative will in Vigan, whereby she made her four children, named Manuel, Francisca, Vicenta, and Matilde, surnamed Ortiz y Felin, her sole and universal heirs of all her property. Manuel and Francisca were already deceased, leaving Vicenta and Matilda as heirs.

In 1888, the defendants (Matilde and Gaspar), without judicial authorization, nor friendly or extrajudicial agreement, took upon themselves the administration and enjoyment of the properties left by Calixta and collected the rents, fruits, and products thereof, to the serious detriment of Vicenta’s interest. Despite repeated demands to divide the properties and the fruits accruing therefrom, Sps Gaspar and Matilde had been delaying the partition and delivery of the said properties by means of unkempt promises and other excuses.

Vicenta filed a petition for partition with damages in the RTC.

RTC decision: absolved Matilde from payment of damages. It held that the revenues and the expenses were compensated by the residence enjoyed by the defendant party, that no losses or damages were either caused or suffered, nor likewise any other expense besides those aforementioned,

Counsel for Matilde took an exception to the judgment and moved for a new trial on the grounds that the evidence presented did not warrant the judgment rendered and that the latter was contrary to law. That motion was denied by the lower court. Thus, this petition.

ISSUE: WON a co-owner is required to pay for rent in exclusively using the co-owned property.

RULING:

Article 394 of the Civil Code prescribes:

“Each co-owner may use the things owned in common, provided he uses them in accordance with their object and in such manner as not to injure the interests of the community nor prevent the co-owners from utilizing them according to their rights.”

Matilde Ortiz and her husband occupied the upper story, designed for use as a dwelling, in the house of joint ownership; but the record shows no proof that, by so doing, the said Matilde occasioned any detriment to the interests of the community property, nor that she prevented her sister Vicenta from utilizing the said upper story according to her rights. It is to be noted that the stores of the lower floor were rented and an accounting of the rents was duly made to the plaintiffs.

Each co-owner of realty held pro indiviso exercises his rights over the whole property and may use and enjoy the same with no other limitation than that he shall not injure the interests of his coowners, for the reason that, until a division be made, the respective part of each holder can not be determined and every one of the coowners exercises together with his other coparticipants, joint ownership over the pro indiviso property, in addition to his use and enjoyment of the same.

As the hereditary properties of the joint ownership of the two sisters, Vicenta Ortiz, plaintiff, and Matilde Ortiz, defendant, were situated in the Province of Ilocos Sur, and were in the care of the last named, assisted by her husband, while the plaintiff Vicenta with her husband was residing outside of the said province the greater part of the time between 1885 and 1905, when she left these Islands for Spain, it is not at all strange that delays and difficulties should have attended the efforts made to collect the rents and proceeds from the property held in common and to obtain a partition of the latter, especially during several years when, owing to the insurrection, the country was in a turmoil; and for this reason, aside from that founded on the right of co-ownership of the defendants, who took upon themselves the administration and care of the property of joint tenancy for purposes of their preservation and improvement, these latter are not obliged to pay to the plaintiff Vicenta one-half of the rents which might have been derived from the upper story of the said house on Calle Escolta, and, much less, because one of the living rooms and the storeroom thereof were used for the storage of some belongings and effects of common ownership between the litigants. The defendant Matilde, therefore, in occupying with her husband the upper floor of the said house, did not injure the interests of her coowner, her sister Vicenta, nor did she prevent the latter from living therein, but merely exercised a legitimate right pertaining to her as a coowner of the property.

G.R. No. L-15242             June 29, 1962

ROSAURO M. TANINGCO and SIMPLICIA RAMOS, petitioners, vs.REGISTER OF DEEDS OF LAGUNA, respondent.

Juan A. Baes for petitioners.

MAKALINTAL, J.:

On August 10, 1958 the spouses Rosauro M. Taningco and Simplicia Ramos took a mortgage, for a loan of P9,000 extended by them to Nieves Mediarito, on all the "rights, interests, and participation" of the latter in six parcels of land registered in the land records of Laguna as conjugal properties of herself and her husband Salvador Roxas, then already deceased. The properties were under judicial administration in the corresponding intestate proceeding and had not yet been liquidated and partitioned between the widow and the heirs. The deed of mortgage was duly signed by the mortgagor and otherwise appears to have been executed with the requisite formalities. When presented to the Register of Deeds for Laguna, however, it was denied registration on two grounds, of which only the first is now in issue, namely, that "mortgagor Nieves Mediarito, the surviving spouse of Salvador Roxas, alienated her one-half (½) conjugal share without previous liquidation of the conjugal properties." The matter was elevated en consulta by the mortgagees to the Land Registration Commissioner, who sustained the action taken by the Register of Deeds by resolution dated November 22, 1958. A motion for reconsideration was subsequently denied, and petitioners have come to this Court on appeal from both the resolution and the order of denial.

The Land Registration Commissioner does not question the legality or validity of the mortgage, but excepts to its registrability because the mortgagor "does not appear yet to be the registered owner of the property being mortgaged." The suggestion is that there must first be a settlement and distribution of the conjugal estate because before then the interest of the wife therein is merely inchoate. The premise of the reasoning is inaccurate. The interest of the wife is registered, the titles to the lands being in the names of the spouses. After the dissolution of the conjugal partnership, as by death of the husband, this interest ceases to be inchoate and becomes actual and vested with respect to an undivided one-half share of the said properties. It is one thing to say that the widow's share, being undivided, does not consist of determinate and segregated properties and an entirely different thing to consider her interest as still inchoate. The partnership having been dissolved, if the deceased husband leave heirs other than the wife, as in this case, the properties come under the regime of co-ownership among them until final liquidation and partition. In the language of Chief Justice Arellano in Marisga vs. Macabuntoc, 17 Phil. 107, 110: "The community property of the marriage, at the dissolution of this bond by the death of one of the spouses, ceases to belong to the legal partnership and becomes the property of a community, by operation of law, between the surviving spouse and the heirs of the deceased spouse, or the exclusive property of the widower or the widow if he or she be the heir of the deceased spouse." Article 484, Civil Code. And as provided in article 493 of the same Code, each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, although the effect of the

alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. The application of this article, which was taken from article 399 of the old Civil Code, has been elucidated in the case of Maria Lopez vs. Magdalena Gonsaga Vda. de Cuaycong, et al., 74 Phil. 601. Citing Manresa, Volume 3, pp. 486-487, 3rd ed., this Court said:

"Each co-owner owns the whole, and over it he exercises rights of dominion, but at the same time he is the owner of a share which is really abstract, because until the division is effected, such share is not concretely determined. The rights of the co-owners are, therefore, as absolute as dominion requires, because they may enjoy and dispose of the common property, without any limitation other than that they should not, in the exercise of their right, prejudice the general interest of the community, and possess, in addition, the full ownership of their share, which they may alienate, convey or mortgage; which share, we repeat, will not be certain until the community ceases. The right of ownership, therefore, as defined in Art. 348 of the present Civil Code, with its absolute features and its individualized character, is exercised in co-ownership, with no other differences between sole and common ownership than that which is rightly established by the Portuguese Code (Arts. 2175 and 2176), when it says "that the sole owner exercises his rights exclusively, and the co-owner exercises them jointly with the other co-owners"; but we shall add, to each co-owner pertains individually, over his undivided share, all the rights of the owner, aside from the use and enjoyment of the thing, which is common to all the co-owners." (Emphasis supplied.)

In the case at bar the mortgage sought to be registered by appellants does not refer to any specific portions of the six parcels of land described in the mortgage instrument but to the mortgagor-wife's rights, interest and participation therein — whatever they may actually turn out to be upon liquidation and partition. If such mortgage is legal and valid, as the law says it is, there can be no justifiable reason why it should not be registered, registration being an essential requirement in order that the mortgage may be validly constituted. Article 2125, Civil Code. The registration will in no way affect the rights of the deceased husband's creditors, if any, or of his heirs, for their interest is limited to the husband's half of the estate not covered by the mortgage. As far as the debt if any, of the conjugal partnership are concerned, their payment is provided for by law before the one-half share of the wife-mortgagor is finally determined, and therefore would not be affected by the mortgage. Articles 182 and 185.

A roughly analogous case is Gotauco & Co. vs. Register of Deeds of Tayabas, 59 Phil. 756, where a levy of execution was sought to be inscribed in the registry against the share of a judgment debtor in several tracts of land registered in the name of a deceased of whom he was one of the heirs. The inscription was denied by the register of deeds; the question was elevated en consulta to the Fourth Branch of the Court of First Instance of Manila and then appealed therefrom to the Supreme Court. In ordering the acceptance of the levy of execution for inscription in the Registry, this court said that "although the value of the participation of the (judgment debtor) in the state of the (decedent) was indeterminable before the final liquidation of the estate, nevertheless, the right of participation in the estate and the lands thereof may be attached and sold, the real test being, as laid down in Reyes vs. Grey, 21 Phil. 73, 76, whether or

not the judgment debtor holds such a beneficial interest in the property that he can sell or otherwise dispose of for value.

WHEREFORE, the resolution and the order appealed from are set aside and respondent-appellee Register of Deeds of Laguna is ordered to register the document in question upon compliance with the legal requisites concerning the payment of taxes and registration fees. No pronouncement as to costs.1äwphï1.ñët

ADILLE V. CA- Notice of Repudiation

Registration is not equivalent to notice of repudiation when it is done to defraud the others. Torrens title cannot be used as shield for fraud.

FACTS:

There was a woman who had two husband. With the first husband, she produced the Petitioner. The second husband, the Respondents. Meanwhile, this woman owned a land and sold the same to a third person with right of repurchase. However, when the woman died, it was Petitioner who by himself repurchased the land and later on he executed an affidavit of sole ownership and registered the land unto himself alone. Eventually, the other heirs (Respondent) learned of the registration so they filed an action to cancel the title.

Now Petitioner claims prescription almost on similar grounds with the previous case, i.e. the registration constituted constructive notice to the other heirs, if not to the world.

ISSUE:

Whether or not Petitioner is correct.

RULING:

NO! First of all, the redemption by Petitioner benefited all so that the ownership did not transfer to him alone. The other heirs only need to reimburse him.

As to the notice, the registration by Petitioner cannot be considered as notice of the repudiation because they were done in bad faith to deprive the other co-heirs. In fact, they were done clandestinely. One of the co-heir in fact was in possession of the land and yet he was not informed of the pending registration nor ousted by Petitioner. Hence, should there have been any notice, it would be during litigation when the heirs finally learned of the registration. In that case, there is no prescription yet.

G.R. No. 109910 April 5, 1995

REMEDIOS G. SALVADOR and GRACIA G. SALVADOR, petitioners, vs.COURT OF APPEALS, ALBERTO and ELPIA YABO, FRANCISCA YABO, et al., respondents.

 

DAVIDE, JR., J.:

Assailed in this petition is the legal determination made by the Court of Appeals on the issues of which portion of Lot No. 6080 and Lot No. 6180 formed part of the conjugal assets of the spouses Pastor Makibalo and Maria Yabo, and of whether or not the rights of Pastor's co-heirs in the estate of Maria Yabo were extinguished through prescription or laches.

Alipio Yabo was the owner of Lot No. 6080 and Lot No. 6180 situated in Barrio Bulua, Cagayan de Oro City, containing an area of 1,267 and 3,816 square meters, respectively. Title thereto devolved upon his nine children, namely, Victoriano, Procopio, Lope, Jose, Pelagia, Baseliza, Francisca, Maria, and Gaudencia, upon his death sometime before or during the second world war.

On 28 April 1976, Pastor Makibalo, who is the husband of Maria Yabo, one of Alipio's children, filed with the then Court of First Instance of Misamis Oriental a complaint, docketed as Civil Case No. 5000, against the spouses Alberto and Elpia Yabo for "Quieting of Title, Annulment of Documents, and Damages." In the complaint, he alleged that he owned a total of eight shares of the subject lots, having purchased the shares of seven of Alipio's children and inherited the share of his wife, Maria, and that except for the portion corresponding to Gaudencia's share which he did not buy, he occupied, cultivated, and possessed continuously, openly, peacefully, and exclusively the two parcels of land. He then prayed that he be declared the absolute owner of 8/9 of the lots in question. 1

On 8 October 1976, the grandchildren and great-grandchildren of the late Alipio Yabo 2 lodged with the same court a complaint for partition and quieting of title with damages, 3 docketed as Civil Case No. 5174, against Pastor Makibalo, Enecia Cristal, and the spouses Eulogio and Remedies Salvador. They alleged that Lot No. 6080 and Lot No. 6180 are the common property of the heirs of Alipio Yabo, namely, the plaintiffs, defendant Enecia Cristal, Maria Yabo and Jose Yabo, whose share had been sold to Alberto Yabo; that after Alipio's death, the spouses Pastor and Maria Makibalo, Enecia Cristal and Jose Yabo became the de facto administrators of the said properties; and that much to their surprise, they discovered that the Salvador spouses, who were strangers to the family, have been harvesting coconuts from the lots, which act as a cloud on the plaintiffs' title over the lots.

The plaintiffs then prayed that (a) they, as well as defendant Pastor Makibalo, in representation of his wife, and Enecia Cristal, in representation of Gaudencia, be declared as the owners of the lots; (b) the Salvador spouses be declared as having no rights thereto except as possible assignees of their co-defendants, Pastor Makibalo and Enecia Cristal; (c) the lots be partitioned according to law among the aforementioned co-owners; and (d) the defendants be made to pay for the value of the fruits they harvested from the lots and for moral and exemplary damages, attorney's fees, expenses of the litigation, and costs of the suit.

The two cases were consolidated and jointly heard by Branch 5 of the Court of First Instance of Cagayan de Oro City.

By evidence, Pastor, Makibalo sought to prove the following allegations:

He was married to Maria Yabo who died on 17 March 1962. 4 In August 1949, Jose and Victoriano, both surnamed Yabo, sold their respective shares in the disputed lots to one Pedro Ebarat, and in 1952 the latter sold both shares to Pastor Makibalo. 5 Ebarat formalized this conveyance by executing an Affidavit of Waiver and Quitclaim dated 30 May 1969 in favor of Pastor. 6

On 16 January 1951, the heirs of the late Lope Yabo sold Lope's shares in the litigated properties to one Dominador Canomon, 7 who, in turn, sold the same to Pastor. 8 Canomon afterwards executed an Affidavit of Waiver and Quitclaim in favor of the latter.

9

Pastor Makibalo likewise purchased the shares of Baseliza in the two lots in 1942, of Procopio in 1957, of Francisca in 1958, and of Pelagia in 1967. The only share he did not buy was that of Gaudencia. After every purchase, he took possession of the portions bought and harvested the products thereof. 10

In 1966, Pastor sold back to Alberto a portion of Lot No. 6180 which was formerly the share of Alberto's father, Procopio. 11

In December 1968, Pastor mortgaged the two lots to the spouses Eulogio and Remedios Salvador. 12 On 26 September 1978, he executed a document denominated as a "Confirmation and Quitclaim" whereby he waived all his rights, interests, and participation in the lots in favor of the Salvador spouses. 13

On the other hand, by their evidence, l4 the spouses Alberto and Elpia Yabo tried to prove that they had repurchased from Pastor Makibalo the share of Procopio, which was previously sold to Pastor, and had bought the shares of Jose and Maria. 15

Filoteo Yabo denied having sold the share of his father, Lope Yabo, in the contested lots and disowned his signature and those of his mother, brothers, and sisters appearing at the back of Exhibit "C". 16

Ignacio Yabo testified that his father, Victoriano Yabo, did not know how to write and sign his name. He further declared that he had no knowledge that his father affixed his thumbmark in the document marked as Exhibit "A" purporting to alienate his father's share in the disputed lots. l7

On 15 January 1983, the trial court rendered its decision 18 holding as follows:

Assuming that the thumbmark on the typewritten name "Jose Yabo" in Exh. 3 was that of Jose Yabo, Alberto Yabo and Elpia R. Yabo purchased the share of Jose Yabo in bad faith because they knew before and up to the execution of Exh. 3 on October 24, 1972 that Jose Yabo was no longer the owner of that area because from the documents she borrowed from Mrs. Salvador they came to know that Jose Yabo had sold his shares to Pedro Ebarat, and they have seen that Pastor Makibalo has been in possession of those shares together with the seven others exclusively as owner, he having mortgaged them to Mrs. Salvador.

As Jose Yabo was no longer the owner of the one-ninth (1/9) shares which he sold to Alberto Yabo and Elpia Yabo under Exh. 3, the sale is null and void, and Alberto and Elpia acquired nothing because Jose Yabo had no more title, right or interest to dispose of.

. . .

Pastor Makibalo had been in possession of Jose Yabo's share since 1949 after purchasing it from Ebarat, and has been in possession thereof up to September 26, 1978 when he sold it to the spouses Eulogio Salvador and Remedios Salvador, who are now in possession of the same.

Exh. A, evidencing the sale of Victoriano Yabo's share to Pedro Ebarat was identified by the latter who testified that he sold it to Pastor Makibalo in 1951. Exh. A is an ancient document — 1949 when the document came to existence up to now is more than 30 years, and the document had been in the possession of Pastor Makibalo, then Remedios Salvador who had interest in its preservation.

As regards the shares of Lope Yabo, the same had been sold by his surviving spouse Juana Legaspi, and his children Filoteo, Andresa, Jovita, Bonifacio, and Rundino for P105.00 on January 16, 1951 to Dominador Conomon (Exh. C and C-1), who in turn sold it to Pastor Makibalo in 1952, executing a formal Deed of Waiver and Quitclaim on May 30, 1969 (Exh. D).

Exh. C is an ancient document, being more than 30 years old and has been in the possession of Pastor Makibalo and then the spouses Eulogio and Remedios Salvador — who had an interest in its preservation. The claim of Filoteo Yabo that the signatures appearing in Exh. C are not his and those of his brothers and sisters are of no avail, for if they were not the ones who affixed those signatures and so they did not sell the shares of their father Lope Yabo, why did they not then take possession of said shares — they remained silent from 1951 to September 16, 1976 a period of 25 years. They are now [e]stopped by laches.

And as regards the shares of Baseliza, Francisca and Pelagia, there is no evidence presented to effectively rebut the testimony of Pastor Makibalo that he acquired the shares of Baseliza Yabo in 1942 by changing it with a buffalo; that he bought the shares

of Francisca Yabo in 1958 and that he bought the shares of Pelagia Yabo in 1967; Pastor Makibalo had been in possession of these shares from the time he acquired them, continuously, adversely, openly, and peacefully, as owner up to the time he sold his rights and interest therein to the spouses Eulogio and Remedies Salvador. The heirs of Baseliza, Francisca and Pelagia have not taken any step to protect their rights over those shares for over 40 years in the case of Baseliza's share, for about 20 years in the case of Francisca's share, and for more than 10 years in the case of Pelagia's share. Laches, likewise has rendered their rights stale.

On March 10, 1966 Pastor Makibalo sold back to Alberto Yabo the share of Procopio Yabo in Lot 6180 (Exh. 1 and 2), but there is nothing to show that. Pastor Makibalo also sold back Procopio's share in Lot 6080.

So then, by purchase, Pastor Makibalo and Maria Yabo acquired the shares of Baseliza, Victoriano, Jose, Lope, Procopio and Francisca, or six (6) shares from Lots 6080 and 6180. These belonged to the conjugal partnership of Pastor Makibalo and Maria Yabo. Maria Yabo had also a share from Lots 6080 and 6180, and Pastor Makibalo acquired the shares of Pelagia Yabo in both Lots 6080 and 6180. All in all; Pastor Makibalo acquired eight shares in both Lot 6080 and 6180.

While Maria Yabo died on March 17, 1962, and so one-fourth (1/4) of the shares of Baseliza, Victoriano, Jose, Lope, and Francisca, or one-fourth of five-ninth (5/9) of both lots and one-fourth (1/4) of Lot 6080 should go to the children of the brothers and sisters of Maria Yabo by virtue of the provisions of Article 1001 of the New Civil Code, the latter have lost their rights thereto by laches for their inaction for a very long period and their rights have become stale. On the other hand, Pastor Makibalo who had been in possession of the whole of the eight shares in both Lots 6080 and 6180, enjoying the fruits thereof exclusively, uninterruptedly, publicly, peacefully, and continuously from the death of Maria Yabo up to the filing of the complaint in Civil Case No. 5174 on October 8, 1976, or a period of 14 years, had acquired title to the whole of the eight shares in Lot 6080 and seven shares in Lot 6180 (the share of Procopio in Lot 6180 had been sold back to Alberto Yabo).

IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered finding Pastor Makibalo, now Eulogio Salvador and Remedios Salvador the owner of eight (8) shares, equivalent to eight-ninth (8/9) of Lot No. 6080, and of seven (7) shares, equivalent to seven-ninth (7/9) of Lot No. 6180, and therefore, ordering the partition of Lot 6080 so that the one-ninth (1/9) alloted to Gaudencia Yabo will go to her heirs or their assigns, and the remaining eight-ninth (8/9) will go to the spouses Eulogio Salvador and Remedios Salvador, as successor of Pastor Makibalo, and the partition of Lot 6180 so that the seven-ninth (7/9) portion which formerly belonged to Baseliza, Victoriano, Jose, Lope, Maria, Francisca, and Pelagia will go to the spouses Eulogio and Remedios Salvador, the one-ninth (1/9) which formerly belonged to Procopio, will go to Alberto Yabo, and the remaining one-ninth (1/9) which formerly belonged to Gaudencia, will go to Gaudencia's heirs or their assigns.

Doc. No. 720, recorded on page 28 of Notarial Register No. VII, and acknowledged before Notary Public Isidro S. Baculio (Exh. E) [purportedly executed by Maria Yabo and Pastor Makibalo] is hereby declared null and void, and so the Office of the City Fiscal is directed to cause an investigation of this matter to find out the person or persons responsible for the falsification of the said document, and if the evidence warrants, to file the corresponding criminal action in court. The Office of the City Assessor of Cagayan de Oro City is, likewise, directed to cause the cancellation of Tax Declarations Nos. 33553, marked as Exh. H-3, 33557, marked as Exh. H-2, both in the name of Alberto Yabo, for

having been issued on the basis of a falsified document. Let copies of this decision be furnished the Offices of the City Fiscal and City Assessor, both of Cagayan de Oro City.

No pronouncement as to damages, attorney's fees and costs.

SO ORDERED. 19

The defendants in Civil Case No. 5000 and the plaintiffs in Civil Case No. 5174 appealed from the decision to the Court of Appeals on 19 August 1983. 20

In its decision of 3 February 1993, 21 the Court of Appeals held that (a) Maria Yabo did not sell her share to Alberto and Elpia Yabo; (b) prescription and laches have not run against the private respondents with respect to the 1/9 share of Maria Yabo in the estate of her father and to her conjugal share in the portions acquired from her brothers and sisters; and (c) Procopio never sold his share in Lot No. 6080 to Pastor Makibalo. More specifically it stated:

Exh. E is the document found by the lower court to be a falsification. This finding appellants do not dispute and have not raised an error.

. . .

While acknowledging. that upon the death of Maria Yabo on March 17, 1962, one-half (1/2) of the share of Maria Yabo in Lots 6080 and 6180 and one-half (1/2) of Maria Yabo's conjugal share in the portions bought from Basiliza, Victoriano, Jose, Lope, Pelagia and Francisca should go to the children of the brothers and sisters of Maria in accordance with Article 1001 of the Civil Code, the lower court rule that said children have lost their rights by laches "for their inaction for a very long period and their rights have become stale" (Decision, p. 16; Record, Vol. 2, p. 158).

Appellants in their second assignment of error aver that this is an error.

We agree that the lower court erred.

While between March 17, 1962 when Maria Yabo died and October 8, 1976, when Civil Case No. 5174 for partition was filed, was a period of more than fourteen (14) years, that alone to our mind would not suffice to establish laches or prescription. Upon the death of Maria Yabo, appellee Pastor Makibalo and appellants and the other children of the brothers and sisters of Maria, by operation of law become co-owners of the one-ninth (1/9) share of Maria as heir of her father Alipio and the conjugal share of Maria in the portions acquired from Basiliza, Victoriano, Jose, Lope, Pelagia and Francisca. Time alone is not a decisive factor. Appellee Pastor Makibalo, it must be remembered, is the husband of Maria and, therefore, an uncle in-law of appellants. In our culture, a demand by an heir or heirs for partition immediately upon the death of a relative is more often taken not as a legitimate assertion of a right but of something else, like greed. It must also be noted that the spouses, the appellee Pastor Makibalo and his deceased wife Maria, were childless and, therefore, appellants and the other children of the brothers and sisters of Maria must have felt that at any rate the property would go to them in the course of time. This probably explains why appellants started asserting their right over the property only after appellee Pastor Makibalo sold the same to the spouses Eulogio and Remedios Salvador. Besides, Lots 6080 and 6180 have a combined area only of 5,083 square meters and before the development of Northern Mindanao, and even in

1962 when Maria Yabo died, were not that valuable. This is shown by the fact that each heir sold his other share only for P110.00.

As we have said not time alone. In the early case of Cortes v. Oliva, 33 Phil. 480, it was held that"(o)rdinarily, possession by one joint owner will not be presumed to be adverse to the others, but will, as a rule, be held to be for the benefit of all. Much stronger evidence is required to show an adverse holding by one of several joint owners than by a stranger; and in such cases, to sustain a plea of prescription, it must always clearly appear that one who was originally a joint owner has repudiated the claims of his co-owners, and that his co-owners were apprised or should have been apprised of his claim of adverse and exclusive ownership before the alleged prescription began to run (at page 484). This ruling on prescription should apply with equal force to laches.

The third assignment of error challenges the finding of the lower court that "there is nothing to show that Pastor Makibalo also sold back Procopio's share in Lot 6080" (Decision, p. 16; Records, Vol. 2,p. 158).

Exhibits 1 and 2 cover only Procopio's share in Lot 6180. In other words, Exhibits 1 and. 2 conveyed back to Alberto Yabo only his father, Procopio's share in Lot 6180.

There is indeed no evidence that Pastor Makibalo also sold back to Alberto, his father Procopio's share in Lot 6080.

But from the evidence it appears that Procopio Yabo never sold his share in Lot 6080 to Pastor Makibalo. So there was no need to convey back Procopio's share in Lot 6080.

This fact is evident from the Affidavit of Confirmation of Sale (Exh. M) dated April 22, 1970, executed by Alberto Yabo, which is the very document relied upon by the lower court (Decision, p. 11; Record, Vol. 2, p. 153) in finding that "Alberto Yabo admitted that the share of his father Procopio Yabo was previously bought by Pastor Makibalo." A look at Exh. M, particularly par. 3 thereof, reveals that AlbertoYabo merely acknowledged or confirmed the sale of his father's share to Pastor Makibalo in Lot 6180. In effect, it at the same time proves that Lot 6080 was never sold by Procopio to appellee Pastor Makibalo; otherwise, it would have been included in the said Affidavit of Confirmation of Sale. The Deed of Absolute Sale (Exh. 2) subsequently executed by Pastor Makibalo in favor of Alberto Yabo on April 23, 1970, further proves this point, since the latter merely bought back what was previously sold, his father's share in Lot 6180. 22

The respondent court then concluded and held as follows:

In summary, appellee Pastor Makibalo and his assigns, the spouses Eulogio and Remedios Salvador, are entitled only to one-half (½) of the one-ninth (1/9) share of Maria and three-fourths (3/4) of the six-ninth (6/9) shares acquired from Basiliza, Victoriano, Jose, Lope, Pelagia and Francisca. Accordingly, the partition should be done as follows:

(1) 1/9 of Lots 6080 end 6180 should be given to the heirs of Gaudencia Yabo or their successors and assigns;

(2) 1/9 of Lot 6180 should go to Alberto Yabo and his wife Elpia Yabo;

(3) 1/9 of Lot 6080 should be given to the heirs of Procopio Yabo and their successors end assigns, including Alberto Yabo;

(4) The 1/9 share of Maria Yabo in Lots 6080 and 6180 should be partitioned: One-half (1/2) for the surviving spouse Pastor Makibalo (now the spouses Eulogio Salvador and Remedios Salvador) and the other half for the children of the brothers and sisters of Maria Yabo in equal shares.

(5) The remaining 6/9, one-half (1/2) of which is conjugal between Maria Yabo and appellee Pastor Makibalo should be partitioned three-fourths (3/4) for Pastor Makibalo (now the spouses Eulogio Salvador and Remedios Salvador) and one-fourth (1/4) for the children of the brothers and sisters of Maria Yabo in equal shares.

(6) Jose Yabo if he is still alive should participate in the partition as heir of Maria otherwise he shall be represented by his children.

WHEREFORE, premises considered, subject to the modification in the partition, as indicated above, the decision appealed from is AFFIRMED, without pronouncement as to costs. The lower court is directed if necessary to fully effect the partition, to conduct further hearings and determine whether Jose Yabo is still alive and who are the children of the brothers and sisters of Maria Yabo. 23

Unable to obtain a reconsideration of the said-decision, Remedios Salvador, together with her daughter, Ma. Gracia Salvador, as one of the successors-in-interest of Eulogio M. Salvador who died during the pendency of the appeal, 24 elevated the case to this Court contending that the respondent court erred in ruling that: (1) the shares of Pelagia Yabo should be included in the partition; (2) prescription and laches have not run against the private respondents in relation to the 1/9 share of Maria Yabo in the estate of her father and to her ½ conjugal share in those acquired by purchase; (3) Procopio Yabo never sold to Pastor Makibalo his share in Lot No. 6080; and(4) Jose Yabo should be allowed to participate as heir of Maria even as he had openly rejected this option by refusing to participate in both civil cases. 25

Article 160 of the Civil Code provides that all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains .exclusively to the husband or to the wife. Since the shares of Jose, Victoriano, Lope, Baseliza, Procopio, and Francisca in Lot No. 6180 and Lot No. 6080 had been purchased by Pastor during his marriage with Maria, and there is no proof that these were acquired with his exclusive money, the same are deemed conjugal properties. Not forming part of the conjugal partnership are: (1) the 1/9 share inherited by Maria which remained as her exclusive property pursuant to Article 146 (2) of the Civil Code; (2) the 1/9 share of Gaudencia which was not sold to Pastor; and (3) the 1/9 share of Pelagia which was acquired by Pastor in 1967 or five years after the death of his wife and which was therefore his exclusive property.

There is, thus; merit in the petitioners' first assigned error. The Court of .Appeals should have excluded from the conjugal partnership the share of Pelagia which Pastor had acquired after his wife's death.

Upon Maria's death in 1962, the conjugal partnership of gains was dissolved. 26 Half of the conjugal properties, together with Maria's l/9 hereditary share in the disputed lots, constituted Maria's estate and should thus go to her surviving heirs. 27 Under Article 1001 of the Civil Code, her heirs are her spouse, Pastor Makibalo, who shall be entitled to-one-half (1/2) of her estate, her brother, Jose, and the children of her other brothers and sisters, who shall inherit the other half. There having been no actual partition of the estate yet, the said heirs became co-owners thereof by operation of law. 28

We now determine whether prescription and laches can be applied against the co-heirs of Pastor Makibalo.

It has been said that Article 494 of the Civil Code which provides that each co-owner may demand at any time the partition of the common property implies that an action to demand partition is imprescriptible or cannot be barred by laches. 29 The imprescriptibility of the action cannot, however, be invoked when one of the co-owners has possessed the property as exclusive owner and for a period sufficient to acquire it by prescription. 30

What needs to be addressed first is whether or not Pastor Makibalo has acquired by prescription the shares of his other co-heirs or co-owners. Prescription as a mode of acquiring ownership requires a continuous, open, peaceful, public, and adverse possession for a period of time fixed by law.

This Court has held that the possession of a co-owner is like that of a trustee and shall not be regarded as adverse to the other co-owners but in fact as beneficial to all of them. 31 Acts which may be considered adverse to strangers may not be considered adverse insofar as co-owners are concerned. A mere silent possession by a co-owner, his receipt of rents, fruits or profits from the property, the erection of buildings and fences and the planting of trees thereon, and the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear and convincing evidence that he exercised acts of possession which unequivocably constituted an ouster or deprivation of the rights of the other co-owners. 32

Thus, in order that a co-owner's possession may be deemed adverse to the cestui que trust or the other co-owners, the following elements must concur: (1) that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or the other co-owners; (2) that such positive acts of repudiation have been made known to the cestui que trust or the other co-owners; and (3) that the evidence thereon must be clear and convincing. 33

In Pangan vs. Court of Appeals, 34 this Court had occasion to lay down specific acts which are considered as acts of repudiation:

Filing by a trustee of an action in court against the trustor to quiet title to property, or for recovery of ownership thereof, held in possession by the former, may constitute an act of repudiation of the trust reposed on him by the latter.

The issuance of the certificate of title would constitute an open and clear repudiation of any trust, and the lapse of more than 20 years, open and adverse possession as owner would certainly suffice to vest title by prescription.

An action for the reconveyance of land based on implied or constructive trust prescribes within 10 years. And it is from the date of the issuance of such title that the effective assertion of adverse title for purposes of the statute of limitation is counted.

The prescriptive period may only be counted from the time petitioners repudiated the trust relation in 1955 upon the filing of the complaint for recovery of possession against private respondents so that the counterclaim of the private respondents contained in their amended answer wherein they asserted absolute ownership of the disputed realty by reason of the continuous and adverse possession of the same is well within the l0-year prescriptive period.

There is clear repudiation of a trust when one who is an apparent administrator of property causes the cancellation of the title thereto in the name of the apparent beneficiaries and gets a new certificate of title in his own name.

It is only when the defendants, alleged co-owners of the property in question, executed a deed of partition and on the strength thereof obtained the cancellation of the title in the name of their predecessor and the issuance of a new one wherein they appear as the new owners of a definite area each, thereby in effect denying or repudiating the ownership of one of the plaintiffs over his alleged share in the entire lot, that the statute of limitations started to run for the purposes of the action instituted by the latter seeking a declaration of the existence of the co-ownership and of their rights thereunder.

The records do not show that Pastor Makibalo adjudicated to himself the whole estate of his wife by means of an affidavit filed with the Office of the Register of Deeds as allowed under Section 1 Rule 74 of the Rules of Court, or that he caused the issuance of a certificate of title in his name or the cancellation of the tax declaration in Alipio's name and the issuance of a new one in his own name. The only act which may be deemed as a repudiation by Pastor of the co-ownership over the lots is his filing on 28 April 1976 of an action to quiet title (Civil Case No. 5000). The period of prescription started to run only from this repudiation. However, this was tolled when his co-heirs, the private respondents herein, instituted on 8 October 1976 an action for partition (Civil Case No. 5174) of the lots. Hence, the adverse possession by Pastor being for only about six months would not vest in him exclusive ownership of his wife's estate, and absent acquisitive prescription of ownership, laches and prescription of the action for partition will not lie in favor of Pastor. 35

The issue presented by the petitioners in their third assigned error involves a question of fact. This Court is not ordinarily a trier of facts, its jurisdiction being limited to errors of law. Thus; the findings of facts of the Court of Appeals are as a rule deemed conclusive. However, when the findings of facts of the appellate court vary with those of the trial court, this Court has to review the evidence in order to arrive at the correct findings. 36

In the instant case, a conflict in the findings of facts of the lower courts exists. The trial court found that Pastor was the owner of Procopio's share in Lot No. 6080, as there was nothing to show that he sold it back to Alberto Yabo. The respondent court on the other

hand, held that Procopio Yabo never sold his share in Lot No. 6080 to pastor, thus, there was no need to convey it back to Procopio's son, Alberto.

At this juncture, it is worthy to quote pertinent portions of the testimony of Pastor Makibalo:

COURT: (To the witness.)

Q Where is AlbertoYabo living?

A It is there in their house at Bulua.

ATTY. JARAULA: (Continuing.)

Q In whose land?

A Alipio Yabo's land.

Q What relation has that land to the two (2) parcels of land under litigation?

A I bought already.

Q So, will you please tell the Honorable Court, why Alberto Yabo is staying on that land when you said you have bought that land already.

A So, I sold back a portion to them because they requested me.

COURT: (To the witness.)

Q When was that when you said that Alberto Yabo requested a portion?

A In 1967.

COURT:

Q Did you give that portion which they requested?

A Their share being inherited from their father Procopio was the portion they requested.

COURT

Q Yes. Did you grant that?

A Yes.

Q That is the area you sold to Alberto Yabo, pursuant to his request?

A Because that was the land they inherited from their father that was what they requested.

Q All right. So that, the area now being occupied by Alberto Yabo?

A Yes. That land in the Centro.

Q This is now identified as Lot No. 6180?

A Yes, Your Honor.

ATTY. JARAULA: (Continuing.)

Q Where did you sign a document ceding that portion requested by Alberto Yabo?

A We did not make any receipt in favor of AlbertoYabo because they got only the receipt of that of his father.

COURT: (To the witness.)

Q You mean to say, that the receipt which Procopio signed when he sold his share for [sic] the document which Alberto got?

A Yes.

COURT:

All right.

ATTY. JARAULA (Continuing.)

Q Now, for how much did you buy. the shares of each of the brothers and sisters of your wife?

A One Hundred Ten (P110.00) Pesos.

Q When you sold back to Alberto Yabo, the portion corresponding to the share of his father Procopio in the Poblacion, how much did he pay you?

A The same.

Q By the same, you are referring by the same amount of One Hundred Ten (P110.00) Pesos?

A Yes, Sir. The same amount. 37

The petitioners contend that the sales or conveyances made by Alipio's heirs were for their consolidated shares in the two lots. If this was so, and the receipt which Procopio signed when he sold his consolidated share to Pastor was turned over to Alberto, the inevitable conclusion is that Alberto redeemed his father's share in both lots, not only in

Lot: No. 6180. This conclusion is further buttressed by the above-quoted testimony of Pastor that he bought the shares (consolidated) of each of Alipio's heirs for P110.00 and that when he sold back to Alberto the former share of Procopio, Alberto paid him the same amount of P110.00.

However, since the share of Procopio in the two litigated parcels of land was purchased by Pastor during his marriage with Maria, the same became conjugal property, and half of it formed part of Maria's estate upon her death in 1962. Accordingly, Pastor's resale in favor of Alberto could only be valid with respect to Pastor's one-half (1/2) conjugal share and one-fourth (1/4) hereditary share as heir of Maria. 38 The remaining one-fourth (1/4) should go to Pastor's co-heirs, the private respondents herein.

Now on the fourth assigned error.

Section 1, Rule 69 of the Rules of Court requires that all persons interested in the land sought to be partitioned must be joined as defendants in the complaints. All co-owners and persons having an interest in the property are considered indispensable parties and an action for partition will not lie without the joinder of said persons. 39 It has been held that the absence of an indispensable party in a case renders ineffective all the proceedings subsequent to the filing of the complaint including the judgment. 40

It must be recalled that in Civil Case No. 5174 the private respondents sought the partition of the two lots based on the co-ownership which arose from the right of succession to Alipio's estate. Since Jose Yabo confirmed, through his thumbmark in the verification of the complaint, that he had already parted with his share in Alipio's estate, he in effect admitted that he had ceased to be a co-owner of the two lots which comprised his father's estate. Thus, his non-joinder as a party-plaintiff in the complaint would appear to be proper. He does not, as well, appear to be an indispensable party in Civil Case No. 5000.

As it turned out, however, the evidence and the issues which cropped up rendered imperative the determination of the conjugal assets of Pastor Makibalo and Maria Yabo and the partition of the latter's estate among her heirs. Her estate consists of one-half(½) of the conjugal properties, which should then be divided pursuant to Article 1001 of the Civil Code since the marriage produced no child; thus: one-half (½) to Pastor, and the other half to her brother Jose, and to her nephews and nieces.

Insofar as the partition of Maria Yabo's estate is concerned, Jose is an indispensable party. Strictly, the rule on indispensable parties may bar a partition of Maria's estate. Considering, however, that such estate or its partition are but incidents in Civil Case No. 5000 and Civil Case No. 5174, and the parties have not offered any objection to the propriety of the determination and partition of her estate, then in the light of Section 11 of Rule 3 41 and Sections 1 and 5, Rule 10 42 of the Rules of Court, and following the rulings of this Court in the 1910 case of Alonso vs. Villamor 43 and the 1947 case of Cuyugan vs. Dizon, 44 an amendment of the complaint in Civil Case No. 5174 to implead Jose Yabo as party plaintiff would be in order.

In Alonso, it was held that under Section 110 of the Code of Civil Procedure — whose first paragraph is substantially the same as the aforesaid Section 1 of Rule 10 — and Section 503 thereof, this Court "has full power, apart from that power and authority which is inherent, to amend the process, pleadings, proceedings, and decision in this case by substituting, as party plaintiff, the real party in interest." Our ruling in Cuyugan states:

We, however, do not believe that the case should be dismissed for plaintiff's failure to join her husband. (Sec. 11, Rule 2, Rules of Court). Nor should the case be remanded to the court below and a new trial ordered on this account. The complaint may and should be amended here, to cure the defect of party plaintiffs, after final decision is rendered. Section 11, Rule 2, and Section 2, Rule 17, explicitly authorize such procedure. As this Court had occasion to say in Quison vs. Salud, (12 Phil., 109, 116), "a second action would be but a repetition of the first and would involve both parties, plaintiffs and defendant, in much additional expense and would cause much delay, in that way defeating the purpose of the section, which is expressly stated to be "that the actual merits of the controversy may speedily be determined without regard to technicalities and in the most expeditious and inexpensive manner." (See also Diaz vs. De la Rama, 73 Phil., 104)

To avoid further delay in the disposition of this case, we declare Civil Case No. 5174 as thus duly amended. Consequently, Jose Yabo may participate in the partition of the estate of Maria Yabo. The fourth assigned error must then be rejected.

In view of the foregoing disquisitions, the appealed judgment should be modified as follows: (a) the former 1/9 share of Pelagia Yabo in Lots No. 6180 and 6080 which she sold to Pastor should be treated as the latter's exclusive property which should now pertain to the petitioners, his successors-in-interest; and (b) the former 1/9 share of Procopio Yabo in both lots should be divided as follows: 3/4 (respondent Pastor's 1/2 conjugal share and 1/4 representing his share therein as Maria's heir) for the spouses Alberto and Elpia Yabo, and 1/4 (representing the share therein of Maria's collateral relatives as Maria's heirs) for the private respondents, including Alberto and Jose Yabo. The partition of the two lots in controversy should therefore be made in this wise:

(1) 1/9 share of Gaudencia Yabo should be allotted to her heirs or successors-in-interest;

(2) 1/9 share formerly belonging to Pelagia Yabo — to the petitioners as successors-in-interest of Pastor Makibalo;

(3) 1/9 hereditary share of Maria Yabo to be divided as follows:

(a) 1/2 for the petitioners (as successors-in-interest of Pastor Makibalo), and

(b) 1/2 for the private respondents, including Jose Yabo or his heirs;

(4) 1/9 share formerly belonging to Procopio Yabo to be divided thus:

(a) 3/4 for Spouses Alberto and Elpia Yabo, and

(b) 1/4 for the other private respondents, including Jose Yabo or his heirs;

(5) 5/9 shares which became the conjugal properties of Pastor Makibalo and Maria Yabo to be divided thus:

(a) 3/4 for the petitioners (as successors-in-interest of Pastor Makibalo), and

(b) ¼ for the private respondents, including Jose Yabo or his heirs.

In sum, Lots Nos. 6180 anid 6080 should be partitioned as follows:

1/9 or 4/36 — to Guadencia Yabo's heirs or successors-in-interest;

3/4 of 1/9 or 3/36 — to the spouses Alberto and Elpina Yabo;

8/36 — to the private respondents, including Jose Yabu or his heirs;

21/36 — to the petitioners as successors-in-interest of Pastor Makibalo.

WHEREFORE, the challenged decision of the Court of Appeals of 8 February 1993 in CA-G.R. CV No. 12839 is AFFIRMED, subject to the modifications indicated above. Upon the finality of this decision, let this case be forthwith remanded to the court a quo for further proceedings on the partition of Lots Nos. 6180 and 6080 in conformity with this decision.

No pronouncement as to costs.

SO ORDERED.

G.R. No. 79899 April 24, 1989

D. ANNIE TAN, petitioner, vs.COURT OF APPEALS, CHINA BANKING CORPORATION, GEORGE LAUREL TAN, TEODORA TAN ONG, ROSA TAN, ROSITA TAN, and MAURO UMALI TAN, respondents.

Tabaquero, Albano & Evangelista for petitioner.

Del Rosario, Lim, Telan De Vera & Vigilia for respondent China Banking Corporation. Estela B. Perlas for respondents Tan.

 

GUTIERREZ, JR., J.:

Tan Tiong Tick, married to Tan Ong Hun, was the registered owner of a 178 square meter parcel of land and its improvements located at Lot No. 5, Block No. 2021 of the Cadastral Survey of Manila, Carvajal Street, Binondo, Manila.

Mr. and Mrs. Tan had six children - respondents George Laurel Tan, Teodora Tan Ong, Rosa Tan, Rosita Tan, Mauro Umali Tan, and the petitioner, D. Annie Tan.

On February 6, 1963, in order to secure payment of various obligations with respondent China Banking Corporation or China Bank for short, Mr. and Mrs. Tan Tiong Tick mortgaged the disputed property to the bank. Tan Tiong Tick died on December 22, 1969 without having paid his obligations.

On June 27, 1972, China Bank foreclosed the mortgage and purchased the property at public auction as the highest bidder for the sum of P186,100.00.

On August 31, 1972, the widow and children of Tan Tiong Tick filed a complaint against China Bank with the Court of First Instance of Manila praying for the nullity of the real estate mortgage executed by the spouses Tan and the foreclosure sale conducted by the Sheriff. They also asked that the redemption period be suspended.

The one year period for redemption expired on July 6, 1973 without the Tan heirs having exercised the right to redeem the property. The widow Tan Ong Hun having died, only the children were left to redeem the lot and building. China Bank consolidated its ownership over the land and improvements and a new title, Transfer Certificate Title No. 112924 was issued in the name of the bank on August 16, 1973.

About two weeks earlier, however, the heirs of Tan and China Bank agreed to amicably settle the action for nullity of mortgage before the Court of First Instance of Manila. The parties filed a joint motion to dismiss.

The verbal agreement regarding the disposition of the property was confirmed in a letter of China Bank signed by four of the children and one daughter-in-law on August 3, 1973. The heirs were given the right to repurchase the property for P180,000.00 provided it was done on or before August 31,1974. The agreement reads in part:

xxx xxx xxx

It is understood, that should you fail to pay us in full the aforesaid sum of P180,000.00 on or before August 31, 1974, your right to repurchase the property shall terminate and we shall be free to dispose of the property to any other party. (p. 81, Folder of Exhibits; Exhibit 2, CBC)

There are allegations that some of the heirs tried to buy the property in the ensuing one year period but for one reason or another, were unable to do so.

Finally, on August 30, 1974, or one day before the end of the period to buy back, petitioner D. Annie Tan went to the office of Mr. Dee K. Chiong of China Bank and tendered her China Bank Manager's Check for P180,000.00 as payment. Upon the insistence of the bank official, the deed of sale returning the property to the heirs was executed in favor, not of D. Annie Tan who alone paid for the property but of all the six heirs of Tan Tiong Tick who would, therefore, share and share alike.

This led to the filing of the action by D. Annie Tan against her brothers and sisters and the China Banking Corporation, now respondents in this petition. The petitioner prayed the trial court to order the respondents-(1) to reconvey the disputed property to her and (2) to pay actual damages in the amount of P300,000.00, moral damages in the amount of P100,000.00, exemplary damages in the amount of P50,000.00, and attorney's fees in the amount of P10,000.00.

On September 1, 1980, the Court of First Instance of Manila rendered a decision, the dispositive portion of which reads:

ACCORDINGLY, judgment is hereby rendered as follows:

(1) Dismissing the complaint as well as defendants' counter-claim;

(2) Ordering each of the defendants, namely George Laurel Tan, Teodora Tan Ong, Rosa Tan and Rosita Tan to reimburse the plaintiff the sum of P30,000.00 plus 12% interest from August 20, 1974 until the whole amount is fully paid;

(3) Ordering the defendant Mauro Umali Tan who had been ordered in default to execute the deed of sale of his rights and interests over the property covered in Transfer Certificate of Title No. 64806 in favor of the plaintiff in accordance with his instrument of waiver dated June 25, 1974, and

(4) Without pronouncement as to costs. (Annex B, Rollo, pp. 43-44)

On October 17, 1986, the Court of Appeals affirmed the decision of the trial court. On September 7, 1987, a motion for reconsideration was denied. Hence this petition.

The petitioner gives the following grounds why her petition should be given due course:

1. RESPONDENT COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE DECISION OF THE TRIAL COURT ORDERING REIMBURSEMENT TO THE PETITIONER INSPITE OF THE FACT THAT THE LEGAL BASIS FOR THE REIMBURSEMENT, WHICH WAS NOT CLEARLY EXPLAINED IN THE DECISION, MAY HAVE BEEN THE ALLEGED EXISTENCE OF (1) A CO-OWNERSHIP AMONG THE HEIRS, AND (2) CREDITOR-DEBTOR RELATIONSHIP BETWEEN THE HEIRS AND THE BANK, WHICH HAVE NOT BEEN FULLY ESTABLISHED BY EVIDENCE.

2. ASSUMING, WITHOUT ADMITTING, THE EXISTENCE AMONG THE HEIRS OF A CO-OWNERSHIP AND/OR A CREDITOR/ DEBTOR RELATIONSHIP BETWEEN THE RESPONDENT BANK AND THE HEIRS, RESPONDENT COURT GRAVELY ERRED IN NOT HOLDING THAT THE CO-HEIRS OF PETITIONER, THE PRIVATE RESPONDENTS HEREIN, HAVE IMPLIEDLY WAIVED THEIR RIGHT TO BUY BACK THE PROPERTY BY THEIR FAILURE TO RAISE THE MONEY FOR THEIR RESPECTIVE SHARES UP TO THE LAST DAY GIVEN THEM BY THE RESPONDENT BANK ON AUGUST 31, 1974, THUS WHEN PETITIONER BOUGHT THE PROPERTY BY HER EXCLUSIVE FUNDS, IT BENEFITED HER ALONE AND NOT HER CO-HEIRS.

3. RESPONDENT COURT OF APPEALS, GRAVELY ERRED IN NOT HOLDING THAT THE LETTER-AGREEMENT DATED AUGUST 3, 1973, FOR WHICH THE RIGHTS OF THE PETITIONER AND HER CO-HEIRS TO BUY BACK THE FORECLOSED PROPERTY AROSE, IS ACTUALLY NOT A RIGHT TO REPURCHASE BUT IS AN OPTION TO BUY BACK THE PROPERTY WHICH MAY BE EXERCISED BY THE HEIRS SINGLY OR COLLECTIVELY. (Rollo, pp. 21-22)

The decision of the trial court, affirmed by the Court of Appeals, is based on the principle that the heirs of Mr. and Mrs. Tan Tiong Tick being co- owners of the foreclosed property, a repurchase or reconveyance effected by only one of those heirs redounds to the co-ownership. This explains why the courts below ordered four of the heirs - George Laurel Tan, Teodora Tan Ong, Rosa Tan and Rosita Tan - to reimburse D. Annie Tan the sum of P30,000.00 each plus 12% interests while the share of the fifth heir who was in default and who had waived his interest would go to the petititioner.

The petitioner contends that there was no co-ownership and no creditor/debtor relationship between her and the other children.

The petitioner states:

This controversy addresses itself to the question of whether or not the co- ownership among the heirs over a parcel of land formerly belonging to their parents had been

dissolved by the foreclosure and consolidation of title by a bank after the redemption period of one (1) year had expired, such that a unilateral obligation given by the bank to the heirs to buy back the foreclosed property out of liberality is actually an option to buy given to the heirs as group of persons singly or collectively, and not strictly a right of repurchase to be exercised by the heirs as co-owners. If it is admitted that the co-ownership of the heirs over the foreclosed property of their parents had been dissolved by the consolidation of the title in the mortgagee's name, which in this case is respondent Bank and that there exists no creditor-debtor relationship between respondent Bank and the heirs, then the bank may not impose an obligation to the heirs that they should purchase back the property only as former co-owners or as solidary debtors, but as groups of persons, singly or collectively. The bank would then be imposing an onerous condition upon the heirs of going back to the dissolved co- ownership which the law frowns upon. To settle this case once and for all, herein petitioner anchors her claim on the theory that when the respondent Bank foreclosed the property and consolidated its title on August 16, 1973 and T.C.T. No. 112924 was issued in its name, the co-ownership of the heirs of the deceased parents of petitioner and private respondents over the property in question have been dissolved. In this wise, the decision of the respondent court premised on the existence of a co-ownership or in a creditor-debtor relationship, and ordering the reimbursement to petitioner of the money for the purchase of the property in question which allegedly redounded to the benefits of her co-heirs as co-owners or solidary debtors has no leg to stand on. It is this erroneous decision of respondent court based on a misapprehension of facts and contrary to settled jurisprudence that petitioner comes to this Honorable Court, for relief. (Sese v. Intermediate Appellate Court, G.R. No. 66186, July 31, 1987; Moran, Jr. v. Court of Appeals, 133 SCRA 88; Manero v. Court of Appeals, 102 SCRA 817; Carolina Industries v. CMS Brokerage, 97 SCRA 734; Sacay v. Sandiganbayan, 142 SCRA 593) (Rollo, pp. 7-9)

The first question which arises is the correctness of the assumption that there was a co-ownership among the children of Tan Tiong Tick and Tan Ong Hun when the petitioner purchased the property.

Since the lot and its improvement were mortgaged by the deceased parents, there can be no question that a co-ownership existed among the heirs during the period given by law to redeem the foreclosed property. Redemption by one during this period would have inured to the benefit of all (Adille v. Court of Appeals, G.R. No. 44546, 157 SCRA 455 [1988]; and De Guzman v. Court of Appeals, G.R. No. 47378, 148 SCRA 75 [1987]).

The records show, however, that when the petitioner purchased the disputed property on August 30, 1974, any co-ownership among the brothers and sisters no longer existed. The period to redeem had expired more than one year earlier, on July 6, 1973. The respondent China Bank consolidated its ownership and a new title was issued in the bank's name. When the heirs allowed the one year redemption period to expire without redeeming their parents' former property and permitted the consolidation of ownership and the issuance of a new title, the co-ownership was extinguished. The challenged ruling of the respondent court is, therefore, based on erroneous premises.

Under Section 63-B of Presidential Decree No. 1529, the Property Registration Decree, in case of non-redemption, the purchaser at the foreclosure sale, meaning the respondent Bank in this case, is entitled to a new certificate of title in its name after filing

the necessary papers with the Register of Deeds (Spouses Teofisto and Eulalia Verceles v. Court of First Instance of Rizal, et al., G.R. No. 62219, February 28, 1989). It becomes a ministerial duty to place the buyer in possession of the property he now owns (Banco Filipino v. Intermediate Appellate Court, G.R. No. 68878,142 SCRA 44 [1986]). Ownership, therefore, passed to China Bank and there was no more co-ownership among the heirs.

The non-existence of a common inheritance of the Tan children at the time the disputed property was purchased from China Bank is moreover supported by the evidence showing that there was no more inheritance to divide. It had already been divided. Tan Tiong Tick left other properties in addition to the property disputed in this petition. The eldest son, George Laurel Tan, inherited practically all the properties consisting of several hectares of real estate in Novaliches, Metro Manila; a furnished house in Greenhills, Mandaluyong; and a cigar factory (t.s.n., November 18, 1976, p. 24). The petitioner also claims that stock certificates went to another sister, Teodora Tan Ong because she "forced" the other heirs to sign a deed of sale in her favor.

May the heirs be considered as debtors in common, substituting for their parents in liquidating the latter's obligations?

The answer is again, No.

Upon the foreclosure of the mortgaged property and its purchase by China Bank as the highest bidder, the proceeds of the auction sale were applied to the various debts of the Tan spouses. The parents' debts were paid. The obligation having been extinguished, there was no more common debt and no legal subrogation arising when one pays the debts properly accruing to several others.

Respondent China Bank contends that the letter agreement dated August 3, 1973 called for the reconveyance of the land and improvements to all the heirs "in equal undivided shares."

There is no such stipulation in the letter. There is reference to a verbal agreement to reconvey to the "heirs of your late father" but no requirement that everybody must share in the purchase or the offer would be withdrawn.

What is clear is that the bank's general manager, Mr. Dee K. Chiong tried to impose the above requirement when the one year period to buy back was about to expire. Mr. Dee rejected the offer of D. Annie Tan to buy the property for herself alone. He insisted that the money brought by the petitioner would be considered a joint fund of all the heirs and ordered the same annotated on the back of the check given as payment for the property.

This attitude of Mr. Dee K. Chiong is in sharp contrast to the bank's official stand embodied in a letter to the Central Bank.

Asked to comment on a letter-complaint filed by D. Annie Tan with Malacañang and forwarded to the Central Bank, the respondent bank through its Legal Officer wrote the Director, Department of Commercial and Savings Bank, Central Bank an explanation, part of which states:

To our mind, the dispute is not between the Bank and the heirs or any one of them, but among the heirs themselves, for as far as the Bank is concerned, it makes no difference whether the property is reconveyed to all the heirs or to any one of them alone as they may agree. As a matter of fact the complainant has already filed a Petition under the Cadastral Case now pending in the CFI, Manila, involving the property and all the heirs. (Copy of the Petition is hereto attached as Annex "l0").

At any rate, it is our honest conviction that the charges filed by the complainant and the interpretation of Articles 1302 and 1303 of the New Civil Code properly belong to the Courts where the complainant can always have her right, if any, vindicated, and if only to resolve the issue, we shall welcome any court action to clear the matter. (Folder of Exhibits, pp. 97- 98)

The petitioner questions the unusual interest shown by China Bank in the case when its stand should be one of neutrality. She claims that there is an orchestrated alliance between the bank and the other private respondents as shown by the fact that the bank seems to be more eager and vigorous than the other heirs to win the case. (Rollo, p. 310).

As earlier stated, there is nothing in the August 3, 1973 letter-agreement which called for either a purchase by all the heirs or no purchase at all. But could not Mr. Dee K. Chiong validly impose such a requirement at the time the tender of money to buy the property was made?

Again, the answer is in the negative.

We agree with the petitioner that her agreeing to sign an annotation at the back of the check was a case of vitiated consent. She states that her conformity was null and void because it was made under duress. The records show that up to the last hour the petitioner was pleading with Mr. Dee K. Chiong to buy the property for herself alone as the money she had raised was not in any way owned by the other heirs. Since the period was expiring, the petitioner had no choice. It was a case of either agreeing to the bank executive's requirement or losing the family property forever to strangers.

Mr. Dee could not impose a new co-ownership upon the petitioner, her brothers and sisters. Co-ownership is discouraged by law.

As held in the case of Basa v. Aguilar (G.R. No. L-30994, 117 SCRA 128, 130-131 [1982]):

Legal redemption is in the nature of a privilege created by law partly for reasons of public policy and partly for the benefit and convenience of the redemptioner, to afford him a way out of what might be a disagreeable or inconvenient association into which he has thrust. (10 Manresa, 4th Ed., 317.) It is intended to minimize co-ownership. The law grants a co-

owner the exercise of the said right of redemption when the shares of the other owners are sold to "a third person." A third person, within the meaning of this Article, is anyone who is not a co-owner. (Sentencia of February 7, 1944 as cited in Tolentino, Comments on the Civil Code, Vol. V, p. 160.) (Emphasis supplied)

The records show that the annotation at the back of the P180,000.00 manager's check that the funds were contributed by all the heirs was made by a China Bank representative and that D. Annie Tan was told by Dee K Chiong that if she would not sign it, he would not accept the manager's check and she would lose her right to buy the lot within the period offered by the bank. The petitioner, at first, refused but being placed between the difficulty of agreeing to the condition or losing the property, she decided to agree. (t.s.n., September 27, 1976, pp. 24-25; t.s.n., November 18, 1976, p. 36) The petitioner was also aware that a certain Mr. Ang who operated a travel agency in the next door building was eager to buy the property at double the price stated in the letter-agreement executed more than a year earlier. (Court of Appeals Rollo, Brief for Plaintiff-Appellant, p. 77)

The petitioner further argues:

The insistence by respondent Bank that the said letter-agreement is a right to re-purchase given to all the heirs of the late Tan Tiong Tick to be exercised only collectively cannot legally stand considering the following circumstances:

a) What will happen if one of the heirs of the late Tan Tiong Tick refuses or fails to exercise his right to purchase for whatever reason? Cannot any of the other heirs, but all, raise sufficient funds for the full amount of the purchase price because the other heirs could not let him or her borrow money to cover his or her share? Would such refusal then prejudice the other heirs?

b) Cannot two or more heirs, but not all, who have sufficient funds exercise the right of purchase?

c) Would all the heirs then who signed the letter-agreement as in the case at bar lose their right to purchase the property because of the refusal of one heir?

d) If only one of the heirs has sufficient funds to purchase the property and the others do not have, and this particular heir does not want to lend her or his money to the other heirs who have none, can the offer of the other heir to exercise the option to buy in her or his own name alone be legally refused?

e) Finally, can the buying back of the property by one heir alone be disallowed considering that she is the one who has enough or sufficient funds and that her action will prevent the property from going to third persons, like respondent Bank, for failure to pay the purchase price on the last day of the period given by respondent Bank?'

It is petitioner's submission that to follow the arguments of respondent Bank that the letter-agreement can only be exercised collectively and not singly would render the said agreement a useless piece of paper, and gravely prejudicial to the property itself.

What is more, even the respondent bank's legal officer, Atty. Arsenio Sy Santos, when asked to comment on the case of the petitioner, admitted that indeed the letter-

agreement of August 3,1973 is actually an option to buy. Said legal officer gave the following observations and comments, to wit:

x x x x x x x x x

Observations and comments -

It may be interesting to note that the provisions of Articles 1302 and 1303 which read as follows:

"Art. 1302. It is presumed that there is legal subrogation:

(1) When a creditor pays another creditor who is preferred even without the debtor's knowledge;

(2) When a third person, not interested in the obligation, pays with the express or tacit approval of the debtor.

(3) When even without the knowledge of the debtor, a person interested in the fulfillment of the obligation pays, without prejudice to the effects of confusion as to the latter's share.

Art. 1303. Subrogation transfers to the person subrogated the credit with all the rights thereto appertaining, either against the debtor or against third person, be they guarantors or possessors of mortgages, subject to stipulated in a conventional subrogations (sic)."

refer to cases where the creditor-debtor relationship exists among the parties. (Rollo, pp. 243-246)

xxx xxx xxx

There was no creditor-debtor relationship existing among the heirs and Mr. Dee had no legal authority to create one.

China Bank contends that when it told the petitioner that the property could not be reconveyed to her alone, she was likewise informed that a similar offer from some of the other co-heirs had also been politely turned down. (Exhibit 7, China Bank, Folder of Exhibits, p. 87)

The petitioner disputes this claim. She states that there was no such offer by her co-heirs because she was the only one willing to buy back the lot and the only one with the means to do so at that time. It was only on September 12, 1974 that the individual respondents offered to repurchase. By that time, D. Annie Tan had already paid for the lot and was already insisting on a conveyance of the property in her name alone.

The petitioner states:

There is, therefore, no doubt that the money used in buying back the property belongs exclusively to the petitioner. Private respondents' in action in not contributing the

necessary money up to the last day of the buy back period is fatal to their cause. To paraphrase one case decided by this Honorable Court, courts cannot look with favor at parties who, by their silence, delay and inaction, knowingly induce another to spend time, effort and expense in protecting their interests over the property by paying the buy back money only to spring from ambush and claim title or interest over the property when the land and building value have become higher. (See Lola v. Court of Appeals, G.R. No. 46575, November 13, 1986). Moreover, the laws aid the vigilant, not those who slumber on their rights. (Miraflor v. Court of Appeals, G.R. Nos. 40151-52, April 8, 1986).

Definetly, the effects of a waiver militates against the private respondents. Having forfeited, abandoned and/or waived their rights, private respondents are now estopped from taking an inconsistent position. They cannot now assert that they are still CO-owners of the property with the petitioner. (Sec. 65, Rule 123, Rules of Court; Hernaez v. Hernaez, 32 Phil. 214) (See also Banco de Oro Savings & Mortgage Bank v. Equitable Banking Corporation, G.R. No. 74917, January 20, 1988, citing Saura Import and Export Co. v. Court of Appeals, 24 SCRA 974). All the elements of a valid waiver (1) the existence of a right; (2) the knowledge of the existence thereof; and (3) the intention to relinquish such right, either expressly or impliedly are present. (Director of Lands v. Abiertas, 44 O.G. 928). ... (Rollo, pp. 238-239)

The claim of the respondents Tan in their memorandum that they gave their individual contributions to the petitioner to raise the P180,000.00 is not worthy of credence. At the time of the repurchase, the petitioner was already estranged from the respondents Tan and they would not have given her any money without corresponding receipts or given her money under any circumstance, for that matter. In fact, there is no reason why the petitioner should be the one to collect the money of the heirs and bring it to China Bank. She was neither a son nor the eldest. Neither did the others feel kindly towards her. The petitioner had called for a conference on July 23, 1974 at 619 Carvajal Street, Binondo, Manila to discuss compliance with the letter-agreement considering the fast approaching deadline. Not one showed up. (Rollo, pp. 44-45) The money was raised by D. Annie Tan through her connections with Jardine Davies because of her construction business. The decision of the respondent court confirmed the factual findings of the trial court. It declared that the respondents Tan became debtors of petitioner Tan and ordered them to reimburse the P30,000.00 each which were advanced by the petitioner. There was no pooling of resources up to August 30,1974 when at 4:00 in the afternoon, D. Annie Tan went to Mr. Dee K. Chiong with the China Bank manager's check for P180,000.00.

The equities of this case also favor the grant of the petition. D. Annie Tan went to plenty of trouble in her effort to buy back the property formerly owned by her parents. There is nothing in the records to show that, beyond making some perfunctory allegations, the respondents Tan did anything to save the property from falling into the hands of other persons. The petitioner states that she has now spent substantial sums to pay for real estate taxes and to renovate, and improve the premises. According to her she has "spent her little fortunes to preserve the patrimony left by her parents." She alone deserves to be entitled to the property, in law and equity. (Rollo, p. 317)

WHEREFORE, the petition is hereby GRANTED. The questioned decision of the Court of Appeals is REVERSED and SET ASIDE. The respondent China Banking Corporation

is ordered to execute the deed of sale over the disputed property in favor of the petitioner alone.

SO ORDERED.

METRO MANILA TRANSIT CORPORATION, PETITIONER, VS. D.M. CONSORTIUM, INC., RESPONDENT.

DECISION

Corona, J.:

On appeal by certiorari under Rule 45 of the Rules of Court are the decision[1] of the Court of Appeals (CA) dated December 6, 1999 in CA-G.R. CV No. 54294 and its resolution[2] dated March 16, 2001, affirming the judgment[3] of the Regional Trial Court (RTC) of Quezon City, Branch 93.

In 1981, the national government, through petitioner Metro Manila Transit Corporation (MMTC), launched a bus assistance program to aid private bus operators in acquiring new bus units through a “lease-purchase on easy installment payment” scheme. Respondent D.M. Consortium, Inc. (DMCI) availed of the program and entered into a lease-purchase agreement (LPA) with MMTC for the acquisition of 228 buses. Both parties agreed that, pending full payment, the monthly installments were to be treated as rentals. The salient features of the agreement included, among others, the following:

4.05 The operation and use of the [L]eased [E]quipment shall be at the risk of the LESSEE and not of the LESSOR, and the obligation of the LESSEE to pay the rent hereunder to the LESSOR shall be unconditional.

xxx xxx xxx

11.01 It shall be a violation of the Lease Purchase Agreement [:] (a) if the LESSEE shall default in the payment of any rent hereunder and such default shall continue unremedied for a period of three (3) consecutive months;

11.02 In the event of a violation or breach of this lease, as herein defined: (a) the leased equipment shall, upon the LESSOR’s option and demand, forthwith be delivered to the LESSOR, at the LESSEE’s expense, at such place as the LESSOR may designate, and the LESSOR, and/or its agents may, without notice or liability or legal process, enter upon the premises where such leased equipment is situated, and repossess all or any of the leased equipment, using such force as may be necessary and permitted under the law applicable;

xxx xxx xxx

14.01 Title of the [L]eased [E]quipment shall, at all times, remain with the LESSOR. The [L]eased [E]quipment is, and shall remain, personal property of the LESSOR. The original registration of title thereto in the name of the LESSOR or any subsequent registration in the name of the LESSOR shall be effected by the LESSEE at its expense.

xxx xxx xxx

15. 01 The LESSEE shall have the option to purchase or otherwise acquire title to or ownership of any of the [L]eased [E]quipment, upon expiration of the lease period, or prior to the expiration of said lease period, provided, that the LESSEE shall have paid in full all outstanding obligations to the LESSOR.[4]

After an alleged default in its amortizations, DMCI was informed by MMTC that it was taking immediate possession of all the bus units and accessories.

Meanwhile, because of the national emergency caused by a coup d’ etat attempt, then President Corazon Aquino issued Memorandum Order (MO) No. 267 on December 7, 1989 directing the Secretary of Transportation and Communication to temporarily take over the operations of DMCI. Under the MO, the DOTC Secretary was to recommend payment of “just compensation to the owner for the use of their buses and facilities.”[5]

On December 9, 1989, MMTC repossessed the buses by occupying the premises of DMCI, including its offices.

Consequently, MMTC took steps to sell the repossessed buses at a public auction. Before the public bidding, however, DMCI filed a petition for injunction with prayer for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction in the RTC of Quezon City, Branch 93.[6]

On April 11, 1990, a TRO was issued enjoining the scheduled public auction of the buses. After due notice and hearing, the lower court later issued a writ of preliminary injunction in favor of DMCI.

MMTC filed a motion for reconsideration (MR) of said order but this was denied. It subsequently filed a petition for certiorari in the CA questioning the issuance of the writ of preliminary injunction but it was likewise dismissed for lack of merit.

Thereafter, trial of the main case ensued.

On September 11, 1995, the RTC decided in favor of DMCI and found no basis for MMTC to repossess the buses or to sell them at public auction. According to the trial court, under 11.01[7] of the LPA, repossession was possible only if there was failure on the part of DMCI to pay within three consecutive months but, contrary to MMTC’s claim, DMCI made partial payments which were accepted without protest. The trial court added that long before the December 9, 1989 takeover, DMCI had already paid about P106 million or more than its original obligation of P71 million under the LPA. The dispositive portion of the decision read:

WHEREFORE, premises considered, judgment is hereby rendered in favor of [DMCI] and the [MMTC] is hereby ordered to: 

1. Pay [DMCI] the amount of P200,000.00 by way of moral damages.2. Pay the [DMCI] the amount of P100,000.00 for the use of the furniture[s], fixtures and other 

equipments.

3. [Pay] the [DMCI] the amount of P500,000.00 for the reasonable rent for the use of DMC[I]‘s buses from December 9, 1989 up to the present.

4. [Return] all DMC[I]‘s buses that were taken by [MMTC].5. [Pay] attorney’s fees in the amount of P100,000.00[;] and6. [Pay] the costs.

SO ORDERED.[8]

On appeal to the CA, the appellate court sustained the RTC’s order for MMTC to return the buses to DMCI. However, it deleted the award to DMCI of moral damages, payment for the use of its buses and office facilities and attorney’s fees. The decretal portion of the decision read:

WHEREFORE, foregoing considered, a new decision is hereby entered by (1) AFFIRMING the return of all the DMC[I] buses taken by the [MMTC] as embodied in no. 4 of the dispositive portion of the appealed decision; and (2) we REVERSED and SET ASIDE the rest of the dispositive portion of the questioned decision as appearing in no. 1,2,3,5 and 6.

SO ORDERED.[9]

MMTC and DMCI filed their respective MRs of the CA decision.

In its MR, MMTC contended that it owned the buses and its takeover/repossession of said buses was justified under the LPA. On the other hand, DMCI insisted that it was not the LPA that was involved but MO No. 267 which expressly called for payment of just compensation on account of the government’s takeover of its facilities during the national emergency declared by then President Aquino. It also argued that it was entitled to damages since the buses could no longer be returned in their original condition.

On March 16, 2001, the CA issued a resolution modifying its questioned decision. It held:

1. Adjudging – MMTC liable to pay [DMCI] the value of the subject 228 DMC[I] buses as of December, 1989, to be determined by the lower court after appropriate proceedings. For this purpose[,] the case is remanded to the lower court only for this purpose and thereafter to enforce this judgment.

2. Requiring – MMTC to pay [DMCI] the amount of P2,000,000.00 for the appropriation and use of its furniture, fixtures and other equipments.

Except as herein modified, the dispositive part of the Decision of December 6, 1999 is maintained.

SO ORDERED. (emphasis supplied)[10]

The appellate court’s bases for modifying its previous decision read:

There is preponderant evidence that MMTC took over not only of the transport facilities of [DMCI], but also the latter’s furniture, equipments, fixtures….It is not disputed that MMTC did not have the 

semblance of authority whether under the LPA or MO 267 to appropriate the said properties thus listed. MMTC in fact admitted that [DMCI was] entitled to reasonable compensation for the use of these properties.

xxx xxx xxx

While the total value of the items listed by [DMCI] was P5,220,997.59 …, MMTC pray[ed] in their Brief and Motion for Reconsideration for an award of P2,000,000.00. We now find this reasonable and supported by evidence.

xxx xxx xxx

The last matter to be resolved is DMCI’s assertion that MMTC should pay the market value of the 228 bus units as of December 9, 1989, the date of the repossession.

The lower court decreed that the subject buses should be returned to DMCI as a necessary consequence of the absence of legal and factual basis for the taking thereof. On this, we sustained the lower court.

DMCI…pointed out, however, that the subject buses can no longer be returned in the same condition that they were at the time of repossession, understandably so considering that eleven (11) years had lapsed. In any event, there seems to be no disagreement on this point. It is then posited that DMCI … should be paid the corresponding value of the repossessed buses as of the time of the taking, the return thereof having become impractical, if not possible.

We agree.[11]

Only MMTC appealed the CA decision and resolution to us.

In this petition, MMTC raises the following issues: (1) whether it can be ordered to return the repossessed buses after exercising its right of possession as owner/lessor thereof and (2) whether the award of P2 million as payment for the use and appropriation of DMCI’s furniture, fixture and other equipment was warranted.[12]

On the first issue, MMTC argues that the assailed CA decision and resolution were contrary to the provisions of Article 1485[13] in relation to Article 1484[14] of the Civil Code. On the second issue, MMTC insists that the lower courts had no basis for holding it liable for P2 million for the use of DMCI’s furniture, fixtures and equipment.

We deny the petition.

It is futile for MMTC to challenge the CA’s order to return the repossessed buses to DMCI because the CA already vacated this pronouncement in its assailed resolution of March 16, 2001. Instead, the CA directed MMTC to reimburse DMCI the value of the buses at the time of their unlawful seizure considering that they could no longer be returned in their original condition.

MMTC’s invocation of Articles 1484 and 1485 is misplaced. Although these refer to the installment sales of personal properties and to lease, respectively, both provisions find no application in this case.

First, the records indicate that MMTC did not avail of the options set forth in Article 1484; instead it utilized the option to repossess the buses under 11.02[15] of the LPA. Second, the LPA governed the rights of the parties, hence, the CA and the RTC correctly resolved their conflicting claims based on the LPA’s provisions. Well-settled is the rule that a contract voluntarily entered into by the parties is the law between them and all issues or controversies shall be resolved mainly by the provisions thereof.[16]

At any rate, MMTC may still be ordered to return the repossessed buses notwithstanding that, as owner/lessor, it had the right to possess them in the first place.

Undeniably, under the law, jus possidendi is a necessary incident of ownership.[17] However, the owner cannot exercise this right to the prejudice of a party whose possession is predicated on a contract like agency, trust, pledge or lease, as in this case.[18] Under the LPA between MMTC and DMCI, the latter, as lessee, had a right of possession over the buses and it may be deprived of said right only if it failed to pay its dues for three consecutive months.[19] Both the trial court and the appellate court established that there was actually no default on the part of DMCI justifying MMTC’s seizure of the buses. MMTC cannot now use the principle of jus possidendi as an excuse for its unwarranted act and frustrate the redelivery of the vehicles to DMCI.

In addition, a party vested with the right of possession to the property may set up this right even against the owner thereof. Under Article 539 of the Civil Code, every possessor has a right to be respected in his possession and, if deprived of such right, the law shall restore it to him. In the case at bar, after having been unjustly denied of its right of possession to the buses, DMCI is entitled to get them back from MMTC. But since the buses can no longer be returned in their original state and considering further that DMCI has already paid their full amount, the CA resolution ordering MMTC to instead pay DMCI their value at the time of repossession is correct.

In particular, we agree with the CA’s disquisition on the reimbursement order that:

Although the payments made by DMCI were in the concept of rentals, in reality, these form part of the purchase price because the agreement provided for the transfer of ownership from MMTC to DMCI upon full payment of the value of the buses supposedly under lease, it being expressly provided that “the sum total of all the rentals of the [L]eased [E]quipment”shall constitute as the purchase price of the equipment[s].

Considering the payment of the P 106 Million and MMTC’s conduct that rendered it impossible for DMCI to fully comply with its remaining obligations under the LPA, if any, we find applicable and so apply Article 1234 of the Civil Code, which reads:

“ART. 1234. If the obligation has been substantially performed in good faith, the obligor may recover as though there had been strict and complete fulfillment, less damages suffered by the oblige.”

For all intents and purposes…DMCI has acquired ownership of the 228 buses and therefore[,] it is entitled to the value thereof as of the date of unlawful seizure by MMTC. xxx[20]

On the second issue, we hold that the determination of whether the award of P2 million was warranted requires a review of this case’s facts and evidence. This Court is not a trier of facts[21] and it shall only pass upon them for compelling reasons[22] which unfortunately are not present here.

WHEREFORE, the assailed decision of the Court of Appeals dated December 6, 1999 in CA-G.R. CV No. 54294 and its resolution dated March 6, 2001 are hereby AFFIRMED. Let the records of this case be REMANDED to the Regional Trial Court of Quezon City, Branch 93 for the purpose of determining the value of the buses to be paid by petitioner Metro Manila Transit Corporation to respondent D.M. Consortium, Incorporated.

Costs against petitioner.

SO ORDERED.

AZNAR V.YAPDIANGCO

13 SCRA 486

FACTS:Theodoro Santos advertised in the newspapers the sale of his Ford Fairlane 500. After the advertisement, a certain de Dios, claiming to be the nephew of Marella, went to the residence of Santos and expressing his uncle’s intent to purchase the car. Since Santos wasn't around, it was Irineo who talked with de Dios. On being informed, Santos advised his son to seeMarella, which the son did. Marella expressed his intention to purchase the car. A deed of sale was prepared and Irineo was instructed by his father not to part with the deed and the car without receiving the purchase price from Marella. When irineo and de Dios arrived at the residence of Marella, the latter averred that his money was short and had to borrow from his sister. He then instructed de Dios and Irineo to go the supposed house of the sister to obtain the money with an unidentified person. He also asked Irineo to leave the deed to have his lawyer see it. Relying on the good faith of Marella, Irineo did as requested. Upon arriving at the house of Marella’s supposed to be sister, de Dios and the unidentified person then disappeared together with the car. This prompted Santos to report the incident to the authorities. Thereafter, Marella was able to sell the land to Aznar. And while in possession of the car, police authorities confiscated the same. This prompted Aznar to file an action for replevin.

HELD:Marella never had title to the car as the car wasn't ever delivered to him. While there was a deed of sale in his favor, he was only able to obtain possession of the car since he stole it from Santos. The applicable law is Article 559. The rule is to the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it, not only from its finder, thief or robber, but also from third persons who may have acquired it in good faith from such finder, thief orrobber. The said article establishes 2 exceptions to the general rule of irrevindicabilty—to wit, the owner has lost the thing or has been unlawfully deprived thereof. In these cases, the possessor cannot retain the thing as against the owner who may recover it without paying any indemnity, except when the possessor acquired it in a public sale. Furthermore, the common law principle that where one of two innocent persons must suffer a fraud perpetrated by another, the law  imposes the loss upon the party who, by his misplaced confidence, has enable the fraud to be committed, cannot be applied in this case, which is covered by an express provision of law.

DIZON V. SUNTAY

47 SCRA 160

FACTS:Suntay was the owner of a diamond ring. On a relevant date, she and Sison entered into a transaction wherein Sison would sell the diamond ring on a commission basis. Both parties knew each other for a long time and that there was already a prior transaction between the two wherein Sison sold on commission another piece of jewelry owned by Suntay. As dayspassed with no return of Sison, Suntay made demands. The ring could not be returned since it was pledged to Dizon’s pawnshop, without the consent of Suntay. Suntay insisted on the return of her ring and Sison then gave her the pawnshop ticket. Upon knowledge of the pledge, she filed a case of estafa against Sison as well as sent a written demand to Dizon for the return of the ring. Dizon refused to do so.

HELD:One who has lost or has been unlawfully deprived of a movable may  recover the same from the person in possession of the same and the only defense the latter may have is if he has acquired it in good faith at a public sale in which case the owner cannot obtain its return without reimbursing the price paid therefore. Suntay who was unlawfully deprived of the ringwas entitled to recover it from Dizon who was found in possession of the same. In the present case, not only has the ownership and the origin of the ring misappropriated been unquestionably proven but also that Sison has fraudulently and in bad faith, disposed of and pledged them contrary to agreement, with no ownership, and to the prejudice of Suntay, who was thereby illegally deprived of said jewels. The owner has the right to recover. He is not estopped when his property has been unlawfully pledged by another.

EDCA PUBLISHING v. SANTOS

Possession of movable property acquired in GF is equivalent to title. There is no need to produce a receipt.

FACTS:

EDCA Publishing sold 406 books to a certain Professor Jose Cruz who ordered these by telephone, which was agreed to be payable on delivery. The books were subsequently delivered to him with the corresponding invoice, and he paid with a personal check.

Cruz then sold the 120 of the books to Leonor Santos who asked for verification, and was then showed the invoice for the books.

EDCA became suspicious when Cruz ordered another set of books even before his check cleared. Upon investigation, EDCA found that he wasn’t the person he claimed to be (Dean in DLSU). EDCA had the police capture Cruz, as well as seize the books from Santos. Santos demanded the return of the books.

RTC granted the writ of preliminary attachment.

Subsequent dishonor of a check, which did not render the contract of sale void does not amount to unlawful deprivation of property. (There was a perfected contract of sale so the proper remedy is specific performance)

ISSUE:

Whether or not the owner was unlawfully deprived of the property?

HELD: No.

Santos was a good faith buyer after taking steps to verify the identity of the seller. When she was showed the invoice, she reasonably believed that he was a legitimate seller.

With regard to unlawful deprivation, EDCA was not unlawfully deprived of the property by mere failure of consideration. There was already a perfected contract of sale. Proof was even substantiated when EDCA gave the invoice as proof of payment upon delivery of the books. This did not amount to unlawful taking, because by the delivery of EDCA to Cruz, ownership of the books already transferred to him.

VDA. DE ALBAR V. CARANGDANG

106 PHIL 855

FACTS:Dona Rosario Fabie was the owner of a parcel of land with a building constructed thereon. Upon her death, she bequeathed the naked ownership to Rosario Grey while the usufruct to Josefa. Thereafter, a fire broke out and the building constructed on the land was destroyed. Then a Chinaman offered to lease the property and Josefa nows demand a share in the rentals given by the lessor.

HELD:A life usufruct constituted on the rentals of the building located on a certain place includes the rentals on both the building and on the land on which it is erected, because the building cannot exist without the land. Hence, the usufruct isn’t extinguished by the destruction of the building, for under the law, usufruct is extinguished only by the total loss of the thing subject of the encumbrance. 

VILLANUEVA VS. VELASCO- Legal Easement

A legal easement is one mandated by law, constituted for public use or for private interest and becomes a continuing property right unless its removal is provided for in a title of conveyance or the sign of the easement is removed before the execution of the conveyance; Essential requisites for an easement to be compulsory are: (1) the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway; (2) proper indemnity has been paid; (3) the isolation was not due to acts of the proprietor of the dominant estate; (4) the right of way claimed is at point least prejudicial to the servient estate; and (5) to the extent consistent with the foregoing rule, where the distance from the dominant estate to a public highway may be the shortest.

FACTS:

Petitioner Bryan Villanueva bought a parcel of land in QC from Pacific Banking Corporation which it acquired from the spouses Maximo and Justina Gabriel. When he bought it, there was a small house on its southeastern portion. It occupies one meter of two meter wide easement of right of way the Gabriel spouses granted to Espinolas, predecessors-in-interest of the private respondents, in a contract of easement of right of way. Amongst others, the contract provides that the easement’s purpose is to have an outlet to Tandang Sora which is the nearest public road and the least burdensome (Espinolas’s property being the dominant estate and Gabriel spouses’s as the servient estate.) It was also provided in the contract that the easement “shall be binding to the successors, assigns without prejudice in cases of sale of subject property that will warrant the circumstances.”

The private respondents were able to acquire a writ of demolition on the house obstructing the easement against the Spouses Gabriel. The petitioner filed a third party claim with prayer to quash the writ saying that he was not made a party to the civil case and that the writ of demolition should not prosper since the easement which is meant to protect was not annotated in the petitioner’s title.CA ruled in favor of the private respondents saying that the easement exists even though it was not annotated in the torrens title because servitudes are inseparable from the estate to which they actively or passively belong. And that Villanueva is bound by the contact of easement, not only as a voluntary easement but as a legal easement.

ISSUE:

Whether or not the easement on the property binds petitioner?

RULING:

YES. A legal easement is mandated by law, and continues to exists unless its removal is provided for in a title of conveyance or the sign of the easement is removed before the execution of the conveyance conformably with Art 647 in accordance with Article 617 of the Civil Code.

Essential requisites for an easement to be compulsory are: (1) the dominant estate is surrounded by other immovables and has no adequate outlet to a public highway; (2) proper indemnity has been paid; (3) the isolation was not due to acts of the proprietor of the dominant estate; (4) the right of way claimed is at point least prejudicial to the servient estate; and (5) to the extent consistent with the foregoing rule, where the distance from the dominant estate to a public highway may be the shortest.The existence of the easement has been established by the lower courts and the same has become conclusive to the SC. The small house occupying one meter of the two-meter wide easement obstructs the entry of private respondent’s cement mixer and motor vehicle (no mention of what kind.) Accordingly, the petitioner has to demolish the house to make way for the easement.

HIDALGO ENTERPRISES, INC. vs. BALANDAN, et al.- Attractive Nuisance Doctrine

Attractive nuisance doctrine generally is not applicable to bodies of water, artificial (e.g. water tanks) as well as natural, in the absence of some unusual condition or artificial feature other than the mere water and its location.

FACTS:

Guillermo Balandan and his wife is claiming damages in the sum of P2,000 for the death of their son, Mario. Petitioner was the owner of an Ice plant, who had in their premises 2 tanks filled of water, 9 feet deep. The factory was fenced but Ingress and egress was easily made because the gates were always open and there was no guard assigned in the said gate. Also the tanks didn’t have any barricade or fence. One day when Mario was playing with his friend, they saw the tank inside the factory and began playing and swimming inside it. While bathing, Mario sank to the bottom of the tank, only to be fished out later, already as a cadaver, having died of ‘asphyxia secondary to drowning.’ The lower decided in the favor of the parents saying that the petitioner is liable for damages due to the doctrine of attractive nuisance.

ISSUE: Whether or not the doctrine of attractive nuisance is applicable in this case?

RULING: NO.

The doctrine of attractive nuisance states that “One who maintains on his premises dangerous instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable to a child of tender years who is injured thereby, even if the child is technically a trespasser in the premises. American Jurisprudence shows us that the attractive nuisance doctrine generally is not applicable to bodies of water, artificial as well as natural, in the absence of some unusual condition or artificial feature other than the mere water and its location. In the case bar, the tanks themselves cannot fall under such doctrine thus the petitioners cannot be held liable for Mario’s death.