1

G.R. No. 140417

May 28, 2004

AZNAR BROTHERS REALTY COMPANY, petitioner,

vs.
HEIRS OF ANICETO AUGUSTO & PETRONA CALIPAN, namely: TEODORICA ANDALES,
GERONIMO AUGUSTO (deceased) represented by: NICOMEDES AUGUSTO, JOVENCIO
AUGUSTO, TELESPORO AUGUSTO, LOLITA IGOT, ROSARIO NEMBRILLO, ALFREDO AUGUSTO,
URBANO AUGUSTO, FELIPE AUGUSTO, TOMAS AUGUSTO, ZACARIAS AUGUSTO (deceased)
represented by: , FELIPE AUGUSTO, EUGENIO AUGUSTO, MANALO AUGUSTO, FELIS
AUGUSTO, CERAPINO AUGUSTO, CLARITA AYING, MAURA AUGUSTO, CONCHITA AUGUSTO,
ARSENIA OMPAD (deceased) represented by:, SARAH AMIT, ANDRES OMPAD, ALBERTO
OMPAD, LILY DAGATAN, all represented by ALFREDO AUGUSTO, respondents.
DECISION
CORONA, J.:
This is a petition to review the decision+1 of the Court of Appeals in CA-GR CV No. 51279 reversing the decision2
of Branch 27 of the Regional Trial Court (RTC) of Lapu-Lapu City. The CA ruled that the claim of herein
respondent Heirs of Aniceto Augusto (Heirs) had not yet prescribed. The dispositive portion3 read:
WHEREFORE, the appealed Order is hereby REVERSED and SET ASIDE. The complaint is reinstated to the
docket of Branch 27 of the Regional Trial Court of Lapu-Lapu City to which the records of the case is (sic)
ORDERED REMANDED for appropriate action in line with the disposition of this case.
SO ORDERED.
The facts of the case follow.
The subject matter of this controversy is Lot No. 4397, Opon Cadastre, covered by Decree No. 531070 and situated
in Dapdap, Mactan, Lapu-Lapu City, Cebu. It was owned by Aniceto Augusto who was married to Petrona Calipan.
When Aniceto died on December 3, 1934, he left behind five children: Geronimo, Zacarias, Teoderica, Arsenia and
Irenea. Apparently, the property remained undivided as evidenced by Tax Declaration No. 026794 issued to
Petrona Calipan in 1945.
Sometime in 1962, Tax Declaration No. 02679 in the name of Calipan was cancelled pursuant to an "Extrajudicial
Partition"5 executed before Notary Public Vicente Fanilag. In lieu thereof, tax declaration certificates covering Lot
No. 4397 were issued to the following: Filomeno Augusto, Ciriaco Icoy, Felipe Aying, Zacarias Augusto, Abdon
Augusto, Teoderica Augusto, Pedro Tampus and Anacleto Augusto.
On February 13, 1962, these persons sold the property to petitioner Aznar Brothers Realty Company (Aznar Realty)
through a Deed of Sale of Unregistered Land which was registered on the same date with the Register of Deeds of
Lapu-Lapu City.
On September 6, 1962, Carlos Augusto, claiming to be an heir of "his father Aniceto" (when in fact he was the son
of Zacarias and as such was in reality a grandson of Aniceto), filed a Petition for the Reconstitution of Title. He
alleged that the original copy and duplicate owners copy of the title of the property sold to respondent Aznar were
lost during the war.
On February 28, 1963, an "Affidavit of Declaration of Heirs of Aniceto Augusto" was executed wherein Zacarias,
Teoderica, Arsenia and Irenea (Geronimo having died in December 1961) declared that, at the time of their fathers
death, he had five legitimate children and that he left behind 15 parcels of land covered by various tax declarations.
The affidavit was signed by Zacarias and thumbmarked by Teoderica, Arsenia and Irenea, with Carlos Augusto and
Filomeno Augusto as witnesses.

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On April 15, 1963, TCT No. 0070 covering the property was issued to petitioner Aznar Realty, which then secured
Tax Declaration No. 01937.
On July 28, 1992, respondent Heirs filed Civil Case No. 2666-L against petitioner Aznar Realty, and Carlos and
Filomeno Augusto in the RTC of Lapu-Lapu City, Branch 27, for (1) recovery of Lot No. 4397; (2) the declaration of
the Deed of Sale dated February 13, 1962 as null and void; (3) the recognition of the Heirs; (4) the cancellation of
the TCT issued to petitioner Aznar Realty and (5) the issuance of a restraining order and/or writ of preliminary
injunction.
Only petitioner Aznar Realty filed an answer interposing the defense of lack of cause of action and prescription. It
asked for a preliminary hearing on the affirmative defenses as if a motion to dismiss had been filed. This was
granted by the trial court.
After the hearing on the affirmative defenses, the trial court ruled that the claim of respondent Heirs was already
barred by prescription:
On the basis of the foregoing facts and circumstances established by evidence, this Court believes that the action of
the plaintiffs is undisputably barred by prescription. Principally, plaintiffs action is for recovery of a parcel of land.
This type of action prescribes after ten (10) years from the date of registration or from discovery of the fraud. As
held in the case of Caete vs. Benedicto, 158 SCRA 575, "an action for recovery of title or possession of real
property or an interest therein can only be brought within 10 years after the cause of action accrues which is
deemed to have taken place from the registration of the document with the Register of Deeds for registration
constitutes a constructive notice to the whole world" (Gerona vs. de Guzman, 11 SCRA 153). In the case of Gicano
vs. Gegato, 157 SCRA 140, the Supreme Court ruled that "action to recover property which was filed only 23 years
from the issuance of the title to the property on the supposedly fraudulent sale, has been extinguished by
prescription." Moreover, in Casipit vs. Court of Appeals, 204 SCRA 648, the Supreme Court held that "the
prescriptive period for the reconveyance of fraudulently registered real property is ten (10) years reckoned from
the date of issuance of the certificate of title."
The Deed of Sale of Unregistered Land dated February 13, 1962 was registered on the same date at the Register of
Deeds of Lapu-Lapu City as appearing at the back page thereof. Since that time up to the filing of this case on July
28, 1992, thirty (30) years had elapsed. And since the issuance of Transfer Certificate of Title No. 0070 in the name
of Aznar Brothers Realty Co. on April 15, 1963 up to the institution of this action, twenty-nine (29) years had
elapsed. The Court therefore believes there is no more way by which plaintiffs action can rise from its extinct state.
xxx

xxx

xxx

WHEREFORE, finding merit in defendants affirmative defense of prescription, this case is, as it is hereby ordered
DISMISSED.6
Respondents appealed the dismissal order to the Court of Appeals which overturned the decision and remanded
the case to the court a quo. Citing the case of Castillo vs. Heirs of Madrigal,7 the Court of Appeals found that the
claim had not yet prescribed since the action of respondents was for the declaration of nullity of the Deed of Sale
on the ground of absence of consent. Such action was imprescriptible. As held by the appellate court:
In Castillo v. Heirs of Madrigal [198 SCRA 556], the Supreme Court held that an action for the declaration of the
inexistence of a deed of sale is imprescriptible because of the absence of the vendors consent following Article 1410
of the Civil Code which provides:
The action or defense for the declaration of the inexistence of a contract does not prescribe.
as was an action for reconveyance based on a void document where the property has not yet passed to an innocent
purchaser for value, it citing Armamento v. Guerrero, 96 SCRA 178; Baranda, et al. v. Baranda, et al., 150 SCRA 59,
1987. In sustaining the dismissal of the complaint in the case, the High Court declared that although the action for
annulment of the document and the transfer of title was imprescriptible, the complaint was dismissable for failure

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to state a cause of action, the property having been sold by the therein defendant vendee to its co-defendant
subsequent vendee who was not alleged in the complaint to be a purchaser in bad faith.
The present case is for annulment of the deed of sale and the transfer certificate of title issued as a result thereof,
and for reconveyance. The complaint alleges that the heirs-owners of the questioned lot never sold it to Aznar
Realty which conspired with its co-defendants in the fraudulent transfer thereof.
The court a quo thus erred in dismissing the complaint at bar on the ground of prescription.8
Thus, this petition for review on the following assignments of error:9
I
THE COURT OF APPEALS ERRED IN REVERSING THE ORDER DATED OCTOBER 18, 1993 OF THE
REGIONAL TRIAL COURT OF CEBU, BRANCH 27, LAPU-LAPU CITY
II
THE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTION OF THE RESPONDENTS (PLAINTIFFS
IN CIVIL CASE NO. 2666-L) IS IMPRESCRIPTIBLE; and
III
THE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT THE ACTION OF RESPONDENTS
(PLAINTIFFS IN CIVIL CASE NO. 2666-L) IS BARRED BY PRESCRIPTION AND LACHES.
The petition is without merit. The respondents claim is imprescriptible and not barred by laches.
Respondents anchored their action for reconveyance in the trial court on the nullity of the Deed of Sale between
petitioner Aznar and the supposed owners of the property. Respondents impugned the validity of the document
because the sellers were not the true owners of the land and, even if one of the real owners (Teoderica Augusto
Andales) thumbmarked the document, she was unaware that she was selling the land. Paragraphs 5, 9 and 10 of
respondents complaint10 filed with the trial court read:
5. That some on September 6, 1962, Aznar Brothers Realty Co. through its lawyer, Atty. Ramon Igana and Carlos
Augusto, one of the defendants, connived and confederated with one another in filing a petition for reconstitution
of title of the land of the deceased spouses Aniceto Augusto and Petrona Calipan (Talipan) on September 6, 1962
with the Court of First Instance of Cebu, 4th Judicial District. In such petition Carlos Augusto claimed that he is
one of the owners of Lot No. 4397 Opon Cadastre, having inherited the same from his father, the deceased Aniceto
Augusto (see paragraph 2 of the Petition for Reconstitution of Title as stated in the verified xerox copy of the
original petition, marked as Annex "B") when in fact and in truth he is the son of Zacarias Augusto, the son of
Aniceto Augusto, true owner of lot no. 4397;
xxx

xxx

xxx

9. That Teoderica Augusto Andales, the only survivor of the five legal and legitimate children of deceased Aniceto
Augusto and Petrona Calipan (Talipan), and Ciriaco Icoy, whose names were used as vendors by the above
defendants, denied that they sold to Aznar Brothers Realty Co. particularly the land described on the Tax
Declaration Nos. 19281, 19280, 1986 and 19285 as alleged in the Deed of Sale of Unregistered Land (affidavits are
hereto attached, marked as Annexes "G" and "H"), duly notarized by Atty. Maximo S. Ylaya with Doc. No. 395;
Page No. 19; Book No. V; Series of 1962. the original copy of which cannot be found (attached is a certification
from the records management of Archives office, marked as Annex "I");
10. That on February 28, 1963, an affidavit of Declaration of Hrs. of Aniceto Augusto was allegedly executed and
witnessed by Carlos Augusto and Felomino Augusto declaring that deceased Aniceto Augusto at the time of his
death (incidentally Aniceto Augusto died in 1933) left properties consisting of fifteen (15) parcels of land
distributed to the different persons who are strangers to the family of Sps. Aniceto Augusto and Petrona Calipan

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(Talipan) and therefore have no rights over the property of the deceased Aniceto Augusto and Petrona Calipan
(Talipan) the Tax Declarations were obviously procured with the appearance that said parcel of lands are
distributed accordingly; that said affidavit of Declaration of Hrs. of Aniceto Augusto was formulated after the Deed
of Sale was executed (attached is an affidavit of Declaration of Hrs. of Aniceto Augusto, marked as Annex "J").
Respondents sought the declaration of nullity (inexistence) of the Deed of Sale because of the absence of their
consent as the true and lawful owners of the land. They argued that the sale to petitioner Aznar was void since the
purported "owners" who signed the Deed of Sale as vendors were not even heirs of Aniceto Augusto and Petrona
Calipan. They pointed out that the 1945 Tax Declaration in the name of Petrona Calipan indicated that the property
was undivided as of the time Aniceto Augusto died in 1932. The land area appearing in said declaration was 5.7
hectares and this fact belied the February 28, 1963 affidavit of Zacarias et al. that, at the time of Anicetos death, he
left behind 15 parcels of land to persons who were not even his compulsory heirs. The "owners" who sold the land
to petitioner Aznar Realty could not have been the true owners of the land since there was no showing how they
acquired the land in the first place. Thus, the trial court should not have dismissed the complaint without looking
into the validity of the sale of land to petitioner Aznar Realty.
In Heirs of Romana Injug-Tiro vs. Casals,11 a case very similar to this, we said that:
A cursory reading of the complaint, however, reveals that the action filed by petitioners was for partition, recovery
of ownership and possession, declaration of nullity of a deed of sale of unregistered land and extrajudicial
settlement and confirmation of sale. Petitioners causes of action are premised on their claim that: (a) the Deed of
Sale of Unregistered Land is void and of no effect since their respective shares in the inheritance were included in
the sale without their knowledge and consent, and one of the vendor-signatories therein, Eufemio Ingjug (Eufemio
Tiro, husband of Romana Ingjug), was not even a direct and compulsory heir of the decedent; and (b) the
Extrajudicial Settlement and Confirmation of Sale is simulated and therefore null and void ab initio, as it was
purportedly executed in 1967 by, among others, Eufemio Tiro who was not an heir, and by Francisco Ingjug who
died in 1963. Also the prayer in the same complaint expressly asks that all those transactions be declared null and
void. In other words, it is the nullity of the deeds of sale and the extrajudicial settlement and confirmation of the
sale which is the basic hypothesis upon which the instant civil action rests. Thus, it appears that we are dealing
here not with simple voidable contracts tainted with fraud, but with contracts that are altogether null and void ab
initio. (emphasis ours)
Neither is respondents claim barred by laches. In the same case of Injug-Tiro,12 we ruled that:
In actions for reconveyance of property predicated on the fact that the conveyance complained of was null and void
ab initio, a claim of prescription of action would be unavailing. The action or defense for the declaration of the
inexistence of a contract does not prescribe. Neither could laches be invoked in the case at bar. Laches is a doctrine
in equity and our courts are basically courts of law and not courts of equity. Equity, which has been aptly described
as "justice outside legality," should be applied only in the absence of, and never against, statutory law. Aequetas
nunguam contravenit legis. The positive mandate of Art. 1410 of the New Civil Code conferring imprescriptibility to
actions for declaration of the inexistence of a contract should pre-empt and prevail over all abstract arguments
based only on equity. Certainly, laches cannot be set up to resist the enforcement of an imprescriptible legal right,
and petitioners can validly vindicate their inheritance despite the lapse of time.
Consequently, respondent Heirs could not have been guilty of laches. It was only in 1991 when they were evicted
that they discovered their land had been sold to Aznar Realty. From the testimony of respondent Heirs, it was
apparent that all matters relating to the land had been entrusted to Carlos Auguston by the Heirs, most of whom
were unschooled farmers who did not know how to read and write. They never expected him to dupe them of their
inheritance. They had no reason to suspect that he had sold the land since they remained in possession thereof
until they were ejected in 1991 by petitioner Aznar Realty.
Respondents were evicted from their land in November 1991 and they filed their complaint with the trial court on
July 28, 1992. Only eight months had passed from the time they were ejected to the time they asserted their rights
over their property. They certainly could not be deemed to have slept on their rights.

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Petitioner makes much of the fact that respondents brought suit only after the property had already been
developed into an upscale subdivision. Petitioner would have this Court believe that respondents were merely "out
to make an easy profit at [its] expense." This is the exact opposite of the Courts impression of respondent Heirs.
On the contrary, if the Court were to fault respondents, it would be for being too trusting of their kin Carlos
Augusto and certainly not for being opportunistic.
Thus, the Court of Appeals did not err in setting aside the decision of the trial court and ordering that the case be
remanded for trial. Respondents ask this Court to rule on the merits of the case and not to send it back to the trial
court. Respondents herein are destitute farmers who do not have the resources to vindicate their rights to their
inheritance in a long, protracted trial. The Court commiserates with them but it has no choice but to remand the
case to the court a quo to enable both parties to ventilate their claims in a full-blown trial.
To facilitate the resolution of the case, however, the trial court should take note of the facts duly established during
the hearing on the issue of prescription, as affirmed by the Court of Appeals and this Court.
WHEREFORE, the petition is hereby DENIED. The decision of the Court of Appeals in CA-G.R. CV No. 52179 is
AFFIRMED.

[G.R. No. 146890. June 8, 2004]

LILIAN CAPITLE, SOFRONIO CORREJADO, ARTEMIO CORREJADO, VICENTE CORREJADO,
CECILIA CORREJADO, GLORIA VDA. DE BEDUNA, ROGELIA CORREJADO, MANUEL
CORREJADO, RODOLFO CORREJADO, TERESITA C. AMARANTE, JUANITA CORREJADO AND
JULIETA C. PEREGRINO, petitioners, vs. JULIETA VDA. DE GABAN, JULIA CORREJADO AND
HERMINIGILDO CORREJADO, respondents.
DECISION
CARPIO-MORALES, J.:
Fabian Correjado (Fabian) inherited from his father Santos Correjado two parcels of land subject of the case at bar,
Lot No. 1782-B of the Pontevedra Cadastre and Lot No. 952 of the Hinigaran Cadastre containing 26,728 sq. m.
and 55,591 sq. m., respectively.
Fabian died intestate in 1919. He was survived by four children, namely: Julian, Zacarias, Francisco and Manuel,
all surnamed Correjado.
After Fabians death in 1919, his son Julian occupied and cultivated the two subject parcels of land (the property)
until his death in 1950. He was survived by three children, namely, herein respondents Julieta vda. de Gaban
(Julieta), Julia Correjado (Julia) and Hermegildo Correjado.
Julians brother Francisco died in 1960. He was survived by herein petitioners Manuel Correjado, Teresita C.
Amarante, Juanita Correjado, Rodolfo Correjado, and Jileta Peregrino.
Julians brother Zacarias died in 1984. He was survived by the other petitioners herein, Aurora P. vda. de
Correjado, Lilia Capitle, Artemio Correjado, Cecilia Correjado, Rogelia Correjado (Rogelia), Sofronio Correjado,
Vicente Correjado and Gloria vda. de Beduna.
On November 26, 1986, petitioners filed a complaint[1] for partition of the property and damages before the
Regional Trial Court (RTC) of La Carlota City against respondents, alleging that Fabian contracted two marriages,
the first with Brigida Salenda who was the mother of Julian, and the subsequent one with Maria Catahay (Maria)
who was the mother of Zacarias, Manuel and Francisco; that the property remained undivided even after the death

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of Julian in 1950, his children-herein respondents having arrogated unto themselves the use and enjoyment of the
property, to the exclusion of petitioners; and that respondents refused to deliver petitioners share in the property
despite demands therefor and for partition.
To the Complaint respondents countered in their Answer[2] that in the proceedings in the intestate estate of their
great grandfather Santos Correjado, petitioners were not adjudicated any share in the property, for Maria, the
mother of petitioners respective fathers Francisco and Zacarias, was just a mistress of Fabian, hence, Francisco
and Zacarias (as well as Manuel) were illegitimate who were not entitled to inherit under the old Civil Code
(Spanish Civil Code of 1889).
By Decision of December 29, 1992,[3] Branch 63 of the La Carlota City RTC dismissed the complaint upon the
grounds of prescription and laches.
On appeal to the Court of Appeals wherein petitioners raised as sole error of the trial court its dismissal of the
complaint without basis in fact and in law, the appellate court, by Decision of August 29, 2000,[4] dismissed the
appeal and affirmed the decision of the trial court.
In affirming the decision of the trial court, appellant passed upon the issue of legitimacy of the brothers Francisco
and Zacarias (as well as of their brother Manuel) in order to determine whether they co-owned the property with
Julian, illegitimate children not being entitled to inherit under the Spanish Civil Code of 1889[5] which was in
force when the brothers father Fabian died in 1919.
The appellate court found that respondents failed to discharge the onus of proving that Francisco and Zacarias
were illegitimate. But it too found that petitioners also failed to prove that Zacarias and Francisco were legitimate.
Upon the disputable presumption, however, that a man and a woman deporting themselves as husband and wife
have entered into a lawful contract of marriage,[6] the appellate court presumed that Fabian and Maria were
lawfully married, hence, their children Zacarias and Francisco (as well as Manuel)-predecessors-in-interest of
petitioners were legitimate children and, therefore, they co-owned with Julian the property.
Its finding of co-ownership of the property by the predecessors-in-interest of the parties notwithstanding, the
appellate court held that, as did the trial court, prescription and laches had set in, ratiocinating as follows:
It is a hornbook doctrine 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 so much so that each co-owner may demand
at anytime the partition of the common property and that this implies that an action to demand partition is
imprescriptible or cannot be barred by laches (Salvador vs. Court of Appeals, 243 SCRA 23; De Castro vs. Echarri,
20 Phil. 23).
While the right of action to demand partition does not prescribe, acquisitive prescription may set in where one of
the co-owners openly and adversely occupies the property without recognizing the co-ownership (Cordova vs.
Cordova, 102 Phil. 1182; Heirs of Segunda Manungding vs. Court of Appeals, 276 SCRA 601), The statute of
limitations operates, as in other cases, from the moment such adverse title is asserted by the possessor of the
property (Ramos vs. Ramos, 45 Phil. 362; Bargayo vs. Camumot, 40 Phil. 857).
The elements constituting adverse possession by a co-owner against another co-owner or cestui que trust are: (1)
that he has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or other coowners; (ii) that such positive acts of repudiation have been made known to the cestui que trust or the other coowners; and (iii) that the evidence thereon must be clear and convincing (Salvador vs. Court of Appeals, supra).
Granting that appellants, as well as their predecessors-in-interest, were initially co-owners of the disputed
property, nevertheless, acquisitive prescription in favor of appellees had already set in. Appellees had performed
unequivocal acts of repudiation. This is shown by the unrebutted testimony of [herein respondent] Julia who
declared that her brother Atilano (deceased) introduced improvements on the disputed property and the fact that
appellees and their father Julian paid the realty taxes thereon as exclusive owners thereof. Moreover, applicants
admitted in paragraph 12 of the Complaint that after Julians death (in 1950), appellees arrogated unto themselves

7
the use and enjoyment of the disputed property, to the exclusion of appellants. This admission is bolstered by
[herein petitioner] Rogelias testimony, as follows:
Q By the way you said that you are going to recover this 1/6 share from Julieta vda. de Gaban. Why, is she in
possession of this land?
A

Yes, sir.

Q She is presently in possession of the said lot?

A

Yes, sir.

Q Can you tell us since when did she possess that land?
A

1980.

Q Previous to that, can you tell us if she was in possession of the said land?
A

Yes, sir. She has been in possession of the said lot before 1980.

Q Was there a period of years that you have been in possession of the said land?
[A No, sir. We have never been in possession of the said land.]
xxx
Q Were you able to gather benefits from that land?
A

We never benefited.

Q Since when have you not benefited from that land?

A

Since 1919.

xxx
Q By the way, can you tell us since when you have been deprived of that land, from what year?
A

From 1919 to 1990. (TSN, January 9, 1990, pp. 51-55). (Underscoring supplied)[7]

Petitioners filed a motion for reconsideration[8] of the appellate courts decision upon the ground that THIS
CASE HAS BEEN OVERTAKEN BY EVENTS, PARTICULARLY ART. 19 OF THE [NEW] CIVIL CODE which
reads:
ART. 19. Every person, must be in the exercise of his rights and in the performance of his duties, act with justice,
give everyone his due, and observe honesty and good faith,
citing some cases in support thereof.
Finding the invocation of Art. 19 misplaced, the appellate court, by Resolution of February 7, 2001,[9] denied the
Motion for Reconsideration, hence, the present petition[10] proffering the following
ISSUES FOR RESOLUTION
I
WHETHER OR NOT RELIANCE ON ART. 19 OF THE CIVIL CODE ISMISPLACED.
II
WHETHER IN RESOLVING CASES, THE ISSUE OF MORALITY OF THE ACT DOES NOT COME INTO PLAY.

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III
WHETHER OR NOT LACHES IS APPLICABLE IN THE CASE AT BAR.[11]
Petitioners contend that [t]here is such a thing as morality that comes into play, as after all, the appellate court
found the parties to be first cousins and, therefore, following Art. 19 of the Civil Code, petitioners should get their
share in the property.
Petitioners further contend that laches is not strictly applied when it comes to close relations, citing Gallardo v.
IAC, 155 SCRA 248.
The petition fails.
Article 19 of the Civil Code in Chapter 2 on Human Relations is a statement of principle that supplements but does
not supplant a specific provision of law.
With respect to rights to the inheritance of a person who died before the effectivity on August 30, 1950 of the Civil
Code like Fabian who died in 1919:
Art. 2263, New Civil Code
ART. 2263. Rights to the inheritance of a person who died, with or without a will, before the effectivity of this
Code, shall be governed by the Civil Code of 1889, by other previous laws, and by the Rules of Court. x x x
ART. 807, Spanish Civil Code of 1889
ART 807. The following are forced heirs:
1. Legitimate children and descendants, with respect to their legitimate parents and ascendants;
2. In default of the foregoing, legitimate parents and ascendants, with respect to their legitimate children and
descendants;
The widower or widow, natural children legally acknowledged, and the father or the mother of the latter, in the
manner and to the extent established by Articles 834, 835, 836, 837, 840, 841, 842, and 846.
ART. 939, Spanish Civil Code of 1889,
ART. 939. In the absence of legitimate descendants and ascendants, the natural children legally acknowledged and
those legitimated by royal concession shall succeed to the entire estate of the deceased.
With respect to prescription:
Art. 1134, New Civil Code
ART. 1134. Ownership and other real rights over immovable property are acquired by ordinary prescription
through possession of ten years.
Art. 1137, New Civil Code
ART. 1137. Ownership and other real rights over immovables also prescribe through uninterrupted adverse
possession thereof for thirty years, without need of title or of good faith.
Assuming arguendo that petitioners respective fathers Francisco and Zacarias were legitimate and, therefore, were
co-owners of the property: From the moment co-owner Julian occupied in 1919 and claimed to be the absolute and
exclusive owner of the property and denied his brothers any share therein up to the time of his death in 1950, the
question involved is no longer one of partition but of ownership in which case imprescriptibility of the action for
partition can no longer be invoked. The adverse possession by Julian and his successors-in-interest- herein

9
respondents as exclusive owner of the property having entailed a period of about 67 years at the time of the filing of
the case at bar in 1986, ownership by prescription had vested in them.[12]
As for estoppel by laches which is a creation of equity,[13] since laches cannot interfere with the running of the
period of prescription, absent any conduct of the parties operating as estoppel,[14] in light of the prescription of
petitioners action, discussion thereof is dispensed with. Suffice it to state that while laches may not be strictly
applied between near relatives, under the facts and circumstances of the case, especially the uncontroverted claim
of respondents that their father Julian, and the documented claim of respondent Julieta, had paid realty taxes on
the property as exclusive owner, as well as the admission of petitioner Rogelia that, as quoted above, she and her
co-petitioners never benefited or were deprived of any benefits from the property since 1919 up to the time of
the filing of the case in 1986 before the RTC or for a period of 67 years, despite demands therefor, even an
extremely liberal application of laches would bar the filing of the case.
WHEREFORE, the petition is hereby DISMISSED and the decision of the Court of Appeals is AFFIRMED.

[G.R. No. 156973. June 4, 2004]

SPOUSES TOMAS OCCEA and SILVINA OCCEA, petitioners, vs. LYDIA MORALES OBSIANA
ESPONILLA, ELSA MORALES OBSIANA SALAZAR and DARFROSA OBSIANA SALAZAR
ESPONILLA, respondents.
DECISION
PUNO, J.:
The case at bar involves a portion of the 1,198-square meter residential lot (lot no. 265) situated in Sibalom,
Antique, originally owned by spouses Nicolas and Irene Tordesillas under OCT No. 1130. The Tordesillas spouses
had three (3) children, namely: Harod, Angela and Rosario, the latter having been survived by her two (2) children,
Arnold and Lilia de la Flor.
After the death of the Tordesillas spouses, the lot was inherited by their children Harod and Angela, and
grandchildren Arnold and Lilia. In 1951, the heirs executed a Deed of Pacto de Retro Sale[1] in favor of Alberta
Morales covering the southwestern portion of the lot with an area of 748 square meters.
Three (3) years later, in 1954, Arnold and Lilia executed a Deed of Definite Sale of Shares, Rights, Interests and
Participations[2] over the same 748 sq. m. lot in favor of Alberta Morales. The notarized deed also attested that
the lot sold by vendors Arnold and Lilia to Alberta were their share in the estate of their deceased parents.
Alberta possessed the lot as owner, constructed a house on it and appointed a caretaker to oversee her property.
Thereafter, in July 1956, vendor Arnold de la Flor borrowed the OCT from Alberta covering the lot. He executed an
Affidavit[3] acknowledging receipt of the OCT in trust and undertook to return said title free from changes,
modifications or cancellations.
In 1966, Arnold and Angela, nephew and daughter respectively of the Tordesillas spouses, without the knowledge
of Alberta, executed a Deed of Extrajudicial Settlement[4] declaring the two of them as the only co-owners of the
undivided 1,198 sq. m. lot no. 265, without acknowledging their previous sale of 748 sq. m. thereof to Alberta. A
number of times, thereafter, Alberta and her nieces asked Arnold for the OCT of the land but Arnold just kept on
promising to return it.
In 1983, Arnold executed an Affidavit of Settlement of the Estate[5] of Angela who died in 1978 without issue,
declaring himself as the sole heir of Angela and thus consolidating the title of the entire lot in his name.

10
In 1985, vendee Alberta Morales died. Her nieces-heirs, Lydia, Elsa and Dafrosa, succeeded in the ownership of
the lot. Months later, as the heirs were about to leave for the United States, they asked Arnold to deliver to them
the title to the land so they can register it in their name. Arnold repeatedly promised to do so but failed to deliver
the title to them.
On December 4, 1986, after Albertas heirs left for the States, Arnold used the OCT he borrowed from the deceased
vendee Alberta Morales, subdivided the entire lot no. 265 into three sublots, and registered them all under his
name, viz: lot no. 265-A (with TCT No. 16895), lot no. 265-B (with TCT No. 16896) and lot no. 265-C (with TCT
No. 16897). He then paid the real estate taxes on the property.
On August 13, 1990, Arnold sold lot nos. 265-B & C to spouses Tomas and Sylvina Occea, which included the 748
sq. m. portion previously sold to Alberta Morales. A Deed of Absolute Sale[6] over said lots was executed to the
Occea spouses and titles were transferred to their names.
In 1993, after the death of Arnold, the three (3) nieces-heirs of Alberta Morales learned about the second sale of
their lot to the Occea spouses when they were notified by caretaker Abas that they were being ejected from the
land. In 1994, the heirs filed a case[7] for annulment of sale and cancellation of titles, with damages, against the
second vendees Occea spouses. In their complaint, they alleged that the Occeas purchased the land in bad faith
as they were aware that the lots sold to them had already been sold to Alberta Morales in 1954. They averred that
before the sale, when Tomas Occea conducted an ocular inspection of the lots, Morito Abas, the caretaker
appointed by Alberta Morales to oversee her property, warned them not to push through with the sale as the land
was no longer owned by vendor Arnold as the latter had previously sold the lot to Alberta Morales who had a house
constructed thereon.
For their part, the Occea spouses claimed that the OCT in the name of the original owners of the lots, the
Tordesillas spouses, was cancelled after it was subdivided between Angela and Arnold in 1969; that new TCTs had
been issued in the latters names; that they were unaware that the subject lots were already previously sold to
Morales as they denied that Tomas had a talk with caretaker Abas on the matter; that as of December 4, 1987, the
TCTs covering the lots were in the name of Arnold and his wife, without any adverse claim annotated thereon; that
vendor Arnold represented to them that the occupants they saw on the land were squatters and that he merely
tolerated their presence; that they did not personally investigate the alleged squatters on the land and merely
relied on the representation of vendor Arnold; that sometime in 1966-1967, Arnold and his co-heir Angela caused
the survey of the original lot and subdivided it into 3 lots, without opposition from Morales or her heirs. Thus,
three (3) TCTs were issued in 1969 to Arnold and Angela and, two of the lots were then sold to the Occea spouses,
again without objection from Alberta Morales.
The Occea spouses alleged that they were buyers in good faith as the titles to the subject lots were free from liens
or encumbrances when they purchased them. They claimed that in 1989, Arnold offered to sell the subject lots to
them. On August 13, 1990, after they verified with the Antique Registry of Deeds that Arnolds TCTs were clean
and unencumbered, Arnold signed the instrument of sale over the subject lots in favor of the Occeas for
P100,000.00 and new titles were issued in their names.
The Occeas likewise set up the defenses of laches and prescription. They argue that Alberta and plaintiffs-heirs
were barred from prosecuting their action as they failed to assert their right for forty (40) years. Firstly, they point
out that vendor Arnold and Angela subdivided the entire lot in 1966 and declared themselves as the only co-owners
thereof in the deed of extrajudicial settlement. Alberta Morales failed to oppose the inclusion of her 748 sq. m. lot
in the deed. Thus, the title to the entire lot no. 256 was transferred to the names of Arnold and Angela. Secondly,
preparatory to the division of the lots, vendor Arnold had the land surveyed but Alberta again failed to oppose the
same. Finally, Alberta and her heirs who are claiming adverse rights over the land based on the 1951 Deed of Pacto
de Retro Sale and the 1954 Deed of Definite Sale of Shares failed for 40 years to annotate their adverse claims on
the new titles issued to Arnold and Angela, enabling the latter to possess a clean title and transfer them to the
Occea spouses.

11
After trial, the lower court rendered a decision declaring the Occea spouses as buyers in good faith and ruled that
the action of the heirs was time-barred.
On appeal by Albertas heirs, the Court of Appeals reversed the decision of the trial court. It found that the
Occeas purchased the land in bad faith and that the action filed by Albertas heirs was not barred by prescription
or laches. The dispositive portion reads:
WHEREFORE, the instant appeal is hereby GRANTED. Accordingly, the assailed decision is hereby REVERSED
and SET ASIDE and a new one is rendered declaring the Deed of Absolute Sale dated August 13, 1990 executed
between Arnold de la Flor in favor of defendants-appellees null and void and ordering the cancellation of Transfer
Certificate of Title Nos. 16896, 16897, T-18241 and T-18242.
SO ORDERED. [8]
Hence this appeal where petitioner-spouses Occea raise the following issues:
I
WHETHER OR NOT A VERBAL INFORMATION COULD BE MADE TO PREVAIL OVER A CLEAN
CERTIFICATE OF TITLE OF A REGISTERED LAND WHICH IS FREE OF ANY LIEN OR ENCUMBRANCE
ANNOTATED ON ITS CERTIFICATE OF TITLE OR ANY ADVERSE CLAIM RECORDED WITH THE REGISTER
OF DEEDS.
II
WHETHER OR NOT A BUYER OF A REGISTERED LAND IS OBLIGATED TO MAKE INQUIRIES OF ANY
POSSIBLE DEFECT OR ADVERSE CLAIM AFFECTING ITS OWNERSHIP WHICH DOES NOT APPEAR ON THE
CERTIFICATE OF TITLE.
III
WHETHER OR NOT THE PERIOD OF MORE THAN FORTY (40) YEARS WITHOUT POSITIVE ACTION TAKEN
BY RESPONDENTS, AS WELL AS BY ALBERTA MORALES, TO PROTECT THEIR INTEREST CAN BE
CONSIDERED LACHES AND THUS THEIR PRESENT ACTION HAS PRESCRIBED.
On the first two issues, petitioner-spouses claim that they were purchasers of the land in good faith as the law does
not obligate them to go beyond a clean certificate of title to determine the condition of the property. They argue
that a person dealing with registered land is only charged with notice of the burden on the property annotated on
the title. When there is nothing on the title to indicate any cloud or vice in the ownership of the property or any
encumbrance thereon, the purchaser is not required to explore further than the title in quest of any hidden defect
or inchoate right that may subsequently defeat his right thereto. They claim they had every right to purchase the
land despite the verbal warning made by caretaker Abas as the information was mere hearsay and cannot prevail
over the title of the land which was free from any encumbrance.
Their arguments do not persuade.
The petition at bar presents a case of double sale of an immovable property. Article 1544 of the New Civil Code
provides that in case an immovable property is sold to different vendees, the ownership shall belong: (1) to the
person acquiring it who in good faith first recorded it in the Registry of Property; (2) should there be no
inscription, the ownership shall pertain to the person who in good faith was first in possession; and, (3) in the
absence thereof, to the person who presents the oldest title, provided there is good faith.
In all cases, good faith is essential. It is the basic premise of the preferential rights granted to the one claiming
ownership over an immovable.[9] What is material is whether the second buyer first registers the second sale in
good faith, i.e., without knowledge of any defect in the title of the property sold.[10] The defense of indefeasibility
of a Torrens title does not extend to a transferee who takes the certificate of title in bad faith, with notice of a flaw.
[11]

12
The governing principle of prius tempore, potior jure (first in time, stronger in right) enunciated under Art. 1544
has been clarified, thus:
x x x Knowledge by the first buyer of the second sale cannot defeat the first buyers rights except when the second
buyer first registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge
gained by the second buyer of the first sale defeats his rights even if he is first to register, since such knowledge
taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984).
In Cruz vs. Cabaa (G.R. No. 56232, 22 June 1984, 129 SCRA 656), it was held that it is essential, to merit the
protection of Art. 1544, second paragraph, that the second realty buyer must act in good faith in registering his
deed of sale (citing Carbonell vs. Court of Appeals, 69 SCRA 99 and Crisostomo vs. CA, G.R. No. 95843, 02
September 1992).[12]
In the case at bar, we find that petitioner-spouses failed to prove good faith in their purchase and registration of
the land. A purchaser in good faith and for value is one who buys property without notice that some other person
has a right to or interest in such property and pays its fair price before he has notice of the adverse claims and
interest of another person in the same property. So it is that the honesty of intention which constitutes good
faith implies a freedom from knowledge of circumstances which ought to put a person on inquiry. At the trial,
Tomas Occea admitted that he found houses built on the land during its ocular inspection prior to his purchase.
He relied on the representation of vendor Arnold that these houses were owned by squatters and that he was
merely tolerating their presence on the land. Tomas should have verified from the occupants of the land the nature
and authority of their possession instead of merely relying on the representation of the vendor that they were
squatters, having seen for himself that the land was occupied by persons other than the vendor who was not in
possession of the land at that time. The settled rule is that a buyer of real property in the possession of persons
other than the seller must be wary and should investigate the rights of those in possession. Without such inquiry,
the buyer can hardly be regarded as a buyer in good faith and cannot have any right over the property.[13] A
purchaser cannot simply close his eyes to facts which should put a reasonable man on his guard and then claim
that he acted in good faith under the belief that there was no defect in the title of his vendor.[14] His mere refusal
to believe that such defect exists or his willful closing of his eyes to the possibility of the existence of a defect in his
vendors title will not make him an innocent purchaser for value if it later develops that the title was in fact
defective, and it appears that he would have notice of the defect had he acted with that measure of precaution
which may reasonably be required of a prudent man in a similar situation.
Indeed, the general rule is that one who deals with property registered under the Torrens system need not go
beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are
annotated on the title. However, this principle does not apply when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has
knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in good faith.[15]
The evidence of the private respondents show that when Tomas Occea conducted an ocular inspection of the land
prior to the second sale, Abas, the caretaker of the house which Alberta Morales built on the land, personally
informed Tomas that the lot had been previously sold by the same vendor Arnold to Alberta Morales. With this
information, the Occeas were obliged to look beyond the title of their vendor and make further inquiries from the
occupants of the land as to their authority and right to possess it. However, despite this information about a prior
sale, the Occeas proceeded with the purchase in haste. They did not inquire from Abas how they could get in
touch with the heirs or representatives of Alberta to verify the ownership of the land. Neither do the records reveal
that they exerted effort to examine the documents pertaining to the first sale. Having discovered that the land they
intended to buy was occupied by a person other than the vendor not in actual possession thereof, it was incumbent
upon the petitioners to verify the extent of the occupants possessory rights.[16] The Occeas did nothing and
chose to ignore and disbelieve Abas statement.

13
On the third issue, we hold that the action to annul title filed by respondents-heirs is not barred by laches and
prescription. Firstly, laches is a creation of equity and its application is controlled by equitable considerations.
Laches cannot be used to defeat justice or perpetuate fraud and injustice. Neither should its application be used to
prevent the rightful owners of a property from recovering what has been fraudulently registered in the name of
another.[17] Secondly, prescription does not apply when the person seeking annulment of title or reconveyance is
in possession of the lot because the action partakes of a suit to quiet title which is imprescriptible.[18] In this case,
Morales had actual possession of the land when she had a house built thereon and had appointed a caretaker to
oversee her property. Her undisturbed possession of the land for a period of fifty (50) long years gave her and her
heirs a continuing right to seek the aid of a court of equity to determine the nature of the claim of ownership of
petitioner-spouses.[19] As held by this Court in Faja vs. Court of Appeals:[20]
x x x There is settled jurisprudence that one who is in actual possession of a piece of land claiming to be owner
thereof may wait until his possession is disturbed or his title attacked before taking steps to vindicate his right, the
reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of
equity to ascertain and determine the nature of the adverse claim and its effect on his own title, which right can be
claimed only by one who is in possession. x x x The right to quiet title to the property, seek its reconveyance and
annul any certificate of title covering it accrued only from the time the one in possession was made aware of a claim
adverse to his own, and it is only then that the statutory period of prescription commences to run against such
possessor.
In the case at bar, Morales caretaker became aware of the second sale to petitioner-spouses only in 1991 when he
received from the latter a notice to vacate the land. Respondents-heirs did not sleep on their rights for in 1994,
they filed their action to annul petitioners title over the land. It likewise bears to stress that when vendor Arnold
reacquired title to the subject property by means of fraud and concealment after he has sold it to Alberta Morales, a
constructive trust was created in favor of Morales and her heirs. As the defrauded parties who were in actual
possession of the property, an action of the respondents-heirs to enforce the trust and recover the property cannot
prescribe. They may vindicate their right over the property regardless of the lapse of time.[21] Hence, the rule that
registration of the property has the effect of constructive notice to the whole world cannot be availed of by
petitioners and the defense of prescription cannot be successfully raised against respondents.
In sum, the general rule is that registration under the Torrens system is the operative act which gives validity to the
transfer of title on the land. However, it does not create or vest title especially where a party has actual knowledge
of the claimants actual, open and notorious possession of the property at the time of his registration.[22] A buyer
in bad faith has no right over the land. As petitioner-spouses failed to register the subject land in good faith,
ownership of the land pertains to respondent-heirs who first possessed it in good faith.
IN VIEW WHEREOF, the petition is DISMISSED. No costs.

[G.R. No. 128254. January 16, 2004]

HEIRS OF POMPOSA SALUDARES represented by ISABEL DATOR, petitioners, vs. COURT OF
APPEALS, JOSE DATOR and CARMEN CALIMUTAN, respondents.
DECISION
CORONA, J.:
Assailed in the instant petition for review on certiorari is the July 31, 1996 decision[1] of the Court of Appeals
reversing the August 27, 1992 decision[2] of the Regional Trial Court of Lucena City, Branch 56, which in turn
dismissed private respondents petition for reconveyance on the ground of prescription of action.

14
At the core of the present controversy is a parcel of land, known as Lot 5793, measuring 8,916 square meters,
located at Mahabang Parang, Lucban, Quezon. The land formed part of the conjugal properties of spouses Juan
Dator and Pomposa Saludares, known as the Tanza estate.
Pomposa died on May 1, 1923, leaving herein petitioners, Enrica, Petra, Restituto, Amado, Delfina, Beata, Vicenta
and Isabel, all surnamed Dator, as her compulsory heirs (hereinafter referred to as Heirs).
On February 28, 1940, the Heirs and their father Juan executed a deed of extra-judicial partition of the share of
Pomposa in the Tanza estate. The settlement conferred the eastern half of the Tanza estate to Juan and the
western half to the Heirs.
Before the aforementioned partition, Juan was in possession of the entire Tanza estate. After the partition, the
Heirs took possession of their share and had the same tenanted by a certain Miguel Dahilig, husband of Petra, one
of the Heirs, who in turn managed the land in behalf of the other siblings. Juan, the father, remained in possession
of his half of the land until his death on April 6, 1940.
On December 13, 1976, Isabel Dator applied for a free patent over the entire Tanza estate, including Lot 5793, in
behalf of the Heirs. On May 26, 1977, after all the requirements were complied with, the Register of Deeds of
Quezon awarded Free Patent No. 4A-2-8976 and issued Original Certificate of Title (OCT) No. 0-23617 in the
names of the Heirs.
Sometime in 1988, the Heirs were informed by their tenant that private respondents cut some 50 coconut trees
located within the subject lot. Thus, the Heirs sent a letter,[3] dated July 26, 1988, to private respondents
demanding an explanation for their intrusion into their property and unauthorized felling of trees.
On August 25, 1988, private respondents retaliated by filing an action for reconveyance against petitioners,
docketed as civil case no. 88-121, in the Regional Trial Court of Lucena City. Private respondents alleged in their
complaint that: (a) they were the owners in fee simple and possessors of Lot No. 5793; (b) they bought the land
from the successors-in-interest of Petra Dator, one of the heirs; (c) they were in possession of the subject land from
1966 to the present and (d) petitioner Isabel Dator obtained free patent OCT P-23617 over Lot 5793 in favor of the
Heirs by means of fraud and misrepresentation. Thus, private respondents prayed for the cancellation of OCT P23617 and the issuance of a new title in their names.
In their answer, the Heirs denied having sold any portion of the Tanza estate to anyone. They alleged that: (a) they
and their predecessors-in-interest had been and were still in actual, continuous, adverse and public possession of
the subject land in the concept of an owner since time immemorial and (b) title to Lot 5793 was issued in their
favor after faithful compliance with all the requirements necessary for the issuance of a free patent.
After trial, the lower court rendered a decision dismissing the action primarily on the ground of prescription of
action:
More telling is plaintiff Jose Dators admission that the adjacent lot which is 5794 is his and he was a cadastral
claimant, in fact, filed (sic) an application for free patent. By and large, if Jose Dator was personally claiming
rights on the property now denominated as Lot 5793, the Court is intrigued and cannot see its way clear why Jose
Dator did not file any protest in the application of the heirs of Pomposa Saludares, neither had Jose Dator filed any
petition for review within the time frame, instead it took them eleven (11) long years to question the validity.
The doctrine of stale demands or laches is even applicable in the case at bar. Laches means the failure or neglect
for an unreasonable length of time, to do that which by exercising diligence could or should have been done
earlier. (Marcelino versus Court of Appeals, G.R. No. 94422, June 26, 1992)
xxx

xxx

xxx

The issues with respect to ownership have already been amply discussed which brings us to the issue as to whether
or not the action has prescribed and whether the original certificate of title in the name of the heirs of Pomposa
Saludares is already indefeasible.

15
The action for reconveyance at bar was filed on August 28, 1988 or more than eleven (11) years from the issuance
of the title, a fact plaintiffs cannot deny. They cannot claim ignorance that the defendants-heirs of Pomposa
Saludares are applying for a free patent of Lot No. 5793 because notices were sent.
xxx

xxx

xxx

In the absence of competent and positive evidence that the title of the defendants has been secured thru fraud
which in the case at bar is wanting and which would necessarily invalidate it, the presumption is it has been issued
regularly in the absence of actual fraud.
There being no positive evidence presented which would establish actual fraud in the issuance of Free Patent Title
No. P-23617 in the defendants name, their title deserves recognition.
In like manner, in an action for reconveyance after the lapse of one year from the date of the registration, actual
fraud in securing the title must be proved (J.N. Tuazon Co., Inc. versus Macalindog, G.R. No. L-15398, December
29, 1962, 6 SCRA 938).
The plaintiffs claim for reconveyance therefore cannot prosper.
WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiffs ordering the
dismissal of the case with costs against plaintiffs and declaring defendants, heirs of Pomposa Saludares, as the
rightful owners of the land.
The claim of defendants in the matter of attorneys fees and litigation expenses not having been proven by concrete
evidence, the Court opts not to award the same.
SO ORDERED.[4]
On appeal, the appellate court reversed the trial court decision:
It is true that the Torrens title issued upon a free patent may not be cancelled after the lapse of ten years from the
date of its registration because the statute of limitations bars such cancellation. But this doctrine has long been
qualified thusly:
If the registered owner, be he the patentee or his successor-in-interest to whom the Free patent was transferred or
conveyed, knew that the parcel of land described in the patent and in the Torrens belonged to another who
together with his predecessors-in-interest were never in possession thereof, then the statute barring an action to
cancel a Torrens title issued upon a free patent does not apply and the true owner may bring an action to have the
ownership or title to the land judicially settled and the Court in the exercise of its equity jurisdiction, without
ordering the cancellation of the Torrens title issued upon the patent, may direct the defendant, the registered
owner, to reconvey the parcel of land to the plaintiff who has been found to be the true owner thereof. (Vital vs.
Anore, et al., 90 Phil. 855, Underscoring ours.)
In this case, there is clear evidence to show that appellee Isabel had full knowledge that Lot 5793 had been sold to
her brother-in-law Miguel Dahilig and her sister Petra, that Lot 5793 no longer belonged to her and to the heirs she
claimed to represent. She was signatory to the deed of sale dated April 16, 1940 in favor of appellant. (Exh. I) With
this knowledge, there is reason to conclude that appellant Isabel misrepresented herself and the rest of the heirs as
owners entitled to the free patent.
WHEREFORE, all the above considered, judgment is hereby rendered:
1.

Reversing the August 27, 1992 decision of the court below;

2.
Ordering the Register of Deeds of Quezon Province to cancel OCT No. P-23617 in the name of the Heirs of
Pomposa Saludares and to issue another for the same property in the name of plaintiffs Jose Dator and Carmen
Calimutan;

16
3.
Ordering appellees to pay appellants ten thousand (P10,000.00) pesos for attorneys fees, and to pay the
costs.
SO ORDERED.[5]
Aggrieved by the appellate court ruling, the Heirs filed the instant petition, assigning the following errors:
The Court of Appeals erred in tracing the history of the transactions involving the property way back to the year
1923 and render judgment based on its findings, considering that petitioners are the registered owners of the
property under a torrens certificate of title which is conclusive, incontrovertible and indefeasible.
The Court of Appeals erred when it did not consider that the complaint filed by the private respondents for
reconveyance and cancellation of title before the trial court eleven (11) years after a torrens title over the property
was issued in the name of the petitioners (had) prescribed.[6]
Notwithstanding the indefeasibility of the Torrens title, the registered owner may still be compelled to reconvey the
registered property to its true owner. The rationale for the rule is that reconveyance does not set aside or resubject to review the findings of fact of the Bureau of Lands. In an action for reconveyance, the decree of
registration is respected as incontrovertible. What is sought instead is the transfer of the property or its title which
has been wrongfully or erroneously registered in another persons name, to its rightful or legal owner, or to the one
with a better right.[7]
Nevertheless, the right to seek reconveyance of registered property is not absolute because it is subject to extinctive
prescription. In Caro vs. Court of Appeals,[8] the prescriptive period of an action for reconveyance was explained:
Under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art.
1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor of the
true owner. In this context, and vis--vis prescription, Article 1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time the right of action accrues:
(1)

Upon a written contract;

(2)

Upon an obligation created by law;

(3)

Upon a judgment.

xxx

xxx

xxx

An action for reconveyance has its basis in Section 53, paragraph 3 of Presidential Decree No. 1529, which
provides:
In all cases of registration procured by fraud, the owner may pursue all his legal and equitable remedies against the
parties to such fraud without prejudice, however, to the rights of any innocent holder of the decree of registration
on the original petition or application, x x x.
This provision should be read in conjunction with Article 1456 of the Civil Code, which provides:
Article 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the property comes.
The law thereby creates the obligation of the trustee to reconvey the property and the title thereto in favor of the
true owner. Correlating Section 53, paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil Code
with Article 1144(2) of the Civil Code, supra, the prescriptive period for the reconveyance of fraudulently registered
real property is ten (10) years reckoned from the date of the issuance of the certificate of title.
There is but one instance when prescription cannot be invoked in an action for reconveyance, that is, when the
plaintiff is in possession of the land to be reconveyed.[9]

17
In a series of cases,[10] this Court permitted the filing of an action for reconveyance despite the lapse of ten years
and declared that said action, when based on fraud, is imprescriptible as long as the land has not passed to an
innocent purchaser for value. But in all those cases including Vital vs. Anore[11] on which the appellate court
based its assailed decision, the common factual backdrop was that the registered owners were never in possession
of the disputed property. Instead, it was the persons with the better right or the legal owners of the land who had
always been in possession of the same. Thus, the Court allowed the action for reconveyance to prosper in those
cases despite the lapse of more than ten years from the issuance of title to the land. The exception was based on
the theory that registration proceedings could not be used as a shield for fraud or for enriching a person at the
expense of another.[12]
In the case at bar, however, it is the rule rather than the exception which should apply.
This Court does not normally review the factual findings of the Court of Appeals in a petition for review under Rule
45 of the Rules of Court. But when the findings of fact of the appellate court differ from those of the trial court, the
Court in the exercise of its power of review may inquire into the facts of a case.
The trial court declared the Heirs as having been in actual, open and continuous possession of the disputed lot. On
the other hand, the appellate court ruled that it was private respondents.
Private respondents presented documents purportedly showing a series of transactions which led to the alleged
transfer of ownership of Lot 5793 from the Heirs to them, namely: (1) a Kasulatan Ng Pagbibilihang Lampasan,
dated April 16, 1940, wherein the disputed lot was allegedly sold by the Heirs to their sibling Petra Dator and her
husband Miguel Dahilig; (2) an extra-judicial partition showing that, upon the death of Miguel, his heirs Petra,
Angel, Anatalia, Catalina, Felimon and Jacinto, inherited Lot 5793 and (3) two deeds of sale dated December 30,
1978 and March 15,1970 wherein Felimon and Jacinto, and later Catalina, sold their undivided shares in Lot 5793
to private respondents.
Other than the presentation of these documents, however, private respondents failed to prove that they were in
actual, open and continuous possession of Lot 5793.
On the other hand, Isabel Dator, who testified for the Heirs, vehemently denied having signed the Kasulatan Ng
Pagbibilihang Lampasan and pointed out the absence of the signatures of her other siblings Vicenta, Barcelisa and
Adoracion.
The Heirs likewise presented proof of payment of realty taxes from 1956 to 1974 in the names of their deceased
parents, and from 1975 to 1988 in their names.
More importantly, the Heirs convincingly established their open and continuous occupation of the entire Tanza
estate, including Lot 5793, through their tenant Miguel Dahilig. After Miguels death, he was succeeded by
Marcelo Saludares who testified during the trial that: (a) the farm was under the administration of Beata and
Isabel Dator who took over its management after Petra Dator died; (b) he had been consistently tending the land
since 1947; (c) he was the one who planted the various crops and trees thereon, except for some 100 coconut trees
which he explained were planted by other people in response to the Green Revolution project of then President
Marcos.
Saludares identified each and every landmark and boundary of the subject lot. He also enumerated all the trees
planted on the subject lot and, when asked about the fruits of the land, he told the court that he shared the harvest
with the surviving Heirs.
In stark contrast, private respondents witness, farm worker Perpetuo Daya could not identify the boundaries of
the disputed property, its adjoining owners or recall the dates he worked and tilled the subject lot.
Specially noteworthy was the fact that the recorded cadastral claimant of Lot 5793, Angel Dahilig, testified that he
executed a waiver in favor of the Heirs because they were the true owners of the subject parcel of land.[13]

18
Furthermore, we note private respondent Jose Dators declaration that he was the cadastral claimant of and free
patent applicant for Lot 5794 which was adjacent to Lot 5793. This being the case, we find private respondents
inaction difficult to understand, considering that they were among those who received notices of petitioners free
patent application dated January 2, 1979 from the Bureau of Lands.[14]
If private respondents indeed owned Lot 5793, they should have filed an application for free patent for it just as
they did for Lot 5794, or at least opposed the Heirs application for free patent over Lot 5793, to protect their
interests. As a matter of fact, they were aware that the Heirs tenant, Marcelo Saludares, repeatedly harvested the
fruits of Lot 5793.
But even assuming that private respondents indeed validly acquired Lot 5793 in 1966 as they claimed, they
nevertheless slept on their right to secure title thereto. Their unexplained inaction for more than 11 years rendered
their demand for reconveyance stale. Vigilantibus sed non dormientibus jura subverniunt. The law aids the
vigilant, not those who sleep on their rights. This legal precept finds perfect application in the case at bar.
Accordingly, we find that the Court of Appeals committed reversible error in disregarding the ten-year prescriptive
period for the reconveyance of registered real property and in giving due course to said action despite the lapse of
more than 11 years from the issuance of title thereto, which was clearly barred by prescription.
WHEREFORE, the petition is hereby granted. The decision of the Court of Appeals, dated July 31, 1996, is
REVERSED and SET ASIDE and the decision of the Regional Trial Court, dated August 27, 1992, is REINSTATED.
SO ORDERED.

FIRST DIVISION
TEOFISTO OO, PRECY O.NAMBATAC, VICTORIA O. MANUGAS and POLOR O. CONSOLACION,
Petitioners, vs. VICENTE N. LIM, Respondent.
DECISION
BERSAMIN, J.:
The subject of controversy is Lot No. 943 of the Balamban Cadastre in Cebu City, covered by Original
Certificate of Title (OCT) No. RO-9969-(O-20449), over which the contending parties in this action for quieting of
title, initiated by respondent Vicente N. Lim (Lim) in the Regional Trial Court (RTC) in Cebu City, assert exclusive
ownership, to the exclusion of the other. In its decision dated July 30, 1996,[1] the RTC favored Lim, and ordered
the cancellation of OCT No. RO-9969-(O-20449) and the issuance of a new certificate of title in the name of Luisa
Narvios-Lim (Luisa), Lims deceased mother and predecessor-in-interest.
On appeal (CA-GR CV No. 57823), the Court of Appeals (CA) affirmed the RTC on January 28, 2002.[2] It
later denied the petitioners motion for reconsideration through the resolution dated June 17, 2002.[3]
Hence, this appeal via petition for review on certiorari.
Antecedents
On October 23, 1992, Lim filed in the RTC in Cebu City a petition for the reconstitution of the owners
duplicate copy of OCT No. RO-9969-(O-20449), alleging that said OCT had been lost during World War II by his

19
mother, Luisa;[4] that Lot No. 943 of the Balamban Cadastre in Cebu City covered by said OCT had been sold in
1937 to Luisa by Spouses Diego Oo and Estefania Apas (Spouses Oo), the lots registered owners; and that
although the deed evidencing the sale had been lost without being registered, Antonio Oo (Antonio), the only
legitimate heir of Spouses Oo, had executed on April 23, 1961 in favor of Luisa a notarized document
denominated as confirmation of sale,[5] which was duly filed in the Provincial Assessors Office of Cebu.
Zosimo Oo and petitioner Teofisto Oo (Oos) opposed Lims petition, contending that they had the certificate of
title in their possession as the successors-in-interest of Spouses Oo.
On account of the Oos opposition, and upon order of the RTC, Lim converted the petition for reconstitution into
a complaint for quieting of title,[6] averring additionally that he and his predecessor-in-interest had been in actual
possession of the property since 1937, cultivating and developing it, enjoying its fruits, and paying the taxes
corresponding to it. He prayed, inter alia, that the Oos be ordered to surrender the reconstituted owners
duplicate copy of OCT No. RO-9969-(O-20449), and that said OCT be cancelled and a new certificate of title be
issued in the name of Luisa in lieu of said OCT.
In their answer,[7] the Oos claimed that their predecessors-in-interest, Spouses Oo, never sold Lot No.
943 to Luisa; and that the confirmation of sale purportedly executed by Antonio was fabricated, his signature
thereon not being authentic.
RTC Ruling
On July 30, 1996, after trial, the RTC rendered its decision,[8] viz:
WHEREFORE, premises considered, judgment is hereby rendered quieting plaintiff's title to Lot No. 943 of the
Balamban (Cebu) Cadastre, and directing the Register of Deeds of Cebu
(1) To register the aforestated April 23, 1961 Confirmation of Sale of Lot No. 943 of the Balamban, Cebu Cadastre
by Antonio Oo in favor of Luisa Narvios-Lim;
(2) To cancel the original certificate of title covering the said Lot No. 943 of the Balamban, Cebu Cadastre; and,
(3) To issue in the name of Luisa Narvios-Lim, a new duplicate certificate of title No. RO-9969 (O-20449) of the
Register of Deeds of Cebu, which shall contain a memorandum of the fact that it is issued in place of the lost
duplicate certificate of title, and shall in all respects be entitled to like faith and credit as the original certificate,
and shall be regarded as such for all purposes of this decree, pursuant to the last paragraph of Section 109,
Presidential Decree No. 1529.
Without special pronouncement as to costs.
SO ORDERED.[9]
The RTC found that the Lims had been in peaceful possession of the land since 1937; that their possession
had never been disturbed by the Oos, except on two occasions in 1993 when the Oos seized the harvested copra
from the Lims caretaker; that the Lims had since declared the lot in their name for taxation purposes, and had
paid the taxes corresponding to the lot; that the signature of Antonio on the confirmation of sale was genuine,
thereby giving more weight to the testimony of the notary public who had notarized the document and
affirmatively testified that Antonio and Luisa had both appeared before him to acknowledge the instrument as true
than to the testimony of the expert witness who attested that Antonios signature was a forgery.
CA Ruling
On appeal, the Oos maintained that the confirmation of sale was spurious; that the property, being a titled
one, could not be acquired by the Lims through prescription; that their (the Oos) action to claim the property
could not be barred by laches; and that the action instituted by the Lims constituted a collateral attack against their
registered title.

20
The CA affirmed the RTC, however, and found that Spouses Oo had sold Lot No. 943 to Luisa; and that such
sale had been confirmed by their son Antonio. The CA ruled that the action for quieting of title was not a collateral,
but a direct attack on the title; and that the Lims undisturbed possession had given them a continuing right to seek
the aid of the courts to determine the nature of the adverse claim of a third party and its effect on their own title.
Nonetheless, the CA corrected the RTC, by ordering that the Office of the Register of Deeds of Cebu City issue a
new duplicate certificate of title in the name of Luisa, considering that the owners duplicate was still intact in the
possession of the Oos.
The decree of the CA decision was as follows:
WHEREFORE, the appeal is DISMISSED for lack of merit. However, the dispositive portion of the decision
appealed from is CORRECTED as follows:
(1) Within five (5) days from finality of the decision, defendants-appellants are directed to present the owner's
duplicate copy of OCT No. RO-9969 (O-20449) to the Register of Deeds who shall thereupon register the
Confirmation of Sale of Lot No. 943, Balamban Cadastre, Cebu, executed on April 23, 1961 by Antonio Oo in
favor of Luisa Narvios-Lim, and issue a new transfer certificate of title to and in the name of the latter upon
cancellation of the outstanding original and owner's duplicate certificate of title.
(2) In the event defendants-appellants neglect or refuse to present the owner's copy of the title to the Register of
Deeds as herein directed, the said title, by force of this decision, shall be deemed annulled, and the Register of
Deeds shall make a memorandum of such fact in the record and in the new transfer certificate of title to be issued
to Luisa Narvios-Lim.
(3) Defendants-appellants shall pay the costs.
SO ORDERED.[10]
The CA denied the Oos motion for reconsideration[11] on June 17, 2002.[12]
Hence, this appeal.
Issues
The petitioners raise the following issues:
1. Whether or not the validity of the OCT could be collaterally attacked through an ordinary civil action to quiet
title;
2.

Whether or not the ownership over registered land could be lost by prescription, laches, or adverse possession;

3.
Whether or not there was a deed of sale executed by Spouses Oo in favor of Luisa and whether or not said
deed was lost during World War II;
4.

Whether or not the confirmation of sale executed by Antonio in favor of Luisa existed; and

5.

Whether or not the signature purportedly of Antonio in that confirmation of sale was genuine.

Ruling of the Court

The petition has no merit.
A.
Action for cancellation of title is not an attack on the title
The petitioners contend that this action for quieting of title should be disallowed because it constituted a collateral
attack on OCT No. RO-9969-(O-20449), citing Section 48 of Presidential Decree No. 1529, viz:

21
Section 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to collateral attack.
It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.
The petitioners contention is not well taken.
An action or proceeding is deemed an attack on a title when its objective is to nullify the title, thereby challenging
the judgment pursuant to which the title was decreed.[13] The attack is direct when the objective is to annul or set
aside such judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral when, in an
action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.[14]
Quieting of title is a common law remedy for the removal of any cloud, doubt, or uncertainty affecting title to real
property.[15] Whenever there is a cloud on title to real property or any interest in real property by reason of any
instrument, record, claim, encumbrance, or proceeding that is apparently valid or effective, but is, in truth and in
fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action may be brought
to remove such cloud or to quiet the title.[16] In such action, the competent court is tasked to determine the
respective rights of the complainant and the other claimants, not only to place things in their proper places, and to
make the claimant, who has no rights to said immovable, respect and not disturb the one so entitled, but also for
the benefit of both, so that whoever has the right will see every cloud of doubt over the property dissipated, and he
can thereafter fearlessly introduce the improvements he may desire, as well as use, and even abuse the property as
he deems fit.[17]
Lims complaint pertinently alleged:
18. If indeed, the genuine original of the Owner's Duplicate of the Reconstituted Original Certificate of Title No.
RO-9699 (O-20449) for Lot 943, Balamban Cadastre xxx is in Defendant's (Oos) possession, then VNL submits
the following PROPOSITIONS:
xxx
18.2. Therefore, the Original of Owners Duplicate Certificate (which Respondents [Defendants Oos] claim in
their Opposition is in their possession) must be surrendered to VNL upon order of this Court, after the Court shall
have determined VNL's mother's acquisition of the attributes of ownership over said Lot 943, in this action, in
accordance with Section 107, P.D. 1529, Property Registration Decree xxx
xxx
[t]hat OCT 20449 be cancelled and new title for Lot 943 be issued directly in favor of LUISA NARVIOS, to
complete her title to said Lot;[18]
The averments readily show that the action was neither a direct nor a collateral attack on OCT No. RO-9969-(O20449), for Lim was asserting only that the existing title registered in the name of the petitioners predecessors had
become inoperative due to the conveyance in favor of Lims mother, and resultantly should be cancelled. Lim did
not thereby assail the validity of OCT No. RO-9969-(O-20449), or challenge the judgment by which the title of the
lot involved had been decreed. In other words, the action sought the removal of a cloud from Lims title, and the
confirmation of Lims ownership over the disputed property as the successor-in-interest of Luisa.
B.
Prescription was not relevant
The petitioners assert that the lot, being titled in the name of their predecessors-in-interest, could not be
acquired by prescription or adverse possession.
The assertion is unwarranted.
Prescription, in general, is a mode of acquiring or losing ownership and other real rights through the lapse of time
in the manner and under the conditions laid down by law.[19] However, prescription was not relevant to the

22
determination of the dispute herein, considering that Lim did not base his right of ownership on an adverse
possession over a certain period. He insisted herein, instead, that title to the land had been voluntarily transferred
by the registered owners themselves to Luisa, his predecessor-in-interest.
Lim showed that his mother had derived a just title to the property by virtue of sale; that from the time Luisa
had acquired the property in 1937, she had taken over its possession in the concept of an owner, and had
performed her obligation by paying real property taxes on the property, as evidenced by tax declarations issued in
her name;[20] and that in view of the delivery of the property, coupled with Luisas actual occupation of it, all that
remained to be done was the issuance of a new transfer certificate of title in her name.
C.
Forgery, being a question of fact,
could not be dealt with now
The petitioners submit that Lims evidence did not preponderantly show that the ownership of the lot had
been transferred to Luisa; and that both the trial and the appellate courts disregarded their showing that Antonios
signature on the confirmation of sale was a forgery.
Clearly, the petitioners hereby seek a review of the evaluation and appreciation of the evidence presented by
the parties.
The Court cannot anymore review the evaluation and appreciation of the evidence, because the Court is not a
trier of facts.[21] Although this rule admits of certain exceptions, viz: (1) when the conclusion is a finding grounded
entirely on speculation, surmises, or conjecture; (2) when the inference made is manifestly mistaken; (3) where
there is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the
findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the
case, and the findings are contrary to the admissions of both appellant and appellee; (7) when the findings of the
Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without
specific evidence on which they are based; (9) when the facts set forth in the petition as well in the petitioners
main and reply briefs are not disputed by the respondents; and, (10) when the findings of fact of the Court of
Appeals are premised on the supposed absence of evidence and are contradicted by the evidence on record,[22] it
does not appear now that any of the exceptions is present herein. We thus apply the rule without hesitation, and
reject the appeal for that reason.
It is emphasized, too, that the CA upheld the conclusion arrived at by the RTC that the signature of Antonio had
not been simulated or forged. The CA ruled that the testimony of the notary public who had notarized the
confirmation of sale to the effect that Antonio and Luisa had appeared before him prevailed over that of the
petitioners expert witness. The concurrence of their conclusion on the genuineness of Antonios signature now
binds the Court.[23]
In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence.
Preponderance of evidence is the weight, credit, and value of the aggregate evidence on either side, and is usually
considered to be synonymous with the term greater weight of the evidence or greater weight of the credible
evidence. Preponderance of evidence is a phrase that means, in the last analysis, probability of the truth.[24] It is
evidence that is more convincing to the court as worthy of belief than that which is offered in opposition thereto.
Lim successfully discharged his burden of proof as the plaintiff. He established by preponderant evidence that he
had a superior right and title to the property. In contrast, the petitioners did not present any proof of their better
title other than their copy of the reconstituted certificate of title. Such proof was not enough, because the
registration of a piece of land under the Torrens system did not create or vest title, such registration not being a
mode of acquiring ownership. The petitioners need to be reminded that a certificate of title is merely an evidence of
ownership or title over the particular property described therein. Its issuance in favor of a particular person does

23
not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or
that it may be held in trust for another person by the registered owner.[25]
WHEREFORE, the petition for review on certiorari is denied, and the decision dated January 28, 2002 is
affirmed.
The petitioners are ordered to pay the costs of suit.

ROMEO D. MARIANO, Petitioner, vs. PETRON CORPORATION, Respondent.

DECISION
CARPIO, J.
The Case
For review[1] is the Decision[2] of the Court of Appeals upholding the lease contract between petitioner
Romeo D. Mariano and respondent Petron Corporation.
The Facts
On 5 November 1968,[3] Pacita V. Aure, Nicomedes Aure Bundac, and Zeny Abundo (Aure Group), owners of
a 2,064 square meter parcel of land in Tagaytay City[4] (Property), leased the Property to ESSO Standard Eastern,
Inc., (ESSO Eastern), a foreign corporation doing business in the country through its subsidiary ESSO Standard
Philippines, Inc. (ESSO Philippines). The lease period is 90 years[5] and the rent is payable monthly for the first 10
years, and annually for the remaining period.[6] The lease contract (Contract) contained an assignment veto clause
barring the parties from assigning the lease without prior consent of the other.[7] Excluded from the prohibition
were certain corporations to whom ESSO Eastern may unilaterally assign its leasehold right.[8]
On 23 December 1977, ESSO Eastern sold ESSO Philippines to the Philippine National Oil Corporation
(PNOC).[9] Apparently, the Aure Group was not informed of the sale. ESSO Philippines, whose corporate name
was successively changed to Petrophil Corporation then to Petron Corporation (Petron), took possession of the
Property.
On 18 November 1993, petitioner Romeo D. Mariano (petitioner) bought the Property from the Aure Group
and obtained title to the Property issued in his name bearing an annotation of ESSO Easterns lease.[10]
On 17 December 1998, petitioner sent to Petron a notice to vacate the Property. Petitioner informed Petron
that Presidential Decree No. 471 (PD 471),[11] dated 24 May 1974, reduced the Contracts duration from 90 to 25
years, ending on 13 November 1993.[12] Despite receiving the notice to vacate on 21 December 1998, Petron
remained on the Property.
On 18 March 1999, petitioner sued Petron in the Regional Trial Court of Tagaytay City, Branch 18, (trial
court) to rescind the Contract and recover possession of the Property. Aside from invoking PD 471, petitioner
alternatively theorized that the Contract was terminated on 23 December 1977 when ESSO Eastern sold ESSO
Philippines to PNOC, thus assigning to PNOC its lease on the Property, without seeking the Aure Groups prior
consent.

24
In its Answer, Petron countered that the Contract was not breached because PNOC merely acquired ESSO
Easterns shares in ESSO Philippines, a separate corporate entity. Alternatively, Petron argued that petitioners
suit, filed on 18 March 1999, was barred by prescription under Article 1389 and Article 1146(1) of the Civil Code as
petitioner should have sought rescission within four years from PNOCs purchase of ESSO Philippines on 23
December 1977[13] or before 23 December 1981.[14]
To dispense with the presentation of evidence, the parties submitted a Joint Motion for Judgment (Joint
Motion) containing the following stipulation:
5. On December 23, 1977, the Philippine National Oil Co. (PNOC), a corporation wholly owned by the
Philippine Government, acquired ownership of ESSO Standard Philippines, Inc., including its leasehold right over
the land in question, through the acquisition of its shares of stocks.[15] (Emphasis supplied)
The Ruling of the Trial Court
In its Decision dated 30 May 2000, the trial court ruled for petitioner, rescinded the Contract, ordered Petron
to vacate the Property, and cancelled the annotation on petitioners title of Petrons lease.[16] The trial court ruled
that ESSO Easterns sale to PNOC of its interest in ESSO Philippines included the assignment to PNOC of ESSO
Easterns lease over the Property, which, for lack of the Aure Groups consent, breached the Contract, resulting in
its termination. However, because the Aure Group (and later petitioner) tolerated ESSO Philippines continued use
of the Property by receiving rental payments, the law on implied new lease governs the relationship of the Aure
Group (and later petitioner) and Petron, creating for them an implied new lease terminating on 21 December 1998
upon Petrons receipt of petitioners notice to vacate.[17]
Petron appealed to the Court of Appeals, distancing itself from its admission in the Joint Motion that in
buying ESSO Philippines from ESSO Eastern, PNOC also acquired ESSO Easterns leasehold right over the
Property. Petron again invoked its separate corporate personality to distinguish itself from PNOC.
The Ruling of the Court of Appeals
In its Decision dated 29 October 2004, the Court of Appeals found merit in Petrons appeal, set aside the trial
courts ruling, declared the Contract subsisting until 13 November 2058[18] and ordered petitioner to pay Petron
P300,000 as attorneys fees. The Court of Appeals found no reason to pierce ESSO Philippines corporate veil,
treating PNOCs buy-out of ESSO Philippines as mere change in ESSO Philippines stockholding. Hence, the Court
of Appeals rejected the trial courts conclusion that PNOC acquired the leasehold right over the Property.
Alternatively, the Court of Appeals found petitioners suit barred by the four-year prescriptive period under Article
1389 and Article 1146 (1) of the Civil Code, reckoned from PNOCs buy-out of ESSO Philippines on 23 December
1977 (for Article 1389) or the execution of the Contract on 13 November 1968[19] (for Article 1146 [1]).[20]
Petitioner sought reconsideration but the Court of Appeals denied his motion in its Resolution of 26 August
2005.
Hence, this petition.
The Issue
The question is whether the Contract subsists between petitioner and Petron.
The Ruling of the Court
We hold in the affirmative and thus sustain the ruling of the Court of Appeals.
ESSO Eastern Assigned to PNOC its
Leasehold Right over the Property, Breaching the Contract
PNOCs buy-out of ESSO Philippines was total and unconditional, leaving no residual rights to ESSO Eastern.
Logically, this change of ownership carried with it the transfer to PNOC of any proprietary interest ESSO Eastern

25
may hold through ESSO Philippines, including ESSO Easterns lease over the Property. This is the import of
Petrons admission in the Joint Motion that by PNOCs buy-out of ESSO Philippines [PNOC], x x x acquired
ownership of ESSO Standard Philippines, Inc., including its leasehold right over the land in question, through the
acquisition of its shares of stocks. As the Aure Group gave no prior consent to the transaction between ESSO
Eastern and PNOC, ESSO Eastern violated the Contracts assignment veto clause.
Petrons objection to this conclusion, sustained by the Court of Appeals, is rooted on its reliance on its
separate corporate personality and on the unstated assumption that ESSO Philippines (not ESSO Eastern) initially
held the leasehold right over the Property. Petron is wrong on both counts.
Courts are loathe to pierce the fictive veil of corporate personality, cognizant of the core doctrine in corporation
law vesting on corporations legal personality distinct from their shareholders (individual or corporate) thus
facilitating the conduct of corporate business. However, fiction gives way to reality when the corporate personality
is foisted to justify wrong, protect fraud, or defend crime, thwarting the ends of justice.[21] The fiction even holds
lesser sway for subsidiary corporations whose shares are wholly if not almost wholly owned by its parent company.
The structural and systems overlap inherent in parent and subsidiary relations often render the subsidiary as mere
local branch, agency or adjunct of the foreign parent corporation.[22]
Here, the facts compel the conclusion that ESSO Philippines was a mere branch of ESSO Eastern in the
execution and breach of the Contract. First, by ESSO Easterns admission in the Contract, it is a foreign
corporation organized under the laws of the State of Delaware, U.S.A., duly licensed to transact business in the
Philippines, and doing business therein under the business name and style of Esso Standard Philippines x x x. In
effect, ESSO Eastern was ESSO Philippines for all of ESSO Easterns Philippine business.
Second, the Contract was executed by ESSO Eastern, not ESSO Philippines, as lessee, with the Aure Group as
lessor. ESSO Eastern leased the Property for the use of ESSO Philippines, acting as ESSO Easterns Philippine
branch. Consistent with such status, ESSO Philippines took possession of the Property after the execution of the
Contract. Thus, for purposes of the Contract, ESSO Philippines was a mere alter ego of ESSO Eastern.
The Lessors Continued Acceptance of Lease Payments
Despite Breach of Contract Amounted to Waiver
The breach of contract notwithstanding, we hold that the Contract subsists. Contrary to the trial courts
conclusion that ESSO Easterns violation of the assignment veto clause extinguished the Contract, replaced by a
new implied lease with a monthly term,[23] we hold that the breach merely gave rise to a cause of action for the
Aure Group to seek the lessees ejectment as provided under Article 1673, paragraph 3 of the Civil Code.[24]
Although the records do not show that the Aure Group was formally notified of ESSO Philippines sale to PNOC,
the successive changes in the lessees name (from ESSO Philippines to Petrophil Corporation then to Petron)
suffice to alert the Aure Group of a likely change in the personality of the lessee, which, for lack of the Aure Groups
prior consent, was in obvious breach of the Contract. Thus, the continued receipt of lease payments by the Aure
Group (and later by petitioner) despite the contractual breach amounted to a waiver of their option to eject the
lessee.
Petitioners Suit Barred by Prescription
Petitioners waiver of Petrons contractual breach was compounded by his long inaction to seek judicial
redress. Petitioner filed his complaint nearly 22 years after PNOC acquired the leasehold rights to the Property and
almost six years after petitioner bought the Property from the Aure Group. The more than two decades lapse puts
this case well within the territory of the 10 year prescriptive bar to suits based upon a written contract under
Article 1144 (1) of the Civil Code.[25]
WHEREFORE, we DENY the petition. The Decision dated 29 October 2004 and the Resolution dated 26
August 2005 of the Court of Appeals are AFFIRMED.

26

G.R. No. 148225

March 3, 2010

CARMEN DEL PRADO, Petitioner,

vs.
SPOUSES ANTONIO L. CABALLERO and LEONARDA CABALLERO, Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari of the decision1 of the Court of Appeals (CA) dated September 26, 2000
and its resolution denying the motion for reconsideration thereof.
The facts are as follows:
In a judgment rendered on February 1, 1985 in Cadastral Case No. N-6 (LRC Rec. No. N-611), Judge Juan Y. Reyes
of the Regional Trial Court (RTC) of Cebu City, Branch 14, adjudicated in favor of Spouses Antonio L. Caballero
and Leonarda B. Caballero several parcels of land situated in Guba, Cebu City, one of which was Cadastral Lot No.
11909, the subject of this controversy.2 On May 21, 1987, Antonio Caballero moved for the issuance of the final
decree of registration for their lots.3 Consequently, on May 25, 1987, the same court, through then Presiding Judge
Renato C. Dacudao, ordered the National Land Titles and Deeds Registration Administration to issue the decree of
registration and the corresponding titles of the lots in favor of the Caballeros.4
On June 11, 1990, respondents sold to petitioner, Carmen del Prado, Lot No. 11909 on the basis of the tax
declaration covering the property. The pertinent portion of the deed of sale reads as follows:
That we, Spouses ANTONIO L. CABALLERO and LEONARDA B. CABALLERO, Filipinos, both of legal age and
residents of Talamban, Cebu City, Philippines, for and in consideration of the sum of FORTY THOUSAND PESOS
(P40,000.00), Philippine Currency, paid by CARMEN DEL PRADO, Filipino, of legal age, single and a resident of
Sikatuna St., Cebu City, Philippines, the receipt of which is full is hereby acknowledged, do by these presents SELL,
CEDE, TRANSFER, ASSIGN & CONVEY unto the said CARMEN DEL PRADO, her heirs, assigns and/or
successors-in-interest, one (1) unregistered parcel of land, situated at Guba, Cebu City, Philippines, and more
particularly described and bounded, as follows:
"A parcel of land known as Cad. Lot No. 11909, bounded as follows:
North : Lot 11903
East : Lot 11908
West : Lot 11910
South : Lot 11858 & 11912
containing an area of 4,000 square meters, more or less, covered by Tax Dec. No. 00787 of the Cebu City
Assessors Office, Cebu City." of which parcel of land we are the absolute and lawful owners.
Original Certificate of Title (OCT) No. 1305, covering Lot No. 11909, was issued only on November 15, 1990, and
entered in the "Registration Book" of the City of Cebu on December 19, 1990.5 Therein, the technical description of
Lot No. 11909 states that said lot measures about 14,457 square meters, more or less.6
On March 20, 1991, petitioner filed in the same cadastral proceedings a "Petition for Registration of Document
Under Presidential Decree (P.D.) 1529"7 in order that a certificate of title be issued in her name, covering the whole

27
Lot No. 11909. In the petition, petitioner alleged that the tenor of the instrument of sale indicated that the sale was
for a lump sum or cuerpo cierto, in which case, the vendor was bound to deliver all that was included within said
boundaries even when it exceeded the area specified in the contract. Respondents opposed, on the main ground
that only 4,000 sq m of Lot No. 11909 was sold to petitioner. They claimed that the sale was not for a cuerpo cierto.
They moved for the outright dismissal of the petition on grounds of prescription and lack of jurisdiction.
After trial on the merits, the court found that petitioner had established a clear and positive right to Lot No. 11909.
The intended sale between the parties was for a lump sum, since there was no evidence presented that the property
was sold for a price per unit. It was apparent that the subject matter of the sale was the parcel of land, known as
Cadastral Lot No. 11909, and not only a portion thereof.8
Thus, on August 2, 1993, the court a quo rendered its decision with the following dispositive portion:
WHEREFORE, premises considered, the petition is hereby granted and judgment is hereby rendered in favor of
herein petitioner. The Register of Deeds of the City of Cebu is hereby ordered and directed to effect the registration
in his office of the Deed of Absolute Sale between Spouses Antonio Caballero and Leonarda Caballero and
Petitioner, Carmen del Prado dated June 11, 1990 covering Lot No. 11909 after payment of all fees prescribed by
law. Additionally, the Register of Deeds of the City of Cebu is hereby ordered to cancel Original Certificate No. 1305
in the name of Antonio Caballero and Leonarda Caballero and the Transfer Certificate of Title be issued in the
name of Petitioner Carmen del Prado covering the entire parcel of land known as Cadastral Lot No. 11909.9
An appeal was duly filed. On September 26, 2000, the CA promulgated the assailed decision, reversing and setting
aside the decision of the RTC.
The CA no longer touched on the character of the sale, because it found that petitioner availed herself of an
improper remedy. The "petition for registration of document" is not one of the remedies provided under P.D. No.
1529, after the original registration has been effected. Thus, the CA ruled that the lower court committed an error
when it assumed jurisdiction over the petition, which prayed for a remedy not sanctioned under the Property
Registration Decree. Accordingly, the CA disposed, as follows:
IN VIEW OF ALL THE FOREGOING, the appealed decision is REVERSED and SET ASIDE and a new one entered
dismissing the petition for lack of jurisdiction. No pronouncement as to costs.10
Aggrieved, petitioner filed the instant petition, raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN MAKING FINDINGS OF
FACT CONTRARY TO THAT OF THE TRIAL COURT[;]
II. WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING TO RULE THAT
THE SALE OF THE LOT IS FOR A LUMP SUM OR CUERPO CIERTO[;]
III. WHETHER OR NOT THE COURT A QUO HAS JURISDICTION OVER THE PETITION FOR REGISTRATION
OF THE DEED OF ABSOLUTE SALE DATED 11 JUNE 1990 EXECUTED BETWEEN HEREIN PETITIONER AND
RESPONDENTS[.]11
The core issue in this case is whether or not the sale of the land was for a lump sum or not.
Petitioner asserts that the plain language of the Deed of Sale shows that it is a sale of a real estate for a lump sum,
governed under Article 1542 of the Civil Code.12 In the contract, it was stated that the land contains an area of
4,000 sq m more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the South by
Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. When the OCT was issued, the area of Lot No. 11909
was declared to be 14,475 sq m, with an excess of 10,475 sq m. In accordance with Article 1542, respondents are,
therefore, duty-bound to deliver the whole area within the boundaries stated, without any corresponding increase
in the price. Thus, petitioner concludes that she is entitled to have the certificate of title, covering the whole Lot No.
11909, which was originally issued in the names of respondents, transferred to her name.

28
We do not agree.
In Esguerra v. Trinidad,13 the Court had occasion to discuss the matter of sales involving real estates. The Courts
pronouncement is quite instructive:
In sales involving real estate, the parties may choose between two types of pricing agreement: a unit price contract
wherein the purchase price is determined by way of reference to a stated rate per unit area (e.g., P1,000 per square
meter), or a lump sum contract which states a full purchase price for an immovable the area of which may be
declared based on the estimate or where both the area and boundaries are stated (e.g., P1 million for 1,000 square
meters, etc.). In Rudolf Lietz, Inc. v. Court of Appeals (478 SCRA 451), the Court discussed the distinction:
"In a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or
increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the
vendee may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate
reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the
contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he
pays for the additional area at the contract rate.
xxxx
In the case where the area of an immovable is stated in the contract based on an estimate, the actual area delivered
may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the
sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there
shall be no increase or decrease of the price, although there be a greater or less areas or number than that stated in
the contract. . . .
xxxx
Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of
the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which
should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty,
mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits.
In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must
control over any statement with respect to the area contained within its boundaries. It is not of vital consequence
that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its
extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial
area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it
is the entirety thereof that distinguishes the determinate object.14
The Court, however, clarified that the rule laid down in Article 1542 is not hard and fast and admits of an
exception. It held:
A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a
reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference
to its area does not thereby ipso facto take all risk of quantity in the land..
Numerical data are not of course the sole gauge of unreasonableness of the excess or deficiency in area. Courts
must consider a host of other factors. In one case (see Roble v. Arbasa, 414 Phil. 343 [2001]), the Court found
substantial discrepancy in area due to contemporaneous circumstances. Citing change in the physical nature of the
property, it was therein established that the excess area at the southern portion was a product of reclamation,
which explained why the lands technical description in the deed of sale indicated the seashore as its southern
boundary, hence, the inclusion of the reclaimed area was declared unreasonable.15
In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of
P40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the
East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract of

29
sale of land in a mass, the specific boundaries stated in the contract must control over any other statement, with
respect to the area contained within its boundaries.161avvphi1
Blacks Law Dictionary17 defines the phrase "more or less" to mean:
About; substantially; or approximately; implying that both parties assume the risk of any ordinary discrepancy.
The words are intended to cover slight or unimportant inaccuracies in quantity, Carter v. Finch, 186 Ark. 954, 57
S.W.2d 408; and are ordinarily to be interpreted as taking care of unsubstantial differences or differences of small
importance compared to the whole number of items transferred.
Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The difference in the
area is obviously sizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that
should be deemed included in the deed of sale.
We take exception to the avowed rule that this Court is not a trier of facts. After an assiduous scrutiny of the
records, we lend credence to respondents claim that they intended to sell only 4,000 sq m of the whole Lot No.
11909, contrary to the findings of the lower court. The records reveal that when the parties made an ocular
inspection, petitioner specifically pointed to that portion of the lot, which she preferred to purchase, since there
were mango trees planted and a deep well thereon. After the sale, respondents delivered and segregated the area of
4,000 sq m in favor of petitioner by fencing off the area of 10,475 sq m belonging to them.18
Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual contract, because it
is perfected by mere consent. The essential elements of a contract of sale are the following: (a) consent or meeting
of the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter; and
(c) price certain in money or its equivalent. All these elements are present in the instant case.19
More importantly, we find no reversible error in the decision of the CA. Petitioners recourse, by filing the petition
for registration in the same cadastral case, was improper. It is a fundamental principle in land registration that a
certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the
person whose name appears therein. Such indefeasibility commences after one year from the date of entry of the
decree of registration.20 Inasmuch as the petition for registration of document did not interrupt the running of the
period to file the appropriate petition for review and considering that the prescribed one-year period had long
since expired, the decree of registration, as well as the certificate of title issued in favor of respondents, had become
incontrovertible.21
WHEREFORE, the petition is DENIED.

FIRST DIVISION
ANTHONY ORDUA, DENNIS ORDUA, and ANTONITA ORDUA, Petitioners, vs.
EDUARDO J. FUENTEBELLA, MARCOS S. CID, BENJAMIN F. CID, BERNARD G. BANTA, and
ARMANDO GABRIEL, JR., Respondents.

DECISION
VELASCO, JR., J.:
In this Petition for Review[1] under Rule 45 of the Rules of Court, Anthony Ordua, Dennis Ordua and Antonita
Ordua assail and seek to set aside the Decision[2] of the Court of Appeals (CA) dated December 4, 2006 in CAG.R. CV No. 79680, as reiterated in its Resolution of March 6, 2007, which affirmed the May 26, 2003 Decision[3]

30
of the Regional Trial Court (RTC), Branch 3 in Baguio City, in Civil Case No. 4984-R, a suit for annulment of title
and reconveyance commenced by herein petitioners against herein respondents.
Central to the case is a residential lot with an area of 74 square meters located at Fairview Subdivision, Baguio City,
originally registered in the name of Armando Gabriel, Sr. (Gabriel Sr.) under Transfer Certificate of Title (TCT) No.
67181 of the Registry of Deeds of Baguio City.[4]
As gathered from the petition, with its enclosures, and the comments thereon of four of the five respondents,[5] the
Court gathers the following relevant facts:
Sometime in 1996 or thereabouts, Gabriel Sr. sold the subject lot to petitioner Antonita Ordua (Antonita), but no
formal deed was executed to document the sale. The contract price was apparently payable in installments as
Antonita remitted from time to time and Gabriel Sr. accepted partial payments. One of the Orduas would later
testify that Gabriel Sr. agreed to execute a final deed of sale upon full payment of the purchase price.[6]
As early as 1979, however, Antonita and her sons, Dennis and Anthony Ordua, were already occupying the
subject lot on the basis of some arrangement undisclosed in the records and even constructed their house thereon.
They also paid real property taxes for the house and declared it for tax purposes, as evidenced by Tax Declaration
No. (TD) 96-04012-111087[7] in which they place the assessed value of the structure at PhP 20,090.
After the death of Gabriel Sr., his son and namesake, respondent Gabriel Jr., secured TCT No. T-71499[8] over the
subject lot and continued accepting payments from the petitioners. On December 12, 1996, Gabriel Jr. wrote
Antonita authorizing her to fence off the said lot and to construct a road in the adjacent lot.[9] On December 13,
1996, Gabriel Jr. acknowledged receipt of a PhP 40,000 payment from petitioners.[10] Through a letter[11] dated
May 1, 1997, Gabriel Jr. acknowledged that petitioner had so far made an aggregate payment of PhP 65,000,
leaving an outstanding balance of PhP 60,000. A receipt Gabriel Jr. issued dated November 24, 1997 reflected a
PhP 10,000 payment.
Despite all those payments made for the subject lot, Gabriel Jr. would later sell it to Bernard Banta (Bernard)
obviously without the knowledge of petitioners, as later developments would show.
As narrated by the RTC, the lot conveyance from Gabriel Jr. to Bernard was effected against the following
backdrop: Badly in need of money, Gabriel Jr. borrowed from Bernard the amount of PhP 50,000, payable in two
weeks at a fixed interest rate, with the further condition that the subject lot would answer for the loan in case of
default. Gabriel Jr. failed to pay the loan and this led to the execution of a Deed of Sale[12] dated June 30, 1999
and the issuance later of TCT No. T-72782[13] for subject lot in the name of Bernard upon cancellation of TCT No.
71499 in the name of Gabriel, Jr. As the RTC decision indicated, the reluctant Bernard agreed to acquire the lot,
since he had by then ready buyers in respondents Marcos Cid and Benjamin F. Cid (Marcos and Benjamin or the
Cids).
Subsequently, Bernard sold to the Cids the subject lot for PhP 80,000. Armed with a Deed of Absolute Sale of a
Registered Land[14] dated January 19, 2000, the Cids were able to cancel TCT No. T-72782 and secure TCT No.
72783[15] covering the subject lot. Just like in the immediately preceding transaction, the deed of sale between
Bernard and the Cids had respondent Eduardo J. Fuentebella (Eduardo) as one of the instrumental witnesses.
Marcos and Benjamin, in turn, ceded the subject lot to Eduardo through a Deed of Absolute Sale[16] dated May 11,
2000. Thus, the consequent cancellation of TCT No. T-72782 and issuance on May 16, 2000 of TCT No. T-3276[17]
over subject lot in the name of Eduardo.
As successive buyers of the subject lot, Bernard, then Marcos and Benjamin, and finally Eduardo, checked, so each
claimed, the title of their respective predecessors-in-interest with the Baguio Registry and discovered said title to
be free and unencumbered at the time each purchased the property. Furthermore, respondent Eduardo, before
buying the property, was said to have inspected the same and found it unoccupied by the Orduas.[18]

31
Sometime in May 2000, or shortly after his purchase of the subject lot, Eduardo, through his lawyer, sent a letter
addressed to the residence of Gabriel Jr. demanding that all persons residing on or physically occupying the
subject lot vacate the premises or face the prospect of being ejected.[19]
Learning of Eduardos threat, petitioners went to the residence of Gabriel Jr. at No. 34 Dominican Hill, Baguio
City. There, they met Gabriel Jr.s estranged wife, Teresita, who informed them about her having filed an affidavitcomplaint against her husband and the Cids for falsification of public documents on March 30, 2000. According to
Teresita, her signature on the June 30, 1999 Gabriel Jr.Bernard deed of sale was a forgery. Teresita further
informed the petitioners of her intent to honor the aforementioned 1996 verbal agreement between Gabriel Sr. and
Antonita and the partial payments they gave her father-in-law and her husband for the subject lot.
On July 3, 2001, petitioners, joined by Teresita, filed a Complaint[20] for Annulment of Title, Reconveyance with
Damages against the respondents before the RTC, docketed as Civil Case No. 4984-R, specifically praying that TCT
No. T-3276 dated May 16, 2000 in the name of Eduardo be annulled. Corollary to this prayer, petitioners pleaded
that Gabriel Jr.s title to the lot be reinstated and that petitioners be declared as entitled to acquire ownership of
the same upon payment of the remaining balance of the purchase price therefor agreed upon by Gabriel Sr. and
Antonita.
While impleaded and served with summons, Gabriel Jr. opted not to submit an answer.
Ruling of the RTC
By Decision dated May 26, 2003, the RTC ruled for the respondents, as defendants a quo, and against the
petitioners, as plaintiffs therein, the dispositive portion of which reads:
WHEREFORE, the instant complaint is hereby DISMISSED for lack of merit. The four (4) plaintiffs are
hereby ordered by this Court to pay each defendant (except Armando Gabriel, Jr., Benjamin F. Cid, and Eduardo J.
Fuentebella who did not testify on these damages), Moral Damages of Twenty Thousand (P20,000.00) Pesos, so
that each defendant shall receive Moral Damages of Eighty Thousand (P80,000.00) Pesos each. Plaintiffs shall
also pay all defendants (except Armando Gabriel, Jr., Benjamin F. Cid, and Eduardo J. Fuentebella who did not
testify on these damages), Exemplary Damages of Ten Thousand (P10,000.00) Pesos each so that each defendant
shall receive Forty Thousand (P40,000.00) Pesos as Exemplary Damages. Also, plaintiffs are ordered to pay each
defendant (except Armando Gabriel, Jr., Benjamin F. Cid, and Eduardo J. Fuentebella who did not testify on these
damages), Fifty Thousand (P50,000.00) Pesos as Attorneys Fees, jointly and solidarily.
Cost of suit against the plaintiffs.[21]
On the main, the RTC predicated its dismissal action on the basis of the following grounds and/or premises:
1. Eduardo was a purchaser in good faith and, hence, may avail himself of the provision of Article 1544[22] of the
Civil Code, which provides that in case of double sale, the party in good faith who is able to register the property
has better right over the property;
2. Under Arts. 1356[23] and 1358[24] of the Code, conveyance of real property must be in the proper form, else it is
unenforceable;
3. The verbal sale had no adequate consideration; and
4. Petitioners right of action to assail Eduardos title prescribes in one year from date of the issuance of such title
and the one-year period has already lapsed.
From the above decision, only petitioners appealed to the CA, their appeal docketed as CA-G.R. CV No. 79680.
The CA Ruling
On December 4, 2006, the appellate court rendered the assailed Decision affirming the RTC decision. The fallo
reads:

32
WHEREFORE, premises considered, the instant appeal is hereby DISMISSED and the 26 May 2003 Decision of
the Regional Trial Court, Branch 3 of Baguio City in Civil Case No. 4989-R is hereby AFFIRMED.
SO ORDERED.[25]
Hence, the instant petition on the submission that the appellate court committed reversible error of law:
1. xxx WHEN IT HELD THAT THE SALE OF THE SUBJECT LOT BY ARMANDO GABRIEL, SR. AND
RESPONDENT ARMANDO GABRIEL, JR. TO THE PETITIONERS IS UNENFORCEABLE.
2. xxx IN NOT FINDING THAT THE SALE OF THE SUBJECT LOT BY RESPONDENT ARMANDO GABRIEL,
JR. TO RESPONDENT BERNARD BANTA AND ITS SUBSEQUENT SALE BY THE LATTER TO HIS CORESPONDENTS ARE NULL AND VOID.
3.

xxx IN NOT FINDING THAT THE RESPONDENTS ARE BUYERS IN BAD FAITH

4. xxx IN FINDING THAT THE SALE OF THE SUBJECT LOT BETWEEN GABRIEL, SR. AND RESPONDENT
GABRIEL, JR. AND THE PETITIONERS HAS NO ADEQUATE CONSIDERATION.
5.

xxx IN RULING THAT THE INSTANT ACTION HAD ALREADY PRESCRIBED.

6. xxx IN FINDING THAT THE PLAINTIFFS-APPELLANTS ARE LIABLE FOR MORAL AND EXEMPLARY
DAMAGES AND ATTORNEYS FEES.[26]
The Courts Ruling
The core issues tendered in this appeal may be reduced to four and formulated as follows, to wit: first, whether or
not the sale of the subject lot by Gabriel Sr. to Antonita is unenforceable under the Statute of Frauds; second,
whether or not such sale has adequate consideration; third, whether the instant action has already prescribed; and,
fourth, whether or not respondents are purchasers in good faith.
The petition is meritorious.
Statute of Frauds Inapplicable to Partially Executed Contracts
It is undisputed that Gabriel Sr., during his lifetime, sold the subject property to Antonita, the purchase price
payable on installment basis. Gabriel Sr. appeared to have been a recipient of some partial payments. After his
death, his son duly recognized the sale by accepting payments and issuing what may be considered as receipts
therefor. Gabriel Jr., in a gesture virtually acknowledging the petitioners dominion of the property, authorized
them to construct a fence around it. And no less than his wife, Teresita, testified as to the fact of sale and of
payments received.
Pursuant to such sale, Antonita and her two sons established their residence on the lot, occupying the house they
earlier constructed thereon. They later declared the property for tax purposes, as evidenced by the issuance of TD
96-04012-111087 in their or Antonitas name, and paid the real estates due thereon, obviously as sign that they are
occupying the lot in the concept of owners.
Given the foregoing perspective, Eduardos assertion in his Answer that persons appeared in the property[27]
only after he initiated ejectment proceedings[28] is clearly baseless. If indeed petitioners entered and took
possession of the property after he (Eduardo) instituted the ejectment suit, how could they explain the fact that he
sent a demand letter to vacate sometime in May 2000?
With the foregoing factual antecedents, the question to be resolved is whether or not the Statute of Frauds bars the
enforcement of the verbal sale contract between Gabriel Sr. and Antonita.
The CA, just as the RTC, ruled that the contract is unenforceable for non-compliance with the Statute of Frauds.

33
We disagree for several reasons. Foremost of these is that the Statute of Frauds expressed in Article 1403, par. (2),
[29] of the Civil Code applies only to executory contracts, i.e., those where no performance has yet been made.
Stated a bit differently, the legal consequence of non-compliance with the Statute does not come into play where
the contract in question is completed, executed, or partially consummated.[30]
The Statute of Frauds, in context, provides that a contract for the sale of real property or of an interest therein shall
be unenforceable unless the sale or some note or memorandum thereof is in writing and subscribed by the party or
his agent. However, where the verbal contract of sale has been partially executed through the partial payments
made by one party duly received by the vendor, as in the present case, the contract is taken out of the scope of the
Statute.
The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations depending for their
evidence on the unassisted memory of witnesses, by requiring certain enumerated contracts and transactions to be
evidenced by a writing signed by the party to be charged.[31] The Statute requires certain contracts to be
evidenced by some note or memorandum in order to be enforceable. The term Statute of Frauds is descriptive of
statutes that require certain classes of contracts to be in writing. The Statute does not deprive the parties of the
right to contract with respect to the matters therein involved, but merely regulates the formalities of the contract
necessary to render it enforceable.[32]
Since contracts are generally obligatory in whatever form they may have been entered into, provided all the
essential requisites for their validity are present,[33] the Statute simply provides the method by which the
contracts enumerated in Art. 1403 (2) may be proved but does not declare them invalid because they are not
reduced to writing. In fine, the form required under the Statute is for convenience or evidentiary purposes only.
There can be no serious argument about the partial execution of the sale in question. The records show that
petitioners had, on separate occasions, given Gabriel Sr. and Gabriel Jr. sums of money as partial payments of the
purchase price. These payments were duly receipted by Gabriel Jr. To recall, in his letter of May 1, 1997, Gabriel,
Jr. acknowledged having received the aggregate payment of PhP 65,000 from petitioners with the balance of PhP
60,000 still remaining unpaid. But on top of the partial payments thus made, possession of the subject of the sale
had been transferred to Antonita as buyer. Owing thus to its partial execution, the subject sale is no longer within
the purview of the Statute of Frauds.
Lest it be overlooked, a contract that infringes the Statute of Frauds is ratified by the acceptance of benefits under
the contract.[34] Evidently, Gabriel, Jr., as his father earlier, had benefited from the partial payments made by the
petitioners. Thus, neither Gabriel Jr. nor the other respondentssuccessive purchasers of subject lotscould
plausibly set up the Statute of Frauds to thwart petitioners efforts towards establishing their lawful right over the
subject lot and removing any cloud in their title. As it were, petitioners need only to pay the outstanding balance of
the purchase price and that would complete the execution of the oral sale.
There was Adequate Consideration
Without directly saying so, the trial court held that the petitioners cannot sue upon the oral sale since in its own
words: x x x for more than a decade, [petitioners] have not paid in full Armando Gabriel, Sr. or his estate, so that
the sale transaction between Armando Gabriel Sr. and [petitioners] [has] no adequate consideration.
The trial courts posture, with which the CA effectively concurred, is patently flawed. For starters, they equated
incomplete payment of the purchase price with inadequacy of price or what passes as lesion, when both are
different civil law concepts with differing legal consequences, the first being a ground to rescind an otherwise valid
and enforceable contract. Perceived inadequacy of price, on the other hand, is not a sufficient ground for setting
aside a sale freely entered into, save perhaps when the inadequacy is shocking to the conscience.[35]
The Court to be sure takes stock of the fact that the contracting parties to the 1995 or 1996 sale agreed to a
purchase price of PhP 125,000 payable on installments. But the original lot owner, Gabriel Sr., died before full
payment can be effected. Nevertheless, petitioners continued remitting payments to Gabriel, Jr., who sold the
subject lot to Bernard on June 30, 1999. Gabriel, Jr., as may be noted, parted with the property only for PhP

34
50,000. On the other hand, Bernard sold it for PhP 80,000 to Marcos and Benjamin. From the foregoing price
figures, what is abundantly clear is that what Antonita agreed to pay Gabriel, Sr., albeit in installment, was very
much more than what his son, for the same lot, received from his buyer and the latters buyer later. The Court,
therefore, cannot see its way clear as to how the RTC arrived at its simplistic conclusion about the transaction
between Gabriel Sr. and Antonita being without adequate consideration.
The Issues of Prescription and the Bona
Fides of the Respondents as Purchasers
Considering the interrelation of these two issues, we will discuss them jointly.
There can be no quibbling about the fraudulent nature of the conveyance of the subject lot effected by Gabriel Jr.
in favor of Bernard. It is understandable that after his fathers death, Gabriel Jr. inherited subject lot and for which
he was issued TCT No. No. T-71499. Since the Gabriel Sr. Antonita sales transaction called for payment of the
contract price in installments, it is also understandable why the title to the property remained with the Gabriels.
And after the demise of his father, Gabriel Jr. received payments from the Orduas and even authorized them to
enclose the subject lot with a fence. In sum, Gabriel Jr. knew fully well about the sale and is bound by the contract
as predecessor-in-interest of Gabriel Sr. over the property thus sold.
Yet, the other respondents (purchasers of subject lot) still maintain that they are innocent purchasers for value
whose rights are protected by law and besides which prescription has set in against petitioners action for
annulment of title and reconveyance.
The RTC and necessarily the CA found the purchaser-respondents thesis on prescription correct stating in this
regard that Eduardos TCT No. T-3276 was issued on May 16, 2000 while petitioners filed their complaint for
annulment only on July 3, 2001. To the courts below, the one-year prescriptive period to assail the issuance of a
certificate of title had already elapsed.
We are not persuaded.
The basic complaint, as couched, ultimately seeks the reconveyance of a fraudulently registered piece of residential
land. Having possession of the subject lot, petitioners right to the reconveyance thereof, and the annulment of the
covering title, has not prescribed or is not time-barred. This is so for an action for annulment of title or
reconveyance based on fraud is imprescriptible where the suitor is in possession of the property subject of the acts,
[36] the action partaking as it does of a suit for quieting of title which is imprescriptible.[37] Such is the case in
this instance. Petitioners have possession of subject lots as owners having purchased the same from Gabriel, Sr.
subject only to the full payment of the agreed price.
The prescriptive period for the reconveyance of fraudulently registered real property is 10 years, reckoned from the
date of the issuance of the certificate of title, if the plaintiff is not in possession, but imprescriptible if he is in
possession of the property.[38] Thus, one who is in actual possession of a piece of land claiming to be the owner
thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right.
[39] As it is, petitioners action for reconveyance is imprescriptible.
This brings us to the question of whether or not the respondent-purchasers, i.e., Bernard, Marcos and Benjamin,
and Eduardo, have the status of innocent purchasers for value, as was the thrust of the trial courts disquisition and
disposition.
We are unable to agree with the RTC.
It is the common defense of the respondent-purchasers that they each checked the title of the subject lot when it
was his turn to acquire the same and found it clean, meaning without annotation of any encumbrance or adverse
third party interest. And it is upon this postulate that each claims to be an innocent purchaser for value, or one who
buys the property of another without notice that some other person has a right to or interest in it, and who pays
therefor a full and fair price at the time of the purchase or before receiving such notice.[40]

35
The general rule is that one dealing with a parcel of land registered under the Torrens System may safely rely on
the correctness of the certificate of title issued therefor and is not obliged to go beyond the certificate.[41] Where,
in other words, the certificate of title is in the name of the seller, the innocent purchaser for value has the right to
rely on what appears on the certificate, as he is charged with notice only of burdens or claims on the res as noted in
the certificate. Another formulation of the rule is that (a) in the absence of anything to arouse suspicion or (b)
except where the party has actual knowledge of facts and circumstances that would impel a reasonably cautious
man to make such inquiry or (c) when the purchaser has knowledge of a defect of title in his vendor or of sufficient
facts to induce a reasonably prudent man to inquire into the status of the title of the property,[42] said purchaser is
without obligation to look beyond the certificate and investigate the title of the seller.
Eduardo and, for that matter, Bernard and Marcos and Benjamin, can hardly claim to be innocent purchasers for
value or purchasers in good faith. For each knew or was at least expected to know that somebody else other than
Gabriel, Jr. has a right or interest over the lot. This is borne by the fact that the initial seller, Gabriel Jr., was not in
possession of subject property. With respect to Marcos and Benjamin, they knew as buyers that Bernard, the seller,
was not also in possession of the same property. The same goes with Eduardo, as buyer, with respect to Marcos and
Benjamin.
Basic is the rule that a buyer of a piece of land which is in the actual possession of persons other than the seller
must be wary and should investigate the rights of those in possession. Otherwise, without such inquiry, the buyer
can hardly be regarded as a buyer in good faith. When a man proposes to buy or deal with realty, his duty is to read
the public manuscript, i.e., to look and see who is there upon it and what his rights are. A want of caution and
diligence which an honest man of ordinary prudence is accustomed to exercise in making purchases is, in
contemplation of law, a want of good faith. The buyer who has failed to know or discover that the land sold to him
is in adverse possession of another is a buyer in bad faith.[43]
Where the land sold is in the possession of a person other than the vendor, the purchaser must go beyond the
certificates of title and make inquiries concerning the rights of the actual possessor.[44] And where, as in the
instant case, Gabriel Jr. and the subsequent vendors were not in possession of the property, the prospective
vendees are obliged to investigate the rights of the one in possession. Evidently, Bernard, Marcos and Benjamin,
and Eduardo did not investigate the rights over the subject lot of the petitioners who, during the period material to
this case, were in actual possession thereof. Bernard, et al. are, thus, not purchasers in good faith and, as such,
cannot be accorded the protection extended by the law to such purchasers.[45] Moreover, not being purchasers in
good faith, their having registered the sale, will not, as against the petitioners, carry the day for any of them under
Art. 1544 of the Civil Code prescribing rules on preference in case of double sales of immovable property. Occea v.
Esponilla[46] laid down the following rules in the application of Art. 1544: (1) knowledge by the first buyer of the
second sale cannot defeat the first buyers rights except when the second buyer first register in good faith the
second sale; and (2) knowledge gained by the second buyer of the first sale defeats his rights even if he is first to
register, since such knowledge taints his registration with bad faith.
Upon the facts obtaining in this case, the act of registration by any of the three respondent-purchasers was not
coupled with good faith. At the minimum, each was aware or is at least presumed to be aware of facts which should
put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of
his vendor.
The award by the lower courts of damages and attorneys fees to some of the herein respondents was predicated on
the filing by the original plaintiffs of what the RTC characterized as an unwarranted suit. The basis of the award,
needless to stress, no longer obtains and, hence, the same is set aside.

WHEREFORE, the petition is hereby GRANTED. The appealed December 4, 2006 Decision and the March 6, 2007
Resolution of the Court of Appeals in CA-G.R. CV No. 79680 affirming the May 26, 2003 Decision of the Regional
Trial Court, Branch 3 in Baguio City are hereby REVERSED and SET ASIDE. Accordingly, petitioner Antonita
Ordua is hereby recognized to have the right of ownership over subject lot covered by TCT No. T-3276 of the

36
Baguio Registry registered in the name of Eduardo J. Fuentebella. The Register of Deeds of Baguio City is hereby
ORDERED to cancel said TCT No. T-3276 and to issue a new one in the name of Armando Gabriel, Jr. with the
proper annotation of the conditional sale of the lot covered by said title in favor of Antonita Ordua subject to the
payment of the PhP 50,000 outstanding balance. Upon full payment of the purchase price by Antonita Ordua,
Armando Gabriel, Jr. is ORDERED to execute a Deed of Absolute Sale for the transfer of title of subject lot to the
name of Antonita Ordua, within three (3) days from receipt of said payment.
No pronouncement as to costs.

SECOND DIVISION
HEIRS OF JUANITA PADILLA, represented by CLAUDIO PADILLA, Petitioners, vs.
DOMINADOR MAGDUA, Respondent.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review on certiorari[1] assailing the Orders dated 8 September 2006[2] and
13 February 2007[3] of the Regional Trial Court (RTC) of Tacloban City, Branch 34, in Civil Case No. 2001-10-161.
The Facts
Juanita Padilla (Juanita), the mother of petitioners, owned a piece of land located in San Roque, Tanauan,
Leyte. After Juanitas death on
23 March 1989, petitioners, as legal heirs of Juanita, sought to have the land
partitioned. Petitioners sent word to their eldest brother Ricardo Bahia (Ricardo) regarding their plans for the
partition of the land. In a letter dated 5 June 1998 written by Ricardo addressed to them, petitioners were
surprised to find out that Ricardo had declared the land for himself, prejudicing their rights as co-heirs. It was
then discovered that Juanita had allegedly executed a notarized Affidavit of Transfer of Real Property[4] (Affidavit)
in favor of Ricardo on 4 June 1966 making him the sole owner of the land. The records do not show that the land
was registered under the Torrens system.
On 26 October 2001, petitioners filed an action with the RTC of Tacloban City, Branch 34, for recovery of
ownership, possession, partition and damages. Petitioners sought to declare void the sale of the land by Ricardos
daughters, Josephine Bahia and Virginia Bahia-Abas, to respondent Dominador Magdua (Dominador). The sale
was made during the lifetime of Ricardo.
Petitioners alleged that Ricardo, through misrepresentation, had the land transferred in his name without the
consent and knowledge of his co-heirs. Petitioners also stated that prior to 1966, Ricardo had a house constructed
on the land. However, when Ricardo and his wife Zosima separated, Ricardo left for Inasuyan, Kawayan, Biliran
and the house was leased to third parties.
Petitioners further alleged that the signature of Juanita in the Affidavit is highly questionable because on 15
May 1978 Juanita executed a written instrument stating that she would be leaving behind to her children the land
which she had inherited from her parents.

37
Dominador filed a motion to dismiss on the ground of lack of jurisdiction since the assessed value of the land
was within the jurisdiction of the Municipal Trial Court of Tanauan, Leyte.
In an Order dated 20 February 2006,[5] the RTC dismissed the case for lack of jurisdiction. The RTC
explained that the assessed value of the land in the amount of P590.00 was less than the amount cognizable by the
RTC to acquire jurisdiction over the case.[6]
Petitioners filed a motion for reconsideration. Petitioners argued that the action was not merely for recovery
of ownership and possession, partition and damages but also for annulment of deed of sale. Since actions to annul
contracts are actions beyond pecuniary estimation, the case was well within the jurisdiction of the RTC.
Dominador filed another motion to dismiss on the ground of prescription.
In an Order dated 8 September 2006, the RTC reconsidered its previous stand and took cognizance of the
case. Nonetheless, the RTC denied the motion for reconsideration and dismissed the case on the ground of
prescription pursuant to Section 1, Rule 9 of the Rules of Court. The RTC ruled that the case was filed only in 2001
or more than 30 years since the Affidavit was executed in 1966. The RTC explained that while the right of an heir
to his inheritance is imprescriptible, yet when one of the co-heirs appropriates the property as his own to the
exclusion of all other heirs, then prescription can set in. The RTC added that since prescription had set in to
question the transfer of the land under the Affidavit, it would seem logical that no action could also be taken
against the deed of sale executed by Ricardos daughters in favor of Dominador. The dispositive portion of the
order states:
WHEREFORE, premises considered, the order of the Court is reconsidered in so far as the pronouncement
of the Court that it has no jurisdiction over the nature of the action. The dismissal of the action, however, is
maintained not by reason of lack of jurisdiction but by reason of prescription.
SO ORDERED.[7]
Petitioners filed another motion for reconsideration which the RTC denied in an Order dated 13 February
2007 since petitioners raised no new issue.
Hence, this petition.
The Issue
The main issue is whether the present action is already barred by prescription.
The Courts Ruling
Petitioners submit that the RTC erred in dismissing the complaint on the ground of prescription. Petitioners
insist that the Affidavit executed in 1966 does not conform with the requirement of sufficient repudiation of coownership by Ricardo against his co-heirs in accordance with Article 494 of the Civil Code. Petitioners assert that
the Affidavit became part of public records only because it was kept by the Provincial Assessors office for real
property tax declaration purposes. However, such cannot be contemplated by law as a record or registration
affecting real properties. Petitioners insist that the Affidavit is not an act of appropriation sufficient to be deemed
as constructive notice to an adverse claim of ownership absent a clear showing that petitioners, as co-heirs, were
notified or had knowledge of the Affidavit issued by their mother in Ricardos favor.
Respondent Dominador, on the other hand, maintains that Juanita, during her lifetime, never renounced her
signature on the Affidavit or interposed objections to Ricardos possession of the land, which was open, absolute
and in the concept of an owner. Dominador contends that the alleged written instrument dated 15 May 1978
executed by Juanita years before she died was only made known lately and conveys the possibility of being
fabricated. Dominador adds that the alleged highly questionable signature of Juanita on the Affidavit was only
made an issue after 35 years from the date of the transfer in 1966 until the filing of the case in 2001. As a buyer in
good faith, Dominador invokes the defense of acquisitive prescription against petitioners.

38
At the outset, only questions of law may be raised in a petition for review on certiorari under Rule 45 of the
Rules of Court. The factual findings of the lower courts are final and conclusive and may not be reviewed on appeal
except under any of the following circumstances: (1) the conclusion is grounded on speculations, surmises or
conjectures; (2) the inference is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no
citation of specific evidence on which the factual findings are based; (7) the finding of absence of facts is
contradicted by the presence of evidence on record; (8) the findings of the Court of Appeals are contrary to those of
the trial court; (9) the Court of Appeals manifestly overlooked certain relevant and undisputed facts that, if
properly considered, would justify a different conclusion; (10) the findings of the Court of Appeals are beyond the
issues of the case; and (11) such findings are contrary to the admissions of both parties.[8]
We find that the conclusion of the RTC in dismissing the case on the ground of prescription based solely on
the Affidavit executed by Juanita in favor of Ricardo, the alleged seller of the property from whom Dominador
asserts his ownership, is speculative. Thus, a review of the case is necessary.
Here, the RTC granted the motion to dismiss filed by Dominador based on Section 1, Rule 9 of the Rules of
Court which states:
Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending
between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the case. (Emphasis supplied)
The RTC explained that prescription had already set in since the Affidavit was executed on 31 May 1966
and petitioners filed the present case only on 26 October 2001, a lapse of more than 30 years. No action could be
taken against the deed of sale made in favor of Dominador without assailing the Affidavit, and the action to
question the Affidavit had already prescribed.
After a perusal of the records, we find that the RTC incorrectly relied on the Affidavit alone in order to
dismiss the case without considering petitioners evidence. The facts show that the land was sold to Dominador by
Ricardos daughters, namely Josephine Bahia and Virginia Bahia-Abas, during the lifetime of Ricardo. However,
the alleged deed of sale was not presented as evidence and neither was it shown that Ricardos daughters had any
authority from Ricardo to dispose of the land. No cogent evidence was ever presented that Ricardo gave his
consent to, acquiesced in, or ratified the sale made by his daughters to Dominador. In its 8 September 2006
Order, the RTC hastily concluded that Ricardos daughters had legal personality to sell the property:
On the allegation of the plaintiffs (petitioners) that Josephine Bahia and Virginia Bahia-Abas had no
legal personality or right to [sell] the subject property is of no moment in this case. It should be Ricardo Bahia who
has a cause of action against [his] daughters and not the herein plaintiffs. After all, Ricardo Bahia might have
already consented to or ratified the alleged deed of sale.[9]
Also, aside from the Affidavit, Dominador did not present any proof to show that Ricardos possession of
the land had been open, continuous and exclusive for more than 30 years in order to establish extraordinary
acquisitive prescription.[10] Dominador merely assumed that Ricardo had been in possession of the land for 30
years based on the Affidavit submitted to the RTC. The petitioners, on the other hand, in their pleading filed with
the RTC for recovery of ownership, possession, partition and damages, alleged that Ricardo left the land after he
separated from his wife sometime after 1966 and moved to another place. The records do not mention, however,
whether Ricardo had any intention to go back to the land or whether Ricardos family ever lived there.
Further, Dominador failed to show that Ricardo had the land declared in his name for taxation purposes
from 1966 after the Affidavit was executed until 2001 when the case was filed. Although a tax declaration does not
prove ownership, it is evidence of claim to possession of the land.

39
Moreover, Ricardo and petitioners are co-heirs or co-owners of the land. Co-heirs or co-owners cannot
acquire by acquisitive prescription the share of the other co-heirs or co-owners absent a clear repudiation of the coownership, as expressed in Article 494 of the Civil Code which states:
Art. 494. x x x No prescription shall run in favor of a co-owner or co-heir against his co-owners or coheirs as long as he expressly or impliedly recognizes the co-ownership.
Since possession of co-owners is like that of a trustee, in order that a co-owners possession may be
deemed adverse to the cestui que trust or other co-owners, the following requisites must concur: (1) that he has
performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust or other co-owners, (2)
that such positive acts of repudiation have been made known to the cestui que trust or other co-owners, and
(3)
that the evidence thereon must be clear and convincing.[11]
In the present case, all three requisites have been met. After Juanitas death in 1989, petitioners sought
for the partition of their mothers land. The heirs, including Ricardo, were notified about the plan. Ricardo,
through a letter dated 5 June 1998, notified petitioners, as his co-heirs, that he adjudicated the land solely for
himself. Accordingly, Ricardos interest in the land had now become adverse to the claim of his co-heirs after
repudiating their claim of entitlement to the land. In Generosa v. Prangan-Valera,[12] we held that in order that
title may prescribe in favor of one of the co-owners, it must be clearly shown that he had repudiated the claims of
the others, and that they were apprised of his claim of adverse and exclusive ownership, before the prescriptive
period begins to run.
However, in the present case, the prescriptive period began to run only from 5 June 1998, the date
petitioners received notice of Ricardos repudiation of their claims to the land. Since petitioners filed an action for
recovery of ownership and possession, partition and damages with the RTC on 26 October 2001, only a mere three
years had lapsed. This three-year period falls short of the 10-year or 30-year acquisitive prescription period
required by law in order to be entitled to claim legal ownership over the land. Thus, Dominador cannot invoke
acquisitive prescription.
Further, Dominadors argument that prescription began to commence in 1966, after the Affidavit was
executed, is erroneous. Dominador merely relied on the Affidavit submitted to the RTC that Ricardo had been in
possession of the land for more than 30 years. Dominador did not submit any other corroborative evidence to
establish Ricardos alleged possession since 1966. In Heirs of Maningding v. Court of Appeals,[13] we held that
the evidence relative to the possession, as a fact, upon which the alleged prescription is based, must be clear,
complete and conclusive in order to establish the prescription. Here, Dominador failed to present any other
competent evidence to prove the alleged extraordinary acquisitive prescription of Ricardo over the land. Since the
property is an unregistered land, Dominador bought the land at his own risk, being aware as buyer that no title had
been issued over the land. As a consequence, Dominador is not afforded protection unless he can manifestly prove
his legal entitlement to his claim.
With regard to the issue of the jurisdiction of the RTC, we hold that the RTC did not err in taking
cognizance of the case.
Under Section 1 of Republic Act No. 7691 (RA 7691),[14] amending Batas Pambansa Blg. 129, the RTC
shall exercise exclusive jurisdiction on the following actions:
Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the Judiciary Reorganization Act of
1980, is hereby amended to read as follows:
Sec. 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction.
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation;
(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or, for civil
actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00) except actions for forcible

40
entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; x x x
On the other hand, Section 3 of RA 7691 expanded the jurisdiction of the Metropolitan Trial Courts,
Municipal Trial Courts and Municipal Circuit Trial Courts over all civil actions which involve title to or possession
of real property, or any interest, outside Metro Manila where the assessed value does not exceed Twenty thousand
pesos (P20,000.00). The provision states:
Section 3. Section 33 of the same law is hereby amended to read as follows:
Sec. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Trial Circuit Trial Courts
shall exercise:
xxx
(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or
any interest therein where the assessed value of the property or interest therein does not exceed Twenty thousand
pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty thousand
pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees, litigation expenses and costs:
Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined
by the assessed value of the adjacent lots.
In the present case, the records show that the assessed value of the land was P590.00 according to the
Declaration of Property as of 23 March 2000 filed with the RTC. Based on the value alone, being way below
P20,000.00, the MTC has jurisdiction over the case. However, petitioners argued that the action was not merely
for recovery of ownership and possession, partition and damages but also for annulment of deed of sale. Since
annulment of contracts are actions incapable of pecuniary estimation, the RTC has jurisdiction over the case.[15]
Petitioners are correct. In Singson v. Isabela Sawmill,[16] we held that:
In determining whether an action is one the subject matter of which is not capable of pecuniary estimation
this Court has adopted the criterion of first ascertaining the nature of the principal action or remedy sought. If it is
primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and whether
jurisdiction is in the municipal courts or in the courts of first instance would depend on the amount of the claim.
However, where the basic issue is something other than the right to recover a sum of money, where the money
claim is purely incidental to, or a consequence of, the principal relief sought, this Court has considered such actions
as cases where the subject of the litigation may not be estimated in terms of money, and are cognizable by courts of
first instance (now Regional Trial Courts).
When petitioners filed the action with the RTC they sought to recover ownership and possession of the land
by questioning (1) the due execution and authenticity of the Affidavit executed by Juanita in favor of Ricardo which
caused Ricardo to be the sole owner of the land to the exclusion of petitioners who also claim to be legal heirs and
entitled to the land, and (2) the validity of the deed of sale executed between Ricardos daughters and
Dominador. Since the principal action sought here is something other than the recovery of a sum of money, the
action is incapable of pecuniary estimation and thus cognizable by the RTC. Well-entrenched is the rule that
jurisdiction over the subject matter of a case is conferred by law and is determined by the allegations in the
complaint and the character of the relief sought, irrespective of whether the party is entitled to all or some of the
claims asserted.[17]
In sum, we find that the Affidavit, as the principal evidence relied upon by the RTC to dismiss the case on the
ground of prescription, insufficiently established Dominadors rightful claim of ownership to the land. Thus, we
direct the RTC to try the case on the merits to determine who among the parties are legally entitled to the land.
WHEREFORE, we GRANT the petition. We REVERSE AND SET ASIDE the Orders dated 8 September 2006
and 13 February 2007 of the Regional Trial Court of Tacloban City, Branch 34 in Civil Case
No. 2001-10-161.

41
SO ORDERED.

SECOND DIVISION
HEIRS OF SOFIA QUIRONG, Represented by ROMEO P.QUIRONG, Petitioners,
DEVELOPMENT BANK OF THE PHILIPPINES, Respondent.

DECISION
ABAD, J.:
This case is about the prescriptive period of an action for rescission of a contract of sale where the buyer is evicted
from the thing sold by a subsequent judicial order in favor of a third party.
The Facts and the Case
The facts are not disputed. When the late Emilio Dalope died, he left a 589-square meter untitled lot[1] in Sta.
Barbara, Pangasinan, to his wife, Felisa Dalope (Felisa) and their nine children, one of whom was Rosa DalopeFuncion.[2] To enable Rosa and her husband Antonio Funcion (the Funcions) get a loan from respondent
Development Bank of the Philippines (DBP), Felisa sold the whole lot to the Funcions. With the deed of sale in
their favor and the tax declaration transferred in their names, the Funcions mortgaged the lot with the DBP.
On February 12, 1979, after the Funcions failed to pay their loan, the DBP foreclosed the mortgage on the lot and
consolidated ownership in its name on June 17, 1981.[3]
Four years later or on September 20, 1983 the DBP conditionally sold the lot to Sofia Quirong[4] for the price of
P78,000.00. In their contract of sale, Sofia Quirong waived any warranty against eviction. The contract provided
that the DBP did not guarantee possession of the property and that it would not be liable for any lien or
encumbrance on the same. Quirong gave a down payment of P14,000.00.
Two months after that sale or on November 28, 1983 Felisa and her eight children (collectively, the Dalopes)[5]
filed an action for partition and declaration of nullity of documents with damages against the DBP and the
Funcions before the Regional Trial Court (RTC) of Dagupan City, Branch 42, in Civil Case D-7159.
On December 27, 1984, notwithstanding the suit, the DBP executed a deed of absolute sale of the subject lot in
Sofia Quirongs favor. The deed of sale carried substantially the same waiver of warranty against eviction and of
any adverse lien or encumbrance.
On May 11, 1985, Sofia Quirong having since died, her heirs (petitioner Quirong heirs) filed an answer in
intervention[6] in Civil Case D-7159 in which they asked the RTC to award the lot to them and, should it instead be
given to the Dalopes, to allow the Quirong heirs to recover the lots value from the DBP. But, because the heirs
failed to file a formal offer of evidence, the trial court did not rule on the merits of their claim to the lot and,
alternatively, to relief from the DBP.[7]
On December 16, 1992 the RTC rendered a decision, declaring the DBPs sale to Sofia Quirong valid only with
respect to the shares of Felisa and Rosa Funcion in the property. It declared Felisas sale to the Funcions, the
latters mortgage to the DBP, and the latters sale to Sofia Quirong void insofar as they prejudiced the shares of the
eight other children of Emilio and Felisa who were each entitled to a tenth share in the subject lot.

42
The DBP received a copy of the decision on January 13, 1993 and, therefore, it had until January 28, 1993 within
which to file a motion for its reconsideration or a notice of appeal from it. But the DBP failed to appeal supposedly
because of excusable negligence and the withdrawal of its previous counsel of record.[8]
When the RTC judgment became final and the court issued a writ of execution, the DBP resisted the writ by motion
to quash, claiming that the decision could not be enforced because it failed to state by metes and bounds the
particular portions of the lot that would be assigned to the different parties in the case. The RTC denied the DBPs
motion, prompting the latter to seek recourse by special civil action of certiorari directly with this Court in G.R.
116575, Development Bank of the Philippines v. Fontanilla. On September 7, 1994 the Court issued a resolution,
denying the petition for failure of the DBP to pay the prescribed fees. This resolution became final and executory
on January 17, 1995.[9]
On June 10, 1998 the Quirong heirs filed the present action[10] against the DBP before the RTC of Dagupan
City, Branch 44, in Civil Case CV-98-02399-D for rescission of the contract of sale between Sofia Quirong, their
predecessor, and the DBP and praying for the reimbursement of the price of P78,000.00 that she paid the bank
plus damages. The heirs alleged that they were entitled to the rescission of the sale because the decision in Civil
Case D-7159 stripped them of nearly the whole of the lot that Sofia Quirong, their predecessor, bought from the
DBP. The DBP filed a motion to dismiss the action on ground of prescription and res judicata but the RTC denied
their motion.
On June 14, 2004, after hearing the case, the RTC rendered a decision,[11] rescinding the sale between Sofia
Quirong and the DBP and ordering the latter to return to the Quirong heirs the P78,000.00 Sofia Quirong paid the
bank.[12] On appeal by the DBP, the Court of Appeals (CA) reversed the RTC decision and dismissed the heirs
action on the ground of prescription. The CA concluded that, reckoned from the finality of the December 16, 1992
decision in Civil Case D-7159, the complaint filed on June 10, 1998 was already barred by the four-year prescriptive
period under Article 1389 of the Civil Code.[13] The Quirong heirs filed a motion for reconsideration of the
decision but the appellate court denied it,[14] thus, this petition.
The Issues Presented
The issues presented in this case are:
1.
Whether or not the Quirong heirs action for rescission of respondent DBPs sale of the subject property to
Sofia Quirong was already barred by prescription; and
2.
In the negative, whether or not the heirs of Quirong were entitled to the rescission of the DBPs sale of the
subject lot to the late Sofia Quirong as a consequence of her heirs having been evicted from it.
The Courts Rulings
The CA held that the Quirong heirs action for rescission of the sale between DBP and their predecessor, Sofia
Quirong, is barred by prescription reckoned from the date of finality of the December 16, 1992 RTC decision in
Civil Case D-7159 and applying the prescriptive period of four years set by Article 1389 of the Civil Code.
Unfortunately, the CA did not state in its decision the date when the RTC decision in Civil Case D-7159 became
final and executory, which decision resulted in the Quirong heirs loss of 80% of the lot that the DBP sold to Sofia
Quirong. Petitioner heirs claim that the prescriptive period should be reckoned from January 17, 1995, the date
this Courts resolution in G.R. 116575 became final and executory.[15]
But the incident before this Court in G.R. 116575 did not deal with the merit of the RTC decision in Civil Case D7159. That decision became final and executory on January 28, 1993 when the DBP failed to appeal from it within
the time set for such appeal. The incident before this Court in G.R. 116575 involved the issuance of the writ of
execution in that case. The DBP contested such issuance supposedly because the dispositive portion of the
decision failed to specify details that were needed for its implementation. Since this incident did not affect the
finality of the decision in Civil Case D-7159, the prescriptive period remained to be reckoned from January 28,
1993, the date of such finality.

43
The next question that needs to be resolved is the applicable period of prescription. The DBP claims that it should
be four years as provided under Article 1389 of the Civil Code.[16] Article 1389 provides that the action to claim
rescission must be commenced within four years. The Quirong heirs, on the other hand, claim that it should be 10
years as provided under Article 1144 which states that actions upon a written contract must be brought within
10 years from the date the right of action accrues.
Now, was the action of the Quirong heirs for rescission or upon a written contract? There is no question that
their action was for rescission, since their complaint in Civil Case CV-98-02399-D asked for the rescission of the
contract of sale between Sofia Quirong, their predecessor, and the DBP and the reimbursement of the price of
P78,000.00 that Sofia Quirong paid the bank plus damages. The prescriptive period for rescission is four years.
But it is not that simple. The remedy of rescission is not confined to the rescissible contracts enumerated under
Article 1381.[17] Article 1191 of the Civil Code gives the injured party in reciprocal obligations, such as what
contracts are about, the option to choose between fulfillment and rescission. Arturo M. Tolentino, a well-known
authority in civil law, is quick to note, however, that the equivalent of Article 1191 in the old code actually uses the
term resolution rather than the present rescission.[18] The calibrated meanings of these terms are distinct.
Rescission is a subsidiary action based on injury to the plaintiffs economic interests as described in Articles 1380
and 1381. Resolution, the action referred to in Article 1191, on the other hand, is based on the defendants breach
of faith, a violation of the reciprocity between the parties. As an action based on the binding force of a written
contract, therefore, rescission (resolution) under Article 1191 prescribes in 10 years. Ten years is the period of
prescription of actions based on a written contract under Article 1144.
The distinction makes sense. Article 1191 gives the injured party an option to choose between, first, fulfillment of
the contract and, second, its rescission. An action to enforce a written contract (fulfillment) is definitely an action
upon a written contract, which prescribes in 10 years (Article 1144). It will not be logical to make the remedy of
fulfillment prescribe in 10 years while the alternative remedy of rescission (or resolution) is made to prescribe after
only four years as provided in Article 1389 when the injury from which the two kinds of actions derive is the same.
Here, the Quirong heirs alleged in their complaint that they were entitled to the rescission of the contract of sale of
the lot between the DBP and Sofia Quirong because the decision in Civil Case D-7159 deprived her heirs of nearly
the whole of that lot. But what was the status of that contract at the time of the filing of the action for rescission?
Apparently, that contract of sale had already been fully performed when Sofia Quirong paid the full price for the lot
and when, in exchange, the DBP executed the deed of absolute sale in her favor. There was a turnover of control of
the property from DBP to Sofia Quirong since she assumed under their contract, the ejectment of squatters
and/or occupants on the lot, at her own expense.[19]
Actually, the cause of action of the Quirong heirs stems from their having been ousted by final judgment from the
ownership of the lot that the DBP sold to Sofia Quirong, their predecessor, in violation of the warranty against
eviction that comes with every sale of property or thing. Article 1548 of the Civil Code provides:
Article 1548. Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act
imputable to the vendor, the vendee is deprived of the whole or of a part of thing purchased.
xxxx

With the loss of 80% of the subject lot to the Dalopes by reason of the judgment of the RTC in Civil Case D-7159,
the Quirong heirs had the right to file an action for rescission against the DBP pursuant to the provision of Article
1556 of the Civil Code which provides:
Article 1556. Should the vendee lose, by reason of the eviction, a part of the thing sold of such importance, in
relation to the whole, that he would not have bought it without said part, he may demand the rescission of the
contract; but with the obligation to return the thing without other encumbrances than those which it had when he
acquired it. x x x

44
And that action for rescission, which is based on a subsequent economic loss suffered by the buyer, was precisely
the action that the Quirong heirs took against the DBP. Consequently, it prescribed as Article 1389 provides in
four years from the time the action accrued. Since it accrued on January 28, 1993 when the decision in Civil Case
D-7159 became final and executory and ousted the heirs from a substantial portion of the lot, the latter had only
until January 28, 1997 within which to file their action for rescission. Given that they filed their action on June 10,
1998, they did so beyond the four-year period.
With the conclusion that the Court has reached respecting the first issue presented in this case, it would serve no
useful purpose for it to further consider the issue of whether or not the heirs of Quirong would have been entitled
to the rescission of the DBPs sale of the subject lot to Sofia Quirong as a consequence of her heirs having been
evicted from it. As the Court has ruled above, their action was barred by prescription. The CA acted correctly in
reversing the RTC decision and dismissing their action.
Parenthetically, the Quirong heirs were allowed by the RTC to intervene in the original action for annulment of sale
in Civil Case D-7159 that the Dalopes filed against the DBP and the Funcions. Not only did the heirs intervene in
defense of the sale, they likewise filed a cross claim against the DBP. And they were apparently heard on their
defense and cross claim but the RTC did not adjudicate their claim for the reason that they failed to make a formal
offer of their documentary exhibits. Yet, they did not appeal from this omission or from the judgment of the RTC,
annulling the DBPs sale of the subject lot to Sofia Quirong. This point is of course entirely academic but it shows
that the Quirong heirs have themselves to blame for the loss of whatever right they may have in the case.
WHEREFORE, the Court DENIES the petition and AFFIRMS the November 30, 2005 decision of the Court of
Appeals in CA-G.R. CV 83897.

SECOND DIVISION
JAIME D. ANG, Petitioner, vs.
COURT OF APPEALS AND BRUNO SOLEDAD, Respondents.

DECISION
CARPIO MORALES, J.:
Under a car-swapping scheme, respondent Bruno Soledad (Soledad) sold his Mitsubishi GSR sedan 1982 model
to petitioner Jaime Ang (Ang) by Deed of Absolute Sale[1] dated July 28, 1992. For his part, Ang conveyed to
Soledad his Mitsubishi Lancer model 1988, also by Deed of Absolute Sale[2] of even date. As Angs car was of a
later model, Soledad paid him an additional P55,000.00.
Ang, a buyer and seller of used vehicles, later offered the Mitsubishi GSR for sale through Far Eastern Motors, a
second-hand auto display center. The vehicle was eventually sold to a certain Paul Bugash (Bugash) for
P225,000.00, by Deed of Absolute Sale[3] dated August 14, 1992. Before the deed could be registered in Bugashs
name, however, the vehicle was seized by virtue of a writ of replevin[4] dated January 26, 1993 issued by the Cebu
City Regional Trial Court (RTC), Branch 21 in Civil Case No. CEB-13503, BA Finance Corporation vs. Ronaldo
and Patricia Panes, on account of the alleged failure of Ronaldo Panes, the owner of the vehicle prior to Soledad,
to pay the mortgage debt[5] constituted thereon.

45
To secure the release of the vehicle, Ang paid BA Finance the amount of P62,038.47[6] on March 23, 1993.
Soledad refused to reimburse the said amount, despite repeated demands, drawing Ang to charge him for Estafa
with abuse of confidence before the Office of the City Prosecutor, Cebu City. By Resolution[7] of July 15, 1993, the
City Prosecutors Office dismissed the complaint for insufficiency of evidence, drawing Ang to file on November 9,
1993 the first[8] of three successive complaints for damages against Soledad before the RTC of Cebu City where it
was docketed as Civil Case No. Ceb-14883.
Branch 19 of the Cebu City RTC, by Order[9] dated May 4, 1995, dismissed Civil Case No. Ceb-14883 for failure to
submit the controversy to barangay conciliation.
Ang thereafter secured a certification to file action and again filed a complaint for damages,[10] docketed as Ceb17871, with the RTC of Cebu City, Branch 14 which dismissed it, by Order[11] dated March 27, 1996, on the ground
that the amount involved is not within its jurisdiction.
Ang thereupon filed on July 15, 1996 with the Municipal Trial Court in Cities (MTCC) a complaint,[12] docketed as
R-36630, the subject of the instant petition.
After trial, the MTCC dismissed the complaint on the ground of prescription, vz:
It appearing that the Deed of Sale to plaintiff o[f] subject vehicle was dated and executed on 28 July 1992, the
complaint before the Barangay terminated 21 September 1995 per Certification to File Action attached to the
Complaint, and this case eventually was filed with this Court on 15 July 1996, this action has already been barred
since more than six (6) months elapsed from the delivery of the subject vehicle to the plaintiff buyer to the filing of
this action, pursuant to the aforequoted Article 1571.[13] (Emphasis and underscoring supplied)
His motion for reconsideration having been denied, Ang appealed to the RTC, Branch 7 of which affirmed the
dismissal of the complaint, albeit it rendered judgment in favor of Ang for the sake of justice and equity, and in
consonance with the salutary principle of non-enrichment at anothers expense. The RTC ratiocinated:
xxxx
[I]t was error for the Court to rely on Art. 1571 of the Civil Code to declare the action as having prescribed, since the
action is not one for the enforcement of the warranty against hidden defects. Moreover, Villostas vs. Court of
Appeals declared that the six-month prescriptive period for a redhibitory action applies only to implied warranties.
There is here an express warranty. If at all, what applies is Art. 1144 of the Civil Code, the general law on
prescription, which states, inter alia, that actions upon a written contract prescribes in ten (10) years [Engineering
& Machinery Corporation vs. Court of Appeals, G.R. No. 52267, January 24, 1996].
More appropriate to the discussion would be defendants warranty against eviction, which he explicitly made
in the Deed of Absolute Sale: I hereby covenant my absolute ownership to (sic) the above-described property and
the same is free from all liens and encumbrances and I will defend the same from all claims or any claim
whatsoever
Still the Court finds that plaintiff cannot recover under this warranty. There is no showing of compliance
with the requisites.
xxxx
Nonetheless, for the sake of justice and equity, and in consonance with the salutary principle of nonenrichment at anothers expense, defendant should reimburse plaintiff the P62,038.47 which on March 23, 1993
he paid BA Finance Corporation to release the mortgage on the car. (Emphasis and underscoring supplied)[14
The RTC thus disposed as follows:
Wherefore, judgment is rendered directing defendant to pay plaintiff P62,038.47, the amount the latter paid
BA Finance Corporation to release the mortgage on the vehicle, with interest at the legal rate computed from

46
March 23, 1993. Except for this, the judgment in the decision of the trial court, dated October 8, 2001 dismissing
the claims of plaintiff is affirmed. (Underscoring supplied)[15]
Soledads Motion for Reconsideration was denied by Order[16] of December 12, 2002, hence, he elevated the
case to the Court of Appeals, Cebu City.
The appellate court, by the challenged Decision[17] of August 30, 2006, noting the sole issue to be resolved
whether the RTC erred in directing Soledad to pay Ang the amount the latter paid to BA Finance plus legal interest,
held that, following Goodyear Phil., Inc. v. Anthony Sy,[18] Ang cannot anymore seek refuge under the Civil Code
provisions granting award of damages for breach of warranty against eviction for the simple fact that three years
and ten months have lapsed from the execution of the deed of sale in his favor prior to the filing of the instant
complaint. It further held:
It bears to stress that the deed of absolute sale was executed on July 28, 1992, and the instant complaint dated May
15, 1996 was received by the MTCC on July 15, 1996.
While it is true that someone unjustly enriched himself at the expense of herein respondent, we agree with
petitioner (Soledad) that it is not he.
The appellate court accordingly reversed the RTC decision and denied the petition.
By Resolution[19] of April 25, 2007, the appellate court denied Angs motion for reconsideration, it further noting
that when Ang settled the mortgage debt to BA Finance, he did so voluntarily in order to resell the vehicle, hence,
Soledad did not benefit from it as he was unaware of the mortgage constituted on the vehicle by the previous
owner.
The appellate court went on to hold that Soledad has nothing to do with the transaction anymore; his obligation
ended when he delivered the subject vehicle to the respondent upon the perfection of the contract of sale. And it
reiterated its ruling that the action, being one arising from breach of warranty, had prescribed, it having been
filed beyond the 6-month prescriptive period.
The appellate court brushed aside Angs contention that Soledad was the proximate cause of the loss due to the
latters failure to thoroughly examine and verify the registration and ownership of the previous owner of the
vehicle, given that Ang is engaged in the business of buying and selling second-hand vehicles and is therefore
expected to be cautious in protecting his rights under the circumstances.
Hence, the present recourse petition for review on certiorari, Ang maintaining that his cause of action had not
yet prescribed when he filed the complaint and he should not be blamed for paying the mortgage debt.
To Ang, the ruling in Goodyear v. Sy is not applicable to this case, there being an express warranty in the herein
subject Deed of Absolute Sale and, therefore, the action based thereon prescribes in ten (10) years following
Engineering & Machinery Corp. v. CA[20] which held that where there is an express warranty in the contract, the
prescriptive period is the one specified in the contract or, in the absence thereof, the general rule on rescission of
contract.
Ang likewise maintains that he should not be blamed for paying BA Finance and should thus be entitled to
reimbursement and damages for, following Carrascoso, Jr. v. Court of Appeals,[21] in case of breach of an express
warranty, the seller is liable for damages provided that certain requisites are met which he insists are present in the
case at bar.
The resolution of the sole issue of whether the complaint had prescribed hinges on a determination of what kind of
warranty is provided in the Deed of Absolute Sale subject of the present case.
A warranty is a statement or representation made by the seller of goods, contemporaneously and as part of the
contract of sale, having reference to the character, quality or title of the goods, and by which he promises or
undertakes to insure that certain facts are or shall be as he then represents them.[22]

47
Warranties by the seller may be express or implied. Art. 1546 of the Civil Code defines express warranty as follows:
Art. 1546. Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the
natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the buyer
purchases the thing relying thereon. No affirmation of the value of the thing, nor any statement purporting to be a
statement of the sellers opinion only, shall be construed as a warranty, unless the seller made such affirmation or
statement as an expert and it was relied upon by the buyer. (Emphasis and underscoring supplied)
On the other hand, an implied warranty is that which the law derives by application or inference from the nature of
the transaction or the relative situation or circumstances of the parties, irrespective of any intention of the seller to
create it.[23] Among the implied warranty provisions of the Civil Code are: as to the sellers title (Art. 1548),
against hidden defects and encumbrances (Art. 1561), as to fitness or merchantability (Art. 1562), and against
eviction (Art. 1548).
The earlier cited ruling in Engineering & Machinery Corp. states that the prescriptive period for instituting actions
based on a breach of express warranty is that specified in the contract, and in the absence of such period, the
general rule on rescission of contract, which is four years (Article 1389, Civil Code).
As for actions based on breach of implied warranty, the prescriptive period is, under Art. 1571 (warranty against
hidden defects of or encumbrances upon the thing sold) and Art. 1548 (warranty against eviction), six months from
the date of delivery of the thing sold.
The following provision of the Deed of Absolute Sale reflecting the kind of warranty made by Soledad reads:
xxxx
I hereby covenant my absolute ownership to (sic) the above-described property and the same is free from all liens
and encumbrances and I will defend the same from all claims or any claim whatsoever; will save the vendee from
any suit by the government of the Republic of the Philippines.
x x x x (Emphasis supplied)
In declaring that he owned and had clean title to the vehicle at the time the Deed of Absolute Sale was forged,
Soledad gave an implied warranty of title. In pledging that he will defend the same from all claims or any claim
whatsoever [and] will save the vendee from any suit by the government of the Republic of the Philippines, Soledad
gave a warranty against eviction.
Given Angs business of buying and selling used vehicles, he could not have merely relied on Soledads affirmation
that the car was free from liens and encumbrances. He was expected to have thoroughly verified the cars
registration and related documents.
Since what Soledad, as seller, gave was an implied warranty, the prescriptive period to file a breach thereof is six
months after the delivery of the vehicle, following Art. 1571. But even if the date of filing of the action is reckoned
from the date petitioner instituted his first complaint for damages on November 9, 1993, and not on July 15, 1996
when he filed the complaint subject of the present petition, the action just the same had prescribed, it having been
filed 16 months after July 28, 1992, the date of delivery of the vehicle.
On the merits of his complaint for damages, even if Ang invokes breach of warranty against eviction as inferred
from the second part of the earlier-quoted provision of the Deed of Absolute Sale, the following essential requisites
for such breach, vz:
A breach of this warranty requires the concurrence of the following circumstances:
(1) The purchaser has been deprived of the whole or part of the thing sold;
(2) This eviction is by a final judgment;
(3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and

48
(4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.
In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be declared.
[24] (Emphasis supplied),
have not been met. For one, there is no judgment which deprived Ang of the vehicle. For another, there was no
suit for eviction in which Soledad as seller was impleaded as co-defendant at the instance of the vendee.
Finally, even under the principle of solutio indebiti which the RTC applied, Ang cannot recover from Soledad the
amount he paid BA Finance. For, as the appellate court observed, Ang settled the mortgage debt on his own
volition under the supposition that he would resell the car. It turned out
that he did pay BA Finance in order to avoid returning the payment made by the ultimate buyer Bugash. It need
not be stressed that Soledad did not benefit from Angs paying BA Finance, he not being the one who mortgaged
the vehicle, hence, did not benefit from the proceeds thereof.
WHEREFORE, the petition is, in light of the foregoing disquisition, DENIED.