FELS Energy, Inc. v.

The Province of Batangas

G.R. No. 168557, February 16, 2007
Callejo, Sr., J.
FACTS: On January 18, 1993, NPC entered into a lease contract with Polar Energy, Inc. over diesel engine power barges moored at Balayan Bay in
Calaca, Batangas. The contract staes that NPC shall be responsible for the payment of all taxes other levies imposed government to which POLAR
may be or become subject to in respect of the Power Barges. Subsequently, Polar Energy, Inc. assigned its rights under the agreement to FELS
Energy Inc.
On August 7, 1995, FELS received an assessment of real property taxes on the power barges from Provincial Assessor of Batangas City. The assessed
tax amounted to P56,184,088.40 per annum. FELS referred the matter to NPC, reminding it of its obligation under the agreement to pay all real estate
taxes. NPC sought reconsideration of the Provincial Assessors decision to assess real property taxes on the power barges, alleging that barges are
non-taxable items. In its answer, the Provincial Assessor averred that the barges were real property for purposes of taxation under Section 199(c) of
Republic Act (R.A.) No. 7160.
ISSUE: Whether power barges, which are floating and movable, are personal properties and therefore, not subject to real property tax.
HELD: NO. The power barges are real property and are thus subject to real property tax. Tax assessments by tax examiners are presumed correct and
made in good faith, with the taxpayer having the burden of proving otherwise. Besides, factual findings of administrative bodies, which have
acquired expertise in their field, are generally binding and conclusive upon the Court.
Manila International Airport Authority v. Court of Appeals
G.R. No. 155650, July 20, 2006
Carpio, J.
FACTS: MIAA received Final Notices of Real Estate Tax Delinquency from the City of Paraaque for the taxable years 1992 to 2001. MIAAs real
estate tax delinquency was estimated at P624 million. Thus, the City of Paraaque, through its City Treasurer, issued notices of levy and warrants of
levy on the Airport Lands and Buildings. The Mayor of the City of Paraaque threatened to sell at public auction the Airport Lands and Buildings
should MIAA fail to pay the real estate tax delinquency. City of Paraaque contends that Section 193 of the Local Government Code expressly
withdrew the tax exemption privileges of government-owned and-controlled corporations upon the effectivity of the Local Government Code.
However, MIAA avers that airport lands and buildings are owned by the State, and thus, exempt from tax.
ISSUE: Whether or not airport lands and buildings of MIAA are exempt from real estate tax.
HELD: Yes. MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental functions. MIAA is like any
other government instrumentality, the only difference is that MIAA is vested with corporate powers. Unless the government instrumentality is
organized as a stock or non-stock corporation, it remains a government instrumentality exercising not only governmental but also corporate powers.
Thus, MIAA exercises the governmental powers of eminent domain, police authority and the levying of fees and charges. The airport lands and
buildings of MIAA are property of public dominion and therefore owned by the State or the Republic of the Philippines. Hence, the subject properties
are not subject to tax.
German Management & Services, Inc. v. Court of Appeals
G.R. No. 76216 and 76217, September 14, 1989, 177 SCRA 495
Fernan, J.
FACTS: Spouses Cynthia Cuyegkeng Jose and Manuel Rene Jose, residents of Pennsylvania, Philadelphia, USA are the owners of a parcel of land
situated in Sitio Inarawan, San Isidro, Antipolo, Rizal, with an area of 232,942 sq. M. The land was originally registered on 5 August 1948 in the
Office of the Register of Deeds Rizal as OCT 19, pursuant to a Homestead Patent granted by the President of the Philippines on 27 July 1948. On 26
February 1982, the spouses Jose executed a special power of attorney authorizing German Management Services to develop their property into a
residential subdivision. Consequently, the German Management obtained Development Permit 00424 from the Human Settlements Regulatory
Commission for said development. Finding that part of the property was occupied by Gernale and Villeza and 20 other persons, German Management
advised the occupants to vacate the premises but the latter refused. Nevertheless, German Management proceeded with the development of the
subject property which included the portions occupied and cultivated by Gernale, et.al. Gernale, et.al. filed an action for forcible entry against
German Management before the MTC Antipolo, Rizal, alleging that they are mountainside farmers of Sitio Inarawan who have occupied and tilled
their farmholdings some 12 to 15 years prior to the promulgation of PD 27, and that they were deprived of their property without due process of law
when German Management forcibly removed and destroyed the barbed wire fence enclosing their farmholdings without notice and bulldozing the
rice, corn, fruit bearing trees and other crops that they planted by means of force, violence and intimidation The MTC dismissed Gernale et.al.'s
complaint for forcible entry. On appeal, the RTC sustained the dismissal by the MTC. Gernale then filed a petition for review with the Court of
Appeals. Said court gave due course to their petition and reversed the decisions of the MTC and the RTC. The Appellate Court held that since
Gernale, et.al. were in actual possession of the property at the time they were forcibly ejected by German Management, they have a right to
commence an action for forcible entry regardless of the legality or illegality of possession. German Management moved to reconsider but the same
was denied by the Appellate Court. Hence, here is the present recourse.
ISSUE: Whether the doctrine of self-help may be availed of when respondents refused to vacate the premises.
HELD: No. The justification that the drastic action of bulldozing and destroying the crops of the prior possessor on the basis of the doctrine of self
help (enunciated in Article 429 NCC) is unavailing because the such doctrine can only be exercised at the time of actual or threatened dispossession,
which is absent in the present case. When possession has already been lost, the owner must resort to judicial process for the recovery of property.
This is clear from Article 536 New Civil Code which provides that "in no case may possession be acquired through force or intimidation as long as

there is a possessor who objects thereto. He, who believes that he has an action or right to deprive another of the holding of a thing, must invoke the
aid of the competent court, if the holder should refuse to deliver the thing."
HEIRS OF MARIO MALABANAN vs. REPUBLIC OF THE PHILIPPINES
HEIRS OF MARIO MALABANAN vs. REPUBLIC OF THE PHILIPPINES
GR No. 179987
April 29, 2009
en banc
FACTS:
On 20 February 1998, Mario Malabanan filed an application for land registration before the RTC of Cavite-Tagaytay, covering a parcel of land
situated in Silang Cavite, consisting of 71,324 square meters. Malabanan claimed that he had purchased the property from Eduardo Velazco, and that
he and his predecessors-in-interest had been in open, notorious, and continuous adverse and peaceful possession of the land for more than thirty (30)
years. Velazco testified that the property was originally belonged to a twenty-two hectare property owned by his great-grandfather, Lino Velazco.
Lino had four sons Benedicto, Gregorio, Eduardo and Estebanthe fourth being Aristedess grandfather. Upon Linos death, his four sons inherited
the property and divided it among themselves. But by 1966, Estebans wife, Magdalena, had become the administrator of all the properties inherited
by the Velazco sons from their father, Lino. After the death of Esteban and Magdalena, their son Virgilio succeeded them in administering the
properties, including Lot 9864-A, which originally belonged to his uncle, Eduardo Velazco. It was this property that was sold by Eduardo Velazco to
Malabanan.
Among the evidence presented by Malabanan during trial was a Certification dated 11 June 2001, issued by the Community Environment & Natural
Resources Office, Department of Environment and Natural Resources (CENRO-DENR), which stated that the subject property was verified to be
within the Alienable or Disposable land per Land Classification Map No. 3013 established under Project No. 20-A and approved as such under FAO
4-1656 on March 15, 1982. On 3 December 2002, the RTC approved the application for registration.
The Republic interposed an appeal to the Court of Appeals, arguing that Malabanan had failed to prove that the property belonged to the alienable
and disposable land of the public domain, and that the RTC had erred in finding that he had been in possession of the property in the manner and for
the length of time required by law for confirmation of imperfect title. On 23 February 2007, the Court of Appeals reversed the RTC ruling and
dismissed the appliocation of Malabanan.
ISSUES:
1. In order that an alienable and disposable land of the public domain may be registered under Section 14(1) of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, should the land be classified as alienable and disposable as of June 12, 1945 or is it sufficient
that such classification occur at any time prior to the filing of the applicant for registration provided that it is established that the applicant has been in
open, continuous, exclusive and notorious possession of the land under a bona fide claim of ownership since June 12, 1945 or earlier?
2. For purposes of Section 14(2) of the Property Registration Decree may a parcel of land classified as alienable and disposable be deemed private
land and therefore susceptible to acquisition by prescription in accordance with the Civil Code?
3. May a parcel of land established as agricultural in character either because of its use or because its slope is below that of forest lands be registrable
under Section 14(2) of the Property Registration Decree in relation to the provisions of the Civil Code on acquisitive prescription?
4. Are petitioners entitled to the registration of the subject land in their names under Section 14(1) or Section 14(2) of the Property Registration
Decree or both?
HELD:
The Pertition is denied.
(1) In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the Public Land Act recognizes and confirms that those
who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of
alienable and disposable lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945 have acquired
ownership of, and registrable title to, such lands based on the length and quality of their possession.
(a) Since Section 48(b) merely requires possession since 12 June 1945 and does not require that the lands should have been alienable and disposable
during the entire period of possession, the possessor is entitled to secure judicial confirmation of his title thereto as soon as it is declared alienable
and disposable, subject to the timeframe imposed by Section 47 of the Public Land Act.
(b) The right to register granted under Section 48(b) of the Public Land Act is further confirmed by Section 14(1) of the Property Registration Decree.
(2) In complying with Section 14(2) of the Property Registration Decree, consider that under the Civil Code, prescription is recognized as a mode of
acquiring ownership of patrimonial property. However, public domain lands become only patrimonial property not only with a declaration that these
are alienable or disposable. There must also be an express government manifestation that the property is already patrimonial or no longer retained for
public service or the development of national wealth, under Article 422 of the Civil Code. And only when the property has become patrimonial can
the prescriptive period for the acquisition of property of the public dominion begin to run.

(a) Patrimonial property is private property of the government. The person acquires ownership of patrimonial property by prescription under the Civil
Code is entitled to secure registration thereof under Section 14(2) of the Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial property may be acquired, one ordinary and other extraordinary. Under ordinary
acquisitive prescription, a person acquires ownership of a patrimonial property through possession for at least ten (10) years, in good faith and with
just title. Under extraordinary acquisitive prescription, a persons uninterrupted adverse possession of patrimonial property for at least thirty (30)
years, regardless of good faith or just title, ripens into ownership.
It is clear that the evidence of petitioners is insufficient to establish that Malabanan has acquired ownership over the subject property under Section
48(b) of the Public Land Act. There is no substantive evidence to establish that Malabanan or petitioners as his predecessors-in-interest have been in
possession of the property since 12 June 1945 or earlier. The earliest that petitioners can date back their possession, according to their own evidence
the Tax Declarations they presented in particularis to the year 1948. Thus, they cannot avail themselves of registration under Section 14(1) of the
Property Registration Decree.
Neither can petitioners properly invoke Section 14(2) as basis for registration. While the subject property was declared as alienable or disposable in
1982, there is no competent evidence that is no longer intended for public use service or for the development of the national evidence, conformably
with Article 422 of the Civil Code. The classification of the subject property as alienable and disposable land of the public domain does not change
its status as property of the public dominion under Article 420(2) of the Civil Code. Thus, it is insusceptible to acquisition by prescription.
FELICIANO vs. ZALDIVAR
G.R. No. 162593
September 26, 2006
FACTS: Feliciano filed against the spouses Aurelio and Luz Zaldivar a complaint for declaration of nullity of Transfer Certificate of Title and
reconveyance of the subject property in Cagayan de Oro City. The said title is registered in the name of Aurelio Zaldivar.
In her complaint,Feliciano alleged that she was the registered owner of a parcel of land covered by a TCT. Sometime in 1974, Aurelio, allegedly
through fraud, was able to obtain a TCT covering the portion of Felicianos lot as described in her TCT.
According to Feliciano, the subject lot was originally leased from her by Pio Dalman, Aurelios father-in-law. She further alleged that she was going
to mortgage the subject lot to Ignacio Gil which however, did not push through because Gil took back the money without returning the receipt she
had signed as evidence of the supposed mortgage contract. Thereafter, in 1974, Aurelio filed with the then CFI of Misamis Oriental a petition for
partial cancellation of theTCT in Felicianos name. It was allegedly made to appear therein that Aurelio and his spouse Luz acquired the subject lot
from Dalman who, in turn, purchased it from Gil. The petition was granted and a TCT was issued in Aurelios name.
Remegia denied that she sold the subject lot either to Gil or Dalman. She likewise impugned as falsified the joint affidavit of confirmation of sale that
she and her uncle, Narciso Labuntog, purportedly executed before a notary public, where Remegia appears to have confirmed the sale of the subject
property to Gil. She alleged that she never parted with the certificate of title and that it was never lost. As proof that the sale of the subject lot never
transpired, Remegia pointed out that the transaction was not annotated on her TCT.
In their answer, the spouses Zaldivar denied the material allegations in the complaint and raised the affirmative defense that Aurelio is the absolute
owner and possessor of the subject lot as evidenced by his TCT and Tax Declaration covering the same. Aurelio claimed that he acquired the subject
lot by purchase from Dalman who, in turn, bought the same from Gil on April 4, 1951. Gil allegedly purchased the subject lot from Remegia and this
sale was allegedly conformed and ratified by the latter and her uncle, Narciso Labuntog, before a notary public on December 3, 1965.
After Aurelio obtained a loan from the GSIS, the spouses Zaldivar constructed their house on the subject lot. They alleged that they and their
predecessors-in-interest had been occupying the said property openly, publicly, adversely and continuously for over 41 years already. Aurelio filed a
petition for the issuance of a new owners duplicate copy of because when he asked Remegia about it, the latter claimed that it had been lost.
The RTC rendered judgment in favor of Remegia. On appeal, the CA reversed the decision of the RTC and ruled in favor of the spouses Zaldivar.
When their MR was denied by the CA, the heirs of Feliciano (the petitioners) sought recourse to the Court in their petition for review.
ISSUE: WON the CA erred:
1. in ruling that the court who ordered the issuance of new certificate of title despite existence of owners duplicate copy that was never lost has
jurisdiction over the case.
2. in concluding that the respondents (defendants-appellants) are the absolute owners of the subject lot based on the TCT issued to them.
3. in concluding that petitioners claim of ownership over the subject lot was barred by estoppel or laches.
HELD: WHEREFORE, the petition is GRANTED. The Decision of the CA are REVERSED and SET ASIDE. The Decision RTC of Cagayan de Oro
City is REINSTATED with the MODIFICATION that petitioners are likewise ordered to exercise the option under Article 448 of the Civil Code.
1. YES. As the trial court correctly held, the CFI which granted respondent Aurelios petition for the issuance of a new owners duplicate copy did not
acquire jurisdiction to issue such order. It has been consistently ruled that when the owners duplicate certificate of title has not been lost, but is in
fact in the possession of another person, then the reconstituted certificate is void, because the court that rendered the decision had no jurisdiction.
Reconstitution can validly be made only in case of loss of the original certificate. In such a case, the decision authorizing the issuance of a new
owners duplicate certificate of title may be attacked any time
2. YES. The court a quo correctly nullified the TCT in Aurelios name, emanating as it did from the new owners duplicate, which Aurelio procured
through fraud.
The appellate courts reliance on the joint affidavit of confirmation of sale purportedly executed by Remegia and her uncle, Narciso Labuntog, is not
proper. In the first place, respondent Aurelio cannot rely on the joint affidavit of confirmation of sale to prove that they had validly acquired the
subject lot because, by itself, an affidavit is not a mode of acquiring ownership.Moreover, the affidavit is written entirely in English, the hearing
revealing that Feliciano does not understand English.
On this point, Article 1332 of the Civil Code is relevant:
ART.1332. When one of the parties is unable to read, or if the contract is in a language not understood by him, and mistake or fraud is alleged, the
person enforcing the contract must show that the terms thereof have been fully explained to the former.
If the person enforcing the contract fails to discharge this burden, the presumption of mistake, if not, fraud, stands unrebutted and controlling. The
bare statement of Atty. Velez (testified for the Zaldivar spouses) that he read and interpreted the document to the affiants and that he asked them as

to the correctness of its contents does not necessarily establish that Remegia actually comprehended or understood the import of the joint affidavit of
confirmation of sale
In a long line of cases, the Court has consistently ruled that lands covered by a title cannot be acquired by prescription or adverse possession. A claim
of acquisitive prescription is baseless when the land involved is a registered land.
Moreover, respondent Aurelio cannot raise the defense of indefeasibility of [his] title because the principle of indefeasibility of a Torrens title does
not apply where fraud attended the issuance of the title. The Torrens title does not furnish a shield for fraud. As such, a title issued based on void
documents may be annulled.
3. As registered owners of the lots in question, the private respondents have a right to eject any person illegally occupying their property. This right is
imprescriptible. Even if it be supposed that they were aware of the petitioners occupation of the property, and regardless of the length of that
possession, the lawful owners have a right to demand the return of their property at any time as long as the possession was unauthorized or merely
tolerated, if at all. This right is never barred by laches
Nonetheless, the Court is not unmindful of the fact that respondents had built their house on the subject lot and, despite knowledge thereof, Remegia
did not lift a finger to prevent it. Article 453 of the Civil Code is applicable to their case:
ART. 453. If there was bad faith, not only on the part of the person who built, planted or sowed on the land of another, but also on the part of the
owner of such land, the rights of one and the other shall be the same as though both had acted in good faith.
It is understood that there is bad faith on the part of the landowner whenever the act was done with his knowledge and without opposition on his part.
Under the circumstances, respondents and Remegia are in mutual bad faith and, as such, would entitle the former to the application of Article 448 of
the Civil Code governing builders in good faith:
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith, shall have the right to appropriate as his own the
works, sowing or planting, after payment of the indemnity provided for in Articles 54629 and 548,30 or to oblige the one who built or planted to pay
the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after the proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof.
Following the above provision, the owner of the land on which anything has been built, sown or planted in good faith shall have the right to
appropriate as his own the building, planting or sowing, after payment to the builder, planter or sower of the necessary and useful expenses, and in
the proper case, expenses for pure luxury or mere pleasure.
Consequently, the petitioners are obliged to exercise either of the following options:
(1) to appropriate the improvements, including the house, built by the respondents on the subject lot by paying the indemnity required by law, or
(2) sell the subject lot to the respondents.
Petitioners cannot refuse to exercise either option and compel respondents to remove their house from the land. In case petitioners choose to exercise
the second option, respondents are not obliged to purchase the subject lot if its value is considerably more than the improvements thereon and in
which case, respondents must pay rent to petitioners. If they are unable to agree on the terms of the lease, the court shall fix the terms thereof.
Nuguid vs. Court of Appeals, and Guevarra
171 SCRA 213
March 1989
FACTS:
The deceased spouses Victorino and Crisanta dela Rosa (spouses dela Rosa) were registered owners of a parcel of land in Orani, Bataan, and covered
by OCT No. 3778. On or about May 4, 1931, Victorino dela Rosa (widowed by then) sold one-half of the said property to Juliana Salazar for P95.00.
This sale between him and Salazar, though evidenced by a document, was not registered. Nevertheless, Juliana Salazar constructed a house on the lot
she purchased immediately after the sale. On March 10, 1964, petitioner spouses Diosdado Nuguid and Marqiueta Venegas (spouses Nuguid) caused
the registration of a document entitled "Kasulatan ng Partihan at Bilihan" (Kasulatan) dated June 6, 1961. In this document, Marciana dela Rosa,
together with the heirs of Victorino and Crisanta dela Rosa, sold to spouses Nuguid the entire area of the property for the sum of P300.00.
Subsequently, OCT No. 3778 was cancelled by the Register of Deeds of Bataan, and TCT No. T-12782 was issued in the spouses Nuguids names.
Private respondents claimed that the presented by spouses Nuguid was forged. They also allegedly discovered the forged deed as well as the
certificate of title in the name of the petitioners much later, that is, on February 28, 1978, when respondents Amorita Guevarra and Teresita Guevarra
thought of having the title of their grandmother Juliana Salazar, registered. On the other hand, spouse Nuguid assert that in the latter part of 1960,
Nicolas dela Rosa, uncle of respondent Marciana dela Rosa and grandfather of the other heirs-signatories, offered to sell the subject land to them.
Apparently, Nicolas dela Rosa claimed that he had already purchased the shares of the heirs over the subject property as evidenced by a private
document entitled "Kasunduan" (Kasunduan) dated August 31, 1955, and as a matter of fact, he had in his possession the original certificate of title
covering the property in the name of the deceased Victorino and Crisanta dela Rosa.
The CFI of Bataan dismissed the complaint filed by private respondents, but the Court of Appeals reversed said decision and ordered the spouses
Nuguid to execute a deed of reconveyance in favor of herein respondents.
ISSUE:
Who is the rightful owner of the subject property?
COURT RULING:
The Supreme Court reinstated the decision of the CFI of Bataan. The basis for the Court of Appeals' conclusion that petitioners were buyers in bad
faith is ambiguous because said court relied on the singular circumstance that the petitioners are from Orani, Bataan, and should have personally
known that the private respondents were the persons in actual possession. However, at the time of the purchase, the spouses Nuguid dealt with Pedro
Guevarra and Pascuala Tolentino, the latter being the actual occupants. The respondents Guevarras, children of the said Pedro and Pascuala Guevarra,
came into the picture only after their parents died. As for the respondent heirs of Victorino dela Rosa, their being in actual possession of any portion

of the property was, likewise, simply presumed or taken for granted by the Court of Appeals.
The private respondents cannot also honestly claim that they became aware of the spouses Nuguids title only in 1978, because ever since the latter
bought the property in 1961, the spouse Nuguid have occupied the same openly, publicly, and continuously in the concept of owners, even building
their house thereon. For seventeen years they were in peaceful possession, with the respondents Guevarras occupying less than one-half of the same
property.
SPS.MACASAET vs SPS. MACASAET G.R. 154391-92 Sept. 30, 2004
Facts:
Petitioners Ismael and TeresitaMacasaet and Respondents Vicente and Rosario Macasaet are first-degree relatives. Ismael is the son of respondents
and Teresita is his wife.
On December 10, 1997, the parents filed with the MTC of Lipa an ejectment suit against the children.
Respondents alleged that they were the owners of 2 parcels of land, situated at Banay-banay, Lipa City; that by way of a verbal lease agreement,
Ismael and Teresita occupied these lots in Mar. 1992 and used them as their residence and the situs of their construction business; and that despite
repeated demands, petitioners failed to pay the agreed rental of P500.
Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that respondents had invited them to construct their residence
and business on the subject lots in order that they could all live near one another, employ marivic, the sister of Ismael, and help in resolving the
problems of the family.
They added that it was the policy of respondents to allot the land they owned as an advance grant of inheritance in favor of their children.
The MTCC ruled in favor of respondents and ordered petitioners to vacate the premises. It opined that Ismael and Teresita had occupied the lots, not
by virtue of a verbal lease agreement, but by tolerance of Vicente and Rosario.
As their stay was merely tolerance, petitioners were necessarily bound by an implied promise to vacate the lots upon demand.
On appeal, the regional trial court updheld the findings fo the MTCC. However, the RTC allowed the respondents to appropriate the building and
other improvements introduced by petitioners, after payment of the indemnity provided for by Art. 448 in relation to Art. 546 and 548 of the NCC.
The CA sustained the finding of the two lower courts that Ismael and Teresita had been occupying the subject lots only by the tolerance of Vicente
and Rosario. Citing Calubayan v. pascual, the CA further ruled that petitioners status was analogous to that of a lessee or a tenant whose term of lease
had expired, but whose occupancy continued by tolerance of the owner.
Consequently , in ascertaining the right of the petitioners to be reimbursed for the improvements they had introduced on respondents properties, the
appellate court applied the Civil Codes provisions on lease.
Issue:
W.O.N.the courts should fix the duration of possession.
Held:
That Ismael and Teresita had a right to occupy the lots is therefore clear, the issue is the duration of possession. In the absence of a stipulation on this
point, Art. 1197 of the civil Code allows the courts to fix the duration or the period.
Article 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be inferred that a period was intended, the courts
may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
Article 1197, however, applies to a situation in which the parties intended a period. Such qualification cannot be inferred from the facts of the present
case.
The mere failure to fix the duration of their agreement does not necessarily justify or authorize the courts to do so
It can be safely concluded that the agreement subsisted as long as the parents and the children mutually benefited from the arrangement.
Effectively, there is a resolutory condition in such an agreement.
Their possession which was originally lawful became unlawful when the reason therefore love and solidarity ceased to exist between them.
MERCY VDA. DE ROXAS, represented by ARLENE C. ROXAS-CRUZ, in her capacity as substitute appellant-petitioner, Petitioner,
vs.
OUR LADY'S FOUNDATION, INC., Respondent
G.R. No. 182378
March 6, 2013
SERENO, CJ.:
DOCTRINE:
From when does the value of property encroached computed
Piercing the veil of corporate personality
FACTS:
On 1 September 1988, Salve Dealca Latosa filed before the RTC a Complaint for the recovery of ownership of a
portion of her residential land located at Our Ladys Village, Bibincahan, Sorsogon, Sorsogon. According to her, Atty. Henry Amado Roxas (Roxas),
represented by petitioner herein, encroached on a quarter of her property by arbitrarily extending his concrete fence beyond the correct limits. In his
Answer, Roxas imputed the blame to respondent Our Ladys Village Foundation, Inc., now Our Ladys Foundation, Inc. (OLFI). He then filed a
Third-Party Complaint against respondent and claimed that he only occupied the adjoining portion in order to get the equivalent area of what he had
lost when OLFI trimmed his property for the subdivision road. The trial court held that Latosa had established her claim of encroachment by a
preponderance of evidence. It found that Roxas occupied a total of 112 square meters of Latosas lots, and that, in turn, OLFI trimmed his property by
92 square meters. The trial court ordered for Roxas to return and surrender the encroached portion of Latosas lot and to demolish whatever structure
constructed thereon and remove the same at his own expense. On the 3rd party complaint the trial court ordered OLFI to reimburse Roxas plus legal
interest to be reckoned from the time it was paid to the 3rd Party Defendant.
Subsequently, Roxas appealed to the CA, which later denied the appeal, the RTC issued a writ of execution to implement the ruling ordering OLFI to
reimburse Roxas for the value of the 92-square-meter property plus legal interest to be reckoned from the time the amount was paid to the third-party

defendant. The trial court then approved the Sheriffs Bill, which valued the subject property at P2,500 per square meter which was later amended
which reduced the valuation to P1,800 per square meter.
Opposing the valuation of the subject property, OLFI filed a Motion to Quash the Sheriffs Bill and a Motion for Inhibition of the RTC judge. It
insisted that it should reimburse Roxas only at the rate of P40 per square meter, the same rate that Roxas paid when the latter first purchased the
property. Eventually, the RTC denied both the Motion for Inhibition and the Motion to Quash the Sheriffs Bill. It cited fairness to justify the
computation of respondents judgment obligation found in the Amended Sheriffs Bill. To collect the aforementioned amount, notices of
Garnishment were then issued by the sheriff to the managers of the Development Bank of the Philippines and the United Coconut Planters Bank for
them to garnish the account of Bishop Robert Arcilla-Maullon (Arcilla-Maullon), OLFIs general manager. Refusing to pay P1,800 per square meter
to Roxas, OLFI filed a Rule 65 Petition before the CA. CA ruled in favor of OFLI. It construed reimbursement as an obligation to pay back what was
previously paid and thus required OLFI to merely reimburse him at the rate of P40 per square meter, which was the consideration respondent had
received when Roxas purchased the subdivision lots. Therefore, for changing the tenor of the RTC Decision by requiring the reimbursement
of P1,800 per square meter, both the Amended Sheriffs Bill and the 2 December 2004 Order of the RTC were considered null and void.Further, the
CA nullified the Notices of Garnishment issued against the bank accounts of Arcilla-Maullon. It noted that since the general manager of OLFI was
not impleaded in the proceedings, he could not be held personally liable for the obligation of the corporation.
Hence, the pertinent issue in this case requires the determination of the correct amount to be reimbursed by OLFI to Roxas. As a corollary matter, this
Court also resolves the propriety of issuing the Notices of Garnishment against the bank accounts of Arcilla-Maullon as OLFIs general manager.
ISSUE:
Whether or not the value of the property is to be reckoned from the date of the purchase of the lot or from the current market value.
Whether or not the general manager could be held personally liable for the obligation of the corporation.
HELD:
To settle the contention, this Court resorts to the provisions of the Civil Code governing encroachment on property. Under Article 448 pertaining to
encroachments in good faith, as well as Article 450 referring to encroachments in bad faith, the owner of the land encroached upon petitioner herein
has the option to require respondent builder to pay the price of the land.
Although these provisions of the Civil Code do not explicitly state the reckoning period for valuing the property, Ballatan v. Court of Appeals already
specifies that in the event that the seller elects to sell the lot, "the price must be fixed at the prevailing market value at the time of payment." More
recently, Tuatis v. Spouses Escol illustrates that the present or current fair value of the land is to be reckoned at the time that the landowner elected
the choice, and not at the time that the property was purchased. We quote below the relevant portion of that Decision: In Sarmiento v. Agana, we
reckoned the valuation of the property at the time that the real owner of the land asked the builder to vacate the property encroached upon. Moreover,
the oft-cited case Depra v. Dumlao likewise ordered the courts of origin to compute the current fair price of the land in cases of encroachment on real
properties.
This Court upholds the doctrine of separate juridical personality of corporate entities. The case emphasizes that a corporation is a juridical entity with
a legal personality separate and distinct from those acting for and on its behalf and, in general, of the people comprising it. Hence, the obligations
incurred by the corporation, acting through its officers such as in this case, are its sole liabilities.
To hold the general manager of OLFI liable, petitioner claims that it is a mere business conduit of Arcilla-Maullon, hence, the corporation does not
maintain a bank account separate and distinct from the bank accounts of its members. In support of this claim, petitioner submits that because OLFI
did not rebut the attack on its legal personality, as alleged in petitioners Opposition and Comments on the Motion to Quash Notice/Writ of
Garnishment dated 15 March 2005, respondent effectively admitted by its silence that it was a mere dummy corporation.This argument does not
persuade us, for any piercing of the corporate veil has to be done with caution. Save for its rhetoric, petitioner fails to adduce any evidence that would
prove OLFI's status as a dummy corporation. The court recently explained in Sarona v. NLRC that a court should be mindful of the milieu where it is
to be applied.1wphi1 It must be certain that the corporate fiction was misused to such an extent that injustice, fraud, or crime was committed against
another, in disregard of rights. The wrongdoing must be clearly and convincingly established; it cannot be presumed. Otherwise, an injustice that was
never unintended may result from an erroneous application. In any event, in order for the court to hold Arcilla-Maullon personally liable alone for the
debts of the corporation and thus pierce the veil of corporate fiction, bad faith of the officer must first be established clearly and
convincingly. Petitioner, however, has failed to include any submission pertaining to any wrongdoing of the general manager. Hence, it would be
unjust to hold the latter personally liable.