YU vs PACLEB

FIRST DIVISION

x------------------------------------------------x

DECISION

PUNO, C.J.:
Before the Court is a Petition filed under Rule 45 of the Rules of Court assailing: (i)
the Decision[1] dated August 31, 2005 of the Court of Appeals in CA-G.R. CV No.
78629 setting aside the Decision[2] dated December 27, 2002 of the Regional Trial
Court in Civil Case No. 1325-96; and (ii) the Resolution[3] dated April 3, 2006 of the
Court of Appeals denying reconsideration of the said decision.

The facts are well established.

Respondent Baltazar N. Pacleb and his late first wife, Angelita Chan, are the
registered owners of an 18,000-square meter parcel of land in Barrio Langcaan,
Dasmarias, Cavite, covered by Transfer Certificate of Title (TCT) No. T-
118375[4] (Langcaan Property).

In 1992, the Langcaan Property became the subject of three (3) documents
purporting to transfer its ownership. On February 27, 1992, a Deed of Absolute
Sale[5] was entered into between Spouses Baltazar N. Pacleb and Angelita Chan and
Rebecca Del Rosario. On May 7, 1992, a Deed of Absolute Sale[6] was entered into
between Rebecca Del Rosario and Ruperto L. Javier (Javier). On November 10,
1992, a Contract to Sell[7] was entered into between Javier and petitioner spouses
Ernesto V. Yu and Elsie Ong Yu. In their contract, petitioner spouses Yu agreed to
pay Javier a total consideration of P900,000. Six hundred thousand pesos
(P600,000) (consisting of P200,000 as previous payment and P400,000 to be paid
upon execution of the contract) was acknowledged as received by Javier
and P300,000 remained as balance. Javier undertook to deliver possession of the
Langcaan Property and to sign a deed of absolute sale within thirty (30) days from
execution of the contract.

All the aforementioned sales were not registered.

On April 23, 1993, petitioner spouses Yu filed with the Regional Trial Court of Imus,
Cavite, a Complaint[8] for specific performance and damages against Javier,
docketed as Civil Case No. 741-93, to compel the latter to deliver to them
ownership and possession, as well as title to the Langcaan Property. In their
Complaint, they alleged that Javier represented to them that the Langcaan
Property was not tenanted. However, after they already paid P200,000 as initial
payment and entered into an Agreement dated September 11, 1992 for the sale of
the Langcaan Property, they discovered it was tenanted by Ramon C. Pacleb
(Ramon).[9] Petitioner spouses demanded the cancellation of their agreement and
the return of their initial payment.Thereafter, petitioner spouses and Javier verified
from Ramon if he was willing to vacate the property and the latter was
agreeable. Javier then promised to make arrangements with Ramon to vacate the
property and to pay the latter his disturbance compensation. Hence, they
proceeded to enter into a Contract to Sell canceling the Agreement mentioned.
However, Javier failed to comply with his obligations.

Javier did not appear in the proceedings and was declared in default. On September
8, 1994, the trial court rendered a Decision,[10] the dispositive portion of which
reads:

WHEREFORE, judgment is hereby rendered for the plaintiff and against

the defendant based on the sale of subject parcel of land to the former
who is entitled thereby to the ownership and possession thereof from
the said defendant who is further directed to pay damages of Thirty
Thousand Pesos (P30,000.00) including attorneys fees and expenses
incurred by the plaintiff in this case as a consequence.
 The defendant is further directed to deliver the certificate of
title of the land to the plaintiff who is entitled to it as transferee and
new owner thereof upon payment by the plaintiff of his balance of the
purchase price in the sum of Three Hundred Thousand Pesos
(P300,000.00) with legal interest from date.
SO ORDERED.

The said Decision and its Certificate of Finality[11] were annotated on TCT No. T-
118375 as Entry No. 2676-75[12] and Entry No. 2677-75,[13] respectively.

On March 10, 1995, petitioner spouses and Ramon and the latters wife, Corazon
Bodino, executed a Kusangloob na Pagsasauli ng Lupang Sakahan at
Pagpapahayag ng Pagtalikod sa Karapatan.[14] Under the said agreement,
petitioner spouses paid Ramon the amount of P500,000 in exchange for the waiver
of his tenancy rights over the Langcaan Property.
On October 12, 1995, respondent filed a Complaint[15] for annulment of deed of
sale and other documents arising from it, docketed as Civil Case No. 1199-95. He
alleged that the deed of sale purportedly executed between him and his late first
wife and Rebecca Del Rosario was spurious as their signatures thereon were
forgeries. Respondent moved to have summons served upon Rebecca Del Rosario
by publication since the latters address could not be found. The trial court,
however, denied his motion.[16] Respondent then moved to dismiss the case, and
the trial court granted the motion in its Order[17] dated April 11, 1996, dismissing
the case without prejudice.

Meanwhile, on November 23, 1995, petitioner spouses filed an action for

forcible entry against respondent with the Municipal Trial Court (MTC). They
alleged that they had prior physical possession of the Langcaan Property through
their trustee, Ramon, until the latter was ousted by respondent in September 1995.
The MTC ruled in favor of petitioner spouses, which decision was affirmed by the
Regional Trial Court.[18] However, the Court of Appeals set aside the decisions of
the lower courts and found that it was respondent who had prior physical
possession of the property as shown by his payment of real estate taxes thereon.[19]

On May 29, 1996, respondent filed the instant case for removal of cloud from
title with damages to cancel Entry No. 2676-75 and Entry No. 2677-75, the
annotated Decision in Civil Case No. 741-93 and its Certificate of Finality, from the
title of the Langcaan Property.[20] Respondent alleged that the deed of sale
between him and his late first wife and Rebecca Del Rosario, who is not known to
them, could not have been possibly executed on February 27, 1992, the date
appearing thereon. He alleged that on said date, he was residing in the United
States[21] and his late first wife, Angelita Chan, died twenty (20) years ago.[22]
On May 28, 1997, during the pendency of the instant case before the trial court,
respondent died without having testified on the merits of his case. Hence, he was
substituted by his surviving spouse, Antonieta S. Pacleb, and Lorna Pacleb-
Guerrero, Florencio C. Pacleb and Myrla C. Pacleb representing the children with
the first wife.[23]

On December 27, 2002, the trial court dismissed respondents case and held that
petitioner spouses are purchasers in good faith.[24] The trial court ratiocinated that
the dismissal of respondents complaint for annulment of the successive sales at his
instance sealed the regularity of the purchase[25] by petitioner spouses and that he
in effect admits that the said salewas valid and in order.[26] Further, the trial court
held that the Decision in Civil Case No. 741-93 on petitioner spouses action for
specific performance against Javier is already final and can no longer be
altered. Accordingly, the trial court ordered the cancellation of TCT No. T-118375
in the name of respondent and the issuance of a new title in the name of petitioner
spouses. The trial court also ordered the heirs of respondent and all persons
claiming under them to surrender possession of the Langcaan Property to
petitioner spouses.
On appeal by respondent, the Court of Appeals reversed and set aside the decision
of the trial court.[27] The Court of Appeals ruled that petitioner spouses are not
purchasers in good faith and that the Decision in Civil Case No. 741-93 did not
transfer ownership of the Langcaan Property to them. Accordingly, the appellate
court ordered the cancellation of the annotation of the Decision in Civil Case No.
741-93 on the title of the Langcaan Property. The Court of Appeals denied
reconsideration of said decision.[28]

Hence, this Petition.

Two issues are involved in the instant petition. The first is whether petitioner
spouses are innocent purchasers for value and in good faith. The second is whether
ownership over the Langcaan Property was properly vested in petitioner spouses
by virtue of the Decision in Civil Case No. 741-93.

Petitioner spouses argue that they are purchasers in good faith. Further, they
contend that the Court of Appeals erred in finding that: Ramon told him [Ernesto
V. Yu] that the property is owned by his father, Baltazar, and that he is the mere
caretaker thereof[29] since Ramon clarified that his father was the former owner of
the Langcaan Property. In support of their stance, they cite the following testimony
of petitioner Ernesto V. Yu:

Atty. Abalos: Mr. Witness, you testified during the direct that you
acquired the subject property from one Ruperto Javier,
when for the first time have you come to know Mr.
Ruperto Javier?

A: I first came to know him in the year 1992 when he was

accompanied by Mr. Kalagayan. He showed me some
papers to the office.

Q: Do you know the exact date Mr. Witness?

A: I forgot the exact date, maam.

Q: More or less can you estimate what month?

A: Sometime in February or March 1992.

Q: When you said that the subject property was offered to you for
sale, what did you do Mr. Witness, in preparation for a
transaction?

A: I asked my lawyer Atty. Florencio Paredes to check and verify the

Deed of Sale.
Q: And after Atty. Florencio Paredes verified the document you
decided to buy the property?

A: No, maam. We visited the place.

Q: When was that?

A: I could not remember the exact date but I visited the place and I
met the son, Ramon Pacleb. I went there in order to
verify if the property is existing.When I verified that the
property is existing Mr. Javier visited me again to follow-
up what decision I have but I told him that I will wait for
my lawyers advi[c]e.
Q: Mr. Witness, what particular instruction did you give to your
lawyer?

A: To verify the title and the documents.

Court: Documents for the title?

A: Yes, Your Honor.

Atty. Abalos: When you were able to get the title in whose name the
title was registered?

A: It was registered in the name of the older Pacleb.

Court: By the way Mr. Witness, when you said you met Ramon
Pacleb the son of the owner of the property, was he
residing there or he was (sic) just went there? When you
visited the property did you find him to be residing in
that property?

A: No, Your Honor.

Atty. Abalos: You mean to say Mr. Witness, you just met Mr. Ramon
Pacleb in the place at the time you went there?

A: No, maam. He went to my office with Mr. Kalagayan.He was

introduced to me at the Kelly Hardware. I do not know
 Mr. Ruperto Javier. He told me that there is a property
that [is] tenanted and occupied by the son Ramon
Pacleb after that I went with them to visit the place. On
(sic) there he introduced me [to] Mr. Ramon Pacleb the
caretaker of the property and I told them that I will still
look at the property and he gave me some documents
and that (sic) documents I gave it to my lawyer for
verification.

Q: You said that Mr. Ruperto Javier went to your office with Mr.
Kalagayan, so the first time you visited the property you
did not see Mr. Ramon Pacleb there?

A: No, maam. When I went there I met Ramon Pacleb the caretaker
and he was the one who showed the place to us.

Q: Mr. Witness, since you visited the place you were able to see the
allege[d] caretaker Mr. Ramon Pacleb, did you ask him
regarding the property or the whereabouts of the
registered owner, did you ask him?

A: When Ruperto introduced me to Mr. Ramon Pacleb he told me

that he is the son of the owner and he is the caretaker
and his father is in the States. He showed me the place,
I verified and I saw the monuments and I told him I will
come back to check the papers and if it is okay I will
bring with me the surveyor.
Q: Could you estimate Mr. Witness, more or less what was the
month when you were able to talk to Mr. Ramon
Pacleb?

A: I am not sure but it was morning of February.

Q: So it was in February, Mr. Witness?

A: I am not sure if February or March.

Q: But definitely

A: Before I purchased the property I checked the property.

Q: But that was definitely after Mr. Ruperto offered to you for sale
the subject property?

xxx

Atty. Abalos: Okay, Mr. Witness, you said that you talked to Mr.
Ramon Pacleb and he told you that his father is the
owner of the property?

A: He told me that property is their former property and it was

owned by them. Now, he is the tenant of the
property.[30] (Emphasis ours)
 Petitioner spouses conclude that based on their personal inspection of the
property and the representations of the registered tenant thereon, they had no
reason to doubt the validity of the deeds of absolute sale since these were duly
notarized. Consequently, the alleged forgery of Angelita Chans signature is of no
moment since they had no notice of any claim or interest of some other person in
the property despite their diligent inquiry.
We find petitioner spouses contentions without merit.
At the outset, we note that in petitioner Ernesto V. Yus testimony, he stated that
he inspected the Langcaan Property and talked with the tenant, Ramon, before he
purchased the same. However, in his Complaint for specific performance and
damages which he filed against Javier, he alleged that it was only after he had
entered into an Agreement for the sale of the property and his initial payment
of P200,000 that he discovered that the property was indeed being tenanted by
Ramon who lives in the said farm, viz.:

8. Sometime on September 11, 1992, defendant came again to

the Office of plaintiff reiterating his offer to sell said Lot No. 6853-D,
containing an area of 18,000 square meters, at P75.00 per square
meters (sic). Defendant manifested to the plaintiff that if his offer is
acceptable to the plaintiff, he binds and obligates himself to pay the
capital gains of previous transactions with the BIR and register subject
Lot No. 6853-D in his name (defendant).On these conditions, plaintiff
accepted the offer and made [the] initial payment of TWO HUNDRED
THOUSAND PESOS (P200,000.00) to defendant by issuance and
delivery of plaintiffs personal check.

9. Sometime on September 11, 1992, plaintiff and defendant

signed an AGREEMENT on the sale of Lot No. 6853-D of the subdivision
plan (LRC) Psd-282604, containing an area of 18,000 square meters,
more or less, located at Bo.
 Langcaan, Municipality of Dasmarinas, Province of Cavite, at a selling
price of P75.00 per square meter. A xerox copy of this AGREEMENT
signed by the parties thereto is hereto attached and marked as ANNEX
D of this complaint.

10. Thereafter, however, plaintiff and defendant, with their

surveyor discovered that subject Lot No. 6853-D offered for sale to the
plaintiff is indeed being tenanted by one RAMON PACLEB who lives in
the said farm.

11. In view of the foregoing developments, plaintiff informed

defendant that he wanted the Agreement be cancelled and for the
defendant to return the sum of TWO HUNDRED THOUSAND PESOS
(P200,000.00).[31](Emphasis supplied)

This inconsistency casts grave doubt as to whether petitioner spouses

personally inspected the property before purchasing it.

More importantly, however, several facts should have put petitioner spouses
on inquiry as to the alleged rights of their vendor, Javier, over the Langcaan
Property.

First, it should be noted that the property remains to be registered in the

name of respondent despite the two (2) Deeds of Absolute Sale[32] purporting to
transfer the Langcaan Property from respondent and his late first wife, Angelita
Chan, to Rebecca Del Rosario then from the latter to Javier. Both deeds were not
even annotated in the title of the Langcaan Property.
 Second, a perusal of the two deeds of absolute sale reveals that they were
executed only about two (2) months apart and that they contain identical
provisions.

Third, it is undisputed that the Langcaan Property is in the possession of

Ramon, the son of the registered owner.Regardless of the representations given by
the latter, this bare fact alone should have made petitioner spouses suspicious as
to the veracity of the alleged title of their vendor. Moreover, as noted by the Court
of Appeals, petitioner spouses could have easily verified the true status of the
Langcaan Property from Ramons wife, since the latter is their relative, as averred
in paragraph 13 of their Answer in Civil Case No. 1199-95.[33] The case law is well
settled, viz.:

The law protects to a greater degree a purchaser who buys from

the registered owner himself. Corollarily, it requires a higher degree
of prudence from one who buys from a person who is not the
registered owner, although the land object of the transaction is
registered. While one who buys from the registered owner does not
need to look behind the certificate of title, one who buys from one
who is not the registered owner is expected to examine not only the
certificate of title but all factual circumstances necessary for him to
determine if there are any flaws in the title of the transferor, or in
his capacity to transfer the land.

This Court has consistently applied the stricter rulewhen it

comes to deciding the issue of good faith of one who buys from one
who is not the registered owner, but who exhibits a certificate of
title.[34] (Emphasis supplied)

Finally, as correctly pointed out by the Court of Appeals, the dismissal of Civil
Case No. 1199-95 (the action to annul the successive sales of the property) cannot
serve to validate the sale to petitioner spouses since the dismissal was ordered
because Rebecca Del Rosario and Javier could no longer be found. Indeed, the
dismissal was without prejudice.

Based on the foregoing, therefore, petitioner spouses cannot be considered

as innocent purchasers in good faith.

We now go to the second issue.

Petitioner spouses argue that the decision of the Regional Trial Court in Civil Case
No. 741-93 as to the rightful owner of the Langcaan Property is conclusive and
binding upon respondent even if the latter was not a party thereto since it involved
the question of possession and ownership of real property, and is thus not merely
an action in personam but an action quasi in rem.

In Domagas v. Jensen,[35] we distinguished between actions in personam and

actions quasi in rem.

The settled rule is that the aim and object of an action

determine its character. Whether a proceeding is in rem, or in
personam, or quasi in rem for that matter, is determined by its nature
and purpose, and by these only. A proceeding in personam is a
proceeding to enforce personal rights and obligations brought
against the person and is based on the jurisdiction of the person,
although it may involve his right to, or the exercise of ownership of,
specific property, or seek to compel him to control or dispose of it in
accordance with the mandate of the court. The purpose of a
proceeding in personam is to impose, through the judgment of a
court, some responsibility or liability directly upon the person of the
defendant. Of this character are suits to compel a defendant to
specifically perform some act or actions to fasten a pecuniary liability
on him. An action in personam is said to be one which has for its
 object a judgment against the person, as distinguished from a
judgment against the propriety (sic) to determine its state. It has
been held that an action in personam is a proceeding to enforce
personal rights or obligations; such action is brought against the
person.

xxx

On the other hand, a proceeding quasi in rem is one brought

against persons seeking to subject the property of such persons to the
discharge of the claims assailed. In an action quasi in rem, an
individual is named as defendant and the purpose of the proceeding
is to subject his interests therein to the obligation or loan burdening
the property. Actions quasi in rem deal with the status, ownership or
liability of a particular property but which are intended to operate on
these questions only as between the particular parties to the
proceedings and not to ascertain or cut off the rights or interests of all
possible claimants. The judgments therein are binding only upon the
parties who joined in the action.

Civil Case No. 741-93 is an action for specific performance and damages filed by
petitioner spouses against Javier to compel performance of the latters
undertakings under their Contract to Sell. As correctly held by the Court of Appeals,
its object is to compel Javier to accept the full payment of the purchase price, and
to execute a deed of absolute sale over the Langcaan Property in their favor. The
obligations of Javier under the contract to sell attach to him alone, and do not
burden the Langcaan Property.[36]

We have held in an unbroken string of cases that an action for specific

performance is an action in personam.[37]In Cabutihan v. Landcenter Construction
and Development Corporation,[38] we ruled that an action for specific performance
praying for the execution of a deed of sale in connection with an undertaking in a
contract, such as the contract to sell, in this instance, is an action in personam.

Being a judgment in personam, Civil Case No. 741-93 is binding only upon the
parties properly impleaded therein and duly heard or given an opportunity to be
heard.[39]Therefore, it cannot bind respondent since he was not a party
therein. Neither can respondent be considered as privy thereto since his signature
and that of his late first wife, Angelita Chan, were forged in the deed of sale.

All told, we affirm the ruling of the Court of Appeals finding that, as between
respondent and petitioner spouses, respondent has a better right over the
Langcaan Property as the true owner thereof.
IN VIEW WHEREOF, the petition is DENIED. The decision of the Court of
Appeals is affirmed. Costs against petitioners.

SO ORDERED.
FIRST DIVISION

[G.R. No. 149295. September 23, 2003]

PHILIPPINE NATIONAL BANK, petitioner, vs. GENEROSO DE JESUS, represented by

his Attorney-in-Fact, CHRISTIAN DE JESUS, respondent.

DECISION

VITUG, J.:

Petitioner Philippine National Bank disputes the decision handed down by the
Court of Appeals promulgated on 23 March 2001 in CA-G.R. CV No. 56001,
entitled Generoso De Jesus, represented by his Attorney-in-Fact, Christian De
Jesus, versus Philippine National Bank. The assailed decision has affirmed the
judgment rendered by the Regional Trial Court, Branch 44, of Mamburao,
Occidental Mindoro, declaring respondent Generoso de Jesus as being the true
and lawful owner of the 124-square-meter portion of the land covered by
Transfer Certificate of Title (TCT) No. T-17197 and ordering petitioner bank to
vacate the premises, to deliver possession thereof to respondent, and to remove
the improvement thereon.

It would appear that on 10 June 1995, respondent filed a complaint against

petitioner before the Regional Trial Court of Occidental Mindoro for recovery of
ownership and possession, with damages, over the questioned property. In his
complaint, respondent stated that he had acquired a parcel of land situated in
Mamburao, Occidental Mindoro, with an area of 1,144 square meters covered by
TCT No. T-17197, and that on 26 March 1993, he had caused a verification survey
of the property and discovered that the northern portion of the lot was being
encroached upon by a building of petitioner to the extent of 124 square meters.
Despite two letters of demand sent by respondent, petitioner failed and refused
to vacate the area.

Petitioner, in its answer, asserted that when it acquired the lot and the building
sometime in 1981 from then Mayor Bienvenido Ignacio, the encroachment
already was in existence and to remedy the situation, Mayor Ignacio offered to
sell the area in question (which then also belonged to Ignacio) to petitioner at
P100.00 per square meter which offer the latter claimed to have accepted. The
sale, however, did not materialize when, without the knowledge and consent of
petitioner, Mayor Ignacio later mortgaged the lot to the Development Bank of the
Philippines.

The trial court decided the case in favor of respondent declaring him to be the
rightful owner of the disputed 124-square-meter portion of the lot and ordering
petitioner to surrender possession of the property to respondent and to cause, at
its expense, the removal of any improvement thereon.

The Court of Appeals, on appeal, sustained the trial court but it ordered to be
deleted the award to respondent of attorneys fees, as well as moral and
exemplary damages, and litigation expenses.

Petitioner went to this Court, via a petition for review, after the appellate court
had denied the banks motion for reconsideration, here now contending that –

1. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN ADJUDGING PNB A

BUILDER IN BAD FAITH OVER THE ENCROACHED PROPERTY IN QUESTION;

2. THE COURT OF APPEALS GRAVELY ERRED IN LAW IN NOT APPLYING IN

FAVOR OF PNB THE PROVISION OF ARTICLE 448 OF THE CIVIL CODE AND
 THE RULING IN TECNOGAS PHILIPPINES MANUFACTURING CORP. VS.
COURT OF APPEALS, G.R. No. 108894, February 10, 1997, 268 SCRA 7.[1]

The Regional Trial Court and the Court of Appeals have both rejected the idea
that petitioner can be considered a builder in good faith. In the context that such
term is used in particular reference to Article 448, et seq., of the Civil Code, a
builder in good faith is one who, not being the owner of the land, builds on that
land believing himself to be its owner and unaware of any defect in his title or
mode of acquisition.

The various provisions of the Civil Code, pertinent to the subject, read:

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

Article 449. He who builds, plants, or sows in bad faith on the land of another,
loses what is built, planted or sown without right to indemnity.

Article 450. The owner of the land on which anything has been built, planted or
sown in bad faith may demand the demolition of the work, or that the planting or
sowing be removed, in order to replace things in their former condition at the
expense of the person who built, planted or sowed; or he may compel the builder
or planter to pay the price of the land, and the sower the proper rent.

A builder in good faith can, under the foregoing provisions, compel the landowner
to make a choice between appropriating the building by paying the proper
indemnity or obliging the builder to pay the price of the land. The choice belongs
to the owner of the land, a rule that accords with the principle of accession, i.e.,
that the accessory follows the principal and not the other way around.[2] Even as
the option lies with the landowner, the grant to him, nevertheless, is preclusive.
He much choose one. He cannot, for instance, compel the owner of the building
to instead remove it from the land.[3] In order, however, that the builder can
invoke that accruing benefit and enjoy his corresponding right to demand that a
choice be made by the landowner, he should be able to prove good faith on his
part.

Good faith, here understood, is an intangible and abstract quality with no

technical meaning or statutory definition, and it encompasses, among other
things, an honest belief, the absence of malice and the absence of design to
defraud or to seek an unconscionable advantage. An individuals personal good
faith is a concept of his own mind and, therefore, may not conclusively be
determined by his protestations alone. It implies honesty of intention, and
freedom from knowledge of circumstances which ought to put the holder upon
inquiry.[4] The essence of good faith lies in an honest belief in the validity of ones
right, ignorance of a superior claim, and absence of intention to overreach
another.[5] Applied to possession, one is considered in good faith if he is not
aware that there exists in his title or mode of acquisition any flaw which
invalidates it.[6]

Given the findings of both the trial court and the appellate court, it should be
evident enough that petitioner would fall much too short from its claim of good
faith. Evidently, petitioner was quite aware, and indeed advised, prior to its
acquisition of the land and building from Ignacio that a part of the building sold to
it stood on the land not covered by the land conveyed to it.

Equally significant is the fact that the building, constructed on the land by Ignacio,
has in actuality been part of the property transferred to petitioner. Article 448, of
the Civil Code refers to a piece of land whose ownership is claimed by two or
more parties, one of whom has built some works (or sown or planted something)
and not to a case where the owner of the land is the builder, sower, or planter
who then later loses ownership of the land by sale or otherwise for, elsewise
stated, where the true owner himself is the builder of works on his own land, the
issue of good faith or bad faith is entirely irrelevant. [7]

In fine, petitioner is not in a valid position to invoke the provisions of Article 448
of the Civil Code. The Court commiserates with petitioner in its present
predicament; upon the other hand, respondent, too, is entitled to his rights under
the law, particularly after having long been deprived of the enjoyment of his
property. Nevertheless, the Court expresses hope that the parties will still be able
to come up with an arrangement that can be mutually suitable and acceptable to
them.

WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56001 is

AFFIRMED. No costs.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Ynares-Santiago, and Carpio, JJ., concur.

Azcuna, J., on sick leave.

[1] Rollo, p. 12.

[2] Depra vs. Dumlao, G.R. No. L-57348, 16 May 1985, 136 SCRA 475.

[3] Ignacio vs. Hilario, 76 Phil. 605; Sarmiento vs. Agana, G.R. No. L-57288, 30 April
1984, 129 SCRA 122; Tecnogas Philippines Manufacturing Corp. vs. Court of
Appeals, G.R. No. 108894, 10 February 1997, 268 SCRA 7.

[4] Blacks Law Dictionary, Abridged Fifth Edition, p. 353.

[5] Bernardo vs. Bernardo, 96 Phil. 202; Negrete vs. CFI of Marinduque, G.R. No. L-
31267, 24 November 1972, 48 SCRA 113.

[6] Article 526, Civil Code of the Philippines.

[7] Pecson vs. Court of Appeals, G.R. No. 115814, 26 May 1995, 244 SCRA 407.
I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

LEOsNARDO A. QUISUMBING

Associate Justice

Chairperson

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Division

Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer
of the Courts Division.

ARTEMIO V. PANGANIBAN

Chief Justice

[1] Rollo, pp. 44-50. Penned by Associate Justice Conrado Vasquez, Jr. and
concurred in by Associate Justices Josefina Guevara-Salonga and Fernanda
Lampas Peralta.

[2] Id. At 79-83. Penned by Judge Alipio Flores and dated November 13, 2003.
[3] Id. At 73-78. Penned by Judge Francisco Ante, Jr.

[4] Id. At 13.

[5] 1 Records, pp. 162-168.

[6] Rollo, pp. 74-75.

[7] 1 Records, p. 13

[8] Id. At 14-17.

[9] Rollo, p. 53.

[10] Records, pp. 1-7.

[11] Rollo, pp. 79-83.

[12] Id. At 49-50

[13] Id. At 49.

[14] Id. At 17-18.

[15] Id. At 22.

[16] Id. At 22-23.

[17] Id. At 37.

[18] Article 1868 and 1869 of the New Civil Code provide:

ART. 1868. By the contract of agency a person binds himself to render some
service or to do something in representation or on behalf of another, with the
consent or authority of the latter.

ART. 1869. Agency may be express, or implied from the acts of the principal, from
his silence or lack of action or his failure to repudiate the agency, knowing that
another person is acting on his behalf without authority.

[19] V. PARAS, CIVIL CODE OF THE PHILIPPINES, 14th ed., 2000, p. 402.

[20] REPORT OF THE CODE COMMISSION, pp. 144-145.

[21] Macasaet v. Macasaet, G.R. Nos. 154391-92, September 30, 2004, 439 SCRA
625, 643-644; Lopez v. Sarabia, G.R. No. 140357, September 24, 2004, 439 SCRA
35, 50; Chua v. Court of Appeals, 361 Phil. 308, 318 (1999); Heirs of the Late Jaime
Binuya v. Court of Appeals, G.R. No. 100493, July 23, 1992, 211 SCRA 761, 766-
767; Cabangis v. Court of Appeals, G.R. No. 83722, Aug. 9, 1991, 200 SCRA 414
(1991); Gabrito v. Court of Appeals, No. L-77976, November 24, 1988, 167 SCRA
771, 778-779; Balucanag v. Francisco, No. L-33422, May 30, 1983, 122 SCRA 498,
502; Racaza v. Susana Realty, Inc, No. L-20330, December 22, 1966, 18 SCRA 1172,
1177-1178; Quemuel v. Olaes, No. L-11084, April 29, 1961, 1 SCRA 1159, 1164.

[22] Quemuel v. Olaes, supra.

[23] Citing Alburo v. Villanueva, 7 Phil. 277, 280 (1907) (referring to the provisions
of the Old Civil Code); Racaza v. Suzana Realty, Inc., supra at 1177-1178;
Balucanag v. Francisco, supra; Gabrito v. Court of Appeals, supra; Cabangis v.
Court of Appeals, supra at 419-421; Heirs of the late Jaime Binuya v. Court of
Appeals, supra.

[24] Geminiano v. Court of Appeals, G.R. No. 120303, July 24, 1996, 259 SCRA 344,
351.

[25] G.R. No. 108222, May 5, 1997, 272 SCRA 141, 156-158.

[26] Supra.

[27] Rollo, p. 22.

 THIRD DIVISION

SAMUEL PARILLA, CHINITA G.R. No. 167680

PARILLA and DEODATO
PARILLA, Present:
Petitioners,

QUISUMBING, Chairperson,
CARPIO,

- versus - CARPIO MORALES,

TINGA, and
VELASCO, JR., JJ.

DR. PROSPERO PILAR, Promulgated:

Respondent.
November 30, 2006

x - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - -- - - - - - - - - - x
DECISION

CARPIO MORALES, J.:

Assailed via Petition for Review on Certiorari is the Court of Appeals

Decision[1] of January 19, 2005 reversing that of the Regional Trial Court (RTC)
of Vigan City, Branch 20[2] which affirmed the Decision[3] of February 3, 2003 of the
Municipal Trial Court (MTC) of Bantay, Ilocos Sur.
Petitioner-spouses Samuel and Chinita Parilla and their co-petitioner-son Deodato
Parilla, as dealers[4] of Pilipinas Shell Petroleum Corporation (Pilipinas Shell), have
been in possession of a parcel of land (the property) located at the poblacion of
Bantay, Ilocos Sur which was leased to it by respondent Dr. Prospero Pilar under a
10-year Lease Agreement[5] entered into in 1990.

When the lease contract between Pilipinas Shell and respondent expired in
2000, petitioners remained in possession of the property on which they built
improvements consisting of a billiard hall and a restaurant, maintained a sari-
sari store managed by Leonardo Dagdag, Josefina Dagdag and Edwin Pugal, and
allowed Flor Pelayo, Freddie Bringas and Edwin Pugal to use a portion thereof as
parking lot.[6]

Despite demands to vacate, petitioners[7] and the other occupants[8] remained in

the property.

Hence, respondent who has been residing in the United States,[9] through his
attorney-in-fact Marivic Paz Padre, filed on February 4, 2002 a complaint for
ejectment before the Bantay MTC with prayer for the issuance of a writ of
preliminary injunction with damages[10] against petitioners and the other
occupants of the property.

After trial, the MTC, by Decision of February 3, 2003, ordered herein petitioners
and their co-defendants and all persons claiming rights under them to vacate the
property and to pay the plaintiff-herein respondent the amount of P50,000.00 as
reasonable compensation for the use of the property and P10,000.00 as attorneys
fees and to pay the cost of suit. And it ordered the plaintiff-herein respondent to
reimburse defendants Samuel Parilla, Chinita Parilla and Deodato Parilla the
amount of Two Million Pesos (P2,000,000.00) representing the value of the
improvements introduced on the property.
Respondent appealed to the RTC of Vigan City that portion of the trial courts
decision ordering him to reimburse petitioners the amount of Two Million
Pesos. The RTC affirmed the MTC Decision, however.[11]

On respondents petition for review, the Court of Appeals set aside the questioned
order for respondent to reimburse petitioners Two Million Pesos.[12] In setting aside
the questioned order, the appellate court, applying Article 546 of the New Civil
Code which provides:

ART. 546. Necessary expenses shall be refunded to every

possessor; but only the possessor in good faith may retain the
thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in

good faith with the same right of retention, the person who has
defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which
the thing may have acquired by reason thereof[,]

held that [herein petitioners] tolerated occupancy . . . could not be interpreted to

mean . . . that they are builders or possessors in good faith[13] and that for one to
be a builder in good faith, it is assumed that he claims title to the property which is
not the case of petitioners.

Hence, the present petition which faults the appellate court to have erred

I
 . . . WHEN IT SET ASIDE THE DECISIONS OF THE TRIAL COURTS WHICH
ORDERED THE RESPONDENT TO REIMBURSE PETITIONERS THE
AMOUNT OF TWO MILLION (P2,000,000.00) PESOS FOR THE
SUBSTANTIAL IMPROVEMENTS INTRODUCED BY THEM ON THE
SUBJECT PREMISES.

II

. . . IN NOT HOLDING THAT PETITIONERS ARE BUILDERS IN GOOD FAITH

OF THE SUBSTANTIAL IMPROVEMENTS THEY HAD INTRODUCED ON
THE PREMISES, HENCE, THEY ARE ENTITLED TO REIMBURSEMENT OF
SUCH IMPROVEMENTS.

III

. . . IN NOT HOLDING THAT THE BUILDING WHICH PETITIONERS

ERECTED ON THE PREMISES WAS WORTH, AND THAT THE
PETITIONERS ACTUALLY SPENT, THE AMOUNT OF TWO MILLION
(P2,000,000.00) PESOS.

IV

. . . IN NOT HOLDING THAT PETITIONERS HAVE THE RIGHT OF

RETENTION OF THE PREMISES UNTIL THEY ARE REIMBURSED OF THE
SAID AMOUNT ADJUDGED IN THEIR FAVOR BY THE COURTS A QUO.[14]

Petitioners, proffering that neither respondent nor his agents or representatives

performed any act to prevent them from introducing the
[15]
improvements, contend that the appellate court should have applied Article 453
of the New Civil Code which provides that [i]f 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.[16]

Petitioners thus conclude that being builders in good faith, until they are
reimbursed of the Two Million Peso-value of the improvements they had
introduced on the property, they have the right of retention or occupancy thereof
pursuant to Article 448, in relation to Article 546, of the New Civil
Code,[17] otherwise, respondent would be unjustly enriched at their expense.

The petition fails in light of the following discussions.

The evidence shows that in 1960, a lease contract over the property was forged
between Shell Company of the Philippines Limited and respondents predecessors-
in-interest. In 1990, the lease contract was renewed by Pilipinas Shell and
respondent.

Petitioners, being dealers of Pilipinas Shells petroleum products, were

allowed to occupy the property. Petitioners are thus considered agents[18] of
Pilipinas Shell. The factual milieu of the instant case calls then for the application
of the provisions on lease under the New Civil Code.

The right of the lessor upon the termination of a lease contract with respect to
useful improvements introduced on the leased property by a lessee is covered by
Article 1678 which reads:

Art. 1678. If the lessee makes, in good faith, useful improvements

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

x x x x (Emphasis supplied)

The foregoing provision is a modification of the old Code under which the lessee
had no right at all to be reimbursed for the improvements introduced on the leased
property, he being entitled merely to the rights of a usufructuary right of removal
and set-off, but not of reimbursement.[19]

The modification introduced in the above-quoted paragraph of Article 1678 on

partial reimbursement was intended to prevent unjust enrichment of the lessor
which now has to pay one-half of the value of the improvements at the time the
lease terminates because the lessee has already enjoyed the same, whereas the
lessor could enjoy them indefinitely thereafter.[20]

As the law on lease under the New Civil Code has specific rules concerning useful
improvements introduced by a lessee on the property leased, it is erroneous on the
part of petitioners to urge this Court to apply Article 448, in relation to Article 546,
regarding their claim for reimbursement and to invoke the right of retention before
reimbursement is made. Article 448 and Article 546 read:

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

ART. 546. Necessary expenses shall be refunded to every

possessor; but only the possessor in good faith may retain the
thing until he has been reimbursed therefor.

Useful expenses shall be refunded only to the possessor in

good faith with the same right of retention, the person who has
defeated him in the possession having the option of refunding the
amount of the expenses or of paying the increase in value which
the thing may have acquired by reason thereof.

Jurisprudence is replete with cases[21] which categorically declare that Article 448
covers only cases in which the builders, sowers or planters believe themselves to
be owners of the land or, at least, have a claim of title thereto, but not when the
interest is merely

that of a holder, such as a mere tenant, agent or usufructuary. A tenant cannot be

said to be a builder in good faith as he has no pretension to be owner.[22]
In a plethora of cases,[23] this Court has held that Articles 448 of the
Civil Code, in relation to Article 546 of the same Code, which allows
full reimbursement of useful improvements and retention of the
premises until reimbursement is made, applies only to a possessor in
good faith, i.e., one who builds on land with the belief that he is the
owner thereof. It does not apply where ones only interest is that of a
 lessee under a rental contract; otherwise, it would always be in the
power of the tenant to improve his landlord out of his
property.[24] (Underscoring supplied)

Sia v. Court of Appeals,[25] which cites Cabangis v. Court of

Appeals,[26] exhaustively explains the applicability of Article 1678 on disputes
relating to useful improvements introduced by a lessee on leased premises, viz:

xxxx

Second. Petitioner stubbornly insists that he may not be ejected from

private respondent's land because he has the right, under Articles 448
and 546 of the New Civil Code, to retain possession of the leased
premises until he is paid the full fair market value of the building
constructed thereon by his parents. Petitioner is wrong, of course. The
Regional Trial Court and the Court of Appeals correctly held that it is
Article 1678 of the New Civil Code that governs petitioner's right vis-
a-vis the improvements built by his parents on private respondent's
land.
In the 1991 case of Cabangis v. Court of Appeals where the subject of
the lease contract was also a parcel of land and the lessee's father
constructed a family residential house thereon, and the lessee
subsequently demanded indemnity for the improvements built on the
lessor's land based on Articles 448 and 546 of the New Civil Code, we
pointed out that reliance on said legal provisions was misplaced.

"The reliance by the respondent Court of Appeals on Articles 448 and

546 of the Civil Code of the Philippinesis misplaced. These provisions
have no application to a contract of lease which is the subject matter
of this controversy. Instead, Article 1678 of the Civil Code applies. . . .

xxxx

On the other hand, Article 448 governs the right of accession while
Article 546 pertains to effects of possession. The very language of
these two provisions clearly manifest their inapplicability to lease
contracts. . . .

xxxx

Thus, the improvements that the private respondent's father had

introduced in the leased premises were done at his own risk as lessee.
The right to indemnity equivalent to one-half of the value of the said
improvements the house, the filling materials, and the hollow block
fence or wall is governed, as earlier adverted to, by the provisions of
Art. 1678, first paragraph of the Civil Code above quoted. But this right
to indemnity exists only if the lessor opts to appropriate the
improvements (Alburo v. Villanueva, supra, note 10 at 279-
 280; Valencia v. Ayala de Roxas, supra, note 10 at 46). The refusal of
the lessor to pay the lessee one-half of the value of the useful
improvements gives rise to the right of removal. On this score, the
commentary of Justice Paras is enlightening.

'Note that under the 1st paragraph of Art. 1678, the law on the
right of REMOVAL says that 'should the lessor refuse to
reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer
thereby.' While the phrase 'even though' implies that Art. 1678
always applies regardless of whether or not the improvements
can be removed without injury to the leased premises, it is
believed that application of the Article cannot always be done.
The rule is evidently intended for cases where a true accession
takes place as when part of the land leased is, say, converted
into a fishpond; and certainly not where as easily removable

thing (such as a wooden fence) has been introduced. There is

no doubt that in a case involving such a detachable fence, the
lessee can take the same away with him when the lease
expires (5 E. Paras, Civil Code of the Philippines Annotated 345
[11th ed., 1986]).'

xxxx

Clearly, it is Article 1678 of the New Civil Code which applies to the present case.

Petitioners claim for reimbursement of the alleged entire value of the

improvements does not thus lie under Article 1678. Not even for one-half of such
alleged value, there being no substantial evidence, e.g., receipts or other
documentary evidence detailing costs of construction. Besides, by petitioners
admission, of the structures they originally built the billiard hall, restaurant, sari-
sari store and a parking lot, only the bodega-like sari-sari store and the parking lot
now exist.[27]

At all events, under Article 1678, it is the lessor who is given the option, upon
termination of the lease contract, either to appropriate the useful improvements
by paying one-half of their value at that time, or to allow the lessee to remove the
improvements. This option solely belongs to the lessor as the law is explicit that
[s]hould the lessor refuse to reimburse said amount, the lessee may remove the
improvements, even though the principal thing may suffer damage thereby. It
appears that the lessor has opted not to reimburse.
WHEREFORE, the petition is DENIED. The Court of Appeals Decision of January 19,
2005 is AFFIRMED in light of the foregoing discussions.

Costs against petitioners.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice
THIRD DIVISION

[G.R. No. 137944. April 6, 2000]

FERNANDA MENDOZA CEQUENA and RUPERTA MENDOZA LIRIO, petitioners, vs.

HONORATA MENDOZA BOLANTE, respondent. J lexj

DECISION

PANGANIBAN, J.:

Tax receipts and declarations are prima facie proofs of ownership or possession of
the property for which such taxes have been paid. Coupled with proof of actual
possession of the property, they may become the basis of a claim for ownership.
By acquisitive prescription, possession in the concept of owner – public, adverse,
peaceful and uninterrupted – may be converted to ownership. On the other hand,
mere possession and occupation of land cannot ripen into ownership.

The Case

Before us is a Petition for Review on Certiorari of the March 19, 1999 Decision[1]
of the Court of Appeals[2] (CA) in CA-GR CV No. 43423. The assailed Decision
disposed as follows:[3]

“WHEREFORE, for all the foregoing, the decision of the trial court appealed from
is REVERSED and SET ASIDE. In lieu thereof, judgment is hereby rendered
declaring x x x Honorata Mendoza Bolante the rightful owner and possessor of the
parcel of land which is the subject of this appeal.” Lexj uris
The Facts

The Petition herein refers to a parcel of land situated in Barangay Bangad,

Binangonan, Province of Rizal, having an area of 1,728 square meters and covered
by Tax Declaration No. 26-0027.

The undisputed antecedents of this case are narrated by the Court of Appeals as
follows:[4]

“The facts not disputed revealed that prior to 1954, the land was originally
declared for taxation purposes in the name of Sinforoso Mendoza, father of
[respondent] and married to Eduarda Apiado. Sinforoso died in 1930. [Petitioners]
were the daughters of Margarito Mendoza. On the basis of an affidavit, the tax
declaration in the name of Sinforoso Mendoza of the contested lot was cancelled
and subsequently declared in the name of Margarito Mendoza. Margarito and
Sinforoso are brothers. [Respondent] is the present occupant of the land. Earlier,
on October 15, 1975, [respondent] and Miguel Mendoza, another brother of
[petitioners], during the cadastral survey had a dispute on [the] ownership of the
land. Juri smis

“During the pre-trial conference, parties stipulated the following facts:

1) The land subject of the case was formerly declared for taxation purposes in
the name of Sinforoso Mendoza prior to 1954 but is now declared in the
name of Margarito Mendoza.

2) The parties agree[d] as to the identity of the land subject of instant case.
 3) [Petitioners] are the daughters of Margarito Mendoza while the
[respondent] is the only daughter of Sinforoso Mendoza.

‘4) Margarito Mendoza and Sinforoso Mendoza [were] brothers, now deceased.

4) During the cadastral survey of the property on October 15, 1979 there was
already a dispute between Honorata M. Bolante and Miguel Mendoza,
brother of [petitioners].

5) [Respondent was] occupying the property in question.

The only issue involved [was] who [was] the lawful owner and possessor of the
land subject of the case.

“After trial, the court a quo rendered its judgment in favor of [petitioners], the
dispositive portion of which reads as follows:

Wherefore, in view of the foregoing considerations, judgment is hereby rendered

for the [petitioners] and against the [respondent]:

1. Declaring that the parcel of land situated in Bangad, Binangonan, Rizal

covered by tax declaration no. 26-0027 in the name of Margarito Mendoza
belong to his heirs, the [petitioners] herein;
 2. Ordering [respondent] to vacate the property subject of the case and
deliver possession thereof to the heirs of Margarito Mendoza. Jjj uris

3. Ordering the [respondent] to indemnify the [petitioners] in the sum of

P10,000.00, as actual damages.

4. Ordering the [respondent] to pay the costs.”

Ruling of the Court of Appeals

The Court of Appeals reversed the trial court because the genuineness and the
due execution of the affidavit allegedly signed by the respondent and her mother
had not been sufficiently established. The notary public or anyone else who had
witnessed the execution of the affidavit was not presented. No expert testimony
or competent witness ever attested to the genuineness of the questioned
signatures.

The CA further ruled that the affidavit was insufficient to overcome the denial of
respondent and her mother. The former testified that the latter, never having
attended school, could neither read nor write. Respondent also said that she had
never been called “Leonor,” which was how she was referred to in the affidavit.

Moreover, the appellate court held that the probative value of petitioners tax
receipts and declarations paled in comparison with respondents proof of
ownership of the disputed parcel. Actual, physical, exclusive and continuous
possession by respondent since 1985 indeed gave her a better title under Article
538 of the Civil Code. Lex
Hence, this Petition.[5]

Issues

Insisting that they are the rightful owners of the disputed land, the petitioners
allege that the CA committed these reversible errors:[6]

“1. Xxx [I]n not considering the affidavit as an exception to the general rule that
an affidavit is classified as hearsay evidence, unless the affiant is placed on the
witness stand; and Jksm

“2. Xxx [I]n holding that respondent has been in actual and physical possession,
coupled with xxx exclusive and continuous possession of the land since 1985,
which are evidence of the best kind of circumstance proving the claim of the title
of ownership and enjoys the presumption of preferred possessor.”

The Court’s Ruling

The Petition has no merit.

First Issue: Admissibility of the Affidavit

Petitioners dispute the CA’s ruling that the affidavit was not the best evidence of
their father’s ownership of the disputed land, because the “affiant was not placed
on the witness stand.” They contend that it was unnecessary to present a witness
to establish the authenticity of the affidavit because it was a declaration against
respondent’s interest and was an ancient document. As a declaration against
interest, it was an exception to the hearsay rule. As a necessary and trustworthy
document, it was admissible in evidence. And because it was executed on March
24, 1953, it was a self-authenticating ancient document. Chief

We quote below the pertinent portion of the appellate court’s ruling:[7]

“While it is true that the affidavit was signed and subscribed before a notary
public, the general rule is that affidavits are classified as hearsay evidence, unless
affiants are placed on the witness stand (People’s Bank and Trust Company vs.
Leonidas, 207 SCRA 164). Affidavits are not considered the best evidence, if
affiants are available as witnesses (Vallarta vs. Court of Appeals, 163 SCRA 587).
The due execution of the affidavit was not sufficiently established. The notary
public or others who saw that the document was signed or at least [could]
confirm its recitals [were] not presented. There was no expert testimony or
competent witness who attested to the genuineness of the questioned
signatures. Worse, [respondent] denied the genuineness of her signature and that
of her mother xxx. [Respondent] testified that her mother was an illiterate and as
far as she knew her mother could not write because she had not attended school
(p. 7, ibid). Her testimony was corroborated by Ma. Sales Bolante Basa, who said
the [respondent’s] mother was illiterate.”

The petitioners allegations are untenable. Before a private document offered as

authentic can be received in evidence, its due execution and authenticity must be
proved first.[8] And before a document is admitted as an exception to the hearsay
rule under the Dead Man’s Statute, the offeror must show (a) that the declarant is
dead, insane or unable to testify; (b) that the declaration concerns a fact
cognizable by the declarant; (c) that at the time the declaration was made, he was
aware that the same was contrary to his interest; and (d) that circumstances
render improbable the existence of any motive to falsify.[9]Esmsc
In this case, one of the affiants happens to be the respondent, who is still alive
and who testified that the signature in the affidavit was not hers. A declaration
against interest is not admissible if the declarant is available to testify as a
witness.[10] Such declarant should be confronted with the statement against
interest as a prior inconsistent statement.

The affidavit cannot be considered an ancient document either. An ancient

document is one that is (1) more than 30 years old, (2) found in the proper
custody, and (3) unblemished by any alteration or by any circumstance of
suspicion.[11] It must on its face appear to be genuine. The petitioners herein
failed, however, to explain how the purported signature of Eduarda Apiado could
have been affixed to the subject affidavit if, according to the witness, she was an
illiterate woman who never had any formal schooling. This circumstance casts
suspicion on its authenticity.

Not all notarized documents are exempted from the rule on authentication. Thus,
an affidavit does not automatically become a public document just because it
contains a notarial jurat. Furthermore, the affidavit in question does not state
how the ownership of the subject land was transferred from Sinforoso Mendoza
to Margarito Mendoza. By itself, an affidavit is not a mode of acquiring
ownership.

Second Issue: Preference of PossessionEsmmis

The CA ruled that the respondent was the preferred possessor under Article 538
of the Civil Code because she was in notorious, actual, exclusive and continuous
possession of the land since 1985. Petitioners dispute this ruling. They contend
that she came into possession through force and violence, contrary to Article 536
of the Civil Code.
We concede that despite their dispossession in 1985, the petitioners did not lose
legal possession because possession cannot be acquired through force or
violence.[12] To all intents and purposes, a possessor, even if physically ousted, is
still deemed the legal possessor.[13] Indeed, anyone who can prove prior
possession, regardless of its character, may recover such possession.[14]

However, possession by the petitioners does not prevail over that of the
respondent. Possession by the former before 1985 was not exclusive, as the latter
also acquired it before 1985. The records show that the petitioners father and
brother, as well as the respondent and her mother were simultaneously in
adverse possession of the land. Es-mso

Before 1985, the subject land was occupied and cultivated by the respondent’s
father (Sinforoso), who was the brother of petitioners’ father (Margarito), as
evidenced by Tax Declaration No. 26425.[15] When Sinforoso died in 1930,
Margarito took possession of the land and cultivated it with his son Miguel. At the
same time, respondent and her mother continued residing on the lot.

When respondent came of age in 1948, she paid realty taxes for the years 1932-
1948.[16] Margarito declared the lot for taxation in his name in 1953[17] and paid
its realty taxes beginning 1952.[18] When he died, Miguel continued cultivating
the land. As found by the CA, the respondent and her mother were living on the
land, which was being tilled by Miguel until 1985 when he was physically ousted
by the respondent.[19]

Based on Article 538 of the Civil Code, the respondent is the preferred possessor
because, benefiting from her father’s tax declaration of the subject lot since 1926,
she has been in possession thereof for a longer period. On the other hand,
petitioners’ father acquired joint possession only in 1952. Ms-esm
Third Issue: Possession of Better Right

Finally, the petitioners challenge the CA ruling that “actual and physical coupled
with the exclusive and continuous possession [by respondent] of the land since
1985” proved her ownership of the disputed land. The respondent argues that
she was legally presumed to possess the subject land with a just title since she
possessed it in the concept of owner. Under Article 541 of the Code, she could not
be obliged to show or prove such title.

The respondent’s contention is untenable. The presumption in Article 541 of the

Civil Code is merely disputable; it prevails until the contrary is proven.[20] That is,
one who is disturbed in one’s possession shall, under this provision, be restored
thereto by the means established by law.[21] Article 538 settles only the question
of possession, and possession is different from ownership. Ownership in this case
should be established in one of the ways provided by law. E-xsm

To settle the issue of ownership, we need to determine who between the

claimants has proven acquisitive prescription.[22]

Ownership of immovable property is acquired by ordinary prescription through

possession for ten years.[23] Being the sole heir of her father, respondent showed
through his tax receipt that she had been in possession of the land for more than
ten years since 1932. When her father died in 1930, she continued to reside there
with her mother. When she got married, she and her husband engaged in kaingin
inside the disputed lot for their livelihood.[24]

Respondent’s possession was not disturbed until 1953 when the petitioners’
father claimed the land. But by then, her possession, which was in the concept of
owner – public, peaceful, and uninterrupted[25] – had already ripened into
ownership. Furthermore she herself, after her father’s demise, declared and paid
realty taxes for the disputed land. Tax receipts and declarations of ownership for
taxation, when coupled with proof of actual possession of the property, can be
the basis of a claim for ownership through prescription.[26]Ky-le

In contrast, the petitioners, despite thirty-two years of farming the subject land,
did not acquire ownership. It is settled that ownership cannot be acquired by
mere occupation.[27] Unless coupled with the element of hostility toward the
true owner,[28] occupation and use, however long, will not confer title by
prescription or adverse possession. Moreover, the petitioners cannot claim that
their possession was public, peaceful and uninterrupted. Although their father
and brother arguably acquired ownership through extraordinary prescription
because of their adverse possession for thirty-two years (1953-1985),[29] this
supposed ownership cannot extend to the entire disputed lot, but must be limited
to the portion that they actually farmed.

We cannot sustain the petitioners’ contention that their ownership of the

disputed land was established before the trial court through the series of tax
declarations and receipts issued in the name of Margarito Mendoza. Such
documents prove that the holder has a claim of title over the property. Aside
from manifesting a sincere desire to obtain title thereto, they announce the
holder’s adverse claim against the state and other interested parties.[30]Ky-calr

However, tax declarations and receipts are not conclusive evidence of

ownership.[31] At most, they constitute mere prima facie proof of ownership or
possession of the property for which taxes have been paid.[32] In the absence of
actual public and adverse possession, the declaration of the land for tax purposes
does not prove ownership.[33] In sum, the petitioners’ claim of ownership of the
whole parcel has no legal basis.
WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution
AFFIRMED. Costs against petitioners.
SO ORDERED.
THIRD DIVISION

[G.R. No. 146815. April 9, 2003]

HEIRS OF PEDRO LAURORA and LEONORA LAURORA, petitioners, vs. STERLING

TECHNOPARK III and S.P. PROPERTIES, INC., respondents.

DECISION

PANGANIBAN, J.:

The owners of a property have no authority to use force and violence to eject
alleged usurpers who were in prior physical possession of it. They must file the
appropriate action in court and should not take the law into their own hands.

The Case

Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking
to set aside the June 27, 2000 Decision[2] and the January 22, 2001 Resolution[3]
of the Court of Appeals[4] (CA) in CA-GR SP No. 54667. The dispositive part of the
Decision reads:

WHEREFORE, the [P]etition is GRANTED and the RTC [D]ecision dated 06 May
1999 and the RTC [O]rder dated 03 August 1999 are hereby REVERSED and SET
ASIDE, and corollarily, the MCTC [D]ecision is AFFIRMED. [5]
The assailed Resolution denied petitoners Motion for Reconsideration.

The Facts

The factual antecedents are summarized by the CA as follows:

In a [C]omplaint for Forcible Entry with Damages filed on 27 September 1997

before the Fifth Municipal Circuit Trial Court of Carmona and Gen. Mariano
Alvarez, plaintiffs therein, x x x Pedro Laurora and Leonora Laurora [herein
petitioners] alleged that they [were] the owners of Lot 1315-G, SWD-40763 of the
Yaptinchay Estate with an area of 39,771 sq. meters and located in Carmona,
Cavite. Pedro Laurora planted trees and has possessed the land up to the present.
On 15 September 1997, [respondents] Sterling Technopark III and S.P. Properties,
Inc. x x x through their Engr. Bernie Gatchalian bulldozed and uprooted the trees
and plants, and with the use of armed men and by means of threats and
intimidation, succeeded in forcibly ejecting [petitioners]. As a result of their
dispossession, [petitioners] suffered actual damages in the amount of
P3,000,000.00 and P10,000.00 as attorneys fees.

In their [A]nswer to the [C]omplaint, [respondents] averred that [petitioners

were] not the owners of the land because they disposed of it sometime in 1976 as
shown by legal documents. On 02 April 1969, the Land Authority issued an order
of award in favor of [petitioners], approving the application of Pedro Laurora to
buy the subject Lot 1315-G from the government. On 01 March 1974,
[petitioners] requested the Department of Agrarian Reform for the transfer of the
lot to Juan Manaig. Favorably acted upon, the DAR issued a permit to transfer
dated 03 June 1975 through its Regional Director Benjamin R. Estrellado. On 03
July 1975, Juan Manaig, as transferee and buyer, paid the required amount of
P10,643.65 under Official Receipt No. 8304707 to the government as full payment
for the transfer of said lot to him. On 26 March 1976, the [petitioners] as sellers
and witnessed by their sons, Efren Laurora and Dominador Laurora, executed a
Kasulatan ng Paglilipatan ng Lupa transferring the land to Juan Manaig as buyer.
On 11 June 1976, the [petitioners] again witnessed by their sons, Efren and
Dominador, executed a Kasulatan ng Bilihang Tuluyan or Deed of Sale wherein
they sold Lot 1315-G including all improvements therein, in favor of Juan Manaig.
The Deed of Absolute Sale was approved by the Department of Agrarian Reform
on 14 June 1976 in DAR Approval of Transfer of Rights signed by DAR Regional
Director, Benjamin R. Estrellado. After the approval of the sale from the
[petitioners] to Juan Manaig, the latter paid its real estate taxes. The tax
declarations of the land in the name of its previous owners, Yaptinchays, were
cancelled and transferred in the name of [petitioner] Pedro Laurora as owner-
transferee. Thereupon, the heirs of the late JUAN MANAIG sold the land to
Golden Mile Resources Development Corporation which likewise sold it to
[respondent] S. P. Properties, Inc.

After summary proceedings in the MCTC, x x x, a judgment was rendered

dismissing the complaint. The case was elevated to the Regional Trial Court. In
due course, the said court rendered a decision reversing the MCTC judgment. X x
x[6]

Ruling of the Court of Appeals

The CA reversed the Regional Trial Court (RTC) and reinstated the Order of
dismissal issued by the Municipal Circuit Trial Court (MCTC). It held that there was
no evidence to support the claim of petitioners to the prior physical possession of
the property. The evidence allegedly showed that they had already sold the land
with the approval of the Department of Agrarian Reform (DAR). Accordingly, their
subsequent entry into and possession of the land constituted plain usurpation,
which could not be the source of any right to occupy it. Being planters in bad
faith, they had no right to be reimbursed for improvements on the land, in
accordance with Article 449 of the New Civil Code.
Hence, this Petition.[7]

The Issue

In their Memorandum,[8] petitioners raise this sole issue for our consideration:

X x x [W]hether [p]rivate [r]espondent[s] ha[ve] a valid and legal right to forcibly

eject petitioners from the premises despite their resistance and objection,
through the use of arm[ed] men and by bulldozing, cutting, and destroying trees
and plants planted by petitioners, without court order, to the damage and
prejudice of the latter.[9]

The Courts Ruling

The Petition is meritorious.

Main Issue:

Physical Possession of the Land

The only issue in forcible entry cases is the physical or material possession of real
property – possession de facto, not possession de jure.[10] Only prior physical
possession, not title, is the issue.[11] If ownership is raised in the pleadings, the
court may pass upon such question, but only to determine the question of
possession.[12]
The ownership claim of respondents upon the land is based on the evidence they
presented. Their evidence, however, did not squarely address the issue of prior
possession. Even if they succeed in proving that they are the owners of the
land,[13] the fact remains that they have not alleged or proved that they
physically possess it by virtue of such ownership. On the other hand, petitioners
prior possession of the land was not disputed by the CA, which merely described
it as usurpation.[14]

We stress that the issue of ownership in ejectment cases is to be resolved only

when it is intimately intertwined with the issue of possession,[15] to such an
extent that the question of who had prior possession cannot be determined
without ruling on the question of who the owner of the land is.[16] No such
intertwinement has been shown in the case before us. Since respondents claim of
ownership is not being made in order to prove prior possession, the ejectment
court cannot intrude or dwell upon the issue of ownership.[17]

Notwithstanding the actual condition of the title to the property, a person in

possession cannot be ejected by force, violence or terror – not even by the
owners.[18] If such illegal manner of ejectment is employed, as it was in the
present case, the party who proves prior possession – in this case, petitioners –
can recover possession even from the owners themselves. [19]

Granting arguendo that petitioners illegally entered into and occupied the
property in question, respondents had no right to take the law into their own
hands and summarily or forcibly eject the occupants therefrom.

Verily, even if petitioners were mere usurpers of the land owned by respondents,
still they are entitled to remain on it until they are lawfully ejected therefrom.
Under appropriate circumstances, respondents may file, other than an ejectment
suit, an accion publiciana – a plenary action intended to recover the better right
to possess;[20] or an accion reivindicatoria – an action to recover ownership of
real property.[21]

The availment of the aforementioned remedies is the legal alternative to prevent

breaches of peace and criminal disorder resulting from the use of force by
claimants out to gain possession.[22] The rule of law does not allow the mighty
and the privileged to take the law into their own hands to enforce their alleged
rights. They should go to court and seek judicial vindication.

WHEREFORE, the Petition is GRANTED and the assailed Decision REVERSED and
SET ASIDE. No costs.

SO ORDERED.