[G.R. No. 144773.

May 16, 2005]

AZNAR BROTHERS REALTY COMPANY, petitioner, vs. LAURENCIO AYING, IN HIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS OF EMILIANO AYING, PAULINO AYING, IN HIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS OF SIMEON AYING, AND WENCESLAO SUMALINOG, IN HIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS OF ROBERTA AYING, respondents. DECISION AUSTRIA-MARTINEZ, J.: This resolves the petition for review on certiorari seeking the modification of the Decision[1] of the Court of Appeals (CA) dated March 7, 2000 which affirmed with modification the Decision of the Regional Trial Court (RTC) of Lapu-Lapu City, Branch 27 in Civil Case No. 2930-L; and the Resolution dated August 2, 2000 denying petitioners motion for reconsideration of the aforementioned decision. The antecedent facts are as follows: The disputed property is Lot No. 4399 with an area of 34,325 square meters located at Dapdap, Lapu-Lapu City. Crisanta Maloloy-on petitioned for the issuance of a cadastral decree in her favor over said parcel of land. After her death in 1930, the Cadastral Court issued a Decision directing the issuance of a decree in the name of Crisanta Maloloy-ons eight children, namely: Juan, Celedonio, Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying. The certificate of title was, however, lost during the war. Subsequently, all the heirs of the Aying siblings executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964, conveying the subject parcel of land to herein petitioner Aznar Brothers Realty Company. Said deed was registered with the Register of Deeds of Lapu-Lapu City on March 6, 1964 under Act No. 3344 (the law governing registration for unregistered land), and since then, petitioner had been religiously paying real property taxes on said property. In 1988, herein petitioner filed a Petition for Reconstitution of the Original Title as the original title over the subject property had been lost during the war. On April 12, 1988, the court granted said petition, thereby directing the Register of Deeds of Lapu-Lapu City to issue a reconstituted title in the name of the abovementioned Aying siblings. Thus, Original Certificate of Title (OCT) No. RO-2856 was issued. In 1991, petitioner, claiming to be the rightful owner of the subject property, sent out notices to vacate, addressed to persons occupying the property. Unheeded, petitioner then filed a complaint for ejectment against the occupants before the Metropolitan Trial Court (MTC), Lapu-Lapu City. On February 1, 1994, the MTC ordered the occupants to vacate the property. The case eventually reached this Court, docketed as G.R. No. 128102, entitled Aznar Brothers Realty Company vs. Court of Appeals, Luis Aying, Demetrio Sida, Felomino Augusto, Federico Abing, and Romeo Augusto.[2] On March 7, 2000, a Decision was promulgated in favor of herein petitioner, declaring it as the rightful possessor of the parcel of land in question. Meanwhile, herein respondents, along with other persons claiming to be descendants of the eight Aying siblings, all in all numbering around 220 persons, had filed a complaint for

cancellation of the Extra-Judicial Partition with Absolute Sale, recovery of ownership, injunction and damages with the RTC of Lapu-Lapu City. The complaint was dismissed twice without prejudice. Said complaint was re-filed on August 19, 1993, docketed as Civil Case No. 2930-L. In their amended complaint, herein respondents (plaintiffs before the RTC) alleged that: they are co-owners of subject property, being descendants of the registered owners thereof under OCT No. RO-2856; they had been in actual, peaceful, physical, open, adverse, continuous and uninterrupted possession in concept of owner of subject parcel of land since time immemorial; their possession was disturbed only in the last quarter of 1991 when some of them received notices to vacate from petitioner and several weeks thereafter, earthmoving equipment entered the disputed land, bulldozing the same and destroying plants, trees and concrete monuments (mohon); respondents discovered that such activities were being undertaken by petitioner together with Sta. Lucia Realty and Development, Inc.; petitioner claimed to be the owner of subject property by virtue of an extra-judicial partition of real estate with deed of absolute sale executed in petitioners favor by the alleged heirs of Crisanta Maloloy-on; the aforementioned extra-judicial partition of real estate with deed of absolute sale is a fraud and is null and void ab initio because not all the co-owners of subject property affixed their signature on said document and some of the co-owners who supposedly signed said document had been dead at the time of the execution thereof; petitioner entered subject land in bad faith, knowing fully well that it did not have any right to the land and used force, threat and intimidation against respondents; and they suffered moral damages.[3] Petitioner (defendant before the RTC) filed its Answer, denying that respondents are the lawful owners of subject parcel of land by virtue of their being descendants or heirs of the registered owners of subject property. Instead, petitioner alleged that it had been in actual possession of subject land as owner thereof by virtue of the extra-judicial partition of real property and deed of absolute sale executed in its favor; that in fact, it had been paying taxes thereon religiously; that it tolerated about 6 persons to live on said land but said persons were eventually ejected by court order. Petitioner then raised the affirmative defenses of failure to state cause of action and prescription, as it took respondents 27 years, 10 months and 27 days to file the action to recover subject property, when an action to recover property based on an implied trust should be instituted within 4 years from discovery of the fraud. [4] In the Pre-Trial Order dated January 30, 1995 of the RTC, the issues were narrowed down to the following: 1. Whether or not the plaintiffs [herein respondents] are the heirs of the registered owners of Lot No. 4399. 2. Whether or not plaintiffs are the owners of Lot No. 4399.

3. Whether or not the defendant Aznar [herein petitioner] is estopped to make any claim on Lot No. 4399. 4. Whether or not the defendant Aznar is a builder in bad faith.

5. Whether or not the defendants are liable for damages and attorneys fees in favor of the plaintiffs. 6. Whether or not the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and had, in effect, validly conveyed to defendant Aznar Lot No. 4399.

7.

Whether or not the plaintiffs action has prescribed.[5]

After trial, the RTC rendered a Decision dated July 4, 1997, ruling that respondents evidence failed to prove that the extra-judicial partition with deed of absolute sale was a totally simulated or fictitious contract and concluded that said document is valid, thus, effectively conveying to petitioner the property in question. It further held that respondents action had prescribed in that the action is considered as one for reconveyance based on implied or constructive trust, it prescribed in 10 years from the registration of the deed on March 6, 1964; and if the action is considered as one for annulment of contract on the ground of fraud, it should have been filed within 4 years from discovery of the fraud. The trial court also ruled that respondents failed to present any admissible proof of filiation, hence, they were not able to prove that they are indeed heirs of the eight Aying siblings who appear as the registered owners under OCT No. RO-2856. The dispositive portion of the RTC Decision reads as follows: WHEREFORE, judgment is hereby rendered dismissing the amended complaint on the ground of prescription, and declaring the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale dated March 3, 1964 as valid and binding, adjudging that Lot 4399 with an area of 34,325 square meters located at Dapdap, Mactan, Lapu-Lapu City had been validly conveyed to and in favor of Aznar Brothers Realty Company, and directing the Register of Deeds of Lapu-Lapu City to register the above-mentioned deed in accordance with law and to cancel Original Certificate of Title No. RO-2856, and to issue a transfer certificate of title in the name of Aznar Brothers Realty Company upon payment of the necessary registration fees pursuant thereto. The Writ of Preliminary Injunction issued in this case is hereby ordered dissolved. The Motion for Contempt filed by the plaintiffs against defendants is dismissed for want of factual and legal basis. Costs against the plaintiffs. SO ORDERED.[6] Herein respondents appealed the foregoing decision to the CA and on March 7, 2000, said court promulgated its Decision, the dispositive portion of which is reproduced hereunder: THE FOREGOING CONSIDERED, the contested Decision while AFFIRMED is hereby MODIFIED. The heirs of Emiliano Aying, Simeon Aying and Roberta Aying are hereby declared as the lawful owners of the contested property but equivalent only to 3/8. SO ORDERED. In modifying the RTC judgment, the CA ratiocinated that an action for recovery of possession of registered land never prescribes in view of the provision of Section 44, Act No. 496 (now Sec. 47, PD 1520), to the effect that no title to registered land in derogation to that of a registered owner shall be acquired by prescription. The CA further ruled that even if the action is deemed to be based on implied trust, prescription did not begin to run since there is no evidence that positive acts of repudiation were made known to the heirs who did not participate in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. Thus, striking down the RTCs ruling that the respondents complaint is

dismissible on the ground of prescription, the CA held instead that herein respondents action had not prescribed but upheld the validity of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, except as to the shares of the heirs of Emiliano, Simeon and Roberta, who did not participate in the execution of said document. Herein petitioners motion for reconsideration of the CA decision was denied per Resolution dated August 2, 2000. Hence, the present petition for review on certiorari assailing the CA decision on the following grounds: I THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT AN HEIR OF THE ORIGINAL REGISTERED OWNER MAY LOSE HIS RIGHT TO RECOVER A TITLED PROPERTY BY REASON OF LACHES; II THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE RULE THAT THE ACT OF REGISTRATION OF THE DEED OF PARTITION WITH SALE MAY BE CONSIDERED AN UNEQUIVOCAL REPUDIATION OF THE TRUST GIVING RISE TO PRESCRIPTION; III THE COURT OF APPEALS ERRED IN FAILING TO APPLY THE PROVISIONS OF ARTICLE 1104 OF THE CIVIL CODE TO THE EFFECT THAT IN THE ABSENCE OF BAD FAITH OR FRAUD, THE PARTITION WITH PRETERITION OF ANY COMPULSORY HEIR SHALL NOT BE RESCINDED. [7] In their Comment, respondents argue that this case is an action to declare as null and void the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale, hence, under Article 1410 of the Civil Code, an action for declaration of an inexistent contract does not prescribe. Respondents further posit that the principle of laches should be applied against petitioner and not against them, as they (respondents) had been in actual possession of the subject property, while petitioner merely brought action to eject them more than 29 years after the alleged execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. They also refuted petitioners arguments regarding the application of the principles of implied and constructive trusts in this case. At the outset, it should be stressed that not all the plaintiffs who filed the amended complaint before the trial court had been impleaded as respondents in the present petition. The only parties impleaded are the heirs of Emiliano, Simeon and Roberta Aying, whom the CA adjudged as owners of a 3/8 portion of the land in dispute for not having participated in the execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. It is significant to note that herein petitioner does not question the CA conclusion that respondents are heirs of the aforementioned three Aying siblings. Hence, the trial court and appellate courts findings that the Extra- Judicial Partition of Real Estate with Deed of Absolute Sale was not forged nor simulated and that the heirs of Emiliano, Simeon and Roberta Aying did not participate in the execution thereof, are now beyond cavil. The issues raised by petitioner for the Courts resolution are (1) whether or not respondents cause of action is imprescriptible; and (2) if their right to bring action is indeed imprescriptible, may the principle of laches apply. Respondents alleged in their amended complaint that not all the co-owners of the land in question signed or executed the document conveying ownership thereof to petitioner and

made the conclusion that said document is null and void. We agree with the ruling of the RTC and the CA that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and binding only as to the heirs who participated in the execution thereof, hence, the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not participate therein, cannot be bound by said document. However, the facts on record show that petitioner acquired the entire parcel of land with the mistaken belief that all the heirs have executed the subject document. Thus, the trial court is correct that the provision of law applicable to this case is Article 1456 of the Civil Code which states: ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. In Vda. De Esconde vs. Court of Appeals,[8] the Court expounded thus: Construing this provision of the Civil Code, in Philippine National Bank v. Court of Appeals , the Court stated: A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust, confidence is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust, respecting property which is held by the trustee for the benefit of the cestui que trust. A constructive trust, unlike an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for the beneficiary.[9] The concept of constructive trusts was further elucidated in the same case, as follows: . . . implied trusts are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties. In turn, implied trusts are either resulting or constructive trusts. These two are differentiated from each other as follows: Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature of circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold.[10] (Emphasis supplied) Based on such concept of constructive trusts, the Court ruled in said case that: The rule that a trustee cannot acquire by prescription ownership over property entrusted to him until and unless he repudiates the trust, applies to express trusts and resulting implied trusts. However, in constructive implied trusts, prescription may supervene even if the

trustee does not repudiate the relationship. Necessarily, repudiation of said trust is not a condition precedent to the running of the prescriptive period.[11] The next question is, what is the applicable prescriptive period? In Amerol vs. Bagumbaran,[12] the Court expounded on the prescriptive period within which to bring an action for reconveyance of property based on implied or constructive trust, to wit: . . . under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor of the true owner. In this context, and vis--vis prescription, Article 1144 of the Civil Code is applicable. Article 1144. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment. xxx xxx xxx

An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years from the issuance of the Torrens title over the property. [13] It has also been ruled that the ten-year prescriptive period begins to run from the date of registration of the deed or the date of the issuance of the certificate of title over the property, but if the person claiming to be the owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe.[14] In the present case, respondents Wenceslao Sumalinog, an heir of Roberta Aying; Laurencio Aying, an heir of Emiliano Aying; and Paulino Aying, an heir of Simeon Aying, all testified that they had never occupied or been in possession of the land in dispute. [15] Hence, the prescriptive period of ten years would apply to herein respondents. The question then arises as to the date from which the ten-year period should be reckoned, considering that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under Act No. 496 (Land Registration Act), despite the fact the land in dispute was already titled under Act No. 496 in the names of the Aying siblings at the time the subject document was executed. In Spouses Abrigo vs. De Vera,[16] it was held that registration of instruments must be done in the proper registry, in order to affect and bind the land and, thus, operate as constructive notice to the world.[17] Therein, the Court ruled: x x x If the land is registered under the Land Registration Act (and has therefore a Torrens Title), and it is sold but the subsequent sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered REGISTERED x x x .[18]

In this case, since the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under Act No. 496, said document is deemed not registered. Accordingly, the ten-year prescriptive period cannot be reckoned from March 6, 1964, the date of registration of the subject document under Act No. 3344. The prescriptive period only began to run from the time respondents had actual notice of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. The only evidence on record as to when such prescriptive period commenced as to each of the respondents are Wenceslao Sumalinogs (heir of Roberta Aying) testimony that about three years after 1964, they already learned of the existence of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale; [19] and Laurencio Ayings (heir of Emiliano Aying) admission that he found out about the sale of the land in dispute a long time ago and can only estimate that it must be after martial law.[20] Paulino Aying (heir of Simeon Aying) gave no testimony whatsoever as to when the children of Simeon Aying actually learned of the existence of the document of sale. On the other hand, petitioner did not present any other evidence to prove the date when respondents were notified of the execution of the subject document. In view of the lack of unambiguous evidence of when the heirs of Emiliano Aying and Simeon Aying discovered the existence of the document of sale, it must be determined which party had the burden of proof to establish such fact. The test for determining where the burden of proof lies is to ask which party to an action or suit will fail if he offers no evidence competent to show the facts averred as the basis for the relief he seeks to obtain. [21] Moreover, one alleging a fact that is denied has the burden of proving it and unless the party asserting the affirmative of an issue sustains the burden of proof of that issue by a preponderance of the evidence, his cause will not succeed. [22] Thus, the defendant bears the burden of proof as to all affirmative defenses which he sets up in answer to the plaintiffs claim or cause of action; he being the party who asserts the truth of the matter he has alleged, the burden is upon him to establish the facts on which that matter is predicated and if he fails to do so, the plaintiff is entitled to a verdict or decision in his favor.[23] In the case at bar, it was petitioner, as the defendant before the RTC, which set up in its Answer the affirmative defense of prescription. It was, therefore, incumbent upon petitioner to prove the date from which the prescriptive period began to run. Evidence as to the date when the ten-year prescriptive period began exists only as to the heirs of Roberta Aying, as Wenceslao Sumalinog admitted that they learned of the existence of the document of sale in the year 1967. As to the heirs of Emiliano Aying and Simeon Aying, there is no clear evidence of the date when they discovered the document conveying the subject land to petitioner. Petitioner miserably failed to adduce proof of when the heirs of Emiliano Aying and Simeon Aying were notified of the subject document. Hence, with regard to said heirs, the Court may consider the admission in the amended complaint that they learned of the conveyance of the disputed land only in 1991 when petitioner sent notices to vacate to the occupants of the subject land, as the date from which the ten-year prescriptive period should be reckoned. Respondents filed their Amended Complaint on December 6, 1993. [24] Thus, with regard to respondent heirs of Roberta Aying who had knowledge of the conveyance as far back as 1967, their cause of action is already barred by prescription when said amended complaint was filed as they only had until 1977 within which to bring action. As to the respondent heirs of Emiliano and Simeon Aying, they were able to initiate their action for reconveyance of property based on implied or constructive trust well within the ten-year prescriptive period reckoned from 1991 when they were sent by petitioner a notice to vacate the subject property.

Evidently, laches cannot be applied against respondent heirs of Emiliano and Simeon Aying, as they took action to protect their interest well within the period accorded them by law. With regard to petitioners argument that the provision of Article 1104 of the Civil Code, stating that a partition made with preterition of any of the compulsory heirs shall not be rescinded, should be applied, suffice it to say that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is not being rescinded. In fact, its validity had been upheld but only as to the parties who participated in the execution of the same. As discussed above, what was conveyed to petitioner was ownership over the shares of the heirs who executed the subject document. Thus, the law, particularly, Article 1456 of the Civil Code, imposed the obligation upon petitioner to act as a trustee for the benefit of respondent heirs of Emiliano and Simeon Aying who, having brought their action within the prescriptive period, are now entitled to the reconveyance of their share in the land in dispute. IN VIEW OF THE FOREGOING, the petition is PARTIALLY GRANTED and the Decision of the Court of Appeals dated March 7, 2000 is MODIFIED, as follows: The amended complaint of the heirs of Roberta Aying is DISMISSED on the ground of prescription. However, the heirs of Emiliano Aying and Simeon Aying, having instituted the action for reconveyance within the prescriptive period, are hereby DECLARED as the LAWFUL OWNERS of a 2/8 portion of the parcel of land covered by Original Certificate of Title No. RO-2856. SO ORDERED. Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

[G.R. No. 128102. March 7, 2000] AZNAR BROTHERS REALTY COMPANY, petitioner, vs. COURT OF APPEALS, LUIS AYING, DEMETRIO SIDA, FELOMINO AUGUSTO, FEDERICO ABING, and ROMEO AUGUSTO, respondents. DECISION DAVIDE, JR., C.J.: This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court seeking to reverse and set aside the 26 March 1996 Decision [1] of the Court of Appeals declaring the private respondents the rightful possessors de facto of the subject lot and permanently enjoining Sheriff Juan Gato or his representative from effecting the demolition of private respondents houses. Culled from the evidence proffered by petitioner Aznar Brothers Realty Co. (hereafter AZNAR), it appears that Lot No. 4399 containing an area of 34,325 square meters located at Brgy. Mactan, Lapu-Lapu City, was acquired by AZNAR from the heirs of Crisanta Maloloy-on by virtue of an Extrajudicial Partition of Real Estate with Deed of Absolute Sale dated 3 March 1964. This deed was registered with the Register of Deeds of Lapu-Lapu City on 6 March 1964 as shown on the face thereof. After the sale, petitioner AZNAR declared this property under its name for taxation purposes and regularly paid the taxes thereon. Herein private respondents were allegedly allowed to occupy portions of Lot No. 4399 by mere tolerance provided that they leave the land in the event that the company would use the property for its purposes. Later, AZNAR entered into a joint venture with Sta. Lucia Realty Development Corporation for the development of the subject lot into a multi-million peso housing subdivision and beach resort. When its demands for the private respondents to

vacate the land failed, AZNAR filed with the Municipal Trial Court (MTCC) of Lapu-Lapu City a case for unlawful detainer and damages, which was docketed as Civil Case No. R-1027. On the other hand, the private respondents alleged that they are the successors and descendants of the eight children of the late Crisanta Maloloy-on, whose names appear as the registered owners in the Original Certificate of Title No. RC-2856. They had been residing and occupying the subject portion of the land in the concept of owner since the time of their parents and grandparents, except for Teodorica Andales who was not a resident in said premises. Private respondents claimed that the Extrajudicial Partition of Real Estate with Deed of Absolute Sale is void ab initio for being simulated and fraudulent, and they came to know of the fraud only when AZNAR entered into the land in the last quarter of 1991 and destroyed its vegetation. They then filed with the Regional Trial Court (RTC) of Lapu-Lapu City a complaint seeking to declare the subject document null and void. This case was docketed as Civil Case No. 2930-L. On 1 February 1994, the MTCC rendered a decision ordering the private respondents to (a) vacate the land in question upon the finality of the judgment; and (b) pay P8,000 as attorneys fees and P2,000 as litigation expenses, plus costs.[2] The MTCC delved into the issue of ownership in order to resolve the issue of possession. It found that petitioner AZNAR acquired ownership of Lot No. 4399 by virtue of the Extrajudicial Partition of Real Estate with Deed of Absolute Sale executed by the Heirs of Crisanta Maloloy-on on 3 March 1964, which was registered with the Register of Deeds of Lapu-Lapu City on 6 March 1964 as appearing on the face thereof. Private respondents allegation that two of the signatories were not heirs of the registered owners; that some of the signatories were already dead at the date of the execution of the deed; and that many heirs were not parties to the extrajudicial partition is a form of a negative pregnant, which had the effect of admitting that the vendors, except those mentioned in the specific denial, were heirs and had the legal right to sell the subject land to petitioner. The fact that some or most heirs had not signed the deed did not make the document null and void ab initio but only annullable, unless the action had already prescribed. Since the private respondents occupied the land merely by tolerance, they could be judicially ejected therefrom. That the Deed has not been annotated on OCT RO-2856 is of no moment, since said title was reconstituted only on 25 August 1988, while the subject Deed was executed on 3 March 1964. Lastly, the reconstituted title has not as yet been transferred to a purchaser for value. Aggrieved by the decision of the MTCC, private respondents appealed to the RTC. During the pendency of the appeal, or on 8 March 1994, the RTC, upon Aznars ex parte motion, issued an order granting the issuance of a writ of execution pursuant to Section 8, Rule 70 of the Revised Rules of Court in view of the failure of private respondents to put up a supersedeas bond. A week later, a writ of execution was issued. The sheriff then served upon private respondents the said writ of execution together with a notice to vacate. On 11 April 1994, the sheriff padlocked their houses, but later in the day, private respondents re-entered their houses. Thus, on 6 May 1994, AZNAR filed an omnibus motion for the issuance of a writ of demolition, which private respondents opposed. This motion was set for hearing three times, but the parties opted to submit a consolidated memorandum and agreed to submit the same for resolution.[3] On 22 July 1994, the RTC affirmed the decision of the MTCC and ordered the issuance of a writ of demolition directing the sheriff to demolish private respondents houses and other improvements which might be found on the subject premises.[4]

On 29 July 1994, a writ of demolition was issued, and notices of demolition were served upon private respondents. Per Sheriffs Report,[5] private respondents houses were demolished on 3 August 1994, except for two houses which were moved outside the premises in question upon the plea of the owners thereof. On appeal by the private respondents, the Court of Appeals reversed and set aside the decision of the RTC; declared the private respondents as the rightful possessors de facto of the land in question; and permanently enjoined Sheriff Juan Gato or whoever was acting in his stead from effectuating the demolition of the houses of the private respondents. In arriving at its challenged decision, the Court of Appeals noted that at the time AZNAR entered the property, the private respondents had already been in possession thereof peacefully, continuously, adversely and notoriously since time immemorial. There was no evidence that petitioner was ever in possession of the property. Its claim of ownership was based only on an Extrajudicial Partition with Deed of Absolute Sale, which private respondents, however, claimed to be null and void for being simulated and fraudulently obtained. The Court of Appeals further held that where not all the known heirs had participated in the extrajudicial agreement of partition, the instrument would be null and void and therefore could not be registered.[6] Moreover, AZNAR was estopped to assert ownership of the property in question, since it had admitted in a pleading in the reconstitution proceedings that the property had never been conveyed by the decreed owners. Additionally, from 1988 up to the filing of the ejectment case on 4 August 1993, AZNAR never registered the extrajudicial partition despite opportunities to do so. Its allegation that private respondents occupied the property by mere tolerance was not proved. Pursuant to the ruling in Vda. de Legazpi v. Avendano,[7] the fact that the right of the private respondents was so seriously placed in issue and the execution of the decision in the ejectment case would have meant demolition of private respondents houses constituted an equitable reason to suspend the enforcement of the writ of execution and order of demolition. AZNAR then elevated the case to this Court, via this petition for review on certiorari, contending that respondent Court of Appeals erred in 1. ... reversing the judgments of the Municipal Trial Court and the Regional Trial Court of Lapu-Lapu City despite the finality of the judgments and the full implementation thereof; 2. ... invoking lack of prior physical possession over the land in question by the petitioner as one ground in its Decision sought to be reviewed; 3. ... holding that the Extrajudicial Partition with Deed of Absolute Sale was null and void; 4. ...holding that petitioner was in estoppel in pais when it made the allegation that the property was not sold or encumbered in its petition for reconstitution of title; 5. ... applying the ruling in the case of Vda. de Legazpi vs. Avendano (79 SCRA 135 [1977]). We shall jointly discuss the first and fifth assigned errors for being interrelated with each other.

In its first assigned error, petitioner argues that the decision of the MTCC of Lapu-Lapu City had become final and immediately executory in view of the undisputed failure of the private respondents to post a supersedeas bond as required by Section 8, Rule 70 of the Revised Rules of Court. We do not agree. Since the private respondents had seasonably filed an appeal with the RTC of Lapu-Lapu City, the judgment of the MTCC of Lapu-Lapu City did not become final. And for reasons hereunder stated, the perfection of the appeal was enough to stay the execution of the MTCC decision. Under the former Section 8, Rule 70 of the Rules of Court, [8] if the judgment of the municipal trial court in an ejectment case is adverse to the defendant, execution shall issue immediately. To stay the immediate execution of the judgment, the defendant must (1) perfect his appeal; (2) file a supersedeas bond to answer for the rents, damages, and costs accruing down to the time of the judgment appealed from; and (3) periodically deposit the rentals falling due during the pendency of the appeal.[9] As a rule, the filing of a supersedeas bond is mandatory and if not filed, the plaintiff is entitled as a matter of right to the immediate execution of the judgment. An exception is where the trial court did not make any findings with respect to any amount in arrears, damages or costs against the defendant,[10] in which case no bond is necessary to stay the execution of the judgment. Thus, in Once v. Gonzales,[11] this Court ruled that the order of execution premised on the failure to file a supersedeas bond was groundless and void because no such bond was necessary there being no back rentals adjudged in the appealed judgment. Similarly, in the instant case, there was no need for the private respondents to file a supersedeas bond because the judgment of the MTCC did not award rentals in arrears or damages. The attorneys fees of P8,000 and the litigation expenses of P2,000 awarded in favor of the petitioner need not be covered by a bond, as these are not the damages contemplated in Section 8 of Rule 70 of the Rules of Court. The damages referred to therein are the reasonable compensation for the use and occupation of the property which are generally measured by its fair rental value and cannot refer to other damages which are foreign to the enjoyment or material possession of the property. [12] Neither were the private respondents obliged to deposit the rentals falling due during the pendency of the appeal in order to secure a stay of execution because the appealed judgment did not fix the reasonable rental or compensation for the use of the premises.[13] Hence, it was error for the RTC to order the execution of the judgment of the MTCC. At any rate, pursuant to Section 21 of the Revised Rules of Summary Procedure, the decision of the RTC affirming the decision of the MTCC has become immediately executory, without prejudice to the appeal before the Court of Appeals. The said Section repealed Section 10 of the Rules of Court allowing during the pendency of the appeal with the Court of Appeals a stay of execution of the RTC judgment with respect to the restoration of possession where the defendant makes a periodic deposit of rentals. Thus, immediate execution of the judgment becomes a ministerial duty of the court. No new writ of execution was, however, issued. Nevertheless, the writ of demolition thereafter issued was sufficient to constitute a writ of execution, as it substantially complied with the form and contents of a writ of execution as provided for under Section 8 of Rule 39 of the Rules of Court. Moreover, private respondents were duly notified and heard on the omnibus motion for the issuance of the writ of demolition and were given five days to remove their houses.[14] Invoking Legaspi v. Avendao,[15] the Court of Appeals held that there was an equitable reason to suspend the enforcement of the writ of execution and order of demolition until

after the final determination of the civil case for the nullification of the Extrajudicial Partition with Deed of Absolute Sale. In Legaspi, this Court held: Where the action ... is one of illegal detainer ... and the right of the plaintiff to recover the premises is seriously placed in issue in a proper judicial proceeding, it is more equitable and just and less productive of confusion and disturbance of physical possession, with all its concomitant inconvenience and expense [f]or the court in which the issue of legal possession, whether involving ownership or not, is brought to restrain, should a petition for preliminary injunction be filed with it, the effects of any order or decision in the unlawful detainer case in order to await the final judgment in the more substantive case involving legal possession or ownership. In the instant case, private respondents petition for review with prayer for the immediate issuance of a temporary restraining order (TRO) or preliminary injunction was mailed on 2 August 1994 but was received by the Court of Appeals only on 30 August 1994. Meanwhile, on 3 August 1994, the writ of demolition was implemented, resulting in the demolition of private respondents houses. Hence, any relevant issue arising from the issuance or enforcement of the writ had been rendered moot and academic. Injunction would not lie anymore, as the acts sought to have been enjoined had already become a fait accompli or an accomplished or consummated act. Now on the applicability to unlawful detainer cases of the requirement of prior physical possession of the disputed property. Contrary to the ruling of the Court of Appeals, prior physical possession by the plaintiff of the subject property is not an indispensable requirement in unlawful detainer cases, although it is indispensable in an action for forcible entry.[16]The lack of prior physical possession on the part of AZNAR is therefore of no moment, as its cause of action in the unlawful detainer case is precisely to terminate private respondents possession of the property in question.[17] We now come to the issue of the validity of the Extrajudicial Partition with Deed of Absolute Sale. In an action for ejectment, the only issue involved is possession de facto. However, when the issue of possession cannot be decided without resolving the issue of ownership, the court may receive evidence upon the question of title to the property but solely for the purpose of determining the issue of possession.[18] In the instant case, private respondents have set up the defense of ownership and questioned the title of AZNAR to the subject lot, alleging that the Extrajudicial Partition with Deed of Absolute Sale upon which petitioner bases its title is null and void for being simulated and fraudulently made. First, private respondents claim that not all the known heirs of Crisanta Maloloy-on participated in the extrajudicial partition, and that two persons who participated and were made parties thereto were not heirs of Crisanta. This claim, even if true, would not warrant rescission of the deed. Under Article 1104 of the Civil Code, "[a] partition made with preterition of any of the compulsory heirs shall not be rescinded, unless it be proved that there was bad faith or fraud on the part of the persons interested; but the latter shall be proportionately obliged to pay to the person omitted the share which belongs to him." In the present case, no evidence of bad faith or fraud is extant from the records. As to the two parties to the deed who were allegedly not heirs, Article 1105 is in point; it provides: "A

partition which includes a person believed to be an heir, but who is not, shall be void only with respect to such person." In other words, the participation of non-heirs does not render the partition void in its entirety but only to the extent corresponding to them. Private respondents also allege that some of the persons who were made parties to the deed were already dead, while others were still minors. Moreover, the names of some parties thereto were misspelled, and others who knew how to read and write their names were made to appear to have affixed only their thumbmark in the questioned document. Likewise, the signatures of those who were made parties were forged. The foregoing are bare allegations with no leg to stand on. No birth or death certificates were presented before the MTCC to support the allegations that some of the parties to the deed were minors and others were already dead at the time of the execution of the deed. What private respondents adduced as evidence was merely a family tree, which was at most self-serving. It was only when the case was on appeal with the RTC that the private respondents presented as Annex "B" of their Memorandum and Appeal Brief a photocopy of the certificate of death of Francisco Aying, [19] son of Crisanta Maloloy-on, who reportedly died on 7 March 1963. This certificate was allegedly issued on 17 January 1992 by the Parish Priest of Virgen de Regla Parish, Lapu-Lapu City. The fact remains, however, that this photocopy was not certified to be a true copy. It is worthy to note that the Extrajudicial Partition with Deed of Absolute Sale is a notarized document. As such, it has in its favor the presumption of regularity, and it carries the evidentiary weight conferred upon it with respect to its due execution. [20] It is admissible in evidence without further proof of authenticity[21] and is entitled to full faith and credit upon its face.[22] He who denies its due execution has the burden of proving that contrary to the recital in the Acknowledgment he never appeared before the notary public and acknowledged the deed to be his voluntary act.[23] It must also be stressed that whoever alleges forgery has the burden of proving the same. Forgery cannot be presumed but should be proved by clear and convincing evidence.[24] Private respondents failed to discharge this burden of proof; hence, the presumption in favor of the questioned deed stands. Private respondents contend that there was violation of the Notarial Law because the lawyer who prepared and notarized the document was AZNARs representative in the execution of the said document. Under Section 22 of the Spanish Notarial Law of 1889, a notary public could not authenticate a contract which contained provisions in his favor or to which any of the parties interested is a relative of his within the fourth civil degree or second degree of affinity; otherwise, pursuant to Section 28 thereof, the document would not have any effect. This rule on notarial disqualification no longer holds true with the enactment of Act No. 496, which repealed the Spanish Notarial Law.[25] Under the Notarial Law in force at the time of the notarization of the questioned deed, Chapter 11 of the Revised Administrative Code, only those who had been convicted of any crime involving moral turpitude were disqualified to notarize documents. Thus, a representative of a person in whose favor a contract was executed was not necessarily so disqualified. Besides, there is no proof that Atty. Ramon Igaa was a representative of petitioner in 1964; what appears on record is that he was the Chief of the petitioners Legal Department in 1993. Additionally, this alleged violation of the Notarial Law was raised only now. Anent the non- annotation of the Extrajudicial Partition with Deed of Absolute Sale in the reconstituted Original Certificate of Title No. RO-2856, the same does not render the deed legally defective. It must be borne in mind that the act of registering a document is never necessary to give the conveyance legal effect as between the parties [26] and the vendors heirs. As between the parties to a sale, registration is not indispensable to make it valid and effective. The peculiar force of a title is exhibited only when the purchaser has sold to

innocent third parties the land described in the conveyance. The purpose of registration is merely to notify and protect the interests of strangers to a given transaction, who may be ignorant thereof, and the non-registration of the deed evidencing said transaction does not relieve the parties thereto of their obligations thereunder. [27] Here, no right of innocent third persons or subsequent transferees of the subject lot is involved; thus, the conveyance executed in favor of AZNAR by private respondents and their predecessors is valid and binding upon them, and is equally binding and effective against their heirs. [28] The principle that registration is the operative act that gives validity to the transfer or creates a lien upon the land "refers to cases involving conflicting rights over registered property and those of innocent transferees who relied on the clean title of the properties."[29] This principle has no bearing on the present case, as no subsequent transfer of the subject lot to other persons has been made either by private respondents or their predecessors-in-interest.[30] By and large, it appears on the face of the Extrajudicial Partition with Deed of Absolute Sale that the same was registered on 6 March 1964. The registration was under Act No. 3344 on unregistered lands allegedly because at the time, no title was existing in the files of the Register of Deeds of Lapu-Lapu City, as it was allegedly lost during the last world war. It was only on 8 August 1988 that the title was reconstituted at the instance of the petitioner. As to the fourth assigned error, we do not agree with the Court of Appeals and the private respondents that petitioner is in estoppel to assert ownership over the subject property because of petitioners own allegation in the petition for reconstitution, to wit: That certificates of title were issued thereto but were lost during the last world war. That the same were not conveyed much less offered as a collateral for any debt contracted or delivered for the security of payment of any obligation in favor of any person or lending institution. The words "the same" in the second sentence of the afore-quoted paragraph clearly refers to the certificates of title. This means that the certificates of title, not necessarily the subject lot, were not conveyed or offered as a collateral but were lost during the last world war. Indeed, as petitioner contends, it would be very absurd and self-defeating construction if we were to interpret the above-quoted allegation in the manner that the Court of Appeals and the private respondents did, for how could petitioner, who is claiming ownership over the subject property, logically allege that the property was not sold to it? It bears repeating that petitioners claim of possession over the subject lot is anchored on its claim of ownership on the basis of the Extrajudicial Partition with Deed of Absolute Sale. Our ruling on the issue of the validity of the questioned deed is solely for the purpose of resolving the issue of possession and is to be regarded merely as provisional, without prejudice, however, to the final determination of the issue in the other case for the annulment or cancellation of the Extrajudicial Partition with Deed of Absolute Sale. WHEREFORE, the petition is GRANTED. The challenged decision of public respondent Court of Appeals in CA-G.R. SP No. 35060 is hereby REVERSED, and the decision of the Regional Trial Court, Branch 27, Lapu-Lapu City, is REINSTATED. No pronouncement as to costs. SO ORDERED.

Puno, Kapunan, Pardo, and Ynares-Santiago, JJ., concur.

FIRST DIVISION [G.R. NO. 153625 : July 31, 2006] Heirs of MARCELINO CABAL, represented by VICTORIA CABAL, Petitioner, v.Spouses LORENZO CABAL1 and ROSITA CABAL, Respondents. DECISION AUSTRIA-MARTINEZ, J.: Before the Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision2 of the Court of Appeals (CA) dated September 27, 2001 in CA-G.R. SP No. 64729 which affirmed in toto the Decision of the Regional Trial Court, Branch 70, Iba, Zambales (RTC) dated August 10, 2000 in Civil Case No. RTC-1489-I; and the CA Resolution3 dated May 22, 2002 which denied the Motion for Reconsideration of Marcelino Cabal (Marcelino). The factual background of the case is as follows: During his lifetime, Marcelo Cabal (Marcelo) was the owner of a 4,234-square meter parcel of land situated at Barrio Palanginan, Iba, Zambales, described as Lot G and covered by Original Certificate of Title (OCT) No. 29 of the Registry of Deeds of Zambales. Sometime in August 1954,4 Marcelo died, survived by his wife Higinia Villanueva (Higinia) and his children: Marcelino, Daniel, Cecilio, Natividad, Juan, Margarita, Lorenzo, Lauro and Anacleto.5 It appears that sometime in 1949, five years before he died, Marcelo allowed his son, Marcelino, to build his house on a portion of Lot G, now the southernmost portion of Lot 1-E of Transfer Certificate of Title (TCT) No. 43419.6Since then, Marcelino resided thereon.7 Later, Marcelino's son also built his house on the disputed property. 8 On August 17, 1964, Marcelo's heirs extra-judicially settled among themselves Lot G into undivided equal shares of 423.40-square meters each and Transfer Certificate of Title (TCT) No. T-8635 was issued in their names.9 On September 17, 1973, Daniel sold 380 square meters of his 423.40-square meter undivided share to spouses Oscar Merete and Clarita Ebue.10 On September 12, 1976, the heirs subdivided Lot G into Lot G-1 in favor of Marcelino, resulting in the issuance of TCT No. T-22656;11 and Lot G-2 in favor of Higinia, Daniel, Natividad, Juan, Cecilio, Margarita, Lorenzo, Lauro and Anacleto, resulting in the issuance of TCT No. 22657.12

On March 1, 1977, Marcelino mortgaged his share, as described under TCT No. 22656, to the Rural Bank of San Antonio (Zambales), Inc.13 The mortgage on the property was subsequently released on December 19, 1983.14 In the interim, based on consolidated subdivision plan (LRC) Pcd-24078, Lot G-2 was further subdivided and the remaining portion, known as Lot 1 of the subdivision plan, comprising 3387.20 square meters, became subject of TCT No. T-24533 with Higinia, Margarita, Natividad, Lorenzo, Daniel, Oscar Merete, Cecilio, Carmelita C. Pagar, and Anacleto as coowners. On August 3, 1978, the co-owners of Lot 1 executed a Deed of Agreement of Partition with Sale. Lot 1 was subdivided among the co-owners with Higinia, Margarita, Natividad, Lorenzo, Cecilio, Carmelita C. Pagar and Anacleto, receiving 423.40 square meters each; Daniel, with 43.4 square meters; and Oscar Merete, with 380 square meters. 15 In the same deed, Lorenzo bought the shares of Higinia, Margarita, Daniel and Natividad. 16Thus, Lorenzo's share in the co-ownership amounted to 1,737 square meters. Likewise, in the same deed, Cecilio sold his share to a certain Marcela B. Francia.17 On January 13, 1982, a land survey was conducted on Lot 1 by Geodetic Engineer Dominador L. Santos and Junior Geodetic Engineer Eufemio A. Abay and based on the survey, they submitted subdivision survey plan (LRC) Psd-307100, designating the shares of Carmelita C. Pagar, Marcela B. Francia, spouses Oscar Merete and Clarita Ebue, Anacleto, and Lorenzo as Lots 1-A, 1-B, 1-C, 1-D and 1-E, respectively. 18 The subdivision survey plan of Lot 1 was approved by the Director of the Bureau of Lands on May 7, 1982. 19 On June 7, 1990, the co-owners of Lot 1 executed a Subdivision Agreement designating their shares based on the approved subdivision plan.20 On July 13, 1993, TCT No. 43419 covering Lot 1-E was issued in the name of Lorenzo.21 In the meantime, since the subdivision plan revealed that Marcelino and his son occupied and built their houses on a 423-square meter area located on the southernmost portion of Lot 1-E and not the adjacent lot designated as Lot G-1 under TCT No. T-22656, 22 the spouses Lorenzo and Rosita Cabal (respondents) confronted Marcelino on this matter which resulted to an agreement on March 1, 1989 to a re-survey and swapping of lots for the purpose of reconstruction of land titles.23 However, the agreed resurvey and swapping of lots did not materialize24 and efforts to settle the dispute in the barangay level proved futile.25 Hence, on August 10, 1994, respondents filed a complaint for Recovery of Possession with Damages against Marcelino before the Municipal Trial Court of Iba, Zambales (MTC), docketed as Civil Case No. 735. They alleged that Marcelino introduced improvements in bad faith on their land with knowledge that the adjacent lot is titled in his name. 26 On August 26, 1994, Marcelino filed his Answer with Counterclaim, contending that respondents have no cause of action against him because he has been in possession in good faith since 1949 with the respondents' knowledge and acquiescence. He further avers that acquisitive prescription has set in.27 On January 24, 1997, during the pendency of the trial of the case, Lorenzo died. Following trial on the merits, the MTC rendered on November 19, 1997 its Decision 28 in favor of Marcelino, the dispositive portion of which reads: WHEREFORE, on the basis of the foregoing premises as adduced by this Court the plaintiff or their representatives are hereby directed to relinquish the possession of said property subject matter of this case and deliver the peaceful possession of the same to the herein defendant or his authorized representatives, to remove the improvements made thereon

within fifteen (15) days from the receipt of this decision, otherwise, this Court would remove and/or destroy the same with cost against the plaintiff, further the plaintiff is hereby ordered to pay the amount of Ten Thousand Pesos (P10,000.00), Philippine Currency representing moral damages and exemplary damages in the amount of Five Thousand Pesos (P5,000.00), Philippine Currency, and the amount of Twenty Thousand Pesos (P20,000.00), Philippine Currency, representing attorney's fees. SO ORDERED.29 The MTC reasoned that prescription or the length of time by which Marcelino has held or possessed the property has barred the respondents from filing a claim. On December 12, 1997, respondents filed a Motion for Reconsideration 30 but the MTC denied it in its Order dated February 5, 1998.31 Dissatisfied, respondents filed an appeal with the RTC Branch 70, Iba, Zambales, docketed as RTC-1489-I. On August 10, 2000, the RTC rendered its Decision setting aside the Decision of the MTC.32 The dispositive portion of the Decision states: WHEREFORE, the appealed Decision of the Municipal Trial Court is hereby REVERSED and SET ASIDE ordering the defendant Marcelino Cabal and all other persons claiming interest under him to vacate and deliver peaceful possession of the disputed area of 423 sq. m. within Lot 1-E embraced in TCT No. T-43419 to the plaintiffs-appellants; to remove all improvements therein introduced by said defendant or by persons under his direction and authority; to pay the plaintiffs-appellants P10,000.00 and P5,000.00 by way of moral and exemplary damages, respectively; to pay plaintiff-appellants attorney's fee in the sum ofP20,000.00 and cost of this suit. SO ORDERED.33 In reversing the MTC, the RTC held that Marcelino's possession was in the concept of a coowner and therefore prescription does not run in his favor; that his possession, which was tolerated by his co-owners, does not ripen into ownership. On August 30, 2000, Marcelino filed a Motion for Reconsideration 34 but the RTC denied it in its Order dated May 3, 2001.35 On May 18, 2001, Marcelino filed a Petition for Review with the CA, docketed as CA-G.R. SP No. 64729.36 Marcelino, however, died during the pendency of the case. On September 27, 2001, the CA rendered its Decision affirming in toto the Decision of the RTC.37 In sustaining the RTC, the CA held that Marcelino may have been in good faith when he started to occupy the disputed portion in 1949 but his occupation in good faith diminished after Lot G was surveyed when he was apprised of the fact that the portion he was occupying was not the same as the portion titled in his name; that from the tenor of the Petition for Review Marcelino would like to hold on to both the lot he occupies and Lot G-1, which cannot be allowed since it will double his inheritance to the detriment of his brother Lorenzo. On November 13, 2001, Marcelino's counsel filed a Motion for Reconsideration 38 but the CA denied it in its Resolution dated May 22, 2002.39

On June 6, 2002, the heirs of Marcelino (petitioners), represented by his widow, Victoria Cabal, filed the present petition anchored on the following grounds: I. CONTRARY TO THE COURT OF APPEALS' FINDINGS AND CONCLUSION, PETITIONER NEVER INTENDED AND NEITHER DOES HE INTEND TO HOLD ON TO BOTH THE 423 SQUARE METER WITHIN LOT 1-E WHICH HE IS OCCUPYING AND LOT 1-G (sic). PETITIONER IS ONLY INTERESTED IN THE DISPUTED PROPERTY, THAT IS, A PORTION OF LOT 1-E BECAUSE THIS IS WHERE HE INTRODUCED CONSIDERABLE IMPROVEMENTS IN GOOD FAITH. II. THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT RULED THAT THE GOOD FAITH OF PETITIONER ON THE DISPUTED PROPERTY BEGAN TO DIMINISH AFTER LOT-G WAS SURVEYED.40 Anent the first ground, petitioners contend that since 1949 Marcelino has claimed no other portion as his inheritance from Marcelo, except the disputed lot; that Marcelino believed in good faith that the disputed lot is Lot G-1; that Marcelino never intended to hold on to both lots since he did not introduce any improvement on Lot G-1 and he even agreed to a resurvey, swapping of lots and reconstruction of title after discovery of the mistake in 1989; that Marcelino wanted the disputed lot because he has introduced considerable improvements thereon. On the second ground, petitioners maintain that Marcelino became aware of the flaw in his title only before the execution of the swapping agreement in March 1, 1989, long after he had introduced considerable improvements in the disputed lot; that Marcelino should not be faulted for believing that the disputed lot is his titled property because he is a layman, not versed with the technical description of properties; that Marcelino should be adjudged a builder in good faith of all the improvements built on the disputed property immediately prior to the execution of the swapping agreement and accorded all his rights under the law or, alternatively, the swapping of lots be ordered since no improvements have been introduced on Lot G-1. Respondents, on the other hand, submit that Marcelino cannot be adjudged a builder in good faith since he exhibited blatant and deliberate bad faith in dealing with respondents. The Court rules in favor of the petitioners. As a general rule, in petitions for review, the jurisdiction of this Court in cases brought before it from the CA is limited to reviewing questions of law which involves no examination of the probative value of the evidence presented by the litigants or any of them. 41 The Supreme Court is not a trier of facts; it is not its function to analyze or weigh evidence all over again.42 Accordingly, findings of fact of the appellate court are generally conclusive on the Supreme Court.43 Nevertheless, jurisprudence has recognized several exceptions in which factual issues may be resolved by this Court, such as: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts ; (5) when the findings of facts are conflicting; (6) when in making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of fact are premised on the supposed absence of

evidence and contradicted by the evidence on record; (11) when the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion .44 The Court finds that exceptions (1), (2), (4) and (11) apply to the present petition. It is undisputed that Marcelino built his house on the disputed property in 1949 with the consent of his father. Marcelino has been in possession of the disputed lot since then with the knowledge of his co-heirs, such that even before his father died in 1954, when the coownership was created, his inheritance or share in the co-ownership was already particularly designated or physically segregated. Thus, even before Lot G was subdivided in 1976, Marcelino already occupied the disputed portion and even then co-ownership did not apply over the disputed lot. Elementary is the rule that there is no co-ownership where the portion owned is concretely determined and identifiable, though not technically described, 45 or that said portion is still embraced in one and the same certificate of title does make said portion less determinable or identifiable, or distinguishable, one from the other, nor that dominion over each portion less exclusive, in their respective owners. 46 Thus, since Marcelino built a house and has been occupying the disputed portion since 1949, with the consent of his father and knowledge of the co-heirs, 47 it would have been just and equitable to have segregated said portion in his favor and not one adjacent to it. Undoubtedly, the subdivision survey effected in 1976 spawned the dilemma in the present case. It designated Lot G-1 as Marcelino's share in the inheritance notwithstanding his possession since 1949 of a definite portion of Lot G, now the southernmost portion of Lot 1E. Marcelino raised the defense of acquisitive prescription, in addition to possession in good faith, in his Answer to the Complaint in the MTC. Prescription, in general, is a mode of acquiring or losing ownership and other real rights through the lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse.48 Acquisitive prescription is either ordinary or extraordinary.49 Ordinary acquisitive prescription requires possession in good faith and with just title50 for ten years.51 In extraordinary prescription ownership and other real rights over immovable property are acquired through uninterrupted adverse possession thereof for thirty years, without need of title or of good faith. 52 In the present case, the evidence presented during the trial proceedings in the MTC were sorely insufficient to prove that acquisitive prescription has set in with regards to the disputed lot. The tax declaration53 and receipts54 presented in evidence factually established only that Marcelino had been religiously paying realty taxes on Lot G-1. Tax declarations and receipts can only be the basis of a claim of ownership through prescription when coupled with proof of actual possession.55 Evidently, Marcelino declared and paid realty taxes on property which he did not actually possess as he took possession of a lot eventually identified as the southernmost portion of Lot 1-E of subdivision plan (LRC) Psd-307100. Furthermore, the Court notes that Marcelino no longer invoked prescription in his pleadings before the RTC56 and CA;57 neither did herein petitioners raise prescription in their petition58 and memorandum59 before this Court. They only extensively discussed the defense of possession in good faith. They are thus deemed to have abandoned the defense of prescription. The Court shall now delve on the applicability of the principle of possession in good faith. It has been said that good faith is always presumed, and upon him who alleges bad faith on the part of the possessor rests the burden of proof.60 Good faith 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 individual's 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.61 The essence of good faith lies in an honest belief in the validity of one's right, ignorance of a superior claim, and absence of intention to overreach another.62 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. 63 In the present case, Marcelino's possession of the disputed lot was based on a mistaken belief that Lot G-1 is the same lot on which he has built his house with the consent of his father. There is no evidence, other than bare allegation, that Marcelino was aware that he intruded on respondents' property when he continued to occupy and possess the disputed lot after partition was effected in 1976. Moreover, the fact that in 1977 Marcelino mortgaged Lot G-1 subject of TCT No. 22656 is not an indication of bad faith since there is no concrete evidence that he was aware at that time that the property covered by the title and the one he was occupying were not the same. There is also no evidence that he introduced improvements on Lot G-1. In fact, the agreement on March 1, 1989 to a resurvey and swapping of lots for the purpose of reconstructing the land titles is substantial proof of Marcelino's good faith, sincerity of purpose and lack of intention to hold on to two lots. Thus, the CA's conclusion that Marcelino intended to hold on to both the disputed lot and Lot G-1 is pure speculation, palpably unsupported by the evidence on record. Marcelino is deemed a builder in good faith64 at least until the time he was informed by respondents of his encroachment on their property.65 When a person builds in good faith on the land of another, the applicable provision is Article 448, which reads: 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 54666 and 548,67 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. Thus, 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. The owner of the land may also oblige the builder, planter or sower to purchase and pay the price of the land. If the owner chooses to sell his land, the builder, planter or sower must purchase the land, otherwise the owner may remove the improvements thereon. The builder, planter or sower, however, is not obliged to purchase the land if its value is considerably more than the building, planting or sowing. In such case, the builder, planter or sower must pay rent to the owner of the land. If the parties cannot come to terms over the conditions of the lease, the court must fix the terms thereof.

The right to choose between appropriating the improvement or selling the land on which the improvement stands to the builder, planter or sower, is given to the owner of the land. 68 In accordance with Depra v. Dumlao, 69 this case must be remanded to the trial court to determine matters necessary for the proper application of Article 448 in relation to Articles 546 and 548. Such matters include the option that respondents would take and the amount of indemnity that they would pay, should they decide to appropriate the improvements on the lots. The Court notes that petitioners' alternative prayer that swapping of lots be ordered because no improvements have been introduced on Lot G-1. This cannot be granted. Respondents and Marcelino, petitioners' predecessor-in-interest, did not pray for swapping of lots in all their pleadings below. Both parties also did not allege the existence of a swapping agreement in their initial pleadings, much less pursue the enforcement of the swapping agreement. They are deemed to have renounced or abandoned any enforceable right they had under the swapping agreement and the parties cannot be compelled to a swapping of lots. WHEREFORE, the instant petition is GRANTED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 64729 are REVERSED and SET ASIDE. The case is REMANDED to the court of origin for further proceedings to determine the facts essential to the proper application of Article 448 in relation to Articles 546 and 548 of the Civil Code. No pronouncement as to costs.

FIRST DIVISION ARNELITO ADLAWAN, Petitioner, G.R. No. 161916 Present: Panganiban, C.J. (Chairman), Ynares-Santiago, Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ. Promulgated: January 20, 2006

- versus -

EMETERIO M. ADLAWAN and NARCISA M. ADLAWAN, Respondents.

x ---------------------------------------------------------------------------------------- x DECISION YNARES-SANTIAGO, J.: Assailed in this petition for review is the September 23, 2003 Decision [1] of the Court of Appeals in CA-G.R. SP No. 74921 which set aside the September 13, 2002 Decision[2] of the Regional Trial Court (RTC) of Cebu City, Branch 7, in Civil Case No. CEB-27806, and

reinstated the February 12, 2002 Judgment [3] of the Municipal Trial Court (MTC) of Minglanilla, Metro Cebu, in Civil Case No. 392, dismissing petitioner Arnelito Adlawans unlawful detainer suit against respondents Emeterio and Narcisa Adlawan. Likewise questioned is the January 8, 2004 Resolution [4] of the Court of Appeals which denied petitioners motion for reconsideration. The instant ejectment suit stemmed from the parties dispute over Lot 7226 and the house built thereon, covered by Transfer Certificate of Title No. 8842, [5]registered in the name of the late Dominador Adlawan and located at Barrio Lipata, Municipality of Minglanilla, Cebu. In his complaint, petitioner claimed that he is an acknowledged illegitimate child[6] of Dominador who died on May 28, 1987 without any other issue. Claiming to be the sole heir of Dominador, he executed an affidavit adjudicating to himself Lot 7226 and the house built thereon.[7] Out of respect and generosity to respondents who are the siblings of his father, he granted their plea to occupy the subject property provided they would vacate the same should his need for the property arise. Sometime in January 1999, he verbally requested respondents to vacate the house and lot, but they refused and filed instead an action for quieting of title [8] with the RTC. Finally, upon respondents refusal to heed the last demand letter to vacate dated August 2, 2000, petitioner filed the instant case on August 9, 2000.[9] On the other hand, respondents Narcisa and Emeterio, 70 and 59 years of age, respectively,[10] denied that they begged petitioner to allow them to stay on the questioned property and stressed that they have been occupying Lot 7226 and the house standing thereon since birth. They alleged that Lot 7226 was originally registered in the name of their deceased father, Ramon Adlawan [11] and the ancestral house standing thereon was owned by Ramon and their mother, Oligia Maacap Adlawan. The spouses had nine[12] children including the late Dominador and herein surviving respondents Emeterio and Narcisa. During the lifetime of their parents and deceased siblings, all of them lived on the said property. Dominador and his wife, Graciana Ramas Adlawan, who died without issue, also occupied the same.[13] Petitioner, on the other hand, is a stranger who never had possession of Lot 7226. Sometime in 1961, spouses Ramon and Oligia needed money to finance the renovation of their house. Since they were not qualified to obtain a loan, they transferred ownership of Lot 7226 in the name of their son Dominador who was the only one in the family who had a college education. By virtue of a January 31, 1962 simulated deed of sale, [14] a title was issued to Dominador which enabled him to secure a loan with Lot 7226 as collateral. Notwithstanding the execution of the simulated deed, Dominador, then single, never disputed his parents ownership of the lot. He and his wife, Graciana, did not disturb respondents possession of the property until they died on May 28, 1987 and May 6, 1997, respectively. Respondents also contended that Dominadors signature at the back of petitioners birth certificate was forged, hence, the latter is not an heir of Dominador and has no right to claim ownership of Lot 7226.[15] They argued that even if petitioner is indeed Dominadors acknowledged illegitimate son, his right to succeed is doubtful because Dominador was survived by his wife, Graciana.[16] On February 12, 2002, the MTC dismissed the complaint holding that the establishment of petitioners filiation and the settlement of the estate of Dominador are conditions precedent to the accrual of petitioners action for ejectment. It added that since Dominador was survived by his wife, Graciana, who died 10 years thereafter, her legal heirs are also entitled to their share in Lot 7226. The dispositive portion thereof, reads:

In View of the foregoing, for failure to prove by preponderance of evidence, the plaintiffs cause of action, the above-entitled case is hereby Ordered DISMISSED. SO ORDERED.[17] On appeal by petitioner, the RTC reversed the decision of the MTC holding that the title of Dominador over Lot 7226 cannot be collaterally attacked. It thus ordered respondents to turn over possession of the controverted lot to petitioner and to pay compensation for the use and occupation of the premises. The decretal portion thereof, provides: Wherefore, the Judgment, dated February 12, 2002, of the Municipal Trial Court of Minglanilla, Cebu, in Civil Case No. 392, is reversed. Defendants-appellees are directed to restore to plaintiff-appellant possession of Lot 7226 and the house thereon, and to pay plaintiff-appellant, beginning in August 2000, compensation for their use and occupation of the property in the amount of P500.00 a month. So ordered.[18] Meanwhile, the RTC granted petitioners motion for execution pending appeal[19] which was opposed by the alleged nephew and nieces of Graciana in their motion for leave to intervene and to file an answer in intervention. [20] They contended that as heirs of Graciana, they have a share in Lot 7226 and that intervention is necessary to protect their right over the property. In addition, they declared that as co-owners of the property, they are allowing respondents to stay in Lot 7226 until a formal partition of the property is made. The RTC denied the motion for leave to intervene. [21] It, however, recalled the order granting the execution pending appeal having lost jurisdiction over the case in view of the petition filed by respondents with the Court of Appeals. [22] On September 23, 2003, the Court of Appeals set aside the decision of the RTC and reinstated the judgment of the MTC. It ratiocinated that petitioner and the heirs of Graciana are co-owners of Lot 7226. As such, petitioner cannot eject respondents from the property via an unlawful detainer suit filed in his own name and as the sole owner of the property. Thus WHEEFORE, premises considered, the appealed Decision dated September 13, 2002 of the Regional Trial Court of Cebu City, Branch 7, in Civil Case No. CEB-27806 is REVERSED and SET ASIDE, and the Judgment dated February 12, 2002 of the Municipal Trial Court of Minglanilla, Metro Cebu, in Civil Case No. 392 is REINSTATED. Costs against the respondent. SO ORDERED.[23] Petitioners motion for reconsideration was denied. Hence, the instant petition. The decisive issue to be resolved is whether or not petitioner can validly maintain the instant case for ejectment. Petitioner averred that he is an acknowledged illegitimate son and the sole heir of Dominador. He in fact executed an affidavit adjudicating to himself the controverted property. In ruling for the petitioner, the RTC held that the questioned January 31, 1962 deed of sale validly transferred title to Dominador and that petitioner is his acknowledged

illegitimate son who inherited ownership of the questioned lot. The Court notes, however, that the RTC lost sight of the fact that the theory of succession invoked by petitioner would end up proving that he is not the sole owner of Lot 7226. This is so because Dominador was survived not only by petitioner but also by his legal wife, Graciana, who died 10 years after the demise of Dominador on May 28, 1987.[24] By intestate succession, Graciana and petitioner became co-owners of Lot 7226. [25] The death of Graciana on May 6, 1997, did not make petitioner the absolute owner of Lot 7226 because the share of Graciana passed to her relatives by consanguinity and not to petitioner with whom she had no blood relations. The Court of Appeals thus correctly held that petitioner has no authority to institute the instant action as the sole owner of Lot 7226. Petitioner contends that even granting that he has co-owners over Lot 7226, he can on his own file the instant case pursuant to Article 487 of the Civil Code which provides: ART. 487. Any one of the co-owners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession. Article 487 includes forcible entry and unlawful detainer ( accion interdictal), recovery of possession (accion publiciana), and recovery of ownership (accion de reivindicacion).[26] A co-owner may bring such an action without the necessity of joining all the other co-owners as coplaintiffs because the suit is presumed to have been filed to benefit his co-owners. It should be stressed, however, that where the suit is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession of the litigated property, the action should be dismissed.[27] The renowned civilist, Professor Arturo M. Tolentino, explained A co-owner may bring such an action, without the necessity of joining all the other co-owners as co-plaintiffs, because the suit is deemed to be instituted for the benefit of all. If the action is for the benefit of the plaintiff alone, such that he claims possession for himself and not for the coownership, the action will not prosper. (Emphasis added)[28] In Baloloy v. Hular,[29] respondent filed a complaint for quieting of title claiming exclusive ownership of the property, but the evidence showed that respondent has coowners over the property. In dismissing the complaint for want of respondents authority to file the case, the Court held that Under Article 487 of the New Civil Code, any of the co-owners may bring an action in ejectment. This article covers all kinds of actions for the recovery of possession, including anaccion publiciana and a reinvidicatory action. A co-owner may bring such an action without the necessity of joining all the other co-owners as co-plaintiffs because the suit is deemed to be instituted for the benefit of all. Any judgment of the court in favor of the coowner will benefit the others but if such judgment is adverse, the same cannot prejudice the rights of the unimpleaded co-owners. If the action is for the benefit of the plaintiff alone who claims to be the sole owner and entitled to the possession thereof, the action will not prosper unless he impleads the other co-owners who are indispensable parties. In this case, the respondent alone filed the complaint, claiming sole ownership over the subject property and praying that he be declared the sole owner thereof. There is no proof that the other co-owners had waived their rights over the subject property or conveyed the same to the respondent or such co-owners were aware of the case in the trial court. The trial court

rendered judgment declaring the respondent as the sole owner of the property and entitled to its possession, to the prejudice of the latters siblings. Patently then, the decision of the trial court is erroneous. Under Section 7, Rule 3 of the Rules of Court, the respondent was mandated to implead his siblings, being co-owners of the property, as parties. The respondent failed to comply with the rule. It must, likewise, be stressed that the Republic of the Philippines is also an indispensable party as defendant because the respondent sought the nullification of OCT No. P-16540 which was issued based on Free Patent No. 384019. Unless the State is impleaded as party-defendant, any decision of the Court would not be binding on it. It has been held that the absence of an indispensable party in a case renders ineffective all the proceedings subsequent to the filing of the complaint including the judgment. The absence of the respondents siblings, as parties, rendered all proceedings subsequent to the filing thereof, including the judgment of the court, ineffective for want of authority to act, not only as to the absent parties but even as to those present.[30] In the instant case, it is not disputed that petitioner brought the suit for unlawful detainer in his name alone and for his own benefit to the exclusion of the heirs of Graciana as he even executed an affidavit of self- adjudication over the disputed property. It is clear therefore that petitioner cannot validly maintain the instant action considering that he does not recognize the co-ownership that necessarily flows from his theory of succession to the property of his father, Dominador. In the same vein, there is no merit in petitioners claim that he has the legal personality to file the present unlawful detainer suit because the ejectment of respondents would benefit not only him but also his alleged co-owners. However, petitioner forgets that he filed the instant case to acquire possession of the property and to recover damages. If granted, he alone will gain possession of the lot and benefit from the proceeds of the award of damages to the exclusion of the heirs of Graciana. Hence, petitioner cannot successfully capitalize on the alleged benefit to his co-owners. Incidentally, it should be pointed out that in default of the said heirs of Graciana, whom petitioner labeled as fictitious heirs, the State will inherit her share [31] and will thus be petitioners co-owner entitled to possession and enjoyment of the property. The present controversy should be differentiated from the cases where the Court upheld the right of a co-owner to file a suit pursuant to Article 487 of the Civil Code. In Resuena v. Court of Appeals,[32] and Sering v. Plazo,[33] the co-owners who filed the ejectment case did not represent themselves as the exclusive owner of the property. In Celino v. Heirs of Alejo and Teresa Santiago ,[34] the complaint for quieting of title was brought in behalf of the co-owners precisely to recover lots owned in common. [35] Similarly in Vencilao v. Camarenta,[36] the amended complaint specified that the plaintiff is one of the heirs who co-owns the controverted properties. In the foregoing cases, the plaintiff never disputed the existence of a co-ownership nor claimed to be the sole or exclusive owner of the litigated lot. A favorable decision therein would of course inure to the benefit not only of the plaintiff but to his co-owners as well. The instant case, however, presents an entirely different backdrop as petitioner vigorously asserted absolute and sole ownership of the questioned lot. In his complaint, petitioner made the following allegations, to wit: 3. The plaintiff was the only son (illegitimate) and sole heir of the late DOMINADOR ADLAWAN who died intestate on 28 May 1987 without any other descendant nor ascendant x x x.

xxxx 5. Being the only child/descendant and, therefore, sole heir of the deceased Dominador Adlawan, the plaintiff became the absolute owner, and automatically took POSSESSION, of the aforementioned house and lot x x x. (Emphasis added)[37] Clearly, the said cases find no application here because petitioners action operates as a complete repudiation of the existence of co-ownership and not in representation or recognition thereof. Dismissal of the complaint is therefore proper. As noted by Former Supreme Court Associate Justice Edgrado L. Paras [i]t is understood, of course, that the action [under Article 487 of the Civil Code] is being instituted for all. Hence, if the co-owner expressly states that he is bringing the case only for himself, the action should not be allowed to prosper.[38] Indeed, respondents not less than four decade actual physical possession of the questioned ancestral house and lot deserves to be respected especially so that petitioner failed to show that he has the requisite personality and authority as co-owner to file the instant case. Justice dictates that respondents who are now in the twilight years of their life be granted possession of their ancestral property where their parents and siblings lived during their lifetime, and where they, will probably spend the remaining days of their life. WHEREFORE, the petition is DENIED. The September 23, 2003 Decision of the Court of Appeals in CA-G.R. SP No. 74921 which reinstated the February 12, 2002 Judgment of the Municipal Trial Court of Minglanilla, Metro Cebu, dismissing petitioners complaint in Civil Case No. 392, and its January 8, 2004 Resolution, are AFFIRMED. SO ORDERED. CONSUELO YNARES-SANTIAGO Associate Justice WE CONCUR:

ARTEMIO V. PANGANIBAN Chief Justice

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

ROMEO J. CALLEJO, SR. Associate Justice

MINITA V. CHICO-NAZARIO Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, 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 opinion of the Courts Division.

ARTEMIO V. PANGANIBAN Chief Justice