August 2010 Philippine Supreme Court Decisions on Civil Law

Here are selected August 2010 rulings of the Supreme Court of the Philippines on civil law:

Civil Code

Contract; novation; requirements; novation cannot be presumed.  As a civil law concept, novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which terminates it, either by changing its objects or principal conditions, or by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. Novation may be extinctive or modificatory.  It is extinctive when an old obligation is terminated by the creation of a new one that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent that it remains compatible with the amendatory agreement. Novation may either be express, when the new obligation declares in unequivocal terms that the old obligation is extinguished, or implied, when the new obligation is on every point incompatible with the old one.  The test of incompatibility lies on whether the two obligations can stand together, each one with its own independent existence.

For novation, as a mode of extinguishing or modifying an obligation, to apply, the following requisites must concur:

1)      There must be a previous valid obligation.

2)      The parties concerned must agree to a new contract.

3)      The old contract must be extinguished.

4)       There must be a valid new contract.

Novatio non praesumitur, or novation is never presumed, is a well-settled principle. Consequently, that which arises from a purported modification in the terms and conditions of the obligation must be clear and express. On petitioners thus rests the onus of showing clearly and unequivocally that novation has indeed taken place.

It has often been said that the minds that agree to contract can agree to novate. And the agreement or consent to novate may well be inferred from the acts of a creditor, since volition may as well be expressed by deeds as by words. In the instant case, however, the acts of EPCIB before, simultaneously to, and after its acceptance of payments from petitioners argue against the idea of its having acceded or acquiesced to petitioners’ request for a change of the terms of payments of the secured loan. Far from it.  Thus, a novation through an alleged implied consent by EPCIB, as proffered and argued by petitioners, cannot be given imprimatur by the Court. St. James College of Parañaque; Jaime T. Torres, represented by his legal representative, James Kenley M. Torres; and Myrna M. Torres vs. Equitable PCI Bank, G.R. No. 179441, August 9, 2010.

Contracts; rescission. Under Article 1191 of the Civil Code, the aggrieved party has a choice between specific performance and rescission with damages in either case.  However, we have ruled that if specific performance becomes impractical or impossible, the court may order rescission with damages to the injured party.  After the lapse of more than 30 years, it is now impossible to implement the loan agreement as it was written, considering the absence of evidence as to the rising costs of construction, as well as the obvious changes in market conditions on the viability of the operations of the hotel.    We deem it equitable and practicable to rescind the obligation of DBP to deliver the balance of the loan proceeds to Maceda.  In exchange, we order DBP to pay Maceda the value of  Maceda’s cash equity of  P6,153,398.05 by way of actual damages, plus the applicable interest rate.  The present ruling comes within the purview of Maceda’s and DBP’s prayers for “other reliefs, just or equitable under the premises.” Bonifacio Sanz Maceda, Jr. vs. DBO / DBP Vs. Bonifacio Sanz Maceda, Jr., G.R. No. 174979 & G.R. No. 175010, August 11, 2010.

Contracts; rescission. ALC undertook in the agreement to accomplish 43.91% of the reduced project by the end of December 1998.  The agreement’s threshold was, therefore, 39.52%.  But ALC was only able to accomplish 30.80% which was only 70.14% of the schedule, well below the 90% progress required by Clause 10.  And even if delay due to bad weather could be factored in, ALC would still fall below the 90% target. On this score alone rescission was still justified.  The 90% progress is a requirement imposed by the parties to the agreement.  As a contractual obligation, this supersedes the threshold imposed by law.  Since the parties entered into the agreement primarily due to initial delays in the project, the timetable instituted in it became an integral part of the agreement, an assurance that the project would be completed on time.  ALC’s failure to keep up with the rate of progress as contractually mandated is a substantial and fundamental breach which would defeat the very purpose of the agreement.  Thus, the DPWH was entitled to terminate the project and expel ALC from it. ALC industries, Inc. vs. Department of Public Works and Highways, G.R. No. 173219-20, August 11, 2010.

Damages; moral damages; compensatory damages; attorney’s fees. Take note of this case for it’s input on attorney’s fees. Considering that petitioners acted in good faith in building their house on the subject property of the respondent-spouses, there is no basis for the award of moral damages to respondent-spouses.  Likewise, the Court deletes the award to Vergon of compensatory damages and attorney’s fees for the litigation expenses Vergon had incurred as such amounts were not specifically prayed for in its Answer to petitioners’ third-party complaint.  Under Article 2208 of the Civil Code, attorney’s fees and expenses of litigation are recoverable only in the concept of actual damages, not as moral damages nor judicial costs. Hence, such must be specifically prayed for—as was not done in this case—and may not be deemed incorporated within a general prayer for “such other relief and remedy as this court may deem just and equitable.”  It must also be noted that aside from the following, the body of the trial court’s decision was devoid of any statement regarding attorney’s fees.  In Scott Consultants & Resource Development Corporation, Inc. v. Court of Appeals, we reiterated that attorney’s fees are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal, and equitable justification; its basis cannot be left to speculation or conjecture. Where granted, the court must explicitly state in the body of the decision, and not only in the dispositive portion thereof, the legal reason for the award of attorney’s fees. Luciano Briones and Nelly Briones vs. Jose Macabagdal, Fe D. Macabagdal and Vergon Realty Investments Corporation, G.R. No. 150666, August 3, 2010.

Damages; standard of diligence of a bank; moral damages; no need for bad faith; exemplary damages; attorney’s fees. Unquestionably, the petitioner, being a banking institution, had the direct obligation to supervise very closely the employees handling its depositors’ accounts, and should always be mindful of the fiduciary nature of its relationship with the depositors. Such relationship required it and its employees to record accurately every single transaction, and as promptly as possible, considering that the depositors’ accounts should always reflect the amounts of money the depositors could dispose of as they saw fit, confident that, as a bank, it would deliver the amounts to whomever they directed. If it fell short of that obligation, it should bear the responsibility for the consequences to the depositors, who, like the respondent, suffered particular embarrassment and disturbed peace of mind from the negligence in the handling of the accounts.

In several decisions of the Court, the banks, defendants therein, were made liable for negligence, even without sufficient proof of malice or bad faith on their part, and the Court awarded moral damages of P100,000.00 each time to the suing depositors in proper consideration of their reputation and their social standing. The respondent should be similarly awarded for the damage to his reputation as an architect and businessman.

As for the award of exemplary damages and attorney’s fees, it is never overemphasized that the public always relies on a bank’s profession of diligence and meticulousness in rendering irreproachable service. Its failure to exercise diligence and meticulousness warranted its liability for exemplary damages and for reasonable attorney’s fees. Citytrust Banking Corporation vs. Carlos Romulo N. Cruz, G.R. No. 157049, August 11, 2010.

Equitable mortgage; right of redemption. The existence of any one of the conditions enumerated under Article 1602 of the Civil Code, not a concurrence of all or of a majority thereof, suffices to give rise to the presumption that the contract is an equitable mortgage.

The provisions of the Civil Code governing equitable mortgages disguised as sale contracts are primarily designed to curtail the evils brought about by contracts of sale with right to repurchase, particularly the circumvention of the usury law and pactum commissorium. Courts have taken judicial notice of the well-known fact that contracts of sale with right to repurchase have been frequently resorted to in order to conceal the true nature of a contract, that is, a loan secured by a mortgage. It is a reality that grave financial distress renders persons hard-pressed to meet even their basic needs or to respond to an emergency, leaving no choice to them but to sign deeds of absolute sale of property or deeds of sale with pacto de retro if only to obtain the much-needed loan from unscrupulous money lenders. This reality precisely explains why the pertinent provision of the Civil Code includes a peculiar rule concerning the period of redemption, to wit:

Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases:

x x x

(3)When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;

x x x

Ostensibly, the law allows a new period of redemption to be agreed upon or granted even after the expiration of the equitable mortgagor’s right to repurchase, and treats such extension as one of the indicators that the true agreement between the parties is an equitable mortgage, not a sale with right to repurchase. Heirs of Jose Reyes, jr. namely; Magdalena C. Reyes, et al. vs. Amanda S. Reyes, et al., G.R. No. 158377, August 13, 2010.

Legal interest. In accordance with our ruling in Sta. Lucia Realty and Development v.  Spouses Buenaventura, the applicable interest rate on the P6,153,398.05 to be paid by DBP to Maceda is 6% per annum, to be reckoned from the time of the filing of the complaint on 15 October 1984, because the case at bar involves a breach of obligation and not a loan or forbearance of money.  We guide ourselves with the rules of thumb established in Eastern Shipping Lines, Inc. v. Court of Appeals.

1.       When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded.  In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2.       When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.  No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty.  Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained).  The actual base for the computation of legal interest shall, in any case be on the amount finally adjudged.

3.       When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

Pursuant to these rules, the interest rate of 12% per annum shall apply from the finality of judgment until the total amount awarded is fully paid.  Bonifacio Sanz Maceda, Jr. vs. DBO / DBP Vs. Bonifacio Sanz Maceda, Jr., G.R. No. 174979 & G.R. No. 175010, August 11, 2010.

Marriage; annulment; psychological incapacity. This case reiterates the previous rulings of Santos and Molina, and presents another example of the Supreme Court’s not being too taken with the testimony of the psychiatrist or therapist retained to prove the psychological incapacity of one of the parties. Lawyers representing a spouse in a potential annulment case should study the issues which have been raised by the court in respect of such testimonies. In this case, the Supreme Court observed that what should not be lost in reading and applying its established rulings is the intent of the law to confine the application of Article 36 of the Family Code to the most serious cases of personality disorders — these are the disorders that result in the utter insensitivity or inability of the afflicted party to give meaning and significance to the marriage he or she contracted.  Furthermore, the psychological illness and its root cause must have been there from the inception of the marriage.  From these requirements arise the concept that Article 36 of the Family Code does not really dissolve a marriage; it simply recognizes that there never was any marriage in the first place because the affliction – already then existing – was so grave and permanent as to deprive the afflicted party of awareness of the duties and responsibilities of the matrimonial bond he or she was to assume or had assumed.

In this regard, the court noted that mere “difficulty,” “refusal, or “neglect” in the performance of marital obligations or “ill will” on the part of the spouse is different from “incapacity” rooted on some debilitating psychological condition or illness, and in this case ruled that the following is not a reason to set aside the marital bonds (although if you or I were at the receiving end, we would probably beg to disagree):

–  Failure to manage the family’s finances resulting in the loss of the house and lot intended to be their family residence? According to the Supreme Court:  this merely constituted difficulty, refusal or neglect, during the marriage, in the handling of funds intended for the family’s financial support.

–  Infidelity? According to the Supreme Court: for sexual infidelity to constitute as psychological incapacity, the respondent’s unfaithfulness must be established as a manifestation of a disordered personality, completely preventing the respondent from discharging the essential obligations of the marital state; there must be proof of a natal or supervening disabling factor that effectively incapacitated spouse from complying with the obligation to be faithful to his or her spouse.

Here are what may be considered guidelines on the kind of evidence or testimony that should be presented, based on this case:

(i)          In So v. Valera, the Court considered the psychologist’s testimony and conclusions to be insufficiently in-depth and comprehensive to warrant the finding of respondent’s psychological incapacity because the facts, on which the conclusions were based, were all derived from the petitioner’s statements whose bias in favor of his cause cannot be discounted.

(ii)         In another case, Padilla-Rumbaua v. Rumbaua, the Court declared that while the various tests administered on the petitioner-wife could have been used as a fair gauge to assess her own psychological condition, this same statement could not be made with respect to the respondent-husband’s psychological condition.  Conclusions and generalizations about a spouse’s psychological condition, based solely on information fed by the other spouse, are not any different in kind from admitting hearsay evidence as proof of the truthfulness of the content of such evidence.

(iii)        To be sure, the law does not require that the allegedly incapacitated spouse be personally examined by a physician or by a psychologist as a condition sine qua non for the declaration of nullity of marriage under Article 36 of the Family Code.  This recognition, however, does not signify that the evidence should be any less than the evidence that an Article 36 case, by its nature, requires.

(iv)       It is still essential – although from sources other than the respondent spouse – to show his or her personality profile, or its approximation, at the time of marriage; the root cause of the inability to appreciate the essential obligations of marriage; and the gravity, permanence and incurability of the condition. Other than from the spouses, such evidence can come from persons intimately related to them, such as relatives, close friends or even family doctors or lawyers who could testify on the allegedly incapacitated spouse’s condition at or about the time of marriage, or to subsequent occurring events that trace their roots to the incapacity already present at the time of marriage. (In the present case, the only other party outside of the spouses who was ever asked to give statements for purposes of the spouse’s psychological evaluation was the spouses’ eldest son who would not have been very reliable as a witness in an Article 36 case because he could not have been there when the spouses were married and could not have been expected to know what was happening between his parents until long after his birth.)

(v)         The Supreme Court did not consider isolated instances of the spouses fighting over the foreclosure of their house, the husband’s alleged womanizing, and their differences in religion, as indicative of any basic psychological disorder existing at the time of marriage.  For one, these points of dispute are not uncommon in a marriage and relate essentially to the usual roots of marital problems – finances, fidelity and religion.

(vi)       If a psychologist’s testimony will be submitted, the  psychological evaluation should fully explain the details – i.e., the what, how, when, where and since when – of the spouse’s alleged personality disorder. It should also explain the incapacitating nature of the disorder, how it related to the essential marital obligations that the spouse failed to assume, and how grave and incurable it was.  Ricardo P. Toring vs. Teresita M. Toring and Republic of the Philippines, G.R. No. 165321, August 3, 2010.

Marriage; annulment; psychological incapacity; Court agrees to annul! Finally, finally, finally, the Supreme Court upholds a petition to have a marriage annulled on the ground of psychological incapacity of the husband. Practitioners can try to compare this with the Toring case (also digested in the edition), to see where the parties went wrong in that case, and went right in this one.

Here, testimonies of two clinical psychologists and a psychiatrist had been presented to show the incapacity of the husband. The Court of Appeals in reversing the RTC decision to annul the marriage, “rejected, wholesale, the testimonies of Doctors Magno and Villegas for being hearsay since they never personally examined and interviewed the respondent.”

The Supreme Court disagreed with the CA observing that the lack of personal examination and interview of the respondent, or any other person diagnosed with personality disorder, does not per se invalidate the testimonies of the doctors. Neither do their findings automatically constitute hearsay that would result in their exclusion as evidence. For one, marriage, by its very definition, necessarily involves only two persons. The totality of the behavior of one spouse during the cohabitation and marriage is generally and genuinely witnessed mainly by the other. In this case, the experts testified on their individual assessment of the present state of the parties’ marriage from the perception of one of the parties, herein petitioner. Certainly, petitioner, during their marriage, had occasion to interact with, and experience, respondent’s pattern of behavior which she could then validly relay to the clinical psychologists and the psychiatrist.

For another, the clinical psychologists’ and psychiatrist’s assessment were not based solely on the narration or personal interview of the petitioner. Other informants such as respondent’s own son, siblings and in-laws, and sister-in-law (sister of petitioner), testified on their own observations of respondent’s behavior and interactions with them, spanning the period of time they knew him. These were also used as the basis of the doctors’ assessments.

The court went on to cite the recent case of Lim v. Sta. Cruz-Lim, citing The Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition (DSM IV), which sets out the general diagnostic criteria for personality disorders. Please check this or that case to get the guidelines.

Within their acknowledged field of expertise, doctors can diagnose the psychological make up of a person based on a number of factors culled from various sources. A person afflicted with a personality disorder will not necessarily have personal knowledge thereof. In this case, considering that a personality disorder is manifested in a pattern of behavior, self-diagnosis by the respondent consisting only in his bare denial of the doctors’ separate diagnoses, does not necessarily evoke credence and cannot trump the clinical findings of experts.

The Supreme Court also rejected the CA’s view that because one of the psychologists had recommended therapy, she believe the illness was curable. A recommendation for therapy does not automatically imply curability. In general, recommendations for therapy are given by clinical psychologists, or even psychiatrists, to manage behavior. In Kaplan and Saddock’s textbook entitled Synopsis of Psychiatry, treatment, ranging from psychotherapy to pharmacotherapy, for all the listed kinds of personality disorders are recommended. In short, the recommendation that respondent should undergo therapy does not necessarily negate the finding that respondent’s psychological incapacity is incurable. Moreover, the psycholigist in question, during her testimony, categorically declared that respondent is psychologically incapacitated to perform the essential marital obligations. As aptly stated by Justice Romero in her separate opinion in the ubiquitously cited case of Republic v. Court of Appeals & Molina:

[T]he professional opinion of a psychological expert became increasingly important in such cases. Data about the person’s entire life, both before and after the ceremony, were presented to these experts and they were asked to give professional opinions about a party’s mental capacity at the time of the wedding. These opinions were rarely challenged and tended to be accepted as decisive evidence of lack of valid consent.

… [Because] of advances made in psychology during the past decades. There was now the expertise to provide the all-important connecting link between a marriage breakdown and premarital causes.

At this point, the Supreme Court noted how it had, on many, many occasions essentially pshawed at the testimonies of various therapists and psychiatrists: “It is true that a clinical psychologist’s or psychiatrist’s diagnoses that a person has personality disorder is not automatically believed by the courts in cases of declaration of nullity of marriages. Indeed, a clinical psychologist’s or psychiatrist’s finding of a personality disorder does not exclude a finding that a marriage is valid and subsisting, and not beset by one of the parties’ or both parties’ psychological incapacity. On more than one occasion, we have rejected an expert’s opinion concerning the supposed psychological incapacity of a party…  In the case at bar, however, even without the experts’ conclusions, the factual antecedents  (narrative of events)  alleged   in  the  petition  and   established during trial, all point to the inevitable conclusion that respondent is psychologically incapacitated to perform the essential marital obligations.

Article 68 of the Family Code provides:

Art. 68. The husband and wife are obliged to live together, observe mutual love, respect and fidelity, and render mutual help and support.

In this connection, it is well to note that persons with antisocial personality disorder exhibit the following clinical features:

Patients with antisocial personality disorder can often seem to be normal and even charming and ingratiating. Their histories, however, reveal many areas of disordered life functioning. Lying, truancy, running away from home, thefts, fights, substance abuse, and illegal activities are typical experiences that patients report as beginning in childhood. x x x Their own explanations of their antisocial behavior make it seem mindless, but their mental content reveals the complete absence of delusions and other signs of irrational thinking. In fact, they frequently have a heightened sense of reality testing and often impress observers as having good verbal intelligence.

x x x Those with this disorder do not tell the truth and cannot be trusted to carry out any task or adhere to any conventional standard of morality. x x x A notable finding is a lack of remorse for these actions; that is, they appear to lack a conscience.

In the instant case, respondent’s pattern of behavior manifests an inability, nay, a psychological incapacity to perform the essential marital obligations as shown by his: (1) sporadic financial support; (2) extra-marital affairs; (3) substance abuse; (4) failed business attempts; (5) unpaid money obligations; (6) inability to keep a job that is not connected with the family businesses; and (7) criminal charges of estafa….   In fine, given the factual milieu of the present case and in light of the foregoing disquisition, we find ample basis to conclude that respondent was psychologically incapacitated to perform the essential marital obligations at the time of his marriage to the petitioner. Ma. Socorro Camacho-Reyes vs. Ramon Reyes, G.R. No. 185286, August 18, 2010.

Marriage; governing law, depends on when celebrated; impact on who can file for petition of nullity.         A valid marriage is essential in order to create the relation of husband and wife and to give rise to the mutual rights, duties, and liabilities arising out of such relation. The law prescribes the requisites of a valid marriage. Hence, the validity of a marriage is tested according to the law in force at the time the marriage is contracted. As a general rule, the nature of the marriage already celebrated cannot be changed by a subsequent amendment of the governing law. To illustrate, a marriage between a stepbrother and a stepsister was void under the Civil Code, but is not anymore prohibited under the Family Code; yet, the intervening effectivity of the Family Code does not affect the void nature of a marriage between a stepbrother and a stepsister solemnized under the regime of the Civil Code. The Civil Code marriage remains void, considering that the validity of a marriage is governed by the law in force at the time of the marriage ceremony.

Before anything more, the Court has to clarify the impact to the issue posed herein of Administrative Matter (A.M.) No. 02-11-10-SC (Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages), which took effect on March 15, 2003.

Section 2, paragraph (a), of A.M. No. 02-11-10-SC explicitly provides the limitation that a petition for declaration of absolute nullity of void marriage may be filed solely by the husband or wife. Such limitation demarcates a line to distinguish between marriages covered by the Family Code and those solemnized under the regime of the Civil Code. Specifically, A.M. No. 02-11-10-SC extends only to marriages covered by the Family Code, which took effect on August 3, 1988, but, being a procedural rule that is prospective in application, is confined only to proceedings commenced after March 15, 2003.

Based on Carlos v. Sandoval, the following actions for declaration of absolute nullity of a marriage are excepted from the limitation, to wit:

1.     Those commenced before March 15, 2003, the effectivity date of A.M. No. 02-11-10-SC; and

2.     Those filed vis-à-vis marriages celebrated during the effectivity of the Civil Code and, those celebrated under the regime of the Family Code prior to March 15, 2003.

Considering that the marriage between Cresenciano and Leonila was contracted on December 26, 1949, the applicable law was the old Civil Code, the law in effect at the time of the celebration of the marriage.  Hence, the rule on the exclusivity of the parties to the marriage as having the right to initiate the action for declaration of nullity of the marriage under A.M. No. 02-11-10-SC had absolutely no application to the petitioner.

The old and new Civil Codes contain no provision on who can file a petition to declare the nullity of a marriage, and when. Accordingly, in Niñal v. Bayadog, the children were allowed to file after the death of their father a petition for the declaration of the nullity of their father’s marriage to their stepmother contracted on December 11, 1986 due to lack of a marriage license.

It is clarified, however, that the absence of a provision in the old and new Civil Codes cannot be construed as giving a license to just any person to bring an action to declare the absolute nullity of a marriage. According to Carlos v. Sandoval, the plaintiff must still be the party who stands to be benefited by the suit, or the party entitled to the avails of the suit, for it is basic in procedural law that every action must be prosecuted and defended in the name of the real party in interest. Thus, only the party who can demonstrate a “proper interest” can file the action. Interest within the meaning of the rule means material interest, or an interest in issue to be affected by the decree or judgment of the case, as distinguished from mere curiosity about the question involved or a mere incidental interest. One having no material interest to protect cannot invoke the jurisdiction of the court as plaintiff in an action. When the plaintiff is not the real party in interest, the case is dismissible on the ground of lack of cause of action.

Here, the petitioner alleged himself to be the late Cresenciano’s brother and surviving heir. Assuming that the petitioner was as he claimed himself to be, then he has a material interest in the estate of Cresenciano that will be adversely affected by any judgment in the suit. Indeed, a brother like the petitioner, albeit not a compulsory heir under the laws of succession, has the right to succeed to the estate of a deceased brother under the conditions stated in Article 1001 and Article 1003 of the Civil Code. Isidro Ablaza vs. Republic of the Philippines, G.R. No. 158298,  August 11, 2010.

Ownership; co-ownership; 20-year limitation. It is clear from Basilio’s will that he intended the house and lot in Manila to be transferred in petitioners’ names for administration purposes only, and that the property be owned by the heirs in common, thus:

e)  Ang lupa’t bahay sa Lunsod ng Maynila na nasasaysay sa itaas na 2(c) ay ililipat at ilalagay sa pangalan nila Ma. Pilar at Clemente hindi bilang pamana ko sa kanila kundi upang pamahalaan at pangalagaan lamang nila at nang ang sinoman sa aking mga anak sampu ng apo at kaapuapuhan ko sa habang panahon ay may tutuluyan kung magnanais na mag-aral sa Maynila o kalapit na mga lunsod sa medaling salita, ang bahay at lupang ito’y walang magmamay-ari bagkus ay gagamitin habang panahon ng sinomang magnanais sa aking kaapuapuhan na tumuklas ng karunungan sa paaralan sa Maynila at katabing mga lunsod x x x x (emphasis and underscoring supplied)

But the condition set by the decedent on the property’s indivisibility is subject to a statutory limitation.  On this point, the Court agrees with the ruling of the appellate court, viz:

For this Court to sustain without qualification, [petitioners]’s contention, is to go against the provisions of law, particularly Articles 494, 870, and 1083 of the Civil Code, which provide that the prohibition to divide a property in a co-ownership can only last for twenty (20) years x x x x

x x x x

x x x x Although  the Civil Code is silent as to the effect of the indivision of a property for more than twenty years, it would be contrary to public policy to sanction co-ownership beyond the period expressly mandated by the Civil Code x x x x

In Re: Petition for probate of last will and testament of Basilio Santiago, et al. Vs/ Zoilo S. Santiago, et al., G.R. No. 179859, August 9, 2010.

Ownership; prescription; requirement of possession; compromise agreement does not constitute “possession”. Prescription, as a mode of acquiring ownership and other real rights over immovable property, is concerned with 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. The party who asserts ownership by adverse possession must prove the presence of the essential elements of acquisitive prescription.

Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just title for ten years. In extraordinary prescription, ownership and other real rights over immovable property are acquired through uninterrupted adverse possession for thirty years without need of title or of good faith.

Possession “in good faith” consists in the reasonable belief that the person from whom the thing is received has been the owner thereof, and could transmit his ownership. There is “just title” when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right.

The Supreme Court found that the Court of Appeals mistakenly relied upon a compromise agreement to conclude that the respondents were possessors in good faith and with just title who acquired the property through ordinary acquisitive prescription. The main purpose of a compromise agreement is to put an end to litigation because of the uncertainty that may arise from it. Reciprocal concessions are the very heart and life of every compromise agreement. By the nature of a compromise agreement, it brings the parties to agree to something that neither of them may actually want, but for the peace it will bring them without a protracted litigation. Thus, no right can arise from the compromise agreement because the parties executed the same only to buy peace and to write finis to the controversy; it did not create or transmit ownership rights over the subject property. In executing the compromise agreement, the parties, in effect, merely reverted to their situation before the earlier civil case was filed.

Neither can the respondents benefit from the contract of sale of the subject property to support their claim of possession in good faith and with just title. In the vintage case [Digester’s Note: Use of word “vintage” to describe a case, the ponente’s, not mine] of Leung Yee v. F.L. Strong Machinery Co. and Williamson, the court had noted that “[O]ne who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.” Good faith, or the want of it, can be ascertained only from the acts of the one claiming it, as it is a condition of mind that can only be judged by actual or fancied token or signs.

In the present case, no dispute exists that Roberto, without Nicomedesa’s knowledge or participation, bought the subject property on September 16, 1977 or during the pendency of Civil Case No. B-565. Roberto, therefore, had actual knowledge that Belacho’s claim to ownership of the subject property, as Gavino’s purported heir, was disputed because he (Roberto) and Nicomedesa were the defendants in Civil Case No. B-565. Roberto even admitted that he bought the subject property from Belacho to “avoid any trouble.” He, thus, cannot claim that he acted in good faith under the belief that there was no defect or dispute in the title of the vendor, Belacho.

Not being a possessor in good faith and with just title, the ten-year period required for ordinary acquisitive prescription cannot apply in Roberto’s favor. Even the thirty-year period under extraordinary acquisitive prescription has not been met because of the respondents’ claim to have been in possession, in the concept of owner, of the subject property for only twenty-four years, from the time the subject property was tax declared in 1974 to the time of the filing of the complaint in 1998. Rosario P. Tan vs. Artemio G. Ramirez, et al., G.R. No. 158929, August 3, 2010.

Ownership; prescription; element of possession; in an equitable mortgage. Did respondents acquire the mortgaged property through prescription? It is true that the respondent Alejandro became a co-owner of the property by right of representation upon the death of his father, Jose Sr. As a co-owner, however, his possession was like that of a trustee and was not regarded as adverse to his co-owners but in fact beneficial to all of them. Yet, the respondents except to the general rule, asserting that Alejandro, having earlier repudiated the co-ownership, acquired ownership of the property through prescription. The Court cannot accept the respondents’ posture.

In order that a co-owner’s possession may be deemed adverse to that of the cestui que trust or the other co-owners, the following elements must concur:

1.     The co-owner has performed unequivocal acts of repudiation of the co-ownership amounting to an ouster of the cestui que trust or the other co-owners;

2.     Such positive acts of repudiation have been made known to the cestui que trust or the other co-owners;

3.     The evidence on the repudiation is clear and conclusive; and

4.     His possession is open, continuous, exclusive, and notorious.

The concurrence of the foregoing elements was not established herein. For one, Alejandro did not have adverse and exclusive possession of the property, as, in fact, the other co-owners had continued to possess it, with Alejandro and his heirs occupying only a portion of it. Neither did the cancellation of the previous tax declarations in the name of Leoncia, the previous co-owner, and the issuance of a new one in Alejandro’s name, and Alejandro’s payment of the realty taxes constitute repudiation of the co-ownership.  The sole fact of a co-owner declaring the land in question in his name for taxation purposes and paying the land taxes did not constitute an unequivocal act of repudiation amounting to an ouster of the other co-owner and could not constitute adverse possession as basis for title by prescription. Moreover, according to Blatero v. Intermediate Appellate Court, if a sale a retro is construed as an equitable mortgage, then the execution of an affidavit of consolidation by the purported buyer to consolidate ownership of the parcel of land is of no consequence and the “constructive possession” of the parcel of land will not ripen into ownership, because only possession acquired and enjoyed in the concept of owner can serve as title for acquiring dominion.

In fine, the respondents did not present proof showing that Alejandro had effectively repudiated the co-ownership. Their bare claim that Alejandro had made oral demands to vacate to his co-owners was self-serving and insufficient. Alejandro’s execution of the affidavit of consolidation of ownership on August 21, 1970 and his subsequent execution on October 17, 1970 of the joint affidavit were really equivocal and ambivalent acts that did not manifest his desire to repudiate the co-ownership.

The only unequivocal act of repudiation was done by the respondents when they filed the instant action for quieting of title on September 28, 1994, nearly a year after Alejandro’s death on September 2, 1993. However, their possession could not ripen into ownership considering that their act of repudiation was not coupled with their exclusive possession of the property. Heirs of Jose Reyes, jr. namely; Magdalena C. Reyes, et al. vs. Amanda S. Reyes, et al., G.R. No. 158377, August 13, 2010.

Prescription; revival of judgment. An action for revival of judgment is governed by Article 1144 (3), Article 1152 of the Civil Code and Section 6, Rule 39 of the Rules of Court. Article 1144(3) provides:

Art. 1144. The following actions must be brought within ten years from the time the right of action accrues:

x x x x

(3) Upon a judgment

while Article 1152 of the Civil Code states that “[T] he period for prescription of actions to demand the fulfillment of obligations declared by a judgment commences from the time the judgment became final. In this regard, Section 6, Rule 39 of the Rules of Court provides that “[A] final and executory judgment or order may be executed on motion within five (5) years from the date of its entry.  After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations. (emphasis supplied)”

The rules are clear.  Once a judgment becomes final and executory, the prevailing party can have it executed as a matter of right by  mere  motion  within five years from the date of entry of judgment.  If the prevailing party fails to have the decision enforced by a motion after the lapse of five years, the said judgment is reduced to a right of action which must be enforced by the institution of a complaint in a regular court within ten years from the time the judgment becomes final.

Petitioner Villeza, however, wants this Court to agree with him that the abeyance granted to him by the lower court tolled the running of the prescriptive period. He even cited cases allowing exceptions to the general rule.  The cited cases are, in fact, not applicable to him. The records reveal that it was petitioner Villeza, the prevailing party himself, who moved to defer the execution of judgment.  The losing party never had any hand in the delay of its execution.  Neither did the parties have any agreement on that matter.  After the lapse of five years from the finality of judgment, petitioner Villeza should have instead filed a complaint for its revival in accordance with Section 6, Rule 39 of the Rules of Court.  He, however, filed a motion to execute the same which was a wrong course of action.  On the 11th year, he finally sought its revival but he requested the aid of the courts too late.

The Court has pronounced in a plethora of cases that it is revolting to the conscience to allow someone to further avert the satisfaction of an obligation because of sheer literal adherence to technicality; that although strict compliance with the rules of procedure is desired, liberal interpretation is  warranted  in  cases  where a strict enforcement of the rules will not serve the ends of justice; and that it is a better rule that courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches when to do so, manifest wrong or injustice would result. These cases, though, remain exceptions to the general rule. The purpose of the law in prescribing time limitations for enforcing judgment by action is precisely to prevent the winning parties from sleeping on their rights. The Court cannot just set aside the statute of limitations into oblivion every time someone cries for equity and justice.  Indeed, “if eternal vigilance is the price of safety, one cannot sleep on one’s right for more than a 10th of a century and expect it to be preserved in pristine purity.” Ernesto Villeza vs. German Management and Services, Inc., et al., G.R. No. 182937, August 8, 2010.

Property; builder in good faith. Article 527 of the Civil Code presumes good faith, and since no proof exists to show that the mistake was done by petitioners in bad faith, the latter should be presumed to have built the house in good faith.

When a person builds in good faith on the land of another, Article 448 of the Civil Code governs. This article covers cases in which the builders, sowers or planters believe themselves to be owners of the land or, at least, to have a claim of title thereto.  The builder in good faith can 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.   However, even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one.   He cannot, for instance, compel the owner of the building to remove the building from the land without first exercising either option.  It is only if the owner chooses to sell his land, and the builder or planter fails to purchase it where its value is not more than the value of the improvements, that the owner may remove the improvements from the land.  The owner is entitled to such remotion only when, after having chosen to sell his land, the other party fails to pay for the same.

Moreover, petitioners have the right to be indemnified for the necessary and useful expenses they may have made on the subject property as provided in Articles 546 and 548 of the Civil Code. Consequently, the respondent-spouses have the option to appropriate the house on the subject land after payment to petitioners of the appropriate indemnity or to oblige petitioners to pay the price of the land, unless its value is considerably more than the value of the structures, in which case petitioners shall pay reasonable rent. Luciano Briones and Nelly Briones vs. Jose Macabagdal, Fe D. Macabagdal and Vergon Realty Investments Corporation, G.R. No. 150666, August 3, 2010.

Sale; contract to sell versus contract of sale. Regarding the right to cancel the contract for non-payment of an installment, there is need to initially determine if what the parties had was a contract of sale or a contract to sell.  In a contract of sale, the title to the property passes to the buyer upon the delivery of the thing sold.  In a contract to sell, on the other hand, the ownership is, by agreement, retained by the seller and is not to pass to the vendee until full payment of the purchase price.  In the contract of sale, the buyer’s non-payment of the price is a negative resolutory condition; in the contract to sell, the buyer’s full payment of the price is a positive suspensive condition to the coming into effect of the agreement.  In the first case, the seller has lost and cannot recover the ownership of the property unless he takes action to set aside the contract of sale.  In the second case, the title simply remains in the seller if the buyer does not comply with the condition precedent of making payment at the time specified in the contract.

Here, it is quite evident that the contract involved was one of a contract to sell since the Atienzas, as sellers, were to retain title of ownership to the land until respondent Espidol, the buyer, has paid the agreed price. Admittedly, Espidol was unable to pay the second installment of P1,750,000.00 that fell due in December 2002.  That payment was a positive suspensive condition failure of which was not regarded a breach in the sense that there can be no rescission of an obligation (to turn over title) that did not yet exist since the suspensive condition had not taken place. Since the suspensive condition did not arise, the parties stood as if the conditional obligation had never existed.

It should be noted that the condition is not a pure, suspensive one. Although the Atienzas had no obligation as yet to turn over title pending the occurrence of the suspensive condition, it was implicit that they were under immediate obligation not to sell the land to another in the meantime.  But when Espidol failed to pay within the period provided in their agreement, the Atienzas were relieved of any obligation to hold the property in reserve for him. The ruling of the lower courts that, despite the default in payment, the Atienzas remained bound to this day to sell the property to Espidol once he is able to raise the money and pay is quite unjustified.  Sps. Paulino Atienza and Rufina Atienza vs. Domingo P. Espidol, G.R. No. 180665, August 11, 2010.

Sale; innocent purchaser. A person is considered an innocent purchaser in good faith when he buys the property of another, without notice that some other person has a right or an interest in such property, and pays a full price for the same at the time of such purchase, or before he has notice of the claims or interest of some other person in the property.

Whether petitioners were in good faith when they bought the property from the Samson heirs is a question of fact that will not be disturbed in a petition for review under Rule 45 of the Rules of Court, save for meritorious exceptions.   None of these exceptions is present, however, in the case at bar.  There is thus no compelling reason to overturn the factual findings of the trial court, which was affirmed by the Court of Appeals, respecting petitioners’ notice of respondent’s possession.

As reflected earlier, Palma, a relative of petitioner Cesaria, acknowledged via two documents having been allowed by Josefa, respondent’s mother, to occupy the land.  His testimony, therefore, that he sought the permission of the Samson heirs, and not from Josefa, must give way to documentary evidence.

In another vein, as noted above, petitioners live in the vicinity of the land which was fenced and planted to fruit bearing trees. As such, they were put on notice that the land was possessed by someone.  Where the land subject of sale is in possession of a person other than the vendor, prudence dictates that the vendee should go beyond the certificate of title. Absent such investigation, good faith cannot be presumed. Spouses Braulio Navarro and Cesaria Sindao vs. Perla Rico Go, G.R. No. 187288. August 9, 2010

Sale; notice of cancellation for action to declare contract non-existent. Notice of cancellation by notarial act need not be given before the contract between the Atienzas and respondent Espidol may be validly declared non-existent.  R.A. 6552 which mandated the giving of such notice does not apply to this case.  The cancellation envisioned in that law pertains to extrajudicial cancellation or one done outside of court, which is not the mode availed of here.  The Atienzas came to court to seek the declaration of its obligation under the contract to sell cancelled.  Thus, the absence of that notice does not bar the filing of their action. Sps. Paulino Atienza and Rufina Atienza vs. Domingo P. Espidol, G.R. No. 180665, August 11, 2010.

Sale; void contract.  A void contract is equivalent to nothing; it produces no civil effect. It does not create, modify, or extinguish a juridical relation.  Parties to a void agreement cannot expect the aid of the law; the courts leave them as they are, because they are deemed in pari delicto or in equal fault.  To this rule, however, there are exceptions that permit the return of that which may have been given under a void contract. One of the exceptions is found in Article 1412 of the Civil Code, which states:

Art. 1412.    If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed:

(1)     When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other’s undertaking;

(2)        When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment of what has been promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply with his promise.

Respondent was well aware that as mere grantee of the subject stall, he cannot sell it without the consent of the City Government of Marawi.  Yet, he sold the same to petitioners.  The records, however, are bereft of any allegation and proof that petitioners had actual knowledge of the status of respondent’s ownership of the subject stall.  Petitioners can, therefore, recover the amount they had given under the contract. In Cavite Development Bank v. Spouses Lim, and Castillo, et al. v. Abalayan, we held that in case of a void sale, the seller has no right whatsoever to keep the money paid by virtue thereof, and should refund it, with interest at the legal rate, computed from the date of filing of the complaint until fully paid. Hadja Fatima Gaguil Magoyag, joined by her husband, Hadjihasan Madlawi Magoyag vs. Hadji Abubacar Maruhom, G.R. No. 179743, August 2, 2010.

Succession; compulsory heirs. A decedent’s compulsory heirs in whose favor the law reserves a part of the decedent’s estate are exclusively the persons enumerated in Article 887 of the Civil Code. Spouses Nicanor Tumbokon, et al. vs. Apolonia G. Legaspi adn Paulina S. De Magtanum, G.R. No. 153736, August 12, 2010.

Special Laws

Family Code; family home; exemption from foreclosure. We note that the claim of exemption under Article 153 of the Family Code, thereby raising issue on the mortgaged condominium unit being a family home and not corporate property, is entirely inconsistent with the clear contractual agreement of the REM.  Assuming arguendo that the mortgaged condominium unit constitutes respondents’ family home, the same will not exempt it from foreclosure as Article 155 (3) of the same Code allows the execution or forced sale of a family home “for debts secured by mortgages on the premises before or after such constitution.” Equitable PCI Bank, Inc. vs. OJ-Mark Trading, Inc. and Spouses Oscar and Evangeline Martinez, G.R. No. 165950, August 11, 2010.

Land Reform; Presidential Decree No. 27; RA 3844; relinquishment of rights is void. In this case, the Supreme Court preserved ownership rights of petitioners over parcels of land that had been transferred to them pursuant to their tenancy and the application of land reform laws. The son of the previous owner, however, sought to dispossess them on the ground that the petitioners had unlawfully converted the land into a fish farm and had sub-leased the property. The court confirmed that there was no evidence with respect to the alleged sub-lease. As to the conversion of the land into a fish farm, the court observed that “the conversion of the subject landholding under the 1980 Kasunduan is not the conversion of landholding that is contemplated by Section 36 of the law. Alarcon v. Court of Appeals defined conversion as the act of changing the current use of a piece of agricultural land into some other use as approved by the DAR.  More to the point is that for conversion to avail as a ground for dispossession, the opening paragraph of Section 36 implies the necessity of prior court proceedings in which the issue of conversion has been determined and a final order issued directing dispossession upon that ground.  In the case at bar, however, respondent does not profess that at any time there had been such proceedings or that there was such court order.  Neither does he assert that Lot No. 38—and Lot Nos. 37 and 39 for that matter—had undergone conversion with authority from the DAR.”

The court also noted that “even on the hypothesis that petitioners, as alleged, voluntarily relinquished their rights over Lot Nos. 37, 38 and 39 and surrendered the same to respondent, the transaction would still be void because it is by all means prohibited by law. Our law on agrarian reform is a legislated promise to emancipate poor farm families from the bondage of the soil.  P.D. No. 27 was promulgated in the exact same spirit, with mechanisms which hope to forestall a reversion to the antiquated and inequitable feudal system of land ownership.  It aims to ensure the continued possession, cultivation and enjoyment by the beneficiary of the land that he tills which would certainly not be possible where the former owner is allowed to reacquire the land at any time following the award in contravention of the government’s objective to emancipate tenant-farmers from the bondage of the soil. In order to ensure the tenant-farmer’s continued enjoyment and possession of the property, the explicit terms of P.D. No. 27 prohibit the transfer by the tenant of the ownership, rights or possession of a landholding to other persons, or the surrender of the same to the former landowner.  In other words, a tenant-farmer may not transfer his ownership or possession of, or his rights to the property, except only in favor of the government or by hereditary succession in favor of his successors.  Any other transfer of the land grant is a violation of this proscription and is, therefore, null and void.”  Emilia Micking Vda. De Coronel, et al. Vs. Miguel Tanjangco, Jr., G.R. No. 170693, August 8, 2010

Land Reform Law; Presidential Decree No. 27; restriction on sale of land; exceptions. The Atienzas’ title shows on its face that the government granted title to them on January 9, 1990 by virtue of P.D. 27.  This law explicitly prohibits any form of transfer of the land granted under it except to the government or by hereditary succession to the successors of the farmer beneficiary. Upon the enactment of Executive Order 228 in 1987, however, the restriction ceased to be absolute.  Land reform beneficiaries were allowed to transfer ownership of their lands provided that their amortizations with the Land Bank of the Philippines (Land Bank) have been paid in full.  In this case, the Atienzas’ title categorically states that they have fully complied with the requirements for the final grant of title under P.D. 27.  This means that they have completed payment of their amortization with Land Bank.  Consequently, they could already legally transfer their title to another.  Sps. Paulino Atienza and Rufina Atienza vs. Domingo P. Espidol, G.R. No. 180665, August 11, 2010.

Property Registration Decree; levy on execution versus subsequent registration of sale. The Supreme Court in this case ruled on the issue of whether or not a levy on execution is superior to the subsequent registration of a deed of sale.  It held that a prior registration of a lien creates a preference even though the sale of the land to petitioner took place before the judgment of the trial court in favor of a party and the issuance of the writ of execution over the property in question. Failure to register the sale with the Register of Deeds negated any priority which the buyer may have acquired by virtue of the earlier sale.  Elementary is the rule that it is the act of registration which gives validity to transfer or liens created upon land registered under the Torrens System.  This is clear in Section 51 and Section 52 of Presidential Decree No. 1529, also known as the Property Registration Decree. Considering that the sale was not registered earlier, the right of petitioner over the land became subordinate and subject to the preference created over the earlier annotated levy in favor of Swift. The levy of execution registered and annotated on September 1, 1998 takes precedence over  the  sale  of  the  land  to  petitioner  on  February 16, 1997,  despite the subsequent registration on September 14, 1998 of the prior sale. Such preference in favor of the levy on execution retroacts to the date of levy for to hold otherwise will render the preference nugatory and meaningless.  The Supreme Court had made a similar ruling in Valdevieso v. Damalerio. Jay Hidalgo Uy vs. Spouses Francisco Medina and Natividad Medina, et al., G.R. No. 172541, August 8, 2010.

Property Registration Decree; possession of land; impact of tax declarations and tax payments.  In an original registration of title under Section 14(1)] P.D. No. 1529, the applicant for registration must be able to establish by evidence that he and his predecessor-in-interest have exercised acts of dominion over the lot under a bona fide claim of ownership since June 12, 1945 or earlier.  He must prove that for at least 30 years, he and his predecessor have been in open, continuous, exclusive and notorious possession and occupation of the land.

From the records, it is clear that respondents’ possession through their predecessor-in-interest dates back to as early as 1937.  In that year, the subject property had already been declared for taxation by Zenaida’s father, Sergio, jointly with a certain Toribia Miranda (Toribia). Yet, it also can be safely inferred that Sergio and Toribia had declared the land for taxation even earlier because the 1937 tax declaration shows that it offsets a previous tax number.  The property was again declared in 1979, 1985 and 1994 by Sergio, Toribia and by Romualdo.

Certainly, respondents could have produced more proof of this kind had it not been for the fact that, as certified by the Office of the Rizal Provincial Assessor, the relevant portions of the tax records on file with it had been burned when the assessor’s office was razed by fire in 1997.  Of equal relevance is the fact that with these tax assessments, there came next tax payments.  Respondents’ receipts for tax expenditures on Lot Nos. 4 and 5 between 1977 and 2001 are likewise fleshed out in the records and in these documents, Sergio, Toribia and Romualdo are the named owners of the property with Zenaida being identified as the one who delivered the payment in the 1994 receipts.

The foregoing evidentiary matters and muniments clearly show that Zenaida’s testimony in this respect is no less believable.  And the unbroken chain of positive acts exercised by respondents’ predecessors, as demonstrated by these pieces of evidence, yields no other conclusion than that as early as 1937, they had already demonstrated an unmistakable claim to the property.  Not only do they show that they had excluded all others in their claim but also, that such claim is in all good faith.

Land registration proceedings are governed by the rule that while tax declarations and realty tax payment are not conclusive evidence of ownership, nevertheless, they are a good indication of possession in the concept of owner.  These documents constitute at least proof that the holder has a claim of title over the property, for no one in his right mind would be paying taxes for a property that is not in his actual or at least constructive possession. The voluntary declaration of a piece of property for taxation purposes manifests not only one’s sincere and honest desire to obtain title to the property.  It also announces his adverse claim against the state and all other parties who may be in conflict with his interest.  More importantly, it signifies an unfeigned intention to contribute to government revenues—an act that strengthens one’s bona fide claim of acquisition of ownership.

Indeed, that respondents herein have been in possession of the land in the concept of owner—open, continuous, peaceful and without interference and opposition from the government or from any private individual—itself makes their right thereto unquestionably settled and, hence, deserving of protection under the law. Republic of the Philippines vs. Zenaida Guinto, in her own behalf and as Attorney-in-fact of Ma. Aurora Guinto-Comiso, et al., G.R. No. 175578, August 11, 2010.

Property Registration Decree; title indefeasible under Torren System; right to eject cannot be barred by laches. OCT No. P-3030 was declared valid by the trial court, and respondents do not question the title’s validity. Under the Torrens System of registration, an OCT becomes indefeasible and incontrovertible one year after its final decree.  It is a fundamental principle in land registration that the certificate of title serves as evidence of an indefeasible and incontrovertible title to a property in favor of the person whose name appears therein.  The trial court’s ruling that petitioner had a long and unexplained inaction in asserting his claim over the subject property, and hence, is barred by laches from recovering his property, is without basis.  Petitioner has a valid title over his property (i.e., the land covered by OCT P-3030). As a registered owner, petitioner has a right to eject any person illegally occupying his property.  This right is imprescriptible and can never be barred by laches. Gaudencio Labrador represented by Lulu Labrador Uson as Attorney-in-Fact vs. Spouses Ildefonso Perlas and Pacencia Perlas, et al., G.R. No. 173900, August 8, 2010.

Property Registration Decree; title indefeasible under Torrens System; tax declaration.  A decree of registration is conclusive upon all persons, including the Government of the Republic and all its branches, whether or not mentioned by name in the application for registration or its notice.  Indeed, title to the land, once registered, is imprescriptible.  No one may acquire it from the registered owner by adverse, open, and notorious possession.  Thus, to a registered owner under the Torrens system, the right to recover possession of the registered property is equally imprescriptible since possession is a mere consequence of ownership. Here, the existence and genuineness of the Mendozas’ title over the property has not been disputed. That the City Government of Lipa tax-declared the property and its improvements in its name cannot defeat the Mendozas’ title.  The Supreme Court has allowed tax declarations to stand as proof of ownership only in the absence of a certificate of title.  Otherwise, they have little evidentiary weight as proof of ownership. Republic of the Philippines vs. Primo Mendoza and Maria Lucero, G.R. No. 185091, August 8, 2010.

(Note:  As of the date of this post, not all August 2010 cases have been published.  This post will be updated after the remaining August 2010 cases are published.)