G.R. No.

152809 August 3, 2006

MERCEDES MORALIDAD, Petitioner,

vs.
SPS. DIOSDADO PERNES and ARLENE PERNES, Respondents.

DECISION

GARCIA, J.:

Under consideration is this petition for review on certiorari under Rule 45 of the
Rules of Court to nullify and set aside the following issuances of the Court of
Appeals (CA) in CA-G.R. SP No. 61610, to wit:

1. Decision dated September 27, 2001, 1 affirming an earlier decision of the

Regional Trial Court (RTC) of Davao City which reversed that of the Municipal Trial
Court in Cities (MTCC), Davao City, Branch 1, in an action for unlawful detainer
thereat commenced by the petitioner against the herein respondents; and

2. Resolution dated February 28, 2002, 2 denying petitioners motion for

reconsideration.

At the heart of this controversy is a parcel of land located in Davao City and
registered in the name of petitioner Mercedes Moralidad under Transfer Certificate
of Title (TCT) No. T-123125 of the Registry of Deeds of Davao City.

In her younger days, petitioner taught in Davao City, Quezon City and Manila. While
teaching in Manila, she had the good fortune of furthering her studies at the
University of Pennsylvania, U.S.A. While schooling, she was offered to teach at the
Philadelphia Catholic Archdiocese, which she did for seven (7) years. Thereafter,
she worked at the Mental Health Department of said University for the next
seventeen (17) years.

During those years, she would come home to the Philippines to spend her two-
month summer vacation in her hometown in Davao City. Being single, she would
usually stay in Mandug, Davao City, in the house of her niece, respondent Arlene
Pernes, a daughter of her younger sister, Rosario.

Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug
at the outskirts of Davao City was infested by NPA rebels and many women and
children were victims of crossfire between government troops and the insurgents.
Shocked and saddened about this development, she immediately sent money to
Araceli, Arlenes older sister, with instructions to look for a lot in Davao City where
Arlene and her family could transfer and settle down. This was why she bought the
parcel of land covered by TCT No. T-123125.
Petitioner acquired the lot property initially for the purpose of letting Arlene move
from Mandug to Davao City proper but later she wanted the property to be also
available to any of her kins wishing to live and settle in Davao City. Petitioner made
known this intention in a document she executed on July 21, 1986. 3 The document
reads:

I, MERCEDES VIA MORALIDAD, of legal age, single, having been born on the
29th day of January, 1923, now actually residing at 8021 Lindbergh Boulevard,
Philadelphia, Pennsylvania, U.S.A., wishes to convey my honest intention regarding
my properties situated at Palm Village Subdivision, Bajada, Davao City, 9501,
and hereby declare:

1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house
therein and stay as long as they like;

2. That anybody of my kins who wishes to stay on the aforementioned real property
should maintain an atmosphere of cooperation, live in harmony and must avoid
bickering with one another;

3. That anyone of my kins may enjoy the privilege to stay therein and may avail the
use thereof. Provided, however, that the same is not inimical to the purpose thereof;

4. That anyone of my kins who cannot conform with the wishes of the undersigned
may exercise the freedom to look for his own;

5. That any proceeds or income derived from the aforementioned properties shall be
allotted to my nearest kins who have less in life in greater percentage and lesser
percentage to those who are better of in standing.

xxx xxx xxx

Following her retirement in 1993, petitioner came back to the Philippines to stay with
the respondents on the house they build on the subject property. In the course of
time, their relations turned sour because members of the Pernes family were
impervious to her suggestions and attempts to change certain practices concerning
matters of health and sanitation within their compound. For instance, Arlenes eldest
son, Myco Pernes, then a fourth year veterinary medicine student, would answer
petitioner back with clenched fist and at one time hurled profanities when she
corrected him. Later, Arlene herself followed suit. Petitioner brought the matter to the
local barangay lupon where she lodged a complaint for slander, harassment, threat
and defamation against the Pernes Family. Deciding for petitioner, the lupon
apparently ordered the Pernes family to vacate petitioners property but not after
they are reimbursed for the value of the house they built thereon. Unfortunately, the
parties could not agree on the amount, thus prolonging the impasse between them.
Other ugly incidents interspersed with violent confrontations meanwhile transpired,
with the petitioner narrating that, at one occasion in July 1998, she sustained cuts
and wounds when Arlene pulled her hair, hit her on the face, neck and back, while
her husband Diosdado held her, twisting her arms in the process.

Relations having deteriorated from worse to worst, petitioner, on July 29, 1998,
lodged a formal complaint before the Regional Office of the Ombudsman for
Mindanao, charging the respondent spouses, who were both government
employees, with conduct unbecoming of public servants. This administrative case,
however, did not prosper.

Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful
detainer suit against the respondent spouses. Petitioner alleged that she is the
registered owner of the land on which the respondents built their house; that through
her counsel, she sent the respondent spouses a letter demanding them to vacate
the premises and to pay rentals therefor, which the respondents refused to heed.

In their defense, the respondents alleged having entered the property in question,
building their house thereon and maintaining the same as their residence with
petitioners full knowledge and express consent. To prove their point, they invited
attention to her written declaration of July 21, 1986, supra, wherein she expressly
signified her desire for the spouses to build their house on her property and stay
thereat for as long as they like.

The MTCC, resolving the ejectment suit in petitioners favor, declared that the
respondent spouses, although builders in good faith vis--vis the house they built on
her property, cannot invoke their bona fides as a valid excuse for not complying with
the demand to vacate. To the MTCC, respondents continued possession of the
premises turned unlawful upon their receipt of the demand to vacate, such
possession being merely at petitioners tolerance, and sans any rental. Accordingly,
in its decision dated November 17, 1999, 4 the MTCC rendered judgment for the
petitioner, as plaintiff therein, to wit:

WHEREFORE, judgment is hereby rendered in favor of herein plaintiff and against

the defendants, as follows:

a) Directing the defendants, their agents and other persons acting on their behalf to
vacate the premises and to yield peaceful possession thereof to plaintiff;

b) Ordering defendants to pay P2,000.00 a month from the filing of this complaint
until they vacate premises;

c) Sentencing defendants to pay the sum of P120,000.00 5 as attorneys fees and to

pay the cost of suit.
Defendants counterclaim are hereby dismissed except with respect to the claim for
reimbursement of necessary and useful expenses which should be litigated in an
ordinary civil actions. (sic)

Dissatisfied, the respondent spouses appealed to the RTC of Davao City.

In the meantime, petitioner filed a Motion for Execution Pending Appeal. The motion
was initially granted by the RTC in its Order of February 29, 2000, but the Order was
later withdrawn and vacated by its subsequent Order dated May 9, 2000 6 on the
ground that immediate execution of the appealed decision was not the prudent
course of action to take, considering that the house the respondents constructed on
the subject property might even be more valuable than the land site.

Eventually, in a decision 7 dated September 30, 2000, the RTC reversed that of the
MTCC, holding that respondents possession of the property in question was not, as
ruled by the latter court, by mere tolerance of the petitioner but rather by her express
consent. It further ruled that Article 1678 of the Civil Code on reimbursement of
improvements introduced is inapplicable since said provision contemplates of a
lessor-lessee arrangement, which was not the factual milieu obtaining in the case.
Instead, the RTC ruled that what governed the parties relationship are Articles 448
and 546 of the Civil Code, explaining thus:

Since the defendants-appellees [respondents] are admittedly possessors of the

property by permission from plaintiff [petitioner], and builders in good faith, they have
the right to retain possession of the property subject of this case until they have
been reimbursed the cost of the improvements they have introduced on the
property.

Indeed, this is a substantive right given to the defendants by law, and this right is
superior to the procedural right to [sic] plaintiff to immediately ask for their removal
by a writ of execution by virtue of a decision which as we have shown is erroneous,
and therefore invalid. (Words in brackets supplied),

and accordingly dismissed petitioners appeal, as follows:

WHEREFORE, in view of the foregoing, the Decision appealed from is REVERSED

and declared invalid. Consequently, the motion for execution pending appeal is
likewise denied.

Counter-claims of moral and exemplary damages claimed by defendants are

likewise dismissed. However, attorneys fees in the amount of fifteen thousand
pesos is hereby awarded in favor of defendants-appellants, and against plaintiffs.

SO ORDERED. 8
Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.

On September 27, 2001, the CA, while conceding the applicability of Articles 448
and 546 of the Civil Code to the case, ruled that it is still premature to apply the
same considering that the issue of whether respondents right to possess a portion
of petitioners land had already expired or was already terminated was not yet
resolved. To the CA, the unlawful detainer suit presupposes the cessation of
respondents right to possess. The CA further ruled that what governs the rights of
the parties is the law on usufruct but petitioner failed to establish that respondents
right to possess had already ceased. On this premise, the CA concluded that the
ejectment suit instituted by the petitioner was premature. The appellate court thus
affirmed the appealed RTC decision, disposing:

WHEREFORE, premises considered, the instant petition for review is hereby denied
for lack of merit. Accordingly, the petitioners complaint for Unlawful Detainer is
DISMISSED.

SO ORDERED.

With the CAs denial of her motion for reconsideration in its Resolution of February
28, 2002, petitioner is now before this Court raising the following issues:

I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE

UNLAWFUL DETAINER CASE FOR BEING PREMATURE WHICH DECISION IS
NOT IN ACCORDANCE WITH LAW AND JURISPRUDENCE.

II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING

ARTICLES 448 AND 546 AND THE PROVISIONS OF THE CODE ON USUFRUCT
INSTEAD OF ARTICLE 1678 OF THE CIVIL CODE.

The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was constituted between the
parties herein is one of usufruct over a piece of land, with the petitioner being the
owner of the property upon whom the naked title thereto remained and the
respondents being two (2) among other unnamed usufructuaries who were simply
referred to as petitioners kin. The Court, however, cannot go along with the CAs
holding that the action for unlawful detainer must be dismissed on ground of
prematurity.

Usufruct is defined under Article 562 of the Civil Code in the following wise:

ART. 562. Usufruct gives a right to enjoy the property of another with the obligation
of preserving its form and substance, unless the title constituting it or the law
otherwise provides.
Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers
property. 9 It is also defined as the right to enjoy the property of another temporarily,
including both the jus utendi and the jus fruendi, 10 with the owner retaining the jus
disponendi or the power to alienate the same. 11

It is undisputed that petitioner, in a document dated July 21, 1986, supra, made
known her intention to give respondents and her other kins the right to use and to
enjoy the fruits of her property. There can also be no quibbling about the
respondents being given the right "to build their own house" on the property and to
stay thereat "as long as they like." Paragraph #5 of the same document earmarks
"proceeds or income derived from the aforementioned properties" for the petitioners
"nearest kins who have less in life in greater percentage and lesser percentage to
those who are better of (sic) in standing." The established facts undoubtedly gave
respondents not only the right to use the property but also granted them, among the
petitioners other kins, the right to enjoy the fruits thereof. We have no quarrel,
therefore, with the CAs ruling that usufruct was constituted between petitioner and
respondents. It is thus pointless to discuss why there was no lease contract between
the parties.

However, determinative of the outcome of the ejectment case is the resolution of the
next issue, i.e., whether the existing usufruct may be deemed to have been
extinguished or terminated. If the question is resolved in the affirmative, then the
respondents right to possession, proceeding as it did from their right of usufruct,
likewise ceased. In that case, petitioners action for ejectment in the unlawful
detainer case could proceed and should prosper.

The CA disposed of this issue in this wise:

xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides
xxx

xxx xxx xxx

From the foregoing provision, it becomes apparent that for an action for unlawful
detainer to prosper, the plaintiff [petitioner] needs to prove that defendants
[respondents] right to possess already expired and terminated. Now, has
respondents right to possess the subject portion of petitioners property expired or
terminated? Let us therefore examine respondents basis for occupying the same.

It is undisputed that petitioner expressly authorized respondents o occupy portion of

her property on which their house may be built. Thus "it is my desire that Mr. and
Mrs. Diosdado M. Pernes may build their house therein and stay as long as they
like." From this statement, it seems that petitioner had given the respondents the
usufructuary rights over the portion that may be occupied by the house that the latter
would build, the duration of which being dependent on how long respondents would
like to occupy the property. While petitioner had already demanded from the
respondents the surrender of the premises, this Court is of the opinion that the
usufructuary rights of respondents had not been terminated by the said demand
considering the clear statement of petitioner that she is allowing respondents to
occupy portion of her land as long as the latter want to. Considering that
respondents still want to occupy the premises, petitioner clearly cannot eject
respondents. 12

We disagree with the CAs conclusion of law on the matter. The term or period of the
usufruct originally specified provides only one of the bases for the right of a
usufructuary to hold and retain possession of the thing given in usufruct. There are
other modes or instances whereby the usufruct shall be considered terminated or
extinguished. For sure, the Civil Code enumerates such other modes of
extinguishment:

ART. 603. Usufruct is extinguished:

(1) By the death of the usufructuary, unless a contrary intention clearly appears;

(2) By expiration of the period for which it was constituted, or by the fulfillment of any
resolutory condition provided in the title creating the usufruct;

(3) By merger of the usufruct and ownership in the same person;

(4) By renunciation of the usufructuary;

(5) By the total loss of the thing in usufruct;

(6) By the termination of the right of the person constituting the usufruct;

(7) By prescription. (Emphasis supplied.)

The document executed by the petitioner dated July 21, 1986 constitutes the title
creating, and sets forth the conditions of, the usufruct. Paragraph #3 thereof states
"[T]hat anyone of my kins may enjoy the privilege to stay therein and may avail the
use thereof. Provided, however, that the same is not inimical to the purpose thereof"
(Emphasis supplied). What may be inimical to the purpose constituting the usufruct
may be gleaned from the preceding paragraph wherein petitioner made it
abundantly clear "that anybody of my kins who wishes to stay on the aforementioned
property should maintain an atmosphere of cooperation, live in harmony and must
avoid bickering with one another." That the maintenance of a peaceful and
harmonious relations between and among kin constitutes an indispensable condition
for the continuance of the usufruct is clearly deduced from the succeeding
Paragraph #4 where petitioner stated "[T]hat anyone of my kins who cannot conform
with the wishes of the undersigned may exercise the freedom to look for his own." In
fine, the occurrence of any of the following: the loss of the atmosphere of
cooperation, the bickering or the cessation of harmonious relationship
between/among kin constitutes a resolutory condition which, by express wish of the
petitioner, extinguishes the usufruct.

From the pleadings submitted by the parties, it is indubitable that there were indeed
facts and circumstances whereby the subject usufruct may be deemed terminated or
extinguished by the occurrence of the resolutory conditions provided for in the title
creating the usufruct, namely, the document adverted to which the petitioner
executed on July 21, 1986.

As aptly pointed out by the petitioner in her Memorandum, respondents own

evidence before the MTCC indicated that the relations between the parties "have
deteriorated to almost an irretrievable level." 13 There is no doubt then that what
impelled petitioner to file complaints before the local barangay lupon, the Office of
the Ombudsman for Mindanao, and this instant complaint for unlawful detainer
before the MTCC is that she could not live peacefully and harmoniously with the
Pernes family and vice versa.

Thus, the Court rules that the continuing animosity between the petitioner and the
Pernes family and the violence and humiliation she was made to endure, despite her
advanced age and frail condition, are enough factual bases to consider the usufruct
as having been terminated.

To reiterate, the relationship between the petitioner and respondents respecting the
property in question is one of owner and usufructuary. Accordingly, respondents
claim for reimbursement of the improvements they introduced on the property during
the effectivity of the usufruct should be governed by applicable statutory provisions
and principles on usufruct. In this regard, we cite with approval what Justice
Edgardo Paras wrote on the matter:

If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In
case like this, the terms of the contract and the pertinent provisions of law should
govern (3 Manresa 215-216; se also Montinola vs. Bantug, 71 Phil.
449). 14 (Emphasis ours.)

By express provision of law, respondents, as usufructuary, do not have the right to

reimbursement for the improvements they may have introduced on the property. We
quote Articles 579 and 580 of the Civil Code:

Art. 579. The usufructuary may make on the property held in usufruct such useful
improvements or expenses for mere pleasure as he may deem proper, provided he
does not alter its form or substance; but he shall have no right to be indemnified
therefor. He may, however, remove such improvements, should it be possible to do
so without damage to the property. (Emphasis supplied.)
Art. 580. The usufructuary may set off the improvements he may have made on the
property against any damage to the same.

Given the foregoing perspective, respondents will have to be ordered to vacate the
premises without any right of reimbursement. If the rule on reimbursement or
indemnity were otherwise, then the usufructuary might, as an author pointed out,
improve the owner out of his property. 15 The respondents may, however, remove or
destroy the improvements they may have introduced thereon without damaging the
petitioners property.

Out of the generosity of her heart, the petitioner has allowed the respondent
spouses to use and enjoy the fruits of her property for quite a long period of time.
They opted, however, to repay a noble gesture with unkindness. At the end of the
day, therefore, they really cannot begrudge their aunt for putting an end to their right
of usufruct. The disposition herein arrived is not only legal and called for by the law
and facts of the case. It is also right.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of

the CA are REVERSED and SET ASIDE. Accordingly, the decision of the MTCC is
REINSTATED with MODIFICATION that all of respondents counterclaims are
dismissed, including their claims for reimbursement of useful and necessary
expenses.

No pronouncement as to costs.

SO ORDERED.

CANCIO C. GARCIA

G.R. No. 148830. April 13, 2005

NATIONAL HOUSING AUTHORITY, Petitioners,

vs.
COURT OF APPEALS, BULACAN GARDEN CORPORATION and MANILA
SEEDLING BANK FOUNDATION, INC., Respondents.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 seeking to set aside the Decision2 dated 30 March 2001
of the Court of Appeals ("appellate court") in CA-G.R. CV No. 48382, as well as its
Resolution dated 25 June 2001 denying the motion for reconsideration. The
appellate court reversed the Decision3 of Branch 87 of the Regional Trial Court of
Quezon City ("trial court") dated 8 March 1994 in Civil Case No. Q-53464. The trial
court dismissed the complaint for injunction filed by Bulacan Garden Corporation
("BGC") against the National Housing Authority ("NHA"). BGC wanted to enjoin the
NHA from demolishing BGCs facilities on a lot leased from Manila Seedling Bank
Foundation, Inc. ("MSBF"). MSBF allegedly has usufructuary rights over the lot
leased to BGC.

Antecedent Facts

On 24 October 1968, Proclamation No. 481 issued by then President Ferdinand

Marcos set aside a 120-hectare portion of land in Quezon City owned by the
NHA4 as reserved property for the site of the National Government Center ("NGC").
On 19 September 1977, President Marcos issued Proclamation No. 1670, which
removed a seven-hectare portion from the coverage of the NGC. Proclamation No.
1670 gave MSBF usufructuary rights over this segregated portion, as follows:

Pursuant to the powers vested in me by the Constitution and the laws of the
Philippines, I, FERDINAND E. MARCOS, President of the Republic of the
Philippines, do hereby exclude from the operation of Proclamation No. 481, dated
October 24, 1968, which established the National Government Center Site, certain
parcels of land embraced therein and reserving the same for the Manila Seedling
Bank Foundation, Inc., for use in its operation and projects, subject to private rights
if any there be, and to future survey, under the administration of the
Foundation.

This parcel of land, which shall embrace 7 hectares, shall be determined by the
future survey based on the technical descriptions found in Proclamation No. 481,
and most particularly on the original survey of the area, dated July 1910 to June
1911, and on the subdivision survey dated April 19-25, 1968. (Emphasis added)

MSBF occupied the area granted by Proclamation No. 1670. Over the years,
MSBFs occupancy exceeded the seven-hectare area subject to its usufructuary
rights. By 1987, MSBF occupied approximately 16 hectares. By then the land
occupied by MSBF was bounded by Epifanio de los Santos Avenue ("EDSA") to the
west, Agham Road to the east, Quezon Avenue to the south and a creek to the
north.

On 18 August 1987, MSBF leased a portion of the area it occupied to BGC and
other stallholders. BGC leased the portion facing EDSA, which occupies 4,590
square meters of the 16-hectare area.

On 11 November 1987, President Corazon Aquino issued Memorandum Order No.

127 ("MO 127") which revoked the reserved status of "the 50 hectares, more or less,
remaining out of the 120 hectares of the NHA property reserved as site of the
National Government Center." MO 127 also authorized the NHA to commercialize
the area and to sell it to the public.

On 15 August 1988, acting on the power granted under MO 127, the NHA gave
BGC ten days to vacate its occupied area. Any structure left behind after the
expiration of the ten-day period will be demolished by NHA.

BGC then filed a complaint for injunction on 21 April 1988 before the trial court. On
26 May 1988, BGC amended its complaint to include MSBF as its co-plaintiff.

The Trial Courts Ruling

The trial court agreed with BGC and MSBF that Proclamation No. 1670 gave MSBF
the right to conduct the survey, which would establish the seven-hectare area
covered by MSBFs usufructuary rights. However, the trial court held that MSBF
failed to act seasonably on this right to conduct the survey. The trial court ruled that
the previous surveys conducted by MSBF covered 16 hectares, and were thus
inappropriate to determine the seven-hectare area. The trial court concluded that to
allow MSBF to determine the seven-hectare area now would be grossly unfair to the
grantor of the usufruct.

On 8 March 1994, the trial court dismissed BGCs complaint for injunction. Thus:

Premises considered, the complaint praying to enjoin the National Housing Authority
from carrying out the demolition of the plaintiffs structure, improvements and
facilities in the premises in question is hereby DISMISSED, but the suggestion for
the Court to rule that Memorandum Order 127 has repealed Proclamation No. 1670
is DENIED. No costs.

SO ORDERED.5

The NHA demolished BGCs facilities soon thereafter.

The Appellate Courts Ruling

Not content with the trial courts ruling, BGC appealed the trial courts Decision to
the appellate court. Initially, the appellate court agreed with the trial court that
Proclamation No. 1670 granted MSBF the right to determine the location of the
seven-hectare area covered by its usufructuary rights. However, the appellate court
ruled that MSBF did in fact assert this right by conducting two surveys and erecting
its main structures in the area of its choice.

On 30 March 2001, the appellate court reversed the trial courts ruling. Thus:
WHEREFORE, premises considered, the Decision dated March 8, 1994 of the
Regional Trial Court of Quezon City, Branch 87, is hereby REVERSED and SET
ASIDE. The National Housing Authority is enjoined from demolishing the structures,
facilities and improvements of the plaintiff-appellant Bulacan Garden Corporation at
its leased premises located in Quezon City which premises were covered by
Proclamation No. 1670, during the existence of the contract of lease it (Bulacan
Garden) had entered with the plaintiff-appellant Manila Seedling Bank Foundation,
Inc.

No costs.

SO ORDERED.6

The NHA filed a motion for reconsideration, which was denied by the appellate court
on 25 June 2001.

Hence, this petition.

The Issues

The following issues are considered by this Court for resolution:

WHETHER THE PETITION IS NOW MOOT BECAUSE OF THE DEMOLITION OF

THE STRUCTURES OF BGC; and

WHETHER THE PREMISES LEASED BY BGC FROM MSBF IS WITHIN THE

SEVEN-HECTARE AREA THAT PROCLAMATION NO. 1670 GRANTED TO MSBF
BY WAY OF USUFRUCT.

The Ruling of the Court

We remand this petition to the trial court for a joint survey to determine finally the
metes and bounds of the seven-hectare area subject to MSBFs usufructuary rights.

Whether the Petition is Moot because of the

Demolition of BGCs Facilities

BGC claims that the issue is now moot due to NHAs demolition of BGCs facilities
after the trial court dismissed BGCs complaint for injunction. BGC argues that there
is nothing more to enjoin and that there are no longer any rights left for adjudication.

We disagree.
BGC may have lost interest in this case due to the demolition of its premises, but
its co-plaintiff, MSBF, has not. The issue for resolution has a direct effect on
MSBFs usufructuary rights. There is yet the central question of the exact location of
the seven-hectare area granted by Proclamation No. 1670 to MSBF. This issue is
squarely raised in this petition. There is a need to settle this issue to forestall future
disputes and to put this 20-year litigation to rest.

On the Location of the Seven-Hectare Area Granted by

Proclamation No. 1670 to MSBF as Usufructuary

Rule 45 of the 1997 Rules of Civil Procedure limits the jurisdiction of this Court to the
review of errors of law.7 Absent any of the established grounds for exception,8 this
Court will not disturb findings of fact of lower courts. Though the matter raised in this
petition is factual, it deserves resolution because the findings of the trial court and
the appellate court conflict on several points.

The entire area bounded by Agham Road to the east, EDSA to the west, Quezon
Avenue to the south and by a creek to the north measures approximately 16
hectares. Proclamation No. 1670 gave MSBF a usufruct over only a seven-hectare
area. The BGCs leased portion is located along EDSA.

A usufruct may be constituted for a specified term and under such conditions as the
parties may deem convenient subject to the legal provisions on usufruct. 9 A
usufructuary may lease the object held in usufruct.10 Thus, the NHA may not evict
BGC if the 4,590 square meter portion MSBF leased to BGC is within the seven-
hectare area held in usufruct by MSBF. The owner of the property must respect the
lease entered into by the usufructuary so long as the usufruct exists.11 However, the
NHA has the right to evict BGC if BGC occupied a portion outside of the seven-
hectare area covered by MSBFs usufructuary rights.

MSBFs survey shows that BGCs stall is within the seven-hectare area. On the
other hand, NHAs survey shows otherwise. The entire controversy revolves on the
question of whose land survey should prevail.

MSBFs survey plots the location of the seven-hectare portion by starting its
measurement from Quezon Avenue going northward along EDSA up until the creek,
which serves as the northern boundary of the land in question. Mr. Ben Malto
("Malto"), surveyor for MSBF, based his survey method on the fact that MSBFs
main facilities are located within this area.

On the other hand, NHAs survey determines the seven-hectare portion by starting
its measurement from Quezon Avenue going towards Agham Road. Mr. Rogelio
Inobaya ("Inobaya"), surveyor for NHA, based his survey method on the fact that he
saw MSBFs gate fronting Agham Road.
BGC presented the testimony of Mr. Lucito M. Bertol ("Bertol"), General Manager of
MSBF. Bertol presented a map,12 which detailed the area presently occupied by
MSBF. The map had a yellow-shaded portion, which was supposed to indicate the
seven-hectare area. It was clear from both the map and Bertols testimony that
MSBF knew that it had occupied an area in excess of the seven-hectare area
granted by Proclamation No. 1670.13 Upon cross-examination, Bertol admitted that he
personally did not know the exact boundaries of the seven-hectare area.14 Bertol also
admitted that MSBF prepared the map without consulting NHA, the owner of the
property.15

BGC also presented the testimony of Malto, a registered forester and the Assistant
Vice-President of Planning, Research and Marketing of MSBF. Malto testified that
he conducted the land survey, which was used to construct the map presented by
Bertol.16 Bertol clarified that he authorized two surveys, one in 1984 when he first
joined MSBF, and the other in 1986.17 In both instances, Mr. Malto testified that he
was asked to survey a total of 16 hectares, not just seven hectares. Malto testified
that he conducted the second survey in 1986 on the instruction of MSBFs general
manager. According to Malto, it was only in the second survey that he was told to
determine the seven-hectare portion. Malto further clarified that he based the
technical descriptions of both surveys on a previously existing survey of the
property.18

The NHA presented the testimony of Inobaya, a geodetic engineer employed by the
NHA. Inobaya testified that as part of the NHAs Survey Division, his duties included
conducting surveys of properties administered by the NHA.19Inobaya conducted his
survey in May 1988 to determine whether BGC was occupying an area outside the
seven-hectare area MSBF held in usufruct.20 Inobaya surveyed the area occupied by
MSBF following the same technical descriptions used by Malto. Inobaya also came
to the same conclusion that the area occupied by MSBF, as indicated by the
boundaries in the technical descriptions, covered a total of 16 hectares. He further
testified that the seven-hectare portion in the map presented by BGC,21 which was
constructed by Malto, does not tally with the boundaries BGC and MSBF indicated in
their complaint.

Article 565 of the Civil Code states:

ART. 565. The rights and obligations of the usufructuary shall be those provided in
the title constituting the usufruct; in default of such title, or in case it is deficient, the
provisions contained in the two following Chapters shall be observed.

In the present case, Proclamation No. 1670 is the title constituting the usufruct.
Proclamation No. 1670 categorically states that the seven-hectare area shall be
determined "by future survey under the administration of the Foundation subject to
private rights if there be any." The appellate court and the trial court agree that
MSBF has the latitude to determine the location of its seven-hectare usufruct portion
within the 16-hectare area. The appellate court and the trial court disagree, however,
whether MSBF seasonably exercised this right.

It is clear that MSBF conducted at least two surveys. Although both surveys covered
a total of 16 hectares, the second survey specifically indicated a seven-hectare area
shaded in yellow. MSBF made the first survey in 1984 and the second in 1986, way
before the present controversy started. MSBF conducted the two surveys before the
lease to BGC. The trial court ruled that MSBF did not act seasonably in exercising
its right to conduct the survey. Confronted with evidence that MSBF did in fact
conduct two surveys, the trial court dismissed the two surveys as self-serving. This
is clearly an error on the part of the trial court. Proclamation No. 1670 authorized
MSBF to determine the location of the seven-hectare area. This authority, coupled
with the fact that Proclamation No. 1670 did not state the location of the seven-
hectare area, leaves no room for doubt that Proclamation No. 1670 left it to MSBF to
choose the location of the seven-hectare area under its usufruct.

More evidence supports MSBFs stand on the location of the seven-hectare area.
The main structures of MSBF are found in the area indicated by MSBFs survey.
These structures are the main office, the three green houses, the warehouse and
the composting area. On the other hand, the NHAs delineation of the seven-hectare
area would cover only the four hardening bays and the display area. It is easy to
distinguish between these two groups of structures. The first group covers buildings
and facilities that MSBF needs for its operations. MSBF built these structures before
the present controversy started. The second group covers facilities less essential to
MSBFs existence. This distinction is decisive as to which survey should prevail. It is
clear that the MSBF intended to use the yellow-shaded area primarily because it
erected its main structures there.

Inobaya testified that his main consideration in using Agham Road as the starting
point for his survey was the presence of a gate there. The location of the gate is not
a sufficient basis to determine the starting point. MSBFs right as a usufructuary as
granted by Proclamation No. 1670 should rest on something more substantial than
where MSBF chose to place a gate.

To prefer the NHAs survey to MSBFs survey will strip MSBF of most of its main
facilities. Only the main building of MSBF will remain with MSBF since the main
building is near the corner of EDSA and Quezon Avenue. The rest of MSBFs main
facilities will be outside the seven-hectare area.

On the other hand, this Court cannot countenance MSBFs act of exceeding the
seven-hectare portion granted to it by Proclamation No. 1670. A usufruct is not
simply about rights and privileges. A usufructuary has the duty to protect the owners
interests. One such duty is found in Article 601 of the Civil Code which states:
ART. 601. The usufructuary shall be obliged to notify the owner of any act of a third
person, of which he may have knowledge, that may be prejudicial to the rights of
ownership, and he shall be liable should he not do so, for damages, as if they had
been caused through his own fault.

A usufruct gives a right to enjoy the property of another with the obligation of
preserving its form and substance, unless the title constituting it or the law otherwise
provides.22 This controversy would not have arisen had MSBF respected the limit of
the beneficial use given to it. MSBFs encroachment of its benefactors property
gave birth to the confusion that attended this case. To put this matter entirely to rest,
it is not enough to remind the NHA to respect MSBFs choice of the location of its
seven-hectare area. MSBF, for its part, must vacate the area that is not part of its
usufruct. MSBFs rights begin and end within the seven-hectare portion of its
usufruct. This Court agrees with the trial court that MSBF has abused the privilege
given it under Proclamation No. 1670. The direct corollary of enforcing MSBFs
rights within the seven-hectare area is the negation of any of MSBFs acts beyond it.

The seven-hectare portion of MSBF is no longer easily determinable considering the

varied structures erected within and surrounding the area. Both parties advance
different reasons why their own surveys should be preferred. At this point, the
determination of the seven-hectare portion cannot be made to rely on a choice
between the NHAs and MSBFs survey. There is a need for a new survey, one
conducted jointly by the NHA and MSBF, to remove all doubts on the exact location
of the seven-hectare area and thus avoid future controversies. This new survey
should consider existing structures of MSBF. It should as much as possible include
all of the facilities of MSBF within the seven-hectare portion without sacrificing
contiguity.

A final point. Article 605 of the Civil Code states:

ART. 605. Usufruct cannot be constituted in favor of a town, corporation, or

association for more than fifty years. If it has been constituted, and before the
expiration of such period the town is abandoned, or the corporation or association is
dissolved, the usufruct shall be extinguished by reason thereof. (Emphasis added)

The law clearly limits any usufruct constituted in favor of a corporation or association
to 50 years. A usufruct is meant only as a lifetime grant. Unlike a natural person, a
corporation or associations lifetime may be extended indefinitely. The usufruct
would then be perpetual. This is especially invidious in cases where the usufruct
given to a corporation or association covers public land. Proclamation No. 1670 was
issued 19 September 1977, or 28 years ago. Hence, under Article 605, the usufruct
in favor of MSBF has 22 years left.

MO 127 released approximately 50 hectares of the NHA property as reserved site

for the National Government Center. However, MO 127 does not affect MSBFs
seven-hectare area since under Proclamation No. 1670, MSBFs seven-hectare
area was already "exclude[d] from the operation of Proclamation No. 481, dated
October 24, 1968, which established the National Government Center Site."

WHEREFORE, the Decision of the Court of Appeals dated 30 March 2001 and its
Resolution dated 25 June 2001 in CA-G.R. CV No. 48382 are SET ASIDE. This
case is REMANDED to Branch 87 of the Regional Trial Court of Quezon City, which
shall order a joint survey by the National Housing Authority and Manila Seedling
Bank Foundation, Inc. to determine the metes and bounds of the seven-hectare
portion of Manila Seedling Bank Foundation, Inc. under Proclamation No. 1670. The
seven-hectare portion shall be contiguous and shall include as much as possible all
existing major improvements of Manila Seedling Bank Foundation, Inc. The parties
shall submit the joint survey to the Regional Trial Court for its approval within sixty
days from the date ordering the joint survey.

SO ORDERED.

G.R. No. 158182 June 12, 2008

SESINANDO MERIDA, petitioner,

vs.
PEOPLE OF THE PHILIPPINES, respondent.

DECISION

CARPIO, J.:

The Case

This is a petition for review1 of the Decision2 dated 28 June 2002 and the Resolution
dated 14 May 2003 of the Court of Appeals. The 28 June 2002 Decision affirmed the
conviction of petitioner Sesinando Merida (petitioner) for violation of Section
68,3 Presidential Decree No. 705 (PD 705),4 as amended by Executive Order No.
277. The Resolution dated 14 May 2003 denied admission of petitioner's motion for
reconsideration.5

The Facts

Petitioner was charged in the Regional Trial Court of Romblon, Romblon, Branch 81
(trial court) with violation of Section 68 of PD 705, as amended, for "cut[ting],
gather[ing], collect[ing] and remov[ing]" a lone narra tree inside a private land in
Mayod, Ipil, Magdiwang, Romblon (Mayod Property) over which private complainant
Oscar M. Tansiongco (Tansiongco) claims ownership.6
The prosecution evidence showed that on 23 December 1998, Tansiongco learned
that petitioner cut a narra tree in the Mayod Property. Tansiongco reported the
matter to Florencio Royo (Royo), the punong barangay of Ipil. On 24 December
1998,7 Royo summoned petitioner to a meeting with Tansiongco. When confronted
during the meeting about the felled narra tree, petitioner admitted cutting the tree but
claimed that he did so with the permission of one Vicar Calix (Calix) who, according
to petitioner, bought the Mayod Property from Tansiongco in October 1987 under
a pacto de retro sale. Petitioner showed to Royo Calix's written authorization signed
by Calix's wife.8

On 11 January 1999, Tansiongco reported the tree-cutting to the Department of

Environment and Natural Resources (DENR) forester Thelmo S. Hernandez
(Hernandez) in Sibuyan, Romblon. When Hernandez confronted petitioner about the
felled tree, petitioner reiterated his earlier claim to Royo that he cut the tree with
Calix's permission. Hernandez ordered petitioner not to convert the felled tree trunk
into lumber.

On 26 January 1999, Tansiongco informed Hernandez that petitioner had converted

the narra trunk into lumber. Hernandez, with other DENR employees and
enforcement officers, went to the Mayod Property and saw that the narra tree had
been cut into six smaller pieces of lumber. Hernandez took custody of the
lumber,9 deposited them for safekeeping with Royo, and issued an apprehension
receipt to petitioner. A larger portion of the felled tree remained at the Mayod
Property. The DENR subsequently conducted an investigation on the matter. 10

Tansiongco filed a complaint with the Office of the Provincial Prosecutor of Romblon
(Provincial Prosecutor) charging petitioner with violation of Section 68 of PD 705, as
amended. During the preliminary investigation, petitioner submitted a counter-
affidavit reiterating his claim that he cut the narra tree with Calix's permission. The
Provincial Prosecutor11 found probable cause to indict petitioner and filed the
Information with the trial court (docketed as Criminal Case No. 2207).

During the trial, the prosecution presented six witnesses including Tansiongco,
Royo, and Hernandez who testified on the events leading to the discovery of and
investigation on the tree-cutting. Petitioner testified as the lone defense witness and
claimed, for the first time, that he had no part in the tree-cutting.

The Ruling of the Trial Court

In its Decision dated 24 November 2000, the trial court found petitioner guilty as
charged, sentenced him to fourteen (14) years, eight (8) months and one (1) day to
twenty (20) years of reclusion temporal and ordered the seizedlumber forfeited in
Tansiongco's favor.12 The trial court dismissed petitioner's defense of denial in view
of his repeated extrajudicial admissions that he cut the narra tree in the Mayod
Property with Calix's permission. With this finding and petitioner's lack of DENR
permit to cut the tree, the trial court held petitioner liable for violation of Section 68 of
PD 705, as amended.

Petitioner appealed to the Court of Appeals reiterating his defense of denial.

Petitioner also contended that (1) the trial court did not acquire jurisdiction over the
case because it was based on a complaint filed by Tansiongco and not by a forest
officer as provided under Section 80 of PD 705 and (2) the penalty imposed by the
trial court is excessive.

The Ruling of the Court of Appeals

In its Decision dated 28 June 2002, the Court of Appeals affirmed the trial court's
ruling but ordered the seized lumber confiscated in the government's favor. 13 The
Court of Appeals sustained the trial court's finding that petitioner is bound by his
extrajudicial admissions of cutting the narra tree in the Mayod Property without any
DENR permit. The Court of Appeals also found nothing irregular in the filing of the
complaint by Tansiongco instead of a DENR forest officer considering that the case
underwent preliminary investigation by the proper officer who filed the Information
with the trial court.

On the imposable penalty, the Court of Appeals, in the dispositive portion of its
ruling, sentenced petitioner to 14 years, 8 months and 1 day to 17 years of reclusion
temporal. However, in the body of its ruling, the Court of Appeals held that "the
penalty to be imposed on [petitioner] should be (14) years, eight (8) months and one
(1) day to twenty (20) years of reclusion temporal,"14 the same penalty the trial court
imposed.

Petitioner sought reconsideration but the Court of Appeals, in its Resolution dated
14 May 2003, did not admit his motion for having been filed late.15

Hence, this petition. Petitioner raises the following issues:

I. WHETHER x x x SECTION 68 OF P.D. 705 AS AMENDED PROHIBITING

THE CUTTING, GATHERING, COLLECTING AND REMOVING TIMBER OR
OTHER FOREST PRODUCTS FROM ANY FOREST LAND APPLIES TO
PETITIONER.

II. WHETHER x x x POSSESSION OF THE NARRA TREE CUT IN PRIVATE

LAND CONTESTED BY VICAR CALIX AND PRIVATE-COMPLAINANT
OSCAR TANSIONGCO IS COVERED BY SECTION 80 OF P.D. 705 AS
AMENDED.

III. WHETHER PRIVATE-COMPLAINANT CAN INITIATE THE CHARGE

EVEN WITHOUT THE STANDING AUTHORITY COMING FROM THE
INVESTIGATING FOREST OFFICER OF THE DEPARTMENT OF
 ENVIRONMENT AND NATURAL RESOURCES AS MANDATED BY
SECTION 80 OF P.D. 705 AS AMENDED.

[IV.] WHETHER x x x THE TRIAL COURT ERRED IN TAKING

COGNIZANCE OF THE CASE FILED BY PRIVATE-COMPLAINANT
BECAUSE IT WAS NOT THE INVESTIGATING OFFICER AS REQUIRED
BY SECTION 80 OF P.D. 705 AS AMENDED WHO MUST BE THE ONE TO
INSTITUTE THE FILING OF THE SAME.16

In its Comment to the petition, the Office of the Solicitor General (OSG) countered
that (1) the trial court acquired jurisdiction over the case even though Tansiongco,
and not a DENR forest officer, filed the complaint against petitioner and (2) petitioner
is liable for violation of Section 68 of PD 705, as amended.

The Issues

The petition raises the following issues:17

1) Whether the trial court acquired jurisdiction over Criminal Case No. 2207
even though it was based on a complaint filed by Tansiongco and not by a
DENR forest officer; and

2) Whether petitioner is liable for violation of Section 68 of PD 705, as

amended.

The Ruling of the Court

The petition has no merit.

The Trial Court Acquired Jurisdiction Over

Criminal Case No. 2207

We sustain the OSG's claim that the trial court acquired jurisdiction over Criminal
Case No. 2207. The Revised Rules of Criminal Procedure (Revised Rules) list the
cases which must be initiated by a complaint filed by specified individuals,18 non-
compliance of which ousts the trial court of jurisdiction from trying such
cases.19 However, these cases concern only defamation and other crimes against
chastity20 and not to cases concerning Section 68 of PD 705, as amended. Further,
Section 80 of PD 705 does not prohibit an interested person from filing a complaint
before any qualified officer for violation of Section 68 of PD 705, as amended.
Section 80 of PD 705 provides in relevant parts:

SECTION 80. Arrest; Institution of criminal actions. - x x x x

 Reports and complaints regarding the commission of any of the
offenses defined in this Chapter, not committed in the presence of any
forest officer or employee, or any of the deputized officers or officials, shall
immediately be investigated by the forest officer assigned in the area
where the offense was allegedly committed, who shall thereupon receive the
evidence supporting the report or complaint.

If there is prima facie evidence to support the complaint or report, the

investigating forest officer shall file the necessary complaint with the
appropriate official authorized by law to conduct a preliminary
investigation of criminal cases and file an information in Court.
(Emphasis supplied)

We held in People v. CFI of Quezon21 that the phrase "reports and complaints" in
Section 80 refers to "reports and complaints as might be brought to the forest officer
assigned to the area by other forest officers or employees of the Bureau of
Forest Development or any of the deputized officers or officials, for violations of
forest laws not committed in their presence."22

Here, it was not "forest officers or employees of the Bureau of Forest Development
or any of the deputized officers or officials" who reported to Hernandez the tree-
cutting in the Mayod Property but Tansiongco, a private citizen who claims
ownership over the Mayod Property. Thus, Hernandez cannot be faulted for not
conducting an investigation to determine "if there is prima facie evidence to support
the complaint or report."23 At any rate, Tansiongco was not precluded, either under
Section 80 of PD 705 or the Revised Rules, from filing a complaint before the
Provincial Prosecutor for petitioner's alleged violation of Section 68 of PD 705, as
amended. For its part, the trial court correctly took cognizance of Criminal Case No.
2207 as the case falls within its exclusive original jurisdiction.24

Petitioner is Liable for Cutting Timber in Private

Property Without Permit

Section 68, as amended, one of the 12 acts25 penalized under PD 705, provides:

SECTION 68. Cutting, Gathering and/or Collecting Timber, or Other Forest

Products Without License. - Any person who shall cut, gather, collect, remove
timber or other forest products from any forest land, or timber from alienable
or disposable public land, or from private land, without any authority, or
possess timber or other forest products without the legal documents as
required under existing forest laws and regulations, shall be punished with the
penalties imposed under Articles 309 and 310 of the Revised Penal Code:
Provided, That in the case of partnerships, associations, or corporations, the
officers who ordered the cutting, gathering, collection or possession shall be
liable, and if such officers are aliens, they shall, in addition to the penalty, be
 deported without further proceedings on the part of the Commission on
Immigration and Deportation.

The court shall further order the confiscation in favor of the government of the
timber or any forest products cut, gathered, collected, removed, or possessed
as well as the machinery, equipment, implements and tools illegally used in
the area where the timber or forest products are found. (Emphasis supplied)

Section 68 penalizes three categories of acts: (1) the cutting, gathering, collecting,
or removing of timber or other forest products from any forest land without any
authority; (2) the cutting, gathering, collecting, or removing of timber from alienable
or disposable public land, or from private land without any authority;26 and (3) the
possession of timber or other forest products without the legal documents as
required under existing forest laws and regulations.27 Petitioner stands charged of
having "cut, gathered, collected and removed timber or other forest products from a
private land28 without x x x the necessary permit x x x " thus his liablity, if ever,
should be limited only for "cut[ting], gather[ing], collect[ing] and remov[ing] timber,"
under the second category. Further, the prosecution evidence showed that petitioner
did not perform any acts of "gathering, collecting, or removing" but only the act of
"cutting" a lone narra tree. Hence, this case hinges on the question of whether
petitioner "cut x x xtimber" in the Mayod Property without a DENR permit.29

We answer in the affirmative and thus affirm the lower courts' rulings.

On the question of whether petitioner cut a narra tree in the Mayod Property without
a DENR permit, petitioner adopted conflicting positions. Before his trial, petitioner
consistently represented to the authorities that he cut a narra tree in the Mayod
Property and that he did so only with Calix's permission. However, when he testified,
petitioner denied cutting the tree in question. We sustain the lower courts' rulings
that petitioner's extrajudicial admissions bind him.30 Petitioner does not explain why
Royo and Hernandez, public officials who testified under oath in their official
capacities, would lie on the stand to implicate petitioner in a serious criminal offense,
not to mention that the acts of these public officers enjoy the presumption of
regularity. Further, petitioner does not deny presenting Calix's authorization to Royo
and Hernandez as his basis for cutting the narra tree in the Mayod Property.
Petitioner has no use of Calix's authorization if, as he claimed during the trial, he did
not cut any tree in the Mayod Property.

We further hold that the lone narre tree petitioner cut from the Mayod Property
constitutes "timber" under Section 68 of PD 705, as amended. PD 705 does not
define "timber," only "forest product" (which circuitously includes "timber.")31 Does
the narra tree in question constitute "timber" under Section 68? The closest this
Court came to defining the term "timber" in Section 68 was to provide that
"timber," includes "lumber" or "processed log."32 In other jurisdictions, timber is
determined by compliance with specified dimensions33 or certain "stand age" or
"rotation age."34 In Mustang Lumber, Inc. v. Court of Appeals,35 this Court was faced
with a similar task of having to define a term in Section 68 of PD 705 - "lumber" - to
determine whether possession of lumber is punishable under that provision. In ruling
in the affirmative, we held that "lumber" should be taken in its ordinary or common
usage meaning to refer to "processed log or timber," thus:

The Revised Forestry Code contains no definition of either timber or lumber.

While the former is included in forest products as defined in paragraph (q) of
Section 3, the latter is found in paragraph (aa) of the same section in the
definition of "Processing plant," which reads:

(aa) Processing plant is any mechanical set-up, machine or

combination of machine used for the processing of logs and other
forest raw materials into lumber, veneer, plywood, wallboard,
blackboard, paper board, pulp, paper or other finished wood products.

This simply means that lumber is a processed log or processed forest raw
material. Clearly, the Code uses the term lumber in its ordinary or common
usage. In the 1993 copyright edition of Webster's Third New International
Dictionary, lumber is defined, inter alia, as "timber or logs after being prepared
for the market." Simply put, lumber is a processed log or timber.

It is settled that in the absence of legislative intent to the contrary,

words and phrases used in a statute should be given their plain,
ordinary, and common usage meaning. And in so far as possession
of timber without the required legal documents is concerned, Section 68 of PD
No. 705, as amended, makes no distinction between raw and procesed
timber. Neither should we.36 x x x x (Italicization in the original; boldfacing
supplied)

We see no reason why, as in Mustang, the term "timber" under Section 68 cannot
be taken in its common acceptation as referring to "wood used for or suitable for
building or for carpentry or joinery."37 Indeed, tree saplings or tiny tree stems that are
too small for use as posts, panelling, beams, tables, or chairs cannot be considered
timber.38

Here, petitioner was charged with having felled a narra tree and converted the same
into "several pieces of sawn lumber, about three (3) pcs. 2x16x6 and three (3) pcs.
2x18x7 x x x consisting of 111 board feet x x x." These measurements were
indicated in the apprehension receipt Hernandez issued to petitioner on 26 January
1999 which the prosecution introduced in evidence.39 Further, Hernandez testified
that the larger portion of the felled log left in the Mayod Property "measured 76
something centimeters [at the big end] while the smaller end measured 65
centimeters and the length was 2.8 meters."40 Undoubtedly, the narra tree petitioner
felled and converted to lumber was "timber" fit "for building or for carpentry or
joinery" and thus falls under the ambit of Section 68 of PD 705, as amended.

The Penalty Imposable on Petitioner

Violation of Section 68 of PD 705, as amended, is punishable as Qualified Theft

under Article 310 in relation to Article 309 of the Revised Penal Code (RPC), thus:

Art. 310. Qualified theft. - The crime of qualified theft shall be punished by the
penalties next higher by two degrees than those respectively specified in the
next preceding article x x x.

Art. 309. Penalties. - Any person guilty of theft shall be punished by:

1. The penalty of prisin mayor in its minimum and medium periods, if

the value of the thing stolen is more than 12,000 pesos but does not
exceed 22,000 pesos; but if the value of the thing stolen exceeds the
latter amount, the penalty shall be the maximum period of the one
prescribed in this paragraph, and one year for each additional ten
thousand pesos, but the total of the penalty which may be imposed
shall not exceed twenty years. In such cases, and in connection with
the accessory penalties which may be imposed and for the purpose of
the other provisions of this Code, the penalty shall be termed prisin
mayor or reclusin temporal, as the case may be.

2. The penalty of prisin correccional in its medium and maximum

periods, if the value of the thing stolen is more than 6,000 pesos but
does not exceed 12,000 pesos.

3. The penalty of prisin correccional in its minimum and medium

periods, if the value of the property stolen is more than 200 pesos but
does not exceed 6,000 pesos.

4. Arresto mayor in its medium period to prisin correccional in its

minimum period, if the value of the property stolen is over 50 pesos but
does not exceed 200 pesos.

5. Arresto mayor to its full extent, if such value is over 5 pesos but does
not exceed 50 pesos.

6. Arresto mayor in its minimum and medium periods, if such value

does not exceed 5 pesos.

7. Arresto menor or a fine not exceeding 200 pesos, if the theft is

committed under the circumstances enumerated in paragraph 3 of the
 next preceding article and the value of the thing stolen does not exceed
5 pesos. If such value exceeds said amount, the provisions of any of
the five preceding subdivisions shall be made applicable.

8. Arresto menor in its minimum period or a fine not exceeding 50

pesos, when the value of the thing stolen is not over 5 pesos, and the
offender shall have acted under the impulse of hunger, poverty, or the
difficulty of earning a livelihood for the support of himself or his family.

The Information filed against petitioner alleged that the six pieces of lumber
measuring 111 board feet were valued at P3,330. However, if the value of the log
left at the Mayod Property is included, the amount increases to P20,930.40. To
prove this allegation, the prosecution relied on Hernandez's testimony that these
amounts, as stated in the apprehension receipt he issued, are his "estimates" based
on "prevailing local price."41

This evidence does not suffice. To prove the amount of the property taken for fixing
the penalty imposable against the accused under Article 309 of the RPC, the
prosecution must present more than a mere uncorroborated "estimate" of such
fact.42 In the absence of independent and reliable corroboration of such estimate,
courts may either apply the minimum penalty under Article 309 or fix the value of the
property taken based on the attendant circumstances of the case.43 In People v.
Dator44 where, as here, the accused was charged with violation of Section 68 of PD
705, as amended, for possession of lumber without permit, the prosecution's
evidence for the lumber's value consisted of an estimate made by the apprehending
authorities whose apparent lack of corroboration was compounded by the fact that
the transmittal letter for the estimate was not presented in evidence. Accordingly, we
imposed on the accused the minimum penalty under Article 309(6)45 of the RPC.46

Applying Dator in relation to Article 310 of the RPC and taking into account the
Indeterminate Sentence Law, we find it proper to impose on petitioner, under the
circumstances obtaining here, the penalty of four (4) months and one (1) day
of arresto mayor, as minimum, to three (3) years, four (4) months and twenty-one
(21) days of prision correcional, as maximum.

WHEREFORE, we AFFIRM the Decision dated 28 June 2002 and the Resolution
dated 14 May 2003 of the Court of Appeals with the modification that petitioner
Sesinando Merida is sentenced to four (4) months and one (1) day of arresto mayor,
as minimum, to three (3) years, four (4) months and twenty-one (21) days of prision
correcional, as maximum.

SO ORDERED.
G.R. No. 152195 January 31, 2005

PEDRO SEPULVEDA, SR., substituted by SOCORRO S. LAWAS,

Administratrix of His Estate, petitioner,
vs.
ATTY. PACIFICO S. PELAEZ, respondent.

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, of
the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 43758 affirming the
decision of the Regional Trial Court (RTC) of Danao City, Branch 25, in Civil Case
No. SF-175.

On December 6, 1972, private respondent Atty. Pacifico Pelaez filed a complaint

against his granduncle, Pedro Sepulveda, Sr., with the then Court of First Instance
(CFI) of Cebu, for the recovery of possession and ownership of his one-half (1/2)
undivided share of several parcels of land covered by Tax Declaration (T.D.) Nos.
28199, 18197, 18193 and 28316; his undivided one-third (1/3) share in several other
lots covered by T.D. Nos. 28304, 35090, 18228, 28310, 26308, 28714, 28311,
28312 and 28299 (all located in Danao, Cebu); and for the partition thereof among
the co-owners. The case was docketed as Civil Case No. SF-175.

The eleven (11) lots were among the twenty-five (25) parcels of land which the
private respondents mother, Dulce Sepulveda, inherited from her grandmother,
Dionisia Sepulveda under the Project of Partition2 dated April 16, 1937 submitted by
Pedro Sepulveda, Sr. as the administrator of the formers estate, duly approved by
the then CFI of Cebu in Special Proceeding No. 778-0. Under the said deed, Pedro
Sepulveda, Sr. appeared to be the owner of an undivided portion of Lot No. 28199,
while his brother and Dulces uncle Santiago Sepulveda, was the undivided owner of
one-half (1/2) of the parcels of land covered by T.D. Nos. 18197, 18193 and 28316.
Dulce and her uncles, Pedro and Santiago, were likewise indicated therein as the
co-owners of the eleven other parcels of land, each with an undivided one-third (1/3)
share thereof.

In his complaint, the private respondent alleged that his mother Dulce died intestate
on March 2, 1944, and aside from himself, was survived by her husband Rodolfo
Pelaez and her mother Carlota Sepulveda. Dulces grandfather Vicente Sepulveda
died intestate on October 25, 1920,3 and Dulce was then only about four years old.
According to the private respondent, his grandmother Carlota repeatedly demanded
the delivery of her mothers share in the eleven (11) parcels of land, but Pedro
Sepulveda, Sr. who by then was the Municipal Mayor of Tudela, refused to do so.
Dulce, likewise, later demanded the delivery of her share in the eleven parcels of
land, but Pedro Sepulveda, Sr. still refused, claiming that he needed to continue to
possess the property to reap the produce therefrom which he used for the payment
of the realty taxes on the subject properties. The private respondent alleged that he
himself demanded the delivery of his mothers share in the subject properties on so
many occasions, the last of which was in 1972, to no avail.

The private respondent further narrated that his granduncle executed an affidavit 4 on
November 28, 1961, stating that he was the sole heir of Dionisia when she died
intestate on June 5, 1921, when, in fact, the latter was survived by her three sons,
Santiago, Pedro and Vicente. Pedro Sepulveda, Sr. also executed a Deed of
Absolute Sale5 on July 24, 1968 over the property covered by T.D. No. 19804 (T.D.
No. 35090) in favor of the City of Danao for 7,492.00. According to the private
respondent, his granduncle received this amount without his (private respondents)
knowledge.

The private respondent prayed that, after due hearing, judgment be rendered in his
favor, thus:

ON THE FIRST CAUSE OF ACTION:

1. Declaring the plaintiff the absolute owner of ONE-HALF (1/2) portion of the
TWO (2) parcels of land described in paragraph 2 of the complaint;

2. Declaring the plaintiff the absolute owner of the ONE-THIRD (1/3) portion
of the NINE (9) parcels of land described in paragraph 3 of the complaint;

3. Ordering the defendant to deliver to the plaintiff the latters ONE-THIRD

(1/3) share of the SEVEN THOUSAND FOUR HUNDRED NINETY-TWO
PESOS (7,492.00) representing the purchase price of the parcel of land
described in paragraph 3(a) of the complaint with interest thereon until the
amount is fully paid;

ON THE SECOND CAUSE OF ACTION:

1. Ordering the partition and segregation of the ONE-HALF (1/2) portion

belonging to the plaintiff of the TWO (2) parcels of land described in
paragraph 2 of the complaint;

2. Ordering the partition and segregation of the ONE-THIRD (1/3) portion

belonging to the plaintiff of the remaining EIGHT (8) parcels of land described
in paragraph 3 of the complaint;

COMMON TO THE FIRST AND SECOND CAUSES OF ACTION:

 1. Ordering the defendant to pay the plaintiff the amount of FIFTY
THOUSAND PESOS (50,000.00) as moral damages;

2. Ordering the defendant to pay the plaintiff exemplary damages the amount
of which is left to the discretion of this Honorable Court;

3. Ordering the defendant to deliver to the plaintiff the latters share of the
fruits of the ELEVEN (11) parcels of land subject-matter of this complaint, the
value of which will be proven during the trial;

4. Ordering the defendant to pay the plaintiff actual litigation expenses, the
value of which will be proven during the trial;

5. Ordering the defendant to pay attorneys fee in the amount of TWELVE

THOUSAND PESOS (P12,000.00);

6. Granting to the plaintiff such other reliefs and remedies as he may be

entitled to in accordance with law and equity.6

In his answer to the complaint, Pedro Sepulveda, Sr. admitted having executed a
deed of sale over the parcel of land covered by T.D. No. 19804 in favor of Danao
City, but averred that the latter failed to pay the purchase price thereof; besides, the
private respondent had no right to share in the proceeds of the said sale. He
likewise denied having received any demand for the delivery of Dulces share of the
subject properties from the latters mother Carlota, or from the private respondent.

During the trial, Pedro Sepulveda, Sr. died intestate. A petition for the settlement of
his estate was filed on May 8, 1975 with the RTC of Cebu, docketed as Special
Proceeding No. SF-37. His daughter, petitioner Socorro Sepulveda Lawas, was
appointed administratrix of his estate in July 1976. In compliance with the decision of
this Court in Lawas v. Court of Appeals,7 docketed as G.R. No. L-45809 and
promulgated on December 12, 1986, the deceased was substituted by the petitioner.

To prove the delivery of Dulces share under the project of partition, the petitioner
presented the Affidavit of Consolidation she executed in October 1940 covering
thirteen (13) of the twenty-five (25) parcels of land which were deeded to her under
the Project of Partition,8 as well as the Order9 dated March 24, 1962 of the then CFI
in Special Proceeding No. 778-R, denying Carlotas motion for the reconstitution of
the records of the said case, and for the delivery of Dulces share in the eleven
parcels of land. The court likewise declared therein that Dulce, through her
grandchildren and her mother, Carlota, had already received her share of the estate
from Pedro Sepulveda, Sr. as early as January 10, 1938.

According to the petitioner, Dulce and Pedro Sepulveda, Sr. had a verbal agreement
wherein the eleven parcels of land covered by the complaint would serve as the
latters compensation for his services as administrator of Dionisias estate. Thus,
upon the termination of Special Proceeding No. 778-0, and subsequent to the
distribution of the shares of Dionisias heirs, Pedro Sepulveda, Sr. then became the
sole owner of Dulces shares.

The petitioner likewise adduced evidence that Santiago Sepulveda died intestate
and was survived by his wife, Paz Velez Sepulveda and their then minor children.10 It
was pointed out that the private respondent failed to implead Paz Sepulveda and her
minor children as parties-defendants in the complaint.

It was further claimed that Pedro Sepulveda, Sr. declared the property covered by
T.D. No. 1819911 under his name for taxation purposes since the beginning of
1948.12 It was likewise alleged that the eleven (11) parcels of land deeded to Dulce
under the Project of Partition had been declared for taxation purposes under the
name of Pedro Sepulveda since 1974, and that he and his heirs paid the realty taxes
thereon.13

On June 7, 1993, the trial court rendered judgment14 in favor of the private
respondent. The fallo of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of

plaintiff and against the defendant by declaring that the plaintiff is legally and
rightfully entitled to the one half (1/2) portion of the two (2) parcels of land described
in paragraph 2 of the Complaint and to the one third (1/3) portion of the nine (9)
parcels of land described in paragraph 3 of the complaint as co-owner thereof, and
ordering the partition and segregation of the said one half (1/2) portion of the said
two (2) parcels of land and of the said one third (1/3) portion of the nine (9) parcels
of land, and in the partition thereof, the mechanics of partition outlined in Rule 69 of
the Revised Rules of Court must be followed (Magallon vs. Montejo, 146 SCRA
282); ordering the defendant Socorro Lawas, as administratrix of the Estate of Pedro
Sepulveda, Sr., to deliver to plaintiff the latters one third (1/3) share of the
7,492.00 representing the purchase price of the parcel of land sold to Danao City
with interest of twelve [per] centum (12%) per annum (Reformina vs. Tomol, 139
SCRA 260) from the date of filing of the Complaint until the amount due to plaintiff is
fully paid, to pay attorneys fees to plaintiffs attorney in the sum of 10,000.00, and
to pay the costs. The counterclaim is hereby dismissed.

SO ORDERED.15

The trial court ruled that the private respondents action for reconveyance based on
constructive trust had not yet prescribed when the complaint was filed; that he was
entitled to a share in the proceeds of the sale of the property to Danao City; and that
the partition of the subject property among the adjudicatees thereof was in order.
The petitioner appealed the decision to the CA, which rendered judgment on
January 31, 2002, affirming the appealed decision with modification.

The petitioner now comes to the Court via a petition for review on certiorari,
contending that the appellate court erred as follows:

1. THE COURT OF APPEALS ERRED IN THE INCORRECT APPLICATION OF

ART. 494 OF THE CIVIL CODE AND IN UPHOLDING THE REGIONAL TRIAL
COURTS FINDING THAT A TRUST RELATIONSHIP WAS CREATED BETWEEN
HEREIN RESPONDENT AND PEDRO SEPULVEDA [SR.].

2. THE COURT OF APPEALS ERRED IN NOT APPLYING THE LAWS ON

PRESCRIPTION AND LACHES TO THE FACTS AS PROVEN IN THE CASE
AGAINST HEREIN RESPONDENT.

3. THE COURT OF APPEALS ERRED IN UPHOLDING THE FINDING OF THE

REGIONAL TRIAL COURT, BRANCH 25 IN DANAO CITY THAT PAYMENT WAS
MADE BY DANAO CITY FOR ONE (1) OF THE ELEVEN (11) PARCELS
INVOLVED IN THE CASE AND OF WHICH HEREIN RESPONDENT SHOULD BE
PAID BY PETITIONER ONE THIRD (1/3) OF THE PURCHASE PRICE.

4. THE COURT OF APPEALS ERRED IN AWARDING MORAL AND EXEMPLARY

DAMAGES AND A SHARE IN THE RENTS AND PROFITS OF THE ELEVEN (11)
PARCELS TO HEREIN RESPONDENT.

5. THE COURT OF APPEALS ERRED IN UPHOLDING THE REGIONAL TRIAL

COURTS FINDING THAT ATTORNEYS FEES ARE TO BE AWARDED AND
EVEN INCREASING THE AMOUNT THEREOF.16

The petition is granted for the sole reason that the respondent failed to implead as
parties, all the indispensable parties in his complaint.

As gleaned from the material averments of the complaint and the reliefs prayed for
therein, the private respondent, as plaintiff therein, sought the recovery of the
ownership and possession of the ten (10) parcels of land and the partition thereof;
and for the payment of his share in the proceeds of the sale of the property which
Pedro Sepulveda, Sr. sold to Danao City amounting to 7,492.00, which Pedro
Sepulveda, Sr. claimed was left unpaid. It appears that when the private respondent
filed the complaint, his father, Rodolfo Pelaez, was still alive. Thus, when his mother
Dulce Pelaez died intestate on March 2, 1944, she was survived by her husband
Rodolfo and their son, the private respondent. Under Article 996 of the New Civil
Code,17 Rodolfo Pelaez, as surviving spouse, is entitled to a portion in usufruct equal
to that corresponding by way of legitime to each of the legitimate children who has
not received any betterment. The rights of the usufructuary are provided in Articles
471 to 490 of the old Civil Code.18 In Gamis v. Court of Appeals,19 we held that:
Under articles 807 and 834 of the old Civil Code the surviving spouse is a forced
heir and entitled to a share in usufruct in the estate of the deceased spouse equal to
that which by way of legitime corresponds or belongs to each of the legitimate
children or descendants who have not been bettered or have not received any share
in the one-third share destined for betterment. The right of the surviving spouse to
have a share in usufruct in the estate of the deceased spouse is provided by law of
which such spouse cannot be deprived and which cannot be ignored. Of course, the
spouse may waive it but the waiver must be express.

Section 1, Rule 69 of the Rules of Court provides that in an action for partition, all
persons interested in the property shall be joined as defendants.

Section 1. Complaint in action for partition of real estate.- A person having the right
to compel the partition of real estate may do so as in this rule prescribed, setting
forth in his complaint the nature and extent of his title and an adequate description of
the real estate of which partition is demanded and joining as defendants all the other
persons interested in the property.

Thus, all the co-heirs and persons having an interest in the property are
indispensable parties; as such, an action for partition will not lie without the joinder of
the said parties.20 The mere fact that Pedro Sepulveda, Sr. has repudiated the co-
ownership between him and the respondent does not deprive the trial court of
jurisdiction to take cognizance of the action for partition, for, in a complaint for
partition, the plaintiff seeks, first, a declaration that he is a co-owner of the subject
property; and, second, the conveyance of his lawful shares.21 As the Court ruled
in De Mesa v. Court of Appeals:22

The first stage of an action for judicial partition and/or accounting is concerned with
the determination of whether or not a co-ownership in fact exists and a partition is
proper, that is, it is not otherwise legally proscribed and may be made by voluntary
agreement of all the parties interested in the property. This phase may end in a
declaration that plaintiff is not entitled to the desired partition either because a co-
ownership does not exist or a partition is legally prohibited. It may also end, on the
other hand, with an adjudgment that a co-ownership does in truth exist, that partition
is proper in the premises, and that an accounting of rents and profits received by the
defendant from the real estate in question is in order. In the latter case, "the parties
may, if they are able to agree, make partition among themselves by proper
instruments of conveyance, and the court shall confirm the partition so agreed upon
by all the parties." In either case, whether the action is dismissed or partition and/or
accounting is decreed, the order is a final one and may be appealed by any party
aggrieved thereby.

The second stage commences when the parties are unable to agree upon the
partition ordered by the court. In that event, partition shall be effected for the parties
by the court with the assistance of not more than three (3) commissioners. This
second phase may also deal with the rendition of the accounting itself and its
approval by the Court after the parties have been accorded the opportunity to be
heard thereon, and an award for the recovery by the party or parties thereto entitled
of their just shares in the rents and profits of the real estate in question. 23

In the present action, the private respondent, as the plaintiff in the trial court, failed
to implead the following indispensable parties: his father, Rodolfo Pelaez; the heirs
of Santiago Sepulveda, namely, Paz Sepulveda and their children; and the City of
Danao which purchased the property covered by T.D. 19804 (T.D. No. 35090) from
Pedro Sepulveda, Sr. and maintained that it had failed to pay for the purchase price
of the property.

Rodolfo Pelaez is an indispensable party he being entitled to a share in usufruct,

equal to the share of the respondent in the subject properties. There is no showing
that Rodolfo Pelaez had waived his right to usufruct.

Section 7, Rule 3 of the Rules of Court reads:

SEC. 7. Compulsory joinder of indispensable parties. Parties in interest without

whom no final determination can be had of an action shall be joined either as
plaintiffs or defendants.

Indeed, the presence of all indispensable parties is a condition sine qua non for the
exercise of judicial power. It is precisely when an indispensable party is not before
the court that the action should be dismissed. Thus, the plaintiff is mandated to
implead all the indispensable parties, considering that the absence of one such party
renders all subsequent actions of the court null and void for want of authority to act,
not only as to the absent parties but even as to those present. 24 One who is a party
to a case is not bound by any decision of the court, otherwise, he will be deprived of
his right to due process. Without the presence of all the other heirs as plaintiffs, the
trial court could not validly render judgment and grant relief in favor of the private
respondent. The failure of the private respondent to implead the other heirs as
parties-plaintiffs constituted a legal obstacle to the trial court and the appellate
courts exercise of judicial power over the said case, and rendered any orders or
judgments rendered therein a nullity.25

To reiterate, the absence of an indispensable party renders all subsequent actions

of the court null and void for want of authority to act, not only as to the absent parties
but even as to those present.26 Hence, the trial court should have ordered the
dismissal of the complaint.27

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decisions of

the Court of Appeals in CA-G.R. CV No. 43758 and of the Regional Trial Court are
SET ASIDE. The Regional Trial Court is ORDERED to dismiss the complaint without
prejudice. No pronouncement as to costs.
SO ORDERED.

G.R. No. 148246 February 16, 2007

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
JUAN C. TUVERA, VICTOR P. TUVERA and TWIN PEAKS DEVELOPMENT
CORPORATION, Respondents.

DECISION

TINGA, J.:

The long-term campaign for the recovery of ill-gotten wealth of former President
Ferdinand E. Marcos, his wife Imelda, and their associates, has been met with many
impediments, some of which are featured in this case, that have led to doubts
whether there is still promise in that enterprise. Yet even as the prosecution of those
cases have drudged on and on, the era of their final reckoning is just beginning
before this Court. The heavy hammer of the law is just starting to fall.

The instant action originated from a civil complaint for restitution and damages filed
by the Republic of the Philippines against Marcos and his longtime aide Juan
Tuvera, as well as Tuvera's son Victor and a corporation the younger Tuvera had
controlled. Trial on the case against the Tuveras proceeded separately before the
Sandiganbayan. After the Republic had presented its evidence, the Tuveras
successfully moved for the dismissal of the case on demurrer to evidence. The
demurrer was sustained, and it falls upon this Court to ascertain the absence or
existence of sufficient proof to support the relief sought by the Republic against the
Tuveras.
I.

We begin with the facts.

Twin Peaks Development Corporation (Twin Peaks) was organized on 5 March

1984 as a corporation with a principal purpose of engaging in the real estate
business. There were five incorporating stockholders, including respondent Victor
Tuvera (Victor)1 who owned 48% of the shares of the fledgling corporation. Victor
was the son of respondent Juan Tuvera, who was then Presidential Executive
Assistant of President Marcos.

Acting on a letter dated 31 May 1984 of Twin Peaks Vice-President and Treasurer
Evelyn Fontanilla in behalf of the corporation, President Marcos granted the award
of a Timber License Agreement (TLA), more specifically TLA No. 356, in favor of
Twin Peaks to operate on 26,000 hectares of forest land with an annual allowable
cut of 60,000 cubic meters of timber and to export 10,000 cubic meters of mahogany
of the narra species.2 As a result, Twin Peaks was able to engage in logging
operations.

On 25 February 1986, President Marcos was ousted, and Corazon C. Aquino

assumed the presidency. Among her first acts as President was to establish the
Philippine Commission on Good Government (PCGG), tasked with tracking down
the ill-gotten wealth procured by Marcos, his family, and associates during his 20-
year rule. Among the powers granted to the PCGG was the power to issue writs of
sequestration.3 On 13 June 1988, the PCGG issued a Writ of Sequestration on all
assets, properties, records, documents, and shares of stock of Twin Peaks on the
ground that all the assets of the corporation are ill-gotten wealth for having been
acquired directly or indirectly through fraudulent and illegal means. 4 This was
followed

two days later by Mission Order No. MER-88 (Mission Order), also issued by the
PCGG, implementing the aforementioned Writ of Sequestration.5

On 9 December 1988, the PCGG, in behalf of the Republic, filed the Complaint now
subject of this Petition.6Impleaded as defendants in the Complaint7 were Juan and
Victor Tuvera, as well as the then-exiled President Marcos. Through the Complaint,
the Republic sought to recover funds allegedly acquired by said parties in flagrant
breach of trust and fiduciary obligations with grave abuse of right and power in
violation of the Constitution and the laws of the Republic of the Philippines. 8

In particular, the Complaint alleged that Juan Tuvera, as Presidential Executive

Assistant of President Marcos, took advantage of his relationship to influence upon
and connection with the President by engaging in a scheme to unjustly enrich
himself at the expense of the Republic and of the Filipino people. This was allegedly
accomplished on his part by securing TLA No. 356 on behalf of Twin Peaks despite
existing laws expressly prohibiting the exportation of mahogany of the narra
species9 and Twin Peaks lack of qualification to be a grantee thereof for lack of
sufficient logging equipment to engage in the logging business.10 The Complaint
further alleged that Twin Peaks exploited the countrys natural resources by
engaging in large-scale logging and the export of its produce through its Chinese
operators whereby respondents obtained a revenue of approximately 45 million.

The Complaint prayed that (1) TLA No. 356 be reverted to the State or cancelled; (2)
respondents be jointly and severally ordered to pay 48 million 11 as actual damages;
and (3) respondents pay moral, temperate and exemplary damages, litigation
expenses, and treble judicial costs.12 It cited as grounds for relief, gross abuse of
official position and authority, breach of public trust and fiduciary obligations, brazen
abuse of right and power, unjust enrichment, and violation of the Constitution. 13

In their Answer,14 respondents Victor Tuvera and Twin Peaks claimed that Twin
Peaks was awarded TLA No. 356 only after its articles of incorporation had been
amended enabling it to engage in logging operations,15 that the Republics reference
to Chinese operations and revenue of approximately 45 million were merely

imagined,16 and that the PCGG has no statutory authority to institute the action. 17 By
way of counterclaim, respondents asked that the Republic be ordered to pay Victor
Tuvera moral damages and to pay both Victor Tuvera and Twin Peaks exemplary
damages, and to reimburse their attorneys fees.18

Anent the allegation that Twin Peaks sold about 3 million worth of lumber despite
the Writ of Sequestration issued by the PCGG, respondents stressed that the
Director of Forest Development acted within the scope of his authority and the
courts have no supervising power over the actions of the Director of Forest
Development and the Secretary of the Department of Environment and Natural
Resources (DENR) in the performance of their official duties.19

As an affirmative and special defense, respondents Victor Tuvera and Twin Peaks
alleged that after Twin Peaks was granted TLA No. 356 in 24 August 1984, Felipe
Ysmael, Jr. and Co., Inc. had filed a motion for the cancellation of the same with the
DENR

Secretary. When respondents submitted their Answer, the denial by the DENR of
the Ysmael motion was under review before the Court.20

Juan Tuvera, who was abroad when the case was filed on 9 December 1988, later
submitted his own Answer on 6 December 1989.21 He also denied the allegations of
the Republic and alleged that as Presidential Executive Assistant of then President
Marcos, he acted within the confines of his duties and had perpetrated no unlawful
acts. He merely transmitted communications of approval in the course of his duties
and had nothing to do with the decisions of then President Marcos.22 He denied
having anything to do with Twin Peaks.

Juan Tuvera filed a compulsory counterclaim on the ground that the instant action
had besmirched his reputation and caused serious anxiety and mental anguish thus
entitling him to moral and exemplary damages and litigation expenses. 23

On 3 May 1989, respondents filed an Omnibus Motion to Nullify Writ of

Sequestration and/or the Mission Order.24The Sandiganbayan issued a Temporary
Restraining Order against the PCGG requiring it to cease, refrain and desist from
further implementing the Writ of Sequestration and the Mission
Order.25 Subsequently, on motion of respondents, the Sandiganbayan granted a Writ
of Preliminary Injunction covering the Mission Order. The Sandiganbayan deferred
its resolution on the Motion to Lift the Writ of Sequestration.26

From 1988 to 1993, the proceedings before the Sandiganbayan were delayed owing
to the difficulty of acquiring jurisdiction over the person of President Marcos, who
was by then already in exile. Thus, upon motion by respondents, the Sandiganbayan
granted them a separate pre-trial/trial from President Marcos.27

Respondents submitted their documentary evidence in the Pre-Trial Conference

while the Republic reserved to present the same during trial. After the pre-trial
conference, the Sandiganbayan issued a Pre-Trial Order28 dated 3 November 1993,
which presented the issues for litigation as follows:

Whether or not defendant Juan C. Tuvera who was a Presidential Executive

Assistant at the time material to this case, by himself and in concert with his co-
defendants Ferdinand E. Marcos and Victor Tuvera, took advantage of his relation
and connection with the late Marcos, secure (sic) a timber concession for Twin
Peaks Development Corporation and, engage (sic) in a scheme to unjustly enrich
himself at the expense of the Republic and the Filipino People.29

The Pre-Trial Order also indicated that the Republic admitted the exhibits by
respondents, subject to the presentation of certified true copies thereof.
Respondents exhibits were as follows:30

Exhibit Description
Nos.
1 Amended Articles of Incorporation dated 31 July
1984
2 TLA No. 356
3 Order, Minister Ernesto M. Maceda, 22 July 1986
3-A Order, Minister Ernesto M. Maceda, 10 October
1986
3-B Order, Minister Ernesto M. Maceda, 26 November
1986, O.P. Case No. 3521
3-C Resolution, Office of the President, 6 July 1987,
O.P. Case No. 3521
3-D Order, Office of the President, 14 August 1987, I.S.
No. 66
3-E Complaint, PCGG, dated 20 July 1988
3-E-1, 3- I.S. No. 66 Affidavit, PCGG, Almario F. Mendoza,
E-2, Ltv. Ramon F. Mendoza and Affidavit, Isidro
3-E-3 Santiago
3-F Counter-Affidavit, Juan C. Tuvera, 17 August 1989
 3-F-1 PCGG, Motion to Withdraw, Jose Restituto F.
Mendoza, 10 May 1989
3-F-2 Decision, Supreme Court, 18 October 1990
3-G Resolution, Supreme Court, 5 June 1991
4 Complaint, DENR, Almario F, Mendoza, 9 March
1990
4-A Answer/Comment, DENR, Almario F. Mendoza,
dated 20 April 1990
4-B Decision, DENR, dated 28 August 1990
5 Complaint, Ombudsman, etc., Case No. 0-90-0708,
9 March 1990
6, 6-A Answer/Counter-Affidavit, etc.
6-B Decision, Ombudsman Case No. 0-90-0708, dated 8
August 1990

The Republic presented three (3) witnesses during the trial. The first witness was
Joveniana M. Galicia, Chief of the National Forest Management Division of the
Forest Management Bureau. She identified TLA No. 356 of Twin Peaks dated 20
August 1984 and a Memorandum dated 18 July 1984. She testified that TLA No.
356 covers 26,000 hectares of forest land located in the Municipality of Isabela,
Province of Quirino.31 The Memorandum dated 18 July 1984 addressed to Director
Edmundo Cortez recited then President Marcos grant of the timber concession to
Twin Peaks. Identified and marked in the same memorandum were the name and
signature of Juan Tuvera.32 Upon cross-examination, Galicia stated that she was not
yet the chief of the Division when the documents she identified were submitted to
the Bureau. She further stated it was her first time to see the aforementioned
documents when she was asked to bring the same before the trial court.33

The next witness was Fortunato S. Arcangel, Regional Technical Director III of the
DENR. He testified that he is a Technical Director under the Forest Management
Services of the DENR.34 He identified Forestry Administration Order (FAO) No. 11
dated 1 September 1970. He said he was aware of TLA No. 356 of Twin
Peaks35 because at the time it was issued, he was the chief of the Forestry Second
Division and his duties included the evaluation and processing of applications for
licenses and permits for the disposition and distribution of timber and other forest
products.36 Consequently,

he was aware of the process by which TLA No. 356 was issued to Twin
Peaks.37 According to him, they processed the application insofar as they evaluated
the location of the area concerned and its present vegetative state, examined the
records, and determined the annual allowable land. After the examination, the
license agreement was prepared and submitted for approval.38 He continued that
under FAO No. 11, a public bidding is required before any license agreement or
permit for the utilization of timber within the forestry land is issued39 but no public
bidding was conducted for TLA No. 356.40 He explained that no such bidding was
conducted because of a Presidential Instruction not to accept any application for
timber licensing as a consequence of which bidding procedures were
stopped.41 Upon cross-examination, Arcangel said that at the time TLA No. 356 was
issued, the Revised Forestry Code of the Philippines42 was already in effect but
there were still provisions in FAO No. 11 that remained applicable such as the terms
and conditions of granting a license. He also stated that the issuance of the license
to Twin Peaks emanated from the President of the Philippines.43

The Republics third and last witness was Teresita M. Zuiga, employee of the
Bureau of Internal Revenue. She identified the 1986 Income Tax Returns of Victor
P. Tuvera, Evelyn Fontanilla and Feliciano O. Salvana, stockholders of Twin
Peaks.44

On 24 June 1994, the Republic rested its case after its formal offer of evidence, as
follows:45

Exhibits Documents Purpose

A Timber License To prove that the Timber
Agreement No. 356 of License Agreement was
Twin Peaks Realty executed prior to the
Development Corp. amendment of the Articles of
dated 20 August 1984 Incorporation of Twin Peaks
Realty Development Corp.
B Memorandum dated To prove the participation of
18 July 1984 of Juan Juan C. Tuvera in the grant of
C. Tuvera, the timber concession of Twin
Presidential Executive Peaks Realty Development
Secretary Corp.
C Forestry To prove that Twin Peaks
Administrative Order Realty Development Corp.
No. 11 (Revised) was granted a timber license
agreement without following
the procedure outlined in the
forestry rules and regulation
and in violation of law.
D Income Tax Return of To prove that Victor Tuvera
Victor Tuvera was not a legitimate
 stockholder of Twin Peaks
Realty Development Corp.
E Income Tax Return of To prove that Evelyn
Evelyn Fontanilla Fontanilla was not a
legitimate stockholder of Twin
Peaks Realty Development
Corp.
F Income Tax Return of To prove that Feliciano
Feliciano Salvana Salvana was not a legitimate
stockholder of Twin Peaks
Realty Development Corp.
G Articles of To prove that Twin Peaks
Incorporation of Twin Realty Development Corp.
Peaks Realty was organized to engage in
Development Corp. the real estate business and
(original) not in the logging industry.
H Timber Manifestation To show that Twin Peaks
Report of [Twin Peaks Realty Development Corp.
Realty Development lacks equipment to process
Corp.] consigned to logs.
Scala Sawmill46
I Timber Manifestation To show that Twin Peaks
Report of Twin Peaks Realty Development Corp.
consigned to La Pea lacks equipment to process
Sawmill47 logs.

Respondents subsequently submitted certified true copies of the exhibits they had
presented during the pre-trial conference.48

With leave of court, respondents filed a Demurrer to Evidence. Respondents argued

that the Republic failed to present sufficient legal affirmative evidence to prove its
claim. In particular, respondents demurrer contends that the memorandum (Exh. B)
and TLA No. 356 are not "legal evidence" because "legal evidence" is not meant to
raise a mere suspicion or doubt. Respondents also claim that income tax returns are
not sufficient to show ones holding in a corporation. Respondents also cited the
factual antecedents culminating with the Courts decision in Felipe Ysmael, Jr. &
Corp., Inc. v. Sec. of Environment and Natural Resources.49

The Republic filed a Manifestation, contending that the demurrer is not based on the
insufficiency of its evidence but on the strength of the evidence of respondents as
shown by their own exhibits. The Republic claimed that the Revised Forestry Code
of the Philippines does not dispense with the requirement of public bidding. The
Republic added that Sec. 5 of said law clearly provides that all applications for a
timber license agreement must be filed before the Bureau of Forest Development
and that respondents still have to prove compliance with the requirements for
service contracts.50

Respondents opposed the Manifestation, maintaining that since the Republic

admitted the exhibits of respondents during the pre-trial, it is bound by its own
admission. Further, these same exhibits contain uncontroverted facts and laws that
only magnify the conclusion that the Republic has no right to relief. 51

In its Resolution dated 23 May 2001,52 the Sandiganbayan sustained the demurrer to
evidence and referred to the decision of this Court in Ysmael in holding that res
judicata applies. The Anti-Graft Court also did not give credence to the Republics
allegations concerning respondents abuse of power and/or public trust and
consequent liability for damages in view of its failure to establish any violation of
Arts. 19, 20 and 21 of the Civil Code.

In essence, the Sandiganbayan held that the validity of TLA No. 356 was already
fully adjudicated in a Resolution/Order issued by the Office of the President on 14
August 1987, which had become final and executory with the failure of the aggrieved
party to seek a review thereof. The Sandiganbayan continued that the above
pronouncement is supported by this Court in Ysmael. Consequently, the
Sandiganbayan concluded, the Republic is barred from questioning the validity of
TLA No. 356 in consonance with the principle of res judicata.

The Republic now questions the correctness of the Sandiganbayans decision to

grant the demurrer to evidence because it was not based solely on the insufficiency
of its evidence but also on the evidence of respondent mentioned during the pre-trial
conference. The Republic also challenges the applicability of res judicata.
II.

Preliminarily, we observe that respondents had filed before the Sandiganbayan a

pleading captioned Motion to Dismiss or Demurrer to Evidence, thus evincing that
they were seeking the alternative reliefs of either a motion to dismiss or a demurrer
to evidence. However, the Sandiganbayan, in resolving this motion, referred to it as
Motion to Dismiss on Demurrer to Evidence, a pleading of markedly different
character from a Motion to Dismiss or Demurrer to Evidence. Still, a close reading of
the Sandiganbayan Resolution reveals clearly that the Sandiganbayan was treating
the motion as a demurrer, following Rule 33, Section 1 of the Rules of Court, rather
than a motion to dismiss under Rule 16, Section 1.

This notwithstanding, the Sandiganbayan justified the grant of demurrer with res
judicata as rationale. Res judicata is an inappropriate ground for sustaining a
demurrer to evidence, even as it stands as a proper ground for a motion to dismiss.
A demurrer may be granted if, after the presentation of plaintiffs evidence, it
appears upon the facts and the law that the plaintiff has shown no right to relief. In
contrast, the grounds for res judicata present themselves even before the
presentation of evidence, and it should be at that stage that the defense of res
judicata should be invoked as a ground for dismissal. Properly speaking, the
movants for demurral who wish to rely on a controlling value of a settled case as a
ground for demurrer should invoke the ground of stare decisis in lieu of res judicata.

In Domondon v. Lopez,53 we distinguished a motion to dismiss for failure of the

complainant to state a cause of action from a motion to dismiss based on lack of
cause of action. The first is governed by Rule 16, Section 1(g),54while the second by
Rule 3355 of the Rules of Court, to wit:

x x x The first [situation where the complaint does not alleged cause of action] is
raised in a motion to dismiss under Rule 16 before a responsive pleading is filed and
can be determined only from the allegations in the initiatory pleading and not from
evidentiary or other matter aliunde. The second [situation where the evidence does
not sustain the cause of

action alleged] is raised in a demurrer to evidence under Rule 33 after the plaintiff
has rested his case and can be resolved only on the basis of the evidence he has
presented in support of his claim. The first does not concern itself with the truth and
falsity of the allegations while the second arises precisely because the judge has
determined the truth and falsity of the allegations and has found the evidence
wanting.

Hence, a motion to dismiss based on lack of cause of action is filed by the defendant
after the plaintiff has presented his evidence on the ground that the latter has shown
no right to the relief sought. While a motion to dismiss under Rule 16 is based on
preliminary objections which can be ventilated before the beginning of the trial, a
motion to dismiss under Rule 33 is in the nature of a demurrer to evidence on the
ground of insufficiency of evidence and is presented only after the plaintiff has
rested his case.56 [Emphasis supplied]
III.

We shall first discuss the question of whether or not a demurrer to evidence may be
granted based on the evidence presented by the opposing parties.

An examination of the Sandiganbayans Resolution shows that dismissal of the case

on demurrer to evidence was principally anchored on the Republics failure to show
its right to relief because of the existence of a prior judgment which consequently
barred the relitigation of the same issue. In other words, the Sandiganbayan did

not dismiss the case on the insufficiency of the Republics evidence nor on the
strength of respondents evidence. Rather, it based its dismissal on the existence of
the Ysmael case which, according to it, would render the case barred by res
judicata.

Prescinding from this procedural miscue, was the Sandiganbayan correct in applying
res judicata to the case at bar? To determine whether or not res judicata indeed
applies in the instant case, a review of Ysmael is proper.

In brief, Felipe Ysmael, Jr. & Co., Inc. was a grantee of a timber license agreement,
TLA No. 87. Sometime in August 1983, the Bureau of Forest Development cancelled
TLA No. 87 despite the companys letter for the reconsideration of the revocation.
Barely one year thereafter, one-half (or 26,000 hectares) of the area formerly
covered by TLA No. 87 was re-awarded to Twin Peaks under TLA No. 356.

In 1986, Felipe Ysmael, Jr. & Co., Inc. sent separate letters to the Office of the
President and the Ministry of Natural Resources primarily seeking the reinstatement
of TLA No. 87 and the revocation of TLA No. 356. Both offices denied the relief
prayed for. Consequently, Felipe Ysmael, Jr. & Co., Inc. filed a petition for review
before this Court.

The Court, through the late Justice Irene Cortes, held that Ysmaels letters to the
Office of the President and to the Ministry of Natural Resources in 1986 sought the
reconsideration of a memorandum order by the Bureau of Forest Development
canceling their timber license agreement in 1983 and the revocation of TLA No. 356
subsequently issued by the Bureau in 1984. Ysmael did not attack the administrative
actions until after 1986. Since the decision of the Bureau has become final, it has
the force and effect of a final judgment within the purview of the doctrine of res
judicata. These decisions and orders, therefore, are conclusive upon the rights of
the affected parties as though the same had been rendered by a court of general
jurisdiction. The Court also denied the petition of Ysmael because it failed to file the
special civil action for certiorari under Rule 65 within a reasonable time, as well as in
due regard for public policy considerations and the principle of non-interference by
the courts in matters which are addressed to the sound discretion of government
agencies entrusted with the regulation of activities coming under the special
technical knowledge and training of such agencies.

In Sarabia and Leido v. Secretary of Agriculture and Natural Resources, et al., 57 the
Court discussed the underlying principle for res judicata, to wit:

The fundamental principle upon which the doctrine of res judicata rests is that
parties ought not to be permitted to litigate the same issue more than once; that,
when a right or fact has been judicially tried and determined by a court of competent
jurisdiction, or an opportunity for such trial has been given, the judgment of the
court, so long as it remains unreversed, should be conclusive upon the parties and
those in privity with them in law or estate.
For res judicata to serve as an absolute bar to a subsequent action, the following
requisites must concur: (1) the former judgment or order must be final; (2) the
judgment or order must be on the merits; (3) it must have been rendered by a court
having jurisdiction over the subject matter and parties; and (4) there must be
between the first and second actions, identity of parties, of subject matter, and of
causes of action.58 When there is only identity of issues with no identity of causes of
action, there exists res judicata in the concept of conclusiveness of judgment.59

In Ysmael, the case was between Felipe Ysmael Jr. & Co., Inc. and the Deputy
Executive Secretary, the Secretary of Environment and Natural Resources, the
Director of the Bureau of Forest Development and Twin Peaks Development and
Realty Corporation. The present case, on the other hand, was initiated by the
Republic of

the Philippines represented by the Office of the Solicitor General. No amount of

imagination could let us believe that there was an identity of parties between this
case and the one formerly filed by Felipe Ysmael Jr. & Co., Inc.

The Sandiganbayan held that despite the difference of parties, res judicata
nevertheless applies on the basis of the supposed sufficiency of the "substantial
identity" between the Republic of the Philippines and Felipe Ysmael, Jr. Co., Inc. We
disagree. The Court in a number of cases considered the substantial identity of
parties in the application of res judicata in instances where there is privity between
the two parties, as between their successors in interest by title60 or where an
additional party was simply included in the subsequent case61 or where one of the
parties to a previous case was not impleaded in the succeeding case. 62

The Court finds no basis to declare the Republic as having substantial interest as
that of Felipe Ysmael, Jr. & Co., Inc. In the first place, the Republics cause of action
lies in the alleged abuse of

power on respondents part in violation of R.A. No. 301963 and breach of public trust,
which in turn warrants its claim for restitution and damages. Ysmael, on the other
hand, sought the revocation of TLA No. 356 and the reinstatement of its own timber
license agreement. Indeed, there is no identity of parties and no identity of causes of
action between the two cases.
IV.

What now is the course of action to take since we cannot affirm the
Sandiganbayans grant of the demurrer to evidence? Rule 33, Sec. 1 reads:

Sec. 1. Effect of judgment on demurrer to evidence. After the plaintiff has

completed the presentation of his evidence, the defendant may move for dismissal
on the ground that upon the facts and the law the plaintiff has shown no right to
relief. If his motion is denied, he shall have the right to present evidence. If the
motion is granted but on appeal the order of dismissal is reversed he shall have be
deemed to have waived the right to present evidence.

The general rule is that upon the dismissal of the demurrer in the appellate court, the
defendant loses the right to present his evidence and the appellate court shall then
proceed to render judgment on the

merits on the basis of plaintiffs evidence. As the Court explained in Generoso

Villanueva Transit Co., Inc. v. Javellana:64

The rationale behind the rule and doctrine is simple and logical. The defendant is
permitted, without waiving his right to offer evidence in the event that his motion is
not granted, to move for a dismissal (i.e., demur to the plaintiffs evidence) on the
ground that upon the facts as thus established and the applicable law, the plaintiff
has shown no right to relief. If the trial court denies the dismissal motion, i.e., finds
that plaintiffs evidence is sufficient for an award of judgment in the absence of
contrary evidence, the case still remains before the trial court which should then
proceed to hear and receive the defendants evidence so that all the facts and
evidence of the contending parties may be properly placed before it for adjudication
as well as before the appellate courts, in case of appeal. Nothing is lost. The
doctrine is but in line with the established procedural precepts in the conduct of trials
that the trial court liberally receive all proffered evidence at the trial to enable it to
render its decision with all possibly relevant proofs in the record, thus assuring that
the appellate courts upon appeal have all the material before them necessary to
make a correct judgment, and avoiding the need of remanding the case for retrial or
reception of improperly excluded evidence, with the possibility thereafter of still
another appeal, with all the concomitant delays. The rule, however, imposes the
condition by the same token that if his demurrer is granted by the trial court, and the
order of dismissal is reversed on appeal, the movant loses his right to present
evidence in his behalf and he shall have been deemed to have elected to stand on
the insufficiency of plaintiffs case and evidence. In such event, the appellate court
which reverses the order of dismissal shall proceed to render judgment on the merits
on the basis of plaintiffs evidence.65

It thus becomes the Court's duty to rule on the merits of the complaint, duly taking
into account the evidence presented by the Republic, and without need to consider
whatever evidence the Tuveras have, they having waived their right to present
evidence in their behalf.
V.

Executive Order No. 14-A66 establishes that the degree of proof required in cases
such as this instant case is preponderance of evidence. Section 3 thereof reads:

SEC. 3. The civil suits to recover unlawfully acquired property under Republic Act
No. 1379 or for restitution, reparation of damages, or indemnification for
consequential and other damages or any other civil actions under the Civil Code or
other existing laws filed with the Sandiganbayan against Ferdinand E. Marcos,
Imelda R. Marcos, members of their immediate family, close relatives, subordinates,
close and/or business associates, dummies, agents and nominees, may proceed
independently of any criminal proceedings and may be proved by a
preponderance of evidence. [Emphasis supplied.]

Thus, the Court recently held in Yuchengco v. Sandiganbayan,67 that in establishing

the quantum of evidence required for civil cases involving the Marcos wealth held by
their immediate family, close relatives, subordinates, close and/or business
associates, dummies,

agents and nominees filed before the Sandiganbayan, that "the Sandiganbayan, x x
x was not to look for proof beyond reasonable doubt, but to determine, based on the
evidence presented, in light of common human experience, which of the theories
proffered by the parties is more worthy of credence."

In order that restitution may be proper in this case, it must be first established that
the grant of the TLA to Twin Peaks was illegal. With the illegality of the grant
established as fact, finding Victor Tuvera, the major stockholder of Twin Peaks,
liable in this case should be the ineluctable course. In order that Juan Tuvera may
be held answerable as well, his own participation in the illegal grant should also be
substantiated.

Regarding the first line of inquiry, the Complaint adverted to several provisions of
law which ostensibly were violated by the grant of the TLA in favor of Twin Peaks.
These include R.A. No. 3019, otherwise known as the Anti-Graft and Corrupt
Practices Act, and Articles 19, 20 and 21 of the Civil Code.

Still, the most organic laws that determine the validity or invalidity of the TLA are
those that governed the issuance of timber license agreements in 1984. In that
regard, the Republic argues that the absence of a bidding process is patent proof of
the irregularity of the issuance of the TLA in favor of Twin Peaks.

A timber license agreement authorizes a person to utilize forest resources within any
forest land with the right of possession and exclusion of others.68 The Forestry
Reform Code prohibits any person from utilizing, exploiting, occupying, possessing
or conducting any activity within any forest land unless he had been authorized to do
so under a license agreement, lease, license or permit.69 The Code also mandates
that no timber license agreement shall be issued unless the applicant satisfactorily
proves that he has the financial resources and technical capability not only to
minimize utilization, but also to practice forest protection, conservation and
development measures to insure the perpetuation of said forest in productive
condition.70 However, the Code is silent as to the procedure in the acquisition of
such timber license agreement. Such procedure is more particularly defined under
FAO No. 11, dated 1 September 1970, which provides for the "revised forestry
license regulations."

FAO No. 11 establishes that it is the Director of Forestry who has the power "to
grant timber licenses and permits."71It also provides as a general policy that timber
license agreements shall be

granted through no other mode than public bidding.72 However, Section 24 of FAO
No. 11 does admit that a timber license agreement may be granted through
"negotiation," as well as through "public bidding."

26. When license may be issued.A license under this Regulations may be issued or
granted only after an application and an award either through bidding or by
negotiation has been made and the Director of Forestry is satisfied that the
issuance of such license shall not be inconsistent with existing laws and regulations
or prejudicial to public interest, and that the necessary license fee, bond deposit and
other requirements of the Bureau of Forestry have been paid and complied
with.73 [Emphasis supplied.]

However, even a person who is granted a TLA through "negotiation" is still required
to submit the same requirements and supporting papers as required for public
bidding. The pertinent provisions of FAO No. 11 state:

18. Requirements and supporting papers to be submitted.The following

requirements with accompanying supporting papers or documents shall be
submitted in addition to the requirements of Section 12:

a. With bid application:

The applicant shall support his bid application with the required application fee duly
paid and proofs of the following:

(1) Capitalization.Cash deposits and established credit line by applicant in

domestic bank certified to by the bank President or any of its authorized officials,
duly attested by depositor as his own to be used exclusively in logging and wood
processing operations if awarded the area. The bank certificate shall be
accompanied by a written consent by the applicant-depositor for the Director of
Forestry or his authorized representative to verify such cash deposit with bank
authorities.

Capitalization and financial statements. A minimum capitalization of 20.00 per

cubit meter in cash and an established credit line of 150.00 per cubic meter based
on the allowable annual cut are required. Financial statements certified by the
independent and reputable certified public accountants must accompany the
application as proof of the necessary capitalization.
Additional capitalization, Real Estate. In the event that the capitalization of the
applicant is less than the minimum or less than that set by the Director of Forestry
for the area, the applicant bidder may be asked to submit an affidavit signifying his
readiness, should the area be awarded to him, to convert within a specified time any
specified unencumbered and titled real estate into cash for use in operating and
developing the area. Presentation of real estate should show location by municipality
and province, hectarage, title number, latest land tax declaration, assessed value of
land and improvements (stating kind of improvements), and encumbrances if any.

(2) Logging machinery and equipment.Evidence of ownership or capacity to

acquire the requisite machinery or equipment shall accompany the bid application.
The capacity or ability to acquire machineries and equipments shall be determined
by the committee on award. Leased equipment or machineries may be considered in
the determination by the Committee if expressly authorized in writing by the Director
of Forestry.

(3) Technical know-how.To assure efficient operation of the area or concession,

the applicant shall submit proof of technical competence and know-how and/or his
ability to provide hired services of competent personnel.

(4) Operation or development plan. An appropriate plan of operation and

development of the forest area applied for shall be submitted, including phasing
plans and the fund requirements therefor, consistent with selective logging methods
and the sustained yield policy of the Bureau of Forestry. This plan must be in
general agreement with the working unit plan for the area as contained in Chapter
III, Section 6(a) hereinabove.

(5) Processing plant.The bidder or applicant shall show evidence of ownership of,
or negotiation to acquire, a wood processing plant. The kind and type of plant, such
as plywood, veneer, bandmill, etc. shall be specified. The plant should be capable of
processing at least 60% of the allowable annual cut.

(6) Forestry Department.The applicant shall submit assurance under oath that he
shall put a forestry department composed of trained or experienced foresters to
carry out forest management activities such as selective logging, planting of
denuded or logged-over areas within the concessions as specified by the Director of
Forestry and establish a forest nursery for the purpose.

(7) Statement on sustained yield operations, reforestation, and protection under

management plans. The bidder or applicant shall submit a sworn statement of his
agreement and willingness to operate the area under sustained yield to reforest
cleared areas and protect the concession or licensed area and under the approved
management plan, and to abide with all existing forestry laws, rules and regulations
and those that may hereafter be promulgated; and of his agreement that any
violation of these conditions shall be sufficient cause for the cancellation of the
licenses.

(8) Organization plan.Other important statement connected with sound

management and operation of the area, such as the submission among others, of
the organizational plan and employment of concession guards, shall be submitted.
In this connection, the applicant shall submit a sworn statement to the effect no alien
shall be employed without prior approval of proper authorities.

(9) Unauthorized use of heave equipment.The applicant shall give his assurance
that he shall not introduce into his area additional heave equipment and machinery
without approval of the Director of Forestry.

(10) Such other inducements or considerations to the award as will serve public
interest may also be required from time to time.

xxxx

d) With applications for areas to be negotiated.All the foregoing requirements and

supporting papers required for bidding under Section 18(a) hereinabove and of
Section 20(b) hereinbelow shall also apply to all areas that may be granted through
negotiation. In no case shall an area exceeding 100,000 hectares be granted thru
negotiation.74

The rationale underlying the very elaborate procedure that entails prior to the grant
of a timber license agreement is to avert the haphazard exploitation of the State's
forest resources as it provides that only the most qualified applicants will be allowed
to engage in timber activities within the strict limitations of the grant and that cleared
forest areas will have to be renewed through reforestation. Since timber is not a
readily renewable natural resource, it is essential and appropriate that the State
serve and act as a jealous and zealous guardian of our forest lands, with the layers
of bureaucracy that encumber the grant of timber license agreements effectively
serving as a defensive wall against the thoughtless ravage of our forest resources.

There is no doubt that no public bidding occurred in this case. Certainly,

respondents did not raise the defense in their respective answers. The absence of
such bidding was testified on by prosecution witness Arcangel. Yet even if we
consider that Twin Peaks could have acquired the TLA through "negotiation," the
prescribed requirements for "negotiation" under the law were still not complied with.

It is evident that Twin Peaks was of the frame of mind that it could simply walk up to
President Marcos and ask for a timber license agreement without having to comply
with the elaborate application procedure under the law. This is indicated by the letter
dated 31 May 198475 signed by Twin Peaks Vice President and Treasurer Evelyn
Fontanilla, addressed directly to then President Marcos, wherein Twin Peaks
expressed that "we would like to request a permit to export 20,000 cubic meters of
logs and to cut and process 10,000 cubic meters of the narra species in the same
area."76 A marginal note therein signed by Marcos indicates an approval thereof.
Neither the Forestry Reform Code nor FAO No. 11 provide for the submission of

an application directly to the Office of the President as a proper mode for the
issuance of a TLA. Without discounting the breadth and scope of the Presidents
powers as Chief Executive, the authority of the President with respect to timber
licenses is, by the express terms of the Revised Forestry Code, limited to the
amendment, modification, replacement or rescission of any contract, concession,
permit, license or any other form of privilege granted by said Code.77

There are several factors that taint this backdoor application for a timber license
agreement by Twin Peaks. The forest area covered by the TLA was already the
subject of a pre-existing TLA in favor of Ysmael. The Articles of Incorporation of
Twin Peaks does not even stipulate that logging was either a principal or secondary
purpose of the corporation. Respondents do allege that the Articles was amended
prior to the grant in order to accommodate logging as a corporate purpose, yet since
respondents have waived their right to present evidence by reason of their resort to
demurrer, we cannot consider such allegation as proven.

Sec. 18(a)(1) of FAO No. 11 requires that an applicant must have a minimum
capitalization of 20.00 per cubic meter in cash and an established credit line of
150.00 per cubic meter based on the allowable annual cut. TLA No. 356 allowed
Twin Peaks to operate on 26,000 hectares of forest land with an annual allowable
cut of 60,000 cubic meters of timber. With such annual allowable cut, Twin

Peaks, therefore, must have at least 1,200,000.00 in cash as its minimum

capitalization, following FAO No. 11. An examination of Twin Peaks Articles of
Incorporation shows that its paid-up capital was only 312,500.00.78 Clearly, Twin
Peaks paid-up capital is way below the minimum capitalization requirement.

Moreover, Sec. 18(5) provides that the bidder or applicant shall show evidence of
ownership of, or negotiation to acquire, a wood processing plant. However, although
TLA No. 356 was issued to Twin Peaks in 1984, it continued to engage the services
of at least two sawmills79 as late as 1988. Four (4) years from the issuance of the
license, Twin Peaks remained incapable of processing logs.

What could have made Twin Peaks feel emboldened to directly request President
Marcos for the grant of Timber License Agreement despite the obvious problems
relating to its capacity to engage in timber activities? The reasonable assumption is
that the official and personal proximity of Juan Tuvera to President Marcos was a
key factor, considering that he was the father of Twin Peaks' most substantial
stockholder.
The causes of action against respondents allegedly arose from Juan Tuveras abuse
of his relationship, influence and connection as Presidential Executive Assistant of
then President Marcos. Through Juan Tuveras position, the Republic claims that
Twin Peaks was able to secure a Timber License Agreement despite its lack of
qualification and the absence of a public bidding. On account of the unlawful
issuance of a timber license agreement, the natural resources of the country were
unlawfully exploited at the expense of the Filipino people. Victor Tuvera, as son of
Juan Tuvera and a major stockholder of Twin Peaks, was included as respondent
for having substantially benefited from this breach of trust. The circumstance of
kinship alone may not be enough to disqualify Victor Tuvera from seeking a timber
license agreement. Yet the basic ethical principle of delicadeza should have
dissuaded Juan Tuvera from any official or unofficial participation or intervention in
behalf of the "request" of Twin Peaks for a timber license.

Did Juan Tuvera do the honorable thing and keep his distance from Twin Peaks'
"request"? Apparently not. Instead, he penned a Memorandum dated 18 July 1984
in his capacity as Presidential Executive Assistant, directed at the Director of
Forestry, the official who, under the law, possessed the legal authority to decide
whether to grant the timber license agreements after deliberating on the application
and its supporting documents. The Memorandum reads in full:

Office of the President of the Philippines

Malacanang

18 July 1984

74-84
MEMORANDUM to

Director Edmundo Cortes

Bureau of Forest Development

I wish to inform you that the President has granted the award to the Twin Peaks
Realty Development Corporation, of the concession to manage, operate and
develop in accordance with existing policies and regulations half of the timber area
in the Province of Quirino covered by TLA No. 87, formerly belonging to the Felipe
Ysmael, Jr. & Company and comprising 54,920 hectares, and to export half of the
requested 20,000 cubic meters of logs to be gathered from the area.

Herewith is a copy of the letter concering (sic) this matter of Ms. Evelyn F.
Fontanilla, Vice-President and Treasurer of the Twin Peaks Realty Development
Corporation, on which the President indicated such approval in his own hand, which
I am furnishing you for your information and appropriate action.
(signed)
JUAN C. TUVERA
Presidential Executive Assistant80

The Memorandum establishes at the very least that Tuvera knew about the Twin
Peaks "request," and of President Marcos's favorable action on such "request." The
Memorandum also indicates that Tuvera was willing to convey those facts to the
Director of Forestry, the ostensible authority in deciding whether the Twin Peaks
"request" should have been granted. If Juan Tuvera were truly interested in
preventing any misconception that his own position had nothing to do with the
favorable action on the "request" lodged by the company controlled by his son, he
would not have prepared or signed the Memorandum at all. Certainly, there were
other officials in Malacaang who could have performed that role had the intent of
the Memorandum been merely to inform the Director of Forestry of such Presidential
action.

Delicadeza is not merely a stentorian term evincing a bygone ethic. It is a legal

principle as embodied by certain provisions of the Anti-Graft and Corrupt Practices
Act. Section 3 of R.A. No. 3019 states in part:

Sec. 3. Corrupt practices of public officers.In addition to acts or omissions of

public officers already penalized by existing law, the following shall constitute corrupt
practices of any public officer and are hereby declared to be unlawful:

(a) Persuading, inducing or influencing another public officer to perform an act

constituting a violation of rules and regulations duly promulgated by competent
authority or an offense in connection with the official duties of the latter, or allowing
himself to be persuaded, induced or influenced to commit such violation or offense.

xxxx

(h) Directly or indirectly having financial or pecuniary interest in any business,

contract or transaction in connection with which he intervenes or takes part in his
official capacity, or in which he is prohibited by the Constitution or by any law from
having any interest.

The Memorandum signed by Juan Tuvera can be taken as proof that he "persuaded,
induced or influenced" the Director of Forestry to accommodate a timber license
agreement in favor of Twin Peaks, despite the failure to undergo public bidding, or to
comply with the requisites for the grant of such agreement by negotiation, and in
favor of a corporation that did not appear legally capacitated to be granted such
agreement. The fact that the principal stockholder of Twin Peaks was his own son
establishes his indirect pecuniary interest in the transaction he appears to have
intervened in. It may have been possible on the part of Juan Tuvera to prove that he
did not persuade, induce or influence the Director of Forestry or any other official in
behalf of the timber license agreement of Twin Peaks, but then again, he waived his
right to present evidence to acquit himself of such suspicion. Certainly, the
circumstances presented by the evidence of the prosecution are sufficient to shift
the burden of evidence to Tuvera in establishing that he did not violate the
provisions of the Anti-Graft and Corrupt Practices Act in relation to the Twin Peaks
"request." Unfortunately, having waived his right to present evidence, Juan Tuvera
failed to disprove that he failed to act in consonance with his obligations under the
Anti-Graft and Corrupt Practices Act.

In sum, the backdoor recourse for a hugely priced favor from the government by
itself, and more in tandem with other brazen relevant damning circumstances,
indicates the impudent abuse of power and the detestable misuse of influence that
homologously made the acquisition of ill-gotten wealth a reality. Upon the facts
borne out by the evidence for the Republic and guideposts supplied by the
governing laws, the Republic has a clear right to the reliefs it seeks.
VI.

If only the Court's outrage were quantifiable in sums of money, respondents are due
for significant pecuniary hurt. Instead, the Court is forced to explain in the next few
paragraphs why respondents could not be forced to recompensate the Filipino
people in appropriate financial terms. The fault lies with those engaged by the
government to litigate this case in behalf of the State.

It bears to the most primitive of reasons that an action for recovery of sum of money
must prove the amount sought to be recovered. In the case at bar, the Republic
rested its case without presenting any evidence, documentary or testimonial, to
establish the amount that should be restituted to the State by reason of the illegal
acts committed by the respondents. There is the bare allegation in the complaint that
the State is entitled to 48 million by way of actual damages, but no single proof
presented as to why the State is entitled to such amount.

Actual damages must be proven, not presumed.81 The Republic failed to prove
damages. It is not enough for the Republic to have established, as it did, the legal
travesty that led to the wrongful obtention by Twin Peaks of the TLA. It should have
established the degree of injury sustained by the State by reason of such wrongful
act.

We fail to comprehend why the Republic failed to present any proof of actual
damages. Was it the inability to obtain the necessary financial documents that would
establish the income earned by Twin Peaks during the period it utilized the TLA,
despite the presence of the discovery processes? Was it mere indolence or sheer
incompetence? Whatever the reason, the lapse is inexcusable, and the injury
ultimately conduces to the pain of the Filipino people. If the litigation of this case is
indicative of the mindset in the prosecution of ill-gotten wealth cases, it is
guaranteed to ensure that those who stole from the people will be laughing on their
way to the bank.

The claim for moral damages deserves short shrift. The claimant in this case is the
Republic of the Philippines, a juridical person. We explained in Filipinas
Broadcasting v. Ago Medical & Educational Center-Bicol Christian College of
Medicine (AMEC-BCCM):82

A juridical person is generally not entitled to moral damages because, unlike a

natural person, it cannot experience physical suffering or such sentiments as
wounded feelings, serious anxiety, mental anguish or moral shock. The Court of
Appeals cites Mambulao Lumber Co. v. PNB, et al. to justify the award of moral
damages. However, the Court's statement in Mambulao that "a corporation may
have a good reputation which, if besmirched, may also be a ground for the award of
moral damages" is an obiter dictum.

Nevertheless, AMEC's claim for moral damages falls under item 7 of Article 2219 of
the Civil Code. This provision expressly authorizes the recovery of moral damages
in cases of libel, slander or any other form of defamation. Article 2219(7) does not
qualify whether the plaintiff is a natural or juridical person. Therefore, a juridical
person such as a corporation can validly complain for libel or any other form of
defamation and claim for moral damages.83

As explained, a juridical person is not entitled to moral damages under Article 2217
of the Civil Code. It may avail of moral damages under the analogous cases listed in
Article 2219, such as for libel, slander or any other form of defamation. Suffice it to
say that the action at bar does not involve any of the analogous cases under Article
2219, and indeed upon an intelligent reading of Article 2219, it is difficult to see how
the Republic could sustain any of the injuries contemplated therein. Any lawyer for
the Republic who poses a claim for moral damages in behalf of the State stands in
risk of serious ridicule.

However, there is sufficient basis for an award of temperate damages, also sought
by the Republic notwithstanding the fact that a claim for both actual and temperate
damages is internally inconsistent. Temperate or moderate damages avail when "the
court finds that some pecuniary loss has been suffered but its amount can not from
the nature of the case, be proved with certainty."84 The textual language might
betray an intent that temperate damages do not avail when the case, by its nature, is
susceptible to proof of pecuniary loss; and certainly the Republic could have proved
pecuniary loss herein.85 Still, jurisprudence applying Article 2224 is clear that
temperate damages may be awarded even in instances where pecuniary loss could
theoretically have been proved with certainty. 1aw phi1.net

In a host of criminal cases, the Court has awarded temperate damages to the heirs
of the victim in cases where the amount of actual damages was not proven due to
the inadequacy of the evidence presented by the prosecution. These cases
include People v. Oliano,86 People v. Suplito,87 People v. De la Tongga,[88] People
v. Briones,89 and People v. Plazo.90 In Viron Transportation Co., Inc. v. Delos
Santos,91 a civil action for damages involving a vehicular collision, temperate
damages were awarded for the resulting damage sustained by a cargo truck, after
the plaintiff had failed to submit competent proof of actual damages.

We cannot discount the heavy influence of common law, and its reliance on judicial
precedents, in our law on tort and damages. Notwithstanding the language of Article
2224, a line of jurisprudence has emerged authorizing the award of temperate
damages even in cases where the amount of pecuniary loss could have been
proven with certainty, if no such adequate proof was presented. The allowance of
temperate damages when actual damages were not adequately proven is ultimately
a rule drawn from equity, the principle affording relief to those definitely injured who
are unable to prove how definite the injury. There is no impediment to apply this
doctrine to the case at bar, which involves one of the most daunting and noble
undertakings of our young democracythe recovery of ill-gotten wealth salted away
during the Marcos years. If the doctrine can be justified to answer for the unlawful
damage to a cargo truck, it is a

compounded wrath if it cannot answer for the unlawful exploitation of our forests, to
the injury of the Filipino people. The amount of 1,000,000.00 as temperate
damages is proper.

The allowance of temperate damages also paves the way for the award of
exemplary damages. Under Article 2234 of the Civil Code, a showing that the
plaintiff is entitled to temperate damages allows for the award of exemplary
damages. Even as exemplary damages cannot be recovered as a matter of right,
the courts are empowered to decide whether or not they should be adjudicated. Ill-
gotten wealth cases are hornbook demonstrations where damages by way of
example or correction for the public good should be awarded. Fewer causes of
action deserve the stigma left by exemplary damages, which "serve as a deterrent
against or as a negative incentive to curb socially deleterious actions." 92 The
obtention of the timber license agreement by Twin Peaks through fraudulent and
illegal means was highlighted by Juan Tuveras abuse of his position as Presidential
Executive Assistant. The consequent exploitation of 26 hectares of forest land
benefiting all respondents is a grave case of unjust enrichment at the expense of the
Filipino people and of the environment which should never be countenanced.
Considering the expanse of forest land exploited by respondents, the volume of
timber that was necessarily cut by virtue of their abuse and the estimated wealth
acquired by respondents through grave abuse of trust and public office, it is only
reasonable that petitioner be granted the amount of 1,000,000.00 as exemplary
damages.
The imposition of exemplary damages is a means by which the State, through its
judicial arm, can send the clear and unequivocal signal best expressed in the pithy
but immutable phrase, "never again." It is severely unfortunate that the Republic did
not exert its best efforts in the full recovery of the actual damages caused by the
illegal grant of the Twin Peaks TLA. To the best of our ability, through the
appropriate vehicle of exemplary damages, the Court will try to fill in that deficiency.
For if there is a lesson that should be

learned from the national trauma of the rule of Marcos, it is that kleptocracy cannot
pay. As those dark years fade into the backburner of the collective memory, and a
new generation emerges without proximate knowledge of how bad it was then, it is
useful that the Court serves a reminder here and now.

WHEREFORE, the petition is GRANTED. The Resolution of the Sandiganbayan

dated 23 May 2001 is REVERSED. Respondents Juan C. Tuvera, Victor P. Tuvera
and Twin Peaks Development Corporation are hereby ordered to jointly and
severally pay to the Republic of the Philippines One Million (1,000,000.00) Pesos,
as and for temperate damages, and One Million (1,000,000.00) Pesos, as and for
exemplary damages, plus costs of suit.

SO ORDERED.

G.R. No. L-45359 April 27, 1939

JACINTO DEL SAZ OROZCO Y MORTERA and MARIA PAZ

ALCANTARA, plaintiffs-appellants,
vs.
SALVADOR ARANETA, defendant-appellee.

Angel A. Ansaldo for appellants.

Araneta Zaragoza and Araneta for appellee.

VILLA-REAL, J.:

On October 28, 1935, the plaintiffs and appellants filed in the office of the clerk of
court of the Court of First Instance of Manila a complaint praying, on the facts
alleged therein, that the defendant Salvador Araneta be declared without any right to
have, hold or dispose of the shares of stock covered by certificate of stock No. 8357
issued by the Benguet Consolidated Mining Company in favor of the plaintiff Jacinto
del Saz Orozco y Mortera, and, consequently, without any right to have, hold or
dispose of said certificate of stock; and that they themselves, without the
intervention of said defendant Salvador Araneta, be declared entitled to withdraw
said certificate of stock from the Bank of the Philippine Islands.
On November 20, 1935, the defendant, through counsel, interposed a demurrer
alleging that there was a defect of parties defendant.

After hearing the demurrer, the plaintiffs' opposition thereto and the parties, the court
overruled the same, with the defendant's exception.

On December 20, 1935 said defendant filed an answer in which after denying
generally and specifically each and every fact alleged in the complaint and
interposing a special defense, alleging that inasmuch as he has no personal right to
the aforementioned 11,428 shares of stock of the Benguet Consolidated Mining
Company, subject of this action, as he is merely the lawyer of Francisco del Saz
Orozco y Lopez, Dolores del Saz Orozco Lopez, and their minor children Felisa,
Eugenio, Antonio, Jose Maria, and Carlos, all surnamed Del Saz Orozco Lopez, who
are the real parties in interest and who pretend to own the said shares of stock, and
that said persons being necessary parties for the full and final determination of the
merits of the case, it was necessary that they be included as parties defendant; and
prayed that this be done.

Plaintiffs opposed this petition.

After hearing the petition for the inclusion of parties defendant, the opposition
thereto, and the parties, the court issued an order dated January 4, 1936 requiring
the plaintiffs to amend their complaint within a period of five days by including as
defendants Francisco del Saz Orozco Lopez, Dolores del Saz Orozco Lopez, and
the minors Felisa, Eugenio, Antonio, Jose Maria and Carlos, all surnamed Del Saz
Orozco Lopez.

From the foregoing order the present appeal has been taken, six errors allegedly
committed by the lower court in its order referred to having been assigned, which,
however, may be reduced to the sole proposition that the lower court erred in
ordering the inclusion of Francisco del Saz Orozco Lopez, Dolores del Saz Orozco
Lopez, and the minors Felisa, Eugenio, Antonio, Jose Maria, and Carlos, all
surnamed Del Saz Orozco Lopez, as parties defendant.

It appears from the complaint filed in the present case that the appellant Jacinto del
Saz Orozco y Mortera is the registered owned of the 11,428 shares of stock of the
Benguet Consolidated Mining Company which are the subject of this suit and are
covered by certificate of stock No. 8387 of the aforesaid company, and that
appellant, Maria Paz Alcantara, is the attorney-in-fact of the said plaintiff-appellant
Jacinto del Saz Orozco y Mortera, and the administratrix of the properties and
interests of the latter in the Philippines, and as such attorney-in-fact and
administratrix, she was in possession of the aforesaid certificate of stock No. 8387
on or before December 20, 1934, and was consequently in possession of the shares
of stock represented by said certificate; that the defendant-appellee Salvador
Araneta, without any right to said shares of stock, induced the aforesaid Maria Paz
Alcantara to deliver to him said certificate; that later, when required to return the
same, said defendant answered that he could not do so, inasmuch as the shares of
stock represented by said certificate belonged in naked ownership to some client of
his; that the said appellee, Salvador Araneta, making use of similar means, induced
Maria Paz Alcantara to ask for the delivery of said certificate of stock from the Bank
of the Philippine Islands, preparing therefor a written communication to said bank
with the signature of plaintiff Maria Paz Alcantara and making the latter understand
that said certificate was in the hands of the aforesaid bank; that when the bank was
required by Maria Paz Alcantara to deliver to her the certificate in question, said
bank merely issued a receipt in which it was stated that said certificate was in the
possession of the bank at the disposal of the appellant Maria Paz Alcantara and of
the defendant-appellee Salvador Araneta in view of the latter's opposition; that Maria
Paz Alcantara was not willing to deliver voluntarily to said Bank of the Philippine
Islands or deposit therein or with any other person, that the plaintiff Jacinto del Saz
Orozco y Mortera himself, the said certificate of stock, nor was she authorized by the
plaintiff Jacinto del Saz Orozco y Montera, of whom she is attorney-in-fact and
agent, to make said delivery or deposit with the Bank of the Philippine Islands.

By the demurrer interposed by the defendant, he hypothetically admitted the

allegation contained in the complaint that Maria Paz Alcantara is the attorney-in-fact
and administratrix of the properties and interests in these Islands of the other plaintiff
Jacinto del Saz Orozco y Mortera, who is the registered owner of the 11,428 shares
of stock of the Benguet Consolidated Mining Company which appear in the
certificate of stocks No. 8387 issued in favor of said Jacinto del Saz Orozco y
Mortera free from any annotation of an encumbrance. And in the answer interposed
by said defendant after the overruling of the demurrer, he did state the nature of the
interest which his clients Francisco del Saz Orozco Lopez, Dolores del Saz Orozco
Lopez, and the minors Felisa, Eugenio, Antonio, Jose Maria, and Carlos, all
surnamed Del Saz Orozco Lopez, have in the said 11,428 shares of stock, opposed
to that of the plaintiffs, to show the necessity of making them parties defendant in
the litigation.

It being clear from the complaint that the plaintiff Jacinto del Saz Orozco y Montera,
represented by his attorney-in-fact and administratrix of his properties and interests
in these Islands, Maria Paz Alcantara, is the registered owner of the said 11,428
shares of stock of the Benguet Consolidated Mining Company with the certificate of
stock No. 8387, the subject of the complaint, and the nature of the interest which
defendant alleges his clients have in the aforesaid shares not being clearly shown,
the necessity to compel plaintiffs to include in their complaint said clients of the
defendant as parties defendant can not be determined.

In view of the foregoing, the order appealed from is reversed and it is ordered that
the case be remanded to the Court of First Instance of Manila for further
proceedings. So ordered.
Avancea, C. J., Imperial, Diaz, Laurel, and Conception, JJ., concur.

G.R. No. 107132 October 8, 1999

MAXIMA HEMEDES, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and R & B
INSURANCE CORPORATION, respondents.

G.R. No. 108472 October 8, 1999

R & B INSURANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, DOMINIUM REALTY AND
CONSTRUCTION CORPORATION, ENRIQUE D. HEMEDES and MAXIMA
HEMEDES, respondents.

GONZAGA-REYES, J.:

Assailed in these petitions for review on certiorari is the decision 1 of the eleventh
division of the Court of Appeals in CA-G.R. CV No. 22010 promulgated on
September 11, 1992 affirming in toto the decision of Branch 24 of the Regional Trial
Court of Laguna in Civil Case No. B-1766 dated February 22, 1989, 2 and the
resolution dated December 29, 1992 denying petitioner R & B Insurance
Corporation's (R & B Insurance) motion for reconsideration. As the factual
antecedents and issues are the same, we shall decide the petitions jointly.

The instant controversy involves a question of ownership over an unregistered

parcel of land, identified as Lot No. 6, plan Psu-111331, with an area of 21,773
square meters, situated in Sala, Cabuyao, Laguna. It was originally owned by the
late Jose Hemedes, father of Maxima Hemedes and Enrique D. Hemedes. On
March 22, 1947 Jose Hemedes executed a document entitled "Donation Inter Vivos
With Resolutory Conditions" 3 whereby he conveyed ownership over the subject
land, together with all its improvements, in favor of his third wife, Justa Kauapin,
subject to the following resolutory conditions:

(a) Upon the death or remarriage of the DONEE, the title to the
property donated shall revert to any of the children, or their heirs, of the
DONOR expressly designated by the DONEE in a public document
conveying the property to the latter; or

(b) In absence of such an express designation made by the DONEE

before her death or remarriage contained in a public instrument as
 above provided, the title to the property shall automatically revert to the
legal heirs of the DONOR in common.

Pursuant to the first condition above mentioned, Justa Kausapin executed on

September 27, 1960 a "Deed of Conveyance of Unregistered Real Property by
Reversion" 4 conveying to Maxima Hemedes the subject property under the following
terms

That the said parcel of land was donated unto me by the said Jose
Hemedes, my deceased husband, in a deed of "DONATION INTER
VIVOS WITH RESOLUTORY CONDITIONS" executed by the donor in
my favor, and duly accepted by me on March 22, 1947, before Notary
Public Luis Bella in Cabuyao, Laguna;

That the donation is subject to the resolutory conditions appearing in

the said deed of "DONATION INTER VIVOS WITH RESOLUTORY
CONDITIONS," as follows:

(a) Upon the death or remarriage of the DONEE, the title

to the property donated shall revert to any of the children,
or their heirs, of the DONOR expressly designated by the
DONEE in a public document conveying the property to
the latter; or

(b) In absence of such an express designation made by

the DONEE before her death or remarriage contained in a
public instrument as above provided, the title to the
property shall automatically revert to the legal heirs of the
DONOR in common.

That, wherefore, in virtue of the deed of donation above mentioned and

in the exercise of my right and privilege under the terms of the first
resolutory condition therein contained and hereinabove reproduced,
and for and in consideration of my love and affection, I do hereby by
these presents convey, transfer, and deed unto my designee, MAXIMA
HEMEDES, of legal age, married to RAUL RODRIGUEZ, Filipino and
resident of No. 15 Acacia Road, Quezon City, who is one of the
children and heirs of my donor, JOSE HEMEDES, the ownership of,
and title to the property hereinabove described, and all rights and
interests therein by reversion under the first resolutory condition in the
above deed of donation; Except the possession and enjoyment of the
said property which shall remain vested in me during my lifetime, or
widowhood and which upon my death or remarriage shall also
automatically revert to, and be transferred to my designee, Maxima
Hemedes.
Maxima Hemedes, through her counsel, filed an application for registration and
confirmation of title over the subject unregistered land. Subsequently, Original
Certificate of Title (OCT) No. (0-941) 0-198 5 was issued in the name of Maxima
Hemedes married to Raul Rodriguez by the Registry of Deeds of Laguna on June 8,
1962, with the annotation that "Justa Kausapin shall have the usufructuary rights
over the parcel of land herein described during her lifetime or widowhood."

It is claimed by R & B Insurance that on June 2, 1964, Maxima Hemedes and her
husband Raul Rodriguez constituted a real estate mortgage over the subject
property in its favor to serve as security for a loan which they obtained in the amount
of P6,000.00. On February 22, 1968, R & B Insurance extrajudicially foreclosed the
mortgage since Maxima Hemedes failed to pay the loan even after it became due on
August 2, 1964. The land was sold at a public auction on May 3, 1968 with R & B
Insurance as the highest bidder and a certificate of sale was issued by the sheriff in
its favor. Since Maxima Hemedes failed to redeem the property within the
redemption period, R & B Insurance executed an Affidavit of Consolidation dated
March 29, 1974 and on May 21, 1975 the Register of Deeds of Laguna cancelled
OCT No. (0-941) 0-198 and issued Transfer Certificate of Title (TCT) No. 41985 in
the name of R & B Insurance. The annotation of usufruct in favor of Justa Kausapin
was maintained in the new title. 6

Despite the earlier conveyance of the subject land in favor of Maxima Hemedes,
Justa Kausapin executed a "Kasunduan" on May 27, 1971 whereby she transferred
the same land to her stepson Enrique D. Hemedes, pursuant to the resolutory
condition in the deed of donation executed in her favor by her late husband Jose
Hemedes. Enrique D. Hemedes obtained two declarations of real property in
1972, and again, in 1974, when the assessed value of the property was raised. Also,
he has been paying the realty taxes on the property from the time Justa Kausapin
conveyed the property to him in 1971 until 1979. In the cadastral survey of Cabuyao,
Laguna conducted from September 8, 1974 to October 10, 1974, the property was
assigned Cadastral No. 2990, Cad. 455-D, Cabuyao Cadastre, in the name of
Enrique Hemedes. Enrique Hemedes is also the named owner of the property in the
records of the Ministry of Agrarian Reform office at Calamba, Laguna.

On February 28, 1979, Enriques D. Hemedes sold the property to Dominium Realty
and Construction Corporation (Dominium). On April 10, 1981, Justa Kausapin
executed an affidavit affirming the conveyance of the subject property in favor of
Enrique D. Hemedes as embodied in the "Kasunduan" dated May 27, 1971, and at
the same time denying the conveyance made to Maxima Hemedes.

On May 14, 1981, Dominium leased the property to its sister corporation Asia
Brewery, Inc. (Asia Brewery) who, even before the signing of the contract of lease,
constructed two warehouses made of steel and asbestos costing about
P10,000,000.00 each. Upon learning of Asia Brewery's constructions upon the
subject property, R & B Insurance sent it a letter on March 16, 1981 informing the
former of its ownership of the property as evidenced by TCT No. 41985 issued in its
favor and of its right to appropriate the constructions since Asia Brewery is a builder
in bad faith. On March 27, 1981, a conference was held between R & B Insurance
and Asia Brewery but they failed to arrive at an amicable settlement. 1w phi 1.nt

On May 8, 1981, Maxima Hemedes also wrote a letter addressed to Asia Brewery
wherein she asserted that she is the rightful owner of the subject property by virtue
of OCT No. (0-941) 0-198 and that, as such, she has the right to appropriate Asia
Brewery's constructions, to demand its demolition, or to compel Asia Brewery to
purchase the land. In another letter of the same date addressed to R & B Insurance,
Maxima Hemedes denied the execution of any real estate mortgage in favor of the
latter.

On August 27, 1981, Dominium and Enrique D. Hemedes filed a

complaint 7 with the Court of First Instance of Binan, Laguna for the annulment of
TCT No. 41985 issued in favor of R & B Insurance and/or the reconveyance to
Dominium of the subject property. Specifically, the complaint alleged that Dominium
was the absolute owner of the subject property by virtue of the February 28, 1979
deed of sale executed by Enrique D. Hemedes, who in turn obtained ownership of
the land from Justa Kausapin, as evidenced by the "Kasunduan" dated May 27,
1971. The plaintiffs asserted that Justa Kausapin never transferred the land to
Maxima Hemedes and that Enrique D. Hemedes had no knowledge of the
registration proceedings initiated by Maxima Hemedes.

After considering the merits of the case, the trial court rendered judgment on
February 22, 1989 in favor of plaintiffs Dominium and Enrique D. Hemedes, the
dispositive portion of which states

WHEREFORE, judgment is hereby rendered:

(a) Declaring Transfer Certificate of Title No. 41985 of the

Register of Deeds of Laguna null and void and ineffective;

(b) Declaring Dominium Realty and Construction

Corporation the absolute owner and possessor of the
parcel of land described in paragraph 3 of the complaint;

(c) Ordering the defendants and all persons acting for

and/or under them to respect such ownership and
possession of Dominium Realty and Construction
Corporation and to forever desist from asserting adverse
claims thereon nor disturbing such ownership and
possession; and
 (d) Directing the Register of Deeds of Laguna to cancel
said Transfer Certificate of Title No. 41985 in the name of
R & B Insurance Corporation, and in lieu thereof, issue a
new transfer certificate of title in the name of Dominium
Realty and Construction Corporation. No pronouncement
as to costs and attorney's fees. 8

Both R & B Insurance and Maxima Hemedes appealed from the trial court's
decision. On September 11, 1992 the Court of Appeals affirmed the assailed
decision in toto and on December 29, 1992, it denied R & B Insurance's motion for
reconsideration. Thus, Maxima Hemedes and R & B Insurance filed their respective
petitions for review with this Court on November 3, 1992 and February 22, 1993,
respectively.

In G.R. No. 107132 9, petitioner Maxima Hemedes makes the following assignment
of errors as regards public respondent's ruling

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN

APPLYING ARTICLE 1332 OF THE NEW CIVIL CODE IN
DECLARING AS SPURIOUS THE DEED OF CONVEYANCE OF
UNREGISTERED REAL PROPERTY BY REVERSION EXECUTED
BY JUSTA KAUSAPIN IN FAVOR OF PETITIONER MAXIMA
HEMEDES.

II

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT

FINDING AS VOID AND OF NO LEGAL EFFECT THE "KASUNDUAN"
DATED 27 MAY 1971 EXECUTED BY JUSTA KAUSAPIN IN FAVOR
OF RESPONDENT ENRIQUE HEMEDES AND THE SALE OF THE
SUBJECT PROPERTY BY RESPONDENT ENRIQUE HEMEDES IN
FAVOR OF RESPONDENT DOMINIUM REALTY AND
CONSTRUCTION CORPORATION.

III

RESPONDENT COURT OF APPEALS GRAVELY ERRED IN NOT

FINDING RESPONDENTS ENRIQUE AND DOMINIUM IN BAD
FAITH.

IV
 RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
DECLARING THAT ORIGINAL CERTIFICATE OF TITLE NO. (0-941)
0-198 ISSUED IN THE NAME OF PETITIONER MAXIMA HEMEDES
NULL AND VOID.

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING

THAT NO LOAN WAS OBTAINED BY PETITIONER MAXIMA
HEMEDES FROM RESPONDENT R & B INSURANCE
CORPORATION.

VI

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING

THAT NO REAL ESTATE MORTGAGE OVER THE SUBJECT
PROPERTY WAS EXECUTED BY PETITIONER MAXIMA HEMEDES
IN FAVOR OF RESPONDENT R & B INSURANCE CORPORATION.

VII

RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING

THAT THE VALID TITLE COVERING THE SUBJECT PROPERTY IS
THE ORIGINAL CERTIFICATE OF TITLE NO. (0-941) 0-198 IN THE
NAME OF PETITIONER MAXIMA HEMEDES AND NOT THE
TRANSFER CERTIFICATE OF TITLE (TCT) NO. 41985 IN THE NAME
OF R & B INSURANCE CORPORATION. 10

Meanwhile, in G.R. No. 108472 11, petitioner R & B Insurance assigns almost the
same errors, except with regards to the real estate mortgage allegedly executed by
Maxima Hemedes in its favor. Specifically, R & B Insurance alleges that:

RESPONDENT COURT ERRONEOUSLY ERRED IN APPLYING

ARTICLE 1332 OF THE CIVIL CODE.

II

RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE

ON (sic) THE KASUNDUAN BY AND BETWEEN JUSTA KAUSAPIN
AND ENRIQUE NOTWITHSTANDING THE FACT THAT JUSTA
KAUSAPIN BY WAY OF A DEED OF CONVEYANCE OF
UNREGISTERED REAL PROPERTY BY REVERSION CEDED THE
 SUBJECT PROPERTY TO MAXIMA SOME ELEVEN (11) YEARS
EARLIER.

III

RESPONDENT COURT SERIOUSLY ERRED IN GIVING CREDENCE

ON (sic) THE AFFIDAVIT OF REPUDIATION OF JUSTA KAUSAPIN
NOTWITHSTANDING THE FACT THAT SHE IS A BIAS (sic)
WITNESS AND EXECUTED THE SAME SOME TWENTY-ONE (21)
YEARS AFTER THE EXECUTION OF THE DEED OF CONVEYANCE
IN FAVOR OF MAXIMA.

IV

RESPONDENT COURT SERIOUSLY ERRED IN NOT FINDING THAT

THE COMPLAINT OF ENRIQUE AND DOMINIUM HAS PRESCRIBED
AND/OR THAT ENRIQUE AND DOMINIUM WERE GUILTY OF
LACHES.

RESPONDENT COURT SERIOUSLY ERRED IN FINDING

R & B AS A MORTGAGEE NOT IN GOOD FAITH.

VI

RESPONDENT COURT SERIOUSLY ERRED IN NOT GRANTING

THE DAMAGES PRAYED FOR BY R & B IN ITS COUNTERCLAIM
AND CROSSCLAIM. 12

The primary issue to be resolved in these consolidated petitions is which of the two
conveyances by Justa Kausapin, the first in favor of Maxima Hemedes and the
second in favor of Enrique D. Hemedes, effectively transferred ownership over the
subject land.

The Register of Deeds of Laguna issued OCT No. (0-941) 0-198 in favor of Maxima
Hemedes on the strength of the "Deed of Conveyance of Unregistered Real
Property by Reversion" executed by Justa Kausapin. Public respondent upheld the
trial court's finding that such deed is sham and spurious and has "no evidentiary
value under the law upon which claimant Maxima Hemedes may anchor a valid
claim of ownership over the property." In ruling thus, it gave credence to the April 10,
1981 affidavit executed by Justa Kausapin repudiating such deed of conveyance in
favor of Maxima Hemedes and affirming the authenticity of the "Kasunduan" in favor
of Enrique D. Hemedes. Also, it considered as pivotal the fact that the deed of
conveyance in favor of Maxima Hemedes was in English and that it was not
explained to Justa Kausapin, although she could not read nor understand English;
thus, Maxima Hemedes failed to discharge her burden, pursuant to Article 1332 of
the Civil Code, to show that the terms thereof were fully explained to Justa
Kausapin. Public respondent concluded by holding that the registration of the
property on the strength of the spurious deed of conveyance is null and void and
does not confer any right of ownership upon Maxima Hemedes. 13

Maxima Hemedes argues that Justa Kausapin's affidavit should not be given any
credence since she is obviously a biased witness as it has been shown that she is
dependent upon Enrique D. Hemedes for her daily subsistence, and she was most
probably influenced by Enrique D. Hemedes to execute the "Kasunduan" in his
favor. She also refutes the applicability of article 1332. It is her contention that for
such a provision to be applicable, there must be a party seeking to enforce a
contract; however, she is not enforcing the "Deed of Conveyance of Unregistered
Real Property by Reversion" as her basis in claiming ownership, but rather her claim
is anchored upon OCT No. (0-941) 0-198 issued in her name, which document can
stand independently from the deed of conveyance. Also, there exist various
circumstances which show that Justa Kausapin did in fact execute and understand
the deed of conveyance in favor of Maxima Hemedes. First, the "Donation Intervivos
With Resolutory Conditions" executed by Jose Hemedes in favor of Justa Kausapin
was also in English, but she never alleged that she did not understand such
document. Secondly, Justa Kausapin failed to prove that it was not her thumbmark
on the deed of conveyance in favor of Maxima Hemedes and in fact, both Enrique D.
Hemedes and Dominium objected to the request of Maxima Hemedes' counsel to
obtain a specimen thumbmark of Justa Kausapin. 14

Public respondent's finding that the "Deed of Conveyance of Unregistered Real

Property By Reversion" executed by Justa Kausapin in favor of Maxima Hemedes is
spurious is not supported by the factual findings in this case. It is grounded upon the
mere denial of the same by Justa Kausapin. A party to a contract cannot just evade
compliance with his contractual obligations by the simple expedient of denying the
execution of such contract. If, after a perfect and binding contract has been
executed between the parties, it occurs to one of them to allege some defect therein
as a reason for annulling it, the alleged defect must be conclusively proven, since
the validity and fulfillment of contracts cannot be left to the will of one of the
contracting parties. 15

Although a comparison of Justa Kausapin's thumbmark with the thumbmark affixed

upon the deed of conveyance would have easily cleared any doubts as to whether
or not the deed was forged, the records do not show that such evidence was
introduced by private respondents and the lower court decisions do not make
mention of any comparison having been made. 16 It is a legal presumption that
evidence willfully suppressed would be adverse if produced. 17 The failure of private
respondents to refute the due execution of the deed of conveyance by making a
comparison with Justa Kausapin's thumbmark necessarily leads one to conclude
that she did in fact affix her thumbmark upon the deed of donation in favor of her
stepdaughter.

Moreover, public respondent's reliance upon Justa Kausapin's repudiation of the

deed of conveyance is misplaced for there are strong indications that she is a biased
witness. The trial court found that Justa Kausapin was dependent upon Enrique D.
Hemedes for financial assistance. 18 Justa Kausapin's own testimony attests to this
fact

Atty. Conchu:

Q: Aling Justa, can you tell the Honorable Court why you
donated this particular property to Enrique Hemedes?

A: Because I was in serious condition and he was the one

supporting me financially.

Q: As of today, Aling Justa are you continuing to receive

any assistance from Enrique Hemedes?

A: Yes Sir.

(TSN pp. 19 and 23, November 17, 1981) 19

Even Enrique Hemedes admitted that Justa Kausapin was dependent upon
him for financial support. The transcripts state as follows:

Atty. Mora:

Now you said that Justa Kausapin has been receiving

from you advances for food, medicine & other personal or
family needs?

E. Hemedes:

A: Yes.

Q: Was this already the practice at the time this

"Kasunduan" was executed?

A: No that was increased, no, no, after this document.

xxx xxx xxx

 Q: And because of these accommodations that you have
given to Justa Kausapin; Justa Kausapin has in turn
treated you very well because she's very grateful for that,
is it not?

A: I think that's human nature.

Q: Answer me categorically, Mr. Hemedes she's very

grateful?

A: Yes she might be grateful but not very grateful.

(TSN, p. 34, June 15, 1984) 20

A witness is said to be biased when his relation to the cause or to the parties is such
that he has an incentive to exaggerate or give false color to his statements, or to
suppress or to pervert the truth, or to state what is false. 21 At the time the present
case was filed in the trial court in 1981, Justa Kausapin was already 80 years old,
suffering from worsening physical infirmities and completely dependent upon her
stepson Enrique D. Hemedes for support. It is apparent that Enrique D. Hemedes
could easily have influenced his aging stepmother to donate the subject property to
him. Public respondent should not have given credence to a witness that was
obviously biased and partial to the cause of private respondents. Although it is a
well-established rule that the matter of credibility lies within the province of the trial
court, such rule does not apply when the witness' credibility has been put in serious
doubt, such as when there appears on the record some fact or circumstance of
weight and influence, which has been overlooked or the significance of which has
been
misinterpreted. 22

Finally, public respondent was in error when it sustained the trial court's decision to
nullify the "Deed of Conveyance of Unregistered Real Property by Reversion" for
failure of Maxima Hemedes to comply with article 1332 of the Civil Code, which
states:

When one of the parties is unable to read, or if the contract is in a

language not understood by him, and mistake or fraud is alleged, the
person enforcing the contract must show that the terms thereof have
been fully explained to the former.

Art. 1332 was intended for the protection of a party to a contract who is at a
disadvantage due to his illiteracy, ignorance, mental weakness or other
handicap. 23 This article contemplates a situation wherein a contract has been
entered into, but the consent of one of the parties is vitiated by mistake or fraud
committed by the other contracting party. 24 This is apparent from the ordering of the
provisions under Book IV, Title II, Chapter 2, section 1 of the Civil Code, from which
article 1332 is taken. Article 1330 states that

A contract where consent is given through mistake, violence,

intimidation, undue influence, or fraud is voidable.

This is immediately followed by provisions explaining what constitutes mistake,

violence, intimidation, undue influence, or fraud sufficient to vitiate consent. 25 In
order that mistake may invalidate consent, it should refer to the substance of the
thing which is the object of the contract, or to those conditions which have principally
moved one or both parties to enter into the contract. 26 Fraud, on the other hand, is
present when, through insidious words or machinations of one of the contracting
parties, the other is induced to enter into a contract which, without them, he would
not have agreed to. 27 Clearly, article 1332 assumes that the consent of the
contracting party imputing the mistake or fraud was given, although vitiated, and
does not cover a situation where there is a complete absence of consent. 1w phi 1.nt

In this case, Justa Kausapin disclaims any knowledge of the "Deed of Conveyance
of Unregistered Real Property by Reversion" in favor of Maxima Hemedes. In fact,
she asserts that it was only during the hearing conducted on December 7, 1981
before the trial court that she first caught a glimpse of the deed of conveyance and
thus, she could not have possibly affixed her thumbmark thereto. 28 It is private
respondents' own allegations which render article 1332 inapplicable for it is useless
to determine whether or not Justa Kausapin was induced to execute said deed of
conveyance by means of fraud employed by Maxima Hemedes, who allegedly took
advantage of the fact that the former could not understand English, when Justa
Kausapin denies even having seen the document before the present case was
initiated in 1981.

It has been held by this Court that ". . . mere preponderance of evidence is not
sufficient to overthrow a certificate of a notary public to the effect that the grantor
executed a certain document and acknowledged the fact of its execution before him.
To accomplish this result, the evidence must be so clear, strong and convincing as
to exclude all reasonable controversy as to the falsity of the certificate, and when the
evidence is conflicting, the certificate will be
upheld." 29 In the present case, we hold that private respondents have failed to
produce clear, strong, and convincing evidence to overcome the positive value of
the "Deed Conveyance of Unregistered Real Property by Reversion" a notarized
document. The mere denial of its execution by the donor will not suffice for the
purpose.

In upholding the deed of conveyance in favor of Maxima Hemedes, we must

concomitantly rule that Enrique D. Hemedes and his transferee, Dominium, did not
acquire any rights over the subject property. Justa Kausapin sought to transfer to
her stepson exactly what she had earlier transferred to Maxima Hemedes the
ownership of the subject property pursuant to the first condition stipulated in the
deed of donation executed by her husband. Thus, the donation in favor of Enrique
D. Hemedes is null and void for the purported object thereof did not exist at the time
of the transfer, having already been transferred to his sister. 30 Similarly, the sale of
the subject property by Enrique D. Hemedes to Dominium is also a nullity for the
latter cannot acquire more rights than its predecessor-in-interest and is definitely not
an innocent purchaser for value since Enrique D. Hemedes did not present any
certificate of title upon which it relied.

The declarations of real property by Enrique D. Hemedes, his payment of realty

taxes, and his being designated as owner of the subject property in the cadastral
survey of Cabuyao, Laguna and in the records of the Ministry of Agrarian Reform
office in Calamba, Laguna cannot defeat a certificate of title, which is an absolute
and indefeasible evidence of ownership of the property in favor of the person whose
name appears therein. 31 Particularly, with regard to tax declarations and tax
receipts, this Court has held on several occasions that the same do not by
themselves conclusively prove title to land. 32

We come now to the question of whether or not R & B Insurance should be

considered an innocent purchaser of the land in question. At the outset, we note that
both the trial court and appellate court found that Maxima Hemedes did in fact
execute a mortgage over the subject property in favor of R & B Insurance. This
finding shall not be disturbed because, as we stated earlier, it is a rule that the
factual findings of the trial court, especially when affirmed by the Court of Appeals,
are entitled to respect, and should not be disturbed on
appeal. 33

In holding that R & B Insurance is not a mortgagee in good faith, public respondent
stated that the fact that the certificate of title of the subject property indicates upon
its face that the same is subject to an encumbrance, i.e. usufructuary rights in favor
of Justa Kausapin during her lifetime or widowhood, should have prompted R & B
Insurance to ". . . investigate further the circumstances behind this encumbrance on
the land in dispute," but which it failed to do. Also, public respondent considered
against R & B Insurance the fact that it made it appear in the mortgage contract that
the land was free from all liens, charges, taxes and encumbrances. 34

R & B Insurance alleges that, contrary to public respondent's ruling, the presence of
an encumbrance on the certificate of title is not reason for the purchaser or a
prospective mortgagee to look beyond the face of the certificate of title. The owner
of a parcel of land may still sell the same even though such land is subject to a
usufruct; the buyer's title over the property will simply be restricted by the rights of
the usufructuary. Thus, R & B Insurance accepted the mortgage subject to the
usufructuary rights of Justa Kausapin. Furthermore, even assuming that R & B
Insurance was legally obliged to go beyond the title and search for any hidden
defect or inchoate right which could defeat its right thereto, it would not have
discovered anything since the mortgage was entered into in 1964, while the
"Kasunduan" conveying the land to Enrique D. Hemedes was only entered into in
1971 and the affidavit repudiating the deed of conveyance in favor of Maxima
Hemedes was executed by Justa Kausapin in 1981. 35

We sustain petitioner R & B Insurance's claim that it is entitled to the protection of a

mortgagee in good faith.

It is a well-established principle that every person dealing with registered land may
safely rely on the correctness of the certificate of title issued and the law will in no
way oblige him to go behind the certificate to determine the condition of the
property. 36 An innocent purchaser for value 37 is one who buys the property of
another without notice that some other person has a right to or interest in such
property and pays a full and fair price for the same at the time of such purchase or
before he has notice of the claim of another person. 38

The annotation of usufructuary rights in favor of Justa Kausapin upon Maxima

Hemedes' OCT dose not impose upon R & B Insurance the obligation to investigate
the validity of its mortgagor's title. Usufruct gives a right to enjoy the property of
another with the obligation of preserving its form and
substance. 39 The usufructuary is entitled to all the natural, industrial and civil fruits of
the property 40 and may personally enjoy the thing in usufruct, lease it to another, or
alienate his right of usufruct, even by a gratuitous title, but all the contracts he may
enter into as such usufructuary shall terminate upon the expiration of the usufruct. 41

Clearly, only the jus utendi and jus fruendi over the property is transferred to the
usufructuary. 42 The owner of the property maintains the jus disponendi or the power
to alienate, encumber, transform, and even destroy the same. 43This right is
embodied in the Civil Code, which provides that the owner of property the usufruct of
which is held by another, may alienate it, although he cannot alter the property's
form or substance, or do anything which may be prejudicial to the usufructuary. 44

There is no doubt that the owner may validly mortgage the property in favor of a
third person and the law provides that, in such a case, the usufructuary shall not be
obliged to pay the debt of the mortgagor, and should the immovable be attached or
sold judicially for the payment of the debt, the owner shall be liable to the
usufructuary for whatever the latter may lose by reason thereof. 45

Based on the foregoing, the annotation of usufructuary rights in favor of Justa

Kausapin is not sufficient cause to require R & B Insurance to investigate Maxima
Hemedes' title, contrary to public respondent's ruling, for the reason that Maxima
Hemedes' ownership over the property remained unimpaired despite such
encumbrance. R & B Insurance had a right to rely on the certificate of title and was
not in bad faith in accepting the property as a security for the loan it extended to
Maxima Hemedes.
Even assuming in gratia argumenti that R & B Insurance was obligated to look
beyond the certificate of title and investigate the title of its mortgagor, still, it would
not have discovered any better rights in favor of private respondents. Enrique D.
Hemedes and Dominium base their claims to the property upon the "Kasunduan"
allegedly executed by Justa Kausapin in favor of Enrique Hemedes. As we have
already stated earlier, such contract is a nullity as its subject matter was inexistent.
Also, the land was mortgaged to R & B Insurance as early as 1964, while the
"Kasunduan" was executed only in 1971 and the affidavit of Justa Kausapin
affirming the conveyance in favor of Enrique D. Hemedes was executed in 1981.
Thus, even if R & B Insurance investigated the title of Maxima Hemedes, it would
not have discovered any adverse claim to the land in derogation of its mortgagor's
title. We reiterate that at no point in time could private respondents establish any
rights or maintain any claim over the land.

It is a well-settled principle that where innocent third persons rely upon the
correctness of a certificate of title and acquire rights over the property, the court
cannot just disregard such rights. Otherwise, public confidence in the certificate of
title, and ultimately, the Torrens system, would be impaired for everyone dealing
with registered property would still have to inquire at every instance whether the title
has been regularly or irregularly issued. 46Being an innocent mortgagee for value, R
& B Insurance validly acquired ownership over the property, subject only to the
usufructuary rights of Justa Kausapin thereto, as this encumbrance was properly
annotated upon its certificate of title.

The factual findings of the trial court, particularly when affirmed by the appellate
court, carry great weight and are entitled to respect on appeal, except under certain
circumstances. 47 One such circumstance that would compel the Court to review the
factual findings of the lower courts is where the lower courts manifestly overlooked
certain relevant facts not disputed by the parties and which, if properly considered,
would justify a different conclusion. 48Also, it is axiomatic that the drawing of the
proper legal conclusions from such factual findings are within the peculiar province
of this Court. 49

As regards R & B Insurance's prayer that Dominium be ordered to demolish the

warehouses or that it be declared the owner thereof since the same were built in bad
faith, we note that such warehouses were constructed by Asia Brewery, not by
Dominium. However, despite its being a necessary party in the present case, the
lower courts never acquired jurisdiction over Asia Brewery, whether as a plaintiff or
defendant, and their respective decisions did not pass upon the constructions made
upon the subject property. Courts acquire jurisdiction over a party plaintiff upon the
filing of the complaint, while jurisdiction over the person of a party defendant is
acquired upon the service of summons in the manner required by law or by his
voluntary appearance. As a rule, if a defendant has not been summoned, the court
acquires no jurisdiction over his person, and any personal judgment rendered
against such defendant is null and void. 50 In the present case, since Asia Brewery is
a necessary party that was not joined in the action, any judgment rendered in this
case shall be without prejudice to its rights. 51

As to its claim for moral damages, we hold that R & B Insurance is not entitled to the
same for it has not alleged nor proven the factual basis for the same. Neither is it
entitled to exemplary damages, which may only be awarded if the claimant is
entitled to moral, temperate, liquidated or compensatory damages. 52 R & B
Insurance's claim for attorney's fees must also fail. The award of attorney's fees is
the exception rather than the rule and counsel's fees are not to be awarded every
time a party wins a suit. Its award pursuant to article 2208 of the Civil Code
demands factual, legal and equitable justification and cannot be left to speculation
and conjecture. 53 Under the circumstances prevailing in the instant case, there is no
factual or legal basis for an award of attorney's fees.

WHEREFORE, the assailed decision of public respondent and its resolution dated
February 22, 1989 are REVERSED. We uphold petitioner R & B Insurance's
assertion of ownership over the property in dispute, as evidenced by TCT No.
41985, subject to the usufructuary rights of Justa Kausapin, which encumbrance has
been properly annotated upon the said certificate of title. No pronouncement as to
costs.

SO ORDERED.

HEMEDES vs CA Case Digest

HEMEDES vs CA
316 SCRA 347
FACTS: Jose Hemedes executed a document entitled Donation Inter Vivos With
Resolutory Conditions conveying ownership a parcel of land, together with all its
improvements, in favor of his third wife, Justa Kauapin, subject to the resolutory
condition that upon the latters death or remarriage, the title to the property donated
shall revert to any of the children, or heirs, of the DONOR expressly designated by
the DONEE.
Pursuant to said condition, Justa Kausapin executed a Deed of Conveyance of
Unregistered Real Property by Reversion conveying to Maxima Hemedes the
subject property.

Maxima Hemedes and her husband Raul Rodriguez constituted a real estate
mortgage over the subject property in favor of R & B Insurance to serve as security
for a loan which they obtained.
R & B Insurance extrajudicially foreclosed the mortgage since Maxima Hemedes
failed to pay the loan even. The land was sold at a public auction with R & B
Insurance as the highest bidder. A new title was subsequently issued in favor the
R&B. The annotation of usufruct in favor of Justa Kausapin was maintained in the
new title.

Despite the earlier conveyance of the subject land in favor of Maxima Hemedes,
Justa Kausapin executed a Kasunduan whereby she transferred the same land to
her stepson Enrique D. Hemedes, pursuant to the resolutory condition in the deed of
donation executed in her favor by her late husband Jose Hemedes. Enrique D.
Hemedes obtained two declarations of real property, when the assessed value of
the property was raised. Also, he has been paying the realty taxes on the property
from the time Justa Kausapin conveyed the property to him. In the cadastral survey,
the property was assigned in the name of Enrique Hemedes. Enrique Hemedes is
also the named owner of the property in the records of the Ministry of Agrarian
Reform office at Calamba, Laguna.

Enriques D. Hemedes sold the property to Dominium Realty and Construction

Corporation (Dominium).

Dominium leased the property to its sister corporation Asia Brewery, Inc. (Asia
Brewery) who made constructions therein. Upon learning of Asia Brewerys
constructions, R & B Insurance sent it a letter informing the former of its ownership
of the property. A conference was held between R & B Insurance and Asia Brewery
but they failed to arrive at an amicable settlement.

Maxima Hemedes also wrote a letter addressed to Asia Brewery asserting that she
is the rightful owner of the subject property and denying the execution of any real
estate mortgage in favor of R&B.

Dominium and Enrique D. Hemedes filed a complaint with the CFI for the annulment
of TCT issued in favor of R & B Insurance and/or the reconveyance to Dominium of
the subject property alleging that Dominion was the absolute owner of the land.

The trial court ruled in favor of Dominium and Enrique Hemedes.

ISSUE: W/N the donation in favor of Enrique Hemedes was valid?
HELD: NO. Enrique D. Hemedes and his transferee, Dominium, did not acquire any
rights over the subject property. Justa Kausapin sought to transfer to her stepson
exactly what she had earlier transferred to Maxima Hemedes the ownership of the
subject property pursuant to the first condition stipulated in the deed of donation
executed by her husband. Thus, the donation in favor of Enrique D. Hemedes is null
and void for the purported object thereof did not exist at the time of the transfer,
having already been transferred to his sister. Similarly, the sale of the subject
property by Enrique D. Hemedes to Dominium is also a nullity for the latter cannot
acquire more rights than its predecessor-in-interest and is definitely not an innocent
purchaser for value since Enrique D. Hemedes did not present any certificate of title
upon which it relied.
The declarations of real property by Enrique D. Hemedes, his payment of realty
taxes, and his being designated as owner of the subject property in the cadastral
survey of Cabuyao, Laguna and in the records of the Ministry of Agrarian Reform
office in Calamba, Laguna cannot defeat a certificate of title, which is an absolute
and indefeasible evidence of ownership of the property in favor of the person whose
name appears therein. Particularly, with regard to tax declarations and tax receipts,
this Court has held on several occasions that the same do not by themselves
conclusively prove title to land.

G.R. No. L-51333 May 18, 1989

RAMONA R. LOCSIN, accompanied by her husband RENATO L. LOCSIN;

TERESITA R. GUANZON, accompanied by her husband ROMEO G. GUANZON;
CELINA R. SIBUG; accompanied by her husband CARLOS V. SIBUG; MA.
LUISA R. PEREZ, accompanied by her husband JOSE V. PEREZ; EDITHA R.
YLANAN, accompanied by her husband CARLOS W. YLANAN; and ANA
MARIE R. BENEDICTO, accompanied by her husband JOSE LUIS U.
BENEDICTO, petitioners,
vs.
HONORABLE JUDGE VICENTE P. VALENZUELA, Judge of the Court of First
Instance of Negros Occidental, Branch III and SPOUSES JOSEPH SCHON, and
HELEN BENNETT SCHON, respondents.

G.R. No. 52289 May 19, 1989

RAMONA R. LOCSIN, accompanied by her husband RENATO L. LOCSIN;

TERESITA R. GUANZON, accompanied by her husband ROMEO G. GUANZON;
CELINA R. SIBUG; accompanied by her husband CARLOS V. SIBUG; MA.
LUISA R. PEREZ, accompanied by her husband JOSE V. PEREZ; EDITHA R.
YLANAN, accompanied by her husband CARLOS W. YLANAN; and ANA
MARIE R. BENEDICTO, accompanied by her husband JOSE LUIS U.
BENEDICTO, petitioners,
vs.
CARLOS PANALIGAN, AMADO MARQUEZ, HERBERT PEDROS, ANTONIO
FELICIANO, JR., HUGO AGUILOS, ALBERTO GUBATON, JULIA VDA. DE
ESQUELITO, SERAFIN JANDOQUELE, SEFERIAS ESQUESIDA, CARLOS
DELA CRUZ, ELISEO GELONGOS, ESPINDION JOCSON, SALVADOR MUNUN,
ULFIANO ALEGRIA, and IRENEO BALERA, and Spouses JOSEPH SCHON,
and HELEN BENNETTE SCHON, respondents.

G.R. No. L-51333 May 18, 1989

RAMONA R. LOCSIN, accompanied by her husband RENATO L. LOCSIN;

TERESITA R. GUANZON, accompanied by her husband ROMEO G. GUANZON;
CELINA R. SIBUG; accompanied by her husband CARLOS V. SIBUG; MA.
LUISA R. PEREZ, accompanied by her husband JOSE V. PEREZ; EDITHA R.
YLANAN, accompanied by her husband CARLOS W. YLANAN; and ANA
MARIE R. BENEDICTO, accompanied by her husband JOSE LUIS U.
BENEDICTO, petitioners,
vs.
HONORABLE JUDGE VICENTE P. VALENZUELA, Judge of the Court of First
Instance of Negros Occidental, Branch III and SPOUSES JOSEPH SCHON, and
HELEN BENNETT SCHON, respondents.

Mirano, Mirano & Associates for petitioners in both cases.

Jose V. Valmayor & Samuel SM. Lezama for private respondents in G.R. No. 51333.
Bonifacio R. Cruz for private respondents in G.R. No. 52289.

RESOLUTION

FELICIANO, J.:

There are before us for review the following: (1) the decision of the Court of First
Instance of Negros Occidental, Branch 3, in Civil Case No. 13823; and (2) the
decision of the Court of Agrarian Relations, 11th Judicial District, in CAR Case No.
76. Both of these decisions dismissed the petitioners' complaints for lack of
jurisdiction.
Petitioners Ramona R. Locsin, Teresita R. Guanzon, Celina R. Sibug, Ma. Lusia R.
Perez, Editha R. Ylanan and Ana Marie R. Benedicto were co-owners of a large
tract of agricultural land known as "Hacienda Villa Regalado" located in Barrio
Panubigan, Canlaon City, Negros Occidental. The tract of land was covered by
Transfer Certificate of Title No. T-494 and there more particularly described in the
following terms:

TRANSFER CERTIFICATE OF TITLE

NO. T-494

A parcel of land (Lot 2-G) of the subdivision plan Psd-28446, Sheet 2,

being a portion of Lot 2 (remaining portion) described in plan II-6992,
G.L.R.O. Record No. 133), situated in the Barrio of Panubigan,
Municipality of Canlaon Province of Negros Occidental, Bounded on
the N., by Lot 2-A of the subdivision plan; on the E., and S., by
Binalbagan River; on the W., by Lot 2-E of the subdivision plan; on the
NW., by Lots 2-F and 2-A of the subdivision plan. ...containing an area
of THREE MILLION THIRTY-THREE THOUSAND AND FORTY EIGHT
(3,033,048) square meters, more or less. 1

A portion of this land, known as Lot No. 2-C-A-3 and consisting of an area of
60.07464 hectares, was subject to the lifetime usufructuary rights of respondent
Helen Schon:. The bulk of this lot was cultivated by the following lessees-tenants
who customarily delivered the rental to Helen Schon:

TENANTS

1. Carlos Panaligan 2.00 Ha.

2. Amado Marquez 1.50 Ha.
3. Herbert Pedros 1.50 Ha.
4. Antonio Feliciano, 2.00 Ha.
Jr.
5. Hugo Aguilos 3.50 Ha.
6. Alberto Gubaton 8.90 Ha.
7. Hulo Aguilos 1.32 Ha.
8. Julia Vda. de 2.25 Ha.
Esquelito
9. Carlos Panaligan 1.25 Ha.
10. Serafin 5.35 Ha.
Jandoquele
11. Seferias 2.00 Ha.
Esquesida
12. Carlos de la Cruz 4.70 Ha.
13 Eliseo Gelongos 3.00 Ha.
14. Espindion Jocson 5.55 Ha.
15. Salvador Munon 1.5884 Ha.
16. Ulfiano Alegria 1.85 Ha.
17. Ireneo Balera 8.30 Ha.
TOTAL 56.555 Ha. 2

On 22 October 1972, after the onset of the martial law administration of former
President Marcos, Presidential Decree No. 27 was promulgated, decreeing the
"Emancipation of Tenants." The tract of land owned in common by the petitioners,
including the portion thereof subject to Helen Schon's usufructuary rights, fell within
the scope of "Operation Land Transfer." In consequence, staff members of the
Department of Agrarian Relations Identified the tenant-tillers of said land, and the
necessary parcellary map sketch was made and submitted to the Bureau of Lands
Office in Dumaguete City. 3 Petitioners through counsel sought the opinion of the
DAR as to who (petitioners or respondent Helen Schon) should be entitled to receive
the rental payments which continued to be made by the respondent tenants to Helen
Schon. The DAR District Officer rendered an opinion on 30 May 1977 that the rental
payments as of 22 October 1972 were properly considered as amortization
payments for the land and as such should pertain to the land- owners and not to the
usufructuary. 4

1. Civil Case No. 13828, Court of First Instance of Negros Occidental

On 22 May 1978, petitioners filed against the spouses Joseph and Helen Schon
Civil Case No. 13828 in the then Court of First Instance of Negros Occidental, for
collection of rentals plus damages with prayer for preliminary injunction. There
petitioners claimed that since the land subject to Helen Schon's usufructuary rights
was among the parcels of land which colectively had been declared by the DAR as a
land reform area pursuant to Presidential Decree No. 27, the rental payments which
the respondent spouses had been colecting from the tenants really pertained and
should be delivered to petitioners, beginning from 21 October 1972, as constituting
or forming part of the amortization payments for the land to be made by the tenants.
Petitioners sought in that case to recover from the Schons all such previous rentals
or the money value thereof, and prayed for injunction to prevent the respondents
from collecting any further rental payments from the tenants of the land involved.

Upon the other hand, in their Answer filed on 12 July 1978, the respondents Schon
contended that under the provisions of Section 12 of Presidential Decree No. 946
dated 17 June 1976, and given the facts involved in Civil Case No. 13823, the Court
of First Instance was bereft of jurisdiction over the subject matter of the case. That
jurisdiction, the Schon spouses urged, was vested in the CAR instead. Respondents
further argued that, upon the assumption arguendo that the Court of First Instance
did have jurisdiction, Article 609 of the Civil Code must in any case be applied by
that court in resolving the case . 5

2. CAR Case No. 76, Court of Agrarian Relations

Approximately five (5) months after filing their complaint before the Negros
Occidental Court of First Instance, petitioners filed a second complaint on 13
October 1978, this time with the Court of Agrarian Relations, 11th Judicial District,
San Carlos City. In this complaint before the Agrarian Court, petitioners impleaded
as co-respondents of the spouses Schon the tenants who were cultivating the land
burdened with the usufruct of Helen Schon. Petitioners prayed that the respondent
tenants be required to pay to petitioners (rather than to the spouses Schon) all future
rentals beginning with the crop year of 1978 and every year thereafter, until full
payment of the amortization payments computed by the DAR. In their Answer, the
respondents Schon once again asserted lack of jurisdiction over the subject matter
of the case, this time on the part of the Court of Agrarian Relations. Respondents
contended that the dispute between petitioners and respondents Schon related to
the continued existence or termination of the usufructuary rights of Helen Schon,
which issue did not constitute an agrarian dispute and therefore had to be litigated
elsewhere, i.e., before the regular courts of first instance.

The respondent tenants, for their part, agreed with the Schons that there was no
tenancy relationship existing in respect of the land cultivated by them, since such
land had already been brought within the ambit of "Operation Land Transfer", and
prayed that the petitioners and the usufructuary be required to litigate among
themselves their respective rights before the proper court.

3. Dismissal of Civil Case No. 13823 and CAR Case No. 76

On 15 February 1979, the Agrarian Court rendered a decision dismissing petitioners'

complaint in CAR Case No. 76. The Court of Agrarian Relations held that it had no
jurisdiction to decide the case:
 ... it is crystal clear that the contending parties are actually Ramona R.
Locsin, et al., and the naked owners of 101 hectares of subject
agricultural land, on one hand, and Helen Bennett-Schon, who is the
usufructuary of the same land, on the other.

For all legal intents and purposes, Helen Bennett-Schon belongs to the
category of a landowner, since she is the recipient of any and all fruit
derived from the land of which the plaintiffs are the naked owners. The
usufruct lasts for as long as Helen Bennett-Schon lives. Therefore, this
case actually is a dispute between two landowners one, the naked
owners, the other, the beneficial owner hose controversy revolves
on who of them should receive the rentals being paid by the tenants or
lessees on the land in question. Consequently, there is as between the
two contending parties, no agrarian dispute which this Court may take
cognizance of. Under the circumstances, it is the considered stand of
this Court that it is not the proper forum both with respect to the second
amended complaint and with respect to the petition for appointment of
a receiver.

WHEREFORE, RESOLVING BOTH THE SECOND AMENDED

COMPLAINT AND THE PETITION FOR APPOINTMENT OF A
RECEIVER, THE LATTER BEING ONLY A REPLAY OF THE
FORMER, BOTH ARE DISMISSED FOR LACK OF JURISDICTION
(pp. 7-8 Decision) 6

Petitioners appealed the decision of the Agrarian Court to the Court of Appeals, the
appeal being there docketed as C.A.-G.R. SP No. 09-440. In a Decision dated 27
November 1979, however, the Court of Appeals ruled that since the only issue
presented in the appeal was whether or not the Court of Agrarian Relations had
jurisdiction to try and decide CAR Case No. 76, the appeal raised "a pure question
of law" and certified the case to the Supreme Court for the latter's disposition.

We turn to Civil Case No. 13823. On 16 March 1979, the then Court of First Instance
of Negros Occidental issued an order also dismissing the complaint of petitioners on
the same ground of lack of jurisdiction to hear and decide that case. The Court of
First Instance held that it was the Court of Agrarian Relations that had jurisdiction
over the case, and rationalized this position in the following manner:

In determining whether this Court has jurisdiction, necessarily, a

determination should first be made as to the nature of the lease rentals
that were being paid to the defendants by the tenants-lessees. There is
no question that on May 30, 1977, the Provincial Chairman of
Operation Land Transfer rendered an opinion that the rentals as of
October 21, 1972 was to be considered as amortization payment to the
land and as such should pertain to the land owners and not to the
 usufructuary, the defendants herein (Annex 'B' of the Complaint).
Section 12 of Presidential Decree No. 946 enumerates the case that
falls under the original and exclusive jurisdiction of the Court of
Agrarian Relations, as follows:

(a) Cases involving the rights and obligation of persons in cultivation

and use of agricultural land ...;

(b) Questions involving rights granted and obligations im posed by law,

presidential decrees, orders, instructions, rules and regulations issued
and promulgations in relation to the agrarian reform program ...;

(c) Cases involving the collection of amortization on payment for lands

acquired under Presidential Decree No. 27 as amended ...

It could be seen from the above that the jurisdiction given to the Court
of Agrarian Relations is so broad and sweeping as to cover the issue
involved in the present case. ... the agricultural leasehold relation is not
limited to that of a purely landlord and tenant relationship. The
agricultural leasehold relationship is established also with respect to
the person who furnished the landholding either as owner, civil
lessee, usufructuary or legal possessor and the person who cultivates
the same. It might as well be asked whether the opinion of the
Provincial Chairman of Operation Land Transfer previously adverted to
and which is now one of the issues in this incident would involve the
determination of the rights granted and obligations imposed in relation
to the agrarian reform program. The search for an answer need not be
deferred as reference to Par. (b) of Presidential Decree No. 49
provides such answer-

xxxxxxxxx

Questions involving rights granted and obligations imposed by the law,

presidential decrees, orders, instructions, rules and regulations issued
and promulgations in relation to the agrarian reform program.

Clearly, the determination of the nature of the payment made by the

tenants to the defendants herein is a question which involved the right
of the tenants in relation to the land reform program of the
government. 7

The above order of the Negros Occidental Court of First Instance was brought
directly to us by petitioners on a Petition for Review in G.R. No. 51333.
G.R. No. 51333 and G.R. No. 52289 were consolidated by a Resolution of this Court
dated 16 June 1982.

The consolidated cases present the question of which court had jurisdiction to
decide one and the other case. Both the Court of First Instance and the agrarian
Court were persuaded by the adroit and disingenuous pleading of respondent
Schon's counsel. Beyond the question of jurisdiction over the subject matter, is, of
course, the substantive question of twhether the peitioner as naked owners of the
land subjected to the beneficial owner's right of Helen Schon, became entitled to the
payment's made by the tenants or lessees of such land from and after the property
was declared part of a land reform area.

The issue of which court is vested with jurisdiction over Civil Case no. 13823 and
CAR Case No. 76 is, happily, no longer a live one. Jurisdiction over both cases is
clearly vested in the appropiate Regional Trial Court in view of the provisions of
Section 19(7) of Batas Pambansa Blg. 129 which was enacted by the Batasang
Pambansa on 10 August 1981 and fully implemented on 14 February 1983. 8

Section 19. Jurisdiction in Civil Cases. Regional Trial Courts shall

exercise exclusive original jurisdiction:

xxx xxx xxx

(7) In all civil actions and special proceedings falling within the
exclusive origin al jurisdiction of juvenile and domestic relations courts
and of the courts of agrarian relations as now provided by law;

xxx xxx xxx

(Emphasis supplied)

The Regional Trial Courts have full authority and jurisdiction to interpret and apply
both the mass of statutes and rules and regulations relating to land reform and the
general civil law, including the law on usufruct. Unlike a regional trial court sitting as
a probate court, a region al trial court seized of an agrarian dispute and interpreting
and applying statutes and administrative rules and regulations concerning land
reform and the sliminations of agricultural tenancy relationships, continues to act as
a court of general and plenary jurisdiction. Section 44 of b.P. Blg. 129 abolished the
Courts of Agrarian Relations and did not re-create them.

We note that resolution of the underlying substantive issues here raised requires
examination of both land reform statutes and related rules and regulations (and as
well the practice of the relevant administrative agency or executive department) and
the Civil Code provisions on usufruct.
Mindful of the length of timewhich has gone by since the first of the consolidated
cases reched this Court, and in the effort to render expeditious justice, we have
considered whether we should now confront and resolve the issue relating to the
legal character of the payments made by the respondents tenants-lessees since 21
October 1972 to respondent Helen Schon, as well as the issue relating to the
possible application of Article 609 of the Civil Code. Because, however, of the nature
and importance of the first issue, and considering that the pleadings and the records
of theses two (2) cases are bare of any substantial discussion by the parties on both
issues, the Court feels it would not be prudent to resolve those issues without further
proceedings. We are convinced, however, that those issues are primarily, if not
wholly, issues of law rather than of fact and that hence there appears no need to
remand these cases to the Regional Trial Court for further proceedings there.
Instead, we shall require the parties to file memoranda on the issues above
indicated, and the direct the Solicitor General to intervene in these cases and to file
a memorandum addressing the same issues.

ACCORDINGLY, the Court Resolved to: (1) REQUIRE the petition and private
respondents in G.R. Nos. 51333 and 52289 to file simultaneous memoranda
addressing the substantive issues identified above, within thirty (30) days from
notice hereof, and to FURNISH the Solicitor General a copy of their respective
memoranda; and (2) to DIRECT the Solicitor General to file a motion for intervention
on behalf of the government and a memorandum on the same substantive questions
within thirty (30) days from receipt of petitioners' and private respondents'
memoranda.

SO ORDERED.

[G.R. No. L-9023. November 13, 1956.]

BISLIG BAY LUMBER COMPANY. INC., Plaintiff-Appellee, vs. THE PROVINCIAL GOVERNMENT OF
SURIGAO, Defendant-Appellant.

DECISION
BAUTISTA ANGELO, J.:
Bislig Bay Lumber Co., Inc. is a timber concessionaire of a portion of public forest located in the
provinces of Agusan and Surigao. With a view to developing and exploiting its concession, the company
constructed at its expense a road from the barrio Mangagoy into the area of the concession in Surigao,
with a length of approximately 5.3 kilometers, a portion of which, or about 580 linear meters, is on a
private property of the company. The expenses incurred by the company in the construction of said road
amounted to P113,370, upon which the provincial assessor of Surigao assessed a tax in the amount of
P669.33.
Of this amount, the sum of P595.92 corresponds to the road constructed within the area of the
concession. This was paid under protest. Later, the company filed an action for its refund in the Court of
First Instance of Manila alleging that the road is not subject to tax. Defendant filed a motion to dismiss
on two grounds (1) that the venue is improperly laid, and (2) that the complaint states no cause of
action; but this motion was denied. Thereafter, Defendant filed its answer invoking the same defenses
chan roble svirtualawlibrary

it set up in its motions to dismiss. In the meantime, Congress approved Republic Act No. 1125 creating
the Court of Tax Appeals, whereupon Plaintiff moved that the case be forwarded to the latter court as
required by said Act. This motion however, was denied and, after due trial, the court rendered decision
ordering Defendant to refund to Plaintiffthe amount claimed in the complaint. This is an appeal from
said decision.
The first error assigned refers to the jurisdiction of the lower court. It is contended that since the
present case involves an assessment of land tax the determination of which comes under the exclusive
jurisdiction of the Court of Tax Appeals under Republic Act No. 1125, the lower court erred in assuming
jurisdiction over the case.
It is true that under section 22 of said Act the only cases that are required to be certified and remanded
to the Court of Tax Appeals which upon its approval are pending determination before a court of first
instance are apparently confined to those involving disputed assessment of internal revenue taxes or
custom duties, and the present case admittedly refers to an assessment of land tax, but it does not
mean that because of that apparent omission or oversight the instant case should not be remanded to
the Court of Tax Appeals, for in interpreting the context of the section above adverted to we should not
ignore section 7 of the same act which defines the extent and scope of the jurisdiction of said court. As
we have held in a recent case, section 22 of Republic Act No. 1125 should be interpreted in such a
manner as to make it harmonize with section 7 of the same Act and that the primordial purpose behind
the approval of said Act by Congress is to give to the Court of Tax Appeals exclusive appellate jurisdiction
over all tax, customs, and real estate assessment cases through out the Philippines and to hear and
decide them as soon as possible (Ollada vs. The Court of Tax Appeals, 99 Phil., 604). Considering this
interpretation of the law, it logically follows that the lower court did not act properly in denying the
motion to remand the instant case to the Court of Tax Appeals.
Considering, however, that it would be more expeditious to decide this case now than to remand it to
the Court of Tax Appeals because, even if this course is taken, it may ultimately be appealed to this
court, we will now proceed to discuss the case on the merits.
The Tax in question has been assessed under section 2 of Commonwealth Act No. 470 which provides: chanroblesvirtuallawlibrary

SEC. 2. Incidence of real property tax. Except in chartered cities, there shall be levied, assessed, and
collected, an annual ad- valorem tax on real property, including land, buildings, machinery, and other
improvements not hereinafter specifically exempted.
Note that said section authorizes the levy of real tax not only on lands, buildings, or machinery that may
be erected thereon, but also on any other improvements, and considering the road constructed
by Appellee on the timber concession granted to it as an improvement, Appellantassessed the tax now
in dispute upon the authority of the above provision of the law.
It is the theory of Appellant that, inasmuch as the road was constructed by Appellee for its own use and
benefit it is subject to real tax even if it was constructed on a public land. On the other hand, it is the
theory of Appellee that said road is exempt from real tax because (1) the road belongs to the national
government by right of accession, (2) the road cannot be removed or separated from the land on which
it is constructed and so it is part and parcel of the public land, and (3), according to the evidence, the
road was built not only for the use and benefit of Appelleebut also of the public in general.
We are inclined to uphold the theory of Appellee. In the first place, it cannot be disputed that the
ownership of the road that was constructed by Appellee belongs to the government by right accession
not only because it is inherently incorporated or attached to the timber land leased to Appellee but also
because upon the expiration of the concession, said road would ultimately pass to the national
government (Articles 440 and 445, new Civil Code; Tabotabo vs. Molero, 22 Phil., 418). In the second
chan roblesvirtualawlibrary

place, while the road was constructed by Appellee primarily for its use and benefit, the privilege is not
exclusive, for, under the lease contract entered into by the Appelleeand the government and by public in
by the general. Thus, under said lease contract, Appelleecannot prevent the use of portions, of the
concession for homesteading purposes (clause 12). It is also in duty bound to allow the free use of forest
products within the concession for the personal use of individuals residing in or within the vicinity of the
land (clause 13). The government has reserved the right to set aside communal forest for the use of the
inhabitants of the region, and to set forest reserves for public uses (clause 14). It can also grant licenses
covering any portion of the territory for the cutting and extraction of timber to be used in public works,
for mining purposes, or for the construction of railway lines (clause 15). And, if it so desires, it can
provide for logging railroad, cable ways timber chute os slide, telephone lines, pumping stations log
landings, and other rights of way for the use of forest licensees, concessionaires, permittees, or other
lessees (clause 26). In other words, the government has practically reserved the rights to use the road to
promote its varied activities. Since, as above shown, the road in question cannot be considered as an
improvement which belongs to Appellee, although in part is for its benefit, it is clear that the same
cannot be the subject of assessment within the meaning of section 2 of Commonwealth Act No. 470.
We are not oblivious of the fact that the present assessment was made by Appellant on the strength of
an opinion rendered by the Secretary of Justice, but we find that the same is predicated on authorities
which are not in point, for they refer to improvements that belong to the lessee although constructed
on lands belonging to the government. It is well settled that a real tax, being a burden upon the capital,
should be paid by the owner of the land and not by a usufructuary (Mercado vs. Rizal, 67 Phil., 608; chan

Article 597, new Civil Code). Appellee is but a partial usufructuary of the road in question.
roblesvirtualawlibrary

Wherefore, the decision appealed from is affirmed, without costs.

G.R. No. 3314 January 3, 1907

ANSELMO CHINGEN, plaintiff-appellant,

vs.
TOMAS ARGUELLES AND WIFE, ET AL., defendant-appellees.

Claro Reyes for appellant.

Teodoro Gonzales for appellees.

TORRES, J.:

On the 25th of October, 1905, the plaintiff, Anselmo Chingen, by his attorney, Claro
Reyes, filed a complaint in the Court of First Instance of the city of Manila, praying
for judgment against the four defendants herein for one-half of the jewels therein
mentioned and the rent of the property referred to therein, to wit, 4,170 pesos, or a
half of 8,340 pesos received by the defendants since the date they took possession
of the legacies left by the deceased Raymunda Reyes in her will that is to say,
since the 29th of May 1900 which said legacies consisted of a house numbered
8, 10, 12, and 14 Calle Claviera, district of Binondo, two combs set with diamonds,
and pearls, respectively a gold ring with three diamonds each, and a gold ring with
one large and several diamonds, the defendants having refused to pay half of the
earnings derived from the property left by the testatrix and the legacies referred to
belonging to him as the surviving husband of the deceased, who died without
legitimate heirs, ascendants or descendants all efforts to collect the sum thus
claimed having failed., The plaintiff further prayed that the defendants be required to
pay the costs, and for such other and further relief as the court might deem just and
equitable.

The defendant, by their attorney, Teodoro Gonzalez, after the demurrer of the
complain had been overruled, filed an answer wherein they prayed that the action be
dismissed with the costs against the plaintiff, admitting all the allegations of the
complaint except such as were expressly or tacitly denied in their special answer,
wherein they alleged that the legacies referred to in this complaint were
unconditional legacies, specific and definite of property belonging to the testatrix, the
value of which legacies did not exceed one half of the estate of which she could
freely dispose, and therefore were not subject to the right of usufruct which ordinarily
would belong to the plaintiff; that the testatrix made a partition of her property which
became irrevocable, it not having been contested within the time prescribed by law
by the widower plaintiff, the only one who could have maintained an action for the
rescission of such partition, the said plaintiff having alienated a considerable part of
the personal property assigned to him; and that the property bequeathed in these
legacies was delivered t the defendant legatees by the plaintiff, who was the
executor of the will.

The plaintiff filed a reply to the said answer, admitting all the facts alleged therein in
paragraphs A, B, and C, thereof, except in so far as it was asserted that the right of
usufruct did not extend to the property embraced in the legacies; that the value of
the such property had not been included in the property of the estate and for his
reason it was impossible to determine with certainty the value of one half of the
entire estate; and that if the value of the said legacies was not included in the estate
the right of usufruct which the surviving husband and upon one half of the property
left by the testatrix would be jeopardized; and denying the consequences of
paragraph C and the allegations contained in paragraphs D and E.

After hearing the evidence introduced by both parties, the court entered judgment on
the 6th of March, last, in favor of the defendant and against the plaintiff, dismissing
the said complaint with the costs to the defendant, from which judgment the plaintiff
excepted, and after his motion for a new trial was overruled excepted thereto.

Article 837 of the Civil Code provides:

If the testator should have neither legitimate ascendants or descendants, the

surviving spouse shall be entitled to one half of the estate also in usufruct.
The object of the action brought by the plaintiff was to recover one half of the jewels
mentioned in his complaint and one half of the rent accruing from a certain property,
which said property, as well as the jewels in question, were delivered as part of their
legacies to the legatees, Carmen Reyes, Jose Reyes, and Pedro Reyes, under the
will of the deceased Raymunda Reyes.

The plaintiff in his brief presented on appeal in this case seems to insists upon his
original petition, for he claims this object is to recover the remainder of the property
which belonged to him in usufruct under the law as the surviving spouse of the
testatrix, citing to this end article 815 of the Civil Code.

The main reliance of the plaintiff is that his deceased wife, the testatrix, did not
assign to him in her will the entire portion which belonged to him; that is to say, one
half of the estate in usufruct.

In addition to this, the plaintiff should also have stated that he was one of the
executors of the will in question, the first among those designate in clause 17 of the
will; and that he, the plaintiff, and the minor Lamberto Reyna are the only heirs
under the said will. This will account for the testatrix silence as to the usufructory
portion pertaining to the husband.

The testatrix left no legitimate descendants or ascendants. Her surviving husband

was therefore entitled to the usufruct of one half of the estate. Where the surviving
husband is also an heir under the will, as happens in the present case, the undivided
portion assigned to him as such their in accordance with the terms of the will shall
be considered as an integral part of the one half of the estate subject to the right of
usufruct of such husband for the reason that the latter's right, even though he may
be also an heir under the will, is not superior, and he is not object of the law is to
equalize the condition of the heirs and of the surviving spouse who received nothing
in addition to a share of the estate property, not as surviving spouse, but as an heir,
which share he has already received and accepted.

It is not just that the plaintiff, Anselmo Chingen, after receiving the property to which
he was entitled be also testamentary heir of his deceased wife, should be also
entitled to the usufruct so received by him was not included.

The property of the estate of his deceased wife having been divided in two equal
parts, the property to which the plaintiff was entitled as an heir under the will should
have been taken out of the one half, subject to the usufruct of the surviving spouse.
This done, the usufruct, of course, is extinguished ipso facto by the merger of such
right of usufruct and ownership in the same person, as provided in paragraph 3 of
article 513 of the Civil Code.

It is absurd and contrary to all justices that the plaintiff should received his share as
an heir under the will from one half of the estate and be further entitled to the
usufrucrt of the other half to the prejudice of his coheir and the various legatees
under the will. There is no law or article of the code which authorizes such an
iniquitos privilege.

In any event the portion of the estate subject to the usufruct must be claimed from
the heir or heirs in due time, and in the manner and form prescribed by law.

It appears from the record that the property of the estate was liquidated, distributed,
and apportioned among the heirs and legatees under the will, the plaintiff, as the
executor and heir of his deceased wife, and attorney Nazario Constantino,
guardian ad litem of the minor heir, Lamberto Reyna, being the only ones who took
part in the proceedings were duly approved by the court. (Original bill of exceptions,
pp. 15-23.)

It appears from the proceedings in question that there were assigned to the plaintiff,
Anselmo Chingen, the surviving husband of the deceased, as his share of the
community property and his usufruct, property to the value of 9,740.12 pesos and
13,000 pesos as testamentary heir.

According to the will, a copy of which appears on pages 7 to 13 of the record, there
were twelve legatees and some substitutes who were entitled to various classes of
property described in detail in the said will, and, if it is true as contended by the
executor, now the plaintiff in the will of the testatrix by delivering to the various
legatees the property bequeathed to them by his deceased wife, it may be said that
the liquidation, partition, and distribution of the rest of the estate having been made
between the only two heirs, the plaintiff one of them, the estate is finally and
definitely settled, for the partition of an estate puts an end to the undivided condition
of the same, and confers upon each of the heirs the exclusive ownership of the
property assigned to him. (Article 1068 of the Civil Code. )

The plaintiff, as has been said before, claims half of the jewels bequeathed to the
legatees, and one half of the rents accruing from a certain house also bequeathed to
the defendants, as his, the plaintiffs, usufructory portion. He has failed, however, to
state the total value of the estate and the value of the one half of the property to
which he claims to be entitled in usufruct. He has said absolutely nothing as to the
nature and value of the property assigned to him in the partition of the estate, either
as an heir or as a surviving spouse of the deceased.

The plaintiff does not seek to have the aforesaid partition set aside, nor can he ask
such a thing, for the partition of the estate was made exclusively by him and the
guardian ad litem of this coheir. However, the property of the estate having been
disturbed, and the plaintiff having disposed of some of the most valuable property
awarded to him in said partition, as he himself admits (p. 14), and the properties
having been actually delivered to the respective legatees, a new liquidation or
settlement of the estate can not be had, and the partition made under the exclusive
direction of the plaintiff as executor of the will of the deceased can not be set aside,
since the same is expressly prohibited by the provisions of article 1078 of the Civil
Code. Moreover, it has not been shown that the property bequeathed to the
defendant legatees was included in the one half of the husband. The mere fact that
the plaintiff delivered the said property to the legatees absolutely and unconditionally
shows conclusively that his right of usufruct is intact and has not been injured in any
way.

Finally, it should be borne in mind that the legacy to which this action relates
consists of a house and certain jewels and is according to the will, an unconditional
legacy without any fixed period, and that the property thus bequeathed is specified
in the said will and described as being of the exclusive ownership of the testatrix, so
that the legatees were entitled to the property thus bequeathed to them from the
death of the testatrix, and as owners of such property were also entitled to the fruits
and earnings and any increase thereof, as well as liable for any los or impairment
thereof. (Arts. 881, 882, Civil Code.)

For the reasons hereinbefore set out and those contained in the judgment appealed
from in so far as they conform with this decision, we are of the opinion that judgment
should be affirmed, and the defendants are hereby absolved of the complaint of the
plaintiff, Anselmo Chingen, with the costs against the appellant. After the expiration
of twenty days let judgment be entered in accordance herewith and ten days
thereafter the case be remanded to the Court of First Instance of execution. So
ordered.

Arellano, C.J., Mapa, Carson, Willard and Tracey, JJ., concur.

G.R. No. L-21809 January 31, 1966

GIL P. POLICARPIO, ET AL., plaintiffs-appellees,

vs.
JOSE V. SALAMAT, ET AL., defendants.
VICENTE ASUNCION, ET AL., defendants-appellants.

Tansinsin and Tansinsin for the defendants-appellants.

Eugenio Balabat for the plaintiffs-appellees.

BAUTISTA ANGELO, J.:

In a duly probated last will and testament of one Damasa Crisostomo, she gave the
naked ownership of a fishpond owned by her to her sister Teodorica de la Cruz
while its usufruct to the children of her cousins Antonio Perez, Patricia Vicente and
Canuto Lorenzo. The fishpond is situated at a barrio of Hagonoy, Bulacan.
The children of Antonio Perez, Patricia Vicente and Canuto Lorenzo turned out to be
fourteen, namely: Maria, Pio, Fructuosa, Graciano, Vicente, Victoria, Teodora, and
Juan, all surnamed Perez, Apolonio Lorenzo, Bonifacio Lorenzo, Vicente Asuncion,
Francisco Lorenzo, Leoncio Perez and Servillano Perez. On the other hand,
Teodorica de la Cruz, the naked owner, bequeathed in her will all her rights to the
fishpond to Jose V. Salamat.

The fourteen usufructuaries leased the fishpond first to one Gil P. Policarpio who
used to give them proportionately the usufruct corresponding to them. During the
term of the lease, however, three of the usufructuaries died, namely, Francisco
Lorenzo, Leoncio M. Perez and Servillano Perez, and so, upon their death, both the
naked owner and the remaining usufructuaries claimed the shares corresponding to
the deceased usufructuaries in the amount of P10,714.26. Because of these
conflicting claims, the lessee withheld said amount.

Subsequently, on May 31, 1962, the surviving usufructuaries leased the fishpond to
one Batas Riego de Dios who, after executing the contract of lease, came to know of
the existing conflicting claims, and not knowing to whom of the claimants the shares
of the deceased usufructuaries should be paid, said lessee was also constrained to
withhold the corresponding part of the usufruct of the property. So on November 15,
1962, the two lessees commenced the present action for interpleader against both
the naked owner and surviving usufructuaries to compel them to interplead and
litigate their conflicting claims.

Defendant Jose V. Salamat avers as special defense that he is the successor-in-

interest of Teodorica de la Cruz and as such he is entitled to the shares
corresponding to the three deceased usufructuaries inasmuch as the usufruct in
their favor was automatically extinguished by death and became merged with the
naked owner.

The surviving usufructuaries, on the other hand, adhere to the theory that since the
usufructuaries were instituted simultaneously by the late Damasa Crisostomo, the
death of the three usufructuaries did not extinguish the usufruct, hence, the surviving
usufructuaries are entitled to receive the shares corresponding to the deceased
usufructuaries, the usufruct to continue until the death of the last usufructuary.

When the case was called for hearing, the parties agreed to submit the case for
decision upon the submission of their respective memoranda considering that the
issue involved was purely legal in nature, and on March 29, 1963, the trial court
rendered decision the dispositive part of which reads as follows:

Wherefore, judgment is hereby rendered declaring defendant Jose V.

Salamat entitled to the sum of P10,714.25 representing the shares of the
three deceased usufructuaries in the lease rental due from plaintiff Gil
Policarpio, ordering the latter to deliver to said defendant the aforesaid
 amount; and likewise declaring said defendant Jose V. Salamat entitled to
share with the eleven usufructuaries in the proceeds of the lease contract
executed by them with plaintiff Batas Riego de Dios, ordering the latter to
deliver to him such amount as would be equivalent to the shares of the three
deceased usufructuaries, with the parties bearing their own costs and
expenses of litigation.

The surviving usufructuaries took the present appeal. 1wph1.t

The important issue to be determined is whether the eleven surviving usufructuaries

of the fishpond in question are the ones entitled to the fruits that would have
corresponded to the three deceased usufructuaries or the naked owner Jose V.
Salamat.

Appellants argue that it is the surviving usufructuaries who are entitled to receive the
shares of the deceased by virtue of Article 611 of the Civil Code which provides "A
usufruct constituted in favor of several persons living at the time of its constitution
shall not be extinguished until the death of the last survivor." On the other hand,
appellee contends that the most a usufruct can endure if constituted in favor of a
natural person is the lifetime of the usufructuary, because a usufruct is extinguished
by the death of the usufructuary unless a contrary intention clearly appears (Article
603, Civil Code). Hence, appellee argues, when the three usufructuaries died, their
usufructuary rights were extinguished and whatever rights they had to the fruits
reverted to the naked owner.

If the theory of appellee in the sense that the death of the three usufructuaries has
the effect of consolidating their rights with that of the naked owner were correct,
Article 611 of the Civil Code would be superfluous, because Article 603 already
provides that the death of the usufructuary extinguishes the usufruct unless the
contrary appears. Furthermore, said theory would cause a partial extinction of the
usufruct, contrary to the provisions of Article 611 which expressly provides that the
usufruct shall not be extinguished until the death of the last survivor. The theory of
appellee cannot, therefore, be entertained.

The well-known Spanish commentators on the counterpart of Article 611 we have

copied above which implicitly provides that the share of a usufructuary who dies in
the meantime inures to the benefit of the surviving usufructuaries, also uphold the
view we here express. Thus, the following is their comment on the matter:

Al comentar el articulo 469 (now Art. 564) hablamos, entre formas de

constitucion del usufructo, del disfrute simultaneo y sucesivo. Ninguna duda
cabe, puesto que el derecho de acrecer es aplicable a los
usufructuarios, segun el Art. 987 (now Art. 1023), sobre la no extincion del
usufructo simultaneo, hasta la muerte de la ultima persona que sobreviva. . . .
 . . . Al referirse . . . el articulo 521 (now Art. 611) al usufructo constituido en
provecho de varias personas vivas al tiempo de su constitucion, parece
referirse al usufructo simultaneo. Sin embargo, es indudable que se refiere
tambien al sucesivo, puesto que en esta especie de usufructs el segundo
usufructuario no entra en el disfrute, salvo expresion en contrario, hasta la
muerte del primero, y es claro que al morir el ultimo llamado, se extingue el
usufructo, que es precisamente lo que ordena el presente articulo. (Manresa,
Comentarios al Codigo Civil Espaol, 1931, Tomo IV, par. 486).

. . . refiriendonos al caso de muerte natural, ha de tenerse presente que si

son muchos los llamados el usufructo simultaneamente, muerto uno, su
porcian acrece a los demas, a no ser que el testador exprese lo contrario, o
se infiriera asi del titulo en que se constituye el usufructo, para lo cual puede
verse la doctrina de la ley 33, tit. I, lib. VII del Digesto, que habla del derecho
de acrecer en el usufructo, y el tit. IV del mismo libro, en que se proponen
algunos casos de excepcion.El usufructo constituido en provecho de varias
personas vivas al tiempo de su constitucion, no extinguira hasta la muerte de
la ultima que sobreviviere. Cod. Civ. art. 521. (Del Viso, Lecciones
Elementales de Derecho Civil, sexta edicion, Tomo I, p. 86.)

Si a varios usufructuarios se les lega la totalidad de una herencia; o una

misma parte de ella, se da el derecho de acrecer cuando una de ellos muere
despues del testador, sobreviviendo otro y otros?Como dice la obra
anotado, el Digesto admitio, segun un texto de Paulo, la solucion afirmativa, y
Pothier reprodujo dicha doctrina.

La jurisprudencia del Tribunal Supreme espaol ha admitido y sancionado

tambien en la sentencia de 29 de marzo de 1905, aunque no por aplicacion
del derecho de acrecer, y si por aplicacion de la voluntad presunta del
testador, que babiendose legado el usufructo vitalicio del remanente du sus
bienes, por partes iguales, a dos hermanas, debe entenderse que ellas, o
cualquiera de las dos que sobreviviere a la otra, habia de disfrutar dicho
usufructo, no constituyendo la separacion de partes sino una prevision del
testador, para el arreglo del usufructo total durante la vida de los dos
usufructuarios. (Colin and Capitant, Curso Elemental del Derecho Civil, 1957,
Tomo VIII, pp. 605-606)

It, therefore, appears that the Spanish commentators on the subject are unanimous
that there is accretion among usufructuaries who are constituted at the same time
when one of them dies before the end of the usufruct. The only exception is if the
usufruct is constituted in a last will and testament and the testator makes a contrary
provision. Here there is none. On the contrary, the testatrix constituted the usufruct
in favor of the children of her three cousins with the particular injunction that they are
the only ones to enjoy the same as long as they live, from which it can be implied
that, should any of them die, the share of the latter shall accrue to the surviving
ones. These provisions of the will are clear. They do not admit of any other
interpretation.

Wherefore, the decision appealed from is reversed. The eleven surviving

usufructuaries are hereby declared to be entitled to the shares of the three
deceased usufructuaries and, hence, as a corollary, appellees Gil P. Policarpio and
Batas Riego de Dios are hereby ordered to pay to them the money withheld by them
respectively representing the shares of the deceased usufructuaries. No costs.

Bengzon, C.J., Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon,

J.P., and Zaldivar, JJ., concur.
Barrera, J., took no part.

G.R. No. L-4452 October 1, 1908

JUANA PICHAY, plaintiff-appellee,

vs.
EULALIO QUEROL, ET AL., defendants-appellants.

Evaristo Singson for appellants.

Jose M. del Valle, and Lucas Paredes for appellee.

WILLARD, J.:

From the admissions made in the pleadings, and from the facts agreed upon in the
court below, it appears that the plaintiff, Juan Pichay, in April, 1905, conveyed to the
defendants an undivided one-third interest in twenty- five parcels of land situated in
the Province of Ilocos Sur, as payment of a debt of P1,500 which she owed them.
The contract by which this conveyance was made contained the following clause:

Third. The one-third part of these lands belong to me, it being my share in the
inheritance left by my deceased parents; but I have requested may said
creditors to allow me to enjoy the usufruct of the same until my death,
notwithstanding the fact that I have conveyed the said lands to them in
payment of my debt, and I bind myself not to sell, mortgage, or leave the said
lands as inheritance to any person.

The defendants and appellants claim that this clause above quoted gave plaintiff no
right of usufruct in the land, saying that it appears that she only asked for this right
and it does not appear that the defendants gave it to her. This contention can not be
sustained. The only reason for inserting this clause in the contract was for the
purpose of securing to the plaintiff the right which is therein set out. The form of the
words used is not sufficient to defeat this purpose.

On the 10th of August, 1905, the owners of the twenty- five parcels of land made a
partition thereof among themselves, in which the plaintiff took no part, and in this
partition certain specific tracts of land were assigned to the defendants as the third
to which they were entitled by reason of the conveyance from the plaintiff to them.
They have been in possession of the tracts so assigned to them in partition since the
date thereof, and are now in such possession, and have refused to recognized in the
plaintiff any right of usufruct therein.
lawphil.net

In February, 1907, the plaintiff brought this action against the defendants, asking
that it be declared that she had no right if usufruct in a third a twenty-five parcels of
land; and that she had the right to the administrations of land, and that the appellees
pay her the rents which they had received during the time of her dispossession.

The court rendered the following judgment:

In view of the allegations and evidence adduced by the parties, the court
concludes: (1) That all the lands described in the complaint be delivered to
Juana Pichay for administration; (2) that Juana Pichay has a right of usufruct
in a third party of the said lands until her death; (3) that the partition of the
said lands, made by the coowners of Juana Pichay can not affect the latter;
(4) Eulalio Querol is hereby directed to deliver to Juana Pichay two crops from
the third part of the lands in question, or the equivalent thereof, taking as a
basis the present crop that is, the crop to be harvested within a short time
and (5) Juana Pichay is sentence to indemnify Eulalio Querol in the sum of
P300 on account of the past suit, without costs.

The first proposition contained in this judgment finds no support in the record, and
there is nothing therein to show that the plaintiff had any acquired right to the
administration of the lands described in the complaint.

The second proposition finds its support in the record if it is limited to the lands
which were assigned to the defendants in partition.

The third proposition can not be supported. Article 490 of the Civil Code is as
follows:

ART. 490. The usufructuary of part of a thing held in common shall exercise
all the rights corresponding to the owner thereof with regard to the
administration and collection of fruits or interests. Should the community
cease by reason of the division of the thing possessed in common, the
usufruct of the part awarded to the owner of coowner shall appertain to the
usufructuary.
As to the fourth proposition, the agreed statement of facts shows that, while the
defendants are in possession of the tracts which had been assigned to them, they
received the crops for only two years; that the crop for the year 1906 amounted to
14 uyones and 13 manojos, of the value of P4 for each uyon, and that the crop of
1907 amounted to 15 uyones and 4 manojos, of the value of P6.25 for each uyon.
These are the only amounts which the plaintiff is entitled to recover.

As to the fifth proposition, while it appears that the plaintiff excepted to the judgment,
and stated that she desired to present a bill of exceptions, yet she is in fact did not
present any. The error, therefore, assigned by her with reference to this fifth
proposition can not be considered. (Naval vs. Benavides, 8 Phil. Rep., 250;
Puruganan vs.Martin, 8 Phil. Rep., 519; Ullmann vs. Ullmann and Co., 10 Phil. Rep.,
459.)

The judgment of the court below is reversed and the case remanded, with directions
to enter a judgment in favor of the plaintiff to the effect that she is entitled to the right
of usufruct in the lands assigned to the defendants by the partition of August 10,
1905, and to enter a judgment against the plaintiff and in favor of the defendant
Querol for P149.48 without cost of to either party. No costs will be allowed to either
party in this court. So ordered.

Arellano, C.J., Torres, Mapa, Carson and Tracey JJ., concur.

G.R. No. L-39187 January 30, 1982

ANULINA L. VDA. DE BOGACKI petitioner,

vs.
HON. SANCHO Y. INSERTO Presiding Judge, Branch 1, Court of First Instance
of Iloilo, THE PROVINCIAL SHERIFF OF ILOILO, and MA. EMMA LUZ
BOGACKI respondents.

CONCEPCION JR., J.:

Petition for certiorari and prohibition with preliminary injunction to annul the order of
the respondent Judge dated August 5, 1974, in Civil Case No. 7262 of the Court of
First Instance of Iloilo, directing the issuance of a writ of possession in favor of
therein plaintiff, now private respondent, Maria Emma Luz Bogacki, as well as the
levy on execution dated March 26, 1971, and the sale at public auction dated July
21, 1971, and to restrain the respondents from enforcing said orders or doing acts
that would tend to dispossess the herein petitioner of her usufruct. As prayed for, a
temporary restraining order was issued by this Court on September 23, 1974. 1
The private respondent, Maria Emma Luz Bogacki, is the owner of four parcels of land situated in Iloilo
City, and more particularly known as Lots 72-B, 591, 73, and 72-A of the Cadastral Survey of Iloilo over
which her mother, herein petitioner Anulina Ledesma Vda. de Bogacki has a usufruct, covering one-third
(1/3) of one-half (1/2) each of the said parcels of land or equivalent to one-sixth (1/6) of the share
pertaining to the deceased Cesar Bogacki, Jr. Due to a misundersatnding, Maria Emma Bogacki, left the
home for her mother and the latter took possession of all these properties exclusively for herself, without
sharing with Maria Emma Luz the rentals she obtained from the said properties. As a consequence, Maria
Emma Luz filed an action for partition with the Court of First Instance of Iloilo against her mother Anulina
"to define the portions over which the defendant may exercise her usufructuary rights over the four
parcels of land, Lots 72-B, 591, 73 and 72-A." After appropriate proceedings, judgment was rendered
therein, as follows:

FOR ALL THE FOREGOING, the Court hereby orders the defendant to
limit her right of usufruct to one-sixth (1/6) each of all these portions of
the land described in the complaint and which is now subject of
litigation, including 14th 72-A which is included in the amended
complaint already admitted by this Court.

It is to be regretted that the several attempts of the Court as well as the

attorney for the parties and the willingness on the part of the plaintiff to
assign to the defendant a definite portion of some of these lots to
correspond to the usufructuary right of the mother, she has adamantly
refused to accede to any approach at an amicable settlement thereby
making manifest the necessity of defining the same for her compliance.
Under the circumstances, the Court is constrained to order the mother,
the defendant, to get only one-sixth (1/6) of whatever collection may be
obtain from the lots in question and orders her to turn over to the
plaintiff 5/6 of all that she had previously collected from the lots not
beyond ten years before this date and conservatively appraised at
P50.00 a month from 1959 until the filing of this case and an equivalent
of said amount from date of judgment, without pronouncement as to
other damages or costs. 2

No appeal was taken from said decision and a writ of execution was issued on March 3, 1971. But, since
no tangible assets or properties were available to satisfy the money judgment, the plaintiff therein asked
the Court that a levy be made on the usufructuary rights of the defendant. 3 The defendant opposed the
motion upon the ground that her usufructuary right is one created by law as a surviving spouse and
hence, exempt from execution for family reasons. 4 The motion was denied on March 25, 1971, 5 and
thereafter, the respondent Sheriff set the sale of the usufruct at public auction. 6 The defendant filed an
urgent motion to stop said public auction sale, 7 but the motion was denied on June 24, 1971. 8 The
usufructuary rights were subsequently sold to the judgment creditor, Maria Emma Luz Bogacki, as the
highest bidder thereof, for P6,300.00. 9On July 26, 1971, the defendant Anulina Ledesma Vda. de
Bogacki filed a motion for the reconsideration of the order of June 24, 1971, stating a new grounds
therefor, that the usufructuary right is exempt from execution under Sec. 12(a) of Rule 39, Revised Rules
of Court; and that the usufruct cannot be levied upon, much less sold at the public auction which, in
effect, would extinguish it in a manner not according to the modes for extinguishing a usufruct as provided
for under Art. 603 of the Civil Code. 10 Her motion was denied on July 31, 1971. 11 On October 24, 1972,
the plaintiff filed a motion for the issuance of an alias writ of execution, to which the defendant filed an
opposition, but the said motion was withdrawn before the court could act on it, and the plaintiff, instead,
filed a motion for the issuance of a writ of possession, 12 which was granted by the respondent Judge on
August 5, 1974. 13

Hence, the instant recourse for the annulment of the order of August 5, 1974, as well
as the levy on execution and the sale at public auction of the petitioner's
usufructuary rights, and to restrain the respondents from dispossessing her of the
said usufruct.

The only issue to be resolved, considering the facts, is whether or not there was
abuse of discretion in the levy and sale on execution of the petitioner's usufructuary
rights and the issuance of the writ of possession.

The petitioner claimed that her usufructuary rights are exempt from execution for the
reasons that: (1) a usufruct of a surviving spouse cannot be alienated for family
reasons pursuant to Art. 321 of the Civil Code; (2) her usufruct, already confined to a
single area equivalent to 1/6 of the total area of the lots on which she has a usufruct
and where she had built a residential house, is a homestead within the purview of
Sec. 12 (a) of Rule 39, Rules of Court; and (3) her usufructuary rights partake of the
nature and character of such personal relations as in the right to receive legal
support, government pension and gratuity, as provided for under Sec. 12(1) of Rule
39. The petitioner further claimed that her usufruct cannot be levied on execution,
much less sold at public auction, which, in effect, would extinguish it in a manner not
according to the modes for extinguishing a usufruct provided for under Art. 603 of
the Civil Code.

The petition is without merit. This Court had ruled that the usufruct of a widow may
be transferred, assigned or otherwise disposed of by her as she may please, like
any other hereditary property, 14 and hence, an interest in real property which can be sold upon
execution. 15

Besides, the grounds relied upon by the petitioner in resisting the levy and sale on execution of her
usufructuary rights are devoid of merit. Thus. the petitioner claimed that her usufruct cannot be alienated
for family reasons pursuant to Article 321 of the Civil Code. This article of the Civil Code, however, cannot
be invoked by the petitioner because the usufructuary rights mentioned in this article are those enjoyed
by parents over the property of their unemancipated children under their custody, and not those enjoyed
by the petitioner which are those of a widow, constituted on the property of her late husband as her share
in the estate of the latter. Said article provides:

Art. 321. The property which the unemancipated child has acquired or
may acquire with his work or industry, or by any lucrative title, belongs
to the child in ownership, and in usufruct to the father or mother under
whom he is under parental authority and in whose company he lives;
but if the child, with the parent's consent, should live independently
from them, he shall be considered as emancipated for all purposes
relative to said property, and he shall have over it dominion usufruct
and administration.
The usufruct herein granted cannot be alienated or transferred to third persons
because it arises from parental authority and is necessary to enable the parents to
carry out their obligations to the incompetents under their authority. But, upon
emancipation of the child or loss of parental authority, as in the case of the private
respondent who has already attained the age of majority, is married, and living
independently of the petitioner, the usufruct is extinguished.

The petitioner also claimed that her usufruct, which she had confined to a single
area of about 500 square meters, equivalent to 1/6 of the total area of the lots of the
private respondent on which she has a usufruct, and where she had constructed a
residential house, is a homestead and therefore, exempt from execution according
to Sec-12(a), Rule 39 of the Rules of Court.

But, Section 12(a) of Rule 39 cannot be invoked by the petitioner. Under this
section, the debtor's family home constituted in accordance with the Civil Code, or in
the absence thereof, the homestead in which he resides, and the land necessarily
used in connection therewith, both not exceeding in value P3,000.00, shall be
exempt from execution. In the instant case, however, the execution was not
enforced against the petitioner's "homestead" or residential house, but on her
usufructuary rights over the lots belonging to the private respondent. The residential
house constructed by the petitioner on the land of the private respondent is but an
improvement on the property which the usufructuary may remove upon
extinguishment of the usufruct, if it be possible to do so without damage to the
property. 16

Section 12 (1) of Rule 39 is not also applicable because the property levied and sold on execution is not
the right to receive legal support or money or property obtained as such support, or any pension or
gratuity from the government. The right to support, unlike the usufruct of a widow, is a personal right
essential to the life of the recipient, so that it cannot be subject to attachment or execution. 17 On the
other hand, the usufruct of the widow, which was not reincorporated in the new Civil Code, maybe
transferred or otherwise disposed of by her, as she may please, like any other hereditary property. 18

Moreover, it appears that the levy on execution was made on March 26, 1971, 19 and the petitioner's
usufructuary rights were sold at a public auction sale on July 21, 1971. 20 The petitioner, however, took no
action thereon such that the orders issued have already become final and executory when she filed the
instant petition. It is now too late to review the proceedings made therein.

It results that there was no abuse of discretion committed in the levy and sale on
execution of the petitioner's usufructuary rights to satisfy a judgment against her.

There was, likewise, no abuse of discretion in the issuance of the writ of possession
because the said writ is but complementary to the writ of execution, and the period
for the redemption of the thing sold at public auction had expired without its being
redeemed.
WHEREFORE, the instant petition should be, as it is hereby dismissed. The
temporary restraining order heretofore issued is lifted and set aside. Costs against
the petitioner.

SO ORDERED.

SECOND DIVISION

G.R. No. L-56249 May 29, 1987

IN THE MATTER OF THE TESTATE ESTATE OF THE DECEASED REV.

FATHER TEODORO ARANAS, RAMONA B. VDA. DE ARANAS, ADELIA B.
ARANAS-FERNANDEZ, HEIRS OF THE LATE RODULFO B. ARANAS, ETC., ET
AL., petitioners,
vs.
VICENTE B. ARANAS AND HON. LUIS B. MANTA, respondents.

PARAS, J.:

This is a petition for certiorari which seeks to declare the orders of respondent Judge
dated July 16, 1980 and September 23, 1980 as an exercise of a gross abuse of
discretion amounting to lack of jurisdiction, by ruling that the properties under Group
C of the testate estate of the late Fr.Teodoro Aranas are subject to remunerative
legacies.

The antecedent facts of the case are as follows:

Fr. Teodoro Aranas, a priest of the Roman Catholic Church, died on January 19,
1953. He had executed on June 6, 1946 his Last Will and Testament which was
admitted to probate on August 31, 1956. In said Last Will and Testament, Fr.
Teodoro Aranas stipulated the following:

A. The return to Aniceto Aranas or his heirs of all properties acquired by Fr. Aranas
from his brother Aniceto Aranas and ten (10) parcels of land described in the Will
inherited by the testator from his parents.

B. The return to Carmelo Aranas or his heirs of all properties acquired by Fr. Aranas
from his brother Carmelo Aranas and ten (10) parcels of land described in the Will
inherited by the testator from his parents.

C. The special administration of the remainder of the estate of the testator by

Vicente Aranas, a faithful and serviceable nephew and designating him also as
recipient of 1/2 of the produce of said properties after deducting the expenses for the
administration and the other 1/2 of the produce to be given to the Catholic Church
for the eternal repose of the testator's soul. Said pertinent provision 1 reads as follows:

Fourth. It is my will that the lands I had bought from other persons
should be converged and placed under a "special administrator." The
special administrator of these lands, for his office, should receive one
half of all the produce from which shall be deducted the expenses for
the administration, and the other half of the produce should be received
by the Roman Catholic Church and should be spent for my soul,
Vicente B. Aranas (Tingting), because he is a faithful and serviceable
nephew, should be the first special administrator of said properties,
without bond, until his death or until he should not want to hold the said
office anymore. Anyone of the sons of my brother Carmelo Aranas can
hold the said office of special administrator, and none other than they.
Their father, my brother Carmelo Aranas shall be the one to decide
who among them shall hold the said office, but upon the death of my
said brother Carmelo Aranas, his said sons will have power to select
the one among them ourselves. The special administration is perpetual.

The lower court in its Order 2 dated November 17, 1977 ruled, upon petitioners' (in
Sp. Proc. No. 303) "Motion for the Declaration of Heirs and Partition; and for
Removal of the Administrator (Vicente Aranas) and/or for his Permission to Resign,
and appointment of His Successor" that the "perpetual inalienability and
administration of the portion of the estate of the late Rev. Fr. Teodoro Aranas,
administered by Vicente Aranas, is nun and void after twenty years from January 19,
1954 ... " and declared in the same order the heirs of the late Fr. Teodoro Aranas. It
also declared that "the removal of Vicente Aranas will, therefore, not serve the ends
of justice and for the best interest of all the heirs, particularly with respect to the
portion of the estate taken by the heirs of Aniceto Aranas, represented by the
petitioners herein and the rest of the heirs of Carmelo, represented by the
intervenors, coheirs of Administrator Vicente Aranas." 3

However, the abovesaid Order was subsequently set aside upon the "Urgent Motion
for Reconsideration and to Declare Testate and Intestate Heirs of the late Fr.
Teodoro Aranas," filed by the administrator Vicente Aranas on the allegation that
said order was violative of due process and without legal and factual basis because
only the issue for the removal of the administrator was heard and not the matter of
the declaration of heirs. Thus, the lower court declared in its Order, 4 dated July 16,
1980 that the Order dated November 17, 1977 is "set aside and in the interest of
justice, reopened in order that other heirs, successors-in-interest of Felino
Aranas, 5 could likewise assert their claims, as in the case of the heirs of Aniceto
Aranas and Carmelo Aranas." 6

Their Motion for Reconsideration having been denied by the lower court in its order
dated September 23, 1980, petitioners now come before Us by certiorari raising the
issue that the lower court erred in setting aside its order dated November 17, 1977
and in not applying the provisions on Usufruct of the New Civil Code with respect to
the properties referred to as Group "C" in the Last Will and Testament.

The court ruled in its questioned order that this particular group of properties (Group
"C") is subject to the following:

1. Remunerative legacy by way of usufruct of the net proceeds of 1/2 of

the estate after deducting expenses for administration in favor of
Vicente Aranas, during his lifetime and shall continue an administrator
of the estate, and, who, upon his death or refusal to continue such
usufruct, may be succeeded by any of the brothers of the administrator
as selected by their father, Carmelo Aranas, if still alive or one selected
by his sons if, he, Carmelo, is dead; Pursuant to the Will. (Article 562,
563, 564 and 603 of the New Civil Code).

2. Legacy in favor of the Roman Catholic Church, particularly the

Archbishop diocese of Cagayan de Oro City Represented by the
Reverend Archbishop Patrick H. Cronin over one-half of the proceeds
of the properties under Group "C." (Article 603, New Civil Code) and to
last for a period of Fifty years from the effective date of the legacy,
Article 605, New Civil Code). (Annex "L-14," p. 87, Rollo)

Assailing the aforementioned ruling, petitioners rely heavily on the doctrine laid
down in Art. 870 of the New Civil Code to wit:

Art. 870. The dispositions of the testator declaring all or part of the
estate inalienable for more than twenty years are void.

A cursory reading of the English translation of the Last Will and Testament shows
that it was the sincere intention and desire of the testator to reward his nephew
Vicente Aranas for his faithful and unselfish services by allowing him to enjoy one-
half of the fruits of the testator's third group of properties until Vicente's death and/or
refusal to act as administrator in which case, the administration shall pass to anyone
chosen by Carmelo Aranas among his sons and upon Carmelo's death, his sons will
have the power to select one among themselves. Vicente Aranas therefore as a
usufructuary has the right to enjoy the property of his uncle with all the benefits
which result from the normal enjoyment (or exploitation) of another's property, with
the obligation to return, at the designated time, either the same thing, or in special
cases its equivalent. This right of Vicente to enjoy the fruits of the properties is
temporary and therefore not perpetual as there is a limitation namely his death or his
refusal. Likewise his designation as administrator of these properties is limited by his
refusal and/or death and therefore it does not run counter to Art. 870 of the Civil
Code relied upon by the petitioners. Be it noted that Vicente Aranas is not prohibited
to dispose of the fruits and other benefits arising from the usufruct. Neither are the
naked owners (the other heirs) of the properties, the usufruct of which has been
given to Vicente Aranas prohibited from disposing of said naked ownership without
prejudice of course to Vicente's continuing usufruct. To void the designation of
Vicente Aranas as usufructuary and/or administrator is to defeat the desire and the
dying wish of the testator to reward him for his faithful and unselfish services
rendered during the time when said testator was seriously ill or bed-ridden. The
proviso must be respected and be given effect until the death or until the refusal to
act as such of the instituted usufructuary/administrator, after which period, the
property can be properly disposed of, subject to the limitations provided in Art. 863
of the Civil Code concerning a fideicommissary substitution, said Article says:

A fideicommissary substitution by virtue of which the fiduciary or first

heir instituted is entrusted with the obligation to preserve and to
transmit to a second heir the whole or part of the inheritance, shall be
valid and shall take effect, provided such substitution does not go
beyond one degree from the heir originally instituted, and provided
further, that the fiduciary or first heir and the second heir are living at
the time of the death of the testator.

It is contended by petitioners that the ruling made by respondent court dated

November 17, 1977 was already final and not subject to correction as what was set
aside and to be reheard was only regarding the determination of additional heirs.
Such contention is not worthy of credence. Respondents in their Memorandum
allege and it is not disputed by petitioners that the order of November 17, 1977 has
not yet become final because it was received only on January 12, 1978 by the
counsel for respondent Vicente Aranas and the Motion for Reconsideration and to
declare testamentary and intestate heirs dated January 17, 1978 was filed by the
said respondent within the reglementary period. Besides the validity or invalidity of
the usufructuary dispositions would affect the determination of heirs.

As to petitioners' allegation that the order of July 16, 1980 is without basis, the
record shows that during the hearing of the urgent motion for reconsideration and to
declare testamentary and intestate heirs, it was proven conclusively by the said
respondent Vicente B. Aranas that he was instituted as a remunerative legatee per
mandate of the Last Will and Testament by way of usufructuary. Likewise the right of
the Roman Catholic Church as the other usufructuary legatee for the duration of the
statutory lifetime of a corporation, that is, 50 years from the date of the effectivity of
said legacy, was also established. 7

WHEREFORE, the instant petition is hereby dismissed.

SO ORDERED.