ACQUISITIVE PRESCRIPTION

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-9989 March 13, 1918

EDUARDO CUAYCONG, ET AL., plaintiffs-appellees, vs. RAMONA BENEDICTO, ET AL., defendants-appellants. Ruperto Montinola and Aurelio Montinola for appellants. No appearance for appellees. FISHER, J.: The issues in this case relate to the right of plaintiffs to make use of two roads existing on the Hacienda Toreno, a tract of land in the municipality of Victorias, Negros Occidental, the property of the defendants, Blasa Benedicto and Ramona Benedicto. One of these roads is referred to in the proceedings as the Nanca-Victorias road and the other as the Dacuman Toreno road. The Court of First Instance held that those of the plaintiffs who claimed to be entitled to make use of the Dacuman Toreno road had failed to establish the asserted right, and dismissed the action as to them. From this decision they appealed to this court but, their brief not having been filed within the time prescribed by the rules, their appeal was dismissed, on motion of defendants, by resolution dated February 14, 1916. Consequently, the issues presented on this appeal are limited to those which relate to the rights of the parties with respect to the Nanca-Victorias road, and the determination of the correctness of the decision of the court concerning that part of the controversy submitted to its decision. The allegations in the complaint with respect to the Nanca-Victorias road are that the appellees, Eduardo Cuaycong, Lino Cuaycong, and Eulalio Dolor, are the owners of a group of haciendas situated between the southern boundary of the Hacienda Toreno and the barrio of Nanca, of the municipality of Seravia, and that the appellees Silverio Ginoo, Gervasio Ascalon, and Juan Ledesma, are the lessees of part of said haciendas; that more than twenty years the appellees and their predecessors in interest have made use of the Nanca-Victorias road, which crosses the Hacienda Toreno, openly, publicly, and continiously, with the knowledge of the owners of the said hacienda, for the purpose of conveying the products of their haciendas to the town of Victorias and to the landing place there situated, and for the purpose of transporting supplies from those points to their haciendas, making use of the said road by means of carts, carabaos, and other usual means of transportation; that there is no outlet to a public road from the hacienda occupied by these plaintiffs, the only road and way by which the products of the plaintiffs' property can be taken to the town of Victorias and to the landing place there being across the Hacienda Toreno by the road marked on the plan attached to the complaint; that on the fifteenth day of November, 1912, the defendants closed the road in question at the point at which it crosses the Hacienda Toreno, and refused to permit plaintiffs to continue using it; that plaintiffs were about to commence to grind their crop of sugar cane, and that, if prevented from transporting their sugar across the Hacienda Toreno to their point of embarkation, would suffer damages difficult to estimate. Upon these averments of fact the plaintiffs prayed for a judgment that they are entitled to use the road in question as they have been

using it in the past, and that a perpetual injunction be issued against plaintiffs restraining them from impending such use. Upon the filing of the complaint, plaintiffs moved the court to issue a preliminary injunction restraining defendants from interfering with the use of the road during the pendency of the suit, which motion was granted by the court. Defendants in their answer put in issue all the special averments of the complaint, as above set forth, and by way of counterclaim and special defense, averred that the road crossing the Hacienda Toreno, over which plaintiffs claim the right of passage, is the private property of defendants; and, further, that they have not refused plaintiffs permission to pass over this road but have required them to pay toll for the privilege of doing so. Defendants also claimed damages for the use of the road by plaintiffs during the pendency of the suit, alleging that the preliminary injunction had been improvidently issued upon false statements contained in the verified complaint filed by plaintiffs. The case was tried in July, 1913. The court on December 8, 1913, rendered judgment, dismissing the complaint with respect to the plaintiffs Felix Suarez, Probo Jereza, Enrique Azcona, and Melecio Pido, these being the plaintiffs who claimed the right to use the Dacuman Toreno road. With respect to the Nanca-Victorias road, the court held that it was a public highway over which the public had acquired a right of use by immemorial prescription, and ordered the issuance of a perpetual injunction against plaintiffs, restraining them from interfering in any manner with the use of the said road. The conclusion of the court with respect to the facts affecting the Nanca-Victorias road are as follows: Turning to a consideration of the evidence relative to the Nanca-Victorias road we find incontestable proof that it has been in existence for at least forty years. That the hacenderos located in the southwestern section of Victorias and the public generally passed over it freely and that it was used for all purposes of transportation of farm produce, animals, etc. and by pedestrians as well as carromatas and other conveyances without break or interruption until two or three years ago when the defendants announced that the road was private and that those who wished to pass over it with sugar carts would be obliged to pay a toll of ten centavos all other vehicles, it appears, were permitted to pass free charge. This arrangement seems to have existed during the years of 1911 and 1912 and part of 1913, the money being collected apparently from some hacenderos and not from others. There is some reason to believe from the evidence presented by defendants themselves that the practice of making these payments to hacienda 'Toreno' originated in an attempt to raise a fund for the repair of the road. There is no evidence that any other hacenderos between Nanca and Victorias or any other person made any attempt to close the road or to collect toll. On the contrary the road appears to have been repaired by the hacenderos when it needed repairing and everyone used it on equal terms until the defendants in 1910 or 1911 interposed the objection that the road in dispute was private. This we think is a fair deduction from the evidence and although it is asserted that toll was collected at an earlier date by the late Leon Montinola, brother of the defendant Ruperto Montinola, there is no tangible evidence that this was so and that toll has been paid only during the years of 1911, 1912, and part of 1913. The question presented by the assignment of error are in effect: (a) Is the Nanca-Victorias road at the point at which it traverses the Hacienda Toreno a public highway or not?

(b) If it be held that the road in question is not a public highway, have plaintiffs proven their acquisition of an easement of way over the Hacienda Toreno at the point traversed by the road in question? The trial judge, in holding that the road in question is public, bases in conclusion upon the fact, which he deems to have been proven, that the road has been in existence "from time immemorial," and had been "continiously used as a public road . . . and open to public as such for thirty or forty years . . . until . . . the defendants undertook to claim it as private and to collect toll for the passage of carts." (Bill of Exceptions, p. 56.) There is no doubt that for the past thirty or forty years a road has existed between the former site of the town of Victorias and the barrio of Nanca, of the municipality of Seravia, and that this road crosses defendants' hacienda. It is also true that during this period the plaintiffs and their predecessors in the ownership of the hacienda now held by them have made use of this road for the purpose of going and coming from their haciendas to the town of Victorias; but the question is whether this use was limited to the plaintiffs, and their tenants and employees, or whether it was, as held by the lower court, a use enjoyed by the public in general. Plaintiffs produced only two witnesses, Segundo de Leon (stet. notes, pp. 21-22) and Eduardo Cuaycong, (stet. notes, pp. 27-33) to testify as regards the use of the Nanca-Victorias road. Several other witnesses testified on behalf of plaintiffs, but their testimony relates to the Dacuman Toreno road, which is not involved in this appeal. We have carefully read the testimony of the witnesses Leon and Cuaycong, given upon their direct and cross examination, but we have been unable to find that either of them has testified that the road in question was ever used by the public in general. These witnesses testified with regard to the use of the road by the present and former owners and occupants of the estates of Bacayan, Esperanza, Alcaigan, Pusot, and Dolores for the transportation of the products of these estates to the town of Victorias, and of supplies and agricultural implements from Victorias to the haciendas, but neither of them testified expressly that any other use had been made of said road. Nevertheless, it may be reasonably inferred from the testimony of these witnesses that all persons having occasion to travel between Victorias and the haciendas of Bacayan, Esperanza, Alacaigan, Pusot, and Dolores, whether or not they were owners, tenants, or employees of said estates, made use of the road now in dispute, crossing the Hacienda Toreno, and to this limited extent it may be said that the public made use of the road, but there is nothing in the evidence to indicate that the so called public use extended beyond this. Apart from the fact that there is no direct evidence to support the finding of the court concerning the general public use of the road in dispute, the record contains data strongly tending to show that when the complaint was filed plaintiffs did not contend that the road was a public highway, but merely contended that they had acquired by prescription an easement of way across the Hacienda Toreno. For example, the action is entitled an "action concerning a right of away." (Bill of Exceptions, pp. 64 and 65.) It is not averred in the complaint that the road in question was used by the public. On the contrary, it is averred that it was used by the plaintiffs and their predecessors. The averment in paragraph 8 of the complaint that the plaintiffs have no other "outlet to a public road" than that which they have been accustomed to used by going across the defendants' hacienda for the purpose of going to the town of Victorias also shows that when they commenced this action they had in mind the provisions of articles 564, et seq. of the Civil Code, which relate to the method of establishing the compulsory easement of way. The owners of an existing easement, as well as those whose properties are adjacent with a public road, have no occasion to invoke these provisions of the Code, which relate to the creation of new rights, and not the enforcement of rights already in existence. It is true in the opening statement made to the court, counsel for plaintiffs, who was not the same attorney by whom the complaint was signed, stated that plaintiffs contend that the road in question is public, but as no evidence was introduced tending to establish this contention concerning the Nanca Victorias road, counsel for defendants had no occasion to object upon the ground that such testimony was not relevant to the averments of the complaint. No evidence was taken to indicate that at any time since the road in question has been in existence any part of the expense of its

upkeep has been defrayed by the general government, the province, or the municipality. The trial judge said upon this subject: It is true that whatever repairs were made on the road were made irregularly. The municipality of Victorias had no funds to devote to the construction and repair of roads, and the upkeep of the road depending entirely therefore on the initiative of the persons who used it, was attended to only at such times as repairs were absolutely necessary. (Bill of Exceptions, p. 49.) The court also held that it appears from the government grant issued in 1885 to the original owner of the hacienda adjacent to the Hacienda Toreno on its western boundary, that the Nanca-Victorias road at that time separated that estate from the Jalbuena Hacienda, and that these facts constitute "circumstantial evidence that the road was in existence in 1885." We have examined the document to which the court refers, and we agree that the road in question existed in 1885; but we do not believe that the document in question proves that the road was public highway. Another circumstance established by the evidence, and which is some importance in the determination of this issue, is that although the defendants closed the Nanca-Victorias road in the month of February, 1911, and since that time have collected toll from persons passing over it with carts loaded with sugar, including those belonging to several of the plaintiffs, nothing was done by them to prevent the continuation of this restriction until December, 1912, when this action was commenced. It is natural to assume that if plaintiffs had considered that the road in question was public, they would have protested immediately against the action of the defendants, and would have either commenced a civil action, as they subsequently did, or would have brought about a prosecution under section 16 of Act No. 1511. Upon the evidence taken and admissions contained in the pleadings and those made during the course of the trial we consider that the following findings are warranted: 1. The town of Victorias has always been the shipping point of the products of the Hacienda Toreno, and of the haciendas of appellees, as well as the place from which supplies were brought to those properties. 2. For thirty or forty years before the commencement of the suit a wagon road, herein called the Nanca-Victorias road, has been in existence, connecting the haciendas of appellees with the town of Victorias, and this road traverses the property of defendants. Since the removal of the town of Victorias to a new site the Nanca-Victorias road has been used by appellees in travelling between their properties and the provincial road which crosses the Hacienda Toreno from east to west. 3. No public funds have at any time been expended on the construction or upkeep of the NancaVictorias road, but from time to time work has been done on it by the laborers employed by the present and former owners of the Hacienda Toreno and the haciendas owned by the appellees and their predecessors in title. 4. The Nanca-Victorias wagon road, including that part of it which crosses the Hacienda Toreno, has for thirty-five or forty years been used by the appellees and their predecessors in title for the transportation, by the usual means, of the products of their estates to their shipping points in or near the town of Victorias, and the transportation to their estates of all supplies required by them, and has been used by all persons having occasion to travel to and from all or any of the estates now owned by the appellees.

5. The use of the Nanca-Victorias road in the manner and by the person above mentioned was permitted without objection by the owners of the Hacienda Toreno until the year 1911, when they closed it, and began charging a toll of 5 centavos for each cart which passed over the road, including carts belonging to the appellants, until restrained from continuing to do so by the preliminary injunction granted in this case. 6. The Nanca-Victorias road constitutes the only outlet from the estates of appellants to the nearest public road which is the provincial road which crosses the Hacienda Toreno from east to west. Upon these facts the questions of law to be decided are: (a) Is the Nanca-Victorias road a public highway? (b) If the Nanca-Victoria road, or that part of it which crosses the Hacienda Toreno, is not a public highway, is it subject to a private easement of way in favor of the appellees? The defendants are the owners of the Hacienda Toreno under a Torrens title issued in accordance with the Land Registration Act, conferring to them its absolute ownership, subject only to the limitations of paragraph four of section 39 of said Act. It is admitted that there is no annotation on the certificate of title regarding the road here in question, either as a "public road" or as a "private way established by law," and, therefore, the questions presented by this appeal are to be determined precisely as they would be had the Hacienda Toreno not been brought under the operation of the Land Registration Act. The plaintiffs being the owners of the property in question, the presumption of law is that it is free from any lien or encumbrance whatever, and the burden therefore rests upon plaintiffs to establish the contrary. As this court said in case of Fabie vs. Lichauco and the children of Francisco L. Roxas (11 Phil. Rep., 14): It is settled of law that a property is assumed to be free from all encumbrance unless the contrary is proved. There is admittedly no evidence to show that the land occupied by the road here in question was any time conveyed to the general government or any of its political subdivisions by the present or any of the former owners of the Hacienda Toreno. There is no evidence, even remotely, tending to show that the road existed prior to the time when the property now known as the Hacienda Toreno passed from the State into private ownership. The record fails to disclose any evidence whatever tending to show that the Government has at any time asserted any right or title in or to the land occupied by the road, or that it has incurred any expense whatever in its upkeep or construction. The Civil Code defines as public roads those which are constructed by the State (art. 339), and as provincial and town roads those "the expense of which is borne by such towns or provinces." (Civil Code, art. 344.) While it is not contended that this definition is exclusive, it does show that during the Spanish regime, under normal conditions, roads which were public were maintained at the public expense, and that the fact that at no time was any expense incurred by the Government with respect to the road here in question tends strongly to support the contention of the defendants that it is private way. During the Spanish regime the law required each able to bodied citizen not within one of the exempted classes to work a certain number of days in each year, his labor to be devoted to "services of general utility" to the municipality of his residence. (Royal Decree of July 11, 1883, art. 5.) Under this Decree and the Regulations for its enforcement (Berriz, vol. 11, 258) the greater part of the work on the public road of the Islands was accomplished. Had the road here in question been a public way, it is reasonable to assume that the polistas of the town of Victorias would have been employed in maintaining it. It is most significant that no mention is made in the testimony of the plaintiffs' witnesses of any work of this character having been done on the road at any time,

particularly in view of the fact that their attention was drawn to this point. (Stet. note, pp. 8, 10, 11, 12, 13 and 14.) The evidence shows that the repairs were made by the owners of the estates benefited by the road, and by their laborers, as a pure voluntary act for their own convenience and interest. There being no evidence of a direct grant to the government of the land occupied by the road in question or that any Government funds or labor were expended upon it, the question presents itself whether the use to which the road has been put was such as to justify the conclusion of the lower court that it has become public property. There being no evidence that the original use of the road by plaintiffs' predecessors was based upon any grant of the fee to the road or of an easement of way, or that it began under the assertion of a right on their part, the presumption must be that the origin of the use was the mere tolerance or license of the owners of the estates affected. This being so, has that merely permissive use been converted into a title vested in the public at large, or in the plaintiffs by reason of their ownership of the land beneficially affected by the use? Had it been shown that the road had been maintained at the public expense, with the acquiescence of the owners of the estates crossed by it, this would indicate such adverse possession by the government as in course of time would ripen into title or warrant the presumption of a grant or of a dedication. But in this case there is no such evidence, and the claims of plaintiffs, whether regarded as members of the public asserting a right to use the road as such, or as persons claiming a private easement of way over the land of another must be regarded as resting upon the mere fact of user. If the owner of a tract of land, to accommodate his neighbors or the public in general, permits them to cross his property, it is reasonable to suppose that it is not his intention, in so doing, to divest himself of the ownership of the land so used, or to establish an easement upon it and that the persons to whom such permission, tacit or express, is granted, do not regard their privilege of use as being based upon an essentially revocable license. If the use continues for a long period of time, no change being made in the relations of the parties by any express or implied agreement, does the owner of the property affected lose his right of revocation? Or, putting the same question in another form, does the mere permissive use ripen into title by prescription? It is a fundamental principle of the law in this jurisdiction concerning the possession of real property that such possession is not affected by acts of a possessory character which are "merely tolerated" by the possessor, or which are due to his license (Civil Code, arts. 444 and 1942). This principle is applicable not only with respect to the prescription of the dominium as a whole, but to the prescription of right in rem. In the case of Cortes vs. Palanca Yu Tibo (2 Phil. Rep., 24, 38), the Court said: The provision of article 1942 of the Civil Code to the effect that acts which are merely tolerated produce no effect with respect to possession is applicable as much to the prescription of real rights as to the prescription of the fee, it being a glaring and self-evident error to affirm the contrary, as does the appellant in his motion papers. Possession is the fundamental basis of the prescription. Without it no kind of prescription is possible, not even the extraordinary. Consequently, if acts of mere tolerance produce no effect with respect to possession, as that article provides, in conformity with article 444 of the same Code, it is evident that they can produce no effect with respect to prescription, whether ordinary or extraordinary. This is true whether the prescriptive acquisition be of a fee or of real rights, for the same reason holds in one and the other case; that is, that there has been no true possession in the legal sense of the word. (See also Ayala de Roxas vs. Maglonso, 8 Phil Rep., 745; Municipality of Nueva Caceres vs. Director of Lands and Roman Catholic Bishop of Nueva Caceres, 24 Phil. Rep., 485.)

Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be possession under claim of title (en concepto de dueno), or use the common law equivalent of the term, it must be adverse. Acts of a possessory character performed by one who holds by mere tolerance of the owner are clearly not en concepto de dueo, and such possessory acts, no matter how long so continued, do not start the running of the period of prescription. A similar question was presented in the case of the Roman Catholic Archbishop of Manila vs. Roxas (22 Phil. Rep., 450), in which case it appeared that Roxas, the owner of the Hacienda de San Pedro Macati, claimed a right of way across the property of the church to Calle Tejeron, a public street of the town of San Pedro Macati. The proof showed that the road in question had been used by the tenants of the Hacienda de San Pedro Macati for the passage of carts in coming and leaving the hacienda "from time immemorial," and further that the road had been used for time out of mind, not only by the tenants of the hacienda but by many other people in going and coming from a church half-way between the boundary line of the hacienda and Calle Tejeron. The court held that the facts did not give rise to a prescriptive right of easement in favor of the owner of the hacienda, upon the ground that such use "is to be regarded as permissive and under an implied license, and not adverse. Such a use is not inconsistent with the only use which the proprietor thought fit to make of the land, and until the appellee thinks proper to inclose it, such use is not adverse and will not preclude it from enclosing the land when other views of its interest render it proper to do so. And though an adjacent proprietor may make such use of the open land more frequently than another, yet the same rule will apply unless there be some decisive act indicating a separate and exclusive use under a claim of right. A different doctrine would have a tendency to destroy all neighborhood accommodations in the way of travel; for if it were once understood that a man, by allowing his neighbor to pass through his farm without objection over the pass-way which he used himself, would thereby, after the lapse of time, confer a right on such neighbor to require the pass-way to be kept open for his benefit and enjoyment, a prohibition against all such travel would immediately ensue." The decisions of the supreme court of Louisiana, a State whose jurisdiction is based, as is our own, upon the Roman Law, and whose Civil Code is taken, as is our own,. very largely from the Code of Napoleon, are particularly persuasive in matters of this character. In the case of Torres vs. Fargoust (37 La. Ann., 497), cited by appellants in their brief, in which the issues were very similar to those of the present case, the court held that The mere fact that for thirty or forty years the public was permitted to pass over this ground would not of itself constitute the place a locus publicus . . . dedication must be shown by evidence so conclusive as to exclude all idea of private ownership; . . . such dedication cannot be inferred from ere user alone; . . . no one is presumed to give away his property. The burden is on him who avers a divestiture of ownership to prove it clearly. We are, therefore, of the opinion, and so hold, that upon the facts established by the evidence it does not appear that the road in question is a public road or way. We are also of the opinion that plaintiffs have failed to show that they have acquired by prescription a private right of passage over the lands of defendants. The supreme court of Spain has decided that under the law in force before the enactment of the Civil Code, the easement of way was discontinous, and that while such an easement might be acquired by prescription, it must be used in good faith, in the belief of the existence of the right, and such user must have been continuous from time immemorial. (Judgment of December 15, 1882.) In the appealed decision the court below says that the plaintiffs and their predecessors made use of the road in question "from time immemorial," but there is no evidence whatever in the record to sup[port this finding, although it is true that the evidence shows the existence of the road and its use by the plaintiffs and their predecessors for thirty-five or forty years. Speaking of the evidence required under the present Code of Civil Procedure to show immemorial use of an easement, this court said in the case of Ayal de Roxas vs. Case (8 Phil. Rep., 197, 198):

Third Partida in title 31, law 15 . . . says that discontinues servitudes . . . must be proved by usage or a term so long that men can not remember its commencement. . . . In many judgments the supreme court of Spain has refused to accept proof of any definite number of years as a satisfaction of this requirement of the law. . . . We are of the opinion that in order to establish a right of prescription [title of prescription based upon use from time immemorial] something more required than memory of living witnesses. Whether this something should be the declaration of persons long dead, repeated by those who testify, as exacted by the Spanish law, or should be the common reputation of ownership recognized by the Code of Procedure, it is unnecessary for us to decide. On either theory the appellant has failed in his proof . . . . The same thing may be said in this case. Witnesses have testified that they have known the road for a certain period of years, beginning at a time prior to the enactment of the Civil Code, but no evidence has been made to prove immemorial use by either of the means of proof mentioned in this decision cited, nor is immemorial user averred in the complaint as the basis of the right. It is evident, therefore, that no vested right by user from time immemorial had been acquired by plaintiffs at the time the Civil Code took effect. Under that Code (art 539) no discontinuous easement could be acquired by prescription in any event. Assuming, without deciding, that this rule has been changed by the provisions of the present Code of Civil Procedure relating to prescription, and that since its enactment discontinuous easement may be required by prescription, it is clear that this would not avail plaintiffs. The Code of Civil Procedure went into effect on October 1, 1901. The term of prescription for the acquisition of rights in real estate is fixed by the Code (sec. 41) at ten years. The evidence shows that in February, 1911, before the expiration of the term of ten years since the time the Code of Civil Procedure took effect, the defendants interrupted the use of the road by the plaintiffs by constructing and maintaining a toll gate on it and collecting toll from persons making use of it with carts and continued to do so until they were enjoined by the granting of the preliminary injunction by the trial court in December, 1912. Our conclusion is, therefore, that the plaintiffs have not acquired by prescription a right to an easement of way over the defendant's property; that their use of the Nanca-Victorias road across the Hacienda Toreno was due merely to the tacit license and tolerance of the defendants and their predecessors in title; that license was essentially revokable; and that, therefore, the defendants were within their rights when they closed the road in 1911. While in the allegations from the plaintiffs' complaint it might be inferred that it was their purpose to seek to impose upon the defendants the easement to which arts. 564 et seq. of the Civil Code relate, that purpose was evidently abandoned, and the case was tried upon a wholly different theory. Proof was offered to show that the right of passage across defendants' land is necessary to enable plaintiffs to get their products to market, but there was no offer on their part to pay defendants the indemnity required by section 564. For the reasons stated the judgment of the court below is reversed, the injunction issued against defendants is allowed on this appeal. So ordered. Arellano, C.J., Torres, Araullo, Street, Malcolm, and Avancea, JJ., concur.

Separate Opinions JOHNSON, J., concur. Judgment reversed; injunction dissolved, and action dismissed.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-46753-54 August 25, 1989 ANTONIO SOLIS and ANGELA SOLIS CALIMLIM, petitioners, vs. HONORABLE COURT OF APPEALS, JOSE SOLIS and FLORENCIA DIOQUINO respondents. Benigno P. Pulmano for petitioners. Teodoro P. Regino for private respondents.

MEDIALDEA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court. Petitioners Antonio Solis and Angela Solis Calimlim seek the review of the decision (pp 81-88, Rollo) of the Honorable Court of Appeals in CA-G.R. Nos. 45505-R and 45506R dated May 12, 1977 which set aside the decision of the Court of First Instance of Pangasinan in Civil Case No. D-2039 declaring petitioner Antonio Solis the exclusive owner of an unregistered parcel of land consisting of an area of five hundred thirty-six (536) square meters. In a complaint (pp. 1-8, Record on Appeal) dated May 30, 1967, plaintiffs Antonio Solis and Angela Solis Calimlim alleged that they are co-owners of a parcel of residential land situated at Barrio Bued, Calasiao, Pangasinan, with an area of 1,073 square meters more or less; that this parcel of land was inherited from their parents, Simeon Solis and Petronila Bauzon; that in 1939, they allowed defendants Jose Solis and his wife Florencia Dioquino to construct a house on the eastern portion of plaintiffs' parcel of land (consisting of 536 square meters) with the understanding that they (defendants) should vacate the premises as soon as their financial conditions would permit them. In 1965, plaintiffs demanded that the defendants vacate the premises but the latter refused. The answer (pp. 8-10, Record on Appeal) of defendants raised as affirmative defense the fact of their ownership of the property in question having acquired the same by way of donacion proper nuptias from spouses Tomas Solis and Hermenegilda Jimenez, way back in 1931. They also alleged that since 1931, they were in possession of said property openly, continuously and adversely, to the exclusion of all others, and in the concept of owners and that since 1931 they have paid the taxes due on the property. On November 21, 1968, plaintiffs filed a Motion for the Issuance of a Writ of Preliminary Mandatory Injunction (pp. 11 -12, Record on Appeal) praying that the defendants or their agents be enjoined from commencing and continuing the construction of a residential house on the land in question. The motion was granted in an order dated December 11, 1968. On February 17, 1969, plaintiffs and defendants, thru their respective counsel, filed the following partial stipulation of facts:

COMES NOW the plaintiffs thru their undersigned counsel, and the defendants thru their counsel, respectfully submit the following partial stipulation of facts; 1. Parties know the Identity of the land in litigation as described under paragraph 11 of the complaint; 2. That the subject matter of the litigation refers to the eastern side of the property described in par. 11 of the complaint consisting of about 526 square meters; 3. That the defendants has (sic) a house in the said eastern portion of the said property; 4. That the whole property was previously owned by Simeon Solis; 5. That there exist an alleged donation proper nuptias executed by deceased Tomas Solis in favor of Jose Solis, the defendant over the eastern half of the said property described in par. 11 of the complaint; 6. That Tomas Solis, father of defendant Jose Solis was the nephew of Simeon Solis; that Tomas Solis was the son of Domingo Solis; brother of Simeon Solis; 7. That the land in question has been declared for taxation purposes as follows: a. Before 1918-T.D. 7659 in the name of Simeon Solis. b. 1918-T.D. 21465 revised T.D. 7659 also in the name of Simeon Solis. c. 1920-T.D. 37709 revised T.D. 21465 also in the name of Simeon Solis. d. 1951-T.D. 11144 revised T.D. 37709 also in the name of Simeon Solis. e. 1965-T.D. 27385 revised T.D. 11144 now in the name of Antonio Solis. f. 1966-T.D. 16147 revised T.D. 27385 also in the name of Antonio Solis. g. 1967-T.D. 20097 cancels T.D. 16147 in the name of Jose Solis. ... (pp. 15-17, Record on Appeal). The healing of the case was conducted on a single setting on June 25, 1969 where both parties were allowed to present their evidence. After presentation of evidence, oral and documentary, the trial court found that indeed, herein private respondents spouses Jose Solis and Florencia Dioquino were in possession of the eastern half portion of the property described in the complaint for more than thirty years. However, it ruled that

such possession cannot be held adversely against the plaintiffs who had shown a better title thereto. The pertinent portion of the decision of the trial court dated July 17, 1969 reads: The court rules that while the defendants had possessed the eastern portion of the land in question for more than 30 years, such possession cannot be held adversely against the plaintiffs who had shown a better title thereof. Hence, prescription does not lie in this case. From the partial stipulation submitted by the parties, it was shown that the whole property was previously owned by Simeon Solis, father of herein plaintiffs, and that the same land had been declared for taxation purposes in the name of Simeon Solis from 1918 to 1951. While the defendants exhibited the deed donation proper nuptias (Exh. 1) executed in their favor by Tomas Solis and Hermenegilda Jimenez, they have however, failed to present proof that Simeon Solis who previously owned the whole land in question had conveyed the eastern portion thereof consisting of 536 square meters to his brother Tomas Solis. The situation shows in effect, that Tomas Solis had no title to the property he donated to his children, the defendants, and therefore the latter acquired no right over the subject property. There is evidence of the plaintiffs to the effect that Angela Solis Calimlim had already renounced her right and interest over the land in question in favor of Antonio Solis. IN VIEW OF THE FOREGOING CONSIDERATIONS, the court hereby renders judgment 1) declaring the plaintiff Antonio Solis the exclusive owner of the land in question; 2) ordering the defendants to vacate the eastern portion of the land in question; 3) ordering the defendants to pay plaintiffs the sum of P800.00 for attorney's fees; and 4) to pay the cost of the suit. SO ORDERED. (pp. 27-29, Record on Appeal) Not satisfied with the decision of the trial court, spouses Jose Solis and Florencia Dioquino appealed to the Court of Appeals. In a decision (pp. 81-88, Rollo) dated May 12, 1977, the Court of Appeals reversed the decision of the trial court and declared the appellants the lawful owners of the eastern half of the parcel of land described in the complaint. The pertinent portion of the decision reads: In the present case, there is no question that the actual possession by the appellants of the disputed portion of the land dates back to 1933 and since then appellants have been in the adverse, continuous, open, public, peaceful and interrupted possession of the disputed property in the concept of an owner until this case was filed in court on May 30, 1967. x x x. .....If we have said it before, we repeat it here for emphasis that the appellants took possession of the disputed eastern portion of the land as owners by virtue of a donation executed in their favor in 1933. Since then, they have exercised various acts of dominion over the disputed property such as constructing their house thereon

enjoying its fruits to the exclusion of all others and paying realty taxes corresponding to the disputed one-half portion of the land. Even the plaintiffs acknowledge this fact by their own evidence that they, for their own part, also paid half of the realty taxes for the western portion of the land (Exhibits C, C-1 to C-6; tsn., June 25, 1969, p. 39).
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x x x. ... By the plaintiffs' own evidence, they paid realty taxes only for the other half of the property (Exhibits C, C-1 to C-6; tsn., June 25, 1969, p. 39). This is strongly indicative of the fact that the defendants are the owners of the eastern half of the land over which they, in turn, paid the corresponding half of the realty taxes from 1934 (Exhibits 2, 2-A to 2-S). Further, the circumstance that neither the appellants nor their donors have declared the disputed portion in their names prior to 1967 is not sufficient to overcome the undisputed possession for more than 30 years of the property in question by the appellants. (See Vigor vs. Director of Lands, CA 57 O.G. 5888). WHEREFORE, finding the Appeal to be meritorious, the judgment appealed from is hereby set aside, and another one entered dismissing the complaint and declaring the appellants as the lawful owners of the eastern half of the parcel of land described in the complaint without costs. SO ORDERED. (pp. 84-88, Rollo) The Motion for Reconsideration filed thereat was denied on August 3, 1977. Aggrieved, Antonio Solis and Angela Solis Calimlim filed the instant petition for review on certiorari on September 19, 1977. The herein petitioners manifested in their petition that they admit the findings of facts of the Court of Appeals as embodied in its decision, but they take exception to the conclusions drawn by the appellate court from the undisputed findings (p. 17, Rollo). The following arguments (pp. 23-24, Rollo) were presented in support of their petition: 1. The Court of Appeals was not justified in concluding that the possession by private respondents over the disputed property was adverse and in the concept of owner, because such possession was merely tolerated by the petitioners. 2. The Court of Appeals erred in recognizing the validity and effect of the donation proper nuptias as sufficient to create or establish the just title of private respondents, as donees in said donation, although the alleged donor or grantor Tomas Solis, had no right or title whatsoever over the property in question. 3. The Court of Appeals, in deciding that petitioner's cause of action had prescribed, overlooked the importance of determining when such cause of action accrued. On November 3, 1977, We required the respondents to comment on the petition (p. 106, Rollo). After private respondents' comment and petitioners' reply were submitted, We gave due course to the petition on November 27, 1978 (p. 152, Rollo). Petitioners filed their brief on November 21, 1979 (p. 164, Rollo). Private respondents failed to file their brief within the required period. On March 12, 1980, We resolved to consider the petition submitted for decision without respondents' brief (p. 169, Rollo).

The land in question is not registered under the Torrens System. It consists of an area of 536 square meters and is located at the eastern portion of the land described under paragraph 11 of the complaint. It is admitted that the land described in paragraph 11 was originally owned by Simeon Solis, father of petitioner Antonio Solis. It is the contention of petitioners that the Court of Appeals erred in holding that private respondents' possession of the land was adverse and in the concept of an owner because such possession was merely tolerated by petitioners. The trial court found that indeed, private respondents were in possession of the property for more than thirty (30) years. Noteworthy, however, is the fact that it did not state that such possession was merely tolerated by petitioners. It only held that such possession cannot be held adversely against petitioners who had shown a better title thereto, in view of private respondent's failure to present any evidence showing how title passed from Simeon Solis, petitioners' father, to Tomas Solis, private respondents' father. On the other hand, the appellate court, on the basis of the records of this case found that private respondents' possession of the premises way back in 1933 was adverse, continuous, open, public, peaceful and uninterrupted in the concept of an owner until tills case was filed on May 30, 1967. It pointed out that private respondents exercised various acts of dominion over the disputed property, such as constructing their house thereon, enjoying its fruits to the exclusion of all others, and paying realty taxes corresponding to the disputed one-half portion of the land. It likewise gave due significance to the fact that petitioners acknowledged the ownership of the private respondents of one-half portion of the land when they also paid half of the realty taxes for the western portion of the land. It is firmly settled that findings of fact of the Court of Appeals are final and binding upon this Court, if borne out by the evidence on record. There are of course certain recognized exceptions none of which, however, find any application here (Tan v. CA, et al., L-48619, June 20, 1988). In fact, in the preliminary statement of their petition (p. 17, Rollo), petitioners manifested their admission of the findings of facts of the Court of Appeals.
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Petitioners also contend that since no competent proof was adduced by private respondents to show how Simeon Solis, the previous owner, transferred ownership of the disputed premises to Tomas Solis, father of Jose Solis, thedonacion proper nuptias executed by Tomas is not sufficient to create or establish the just title of private respondents as donees. This contention of petitioners is not meritorious. Suffice it to state that even a void donation may be the basis of claim of ownership which may ripen into title by prescription (Pensador vs. Pensador 47 Phil. 959, 961). It is the essence of the statute of limitations that, whether the party had a right to the possession or not, if he entered under the claim of such right and remained in possession for the period (ten years) named in the statute of limitations, the right of action of the plaintiff who had the better title is barred by that adverse possession. The right given by the statute of limitations does not depend upon, and has no necessary connection, (with) the validity of the claim under which the possession is held. ..." (Vda. de Lima vs. Tio, L-27181, April 30, 1970, citing Conspecto v. Fruto, 129 US 182 [1889]). The "just title" required for acquisitive prescription to set in is not "titulo verdadero y valid"-or such title which by itself is sufficient to transfer ownership Without necessity of letting the prescriptive period elapse but only "titulo colorador" such title where, although there was a mode of transferring ownership, still something is wrong because the grantor is not the owner (See Doliendo vs. Biamesa, 7 Phil. 132).

The donacion was made in 1931 and spouses Jose Solis and Florencia Dioquino took possession of the land in 1933 by virtue of the donacion. It was the Code of Civil Procedure which was then in force. Under the Code of Civil Procedure, ten years of adverse possession by a person claiming to be the owner, in whatever way such occupancy may have commenced shall vest in every actual possessor of such land a full complete title. In Ongsiaco vs. Dallo (27 SCRA 161) the Supreme Court said: 'Under the Code of Civil Procedure formerly in force,good or bad faith was immaterial for purposes of acquisitive prescription. Adverse possession in either character ripened into ownership after the lapse of ten years (Miraflor vs. CA, L-40151-52, April 8, 1986, 142 SCRA 18, 29). Finally, petitioners assail respondent appellate court's holding that their cause of action had prescribed, overlooking the importance of determining when such cause of action accrued. In its findings of fact, the appellate court said that the record shows that Tomas Solis (private respondent's predecessor) was already in possession of the eastern portion in question before 1927 (t.s.n., June 25, 1969, pp. 41, 42, 47; p. 2, CA decision). However, no evidence was presented to show that Tomas Solis' possession thereof was adverse, exclusive or in the concept of an owner. Thus, the appellate court concluded that private respondents possession have been actual, adverse, continuous, open, public, notorious, peaceful and uninterrupted only in 1933, when they took possession of the property by virtue of the donacion proper nuptias. The respondent court, therefore, found and We agree that it was in 1933 when petitioner's cause of action accrued.
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Even if we were to admit, as contended by petitioners, that their cause of action accrued only in 1941 (p. 3 of Reply; p. 148, Rollo), the first time that private respondents can be considered as having repudiated petitioners' ownership of the premises by paying the tax on the property in the name of respondent Jose Solis, the same conclusion would be obtained. The lapse of more than twenty (20) years of adverse possession by private respondents is sufficient to confer ownership on them of the disputed portion under the Old Civil Code which requires only ten (10) years of adverse possession. Article 41 of the Old Civil Code provides: Sec. 41. Title to land by prescription. Ten years of adverse possession by any person claiming to be the owner for that time of any land or interest in land, uninterruptedly, continuously for ten years by occupancy, descent, grants or otherwise, in whatever way such occupancy may have commenced or continued, shall vest in every actual possessor of such land a full complete title, saving to the person under disabilities the rights, secured by the next Section. Although petitioners' action for quieting of title was filed in May 30, 1967 when the New Civil Code was already in effect, Article 1116 of the New Civil Code provides that "prescription already running before the effectivity of this Code (August 30, 1950) shall be governed by laws previously in force; ..." which in this case is the aforequoted Section 41 of the Old Civil Code. Therefore, whatever claim petitioners had over the disputed property had prescribed in view of private 'respondents' open, actual, peaceful, continuous and adverse possession of the same property for more than thirty years or at the least, for more than twenty (20) years. ACCORDINGLY, the petition is DENIED. The decision dated May 12,1977 of the Court of Appeals dismissing the complaint and declaring private respondents Jose Solis and Florencia Dioquino Solis the lawful owners of the eastern portion of the lot described under paragraph 11 of the complaint is hereby AFFIRMED. No costs. SO ORDERED. Narvasa, Cruz, Gancayco and Gri;o-Aquino, JJ., concur.

EXTINCTIVE PRESCRIPTION
Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-24988 March 25, 1926

F. M. YAP TICO & CO., LTD., plaintiff-appellant, vs. JOSE LOPEZ VITO, in his capacity as administrator of the estate of Gregorio Yulo, defendantappellee. Powell and Hill for appellant. Gil Balagot for appellee. STATEMENT October 14, 1910, Gregorio Yulo y Regalado, then 37 years of age, executed a mortgage to and in favor of the commercial house of Francisco Manzano Yap Tico, through its attorney-in-fact, Yap Eng Chong, on his regular plantation, in consideration of which and at the time, the firm advanced Yulo the sum of P15,000. It was stipulated in the mortgage that the debt should draw interest at the rate of 10 per cent annum, and that the original debt, "as well as such obligations as are herein contained," should become due and payable about the month of May, 1911. It was contemplated by both parties that the debt should be paid by Yulo by the delivery and sale of sugar produced on his plantation. This was followed by another like instrument of date November 24, 1911, including some other property, in which it is recited that "on account of the fact that the fields of said haciendas were burned," and "for the purpose of obtaining an extension of that debt up to June 30, 1912, and to increase the credit of P15,000 by the amount of P8,000, Philippine currency, to attend to the necessities of the haciendas Tongo and Napay," that the amount of the original debt should be increased to P23,000, P8,000 of which was then advanced, and that the total amount should draw interest at the rate of 10 per cent per annum. If further appears that on October 22, 1922, there was a settlement between the parties in which it was agreed that there was then due and owing the firm, the sum of P20,065.20. It also appears that the firm from the time to time and in different amounts continued to advance money to Yulo, and that Yulo continued and at different times delivered sugar to the plaintiff; that the last money advanced to Yulo was on July 30, 1918; and that Yulo made his last delivery of sugar on May 30, 1915, amounting to P1,181.43. Apparently such items are the last debits and credits between the parties. Yulo, having died Jose Lopez Vito was appointed as administrator of his estate. In the ordinary course of business, commissioners on claims were appointed to whom the firm duly presented its claim, and, for some unknown reason, no part of it was allowed. From that decision the firm appealed to the Court of First Instance where it sought to establish its claim against the estate for P72,496.48. At the trial before the court, the parties entered into the following stipulation:

The parties agree that the chits signed by Gregorio Yulo and Meliton Fernandez represent the amounts and goods by said Gregorio Yulo on the date shown therein; that the defendant does not admit nor recognize such items set forth in the statement of accounts which the plaintiff presents as Exhibit C, as are not evidenced by receipts or chits signed by Gregorio Yulo or Meliton Fernandez or Jose Yulo. That the defendant alleges as special defense in this case that plaintiff's action has already prescribed as to the amounts shown in the statement of accounts in Exhibit C taken up to October 14, 1914; that the value of the sugar delivered after October 14, 1914, must be applied upon the payment of the amounts taken by Gregorio Yulo, evidenced by chits or receipts subsequent to October 14, 1914; that the document marked Exhibit A is one signed by Gregorio Yulo on the date shown therein; that the document marked Exhibit D is one signed by Gregorio Yulo on the date shown therein; that the receipts and chits marked Exhibits B-1 to B-39 are the vouchers of the items shown in Exhibit C referred to in said receipts and chits; that Exhibit C is an abstract of the debit and credit of the account of the deceased Gregorio Yulo in the books of the plaintiff written in Chinese. That Exhibits E-1 to E-4 are the report of the commissioners of appraisal; the claim of the plaintiff filed with the commissioners; the notice of the hearing of the claim; and a receipt of the commissioners of the copies of chits B-1 to B-39. That the plaintiff has made demand on the defendant for the payment of the amount claimed in the complaint, and said defendant has not paid the same. That the plaintiff corporation is the successor of F. M. Yap Tico. That with the facts herein agreed upon and the defense of the defendant, the parties submit the case to the court for judgment. The lower court held that, as to all or that portion of plaintiff's claim filed before the commissioners which was contracted prior to October 14, 1914, had prescribed under the provisions of paragraph 1, of section 43, of the Code of Civil Procedure, and upon that theory held that the proceeding in so far as it is founded upon Exhibits B-1 to B-24, inclusive, is barred by the statute of limitations, and rendered judgment in favor of the plaintiff and against the estate of Gregorio Yulo for the sum of P11,860.72, plus P10,222.84, with legal interest upon P10,222.84 from October 15, 1924, until the date of payment, together with the costs. Plaintiff appeals and assigns the following errors: 1. The court erred in considering that the statute of limitations is applicable to this case, and that the right of action of plaintiff against the defendant for a certain portion of the indebtedness set out in the complaint has prescribed. 2. The court erred in not allowing interest at the rate of 10 per cent per annum on the principal after the date on which the decision was written in this case. 3. The court erred in not rendering judgment in favor of the plaintiff for the full amount of the principal demanded in the complaint.

JOHNS, J.: The first question is whether or not, as the trial court held, all of plaintiffs claim prior to October 14, 1914, is barred under the provisions of section 43 of the Code of Civil Procedure. It is admitted that on October 22, 1912 the parties then had a settlement of all of their previous mutual dealings, in which it was agreed that Yulo was indebted to the plaintiff in the sum of P20,065.20, and for which he gave the firm a chit on that date. There is no evidence of any other settlement. Be that as it may, on October 24, 1912, Yulo signed a chit to and in favor of the plaintiff for P1,000, and from time to time signed the following chits on the specified dates for the following amounts: November 14, 1912 .............................................................. December 27, 1912 .................................................................. January 3, 1913 ................................................................... January 20, 1913 .................................................................. February 4, 1913 .................................................................. February 6, 1913 .................................................................. February 19, 1913 ................................................................. February 24, 1913 .................................................................. February 28, 1913 .................................................................. March 8, 1913 ..................................................................... March 15, 1913 .................................................................... March 26, 1913 ..................................................................... April 2, 1913 ..................................................................... April 7, 1913 ..................................................................... April 22, 1913 .................................................................... April 29, 1913 .................................................................... May 2, 1913 ....................................................................... May 14, 1913 ...................................................................... July 28, 1913 ..................................................................... March 31, 1914 .................................................................... April 1, 1914 ................................................................... December 3, 1914 ................................................................ January 9, 1915 ................................................................... P1,000.00 38.75 896.05 154.00 200.00 300.00 200.00 80.50 17.00 200.00 500.00 80.50 500.00 300.00 250.00 120.00 150.00 450.00 300.00 194.00 1,000.00 1,000.00 100.00

January 21, 1915 .................................................................. January 22, 1915 .................................................................. January 27, 1915 .................................................................. February 15, 1915 .................................................................. February 23, 1915 ................................................................. March 1, 1915 ...................................................................... March 13, 1915 .................................................................... March 15, 1915.................................................................. March 16, 1915 ..................................................................... March 30, 1915 .................................................................... April 15, 1915 .................................................................... April 24, 1915 .................................................................... April 30, 1915 ..................................................................... July 30, 1918 ...................................................................

280.00 115.27 500.00 88.00 100.00 77.00 200.00 2,500.00 90.00 500.00 500.00 194.00 50.00 6,600.00

All of these items are evidenced by Mr. Yulo's own chits in the record, and, hence, as to them, there cannot be any dispute as to either dates or amounts. It will thus be seen that from their inception, on October 14, 1910, Yulo's dealings with the plaintiff were continuous from month to month and from year to year. By their stipulation of facts "the parties agree that the chits signed by Gregorio Yulo and Meliton Fernandez represent the amounts and goods taken by said Gregorio Yulo on the dates shown therein. It is further stipulated "that Exhibit C is an abstract of the debit and credit of the account of the deceased Gregorio Yulo in the books of the plaintiff written in Chinese." That is to say, Exhibit C is a true and correct copy of all the different entries pro and con in plaintiff's book of accounts. But it will be noted that there is no stipulation, neither is there any evidence that the books in question were accurate or authentic, or that the entries therein made were based on debits and credits, or the mutual dealings between the parties. Neither does it appear to the entries were "repeated in the regular course of business," or that they were "copied from another at or near the time of the transaction." Without some evidence as to how and in what manner the books were kept and by whom they were kept, and the authenticity of the entries, and standing alone, the books themselves would not be competent evidence for any purpose. In this connection, except as to the entries based upon the chits in question, they cannot be used to prove plaintiff's case. It would be a very dangerous thing to admit account books, standing alone, as competent evidence without something to show that they were authentic and were kept in the ordinary course of business. Without some reasonable safeguards, it would be very easy to establish a fictitious claim on manufactured account books against any person. It is very probable that in this particular case, the account books are authentic and were kept as they should have been kept. But there is no evidence of that fact. For such reasons, Exhibit C is not

competent evidence for the plaintiff, except in so far as it is corroborated by the chits, the stipulation of facts or the original documents. Again, referring, to the stipulation of facts and Exhibit C, the abstract of the entries made in plaintiffs books, we find that from month to month and from year to year, after the inception of the transaction, Yulo delivered sugar to the plaintiff on February 5, 1913, March 8, March 11, March 26, April 2, May 14, June 15, 1914, January 9, 1915, January 21, January 25, March 1, March 16, March 29, April 30, and May 30, amounting in value to P14,857.24, for all of which Yulo received credit on plaintiffs books on the corresponding dates of delivery, and his estate now relies upon and claims the month of such credits as payments on his account. Hence, we have an open, mutual, current account between the plaintiff and the defendant commencing on October 14, 1910, in which debits and credits were made from month to month and from year to year down to and including May 30, 1915, the date of the last credit, and July 30, 1918, which was date of the last debit, all of which was in the lifetime of Yulo. It will be noted the plaintiff's claim is based upon an open, mutual, and current account. The plaintiff could have legally treated and relied upon the settlement of October 22, 1912, as stated account, and if it had done so, that portion of its claim would have been barred by the statute of limitations. Therein lies error of the lower court. The plaintiff relies upon and sought to prove an open, current, mutual account dating from the original mortgage. Yulo had a legal right to say to the plaintiff that I want all of any future deliveries of sugar applied to my indebtedness accruing after October 22, 1912, the date of the settlement. There is no evidence that he ever gave plaintiff any such instructions, in the absence of which, plaintiff had a legal right to apply any such payments on the open, current, mutual account. Again, it is very probable that if Yulo had ever given any such instructions, the plaintiff would then insisted upon the payment of the debt evidenced by the settlement, and would have permitted it to run for a period of ten years without a payment of some kind on that account. The fact that there is no proof that Yulo in his lifetime gave any instructions as to the appropriation of payments creates a strong presumption that he and the plaintiff continued n their respective dealings with each other on the assumption that the transactions between them were continuous from the date of their inception. Upon the question of mutual, current, account, Corpus Juris, volume 37, says: Page 865: Where there is mutual, open, and current account consisting of reciprocal demands, the general rule is that the cause of action to recover the balance deemed to accrue at the date of the last item proved, and that the statute of limitations runs from that time, so that, if the last item on either side of the account is not barred, it "draws to itself all the other items" which will become barred only when the statute has run against the last no matter how far back the account commenced. . . . Page 867: * * * It is commonly that the main ground upon which the rule as to mutual accounts rests, independent of express statutory provision, is that every new item and credit in an account given by one party to the other is an admission that there are some unsettled accounts between them, each item within the statutory period being regarded as equivalent to evidence of a promise which takes all the prior items out of the statute. . . .

Page 868: The distinction between a mutual open account and a simple open account is that in the former case the bar of the statute of limitations does not begin to run until the date of the last item, while in the latter the statute begins to run from the date of each particular item. Page 869: Mutual accounts belong made up of matters of set-off, to make an account mutual within the meaning of the rule under discussion the items on the different sides of the account must be capable of being set off against each other, and on time alone does not comply with that requirement. The account on both sides must be between plaintiff and defendant and must have originated between them, and the parties must have dealt with each other in the same capacity or relation. Page 879: * * * Where accounts are settled by carrying the balance forward instead of paying it in cash, they are not to be considered as open and running accounts from the beginning within the rule as to mutual accounts; but the balance carried forward may form a part of a new mutual account so to be saved from the statute by subsequent items within the statutory period. Ruling Case Law, volume 17, page 730, says: 91. Actions on accounts. Where there is mutual open account between two parties it is said that it implies that they have mutually consented that each item shall not constitute an independent debt due immediately, to be paid or enforced at once, but that the items occuring from time to time, in favor of the respective parties, shall operate as mutual set-offs, and that the shifting balance, when either or both shall call for it, shall be the debt, and for this reason the statute of limitations does not run during such a state of mutual dealings, but only from the date of the last item. Where there has been a delay for the statutory period in making or adding any new items to an old mutual account, it may operate as a bar, but if the hiatus is less than the period of limitations, it will not have this effect, and if the last item is within the statutory period, it draws after the items beyond that time. . . . Tested by this rule, we are clearly of the opinion that no part of plaintiff's claim is barred by the statute of limitations. Although, standing alone and within itself, Exhibit C does not tend to prove plaintiff's case, yet having been offered in evidence, the defendant has a legal right to use and rely upon the exhibit to prove his case and show the amount of defendant's credit, this upon the theory that the exhibit is an admission by the plaintiff against his own interest. It is equally clear that under the terms and provisions of their original contract, the plaintiff is entitled to interest on the amount of each yearly balance at the rate of ten per cent per annum. But there is no legal principle upon which it should have compound interest. That is to say, the plaintiff has no legal right to add the amount of the annual interest to the mount due him for each succeeding year, bring the interest forward and make it a part of the principal, and thus obtain interest upon interest. The contract will not bear that construction.

The question then as to the mount due and owing the plaintiff is one of mathematics only. It was agreed that on October 22, 1912, the amount due the plaintiff was P20,065.20. The chits show that during the remainder of that year, the plaintiff advanced Yulo the further sum of P2,039.00, making a total of P22,104.20 due and owing on January 1, 1913. During that year, as appears from the chits, the plaintiff advanced the further sum of P6,752.39, and Yulo paid on account P8,188.75, leaving a balance on January 1, 1914, of P20,667.84, the annual interest upon which would be P2,066.78. For the year 1914, Yulo received P4,417.86, and paid the plaintiff P672.69, leaving a balance due and owing plaintiff on January 1, 1915, of P24,413.01, the annual interest upon which would be P2,441,30. It appears from the chits that during the year 1915, the plaintiff advanced Yulo P7,836.76, and that he paid the plaintiff P5,995.80, leaving a balance on January 1, 1916, of P26,243.97, the annual interest on which is P2,624.39. It does not appear that there are any other credits, and the last debit was on July 30, 1918, at which time the plaintiff paid Yulo P6,600, thus leaving due and owing the plaintiff on January 1, 1919, the principal sum of P32,843.97, the annual interest on which is P3,284.39. since that time there have been no other dealings between the parties. Plaintiff's complaint was filed on March 26, 1925. At that time, the amount of its claim, exclusive of any charge for interest, was P32,843.97. In round numbers, the interest on this amount from January 1, 1925, to March 26, 1925, would be about P800. On this basis, for the year 1914, plaintiff would be entitled to interest amounting to P2,066.78. For 1915 P2,441.30, and for the years 1916 to 1919, inclusive, annual interest in the sum of P2,624.39, and for the years 1920 to 1924, inclusive, to the annual interest of P3,284.39, to which should be added the P800 for the accrued interest from January 1, 1925 to March 26, 1925, inclusive, making a total of P32,227.59, for interest which had accrued on plaintiff's claim at the time its complaint was filed on March 26, 1925, or a total amount due and owing the plaintiff from the estate on March 26, 1925, of principal and all accrued interest, of P65,071.56. It will be noted that our conclusion as to the amount due the plaintiff is based upon Mr. Yulo's own personal chits, about which there is no dispute, and that we have given the defendant credit for every item in Yulo's favor on Exhibit C, and that there is no evidence of any other payments having been made to the plaintiff. The judgment of the lower court is reversed, and one will be entered here in favor of the plaintiff and against the estate of Yulo for P65,071.56, with interest thereon from March 26, 1925, at the rate of 10 per cent per annum, and for costs. So ordered. Avancea, C. J., Street, Malcolm, Villamor, Ostrand, Romualdez and Villa-Real, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 106646 June 30, 1993 JAIME LEDESMA, petitioner, vs. COURT OF APPEALS and RIZAL COMMERCIAL BANKING CORPORATION, respondents. Ledesma, Saludo & Associates for petitioner. Meer, Meer & Meer Law Office for private respondent.

REGALADO, J.: Petitioner has filed a motion for reconsideration of the Court's resolution of March 24, 1993 which denied his petition for review on certiorari for failure to sufficiently show that respondent Court of Appeals had committed any reversible error in its questioned judgment. On August 21, 1980, private respondent Rizal Commercial Banking Corporation filed Case No. 38287 in the then Court of First Instance of Rizal against petitioner to enforce the terms of Trust Receipt Agreement No. 7389 executed by them on April 1, 1974 but which petitioner had failed to comply with. As summons could not be served on the latter, said case was dismissed without prejudice on March 3, 1981. On December 2, 1988, private respondent bank instituted Civil Case No. 88-2572 in the Regional Trial Court of Makati, Metro Manila, Branch 133, against petitioner on the same cause of action and subject matter. Petitioner's motion to dismiss on the ground of prescription was denied and judgment was rendered in favor of private respondent by the court a quo ordering petitioner to pay private respondent P168,00.00 with interest thereon of 12% per annum from December 2, 1988 until full payment of the obligation, P16,800.00 as attorney's fees, and costs of suit. Said judgment was affirmed by respondent Court in CA-G.R. CV No. 29406 in its decision promulgated on January 7, 1992, 1 and petitioner's motion for reconsideration thereof was denied in a resolution dated August 6, 1992. 2 Petitioner's petition for review on certiorari of the said judgment was denied in our aforesaid resolution, hence its present motion for reconsideration, dated May 5, 1993. Contending that the second action filed by private respondent bank had already prescribed, petitioner invokes the rulings in Vda. de Nator, et al. vs. Court of Industrial Relations, et al. 3 and Fulton Insurance Co. vs. Manila Railroad Co., et al. 4 and invites us "to give a second look at the apparently conflicting or divergent jurisprudence." Article 1155 of the Civil. Code provides that the prescription of an action, involving in the present case the 10-year prescriptive period for filing an action on a written contract under Article 1144(1) of the Code, is interrupted by (a) the filing of an action, (b) a written extrajudicial demand by the

creditor, and (c) a written acknowledgment of the debt by the debtor. The effects of the last two instances have already been decided by this Court, the rationale wherein should necessarily apply to the first. The matter of the interruption of the prescriptive period by reason of a written extrajudicial demand by the creditor was decided in Overseas Bank of Manila vs. Geraldez, et al. 5 in this wise: . . . The interruption of the prescriptive period by written extrajudicial demand means that the said period would commence anew from the receipt of the demand. That is the correct meaning of interruption as distinguished from mere suspension or tolling of the prescriptive period. xxx xxx xxx A written extrajudicial demand wipes out the period that has already elapsed and starts anew the prescriptive period. . . . xxx xxx xxx That same view as to the meaning of interruption was adopted in Florendo vs. Organo, 90 Phil 483, 488, where it was ruled that the interruption of the ten-year prescriptive period through a judicial demand means that "the full period of prescription commenced to run anew upon the cessation of the suspension." When prescription is interrupted by a judicial demand, the full time for the prescription must be reckoned from the cessation of the interruption. . . . The interruption of the prescriptive period by reason of a written acknowledgment of the debt by the debtor was dealt with in Philippine National Railways vs. National Labor Relations Commission, et al., 6 thus: Article 1155 of the Civil Code provides that the "prescription of actions is interrupted" inter alia, "when there is any written acknowledgment of the debt by the debtor." This simply means that the period of prescription, when interrupted by such a written acknowledgment, begins to run anew; and whatever time of limitation might have already elapsed from the accrual of the cause of action is thereby negated and rendered inefficacious. . . . xxx xxx xxx . . . The effect of the interruption spoken of in Article 1155 is to renew the obligation, to make prescription run again from the date of the interruption . . . Based on the aforecited cases, Article 1155 has twice been interpreted to mean that upon the cessation of the suspension of the prescriptive period, the full period of prescription commences to run anew. Petitioner, on the other hand, insists that in case of the filing of an action, the prescriptive period is merely tolled and continues to run again, with only the balance of the remaining period available for the filing of another action. This postulation of petitioner, if we are to adopt it, would result in an absurdity wherein Article 1155 would be interpreted in two different ways, i.e., the prescriptive period is interrupted in case of an extrajudicial demand and a written acknowledgment of a debt, but it is merely tolled where an action is filed in court.

In Vda. de Nator, it was held that: . . . The filing of the case with the CFI arrested the period of prescription (Art. 1155 NCC), and the interruption of said period lasted until the time that the dismissal for lack of jurisdiction became final. "When prescription is interrupted by a judicial demand, the full time for the prescription must be reckoned from the cessation of the interruption". . . . The whole period during which the case had been pending cannot be counted for arriving at the prescriptive period. In other words, the running of the period of prescription in this particular case was interrupted on August 6, 1953, when the case in the CFI was filed and began to run again on August 30, 1958, when the same Court had dismissed the case. As the complaint was filed with the CIR on December 5, 1958, the action has not yet prescribed. This case obviously appears to have made conflicting statements since it proceeds upon a certain premise but arrives at a different conclusion. Hence, we cannot agree that the statements therein sufficiently support the thesis of petitioner. The case of Fulton Insurance Company is not clear either on the matter of the interruption of the prescriptive period where an action is filed in court. It was there held that: There are two school(s) of thought as to the legal effect of the cessation of the interruption by an intervening action upon the period of prescription. There is the view expressed and perhaps, not without reasons, that the full period of prescription should start to run anew, reckoned from the date of the cessation of the interruption. The contrary view is, that the cessation of the interruption merely tolls the running of the remaining period of prescription, deducting from the full period thereof the time that has already elapsed prior to the filing of the intervening action. Nevertheless, all discussion on this point is academic; considered in the light of either view, We find that the second action is not barred. In the aforesaid case, the defendant therein moved for the dismissal of the second case alleging that the filing of the first case neither tolled nor interrupted the running of the prescriptive period. This Court ruled that the filing of the first action interrupted the running of the period, and then declared that at any rate, the second action was filed within the balance of the period remaining. It concluded that the issue of whether the filing of the action merely tolled or it actually interrupted the running of the prescriptive period was moot and academic because, in either case, the second action was still filed within the prescriptive period. Consequently, the Fulton case cannotalso sustain the thesis of petitioner. On the foregoing considerations, we are convinced and so hold that the correct interpretations of Article 1155 of the Civil Code are reflected in and furnished by the doctrinal pronouncements in Overseas Bank of Manila andPhilippine National Railways Company, not only because they are later in point of time but because the issue is squarely resolved in a decisive and logical manner therein. Petitioner's submission would result in a bifurcated interpretation of Article 1155, aside from the irrational conclusion that a judicial action itself cannot produce the same result on the prescriptive period as a mere extrajudicial demand or an acknowledgment of the debt. Accordingly, petitioner having failed to adduce any cogent reason or substantial argument to warrant a reconsideration of our resolution of March 24, 1993, the present motion is hereby DENIED with FINALITY. SO ORDERED.

Narvasa, C.J., and Nocon, JJ. concur. Padilla, J., is on leave.

Footnotes 1 Justice Segundino G. Chua, ponente; Justices Santiago M. Kapunan and Luis L. Victor, concurring. 2 Rollo, 24. 3 4 SCRA 727 (1962). 4 21 SCRA 974 (1967). 5 94 SCRA 937 (1979). 6 177 SCRA 740 (1989).