CIVIL LAW BLOG, ANDRES BONIFACIO COLLEGE: ON EASEMENTS

TALISAY-SILAY MILLING CO., INC., petitioner,vs.COURT OF FIRST INSTANCE OF NEGROS OCCIDENTAL, DR. TRINO MONTINOLA, ESTATE OF BERNARDINO (RODOLFO) JALANDONI, SALVADOR LACSON, ET AL., G.R. No. L-33423 December 22, 1971respondents. G.R. No. L-33423 December 22, 1971

Jesus G. Barrera and Vicente F. Forteza for petitioner.

Arsenio Al. Acuña for private respondents.

CASTRO, J.:p

At about the end of the sugar crop year 1969-1970, the petitioner Talisay-Silay Milling Co., Inc. (hereinafter referred to as the Central) faced the prospect of a severe cut-off, in railway connections, from the sugarcane plantations surrounding its mill. The respondents Trino Montinola, Estate of Bernardino Jalandoni, and about 39 others (hereinafter referred to as the respondent landowners) had refused to extend the 50-year contractual right of way granted to the Central's railway complex in the Talisay Silay mill district and outlying areas. In order to keep its railway lines open, the Central obtained several writs of preliminary injunction from the respondent Court of First Instance of Negros Occidental. Subsequently, however, these writs were dissolved at the instance of the respondent landowners. Unable to revive the court's injunction orders, the Central came to us by way of special civil action for certiorari and prohibition with preliminary injunction.

On May 5, 1971, upon the Central's posting of a bond in the amount of P100,000, we enjoined the respondent court and the respondent landowners from giving effect to the various orders denying continuance of the Central's railway operations in the areas concerned. Following its receipt of our injunction order, the respondent court directed the restoration of the railroad tracks in the places where the same had already been dismantled, all at the expense of the landowners who had caused the uprooting of the said tracks. This latter action of the respondent court was likewise halted by us on November 25, 1971, pending final adjudication on the merits.

The record shows that the Central has been operating in the Talisay-Silay mill district in Negros Occidental as early as in the sugar crop year 1920-1921. Sugarcane grown in the district and outlying areas was being processed into sugar and other products in its mill. Coinciding with the start of its operations in 1920, the Central entered into identical milling contracts with the sugarcane planters in the mill district, among them the respondent landowners. Under these contracts, the Central was granted the right to construct and maintain railroad lines traversing the planters' properties for the hauling of sugarcane from the various plantations in the mill district to the mill site. The identical milling contracts, as with the contractual railway easements, were for a period of fifty years to expire at the end of the 1969-l970 sugar crop year.

On July 25, 1970 the Central lodged a complaint again the respondent landowners "for the conversion of the contractual easement of right of way into a legal easement." The essential allegations of this complaint read as follows:

6) That there is no other way by which the locomotives of the plaintiff can pass in order to reach the plantations of planters growing sugar canes in the Talisay-Silay Mill District and milling with plaintiff, except thru the railroad lines travelling the parcels of land indicated in "Annex B", which lines altogether form a continuous system of railroad transportation plaintiff's mill is surrounded by other immovables, and there is no outlet to a public highway to which it can haul the canes of said planters to its mill, said railways system being more particularly indicated in the Sketch attached hereto as Annex "C";

7) That when the mill of the plaintiff was constructed 1920, and railroad tracks were laid out and likewise erected and maintained, on the parcels of land indicated on Annex "B" was on other properties, pursuant to the milling contracts aforesaid, it was in the expectation that the railroad right of way would be maintained and continued not only during the 50 period, but also for a period coterminous with the existence of the Central, as the Central was constructed with the railway system as the sole, adequate, expeditious, most convenient means of hauling of planter's canes to the mill;

8) That the railroad tracks traversing the different parcels of land indicated on Annexes "B" and "C" are on portions thereof least prejudicial to the owners-defendants herein;

9) That before the expiration of the railroad right of way over the lots indicated in Annex "B", the plaintiff by means of letters sent to each and every defendant herein, offered to lease the area in their respective properties occupied by the railroad tracks of the plaintiff at an annual lease rental of P0.20 a sq. meter, xerox copies of said letters being attached hereto as Annex "D", being attached hereto to the complaint of the particular defendant, and made integral parts hereof, however, defendant failed to answer the letters sent to each one of them, which failure amounts to a refusal of said offer or altogether refused to entertain the offer of plaintiff and, instead, demanded the remove of the railroad tracks of plaintiff presently erected on their respective properties, or otherwise threatened to remove and/or close the same for the passage of plaintiff's locomotives and cane cars on the ground that the 50 years' period for railroad right of way has expired.

Further, as a ground for its petition for the issuance of a writ of preliminary injunction, the Central expressed apprehension of irreparable damage to itself, to the planters whose sugarcane needs hauling from their plantations to the mill, and to the national economy in general, that would result from closure of the Central's railways lines on the respondent landowners' properties.

In ultimately denying, after due hearing, the injunction sought by the Central, the respondent court, in its orders of December 8, 1970, January 4, 1971, and February 26, 1971, heavily relied on the rulings of this Court in Bacolod-Murcia Milling Co., Inc. vs. Capital Subdivision, Inc. (L-25887, July 26, 1966, 17 SCRA 731), Angela Estate, Inc. vs. Court of First Instance of Negros Occidental (L-27084, July 31, 1969, 24 SCRA 500), and Locsin vs. Climaco (L-27319, January 31, 1969, 26 SCRA 816). The Central urges us to declare the said rulings inapplicable to the case at bar and to hold that the respondent Court gravely abused its discretion in denying the Central's petition for preliminary injunction.

The Bacolod-Murcia, Angela Estate, and Locsin cases also involved sugar centrals in Negros Occidental whose milling contracts, as with whose easements of railway passage, with the adherent plantations had expired. On the question of whether preliminary injunction may be secured to maintain the centrals' continuous railway passage over the properties of the demurring landowners, this Court, in sum, held that:

1. The function of an injunction is the maintenance of the status quo as of the time of its issuance. Injunction will not issue to allow a central continued use of its expired right of way in the manner established under its former milling contracts with the planters. Courts cannot create contracts between the parties through the expedient of injunctive relief.

2. After the central's right to maintain and use the railroad tracks over the properties of the landowners incontrovertibly expired with the milling contracts, the central has to rely strictly on its supposed entitlement to a compulsory servitude of right of way under the Civil Code, but it cannot claim any such servitude without first establishing the preconditions for its grant, namely, (a) that it is surrounded by other immovables and has no adequate outlet to a public highway; (b) after payment of proper indemnity; (c) that the isolation is not the result of the centrals own acts; and (d) that the right of way claimed at the point least prejudicial to the servient estate, and, so far as consistent with this rule, where the distance from the dominant estate to a public highway may be the short test. 1

The foregoing preconditions were not properly established in the courts below by the central's concerned in the three cases mentioned. Their naked claim that they were entitled to compulsory easements of right of way was not enough to warrant the issuance of preliminary injunctions in their favor.

3. Injunction, whether preliminary or final, is not signed to protect contingent or future rights. An injunction will not issue to protect a right not in esse and which may never arise, or to restrain an act which does not arise to a cause of action. The complainant's right or title, moreover, must be clear and unquestioned, for equity, as rule, will not take cognizance of suits to establish title, and will not lend its preventive aid by injunction where the complainant's title or right is doubtful or disputed. The possibility of irreparable damage, without proof of violation of an actual existing right, is no ground for an injunction, being mere damnum absque injuria.

After assessing the facts obtaining in the case at bar, we do not see any cogent reason why the rulings essayed above should not apply.

The Central points out that at the time it commenced litigation against the respondent landowners, its contractual right of way still subsisted. The petitioner thus argues that the injunction issued shortly thereafter was proper because it merely saw to the preservation of the status quo. This, to our mind, is a simplistic view of the meaning of "status quo." True, at the time the injunction was initially issued by the court below, the Central had open and free use of the easements of right of way over the properties of the respondent landowners. It is equally true, however, that such contractual easements were fast coming to an end. The fact of the normal running of the period during which the milling contracts should last, is part too of the status quo, and it would not serve the salutary function of injunctive relief to simply halt the same.

The factual disparity of the case at bar from the situations obtaining in the Bacolod-Murcia, etc., cases is not substantial and does not give additional leverage to the Central insofar as it must deal with the respondent landowners respecting its desire to obtain a legal easement of right of way for its railway system. The Central claims that it has fulfilled all the preconditions prescribed in articles 649 and 650 of the Civil Code or, at the very least, has alleged their attendance in its verified complaint. This claim of the Central is self-serving.

First, as regards the requisite that the Central's mill must be shown to be surrounded by other immovables and has no adequate outlet to a public highway, the complaint clearly shows that the Central, even as it assumes the role of a dominant estate, wants a railway access to the fields of its planters to be able to haul the latter's sugarcane to the milling site. It does not seek access to a public highway. As a matter of fact, the court a quo made a finding from the sketch submitted by the Central that "the entire length of one side or plaintiff's mill site abuts the provincial road, which certainly is a most adequate outlet to a public highway." After examining the said sketch ourselves, we do not see any error in such findings.

Second, the Central's offer to lease the affected portions of the respondent landowners' properties for P0.20 per square meter per annum is not the "prepayment" referred to in our previous decisions. Prepayment, as we used the term, means the delivery of the proper indemnity required by law for the damage that might be incurred by the servient estate in the event the legal easement is constituted. 2 The fact that a voluntary agreement upon the extent of compensation to be paid cannot be reached by the parties involved, is not an impediment to the establishment of such easement. Precisely, the action of the dominant estate against the servient estate should include a prayer for the fixing of the amount which may be due from the former to the latter. Notably, the action filed by the Central did not opt for this.

Third, as regards the requisite that the isolation is not the result of the Central's own acts, the record shows that the Central has acted to secure the continuance of its easements of right of way at the eleventh hour when its fifty year milling contracts with the respondent landowners were on their last few months of life. This laches on the part of the Central makes the denial of the preliminary injunction all the more justified, for "a remedy based on equity may not be awarded in favor of those who sleep on their rights." 3

Finally, the Central's cardinal mistake is its assumption that the railroad route secured to it under its former milling contracts with the respondent landowners is the same route the court would grant the Central in the event the latter succeeds in proving its right to a legal servitude. It made no attempt to negotiate with the respondent landowners for such railroad connections as will be least prejudicial to the latter's estates, and, insofar as consistent with this norm, where the distance from the Central to the proposed outlet is the shortest. Nor yet did the Central, in its complaint, ask the court to fix the location and length of the servitude sought in the manner and under the limitations defined by law.

In sum, as in Bacolod-Murcia, Angela Estate, and Locsin, the herein Central's right to the legal easement of right of way over the properties of the respondent landowners is not clear. And, unless it can show otherwise during the hearing on the merits, the Central cannot ask for the establishment of the said legal servitude in its favor, much less demand the restoration of the injunction orders dissolved by the respondent court.

ACCORDINGLY, we deny the present petition. The preliminary injunction we issued on May 5, 1971 against the respondents is hereby dissolved. Our order of November 25, 1971, enjoining the respondent court from directing the restoration of the dismantled railroad tracks at the expense of the respondent landowners, is hereby made permanent. Costs against the petitioner Talisay-Silay Milling Co., Inc.

Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Fernando, Teehankee, Barredo, Villamor and Makasiar, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-26848 August 17, 1981

CARIDAD O. DE GALLEGO, petitioner-appellant,

vs.

LAND AUTHORITY (Formerly Land Tenure Administration), oppositor-appellee.

GUERRERO, J.:p

The petitioner herein, who is the registered owner of a parcel of land situated in the Municipality of Parañaque , Rizal and covered by TCT No. 46402 of the Registry of Deeds of Rizal, seeks the cancellation of the following 'CONDITIONS' appearing in the Memorandum of, Encumbrances of the aforementioned Transfer Certificate of Title No. 46402, to wit:

1. That the parcel of land described in this certificate of title, shall not be sold, assigned, encumbered, mortgaged or transferred, within the period of five (5) years from the date hereof without first obtaining the written consent of the Secretary of Agriculture and Natural Resources;

2. That except by hereditary succession, it shall not be conveyed, transferred to, assigned in favor of any person who is not landless and disqualified to acquire or own land in the Philippines;

3. That violation of either of the next two preceding paragraph shall be sufficient ground for the Secretary of Agriculture and Natural Resources or his duly authorized representative to take such action as may be necessary for the reversion of the land to the government. (Doc. No. 1858, page 57, Book XXVI, S. of 1954 of Notary Public of Manila, Andres Urrutia) Date of instrument - June 28, 1954. Date of the inscription - June 30, 1954 - 10:10 a.m.

In her Petition for Cancellation of Encumbrance filed with the Court of First Instance of Rizal, Branch 7, in LRC Case No. 458, it is alleged that the said conditions were entered on June 30, 1954 and a period of five (5) years have since then elapsed so that Condition No. 1 has long become academic; that the aforestated parcel of land formerly formed part of a tract of land which the Government acquired for subdivision into residential lots with the principal objective of distributing the same to the landless and thereby allow more people to have their own homes for which reason, Conditions Nos. 2 and 3 above were entered as encumbrances on the said certificate of title; that the area wherein the above-mentioned parcel of land is comprised has since become commercial community, fronting, as it does, the Manila Bay, and not only said parcel of land but the immediate vicinity thereof now contain improvements devoted purely to commercial purposes that by reason of the foregoing, the objective of the Government in imposing Conditions Nos. (2) and (3) above has lost its meaning inasmuch as the value of said property has become prohibitive to any landless who desire to establish his home therein; that to allow the said Conditions to remain and to affect said parcel of land will only be a deterrent to the economic development and progress of the country; and that in line with the country's program of economic development, therefore, said Conditions should be eliminated.

Respondent opposed the Petition for Cancellation insofar as Conditions Nos. (2) and (3) are concerned on the ground that Condition No. 2 carries with it no prescriptive period at all and the same is considered perpetual in character and any subsequent transactions or dealings involving the land in question must necessarily be with the written consent and permission of the Land Authority, and that Condition No. 3 is likewise perpetual in character. Respondent, however, agrees that Condition No. 1 may be cancelled since it carries the five-year prescriptive period.

In his Order dated July 19, 1966, Presiding Judge Francisco dela Rosa, finding the grounds relied upon in the Opposition to be well- taken, denied the Petition for lack of merit.

Petitioner thru Counsel filed a Motion for Reconsideration, alleging among others, that subsequent to the filing of the Opposition, counsel made representations with the respondent for a withdrawal of the Opposition in line with the position taken by the same office in connection with G.L.R.O. Record No. 7672 of the Court of First Instance of Rizal, Pasig, Branch X entitled, "Sotera Duavit Vda. de Bautista, et al., petitioners," wherein no opposition was filed by the Land Authority to a similar petition for the reason that the property involved was already commercial so that the Land Authority cannot maintain inconsistent position, otherwise it may be guilty of discrimination, arbitrariness, or grave abuse of its official discretion.

Petitioner further pointed out that as to the fact that the land in question is a commercial property and is situated in a commercial territory, namely, fronting the Roxas Boulevard, Parañaque , Rizal, three has been no controversy and the court can take judicial notice thereof as a matter of common knowledge, as in fact the property is presently occupied by the night-club "E L MUNDO" and is classified for real estate taxation as commercial.

It is likewise insisted by petitioner that the primary intention of the restriction against transfers or conveyances of the property except to the landless and except by hereditary succession in order to insure that more people shall own residential homes, has been lost by the transformation of the property from residential to commercial since the landless who may want to establish their residential homes can no longer afford to pay the commercial price of this commercial property and following the principle that "when the reason for the law ceases," the said restriction should be eliminated to allow the aforementioned property to contribute to the economic development of the country.

The attention of the court a quo was also called to the fact that the petitioner who is the wife of former Ambassador Manuel Gallego, is not a landless individual, nor was she landless at the time when the said property was acquired by her, the fact being that the restriction refers only to voluntary conveyances and did not comprehend sales by public auction, as in the particular case, where the petitioner came to own the property as the highest bidder in a foreclosure sale by reason of a mortgage thereon. Petitioner concludes that accordingly, the restriction cannot be intrinsically intended to limit the ownership of this type of property to only the landless where it may be acquired by a landed owner thru an involuntary sale.

The court denied the Motion for Reconsideration in its Order of September 8, 1966, hence the present appeal to this Court.

Petitioner submits a lone assignment of error, and that is, that the trial court erred in denying the petition for cancellation and in denying the motion for reconsideration.

In Petitioner's Brief, it is pointed out that the Order dated July 19, 1966 denying the Petition for Cancellation, as well as the Order of September 8, 1966 denying the Motion for Reconsideration, did not express the reasons in support of said Order. Petitioner argues that Condition No. (1) in the Memorandum of Encumbrances of TCT No. 46402 had long become academic because five years have already elapsed from the date the said annotation was made on June 30, 1954, inasmuch as the Petition for Cancellation was filed on February 11, 1966, almost twelve years after the entry of such condition.

Oppositor Land Authority does not oppose the cancellation of Condition No. (1), hence, finding the said cancellation to be in order, the said condition is hereby ordered cancelled.

Petitioner further contends that Conditions No. (2) and (3) have lost any sound basis in that while the subject parcel of land was originally a residential lot, the classification of the property had been changed to that of commercial, as evidenced by the present tax declaration thereof (Exhibit "B"). According to petitioner, the original intention of the controverted condition to restrict ownership of subject property by people who could utilize the same as their residence has lost its meaning for the said property has gone beyond the reach of any individual to acquire for purely residential purposes.

It is likewise claimed that the inhibition in Condition No. (2) is not entirely absolute because a person who is not landless may still properly acquire the said property in a foreclosure of a mortgage thereon, as in the instant case where petitioner, who is the wife of former Ambassador Manuel V. Gallego, is not landless and had acquired the subject property, not by voluntary conveyance in her favor but as the highest bidder in the public auction sale thereof in relation to a foreclosure of a mortgage involving the said property, which argument assumes that Condition No. (2) limits the restriction only to a conventional or voluntary sale, transfer or assignment of the property, excluding mortgage or encumbrance whereas Condition No. (1) inhibits not only the sale but also the encumbrance or mortgage of the subject land.

Petitioner's contentions are without merit and We reject the same.

Conditions No. (2) and (3) are found or provided in Section 17 and 18 of Land Registration Order No. R-3 under the subject "Rules and Regulations Governing the Acquisition and Disposition of Landed Estate," approved November 15, 1951 by the Secretary of Agriculture and Natural Resources. These sections provide as follows:

16. Prohibition to Alienate.-The applicant shall not sell, assign, encumber, mortgage or transfer, his rights under the agreement to sell or in the property subject thereof without first obtaining the written consent of the Secretary of Agriculture and Natural Resources and this condition shall subsist until the lapse of five (5) years from the date of the execution of the final deed of sale in his favor and shall be annotated as an encumbrance on the certificate of title of the property that may be issued in his favor.

17. Conveyance of Lands, Covered by Final Deeds of Sale.- Except by hereditary succession, no lands acquired hereunder shall be transferred or assigned to any individual unless he be landless and not otherwise disqualified from acquiring and owning lands in the Philippines. This prohibition shall be made a condition in all deeds of sale and shall be annotated as encumbrance in the certificate of title.

18. Violation of the two preceding paragraphs: its effect.-Any sale, assignment, encumbrance, mortgage, or transfer made in violation of the provisions of the next two preceding paragraphs hereof is null and void, and shall be sufficient ground for the Secretary of Agriculture and Natural Resources to cancel the deed of sale and to order the reversion of the land to the government and the forfeiture of whatever payments made on account thereof. In case, however, a deed of sale has already been issued, the violation of the said provisions shall be sufficient ground for the Secretary of Agriculture and Natural Resources to take appropriate action in court with a view to obtaining the reversion of the land involved to the government. All lands reverted to the government shall be disposed of as vacant lot.

It is pertinent to state here that pursuant to the provisions of Section 4, Article XIII of the 1935 Constitution of the Philippines which mandated that Congress may authorize, upon payment of just compensation, the expropriation of land to be subdivided into small lots and conveyed at cost to individuals, Commonwealth Act 539 enacted May 26, 1940, authorized the President of the Philippines to acquire private lands or any interest therein, thru purchase or expropriation and to subdivided the same into home lots or small farms for resale at reasonable prices and under such conditions as he may fix to their bonafide tenants or occupants or to private individuals who will work the lands themselves and who are qualified to acquire and own lands in the Philippines (Section 1, Commonwealth Act 539). And under Section 2 of the same Act, the President may designate any department, bureau, office, or instrumentality of the National Government, or he may organize a new agency to carry out the objectives of the Act, and for tills purpose, the agency so created or designated shall be considered a public corporation. Commonwealth Act 539 amended Commonwealth Act No. 20, as amended by Commonwealth Act 260, and Commonwealth Act No. 378, as amended by Commonwealth Act 420.

As indicated earlier, Sections 16, 17 and 18 of Lands Administrative Order No. R-3 dated October 19, 1951 are the sources which gave rise to the annotation of Conditions Nos. 1, 2 and 3 on the title of subject property. The said Order was published in the Official Gazette of December, 1951, pp. 6075 to 6078, Volume 47, No. 12, and has the force and effect of law. (Javillonar vs. Land Tenure Administration, G. R. No. 10303, Aug. 22,1958,104 Phil. 323)

As the Administrative Order itself provides, the rules and regulations governing the acquisition and disposition of private estates were promulgated for the information and guidance of all concerned "(p)ursuant to the provisions of section 4, article XIII of the Constitution of the Philippines, section 79 (B) of the Revised Administrative Code, and Executive Order No. 376, dated November 28, 1950."

Conditions Nos. 2 and 3, having been imposed pursuant to an Administrative Order which has the force and effect of the law, are therefore binding upon any person who acquires title to the same, it appearing that said Conditions are annotated as encumbrances on the back of the Certificate of Title of the land. Moreover, the said Conditions are not contrary to law, morals, customs, or public policy. In fact, these Conditions had been imposed in order to implement more effectively the main purpose of the constitutional provision which is to break up landed estates into reasonably small portions and to discourage the concentration of excessive landed wealth in an entity or a few individuals, (Republic vs. Baylosis, 96 Phil. 461) Incidentally, the New Constitution of 1973 provided a modification of the original provision in the 1935 Constitution, thus: "The National Assembly may authorize, upon payment of just compensation, the expropriation of private lands to be subdivided into small lots and conveyed at cost to deserving citizens.

These two encumbrances or Conditions annotated on the back of TCT 46402 imposed by and pursuant to the Administrative Order of the Secretary of Agriculture and Natural Resources may not, therefore, be cancelled for under Section 39 of the Land Registration Act,

Every person receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith shall hold the same free of all encumbrance except those noted on said certificate, and any of the following encumbrances which may be subsisting, namely:

First. Liens, claims, or rights arising or existing under the laws or Constitution of the United States or of the Philippine Islands which the statutes of the Philippine Islands cannot require to appear of record in the registry:

Second. Taxes within two years after same become due and payable;

Third. An public highway, way, private way established by law, or any Government irrigation canal or lateral thereof, where the certificate of title does not state that the boundaries of such highway, way, or irrigation canal or lateral thereof, have been determined.

But if there are easements or other rights. appurtenant to a parcel of registered land which for any reason have failed to be registered, such easements or rights shall remain so appurtenant notwithstanding such failure, and shall be held to pass with the land until cut off or extinguished by the registration of the servient estate, or in any other manner. (As amended by Act No. 2011, and Sec. 4, Act No. 3621.)

Presidential Decree No. 1529, amending and codifying the laws relative to registration of property and for other purposes, promulgated June 11, 1978, substantially contains the same provision under Section 44 thereof, which provides:

Every registered owner receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith, shall hold the same free from all encumbrances except those noted on said certificate and any of the following encumberances which may be subsisting, namely:

First. Liens, claims or rights arising or existing under the laws and Constitution of the Philippines which are not by law required to appear of record in the Registry of Deeds in order to be valid against subsequent purchasers or encumbrances of record;

Second. Unpaid real estate taxes levied and assessed within two years immediately preceding the acquisition of any right over the land by an innocent purchaser for value, without prejudice to the right of the government to collect taxes payable before that period from the delinquent taxpayer alone;

Third. Any public highway or private way established or recognized by law, or any government irrigation canal or lateral thereof. if the certificate of title does not state that the boundaries of such highway or irrigation canal or lateral thereof have been determined;

Fourth. Any disposition of the property or limitation on the use thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any other law or regulations on agrarian reform.

Until and unless the law, or the Administrative Order which has the force and effect of law, is repealed, amended, or otherwise, altered or modified, the said encumbrances must remain, notwithstanding the contention of petitioner that a previous governor of the Land Authority had not opposed a similar petition for cancellation in Sotera Duavit Vda. de Bautista and Jaime Bautista, G.L.R.O. Record No. 7672 of the Court of First Instance of Rizal, Branch X, for a wrong act cannot be cured by the commission of another wrong. laws are repealed only by subsequent ones and their violation or non-observance shall not be excused by disuse, or customs or practice to the contrary. (Article 7, New Civil Code)

Neither can petitioner's arguments that the lot in question contains improvements, a nightclub devoted to a purely commercial purpose, that the value of the land has become prohibitive to any landless who desires to establish his house thereon, that to allow the said Conditions to remain and to affect said parcel of land will only be a deterrent to the economic development and progress of the country and that in line with the country's program of economic development, said Conditions should be eliminated, be sustained. The courts are not concerned with the wisdom, necessity or propriety of the law, for these are the particular province of the legislative. As this Court said in Morfe vs. Mutuc, L-20387, January 31, 1968, 22 SCRA 424, 450, speaking thru Justice (now Chief Justice) Fernando citing Angara vs. Electoral Commission, 63 Phil. 139, "It is well to remember, that this Court, in the language of Justice Laurel, 'does not pass upon questions of wisdom, justice or expediency of legislation.' "

WHEREFORE, IN VIEW OF THE FOREGOING, the Orders appealed from dated July 19, 1966 and September 8, 1966 are hereby MODIFIED in the sense that Condition No. (1) inscribed as an encumbrance in Transfer Certificate of Title No. 46402 (Rizal Registry) covering Lot 4, Block 4, Psd-10988 Baclaran, Estate, Baclaran, Parañaque , Rizal, under the name of petitioner Caridad O. de Gallego, is hereby ordered cancelled, the five-year period stated therein having already expired, and that Conditions No. (2) and (3) shall remain as they are.

No costs.

SO ORDERED.

Makasiar, Fernandez and Melencio-Herrera. JJ., concur.

Teehankee, Acting C.J., concur in the result.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-59791 February 13, 1992

MANILA ELECTRIC COMPANY, petitioner,

vs.

THE HONORABLE GREGORIO G. PINEDA, Presiding Judge, Court of First Instance of Rizal, Branch XXI, Pasig, Metro Manila, TEOFILO ARAYON, SR., GIL DE GUZMAN, LUCITO SANTIAGO and TERESA BAUTISTA, respondents.

Quiason, Makalintal & Barot for petitioner.

Gil P. De Guzman Law Offices for private respondents.

MEDIALDEA, J.:p

This is a petition for review on certiorari on pure question of law seeking the nullification of the orders issued by the respondent Judge Gregorio G. Pineda, in his capacity as the presiding Judge of the Court of First Instance (now Regional Trial Court) of Rizal, Branch 21, Pasig, Metro Manila in Civil Case No. 20269, entitled "Manila Electric Company v. Teofilo Arayon, et al." The aforesaid orders are as follows: (1) the order dated December 4, 1981 granting the motion for payment of private respondents; (2) the order dated December 21, 1981 granting the private respondents' omnibus motion; and (3) the order dated February 9, 1982 adjudging in favor of private respondents the fair market value of their property at forty pesos (P40.00) per square meter for a total of P369,720.00 and denying the motions for contempt for being moot and academic and the motion for reconsideration of the orders dated December 4, 1981 and December 21, 1981 for lack of merit.

The antecedent facts giving rise to the controversy at bar are as follows:

Petitioner Manila Electric Company (MERALCO) is a domestic corporation duly organized and existing under the laws of Philippines. Respondent Honorable Judge Gregorio G. Pineda is impleaded in his official capacity as the presiding judge of the Court of First Instance (now Regional Trial Court) of Rizal, Branch XXI, Pasig, Metro Manila. While private respondents Teofilo Arayon, Sr., Gil de Guzman, Lucito Santiago and Teresa Bautista are owners in fee simple of the expropriated property situated at Malaya, Pililla, Rizal.

On October 29, 1974, a complaint for eminent domain was filed by petitioner MERALCO against forty-two (42) defendants with the Court of First Instance (now Regional Trial Court) of Rizal, Branch XXII, Pasig, Metro Manila.

The complaint alleges that for the purpose of constructing a 230 KV Transmission line from Barrio Malaya to Tower No. 220 at Pililla, Rizal, petitioner needs portions of the land of the private respondents consisting of an aggregate area of 237,321 square meters. Despite petitioner's offers to pay compensation and attempts to negotiate with the respondents', the parties failed to reach an agreement.

Private respondents question in their motion to dismiss dated December 27, 1974 the petitioner's legal existence and the area sought to be expropriated as too excessive.

On January 7, 1975, respondents Gil de Guzman and Teresa Bautista filed a motion for contempt of court alleging, among other things that petitioner's corporate existence had expired in 1969 and therefore it no longer exists under Philippine Laws.

But despite the opposition of the private respondents, the court issued an Order dated January 13, 1975 authorizing the petitioner to take or enter upon the possession of the property sought to be expropriated.

On July 13, 1976, private respondents filed a motion for withdrawal of deposit claiming that they are entitled to be paid at forty pesos (P40.00) per square meter or an approximate sum of P272,000.00 and prayed that they be allowed to withdraw the sum of P71,771.50 from petitioner's deposit-account with the Philippine National Bank, Pasig Branch. However, respondents motion was denied in an order dated September 3, 1976.

In the intervening period, Branch XXII became vacant when the presiding Judge Nelly Valdellon-Solis retired, so respondent Judge Pineda acted on the motions filed with Branch XXII.

Pursuant to a government policy, the petitioners on October 30, 1979 sold to the National Power Corporation (Napocor) the power plants and transmission lines, including the transmission lines traversing private respondents' property.

On February 11, 1980, respondent court issued an Order appointing the members of the Board of Commissioners to make an appraisal of the properties.

On June 5, 1980, petitioner filed a motion to dismiss the complaint on the ground that it has lost all its interests over the transmission lines and properties under expropriation because of their sale to the Napocor. In view of this motion, the work of the Commissioners was suspended.

On June 9, 1981, private respondents filed another motion for payment. But despite the opposition of the petitioner, the respondent court issued the first of the questioned Orders dated December 4, 1981 granting the motion for payment of private respondents, to wit:

As prayed for by defendants Teofilo Arayon, Lucito Santiago, Teresa Bautista and Gil de Guzman, thru counsel Gil de Guzman, in their Motion for Payment, for reasons therein stated, this Court hereby orders the plaintiff to pay the movants the amount of P20,400.00 for the expropriated area of 6,800 square meters, at P3.00 per square meter without prejudice to the just compensation that may be proved in the final adjudication of this case.

The aforesaid sum of P20,400.00 having been deposited by plaintiff in the Philippine National Bank (Pasig Branch) under Savings Account No. 9204, let the Deputy Sheriff of this Branch Mr. Sofronio Villarin withdraw said amount in the names of Teofilo Arayon, Lucito Santiago, Teresa Bautista and Gil de Guzman, the said amount to be delivered to the defendant's counsel Atty. Gil de Guzman who shall sign for the receipt thereof.

SO ORDERED. (Rollo, p. 108)

On December 15, 1981, private respondents filed an Omnibus Motion praying that they be allowed to withdraw an additional sum of P90,125.50 from petitioner's deposit-account with the Philippine National Bank.

By order dated December 21, 1981, the respondent court granted the Omnibus Motion hereunder quoted as follows:

Acting on the Omnibus Motion dated December 15, 1981 filed by Atty. Gil de Guzman, counsel for Teofilo Arayon, Sr., Lucito Santiago, Teresita Bautista and for himself, and it appearing that there is deposited in the bank in trust for them the amount of P90,125.50 to guarantee just compensation of P272,000.00, thereby leaving a balance of P161,475.00 still payable to them, the same is hereby GRANTED.

Mr. Nazario Nuevo and Marianita Burog, respectively the Manager and Cashier, Philippine National Bank, Pasig Branch, Pasig, Metro Manila are hereby ordered to allow Sheriff Sofronio Villarin to withdraw and collect from the bank the amount of P90,125.50 under Savings Account No. 9204 and to deliver the same to Atty. Gil de Guzman upon proper receipt, pending final determination of just compensation.

SO ORDERED. (Rollo, p. 120)

Private respondents filed another motion dated January 8, 1982 praying that petitioner be ordered to pay the sum of P169, 200.00.

On January 12, 1982 petitioner filed a motion for reconsideration of the Orders dated December 4, 1981 and December 21, 1981 and to declare private respondents in contempt of court for forging or causing to be forged the receiving stamp of petitioner's counsel and falsifying or causing to be falsified the signature of its receiving clerk in their Omnibus Motion.

In response to private respondents' motion for payment dated January 8, 1982, petitioner filed an opposition alleging that private respondents are not entitled to payment of just compensation at this stage of the proceeding because there is still no appraisal and valuation of the property.

On February 9, 1982 the respondent court denied the petitioner's motion for reconsideration and motion for contempt, the dispositive portion of which is hereunder quoted as follows:

Viewed in the light of the foregoing, this Court hereby adjudges in favor of defendants Teofilo Arayon, Sr., Lucito Santiago, Teresita Bautista and Atty. Gil de Guzman the fair market value of their property taken by MERALCO at P40.00 per square meter for a total of P369,720.00, this amount to bear legal interest from February 24, 1975 until fully paid plus consequential damages in terms of attorney's fees in the sum of P10,000.00, all these sums to be paid by MERALCO to said defendants with costs of suit, minus the amount of P102,800.00 already withdrawn by defendants.

For being moot and academic, the motions for contempt are DENIED; for lack of merit, the motion for reconsideration of the orders of December 4, 1981 and December 21, 1981 is also DENIED.

SO ORDERED. (Rollo, p. 211-212)

Furthermore, the respondent court stressed in said order that "at this stage, the Court starts to appoint commissioners to determine just compensation or dispenses with them and adopts the testimony of a credible real estate broker, or the judge himself would exercise his right to formulate an opinion of his own as to the value of the land in question. Nevertheless, if he formulates such an opinion, he must base it upon competent evidence." (Rollo, p. 211)

Hence, this petition.

Subsequently, the respondent court issued an Order dated March 22, 1982 granting the private respondents' motion for execution pending appeal, thus requiring petitioner to deposit P52,600.00 representing the consideration paid by Napocor for the property it bought from petitioner which includes the subject matter of this case, computed at P200.55 per square meter and to render an accounting.

On March 26, 1982, petitioner filed a petition for preliminary injunction with this Court seeking to enjoin respondent judge and all persons acting under him from enforcing the Order dated March 22, 1982.

This Court issued a temporary restraining order addressed to respondent judge. A motion to lift the restraining order was filed by the respondents. Despite a series of oppositions and motions to lift the said order, this Court reiterated its stand and noted that the restraining order is still effective.

The petitioner strongly maintains that the respondent court's act of determining and ordering the payment of just compensation to private respondents without formal presentation of evidence by the parties on the reasonable value of the property constitutes a flagrant violation of petitioner's constitutional right to due process. It stressed that respondent court ignored the procedure laid down by the law in determining just compensation because it formulated an opinion of its own as to the value of the land in question without allowing the Board of Commissioners to hold hearings for the reception of evidence.

On the other hand, private respondents controvert the position of the petitioner and contend that the petitioner was not deprived of due process. They agreed with respondent court's ruling dispensing the need for the appointment of a Board of Commissioners to determine just compensation, thus concluding that the respondent court did not err in determining just compensation.

Furthermore, petitioner argues that the respondent judge gravely abused his discretion in granting the motion for execution pending appeal and consequently denying the petitioner's motion to dismiss. Respondent judge should have ordered that Napocor be impleaded in substitution of petitioner or could have at least impleaded both the Napocor and the petitioner as party plaintiffs.

The controversy boils down to the main issue of whether or not the respondent court can dispense with the assistance of a Board of Commissioners in an expropriation proceeding and determine for itself the just compensation.

The applicable laws in the case at bar are Sections 5 and 8 of Rule 67 of the Revised Rules of Court. The said sections particularly deal with the ascertainment of compensation and the court's action upon commissioners' report, to wit:

Sec. 5. Upon the entry of the order of condemnation, the court shall appoint not more than three (3) competent and disinterested persons as commissioners to ascertain and report to the court the just compensation for the property sought to be taken. The order of appointment shall designate the time and place of the first session of the hearing to be held by the commissioners and specify the time within which their report is to be filed with the court.

xxx xxx xxx

Sec. 8. Upon the expiration of the period of ten (10) days referred to in the preceding section, or even before the expiration of such period but after all the interested parties have filed their objections to the report or their statement of agreement therewith, the court may, after hearing, accept the report and render judgment in accordance therewith; or, for cause shown, it may recommit the same to the commissioners for further report of facts; or it may set aside the report and appoint new commissioners, or it may accept the report in part and reject it in part; and it may make such order or render such judgment as shall secure to the plaintiff the property essential to the exercise of his right of condemnation, and to the defendant just compensation for the property so taken.

We already emphasized in the case of Municipality of Biñan v. Hon. Jose Mar Garcia (G.R. No. 69260, December 22, 1989, 180 SCRA 576, 583-584) the procedure for eminent domain, to wit:

There are two (2) stages in every action of expropriation. The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends with an order, if not of dismissal of the action, "of condemnation declaring that the plaintiff has a lawful right to take the property sought to be condemned, for the public use or purpose described in the complaint, upon the payment of just compensation to be determined as of the date of the filing of the complaint". An order of dismissal, if this be ordained, would be a final one, of course, since it finally disposes of the action and leaves nothing more to be done by the Court on the merits. So, too, would an order of condemnation be a final one, for thereafter, as the Rules expressly state, in the proceedings before the Trial Court, "no objection to the exercise of the right of condemnation (or the propriety thereof) shall be filed or heard."

The second phase of the eminent domain action is concerned with the determination by the Court of "the just compensation for the property sought to be taken." This is done by the Court with the assistance of not more than three (3) commissioners. The order fixing the just compensation on the basis of the evidence before, and findings of, the commissioners would be final, too. It would finally dispose of the second stage of the suit, and leave nothing more to be done by the Court regarding the issue. Obviously, one or another of the parties may believe the order to be erroneous in its appreciation of the evidence or findings of fact or otherwise. Obviously, too, such a dissatisfied party may seek reversal of the order by taking an appeal therefrom.

Respondent judge, in the case at bar, arrived at the valuation of P40.00 per square meter on a property declared for real estate tax purposes at P2.50 per hectare on the basis of a "Joint Venture Agreement on Subdivision and Housing Projects" executed by A.B.A Homes and private respondents on June 1, 1972. This agreement was merely attached to the motion to withdraw from petitioner's deposit. Respondent judge arrived at the amount of just compensation on its own, without the proper reception of evidence before the Board of Commissioners. Private respondents as landowners have not proved by competent evidence the value of their respective properties at a proper hearing. Likewise, petitioner has not been given the opportunity to rebut any evidence that would have been presented by private respondents. In an expropriation case such as this one where the principal issue is the determination of just compensation, a trial before the Commissioners is indispensable to allow the parties to present evidence on the issue of just compensation. Contrary to the submission of private respondents, the appointment of at least three (3) competent persons as commissioners to ascertain just compensation for the property sought to be taken is a mandatory requirement in expropriation cases. While it is true that the findings of commissioners may be disregarded and the court may substitute its own estimate of the value, the latter may only do so for valid reasons, i.e., where the Commissioners have applied illegal principles to the evidence submitted to them or where they have disregarded a clear preponderance of evidence, or where the amount allowed is either grossly inadequate or excessive (Manila Railroad Company v. Velasquez, 32 Phil. 286). Thus, trial with the aid of the commissioners is a substantial right that may not be done away with capriciously or for no reason at all. Moreover, in such instances, where the report of the commissioners may be disregarded, the trial court may make its own estimate of value from competent evidence that may be gathered from the record. The aforesaid joint venture agreement relied upon by the respondent judge, in the absence of any other proof of valuation of said properties, is incompetent to determine just compensation.

Prior to the determination of just compensation, the property owners may rightfully demand to withdraw from the deposit made by the condemnor in eminent domain proceedings. Upon an award of a smaller amount by the court, the property owners are subject to a judgment for the excess or upon the award of a larger sum, they are entitled to a judgment for the amount awarded by the court. Thus, when the respondent court granted in the Orders dated December 4, 1981 and December 21, 1981 the motions of private respondents for withdrawal of certain sums from the deposit of petitioner, without prejudice to the just compensation that may be proved in the final adjudication of the case, it committed no error.

Records, specifically Meralco's deed of sale dated October 30, 1979, in favor of Napocor show that the latter agreed to purchase the parcels of land already acquired by Meralco, the rights, interests and easements over those parcels of land which are the subject of the expropriation proceedings under Civil Case No. 20269, (Court of First Instance of Rizal, Branch XXII), as well as those parcels of land occupied by Meralco by virtue of grant of easements of right-of-way (see Rollo, pp. 341-342). Thus, Meralco had already ceded and in fact lost all its rights and interests over the aforesaid parcels of land in favor of Napocor. In addition, the same contract reveals that the Napocor was previously advised and actually has knowledge of the pending litigation and proceedings against Meralco (see Rollo, pp. 342-343). Hence, We find the contention of the petitioner tenable. It is therefore proper for the lower court to either implead the Napocor in substitution of the petitioner or at the very least implead the former as party plaintiff.

All premises considered, this Court is convinced that the respondent judge's act of determining and ordering the payment of just compensation without the assistance of a Board of Commissioners is a flagrant violation of petitioner's constitutional right to due process and is a gross violation of the mandated rule established by the Revised Rules of Court.

ACCORDINGLY, the petition is GRANTED and the order dated February 9, 1982 issued by the respondent judge insofar as it finally determined the amount of just compensation is nullified. This case is hereby ordered remanded to the lower court for trial with the assistance of a Board of Commissioners. Further, the National Power Corporation is impleaded as party plaintiff therein.

SO ORDERED.

Narvasa, C.J., Cruz and Griño-Aquino, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-66520 August 30, 1988

EDUARDO C. TAÑEDO, petitioner,

vs.

HON. JUANITO A. BERNAD, Presiding Judge of the Regional Trial Court, 7th Judicial Region, Branch XXI, Cebu City; Spouses ROMEO SIM and PACITA S. SIM; and Spouses ANTONIO CARDENAS and MAE LINDA CARDENAS, respondents.

Numeriano F. Capangpangan for petitioner.

Meinrado P. Parades for private respondents.

PADILLA, J.:p

This is a petition for review on certiorari of the Order issued by the respondent judge, Hon. Juanita A. Bernad on 5 December 1983, which dismissed the complaint for legal redemption filed by the petitioner in Civil Case No. CEB-994 of the Regional Trial Court of Cebu, and the Order of the same respondent judge, dated 20 January 1984, which denied petitioner's motion for reconsideration.

The facts, in brief, are as follows:

The private respondent Antonio Cardenas was the owner of two (2) contiguous parcels of land situated in Cebu City which he had inherited from Lourdes Cardenas and more particularly known as Lot 7501-A, with an area of 140 square meters and Lot 7501-B, with an area of 612 square meters. On Lot 7501-A is constructed an apartment building, while the improvements on Lot 7501-B consist of one four-door apartment of concrete and strong materials; one two-storey house of strong materials; a bodega of strong materials; and a septic tank for the common use of the occupants of Lots 7501-A and 7501-B. A small portion of the apartment building on Lot 7501-A also stands on Lot 7501-B.

On 5 February 1982, said Antonio Cardenas sold Lot 7501-A to herein petitioner Eduardo C. Tañedo. 1

Antonio Cardenas, on that same day, also mortgaged Lot 7501-B to said Eduardo C. Tañedo as a security for the payment of a loan in the amount of P10,000.00. 2

Antonio Cardenas further agreed that he would sell Lot 7501-B only to Eduardo Tañedo in case he should decide to sell it, as the septic tank in Lot 7501-B services Lot 7501-A and the apartment building on Lot 7501-A has a part standing on Lot 7501-B. This was confirmed in a letter, dated 26 February 1982, wherein Antonio Cardenas asked Tañedo not to deduct the mortgage loan of P10,000.00 from the purchase price of Lot 7501-A "because as we have previously agreed, I will sell to you Lot 7501-B." 3

Antonio Cardenas, however, sold Lot 7501-B to the herein respondent spouses Romeo and Pacita Sim. 4 Upon learning of the sale, Eduardo Tañedo offered to redeem the property from Romeo Sim. But the latter refused. Instead, Romeo Sim blocked the sewage pipe connecting the building of Eduardo Tañedo built on Lot 7501-A, to the septic tank in Lot 7501-B. He also asked Tañedo to remove that portion of his building enroaching on Lot 7501-B. As a result, Eduardo Tañedo, invoking the provisions of Art. 1622 of the Civil Code, filed an action for legal redemption and damages, with a prayer for the issuance of a writ of preliminary injunction, before the Regional Trial Court of Cebu, docketed therein as Civil Case No. CEB-994, against the spouses Romeo and Pacita Sim, Antonio Cardenas and his wife Mae Linda Cardenas, the Register of Deeds of Cebu City, and Banco Cebuano, Cebu City Development Bank. 5

Answering, the spouses Romeo and Pacita Sim claimed that they are the absolute owners of Lot 7501-B and that Eduardo Tañedo has no right to redeem the land under Art. 1622 of the Civil Code as the land sought to be redeemed is much bigger than the land owned by Tañedo. 6

Antonio Cardenas, upon the other hand, admitted that he had agreed to sell Lot 7501-B to Eduardo Tañedo and claimed by way of cross-claim against the spouses Romeo and Pacita Sim that the Deed of Sale he had executed in favor of said spouses was only intended as an equitable mortgage, to secure the payment of amounts received by him from said spouses as petty loans . 7

In answer to the cross-claim, the spouses Romeo and Pacita Sim insisted that the sale executed by Antonio Cardenas of Lot 7501-B in their favor was an absolute one. 8

Thereafter, or on 14 October 1983, the spouses Romeo and Pacita Sim filed motions to dismiss the complaint and the cross-claim, for lack of cause of action. 9

Acting upon these motions and other incidental motions, the respondent judge issued the questioned order of 5 December 1983 dismissing the complaint and cross-claim.10

Tañedo filed a motion for reconsideration of the order, but his motion was denied on 20 January 1984. 11

Hence, the present recourse by petitioner Tanedo.

The Court finds merit in the petition. The dismissal of the complaint on the ground of lack of cause of action, is precipitate. The settled rule where dismissal of an action is sought on the ground that the complaint does not state a cause of action is, that the insufficiency of the cause of action must appear on the face of the complaint. And the test of the sufficiency of the ultimate facts alleged in the complaint to constitute a cause of action, is whether or not, admitting the facts alleged, the court can render a valid judgment upon the same in accordance with the prayer of the complaint. For this purpose, the movant is deemed to admit hypothetically the truth of the facts thus averred. 12

In the instant case, it cannot be denied that petitioner Tanedo cannot redeem the entire Lot 7501-B from the spouses Romeo and Pacita Sim pursuant to the provisions of Art. 1622 Romeo and Pacita Sim pursuant to the provisions of Art. 1622 of the Civil Code, since the lot sought to be redeemed, has an area of 612 square meters which is much bigger, area-wise, than the lot owned by petitioner Tañedo. However, the petitioner seeks to purchase only that small portion of Lot 7501-B occupied by his apartment building, because the spouses Romeo and Pacita Sim had told him to remove that portion of his building which enroaches upon Lot 7501-B. Whether or not this is possible should have been determined at the pre-trial stage or trial on the merits.

Besides, the action of petitioner Tañedo is also one for recovery of damages by reason of breach of promise by the respondent Antonio Cardenas to sell Lot 7501-B. Paragraphs 3 and 4 of the amended complaint read, as follows:

3. That by written agreement, plaintiff and defendant spouses Antonio Cardenas and Mae Linda Cardenas agreed that in the event they decide to sell the adjacent Lot No. 7501-B of the subdivision plan (LRC) Psd. 23638, a portion of Lot No. 7501 of the cadastral survey of Cebu, LRC (GLRC) Cad. Record No. 9465, situated in the City of Cebu, containing an area of SIX HUNDRED TWELVE (612) Square meters more or less which lot is adjacent to Lot No. 7501-A of the plaintiff and where part of the plaintiffs apartment is standing on, the same should be sold to the plaintiff, but far from compliance of the written agreement, defendant spouses Antonio Cardenas and Mae Linda Cardenas sureptiously [sic] sold the aforestated Lot No. -7501-B- to the defendant spouses, Romeo Sim and Pacita Sim on July 23, 1982 as per Deed of Sale notarized by Notary Public, Jorge S. Omega and entered in his Notarial Register as Doc. No. 462; Page No. -94- Book No. 11, Series of 1982;

4. That due to the sale by the defendant spouses Antonio Cardenas and Mae Linda Cardenas of the property in question to spouses Romeo Sim and Pacita Lim, plaintiff suffered moral damages in the form of mental anguish, sleepless nights, mental torture, for which he is entitled to a compensation in the amount to be established during the trial of the case and has incurred litigation expenses subject for reimbursentent and attorneys fee in the sum of P10,000.00 which should be chargeable to both defendant spouses; 13

and the plaintiff (herein petitioner) prayed, among others: "(c) That defendant spouses Romeo Sim and Pacita Sim and spouses Antonio Cardenas and Mae Linda Cardenas be ordered to pay plaintiff moral damages, litigation expenses and attorneys fees in the amount of P50,000.00." 14

That there was a written agreement, as alleged in the complaint, between the plaintiff Eduardo Tañedo and the defendant Antonio Cardenas is admitted by the latter. In his answer, he alleged the following:

ALLEGATIONS as to written agreement is ADMITTED, but, specifically denies that herein defendants SUREPTIOUSLY [sic] SOLD the lot in question to the other defendant Spouses Sim the truth is, that the herein defendants [sic] was required to execute the Deed of Sale described in this paragraph 3 as security for the personal loans and other forms of indebtedness incurred from the Spouses Sims but never as a conveyance to transfer ownership; 15

Considering this admission of defendant Cardenas, and that his promise to sell Lot 7501-B to Eduardo Tañedo appears to be for a valuable consideration, a trial is necessary to determine, at the very least, the amount of damages suffered by the plaintiff Eduardo Tafiedo by reason of such breach of promise to sell, if indeed there is such a breach.

Moreover, the finding of the trial court that petitioner Tañedo's right to continue to use the septic tank, erected on Lot 7501-B, ceased upon the subdivision of the land and its subsequent sale to different owners who do not have the same interest,16 also appears to be contrary to law. Article 631 of the Civil Code enumerates the grounds for the extinguishment of an easement. Said article provides:

Art. 631. Easements are extinguished:

(1) By merger in the same person of the ownership of the dominant and servient estates;

(2) By non-user for ten years; with respect to discontinuous easements, this period shall be computed from the day on which they ceased to be used; and, with respect to continuous easements, from the day on which an act contrary to the same took place;

(3) When either or both of the estates fall into such condition that the easement cannot be used; but it shall revive if the subsequent condition of the estates or either of them should again permit its use, unless when the use becomes possible, sufficient time for prescription has elapsed, in accordance with the provisions of the preceding number;

(4) By the expiration of the term or the fulfillment of the conditions, if the easement is temporary or conditional;

(5) By the renunciation of the owner of the dominant estate;

(6) By the redemption agreed upon between the owners of the dominant and servient estates.

As can be seen from the above provisions, the alienation of the dominant and servient estates to different persons is not one of the grounds for the extinguishment of an easement. On the contrary, use of the easement is continued by operation of law. Article 624 of the Civil Code provides:

Art. 624. The existence of an apparent sign of easement between two estates, established or maintained by the owner of both, shall be considered, should either of them be alienated, as a title in order that the easement may continue actively and passively, unless, at the time the ownership of the two estates is divided, the contrary should be provided in the title of conveyance of either of them, or the sign aforesaid should be removed before the execution of the deed. This provision shall also apply in case of the division of a thing owned in common by two or more persons.

In the instant case, no statement abolishing or extinguishing the easement of drainage was mentioned in the deed of sale of Lot 7501-A to Eduardo Tañedo. Nor did Antonio Cardenas stop the use of the drain pipe and septic tank by the occupants of Lot 7501-A before he sold said lot to Eduardo Tafiedo. Hence, the use of the septic tank is continued by operation of law. Accordingly, the spouses Romeo and Pacita Sim the new owners of the servient estate (Lot 7501- B), cannot impair, in any manner whatsoever, the use of the servitude. 17

WHEREFORE, the Orders complained of are hereby REVERSED and SET ASIDE. The respondent judge or another one designated in his place is directed to proceed with the trial of this case on the merits. With costs against private respondents.

SO ORDERED.

Melencio-Herrera, Paras, Sarmiento and Regalado, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 110067 March 13, 1997

MA. LINDA T. ALMENDRAS, petitioner,

vs.

THE COURT OF APPEALS, URCICIO TAN PANG ENG and FABIANA YAP, respondents.

MENDOZA, J.:p

This is a petition to review the decision of the Court of Appeals, reversing the decision of the Regional Trial Court and dismissing petitioner's complaint for the establishment of a right of way.

Petitioner is the registered owner of a parcel of land, covered by TCT No. 91180 of the Register of Deeds of Cebu and designated as Lot-B of the subdivision plan Psd-163902, in Banilad, Cebu. The land is bounded on the north and on the east by lots owned by private respondents Tan Pang Eng and Fabiana Yap, on the south by the lot owned by Celedonio Bongo, and on the west by the properties of Tomas Opone and Zosimo Opone.

About 9.74 meters of the western boundary of petitioner's land abuts an existing private road, 6.00 meters wide, which passes through the lots of Tomas Opone, Vicente Lao, Manuel Opone, Luis Sison, and Silvestre Opone and leads to another private road located on the property of Bienvenido Tudtud which in turn connects to the provincial road.

Sometime in September, 1987, private respondents began building a concrete wall on his property on the northern and eastern sides of petitioner's lot. For this reason, petitioner wrote private respondents on September 15, 1987 offering to buy a portion of the latter's lot, 17.45 meters long and 3 meters wide, so that petitioner could have access to the provincial road. But her request was denied by private respondents on the ground that there was an existing private road on the western side of petitioner's property providing adequate outlet to the provincial road. Private respondents claimed that granting petitioner's request would greatly reduce the value of his property, as the proposed right of way cuts across the middle of the property.

Shortly thereafter, in January 1988, Celedonio Bongo also fenced his property, thus closing off the southern boundary of petitioner's lot.

On January 29, 1988, petitioner brought this action in the Regional Trial Court of Cebu, Branch 16 for the establishment of a right of way (CEB-6607) through private respondents' land.

Zosimo Opone subsequently closed off the western side of petitioner's property by erecting a fence on his lot, with the result that petitioner's property became inaccessible.

After trial, the trial court rendered judgment for petitioner, granting her a right of way through 57.35 square meters of private respondents' property, upon payment by her of P11,470.00 as indemnity. Although there was a private road on the western and southern sides of her lot, the trial court ruled that the easements were constituted for the owners of the lots through which the private road passes and petitioner would have to negotiate with them individually to be allowed to use the private road herself. Moreover, the road had been closed on petitioner's western boundary by Zosimo Opone.

Private respondents appealed. On January 29, 1993, the Court of Appeals rendered its decision, reversing the trial court and holding that the road around petitioner's lot on its western and southern boundaries was an adequate outlet for petitioner to the provincial road. This private road has a width of 6.0 meters, which allows the passage of a cargo truck, and a length of only 149 meters. Although the road is a private one, the appellate court ruled that the designation of the beneficiaries of the easement in the titles of the lots was neither specific nor exclusive, that there was no reason for petitioner not to negotiate with Zosimo Opone before bringing this case, and that the closure by Zosimo Opone of the western side of petitioner's lot was contrary to P.D. No. 1529, §50 because it was done without the approval of the Regional Trial Court as required therein. In any event, it was held that mere inconvenience to the petitioner in negotiating with numerous parties for whose benefit the easement was established was not a reason for granting petitioner an easement through private respondents' property.

Petitioner filed a motion for reconsideration but her motion was denied for having been filed late and for lack of merit. Hence this petition.

The preliminary question is whether petitioner's motion for reconsideration was filed within the 15-day period prescribed by the Rules for filing such motion or appealing the decision of the Court of Appeals to this Court. It appears that a copy of the decision of the appellate court was served on petitioner's counsel on February 10, 1993, so that she had until February 25 within which to file a motion for reconsideration. However, February 25, 1993 had been declared a special holiday in commemoration of the EDSA people power revolution. Hence, petitioner, in accordance with §28 of the Administrative Code of 1987, had until the next day, February 26, 1993, to file her motion, which she did. Her motion was thus timely filed.

Petitioner contends that the appellate court erred in dismissing her complaint because both the Opone and Tudtud roads are private roads which were built for the benefit only of those lots through which the roads pass and, as such, cannot be considered adequate outlets within the contemplation of Art. 649 of the Civil Code. The roads not being adequate outlets, Tan was bound under the law to open up a right of way for her through his property.

The issue in this case is whether or not petitioner is entitled to a right of way through private respondents' property. We hold that she has failed to prove that she has a right to the establishment of such an easement through private respondents' property.

There is no dispute that the road abutting the western boundary of petitioner's lot, known as the Opone road, is an existing, passable, private road which connects to another road, the Tudtud road, on the southern side of petitioner's lot. This road leads to the Cebu-Banilad Cadre Provincial Road located on the eastern side of petitioner's lot.

It appears that the lots traversed by the private road originally constituted only one lot, that is, Lot 1 of the subdivision plan PSU-89847, registered under TCT No. 55684 in the name of the Opone siblings. In May 1979, this lot was subdivided into seven lots, namely, Lot 1-A to Lot 1-G. A right of way was constituted running almost the entire length of the eastern boundary of all these lots, beginning with Lot 1-G, which belongs to Zosimo Opone, through Lot 1-A which belongs to Silvestre Opone. The servitude was annotated on the transfer certificates of title covering the seven lots, the annotations reading substantially as follows:

subject to a road right-of-way from point 1 to point 4 passing through lots 1-A to 1-G which is on the eastern side.

Petitioner's property abuts 9.74 meters of the aforesaid right of way. As already stated, the Opone road connects to another right of way on the property of Bienvenido Tudtud (the Tudtud road). This right of way was constituted on July 4, 1983 by Bienvenido Tudtud in favor of the individual owners of Lot 1-A to Lot 1-G by virtue of an instrument entitled "Easement of Right of Way" 1 which document reads in part:

Now, THEREFORE, for and in consideration of the above premises and as a gesture of his love and service to his fellowmen particularly his neighbors, the SERVIENT ESTATE hereby and these presents, agree, allow and permit the DOMINANT ESTATE to establish and have a permanent easement of right-of-way over his property described under paragraph 1 hereof but limited to a portion situated throughout the whole length of the southern side thereof as indicated in the plan hereto attached as Annex "A," . . . (Emphasis added)

In holding that petitioner's right of way should be constituted on the properties on the western and southern boundaries of petitioner's lot, instead of through the land of private respondents as the trial court ruled, the Court of Appeals pointed to the fact that the Tudtud and the Opone roads already constitute permanent easements. It held that although the Tudtud easement was constituted by naming the owners of the individual lots, the annotation of the easement nevertheless categorically states that the easement is established "as a gesture of [Bienvenido Tudtud's] love and service to his fellowmen," which, the appellate court interpreted to mean for the benefit of the public in general.

To begin with, the owner of a landlocked property has the right to demand a right of way through the neighboring estates. 2 The easement must be established at the point which is least prejudicial to the servient estate and, whenever possible, the shortest to the highway. 3 If these two conditions exist on different properties, the land where establishment of the easement will cause the least prejudice should be chosen. Thus, it has been held that "where the easement may be established on any of several tenements surrounding the dominant estate, the one where the way is shortest and will cause the least damage should be chosen. However, . . . if these two (2) circumstances do not concur in a single tenement, the way which will cause the least damage should be used, even if it will not be the shortest. [2 ARTURO M. TOLENTINO, CIVIL CODE 374 (1974)]" 4

In the case at bar, the trial court ruled that the easement should be constituted through the land of private respondents on the eastern side because it would be the shortest way to the provincial road, being only 17.45 meters long, compared to 149.22 meters if the easement was constituted on the Opone and Tudtud roads on the western and southern sides of petitioner's land.

On the other hand, as already pointed out, the Court of Appeals, in pointing to the longer way, considered the fact that this was already existing and does not preclude its use by other parties than the individual owners of Lot 1-A to Lot 1-G and the owners of the land on which the connecting Tudtud road is found.

The way may be longer and not the most direct way to the provincial road, but if the establishment of the easement in favor of petitioner on this roads will cause the least prejudice, then the easement should be constituted there. This seems to be reasoning of the Court of Appeals. However, this can only be determined if the several lot owners (i.e., the Opones and their buyers and those of Bienvenido Tudtud) are before the court, for the determination of the point least prejudicial to the owners of servient estates (if there are two or more possible sites for an easement) requires a comparative evaluation of the physical conditions of the estates. It is not possible to determine whether the estates which would be least prejudiced by the easement would be those of the owners of the Opone and Tudtud properties because they have not been heard. Although evidence concerning the condition of their estates has been presented by private respondents, it is impossible to determine with certainty which estate would be least prejudiced by the establishment of an easement for petitioner until these parties have been heard. Any decision holding them liable to bear the easement would not be binding on them since they are not parties to this action.

Accordingly, the decisions of the Court of Appeals and of the Regional Trial Court should be set aside and this case remanded to the trial court so that private respondents may file a third-party complaint against the owners of servient estates through whose lands they believe the right of way sought by petitioner should be established and then prove their claim. On the basis of the evidence of all parties concerned the trial court should render a new decision.

WHEREFORE, the decision of the Court of Appeals and that of the Regional Trial Court are SET ASIDE and this case is REMANDED to the Regional Trial Court for further proceedings in accordance with this decision.

SO ORDERED.

Regalado, Romero, Puno and Torres, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. 92245 June 26, 1991

MELANIA A. ROXAS, petitioner,

vs.

THE HON. COURT OF APPEALS and ANTONIO M. CAYETANO, respondents.

Agustin V. Velante for petitioner.

Manuel M. Katapang for private respondent.

PARAS, J.:p

The only issue before Us is whether or not a husband, as the administrator of the conjugal partnership, may legally enter into a contract of lease involving conjugal real property without the knowledge and consent of the wife.

According to the Decision * rendered by the respondent Court of Appeals, the pertinent facts of the case as alleged in plaintiff-petitioner's complaint indicate:

1. That plaintiff is of legal age, married but living separately from husband, one of the defendants herein and presently residing at No. 4 Ambrocia St., Quezon City; while defendant Antonio S. Roxas is likewise of legal age and living separately from his wife, plaintiff herein, with residence at No. 950 Quirino Highway, Novaliches, Quezon City where he may be served with summons; and defendant Antonio M. Cayetano is of legal age and residing at No. 28 Mariano Olondriz Street, BF Homes, Paranaque, Metro Manila where he may be served with summons;

2. That only recently, plaintiff discovered that her estranged husband, defendant Antonio S. Roxas, had entered into a contract of lease with defendant Antonio M. Cayetano sometime on March 30, 1987 covering a portion of their conjugal lot situated at 854 Quirino Highway, Novaliches, Quezon City, described in T.C.T. No. 378197 (formerly T.C.T. No. 23881) of the Land Registry for Quezon City without her previous knowledge, much less her marital consent-xerox; copy of which lease contract is hereto attached as Annex "A", and made an integral part hereof.

3. That on the same lot, plaintiff had planned to put up her flea market with at least twenty (20) stalls and mini-mart for grocery and dry goods items for which she had filed an application for the corresponding Mayor's Permit and Municipal License which had been approved since 1986, but when she attempted to renew it for 1986, the same was disapproved last month due to the complaint lodged by defendant Antonio M. Cayetano whose application for renewal of Mayor's Permit and License for the same business of putting up a flea market, had been allegedly earlier approved;

4. That for the planning and initial construction of plaintiffs project to put up her own business of flea market and mini-mart grocery and wet and dry stores which she had intended to operate partly by herself and lease the rest of the twenty (20) stalls thereon, she had spent some P135,000.00 for the said construction, including materials and labor, where she had expected to earn as daily net income in the minimum amount of P500.00 daily;

5. That due to the illegal lease contract entered into between the herein defendants and the resultant unlawful deprivation of plaintiff from operating her own legitimate business on the same lot of which she is a conjugal owner, plaintiff has been compelled to seek redress and ventilate her grievance to the court for which she has to engage the services of counsel with whom she agreed to pay as and for attorney's fees the sum of P10,000.00; plus the amount equivalent to 20% of whatever damages may be awarded to her in addition to the sum of P500.00 per appearance in court.

xxx xxx xxx

Dated July 31, 1989 defendant Antonio M. Cayetano moved to dismiss the complaint on the sole ground that the complaint states no cause of action, to which an Opposition was filed by plaintiff (now petitioner herein), while defendant Antonio S. Roxas, estranged husband of plaintiff-petitioner, filed an answer.

Confronted with the private respondent's Motion to Dismiss, on August 16, 1989, respondent Judge resolved said Motion by dismissing plaintiff-petitioner's complaint in its Order dated August 16, 1989, the dispositive portion of which reads, as follows:

It is said that the test of sufficiency of the cause of action is whether admitting the facts alleged to be true, the court could render a valid judgment in accordance with the prayer in the complaint. After examining the material allegations in the complaint, the Court finds that the complaint failed to satisfy the test of sufficiency.

WHEREFORE, the complaint is dismissed for failure to state a sufficient cause of action.

IT IS SO ORDERED. (p. 2 Order, dated August 16, 1989).

Plaintiff-petitioner filed a Motion for Reconsideration, which was denied by respondent Judge in its Order dated September 29, 1989. (Decision of Court of Appeals, pp. 1-4; Rollo, Annex "A", pp. 26-29)

Petitioner directly appealed the Decision of the lower court to the Supreme Court.

On November 27, 1989, the Second Division of this Court referred this case to the Court of Appeals for "proper determination and disposition."

Respondent Court of Appeals rendered judgment affirming in toto the Order of the trial court.

Hence, this petition.

Under the New Civil Code (NCC), "Art. 165. The husband is the administrator of the conjugal partnership," in view of the fact that the husband is principally responsible for the support of the wife and the rest of the family. If the conjugal partnership does not have enough assets, it is the husband's capital that is responsible for such support, not the paraphernal property. Responsibility should carry authority with it.

The husband is not an ordinary administrator, for while a mere administrator has no right to dispose of, sell, or otherwise alienate the property being administered, the husband can do so in certain cases allowed by law. He is not required by law to render an accounting. Acts done under administration do not need the prior consent of the wife.

However, administration does not include acts of ownership. For while the husband can administer the conjugal assets unhampered, he cannot alienate or encumber the conjugal realty. Thus, under Art. 166 of NCC "unless the wife has been declared a non-compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership the wife's consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same." This rule prevents abuse on the part of the husband, and guarantees the rights of the wife, who is partly responsible for the acquisition of the property, particularly the real property. Contracts entered into by the husband in violation of this prohibition are voidable and subject to annulment at the instance of the aggrieved wife. (Art. 173 of the Civil Code)

As stated in Black's Law Dictionary, the word "alienation" means 'the transfer of the property and possession of lands, tenements, or other things from one person to another . . . The act by which the title to real estate is voluntarily assigned by one person to another and accepted by the latter, in the form prescribed by law. Cf. In re Enrhardt U.S.D.C. 19 F. 2d 406, 407 . . . ." While encumbrance "has been defined to be every right to, or interest in, the land which may subsist in third persons, to the diminution of the value of the land, but consistent with the passing of the fee by the conveyance; any (act) that impairs the use or transfer of property or real estate . . ." (42 C.J.S., p. 549).

The pivotal issue in this case is whether or not a lease is an encumbrance and/or alienation within the scope of Art. 166 of the New Civil Code.

Under Art. 1643 of the New Civil Code "In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than ninety-nine years shall be valid." Under the law, lease is a grant of use and possession: it is not only a grant of possession as opined by the Court of Appeals. The right to possess does not always include the right to use. For while the bailee in the contract of deposit holds the property in trust, he is not granted by law the right to make use of the property in deposit.

In the contract of lease, the lessor transfers his light of use in favor of the lessee. The lessor's right of use is impaired, therein. He may even be ejected by the lessee if the lessor uses the leased realty. Therefore, lease is a burden on the land, it is an encumbrance on the land. The opinion of the Court of Appeals that lease is not an encumbrance is not supported by law. The concept of encumbrance includes lease, thus "an encumbrance is sometimes construed broadly to include not only liens such as mortgages and taxes, but also attachment, LEASES, inchoate dower rights, water rights, easements, and other RESTRICTIONS on USE." (Capitalization is Ours) (533 Pacific Reporter [second series] 9, 12).

Moreover, lease is not only an encumbrance but also a "qualified alienation, with the lessee becoming, for all legal intents and purposes, and subject to its terms, the owner of the thing affected by the lease." (51 C C.J.S., p. 522)

Thus, the joinder of the wife, although unnecessary for an oral lease of conjugal realty which does not exceed one year in duration, is required in a lease of conjugal realty for a period of more than one year, such a lease being considered a conveyance and encumbrance within the provisions of the Civil Code requiring the joinder of the wife in the instrument by which real property is conveyed or encumbered (See also 41 C.J.S., p. 1149). In case the wife's consent is not secured by the husband as required by law, the wife has the remedy of filing an action for the annulment of the contract. Art. 173 of the Civil Code states "the wife may, during the marriage and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required. . . .

In the case at bar, the allegation in paragraph 2 of the complaint indicates that petitioner's estranged husband, defendant Antonio S. Roxas had entered into a contract of lease with defendant Antonio M. Cayetano without her marital consent being secured as required by law under Art. 166 of the Civil Code. Petitioner, therefore, has a cause of action under Art. 173 to file a case for annulment of the contract of lease entered into without her consent. Petitioner has a cause of action not only against her husband but also against the lessee, Antonio M. Cayetano, who is a party to the contract of lease.

PREMISES CONSIDERED, the decision of the Court of Appeals is hereby SET ASIDE and this case is hereby REMANDED to the Regional Trial court for further proceedings.

SO ORDERED.

Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. L-46963 March 14, 1994

GLORIA A. FERRER, petitioner,

vs.

HON. ANTONIO BAUTISTA, MARIANO BALANAG, AND MAGDALENA DOMONDON, respondents.

Fortunato F.L. Viray, Jr. for petitioner.

Agaton D. Yaranon, Jr., for private respondent.

VITUG, J.:p

This petition for review on certiorari seeks to reverse and set aside the order, dated 11 December 1976, of the Court of First Instance (now Regional Trial Court) of La Union, Branch III, dismissing petitioner's complaint for Quieting of Title to Real Property, as well as its order of 03 May 1977, denying the motion for reconsideration.

Pursuant to this Court's Resolution, dated 19 August 1977 (p. 4, Rollo), petitioner was allowed to file the instant petition under Republic Act No. 5440 considering that only questions of law had been raised.

On 03 August 1978, the Court dismissed the petition for lack of interest due to the failure of petitioner's counsel to submit the requisite memorandum in support of the petition (p. 58, Rollo). In a Resolution, dated 28 September 1978 (p. 63, Rollo), however, the Court resolved to reconsider the dismissal and to reinstate the petition.

Under controversy is a strip of land south of Lot 1980 of the Cadastral survey of Aringay, La Union. Petitioner claims its ownership by virtue of accretion, she being the owner of Lot 1980 covered by TCT No. T-3280, which is immediately north of the land in question. On the other hand, private respondents equally assert ownership over the property on account of long occupation and by virtue of Certificate of Title No. P-168, in the name of respondent Magdalena Domondon, pursuant to Free Patent No. 309504 issued on 24 January 1966 (p. 29, Rollo).

On 23 March 1976, petitioner Gloria A. Ferrer filed a complaint with Branch III of the then Court of First Instance of La Union to "Quiet Title to Real Property" against herein respondents Mariano Balanag and Magdalena Domondon. The case was denominated Civil Case No. A-514.

Prior to Civil Case No. A-514, petitioner had also filed with the Court of First Instance of La Union, Branch III, a complaint for reivindicacion (Civil Case No. A-86), dated 25 November 1965, against private respondents. Herein respondent Judge, who also handled the case, dismissed, on 10 February 1976, the complaint, without prejudice, on the ground that the court had no authority to cancel or annul the decree and the title issued by the Director of Lands on the basis of a mere collateral attack (pp. 22-23, Rollo).

On 11 March 1976, private respondents also moved for the dismissal of Civil Case No. 514-A on the following grounds, to wit:

1) Gloria A. Ferrer's lack of personality to file and prosecute Civil Case No. 514-A;

2) Civil Case 514-A is barred by prior judgment;

3) Lack of sufficient averments to constitute a cause of action; and

4) Civil Case No. 514-A, is a collateral attack on the Free Patent Decree No. 309504 and O.C. of Title No. F-168 (Annex "B," pp. 17-21). (p. 66, Rollo.)

On 07 December 1976, Judge Antonio G. Bautista issued an order(pp. 23-24, Record on Appeal), dismissing petitioner's complaint, ratiocinating, thus

This has reference to the Motion to Dismiss filed by the defendants, through counsel. The plaintiff filed an Answer to the Motion to Dismiss also through counsel.

The subject of the present action for Quieting of Title to Real Property, is covered by Free Patent No. 309504 and Original Certificate of Title No. P-168, in the names of the defendants. However, the plaintiff alleged in her Complaint that said Free Patent and Original Certificate of Title were secured through fraud, etc., on January 24, 1966, for which reason, they are null and void. In view thereof, while the plaintiff filed the present action ostensibly to Quiet Title of her alleged real property, it is in reality for the annulment or revocation of the Free Patent and Original Certificate of Title of the defendants. The observation of the Court is clinched by prayer (a) of the plaintiff's complaint, i.e., "That Patent Title No. 168 be declared revoked and cancelled as null and void from the Records of the Office of the Register of Deeds of San Fernando, La Union, etc." Consequently, the present action is untenable because it constitute a collateral or indirect attach on the Free Patent and Original Certificate of Title of the defendants. That is so, because it was held in the case of Samonte, et al. vs. Sambelon, et al., L-12964, February 29, 1960, that like a decree, a Patent cannot be attacked collaterally.

Furthermore, the plaintiff has no cause of action against the defendants because the Patent title issued in favor of the Firmalos (defendants here) by the Director of Lands is by now already indefeasible due to the lapse of one year following the entry of the decree of registration in the records of the register of deeds (Firmalos vs. Tutaan, No. L-35408, October 27, 1973).

WHEREFORE, the Court is constrained to order dismissal of the plaintiff's complaint. There is no pronouncement as to damages and costs. (p. 33, Rollo.)

Petitioner's motion for reconsideration was denied by the court in its order of 03 May 1977 (p. 38, Record on Appeal).

Hence this petition.

Petitioner submits the following assignment of errors on the part of respondent judge:

I. In not finding and declaring that Gloria A. Ferrer has legal personality to prosecute Civil Case No. 514-A;

II. In not finding and declaring that Civil Case No. 514-A has stated sufficient cause of action;

III. In not finding and declaring that petitioner Gloria A. Ferrer's title to the land is beclouded by the contrary claim of the private respondents thereto; and

IV. In outright dismissing Civil Case No. 514-A on the ground of collateral attack on Free Patent Decree No. 309504 being an abuse of judicial discretion and an excess of his jurisdiction. (p. 13, Rollo.)

The petition has merit.

Article 457 of the Civil Code, under which petitioner claims ownership over the dispute parcel of land, provides:

Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from the effects of the current of the waters.

Undoubtedly, plaintiff is the lawful owner of the accretion, she being the registered owner of Lot 1980 which adjoins the alluvial property. Parenthetically, the same finding has also been made by the trial court in Civil Case No. A-86 (p. 29, Rollo).

Alluvion gives to the owners of lands adjoining the banks of rivers or streams any accretion which is gradually received from the effects of the current of waters (Art. 457, Civil Code; Tuason vs. Court of Appeals, 147 SCRA 37; Cureg vs. IAC, 177 SCRA 313). The rationale for the rule is to provide some kind of compensation to owners of land continually exposed to the destructive force of water and subjected to various easements (Agustin vs. IAC, 187 SCRA 218; Binalay vs. Manalo, 195 SCRA 374).

The Director of Lands has no authority to grant a free patent over land that has passed to private ownership and which has thereby ceased to be public land. Any title thus issued or conveyed by him would be null and void (Tuason vs. Court of Appeals, 147 SCRA 37). The nullity arises, not from fraud or deceit, but from the fact that the land is no longer under the jurisdiction of the Bureau of Lands, the latter's authority being limited only to lands of public dominion and not those that are privately owned (Agne vs. Director of Lands, 181 SCRA 793).

Herein private respondents, therefore, acquired no right or title over the disputed land by virtue of the free patent since at the time it was issued in 1966, it was already private property and not a part of the disposable land of the public domain.

Although, ordinarily, a title becomes incontrovertible one year after it is issued pursuant to a public grant, the rule does not apply when such issuance is null and void. An action to declare the nullity of that void title does not prescribe (Agne vs. Director of Lands, supra); in fact, it is susceptible to direct, as well as to collateral, attack (Estoesta, Sr. vs. Court of Appeals, 179 SCRA 203).

Private respondents contend that an action for reconveyance prescribes in ten years. The ten-year prescriptive period is applicable to an action for reconveyance if, indeed, it is based on an implied or constructive trust. Article 1456 of the Civil Code, upon which a constructive trust can be predicated, cannot be invoked, however, since the public grant and the title correspondingly issued to private respondents that can create that juridical relationship is a patent nullity. Even assuming, nonetheless, that a constructive trust did arise, the running of the prescriptive period is to be deemed interrupted when an action is filed in court (Art. 1155, Civil Code) or, obviously, when one is already there pending.

Here, to recall, the Free Patent was issued on 24 January 1966 and OCT P-168 was transcribed in the Registration Book of La Union on 08 February 1966 (pp. 38-39, Rollo). At that time, Civil Case No. A-86 for reivindicacion between the parties was still pending in court. After Civil Case No. A-86 was dismissed, without prejudice, on 10 February 1976 (p. 32, Rollo), petitioner, on 22 March 1976 (p. 1, Record on Appeal), promptly filed Civil Case No. A-514 (now on appeal in this instance).

Neither can private respondents claim ownership of the disputed property by acquisitive prescription. Ownership and other real rights over immovable property are acquired by ordinary prescription through possession of ten years if the adverse possession is with a just title and the possession is in good faith. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession thereof for thirty years, this time without need of title or of good faith. (See Art. 1134, Civil Code.)

Given the settings in this case at bench, the applicable period of acquisitive prescription, if at all, would be thirty years. Even assuming, then, that private respondents were in adverse possession of the property from 1966 when the free patent was obtained, or even at the inception of their alleged adverse possession in 1954 ("Comment on Petition for Review," p. 35, Rollo), that possession, for purposes of acquisitive prescription, was deemed interrupted upon their receipt of summons (Art. 1123, Civil Code) in Civil Case No. A-86 pending since 1965, as well as Civil Case No. A-514 filed in 1976 following the dismissal the month previous of Civil Case No. A-86. The prescriptive period of prescription may not be held to commence anew during the pendency of said cases.

The instant petition has merely prayed that respondent court be directed to continue hearing Civil Case No. 514-A. We have repeatedly ruled, however, that where the determinative facts are before this Court, and it is in a position to finally resolve the dispute, the expeditious administration of justice will be subserved by the resolution of the case and thereby obviate the needless protracted proceedings consequent to the remand of the case to the trial court (Heirs of Crisanta Almoradie, et al. vs. Court of Appeals, et al., G.R. No. 91385, January 4, 1994; Lianga Bay Logging Co., et al. vs. Court of Appeals, 157 SCRA 357; Escudero vs. Dulay, 158, SCRA 69). Clearly, the records support the finding that herein petitioner is the true owner of the land subject of the free patent issued to private respondents. The court then, in the exercise of its equity jurisdiction. may, instead of remanding the case to the trial court, direct the owner to reconvey the disputed parcel to its lawful owner (Limaza vs. IAC, 182 SCRA 855; Agne vs. Director of Lands, supra). Considering, moreover, the length of time that this case has been pending between the parties, not counting petitioner's original action for reivindicacion in Civil Case No.A-86 filed on 25 November 1956, an order from this Court requiring such reconveyance can certainly be just and warranted.

WHEREFORE, the questioned order of dismissal of the trial court in its Civil Case No. 514-A is REVERSED and SET ASIDE, and judgment is hereby rendered DECLARING petitioner to be the owner of the disputed parcel of land and ORDERING private respondents to reconvey the same to said petitioner. No costs.

SO ORDERED.

Bidin, Romero and Melo, JJ., concur.

Feliciano, J., concurs in the result.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-57641 October 23, 1982

ANTOLIN A. JARIOL, and PAULO S. RODRIGUEZ, In their capacities as Joint Executors of the Estate of Humiliano Rodriguez, deceased, petitioners,

vs.

HON. COURT OF APPEALS, DOMINO JAGDON, in his Capacity as Administrator of the Estate of Timoteo Rodriguez, deceased, CLEMENTE RODRIGUEZ, TERESITA RODRIGUEZ, JULIA RODRIGUEZ, AMPARO RODRIGUEZ, FAUSTA RODRIGUEZ, FRANCISCA VDA. DE RODRIGUEZ, INES VDA. DE RODRIGUEZ, ADDULA RODRIGUEZ, DOLORES RODRIGUEZ and JUANITA RODRIGUEZ, respondents.

Orlando Paray and Francis Zosa & Associates for petitioners.

Pedro T. Garcia for respondents Domino Jagdon, Francisca Vda. de Rodriguez and Fausta Rodriguez.

Domingo Quibranza for respondents Ines Vda. de Rodriguez, Abdulia Rodriguez and Juanita Rodriguez.

Castor Y. Hontanosas, Sr. for respondents Clemente Rodriguez, Teresita Rodriguez, Julia Rodriguez and Amparo Rodriguez.

MELENCIO-HERRERA, J.:p

This is a Petition for Review on certiorari of the Decision of the Court of Appeals in its Case No. CA-G.R. No. 47020-R. The Petition was initially denied but upon a second Motion for Reconsideration, the denial was reconsidered and it was given due course.

We have found the facts to be as follows:

The deceased Quirino Rodriguez left four children: Humiliano, Timoteo, Jose, all surnamed Rodriguez, and Ines Rodriguez de Pages.

On November 25, 1951, these heirs (Jose, then deceased, being represented by Ines Vda. de Rodriguez and his adult children Abdulia, Dolores and Juanita), entered into an extrajudicial partition to divide a parcel of land covered by Transfer Certificate of Title No. RT-345 (T-193) of the Registry of Deeds, Cebu City, in the name of the deceased. The deed was signed by two witnesses and notarized by Atty. Bernardo B. Solotan. In this agreement, the property was divided into Lots "A" to "G" inclusive. Lot "F" was adjudicated to Humiliano, and Lot "G" to Timoteo. Lot "G" has no egress to the public roads.

On November 16, 1953, the original and copies of the Deed of Partition were allegedly burned when the Quirino Rodriguez Building was razed by fire.

On May 22, 1956, Timoteo died and his son, Clemente Rodriguez, was appointed executor of the estate, but was later replaced by Dominino Jagdon. They are two of the private respondents herein.

After Humiliano's death in 1961 or 1962, petitioners Antolin A. Jariol, his son-in- law, and Paulo S. Rodriguez, his son, were appointed executors of his estate.

On June 27, 1960, the Deed of Extra-Judicial Partition, with annotations and additions on the left and right hand margins on page 4 and below the notarial acknowledgment on page 5, was registered by Clemente Rodriguez, son of Timoteo, in the Office of the Register of Deeds of Cebu. These annotations are reproduced in full hereunder:

On the left hand margin of Page 4:

That on the approved subdivision plan with reference to the existing actual private lane, Lots 802-B-2-B-2-C, 802-B-2-B-2-D, 802-B-2-B-2B shall allot for the private lane three (3) meters each on their respective sides and thence six (6) meters for lot 802-B-2-B-2-F following the existing private lane, more particularly described at the bottom of page 5 of this document. (Emphasis supplied).

On the right hand margin of page 4:

That the contracting parties to the aforementioned extrajudicial partition of the estate of the deceased, Quirino Rodriguez, hereby will and bind themselves together with all the heirs, successors, and assigns to an the provisions of the said document.

Below the acknowledgment of page 5:

That the owners of the following lots bind themselves for their mutual benefit a perpetual easement of right of way described as follows:

Lot No. 802-B-2-B-2-G Three meters in width on the N. boundary.

Lot No. 802- B-2-B-2-D Three meters in width on the S. W. boundary.

Lot No. 802-B-2-B-2-C Three meters in width on the S. W. boundary.

Lot No. 802-B-2-B-2-B Three meters in width on the S. W. boundary.

Lot No. 802-B-2-B-2-F Six meters in width along the common boundary line of the said lots with the said boundary line as the centerline. 1

It is said that

xxx xxx xxx

Of the seven (7) heirs who signed at the left hand margins of pages 1, 2, 3 and 5 and at the bottom of page 4, only five (5) initials are found with the left hand margin insertion, with one "T.R. by C.L.R.", on the right hand margin insertion only four (4) initials are found with one "T.R. by C.L.R.", with the insertion of the bottom of page 5, only five (5) initials are found with one "T.R. by C.L.R.", and

No signatures or initials of the two witnesses are found with any of the insertions. 2

To be noted from the partition agreement is the fact that four heirs were to contribute for the easement of right-of-way three (3) meters each, while Humiliano, to whom Lot "F" appertained, was to give six meters.

Upon the contention that they had discovered the annotations only in 1964, petitioners Antolin A. Jariol and Paulo S. Rodriguez, as joint executors of Humiliano's estate, together with Ines Rodriguez de Pages, filed an action with the Court of First Instance of Cebu on March 11, 1965 against respondents Dominino Jagdon as administrator of the estate of Timoteo Rodriguez, Clemente Rodriguez, Dolores Rodriguez, and Ines Vda. de Rodriguez, seeking to declare the nullity of the annotations and insertions for having been surreptitiously and maliciously added long after the execution of the principal document, and the cancellation of the easements of right of way noted as encumbrances on the Certificates of Title issued for the subdivided lots, particularly on "Lot F". It was alleged that the initials of Humiliano and Ines Rodriguez de Pages affixed to the insertions were forged as found by a handwriting expert; that not all the parties to the document had affixed their initials to the insertions; that had the annotations been made at the time of the execution of the document, Timoteo, who was still alive, should have signed the annotations and not his son Clemente. The Complaint was amended three times to include other heirs either as parties plaintiffs or parties defendants.

During the trial, petitioners presented the deposition of Ines Rodriguez de Pages, then 81 years old, to the effect that the initials "I.R.P. " appearing in the insertions were not her own.

Defendants-respondents, on the other hand, sustained the genuineness and due execution of the annotations or additions and presented their own handwriting expert. They averred that the agreement merely confirmed the existing right of way.

In its judgment rendered on August 22, 1968, the Trial Court concluded:

It is the conclusion of this Court therefore, that the initials of Ines Rodriguez de Pages and Humiliano Rodriguez were forged and that Clemente Rodriguez, in initialing the said insertions or additions without any power of attorney from Timoteo Rodriguez does not bind the latter. Hence, the alleged agreement creating the easement is of no force and legal effect upon the heirs of Quirino Rodriguez. 3

and declared the alterations or annotations complained of illegal and unlawful and without any legal force and effect; ordered the Register of Deeds of Cebu to cancel the easement of right of war noted as encumbrances on the title; and finding that Clemente Rodriguez was responsible for the "falsification of the insertions" and the "forgery" of the initials of Humiliano and Ines Rodriguez de Pages, required defendants therein to pay actual, moral and exemplary damages as well as attorney's fees for having "abetted" the "wrondoing" of Clemente.

After defendants-respondents' Motion for New Trial on the ground that the deposition of Ines R. de Pages should not have been admitted in evidence, was denied, they appealed to the Court of Appeals.

On October 15, 1980, the Court of Appealls 4 reversed the judgment appealed from and dismissed the Third Amended Complaint as well as all counterclaims principally on the ground that the right-of-way involved, which was a pre-existing one, even prior to the extra judicial partition, sprang not from any voluntary concession but from law.

Petitioners came to this Court on a Petition for Review on certiorari asserting that respondent Appellate Court erred in skirting the issue on the genuineness and/or binding effect of the forged alterations and insertions on the Deed of Extrajudicial Partition; and in holding that a legal easement of right-of-way automatically attaches to Lot "F" adjudicated to Humiliano, as the servient estate, which was not an issue framed by the parties on appeal.

Petitioners take issue with the findings of respondent Court, which read in part:

Appellees also presented the deposition of Ines Rodriguez Pages, then aged 81, who denied the genuineness of her initials to the questioned insertions. On the other hand, appellants presented, inter alia, Atty. Bernardo Solatan, the lawyer who prepared and notarized the extrajudicial partition document; and Mrs. Amparo R. Casafranca, daughter of Humiliano Rodriguez and sister-in-law of appellee Jariol. Atty. Solatan testified that the partition document was made under the direction of Humiliano Rodriguez (tsn-Cavalida, Jan. 15, 1968, p. 237); that he prepared the insertions at the instance of Humiliano Rodriguez (tsn-Cavalida, Jan. 15, 1968, pp. 240-242); and that the initials attributed to Humiliano Rodriguez and Ines Rodriguez de Pages were authentic. Unrebutted was the testimony of Mrs. Casafranca that her father Humiliano Rodriguez favored the maintaining of a road right of way (tsn-Javier, May 9, 1968, p.4), and that this easement existed long before the execution of the extrajudicial partition (tsn-Javier, May 9, 1968, p. 6). Appellee Jariol confirmed that he knows of only one easement, that is, the one adjacent to his house (tsn-lyog, May 23, 1968, p. 35). We can only conclude that the easement encumbrance inserted in the extra-judicial partition referred to the existing right-of-way to which Humiliano Rodriguez was in favor of maintaining. 5

The Appellate Court then went on to state:

It cannot be denied that easements of right-of-way, being discontinuous, cannot be acquired by prescription. However, a close perusal of the subdivision plan of Lot 802-B-2-B-2 (Exh. D) reveals that Lot 802-B-2-B-2-G with an area of 1422 square meters has no access to the public roads. Corner no. 1 of this lot is almost 80 meters from Juan Luna street and about 73 meters from Colon Street, the latter through Lot No. 802-B-2-B-2-F. Under the partition agreement, Lot 802-B-2-B-2- G appertained to Timoteo Rodriguez and his heirs. A legal easement of right-of- way can therefore be established in favor of the heir to which this lot went. Section 652 of the New Civil Code reads: "Whenever a piece of land acquired by sale, exchange or partition is surrounded by other estates of the vendor, exchanger, or co-owner, he shall be obliged to grant a right-of-way without indemnity." Section 651 explains: "The width of the easement of right-of-way shall be that which is sufficient for the needs of the dominant estate, and may accordingly be changed from time to time." From the foregoing discussions, it would be immaterial to delve into whether the insertions in the extrajudicial partition are illegal and unauthorized. The right of the dominant estate to demand a right-of-way springs not from any voluntary concession but from law. Appellees must provide the owners of the dominant estate (Lot 802-B-2-B-2-G in this case) egress to the public road. Had the partition been the other way around, surely appellees would want a way out to the street. Justice and equity demand that the status quo be maintained with regards to the easement of right-of-way. 6 (Emphasis supplied)

Upon the foregoing exposition, we find that there is no substantial justification for setting aside the aforequoted findings of respondent Court. In the first place, it did not entirely disregard the matter of the questioned alterations and insertions. It summarized the conflicting evidence thereon, as quoted hereinabove, observing that "unrebutted was the testimony of Mrs. Casafranca that her father Humiliano Rodriguez favored the maintaining of a right-of-way (tsn. Javier, May 9, 1968, p. 4)." Mrs. Amparo R. Casafranca, who testified of her own knowledge, is the sister- in-law and sister, respectively, of petitioners. If Humiliano himself favored the right-of-way, petitioners, as his successors-in-interest, should be held bound by it. Respondent Court added that the Notary Public, Atty. Bernardo Solotan, who authenticated the document, also declared that the initials of Humiliano and Ines R. de Pages were authentic, and that the insertions were made at the instance of Humiliano. We view those declarations as amounting to findings of fact made by an Appellate Court, which we consider as binding on us.

And as far as Timoteo is concerned, although the Trial Court found that he did not initial the insertions, supra, there can be no denying that he would be the last to object to the easement established for it also inured to the benefit of "Lot G". which was allocated to him.

Secondly, the substantial question is whether or not "Lot G " is entitled to the easement of right of way. In point of fact, a road right of way providing access to the public road from "Lot G" existed long before the execution of the extrajudicial partition even during the lifetime of Quirino Rodriguez. The Deed of Partition merely sought to legalize and give stability to the access road already existing. That was confirmed by the testimony of Mrs. Casafranca. That is also the position taken by the other heirs who have been included as defendants respondents. As a matter of law, considering that "Lot G " has no access to the public road, the easement is explicitly provided for in Article 652 of the Civil Code 7 , its width being determined by the needs of the servient estate pursuant to Article 651 8 of the same law.

Thirdly, the justice of the situation rather than the technicalities of the controversy should govern herein. The questioned insertions and annotations refer to an "existing actual private lane." The question of legality of those insertions is linked with the need for its continued existence and the laws on easement cannot but have a definite bearing. The annotations did not "create" a right-of-way, contrary to the opinion of the Trial Court. They merely confirmed are existing one. Respondent Appellate Tribunal did not "by judicial fiat" establish a "legal easement of right- of- way" on Lot "F". It found that it had been pre-existing and that under the circumstances, the laws on easement were applicable. A chapel exits in the interior constructed by the deceased Quirino Rodriguez, who was also responsible for giving chapel-goers access thereto from the street. 9 The right-of-way exists for the mutual benefit of most of the heirs of Quirino Rodriguez. As aptly stated by respondent Court "justice and equity demand that the status quo be maintained with regards to the easement of right of way."

With the conclusions arrived at, the Resolution, dated June 30, 1982, giving due course to this Petition must be set aside and this Petition denied.

WHEREFORE, let this Petition for Review be, as it is, hereby denied for lack of merit.

Costs against petitioners.

SO ORDERED.

Teehankee (Chairman), Plana, Vasquez, Relova and Gutierrez, Jr., JJ., concur.

Republic of the Philippines

SUPREME COURT

Manila

SECOND DIVISION

G.R. No. L-41286 July 7, 1976

NATIVIDAD VDA. DE IGNACIO, petitioner,

vs.

HON. DELFIN VIR. SUÑGA, in his capacity as Judge, CFI of Camarines Sur, Branch I, and SIXTO TAN, respondents.

Jose T. Surtida for petitioner.

Luis General, Jr. for respondent.

AQUINO, J.:p

Natividad Vda. de Ignacio in these special civil actions of certiorari, mandamus and prohibition seeks to annul the order of the Court of First Instance of Camarines Sur, Naga City Branch I, setting aside the decision of the City Court of Naga in Civil Case No. 3092 (an ejectment suit) and allowing Sixto Tan to present his evidence in conformity with his answer (Civil Case No. 7580). The facts are as follows:

On October 1, 1955 Mrs. Ignacio, in her personal capacity and as administratrix of the estate of her deceased husband Jose Ignacio, leased to Sixto Tan "for a period of fifteen (15) years" a portion of Lot No. 1367 located in Naga City. The said lot, evidently a conjugal lot, has an area of five hundred ninety-five square meters. The portion leased to Tan has an area of one hundred eighty-one square meters. It has a frontage of twenty six meters on Elias Angeles Street.

It was stipulated in the lease contract that Tan was to construct a one story building on the leased lot. After the expiration of two years from the time the building was ready for occupancy, it would automatically become the lessors' property. Tan would then pay a monthly rental of P300 for the lease of the building. During the two-year period he would not pay any rental.

The lease contract has the peculiarity that while it is stipulated therein that the term thereof is fifteen years (par. 2), without specifying when that period would commence, the contract also contains provisions stating that the lease is for twenty five years (pars. 3, 7 and 8).

The explanation for such dichotomy in the term of the lease is that after the expiration of the fifteen-year period the lease would continue, at a monthly rental of P150, with respect to "the last two doors of' the building near the corner of Angeles and Evangelista Streets. The two doors would "serve as rights of way" to Tan's other building constructed on the adjacent lot belonging to the heirs of Mariano Abella. The easement of right of way as well as the easement of light and view would exist for twenty-five years (pars. 7 and 8).

It was further stipulated in the lease contract that in case of the destruction of the- building constructed by Tan, he would have the option to construct another building under the same terms and conditions for the remaining period of the lease. Should he not exercise that option, then the lease would be deemed rescinded except with respect to the right of way and Tan's right to open windows in the third story of his other building, which rights would endure up to the end of the twenty five year period. For reference, the contract is quoted below:

CONTRACT OF LEASE KNOW ALL MEN BY THESE PRESENTS:

That this contract of lease entered into by and between NATIVIDAD MATEO vda. de IGNACIO, in her personal capacity and in her capacity as the judicial administratrix of the Intestate Estate of the late JOSE IGNACIO, Special Proceeding No. 575 of the Court of First Instance of Camarines Sur, and RICARDO IGNACIO and ANGELITA IGNACIO, all of legal age, single and residents of Naga City, Phil., hereinafter to be known as the LESSORS, and SIXTO TAN, also of legal age, single and a resident of Naga City, hereinafter to be known as the LESSEE.

WITNESSETH:

1. That the LESSORS are the owners pro indiviso of that certain parcel of commercial land, situated at corner Elias Angeles and Evangelists Sts., Naga City, Phil., more particularly described as follows:

BEING Lot No. 1367 of Plan Ps-20046, containing an area of 595 sq. meters.. ... (boundaries are omitted).

2. That LESSORS hereby lease to LESSEE for a period of fifteen (15) years, subject to the conditions hereinafter enumerated, a portion of the above- described property, having a frontage of 26.59 meters along Elias Angeles St., and more specifically described as follows

BOUNDED on the North by Evangelista st., on the East by Elias Angeles St., on the South by the rest of the above described property; and on the West by Hrs. of Mariano Abella. ... CONTAINING an area of 181.23 sq m., more or less.

3. That LESSEE shall construct on the premises leased a one story commercial building of strong materials, in accordance with the plan to be furnished by the LESSORS, to which said LESSORS shall be free to add a second story at their own expense and for their own account, the estimated cost of which one story commercial building is P6,000.00, provided, however, that LESSEE shall be free to construct a roof garden on top of the second story to be constructed by LESSORS, for which roof garden LESSEE shall not pay any additional rental to LESSORS during the life of this lease contract, for twenty five (25) years;

4. That within the first two years, counted from the date said one story building constructed by LESSEE is ready for occupancy, he shall not pay rental to LESSORS;

5. That for and in consideration of the foregoing, after the expiration of said period of two years counted from the time said building constructed by LESSEE is ready for occupancy, said building shall automatically become the absolute and exclusive property of the LESSORS, and LESSEE shall begin paying a monthly rental of THREE HUNDRED (P300.00) Pesos, Phil. currency, for said building constructed by him;

6. That LESSEE shall be free to sub-lease said building constructed by him;

7. That after the expiration of the above-specified period of fifteen (15) years, LESSEE shall have the right to continue leasing the last two doom of said building, counted from the corner of Evangelista and Elias Angeles Sts. for another period of ten (10,) years at a monthly rental of ONE HUNDRED FIFTY (P150.001 Pesos, Phil. currency, for said two doors, which shall serve as rights of way to LESSEE's building, constructed on the lot of the Hrs. of Mariano Abel for the said period of twenty-five (25) years;

8. That within said period of twenty-five (25) years, LESSORS hereby bind themselves not to construct a third-story to the above mentioned building constructed by LESSEE, and LESSEE shall have the rights to open windows on the third story of the building on the lot of the Hrs. of Mariano Abelia overlooking LESSOR's lot in this contract; but after the expiration of said period of 25 years, LESSORS shall have the right to close any such window within two (2) meters of their property line;

9. That LESSEE shall pay to LESSORS, jointly and severally, whatever monthly rentals he has to Pay, in advance within the first ten (10) days of each calendar month;

10. That in case of failure by LESSEE to pay the rentals for four (4) consecutive months, LESSORS may rescind this contract;

11. That in case of the destruction of the building on the leased premises before the expiration of this contract, LESSEE shall have the option to construct another building under the same terms and conditions as in this contract for the remaining period of this lease and in case LESSEE should decide not to construct again, then this contract shall be considered rescinded, with the exception of pars. 7 and 8, which shall continue in force.

IN WITNESS WHEREOF, we have hereunto signed our names this 1st day of October 1955 at Naga City, Philippines.

(SGD) RICARDO IGNACIO (SGD) NATIVIDAD MATEO Lessor VDA. DE IGNACIO In her personal capacity and in her capacity as judicial administratrix in Special Proceeding No. 575 Lessor

(SGD) SIXTO TAN Lessee

(Witnesses and notarial acknowledgment are omitted)

A cursory perusal of the contract shows that it is vitiated by some ambiguities. The date when the fifteen-year period would commence is not crystal clear. That ambiguity affects the twenty-five year period. The provision that in the event the building is destroyed, the lessee may construct another building under the same terms and conditions 'as in this contract" is not clear as to whether the lessee would not pay rentals within the two-year period counted from the date when the new building is ready for occupancy.

It is evident that during the first two years of the fifteen years the lease is a gratuitous lease of the lot (as in commodatum) and that during the thirteen-year period the lease refers to the building which by then had become ipso facto the lessor's property. Thereafter, or during the ten-year period the lease is limited to the last two doors or to the lessors' obligation to recognize the easements of right of way and light and view in favor of Tan's building on the adjacent lot.

Tan constructed the building. It was finished "sometime in 1956" (pp. 58 and 68, Rollo). However, on November 7 or 8, 1968 it was completely burned. On November 23 Tan informed Mrs. Ignacio that he was going to reconstruct the building. They could not agree on the conditions under which the building was to be reconstructed. Mrs. Ignacio insisted that Tan should construct the building as stipulated in the 1955 lease contract. Than proposed that Mrs. Ignacio should shoulder the cost of reconstruction in excess of P6,000, the amount fixed in the lease contract. Mts. Ignacio rejected that proposal.

As Tan persisted in his determination to reconstruct the building at a cost of about P14,000 to P15,000, Mrs. Ignacio filed in the lower court an injunction action to restrain Tan from reconstructing the building. Executive Judge Ulpiano Sarmiento issued a restraining order. The case was assigned to Judge Delfin Vir. Suñga. On January 21, 1970 he issued an order dissolving the restraining order and denying the petition for injunction (Civil Case No. 6868).

Mrs. Ignacio assailed Judge Suñga's order by certiorari in the Court of Appeals. That Court on February 11, 1970 issued a writ of preliminary injunction enjoining Tan from reconstructing the building.

The Court of Appeals in its decision held that because Tan's lease expired on October 1, 1970, he had no more right to stay in the leased premises and he had virtually become a squatter therein. consequently, the injunction suit and the certiorari case had become moot and academic.

The Court of Appeals dismissed the petition without prejudice to Mrs. Ignacio's right to eject Tan should he refuse to vacate the leased premises. The Court found Tan in contempt of court for continuing with the reconstruction of the building in defiance of the injunction. It fined him five hundred pesos (Vda. de Ignacio vs. Judge Suñga, CA-G.R. No. 44657-R, October 28, 1970).

Tan in his motion for reconsideration assailed the Court's finding that the lease had already expired. He contended that the fifteen-year term of the lease did not commence on October 1, 1955 when the contract was executed; that it was stipulated that the rentals would be paid after the expiration of two years from the date the building was ready for occupancy; that even after the expiration of the fifteen-year period, Tan could still occupy for ten years the last two doors, and that, in case of reconstruction of the building, he could occupy it for two years without paying any rental, as stipulated in the lease contract.

The Court of Appeals denied Tan's motion for reconsideration. It noted that its conclusion on the expiration of the lease was based on the contract itself which formed part of the record. At the same time the Court observed that Tan's contentions regarding the term of the lease raised factual issues which could not be resolved at that stage of the case and which should be interposed as defenses in the trial court in the proper case at the proper time. That ambivalent observation spawned this controversy between Tan and Mrs. Ignacio.

Tan filed in this Court a petition for certiorari praying for the reversal of the holding of the Court of Appeals that the lease had already expired and that he had committed contempt of court. This Court in a minute resolution denied the petition for lack of merit and because it involved factual matters (Tan vs. Vda de Ignacio, L-33170, February 18, 1971).

On November 20, 1970 Mrs. Ignacio filed in the City Court of Naga an unlawful detainer action against Tan and his sublessee on the basis of the Court of Appeals' finding that Tan's lease expired on October 1, 1970, She alleged that the reasonable compensation for the use and occupation of the premises occupied by Tan was two thousand five hundred pesos a month.

She further alleged that the building reconstructed by Tan was destroyed on October 13, 1970 by the typhoon Sening and that the Court of Appeals denied Tan's motion for the repair of the building (Civil Case No. 3092).

Tan in his answer merely interposed the negative defense that his lease had not yet expired. He averred that the typhoon only partially destroyed the reconstructed building.

In the City Court the parties entered into a stipulation of facts which included the lease contract, the injunction complaint in Civil Case No. 6868, the restraining order, Judge Suñga's order denying the injunction, the record of the aforementioned certiorari case in the Court of Appeals, Vda. de Ignacio vs. Judge Suñga, CA-G.R. No. 44657-R, October 28, 1970, the record of the certifying case in this Court, Tan vs. Vda. de Ignacio, L-33170, the contract of sublease dated September 25, 1970 and the sublessee's affidavit wherein it was stated that the sublease would take effect on October 1, 1970 when the lease contract between Tan and Mrs Ignacio would expire.

On March 26, 1973 the City Court issued a ruling disallowing cross-examination questions to Mrs. Ignacio which would revive the issue as to the expiration of the lease.

Tan moved for the reconsideration of that ruling. The City Court denied his motion. It assumed that this Court in its minute resolution dismissing Tan's appeal had affirmed the finding of the Court of Appeals that the lease expired on October 1, 1970. The City Court said that it had "no legal authority to set aside" this Court's resolution. It cited the ruling that a final judgment of this Court "is binding on all inferior courts, and hence beyond their power and authority to alter or modified" (Macansantos Ns Fernan, 112 Phil. 1100).

In view of the City Court's refusal to entertain evidence on the expiration of the lease, Tan did not present any evidence. On July 31, 1973 the City Court rendered a decision ejecting Tan and his sublessee It adhered to the Appellate Court's finding that the lease expired on October 1, 1970. It ordered the defendants to pay solidarily to Mrs. Ignacio a monthly rental of five hundred pesos beginning October, 1970.

Tan, appealed. The case was assigned to Judge Suñga (Civil Case No. 7580), the same Judge who in 1970 denied Mrs. Ignacio's petition to enjoin Tan from reconstructing the building.

Tan filed a memorandum praying that the City Court's decision be set aside and that the case be remanded to the inferior court for the reception of his evidence. Mrs. Ignacio in her memorandum prayed that the City Court's decision be affirmed.

Judge Suñga in his order of April 30, 1975 disregarded the finding of the Court of Appeals that Tan's lease expired on October 1, 1970. Judge Suñga said

With due respect to the better opinion of the Court of Appeals and the Supreme Court, this Court finds no ground for the said Courts to ride on the expiration of the contract of lease (Exh. A) as the same was not in issue. ... What was in issue raised by the pleadings and/or prayers of the appellant was an injunction to prevent the appellee Sixto Tan and his agent from continuing the reconstruction of a new commercial building as provided for in par. 10 (Exh. A-7) of the lease contract between them.

Judge Suñga, disagreeing with the Court of Appeals, ruled that the lease had not yet expired, the ordered the remand of the ejectment case to the City Court for the reception of Tan's evidence "pursuant to his answer to the complaint and rebut whatever evidence that the plaintiff has presented".

Mrs Ignacio moved for the reconsideration of Judge Suñga's order. She cited the elementary rule that an inferior court has no legal authority to set aside a final and executory judgment of this Court and grant new trial (Usaffe Veterans Association, Inc. vs. Treasurer of the Philippines, L-18393, December 17, 1966, 18 SCRA 1091).

Judge Suñga denied Mrs. Ignacio's motion for reconsideration in his order (if July 7, 1975. He in effect held that the Court of Appeals could not rule on the expiration of the lease because that matter was allegedly not in issue; that its finding on that Point was an obiter dictum and that the question as to the expiration of the lease could still be litigated in the ejectment case.

On September 1, 1975 Mrs. Ignacio filed in this Court the aforementioned special civil actions of certiorari mandamus and prohibition. She contends that respondent Judge gravely refused his discretion in not accepting the finding of the Court of A Is t hat the lease expired on October 1, 1970.

The issue is whether that finding is binding on the City Court anti Court of First Instance. It should be clarified that this Court did not affirm that finding. This Court merely refused to the decision of the Court of Appeals presumably because Tan's appeal was not warranted under Rule 45 of the Rules of Court.

We hold that finding which is found in the body of the Decision of the Court of Appeals as well as in the dispositive portion of fallo thereof, is res judicata or is the law of the case between Tan and Mrs. Ignacio. It is conclusive between them. It is beyond the power of the lower court to alter or set aside. although it may be erroneous (Sec. 49 [c], Rule 39, Rules of Court, 21 C.J.S. 330-331; Peñalosa vs. Tuason, 22 Phil. 303, 312; Peoples Homesite and Housing Corporation vs. Mencias, L-24114, August 16, 1967, 20 SCRA 1031; People vs. Olarte, L-2244;5, February 25, 1967, 19 SCRA 494; Zarate vs. Director of Lands Phil. 747; Rodriguez s Director of Prisons, 28, 1972, 47 SCRA 153; Balmes vs. Suson, L-27235, May 22, 1969, 28 SCRA 304, National Waterworks and Sewerage Authority vs. NWSA Consolidated Union, L-26894-96, February 28, 1969, 27 SCRA 227).

That finding is the ratio decidendi of the decision of the Court of Appeals which held that the injunction action had become moot and academic, that Tan was a squatter, and that Mrs. Ignacio could judicially eject if he did not vacate the leased premises extrajudicially.

The Court of Appeals in its resolution of Tan's motion for reconsideration said that his contention that the term of the leased had not yet expired could be raised by him as a defense in the ejectment suit. That dictum did not impair the binding force of its conclusive finding that the leased had expired. It averred that the said finding was supported by the said record. By denying Tan's motion for reconsideration, the Court of Appeals in effect reiterated its decision that the injunction action had become moot because of the expiration of the lease on October 1, 1970.

Tan's contention that the off-mentioned conclusion of the Courts of Appeals on the expiration of the lease was merely tentative was belied by the tenor of its decision. Because of the expiration of the lease, the Court of Appeals held that Tan could be ejected from the leased premises; that there was no need for an injunction against him, and that he had no more right to reconstruct the burned building.

Tan further contends that if the lease had already expired, then an ejectment suit was not necessary for then there would be nothing more to decide. That contention is untenable. An ejectment suit was required because if Tan persisted in remaining in the leased premises, Mrs. Ignacio could not forcibly oust him therefrom. She would have no choice but to go to court. The Court of Appeals could not decree in the certiorari case that Tan should be ejected. Moreover, the reasonable compensation for the use and occupation of the lot should be ascertained in the ejectment suit.

Respondent Judge acted with grave abuse of discretion in not giving effect to the ruling of the Court of Appeals. He could express his honest conviction that it was an erroneous ruling that he could not refuse to give it effect (People v. Santos, 104 Phil. 551, 560; People vs. Vera, 65 Phil. 56, 82, Shioji vs. Harvey, 43 Phil. 333, 337). By not applying that ruling, he virtually nullified the decision of the Court of Appeals.

The lower court erred in remanding the ejectment suit to the City Court for the purpose of the receiving Tan's evidence in support of his defense that the lease had not yet expired. The lease contract is the best evidence on the expiration of the lease. Its provisions reveal that during the two-year period from the time when the building was ready for occupancy (sometime in 1965 according to Mrs. Ignacio), no rentals were due because, obviously, the building, which would become the lessors' property, served as the compensation for Tan's use of the lot.

During the remaining thirteen years, the subject matter of the lease was the building for which a monthly rental of three hundred pesos was due. Upon the expiration of the fifteen-year Period (which could have been in 1971 but which the Court of Appeals in its final judgment found to be October 1, 1970), the case could continue for another ten years (up to September 30, 1980) It only with respect to the easements of right of way and light and view for which a monthly rental of one hundred fifty pesos would be paid by Tan to Mrs. Ignacio.

The lower court should decide Tan's appeal on the assumption that the case expired on October 1, 1970 since, as already stated, that finding is res judicata. It should find out whether the evidence presented by Mrs. Ignacio in the City Court is sufficient to sustain the inferior court's finding that the reasonable compensation for the use and occupation of the one Hundred eighty-one square meters originally leased by Tan is five hundred pesos a month, and that Tan should pay P2,000 as attorney fees.

WHEREFORE, respondent Judge's orders of April 30 and July 7, 1975 are set aside. The lower court is directed to conduct further proceedings along the guidelines herein stated. It should decided the ejectment suit by using as a basis the finding of tile Court of Appeals that the lease expired on October 1, 1970 and that Tan is a squatter on the lease premises. No costs.

SO ORDERED.

Fernando, Barredo and Antonio, JJ., concur.

Concepcion, Jr., is on Leave.

Martin, J., was designated to sit in the Second Division.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-23616 September 30, 1976

RODRIGO ENRIQUEZ, AUREA SORIANO DE DIZON and URBANO DIZON, JR., plaintiffs-appellants,

vs.

SOCORRO A. RAMOS, defendant-appellee.

CASTRO, C.J.:p

This case is a direct appeal from an order of the Court of First Instance of Rizal (Quezon City) dated December 3, 1963, reversing its decision dated October 8, 1963 in favor of the plaintiffs-appellants Rodrigo Enriquez, Aurea Soriano de Dizon and Urbano Dizon, Jr., in civil case Q-7229, an action for foreclosure of real estate mortgage.

This is the second time that the herein party litigants have come to this Court on basically the same causes of action affecting the same deed of sale with real estate mortgage covenanted between them.

In Rodrigo Enriquez, et al. vs. Socorro A. Ramos (G.R. No. L18077, September 29, 1962), the plaintiffs-appellants averred that on November 24, 1958 they sold to the defendant-appellee Socorro A. Ramos 20 subdivision lots in Quezon City for the sum of P235,056 of which only P35,056 had been paid 'The balance of P200,000 was to be liquidated within two years from the date of the execution of the deed of sale, with interest at six percent for the first year and twelve percent thereafter until fully paid. To secure the payment of that balance, the defendant-appellee executed in the same document a deed of mortgage in favor of the vendors on several parcels of land variously situated in Quezon City, Pampanga and Bulacan. The deed of mortgage embodies certain stipulations which the plaintiffs-appellants invoked, thus:

During the term and existence of this mortgage, the Mortgagor shall duly pay and discharge, at her expense, and on their maturity, all lawful taxes or assessments levied or assessed upon the mortgaged property: in default thereof the Mortgagee may pay and discharge such taxes of assessments and insure the security of the property, and any and all sums so paid by the Mortgagee shall be repayable on demand with interest at per annum and be a lien or. the property herein mortgaged.

xxx xxx xxx

If for any reason the mortgage cannot be registered, then the whole obligation shall immediately become due and demandable.

In the event that the Mortgagor should fail to pay the amount secured this mortgaged or any part thereof in accordance in that terms an I conditions herein set forth, or should she fail to perform and of the conditions stipulated herein, the Mortgage shall have the right ... to foreclose this mortgage extra-judicial and to that end that Mortgagee is hereby appointed the attorney-in-fact of the Mortgagor with full power of substitution, to enter upon and take possession of the mortgagee property without the order of any court or any `authority other than that herein granted, and to sell and dislike of the same to the highest bidder at public auction after the publication of notice, in accordance with the provisions of Act No. I5 of the Philippine Legislature, as amended.

According to the plaintiffs-appellants in L-18077, the defendant-appellee violated the terms of their agreement in the following respects:

1. Inspite of repeated demands, the defendant-appellee refused to pay the sum of P200,000 within the stipulated period;

2. The mortgage, on the Bulacan property was never registered and

3. The realty tax for 1959 on the lots mortgaged were not paid by the defendant-appellee.

This Court upheld the findings and conclusions of the trial court which ruled that the actual price of the lots sold to the defendant-appellee was only P185,056 instead of P235,056, and that only if and when the roads shall have been constructed pursuant to the ordinances of Quezon City "may the period of two years specified in the contract begin to run." These conclusions arrived account of a private deed entitled "Explanation" in which the plaintiffs- appellants certified that of the consideration of P235,056 appearing in the questioned deed of sale for mortgage, P50,000 "represent contribution of his Socorro A. Ramos for the construction of roads, which we will undertake in accordance with the provisions of the City Ordinances of Quezon City."

With reference to the non-payment of the 1959 realty tax and the non-registration of the mortgaged Bulacan estate, this Court held that "aside from being minor matters, the appear sufficient, explained in the brief of defendant- appellee." In her in L-18077, the defendant-appellee had stated that she applied her backpay certificates to the payment of her realty and income taxes but as she had not yet received said certificates the payment of the taxes was delayed. On the other hand the registration of the Bulacan property could not be Under taken because it was then still registered in both her name in the name of co-owner. The defendant-appellee promised that she would pay the taxes in due time and undertake the needed segregation and the annotation of the lien of the mortgage on the Bulacan property as soon as the vendors proceeded with the construction of the roads on the purchased lots.

Now returning to the case at bar, the plaintiffs-appellants charged on May 4, 1963 before the Court of First Instance of Rizal (Quezon City) that the defendant-appellee has not yet paid the sum of P200,000 despite the fact that the roads on the questioned lots were completed on May 9, 1960; that the mortgage on the Bulacan property has not yet been registered; and that the realty taxes corresponding to the years 1959 to 1963 on the mortgaged lots had not been paid.

The defendant-appellee admits that she has not paid the realty taxes and has not registered the mortgage on the Bulacan property, but argues that in L-18077 these matters were considered minor ones and also sufficiently explained by her, invoking the rule of res judicata. The defendant-appellee likewise does not dispute her non-payment of the sum of P200,000; she contends, however, that the roads have not yet been completed in accordance with Ordinance No. 2999 of Quezon Cities the pertinent portions of which state:

SEC. 10. The following subdivision improvements shall be contracted or provided in accordance with the plans and/pr specifications as adopted by the Administrative Agency.

(a) Street paraments. All streets shall be paved. Waterbound macadam pavements on a suitable base shall be considered the minimum standard or pavement that shall be used.

(b) Curbs and gutters. All streets shall be provided with concrete curbs and gutters.

(d) Drainage facilities. The subdivision shall be provided with adequate drainage facilities as approved by the Administrative Agency.

(e) Tree Plantings. The subdivider shall plant and grow shade trees, if none are yet existing for the purpose of this requirement, on the side or sides of every lot adjacent to streets about three (3) meters from the street line, with a maximum spacing of en (10) meters.

(f) Water facilities. The subdivider shall provide the subdivision with adequate water facilities.

According to the defendant-appellee, the roads in question cannot be considered completed because the plaintiffs-appellants have not yet planted trees nor put up water facilities as required by the foregoing ordinance. Neither may said roads be considered completed in the legal sense until their construction has been accepted by the Capital City Planning Commission which was designated to implement Ordinance 2969. Moreover, even if the roads in question have already been constructed in accordance with the mentioned ordinance. still her obligation to pay the sum of P200,000 has not yet arisen as no previous notice and demand for payment has been made on her.

We find the posture of the defendant-appellee to be untenable.

1. It is true that in L-18077 this Court held that the non-payment of the 1956 realty tax as well as the non-registration of the mortgaged Bulacan estate by the defendant-appellee were minor matters aside from being sufficiently explained by her. That pronouncement, however, should be taken in the light of the environmental, however, should be taken in the light of the environmental, however, should be taken in the light of the environmental milieu under which L-18077 was decided. The non-payment of the realty tax for a year and the non-registration of the mortgaged property within a reasonable time after the execution of a contract may be considered minor matters, particularly where, in addition, the failure to do so was sufficiently explained, and the mortgagor promised this Court that positive remedial action would be taken. The opinion of this Court cannot however be taken as a license for the continued non-fulfillment by the defendant-appellee of her contractual obligations. It was far from the intention of this Court to allow or enable the litigants to utilized its decision as an instrument whereby solemnly covenanted obligations could be avoided. In such situation, the continued obligations could be avoided. In such situation, the continued violation by the defendant appelle of the express terms of her contract can no longer be countenanced. As it is, not only has the defendant-appelle failed to perform the mentioned obligations, but she has likewise entirely failed to deliver to the plaintiffs-appellants the sum of P50,000 which she promised to contribute to the latter for the construction of the roads on her lots in accordance with the ordinances of Quezon City. The deed of sale with mortgage makes it the express duty of the defendant-appellee to pay the realty taxes on the mortgaged lots, to register the mortgaged estates, and to contribute P50,000 for the construction of roads on the purchased lots. By its express terms, if the defendant-appelle failed to fulfill these conditions her entire obligation was to become immediately due and demandable and the mortgage would have the option to foreclosure the mortgage. These terms of the contract have the force of law between the parties thereto. 1

2. On the issue of whether the construction of the questioned roads has already been completed in accordance with the ordinances of Quezon City, evidence adduced below sufficiently supports the plaintiff-appellant's position.

At the trial below, the plaintiffs-appellants adduced the testimonies of two witnesses, Oscar Delfin and Atty. Gelacio L. Dimaano (plaintiffs-appellants' counsel). Delfin testified that he was a construction superintendent of Wendel Construction Co., Inc. which was contracted to open up roads on the lots in question; that his outfit undertook the building of the said roads in accordance with the ordinances of Quezon City, having laid out "type B gutters, concrete curbs, pavement made of Vituminous macadam asphalt;" that construction commenced on November 2, 1959 and was completed on May 9, 1960 for the sum of P100,000 which has already been paid by the plaintiffs-appellants; that while the construction was in progress, the defendant-appellee visited the worksite two or three times and inspected the work being done; and that the certificate of turnover of the roads was given by the president of his firm to the plaintiffs-appellants. Dimaano, in the main, corroborated Delfin's testimony, and added that under the mentioned deed of sale with mortgage, the attorney's fees in case of litigation would be 10% of the amount due.

At the trial below, the defendant-appellee, pursuant to a partial stipulation of facts, presented a letter dated May 9, 1963 of the Acting City Engineer of Quezon City which states the following:

This is in reply to your letter dated May 3, 1969 requesting inspection of the Mindanao Avenue Subdivisions, Quezon City, in which you have purchased thirty-one (31) lots.

In that connection, I wish to advise you that an ocular inspection has already been made by a representative of this Office and his report points out that said subdivision is already provided with curbs and gutters together with drainage facilities. The roads have already been asphalted but no final test, verification and approval have been undertaken by this Office.

It was revealed also that water and lighting system have not yet been installed thereat.

In connection with the aforequoted letter, the parties stipulated that the "test, verification and approval mentioned in Exhibit 1-A is required only when the roads of the subdivision and easements are to be donated to the city Government, and there is no law as to when the roads of any subdivision are to be donated (to the) City Government." This stipulation was arrived at after the counsel for the defendant-appelle had conferred with a representative of the Quezon City Engineer's Office.

On the basis of the foregoing items of evidence, not contradicted by the defendant-appelle, the completion of the roads in question must be regarded as having been sufficiently established.

3. The defendant-appellee, however, argues that the said roads "are not yet completed in the technical, legal sense. This is because the final say or acceptance by the Administrative Agency was not yet secured." This posture is inordinately technical and also is devoid of merit. There is nothing at all in Ordinance 296!) of Quezon City which makes the acceptance by the said agency a condition precedent before a street in Quezon City may be considered constructed in accordance with Ordinance 2969.

4. The planting of trees and the installation of water facilities required by section 10 of Ordinance 2969, supra, which the defendant-appellee says must first be made before the roads in question may be considered legally completed are matters which could not have been conceivably within the contemplation of the parties. In the first place, these activities involve a substantial outlay of funds which, by its very nature, should have been unavoidably referred to in the mentioned "Explanation." In the second place, the said requirements are imposed on the subdivision owner, and it is obvious from this decision in L-18077 that it was the defendant-appellee who intended to develop the purchased lots into a subdivision. this said in L-18077:

We find no error in the conclusion reached by the court a quo for indeed that is the condition to be expected by a person who desire to purchase a big parcel of land for purposes of subdivision. In a subdivision the main improvement to be undertaken before it could be sold to the public is feeder roads as otherwise it would be inaccessible and valueless and would offer no attraction to the buying public. And so it is correct to presume, as the court a quo did, that when the sale in question was being negotiated, the construction of roads in the prospective subdivision must have been uppermost in the mind of defendant for her purpose in purchasing the property was to develop it into a subdivision ...

In the third place, no evidence has been adduced which would show that the planting of trees and the putting up to of water facilities were within the contemplation of the parties when they were negotiating for the purchase of the lots in question. And in the fourth place, there is nothing in Ordinance 2969 which would indicate that a street may be considered completed water facilities are built on the subdivision. These activities are definitely segregable from the laying out and construction of roads and cannot be deemed included within the scope of the latter.

5. As to be alleged lack of previous notice completion and demand for payment, the filing of the case below is sufficient notice to the defendant-appellee of the completion of the roads in question and of the plaintiffs-appellee's desire to be paid the purchase price of the questioned lots. The effect of such demand retroacts to the day of the constitution of the defendant-appellee's obligation. Thus, Article 1187 provides the "The effects of a conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution obligation..." The contacted obligation of the defendant-appellee under the facts of the case at bar was to pay the balance of P200,000 within two years from the date the roads in question are completed.

Accordingly the order of the court a quo dated December 3, 1963 is set aside, and judgment is hereby rendered ordering the defendant- appellee to pay to the plaintiffs-appellants, within ninety (90) days from the finality of this decision, the following :

1. The sum of P200,000 representing the unpaid balance of her contractual obligation;

2. Interest thereon, as stipulated in the deed of sale with mortgage, at the rate of 6% per annum from May 9, 1960 up to May 9, 1961, and, thereafter, 12% interest per annum until the principal amount shall have been fully paid;

3. An amount equivalent to 5% of the mortgage indebtedness of attorney's fees; and

4. The costs.

Should the defendant-appellee fail to pay the aforementioned mortgage indebtedness within the period granted in this decision, and the properties mortgaged shall be sold at public auction and the proceeds thereof shall be applied to the satisfaction of this judgement and the costs of the auction sale. Costs against the defendant-appellee. The motion of Guillermo N. Pablo "to join defendant-appellee as co-party" is denied.

Makasiar, Muñoz Palma and Martin, JJ., concur.

Teehankee, J., concurs in the result.

CIVIL LAW BLOG, ANDRES BONIFACIO COLLEGE

Wednesday, August 8, 2012

ON EASEMENTS

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